EXHIBIT 10.1

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

DATED AS OF JULY 17, 2008

 

AMONG

 

LTC PROPERTIES, INC.

 

THE GUARANTORS FROM TIME TO TIME PARTIES HERETO,

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

AND

 

BANK OF MONTREAL, CHICAGO BRANCH,

as Administrative Agent

 

 

BMO CAPITAL MARKETS,

as Co-Lead Arranger and Book Manager and

 

KEY BANK NATIONAL ASSOCIATION,

as Co-Lead Arranger and Syndication Agent

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

SECTION

 

HEADING

 

PAGE

 

 

 

 

 

SECTION 1.

 

THE CREDIT FACILITIES

 

1

 

 

 

 

 

Section 1.1.

 

Commitments

 

1

Section 1.2.

 

Letters of Credit

 

2

Section 1.3.

 

Applicable Interest Rates

 

4

Section 1.4.

 

Minimum Borrowing Amounts; Maximum Eurodollar Loans

 

6

Section 1.5.

 

Manner of Borrowing Loans and Designating Applicable Interest Rates

 

6

Section 1.6.

 

Interest Periods

 

8

Section 1.7.

 

Maturity of Loans

 

8

Section 1.8.

 

Prepayments

 

9

Section 1.9.

 

Default Rate

 

9

Section 1.10.

 

The Notes

 

10

Section 1.11.

 

Funding Indemnity

 

10

Section 1.12.

 

Commitment Terminations

 

11

Section 1.13.

 

Substitution of Lenders

 

11

Section 1.15.

 

Increase in Revolving Credit Commitments

 

12

 

 

 

 

 

SECTION 2.

 

FEES

 

12

 

 

 

 

 

Section 2.1.

 

Fees

 

12

 

 

 

 

 

SECTION 3.

 

PLACE AND APPLICATION OF PAYMENTS

 

13

 

 

 

 

 

Section 3.1.

 

Place and Application of Payments

 

13

 

 

 

 

 

SECTION 4.

 

GUARANTIES

 

15

 

 

 

 

 

Section 4.1.

 

Guaranties

 

15

Section 4.2.

 

Further Assurances

 

15

 

 

 

 

 

SECTION 5.

 

DEFINITIONS; INTERPRETATION

 

15

 

 

 

 

 

Section 5.1.

 

Definitions

 

15

Section 5.2.

 

Interpretation

 

33

Section 5.3.

 

Change in Accounting Principles

 

34

 

 

 

 

 

SECTION 6.

 

REPRESENTATIONS AND WARRANTIES

 

34

 

 

 

 

 

Section 6.1.

 

Organization and Qualification

 

34

Section 6.2.

 

Subsidiaries

 

34

Section 6.3.

 

Authority and Validity of Obligations

 

35

Section 6.4.

 

Use of Proceeds; Margin Stock

 

35

Section 6.5.

 

Financial Reports

 

36

Section 6.6.

 

No Material Adverse Change

 

36

 

--------------------------------------------------------------------------------

 

Section 6.7.

 

Full Disclosure

 

36

Section 6.8.

 

Trademarks, Franchises, and Licenses

 

36

Section 6.9.

 

Governmental Authority and Licensing

 

36

Section 6.10.

 

Good Title

 

36

Section 6.11.

 

Litigation and Other Controversies

 

37

Section 6.12.

 

Taxes

 

37

Section 6.13.

 

Approvals

 

37

Section 6.14.

 

Affiliate Transactions

 

37

Section 6.15.

 

Investment Company; Public Utility Holding Company

 

37

Section 6.16.

 

ERISA

 

37

Section 6.17.

 

Compliance with Laws

 

38

Section 6.18.

 

Other Agreements

 

39

Section 6.19.

 

Solvency

 

39

Section 6.20.

 

No Broker Fees.

 

39

Section 6.21.

 

No Default

 

39

Section 6.22.

 

Stock of the Borrower

 

39

Section 6.23.

 

Condition of Property; Casualties; Condemnation

 

39

Section 6.24.

 

Legal Requirements, and Zoning

 

40

Section 6.25.

 

Qualified Ground Leases

 

40

Section 6.26.

 

No Defaults; Landlord is in Compliance with Leases

 

40

 

 

 

 

 

SECTION 7.

 

CONDITIONS PRECEDENT

 

40

 

 

 

 

 

Section 7.1.

 

All Credit Events

 

40

Section 7.2.

 

Initial Credit Event

 

41

Section 7.3.

 

Eligible Property Additions and Deletions to the Borrowing Base

 

42

 

 

 

 

 

SECTION 8.

 

COVENANTS

 

43

 

 

 

 

 

Section 8.1.

 

Maintenance of Business

 

43

Section 8.2.

 

Maintenance of Properties

 

43

Section 8.3.

 

Taxes and Assessments

 

43

Section 8.4.

 

Insurance

 

43

Section 8.5.

 

Financial Reports

 

44

Section 8.6.

 

Inspection

 

46

Section 8.7.

 

Office of Foreign Asset Control

 

46

Section 8.8.

 

Liens

 

46

Section 8.9.

 

Investments, Acquisitions, Loans and Advances

 

46

Section 8.10.

 

Mergers, Consolidations and Sales

 

48

Section 8.11.

 

Maintenance of Subsidiaries

 

49

Section 8.12.

 

Intentionally Omitted

 

49

Section 8.13.

 

ERISA

 

49

Section 8.14.

 

Compliance with Laws

 

49

Section 8.15.

 

Burdensome Contracts With Affiliates

 

50

Section 8.16.

 

No Changes in Fiscal Year

 

50

Section 8.17.

 

Intentionally Omitted

 

50

 

ii

--------------------------------------------------------------------------------

 

Section 8.18.

 

Change in the Nature of Business

 

50

Section 8.19.

 

Use of Loan Proceeds

 

50

Section 8.20.

 

No Restrictions

 

50

Section 8.21.

 

Financial Covenants

 

51

Section 8.22.

 

Borrowing Base Covenants

 

51

 

 

 

 

 

SECTION 9.

 

EVENTS OF DEFAULT AND REMEDIES

 

52

 

 

 

 

 

Section 9.1.

 

Events of Default

 

52

Section 9.2.

 

Non-Bankruptcy Defaults

 

54

Section 9.3.

 

Bankruptcy Defaults

 

54

Section 9.4.

 

Collateral for Undrawn Letters of Credit

 

54

Section 9.5.

 

Notice of Default

 

55

Section 9.6.

 

Expenses

 

55

 

 

 

 

 

SECTION 10.

 

CHANGE IN CIRCUMSTANCES

 

55

 

 

 

 

 

Section 10.1.

 

Change of Law

 

55

Section 10.2.

 

Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR

 

56

Section 10.3.

 

Increased Cost and Reduced Return

 

56

Section 10.4.

 

Lending Offices

 

57

Section 10.5.

 

Discretion of Lender as to Manner of Funding

 

58

 

 

 

 

 

SECTION 11.

 

THE ADMINISTRATIVE AGENT

 

58

 

 

 

 

 

Section 11.1.

 

Appointment and Authorization of Administrative Agent

 

58

Section 11.2.

 

Administrative Agent and its Affiliates

 

58

Section 11.3.

 

Action by Administrative Agent

 

58

Section 11.4.

 

Consultation with Experts

 

59

Section 11.5.

 

Liability of Administrative Agent; Credit Decision

 

59

Section 11.6.

 

Indemnity

 

60

Section 11.7.

 

Resignation or Removal of Administrative Agent and Successor Administrative
Agent

 

60

Section 11.8.

 

L/C Issuer.

 

61

Section 11.9.

 

Designation of Additional Agents

 

61

 

 

 

 

 

SECTION 12.

 

THE GUARANTEES

 

61

 

 

 

 

 

Section 12.1.

 

The Guarantees

 

61

Section 12.2.

 

Guarantee Unconditional

 

61

Section 12.3.

 

Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances

 

62

Section 12.4.

 

Subrogation

 

62

Section 12.5.

 

Waivers

 

63

Section 12.6.

 

Limit on Recovery

 

63

Section 12.7.

 

Stay of Acceleration

 

63

Section 12.8.

 

Benefit to Guarantors

 

63

 

iii

--------------------------------------------------------------------------------

 

Section 12.9.

 

Guarantor Covenants

 

63

 

 

 

 

 

SECTION 13.

 

MISCELLANEOUS

 

63

 

 

 

 

 

Section 13.1.

 

Withholding Taxes

 

63

Section 13.2.

 

No Waiver, Cumulative Remedies

 

65

Section 13.3.

 

Non-Business Days

 

65

Section 13.4.

 

Documentary Taxes

 

65

Section 13.5.

 

Survival of Representations

 

65

Section 13.6.

 

Survival of Indemnities

 

65

Section 13.7.

 

Sharing of Set-Off

 

65

Section 13.8.

 

Notices

 

66

Section 13.9.

 

Counterparts

 

66

Section 13.10.

 

Successors and Assigns

 

66

Section 13.11.

 

Participants

 

67

Section 13.12.

 

Assignments

 

67

Section 13.13.

 

Amendments

 

69

Section 13.14.

 

Headings

 

70

Section 13.15.

 

Costs and Expenses; Indemnification

 

70

Section 13.16.

 

Set-off

 

71

Section 13.17.

 

Entire Agreement

 

71

Section 13.18.

 

Governing Law

 

71

Section 13.19.

 

Severability of Provisions

 

71

Section 13.20.

 

Excess Interest

 

71

Section 13.21.

 

Construction

 

72

Section 13.22.

 

Lender’s Obligations Several

 

72

Section 13.23.

 

Submission to Jurisdiction; Waiver of Jury Trial

 

72

Section 13.24.

 

Amendment and Restatement

 

73

Section 13.25.

 

USA Patriot Act

 

73

Section 13.26.

 

Equalization of Outstanding Obligations

 

73

Section 13.27.

 

Departing Lenders

 

73

 

 

 

 

 

Signature Page

 

 

 

S-1

 

EXHIBIT A

 

—

 

Notice of Payment Request

EXHIBIT B

 

—

 

Notice of Borrowing

EXHIBIT C

 

—

 

Notice of Continuation/Conversion

EXHIBIT D

 

—

 

Note

EXHIBIT E

 

—

 

Borrowing Base Certificate

EXHIBIT F

 

—

 

Compliance Certificate

EXHIBIT G

 

—

 

Additional Guarantor Supplement

EXHIBIT H

 

—

 

Assignment and Acceptance

EXHIBIT I

 

—

 

Opinion of Counsel

EXHIBIT J

 

—

 

Commitment Amount Increase Request

SCHEDULE 1.0

 

—

 

Commitments

SCHEDULE 1.1

 

—

 

Initial Properties, Initial Investment Amount and Initial Senior Housing Value

SCHEDULE 6.2

 

—

 

Material Subsidiaries

SCHEDULE 6.26

 

—

 

Significant Leases

 

iv

--------------------------------------------------------------------------------

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

This Second Amended and Restated Credit Agreement is entered into as of
July 17, 2008 by and among LTC Properties, Inc., a Maryland corporation (the
“Borrower”), certain direct and indirect Subsidiaries of the Borrower from time
to time party to this Agreement, as Guarantors, the several financial
institutions from time to time party to this Agreement, as Lenders and Bank of
Montreal, Chicago Branch, as Administrative Agent as provided herein.  All
capitalized terms used herein without definition shall have the same meanings
herein as such terms are defined in Section 5.1 hereof.

 

PRELIMINARY STATEMENTS

 

WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent
are currently party to that certain Amended and Restated Credit Agreement dated
as of November 7, 2005 (the “Prior Credit Agreement”).  The Borrower has
requested that the Prior Credit Agreement be amended in certain respects as
described below to, inter alia, (i) remove certain Lenders (the “Departing
Lenders”) and provide for Commitments from new Lenders, (ii) extend the
Termination Date, (iii) add a provision for increases in Commitments,
(iv) adjust the net worth financial covenant, and (v) make certain additional
modifications to the Prior Credit Agreement, and for the sake of clarity and
convenience, the Borrower has requested that the Prior Credit Agreement be
restated as so amended.

 

WHEREAS, the Borrower has requested that the Lenders continue to extend credit
to it, and those Lenders, upon the occurrence of the Closing Date and subject to
the terms hereof, will continue to lend monies and/or make advances, extensions
of credit or other financial accommodations to, on behalf of or for the benefit
of the Borrower.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.                                                 THE CREDIT
FACILITIES.

 

Section 1.1.           Commitments.  Subject to the terms and conditions hereof,
each Lender, by its acceptance hereof, severally agrees to make a loan or loans
(individually a “Loan” and collectively the “Loans”) in U.S. Dollars to the
Borrower from time to time on a revolving basis up to the amount of such
Lender’s Commitment, subject to any reductions thereof pursuant to the terms
hereof, before the Termination Date.  The sum of the aggregate principal amount
of Loans and L/C Obligations at any time outstanding shall not exceed the lesser
of (i) the Commitments in effect at such time or (ii) the Borrowing Base as
determined based on the most recent Borrowing Base Certificate.  Each Borrowing
of Loans shall be made ratably by the Lenders in proportion to their respective
Percentages.  As provided in Section 1.5(a) hereof, the Borrower may elect that
each Borrowing of Loans be either Adjusted Base Rate Loans or Eurodollar Loans. 
Loans may be repaid and the principal amount thereof reborrowed before the
Termination Date, subject to the terms and conditions hereof.

 

--------------------------------------------------------------------------------

 

Section 1.2.           Letters of Credit.  (a) General Terms.  Subject to the
terms and conditions hereof, as part of the Revolving Credit, the L/C Issuer
shall issue standby and commercial letters of credit (each a “Letter of Credit”)
for the account of Borrower or for the account of the Borrower and one or more
of its Subsidiaries in an aggregate undrawn face amount up to the L/C Sublimit. 
Each Letter of Credit shall be issued by the L/C Issuer, but each Lender shall
be obligated to reimburse the L/C Issuer for such Lender’s Percentage of the
amount of each drawing thereunder and, accordingly, each Letter of Credit shall
constitute usage of the Commitment of each Lender pro rata in an amount equal to
its Percentage of the L/C Obligations then outstanding.

 

(b)                    Applications.  At any time before the Termination Date,
the L/C Issuer shall, at the request of the Borrower, issue one or more Letters
of Credit in U.S. Dollars, in a form satisfactory to the L/C Issuer, with
expiration dates no later than the earlier of 12 months from the date of
issuance (or which are cancelable not later than 12 months from the date of
issuance and each renewal) or thirty (30) days prior to the Termination Date, in
an aggregate face amount as set forth above up to the L/C Sublimit, upon the
receipt of an application duly executed by the Borrower and, if such Letter of
Credit is for the account of one of its Subsidiaries, such Subsidiary for the
relevant Letter of Credit in the form then customarily prescribed by the L/C
Issuer for the Letter of Credit requested (each an “Application”). 
Notwithstanding anything contained in any Application to the contrary:  (i) the
Borrower shall pay fees in connection with each Letter of Credit as set forth in
Section 2.1 hereof, (ii) except as otherwise provided in Section 1.8 hereof,
before the occurrence of an Event of Default, the L/C Issuer will not call for
the funding by the Borrower of any amount under a Letter of Credit before being
presented with a drawing thereunder, and (iii) if the L/C Issuer is not timely
reimbursed for the amount of any drawing under a Letter of Credit on the date
such drawing is paid, the Borrower’s obligation to reimburse the L/C Issuer for
the amount of such drawing shall bear interest (which the Borrower hereby
promises to pay) from and after the date such drawing is paid at a rate per
annum equal to the sum of the Applicable Margin plus the Adjusted Base Rate from
time to time in effect (computed on the basis of a year of 365 or 366 days, as
the case may be, and the actual number of days elapsed).  If the L/C Issuer
issues any Letter of Credit with an expiration date that is automatically
extended unless the L/C Issuer gives notice that the expiration date will not so
extend beyond its then scheduled expiration date, unless the Required Lenders
instruct the L/C Issuer otherwise, the L/C Issuer will give such notice of
non-renewal before the time necessary to prevent such automatic extension if
before such required notice date:  (i) the expiration date of such Letter of
Credit if so extended would be after the date that is thirty (30) days prior to
the Termination Date, (ii) the Commitments have been terminated, or (iii) a
Default or an Event of Default exists and the Administrative Agent, at the
request or with the consent of the Required Lenders, has given the L/C Issuer
instructions not to so permit the extension of the expiration date of such
Letter of Credit.  The L/C Issuer agrees to issue amendments to the Letter(s) of
Credit increasing the amount, or extending the expiration date, thereof at the
request of the Borrower subject to the conditions of Section 7 hereof and the
other terms of this Section 1.2.

 

(c)                     The Reimbursement Obligations.  Subject to
Section 1.2(b) hereof, the obligation of the Borrower to reimburse the L/C
Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”)
shall be governed by the Application related to such Letter of Credit, except
that reimbursement shall be made by no later than 2:00 p.m. (Chicago time) on
the date

 

2

--------------------------------------------------------------------------------

 

when each drawing is to be paid if the Borrower has been informed of such
drawing by the L/C Issuer on or before 11:30 a.m. (Chicago time) on the date
when such drawing is to be paid or, if notice of such drawing is given to the
Borrower after 11:30 a.m. (Chicago time) on the date when such drawing is to be
paid, by the end of such day, in immediately available funds at the
Administrative Agent’s principal office in Chicago, Illinois or such other
office as the Administrative Agent may designate in writing to the Borrower (who
shall thereafter cause to be distributed to the L/C Issuer such amount(s) in
like funds).  If the Borrower does not make any such reimbursement payment on
the date due and the Participating Lenders fund their participations therein in
the manner set forth in Section 1.2(d) below, then all payments thereafter
received by the Administrative Agent in discharge of any of the relevant
Reimbursement Obligations shall be distributed in accordance with
Section 1.2(d) below.

 

(d)                    The Participating Interests.  Each Lender (other than the
Lender acting as L/C Issuer in issuing the relevant Letter of Credit), by its
acceptance hereof, severally agrees to purchase from the L/C Issuer, and the L/C
Issuer hereby agrees to sell to each such Lender (a “Participating Lender”), an
undivided percentage participating interest (a “Participating Interest”), to the
extent of its Percentage, in each Letter of Credit issued by, and each
Reimbursement Obligation owed to, the L/C Issuer.  Upon any failure by the
Borrower to pay any Reimbursement Obligation at the time required on the date
the related drawing is to be paid, as set forth in Section 1.2(c) above, or if
the L/C Issuer is required at any time to return to the Borrower or to a
trustee, receiver, liquidator, custodian or other Person any portion of any
payment of any Reimbursement Obligation, each Participating Lender shall, not
later than the Business Day it receives a certificate in the form of Exhibit A
hereto from the L/C Issuer (with a copy to the Administrative Agent) to such
effect, if such certificate is received before 1:00 p.m. (Chicago time), or not
later than 1:00 p.m. (Chicago time) the following Business Day, if such
certificate is received after such time, pay to the Administrative Agent for the
account of the L/C Issuer an amount equal to such Participating Lender’s
Percentage of such unpaid or recaptured Reimbursement Obligation together with
interest on such amount accrued from the date the related payment was made by
the L/C Issuer to the date of such payment by such Participating Lender at a
rate per annum equal to:  (i) from the date the related payment was made by the
L/C Issuer to the date 2 Business Days after payment by such Participating
Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such
Participating Lender to the date such payment is made by such Participating
Lender, the Adjusted Base Rate in effect for each such day.  Each such
Participating Lender shall thereafter be entitled to receive its Percentage of
each payment received in respect of the relevant Reimbursement Obligation and of
interest paid thereon, with the L/C Issuer retaining its Percentage thereof as a
Lender hereunder.  The several obligations of the Participating Lenders to the
L/C Issuer under this Section 1.2 shall be absolute, irrevocable, and
unconditional under any and all circumstances whatsoever and shall not be
subject to any set-off, counterclaim or defense to payment which any
Participating Lender may have or have had against the Borrower, the L/C Issuer,
the Administrative Agent, any Lender or any other Person whatsoever.  Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any reduction or termination of any
Commitment of any Lender, and each payment by a Participating Lender under this
Section 1.2 shall be made without any offset, abatement, withholding or
reduction whatsoever.

 

3

--------------------------------------------------------------------------------

 

(e)                     Indemnification.  The Participating Lenders shall, to
the extent of their respective Percentages, indemnify the L/C Issuer (to the
extent not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from the L/C Issuer’s gross negligence or
willful misconduct) that the L/C Issuer may suffer or incur in connection with
any Letter of Credit issued by it.  The obligations of the Participating Lenders
under this Section 1.2(e) and all other parts of this Section 1.2 shall survive
termination of this Agreement and of all Applications, Letters of Credit, and
all drafts and other documents presented in connection with drawings thereunder.

 

(f)                       Manner of Requesting a Letter of Credit.  The Borrower
shall provide at least five (5) Business Days’ advance written notice to the
Administrative Agent of each request for the issuance of a Letter of Credit,
such notice in each case to be accompanied by an Application for such Letter of
Credit properly completed and executed by the Borrower and, in the case of an
extension or an increase in the amount of a Letter of Credit, a written request
therefor, in a form acceptable to the Administrative Agent and the L/C Issuer,
in each case, together with the fees called for by this Agreement.  The
Administrative Agent shall promptly notify the L/C Issuer of the Administrative
Agent’s receipt of each such notice and shall send to each Lender within
five (5) Business Days of the date of receipt a facsimile of such notice and the
L/C Issuer shall promptly notify the Administrative Agent and the Lenders of the
issuance of the Letter of Credit so requested.

 

Section 1.3.           Applicable Interest Rates.  (a) Adjusted Base Rate
Loans.  Each Adjusted Base Rate Loan made or maintained by a Lender shall bear
interest during each Interest Period it is outstanding (computed on the basis of
a year of 365 or 366 days, as the case may be, and the actual days elapsed) on
the unpaid principal amount thereof from the date such Loan is advanced or
continued, or created by conversion from a Eurodollar Loan, until maturity
(whether by acceleration or otherwise) at a rate per annum equal to the sum of
the Applicable Margin plus the Adjusted Base Rate from time to time in effect,
payable on the last day of its Interest Period and at maturity (whether by
acceleration or otherwise).

 

“Adjusted Base Rate” means, for any day, the fluctuating rate per annum of
interest equal to the greater of (a) the Prime Rate in effect on such day, and
(b) the Federal Funds Rate in effect on such day plus 0.5 of 1% (one-half of one
percent), and

 

(b)                    Eurodollar Loans.  Each Eurodollar Loan made or
maintained by a Lender shall bear interest during each Interest Period it is
outstanding (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is
advanced or continued, or created by conversion from an Adjusted Base Rate Loan,
until maturity (whether by acceleration or otherwise) at a rate per annum equal
to the sum of the Applicable Margin plus the Adjusted LIBOR applicable for such
Interest Period, payable on the last day of each calendar month within an
Interest Period or on the last day of the Interest Period and at maturity
(whether by acceleration or otherwise).

 

4

--------------------------------------------------------------------------------

 

“Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum
determined in accordance with the following formula:

 

Adjusted LIBOR

 

=

 

LIBOR

 

 

 

 

 

1 - Eurodollar Reserve Percentage

 

 

“Eurodollar Reserve Percentage” means, for any Borrowing of Eurodollar Loans,
the daily average for the applicable Interest Period of the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any
supplemental, marginal, and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) on “eurocurrency liabilities”, as defined in such Board’s
Regulation D (or in respect of any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Loans is
determined or any category of extensions of credit or other assets that include
loans by non-United States offices of any Lender to United States residents),
subject to any amendments of such reserve requirement by such Board or its
successor, taking into account any transitional adjustments thereto.  For
purposes of this definition, the Eurodollar Loans shall be deemed to be
“eurocurrency liabilities” as defined in Regulation D without benefit or credit
for any prorations, exemptions or offsets under Regulation D.

 

“LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Administrative Agent at 11:00 a.m. (London, England time)
2 Business Days before the beginning of such Interest Period by 3 or more major
banks in the interbank eurodollar market selected by the Administrative Agent
for delivery on the first day of and for a period equal to such Interest Period
and in an amount equal or comparable to the principal amount of the Eurodollar
Loan scheduled to be made by the Administrative Agent as part of such Borrowing.

 

“LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one hundred-thousandth of a percentage
point) for deposits in U.S. Dollars for a period equal to such Interest Period,
which appears on the LIBOR0l Page as of 11:00 a.m. (London, England time) on the
day 2 Business Days before the commencement of such Interest Period.

 

“LIBOR01 Page” means the display designated as “Reuters Screen LIBOR01 Page” (or
such other page as may replace LIBOR0l Page on that service or such other
service as may be nominated by the British Bankers’ Association as the
information vendor for the purpose of displaying British Bankers’ Association
Interest Settlement Rates for U.S. Dollar deposits).

 

(c)       Rate Determinations.  The Administrative Agent shall determine each
interest rate applicable to the Loans and the Reimbursement Obligations
hereunder, and its determination thereof shall be conclusive and binding except
in the case of manifest error.

 

5

--------------------------------------------------------------------------------

 

Section 1.4.           Minimum Borrowing Amounts; Maximum Eurodollar Loans. 
Each Borrowing of Adjusted Base Rate Loans advanced under the Revolving Credit
shall be in an amount not less than $100,000.  Each Borrowing of Eurodollar
Loans advanced, continued or converted under the Revolving Credit shall be in an
amount equal to $1,000,000 or such greater amount which is an integral multiple
of $500,000.  Without the Administrative Agent’s consent, there shall not be
more than five (5) Borrowings of Eurodollar Loans outstanding under the
Revolving Credit at any one time.

 

Section 1.5.           Manner of Borrowing Loans and Designating Applicable
Interest Rates.  (a) Notice to the Administrative Agent.  The Borrower shall
give notice to the Administrative Agent by no later than 11:00 a.m. (Chicago
time):  (i) at least 3 Business Days before the date on which the Borrower
requests the Lenders to advance a Borrowing of Eurodollar Loans and (ii) on the
date the Borrower requests the Lenders to advance a Borrowing of Adjusted Base
Rate Loans.  The Loans included in each Borrowing shall bear interest initially
at the type of rate specified in such notice of a new Borrowing.  Thereafter,
subject to the terms and conditions hereof, the Borrower may from time to time
elect to change or continue the type of interest rate borne by each Borrowing
or, subject to Section 1.4’s minimum amount requirement for each outstanding
Borrowing, a portion thereof, as follows:  (i) if such Borrowing is of
Eurodollar Loans, on the last day of the Interest Period applicable thereto, the
Borrower may continue part or all of such Borrowing as Eurodollar Loans or
convert part or all of such Borrowing into Adjusted Base Rate Loans or (ii) if
such Borrowing is of Adjusted Base Rate Loans, on any Business Day, the Borrower
may convert all or part of such Borrowing into Eurodollar Loans for an Interest
Period or Interest Periods specified by the Borrower.  The Borrower shall give
all such notices requesting the advance, continuation or conversion of a
Borrowing to the Administrative Agent by telephone or telecopy (which notice
shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing), substantially in the form attached hereto as Exhibit B
(Notice of Borrowing) or Exhibit C (Notice of Continuation/Conversion), as
applicable, or in such other form acceptable to the Administrative Agent. 
Notice of the continuation of a Borrowing of Eurodollar Loans for an additional
Interest Period or of the conversion of part or all of a Borrowing of Adjusted
Base Rate Loans into Eurodollar Loans must be given by no later than 11:00 a.m.
(Chicago time) at least 3 Business Days before the date of the requested
continuation or conversion.  All such notices concerning the advance,
continuation or conversion of a Borrowing shall specify the date of the
requested advance, continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the
Interest Period applicable thereto.  The Borrower agrees that the Administrative
Agent may rely on any such telephonic or telecopy notice given by any person the
Administrative Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation, and in the event any such
notice by telephone conflicts with any written confirmation such telephonic
notice shall govern if the Administrative Agent has acted in reliance thereon.

 

(b)       Notice to the Lenders.  The Administrative Agent shall (i) give prompt
telephonic or facsimile notice of each Borrowing notice received from Borrower
pursuant to Section 1.5(a) above, (ii) send a facsimile copy to each Lender
within five (5) Business Days of the date of receipt of each notice from the
Borrower received pursuant to Section 1.5(a) above and (iii) if

 

6

--------------------------------------------------------------------------------

 

such notice requests the Lenders to make Eurodollar Loans, the Administrative
Agent shall give notice to the Borrower and each Lender by like means of the
interest rate applicable thereto promptly after the Administrative Agent has
made such determination.

 

(c)       Borrower’s Failure to Notify; Automatic Continuations and
Conversions.  Any outstanding Borrowing of Adjusted Base Rate Loans shall
automatically be continued for an additional Interest Period on the last day of
its then current Interest Period unless the Borrower has notified the
Administrative Agent within the period required by Section 1.5(a) that the
Borrower intends to convert such Borrowing, subject to Section 7.1 hereof, into
a Borrowing of Eurodollar Loans or such Borrowing is prepaid in accordance with
Section 1.8(a).  If the Borrower fails to give notice pursuant to
Section 1.5(a) above of the continuation or conversion of any outstanding
principal amount of a Borrowing of Eurodollar Loans before the last day of its
then current Interest Period within the period required by Section 1.5(a) or,
whether or not such notice has been given, one or more of the conditions set
forth in Section 7.1 for the continuation or conversion of a Borrowing of
Eurodollar Loans would not be satisfied, and such Borrowing is not prepaid in
accordance with Section 1.8(a), such Borrowing shall automatically be converted
into a Borrowing of Adjusted Base Rate Loans.  In the event the Borrower fails
to give notice pursuant to Section 1.5(a) above of a Borrowing equal to the
amount of a Reimbursement Obligation and has not notified the Administrative
Agent by 12:00 noon (Chicago time) on the day such Reimbursement Obligation
becomes due that it intends to repay such Reimbursement Obligation through funds
not borrowed under this Agreement, the Borrower shall be deemed to have
requested a Borrowing of Adjusted Base Rate Loans under the Credit on such day
in the amount of the Reimbursement Obligation then due, which Borrowing shall be
applied to pay the Reimbursement Obligation then due.

 

(d)       Disbursement of Loans.  Not later than 1:00 p.m. (Chicago time) on the
date of any requested advance of a new Borrowing, subject to Section 7 hereof,
each Lender shall make available its Loan comprising part of such Borrowing in
funds immediately available at the principal office of the Administrative Agent
in Chicago, Illinois.  The Administrative Agent shall make the proceeds of each
new Borrowing available to the Borrower at the Administrative Agent’s principal
office in Chicago, Illinois, by depositing such proceeds to the credit of the
Borrower’s operating account maintained with the Administrative Agent or as the
Borrower and the Administrative Agent may otherwise agree.

 

(e)       Administrative Agent Reliance on Lender Funding.  Unless the
Administrative Agent shall have been notified by a Lender prior to (or, in the
case of a Borrowing of Adjusted Base Rate Loans, by 1:00 p.m. (Chicago time) on)
the date on which such Lender is scheduled to make payment to the Administrative
Agent of the proceeds of a Loan (which notice shall be effective upon receipt)
that such Lender does not intend to make such payment, the Administrative Agent
may assume that such Lender has made such payment when due and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower the proceeds of the Loan to be made
by such Lender and, if any Lender has not in fact made such payment to the
Administrative Agent, such Lender shall, on demand, pay to the Administrative
Agent the amount made available to the Borrower attributable to such Lender
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Borrower and ending
on (but excluding) the date

 

7

--------------------------------------------------------------------------------

 

such Lender pays such amount to the Administrative Agent at a rate per annum
equal to:  (i) from the date the related advance was made by the Administrative
Agent to the date 2 Business Days after payment by such Lender is due hereunder,
the Federal Funds Rate for each such day and (ii) from the date 2 Business Days
after the date such payment is due from such Lender to the date such payment is
made by such Lender, the Adjusted Base Rate in effect for each such day.  If
such amount is not received from such Lender by the Administrative Agent
immediately upon demand, the Borrower will, on demand, repay to the
Administrative Agent the proceeds of the Loan attributable to such Lender with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan, but without such payment being considered a payment or
prepayment of a Loan under Section 1.11 hereof so that the Borrower will have no
liability under such Section with respect to such payment.

 

Section 1.6.           Interest Periods.  As provided in Section 1.5(a) hereof,
at the time of each request to advance, continue or create by conversion a
Borrowing of Eurodollar Loans, the Borrower shall select an Interest Period
applicable to such Loans from among the available options.  The term “Interest
Period” means the period commencing on the date a Borrowing of Loans is
advanced, continued or created by conversion and ending:  (a) in the case of
Adjusted Base Rate Loans, on the last day of the calendar month in which such
Borrowing is advanced, continued or created by conversion (or on the last day of
the following calendar month if such Loan is advanced, continued or created by
conversion on the last day of a calendar month) and (b) in the case of a
Eurodollar Loan 1, 2, 3 or 6 months thereafter; provided, however, that:

 

(i)            any Interest Period for a Borrowing of Loans consisting of
Adjusted Base Rate Loans that otherwise would end after the Termination Date
shall end on the Termination Date;

 

(ii)           no Interest Period with respect to any portion of the Loans shall
extend beyond the Termination Date;

 

(iii)          whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall be
extended to the next succeeding Business Day, provided that, if such extension
would cause the last day of an Interest Period for a Borrowing of Eurodollar
Loans to occur in the following calendar month, the last day of such Interest
Period shall be the immediately preceding Business Day; and

 

(iv)          for purposes of determining an Interest Period for a Borrowing of
Eurodollar Loans, a month means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month;
provided, however, that if there is no numerically corresponding day in the
month in which such an Interest Period is to end or if such an Interest Period
begins on the last Business Day of a calendar month, then such Interest Period
shall end on the last Business Day of the calendar month in which such Interest
Period is to end.

 

Section 1.7.           Maturity of Loans.  Each Loan both for principal and
interest not sooner paid, shall mature and become due and payable by the
Borrower on the Termination Date.

 

8

--------------------------------------------------------------------------------

 

Section 1.8.           Prepayments.  (a) Optional.  The Borrower may prepay in
whole or in part (but, if in part, then:  (i) if such Borrowing is of Adjusted
Base Rate Loans, in an amount not less than $100,000, (ii) if such Borrowing is
of Eurodollar Loans, in an amount not less than $500,000, and (iii) in each
case, in an amount such that the minimum amount required for a Borrowing
pursuant to Section 1.4 hereof remains outstanding) any Borrowing of Eurodollar
Loans at any time upon three (3) Business Days prior notice by the Borrower to
the Administrative Agent or, in the case of a Borrowing of Adjusted Base Rate
Loans, notice delivered by the Borrower to the Administrative Agent no later
than 10:00 a.m. (Chicago time) on the date of prepayment (or, in any case, such
shorter period of time then agreed to by the Administrative Agent), such
prepayment to be made by the payment of the principal amount to be prepaid and,
in the case of any Eurodollar Loans, accrued interest thereon to the date fixed
for prepayment plus any amounts due the Lenders under Section 1.11 hereof.

 

(b)       Mandatory.  (i) The Borrower shall, on each date the Commitments are
reduced pursuant to Section 1.12 hereof, prepay the Loans and, if necessary,
prefund the L/C Obligations by the amount, if any, necessary to reduce the sum
of the aggregate principal amount of Loans and L/C Obligations then outstanding
to the amount to which the Commitments have been so reduced.

 

(ii)       If at any time the sum of the unpaid principal balance of the Loans
and the L/C Obligations then outstanding shall be in excess of the Borrowing
Base as determined on the basis of the most recent Borrowing Base Certificate,
the Borrower shall immediately and without notice or demand pay over the amount
of the excess to the Administrative Agent for the account of the Lenders as and
for a mandatory prepayment on such Obligations, with each such prepayment first
to be applied to the Loans until payment in full thereof with any remaining
balance to be held by the Administrative Agent in the Collateral Account as
security for the Obligations owing with respect to the Letters of Credit.

 

(iii)      Unless the Borrower otherwise directs, prepayments of Loans under
this Section 1.8(b) shall be applied first to Borrowings of Adjusted Base Rate
Loans until payment in full thereof with any balance applied to Borrowings of
Eurodollar Loans in the order in which their Interest Periods expire.  Each
prepayment of Loans under this Section 1.8(b) shall be made by the payment of
the principal amount to be prepaid and, in the case of any Eurodollar Loans,
accrued interest thereon to the date of prepayment together with any amounts due
the Lenders under Section 1.11 hereof.  Each prefunding of L/C Obligations shall
be made in accordance with Section 9.4 hereof.

 

(c)       Any amount of Loans paid or prepaid before the Termination Date may,
subject to the terms and conditions of this Agreement, be borrowed, repaid and
borrowed again.

 

Section 1.9.           Default Rate.  Notwithstanding anything to the contrary
contained herein, while any Event of Default exists or after acceleration, the
Borrower shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) on the principal amount of all Loans and
Reimbursement Obligations, and letter of credit fees at a rate per annum equal
to:

 

9

--------------------------------------------------------------------------------

 

(a)     for any Adjusted Base Rate Loan, the sum of 2.0% plus the Applicable
Margin plus the Adjusted Base Rate from time to time in effect;

 

(b)    for any Eurodollar Loan, the sum of 2.0% plus the rate of interest in
effect thereon at the time of such default until the end of the Interest Period
applicable thereto and, thereafter, at a rate per annum equal to the sum of 2.0%
plus the Applicable Margin for Adjusted Base Rate Loans plus the Adjusted Base
Rate from time to time in effect;

 

(c)     for any Reimbursement Obligation, the sum of 2.0% plus the amounts due
under Section 1.2 with respect to such Reimbursement Obligation; and

 

(d)    for any Letter of Credit, the sum of 2.0% plus the letter of credit fee
due under Section 2.1 with respect to such Letter of Credit;

 

provided, however, that in the absence of acceleration, any adjustments pursuant
to this Section shall be made at the election of the Administrative Agent,
acting at the request or with the consent of the Required Lenders, with written
notice to the Borrower.  While any Event of Default exists or after
acceleration, interest shall be paid on demand of the Administrative Agent at
the request or with the consent of the Required Lenders.

 

Section 1.10.        The Notes.  (a) The Loans made to the Borrower by a Lender
shall be evidenced by a single promissory note of the Borrower issued to such
Lender in the form of Exhibit D hereto.  Each such promissory note is
hereinafter referred to as a “Note” and collectively such promissory notes are
referred to as the “Notes.”

 

(b)       Each Lender shall record on its books and records or on a schedule to
its appropriate Note the amount of each Loan advanced, continued or converted by
it, all payments of principal and interest and the principal balance from time
to time outstanding thereon, the type of such Loan, and, for any Eurodollar
Loan, the Interest Period and the interest rate applicable thereto.  The record
thereof, whether shown on such books and records of a Lender or on a schedule to
the relevant Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any Lender to record any of the foregoing
or any error in any such record shall not limit or otherwise affect the
obligation of the Borrower to repay all Loans made to it hereunder together with
accrued interest thereon.  At the request of any Lender and upon such Lender
tendering to the Borrower the appropriate Note to be replaced, the Borrower
shall furnish a new Note to such Lender to replace any outstanding Note.

 

Section 1.11.        Funding Indemnity.  If any Lender shall incur any loss,
cost or expense (including, without limitation, any loss of profit, and any
loss, cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Lender to fund or maintain any
Eurodollar Loan or the relending or reinvesting of such deposits or amounts paid
or prepaid to such Lender) as a result of:

 

(a)     any payment, prepayment or conversion of a Eurodollar Loan on a date
other than the last day of its Interest Period,

 

10

--------------------------------------------------------------------------------

 

(b)    any failure (because of a failure to meet the conditions of Section 7 or
otherwise) by the Borrower to borrow or continue a Eurodollar Loan, or to
convert an Adjusted Base Rate Loan into a Eurodollar Loan, on the date specified
in a notice given pursuant to Section 1.5(a) hereof,

 

(c)     any failure by the Borrower to make any payment of principal on any
Eurodollar Loan when due (whether by acceleration or otherwise), or

 

(d)    any acceleration of the maturity of a Eurodollar Loan as a result of the
occurrence of any Event of Default hereunder,

 

then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense.  If any
Lender makes such a claim for compensation, it shall provide to the Borrower,
with a copy to the Administrative Agent, a certificate setting forth the amount
of such loss, cost or expense in reasonable detail and the amounts shown on such
certificate shall be deemed prime facie correct.

 

Section 1.12.        Commitment Terminations.  (a) Optional Credit
Terminations.  The Borrower shall have the right at any time and from time to
time, upon 5 Business Days prior written notice to the Administrative Agent (or
such shorter period of time agreed to by the Administrative Agent), to terminate
the Commitments without premium or penalty and in whole or in part, any partial
termination to be (i) in an amount not less than $1,000,000 and (ii) allocated
ratably among the Lenders in proportion to their respective Percentages,
provided that the Commitments may not be reduced to an amount less than the sum
of the aggregate principal amount of Loans and L/C Obligations then
outstanding.  Any termination of the Commitments below the L/C Sublimit then in
effect shall reduce the L/C Sublimit by a like amount.  The Administrative Agent
shall give prompt notice to each Lender of any such termination of the
Commitments.

 

(b)       Any termination of the Commitments pursuant to this Section 1.12 may
not be reinstated.

 

Section 1.13.        Substitution of Lenders.  In the event (a) the Borrower
receives a claim from any Lender for compensation under Section 10.3 or 13.1
hereof, (b) the Borrower receives notice from any Lender of any illegality
pursuant to Section 10.1 hereof, (c) any Lender is in default in any material
respect with respect to its obligations under the Loan Documents, or (d) a
Lender fails to consent to an amendment or waiver requiring the consent of each
affected Lender or all Lenders under Section 13.13 hereof at a time when the
Required Lenders have approved such amendment or waiver (any such Lender
referred to in clause (a), (b), (c), or (d) above being hereinafter referred to
as an “Affected Lender”), the Borrower may, in addition to any other rights the
Borrower may have hereunder or under applicable law, require, at the Borrower’s
expense, any such Affected Lender to assign, at par plus accrued interest and
fees, without recourse, all of its interest, rights, and obligations hereunder
(including all of its Commitments and the Loans and participation interests in
Letters of Credit and other amounts at any time owing to it hereunder and the
other Loan Documents) to a commercial bank or other financial institution
specified by the Borrower, provided that (i) such assignment shall not conflict
with or

 

11

--------------------------------------------------------------------------------

 

violate any law, rule or regulation or order of any court or other governmental
authority, (ii) the Borrower shall have received the written consent of the
Administrative Agent, which consent shall not be unreasonably withheld, to such
assignment, (iii) the Borrower shall have paid to the Affected Lender all monies
(together with amounts due such Affected Lender under Section 1.11 hereof as if
the Loans owing to it were prepaid rather than assigned) other than such
principal owing to it hereunder, (iv) the assignment is entered into in
accordance with the other requirements of Section 13.12 hereof (provided any
assignment fees and reimbursable expenses due thereunder shall be paid by the
Borrower), (v) in the case of subsection (a) above, the Borrower’s obligations
to the assignee Lender would be materially less than the obligations to the
affected Lender, and (vi) in the case of subsection (b) above, the assignee
Lender would not be affected by the related illegality.

 

Section 1.14.        Increase in Revolving Credit Commitments.  The Borrower
may, on any Business Day prior to the Termination Date, increase the aggregate
amount of the Commitments by delivering a Commitment Amount Increase Request
substantially in the form attached hereto as Exhibit J or in such other form
acceptable to the Administrative Agent at least five (5) Business Days prior to
the desired effective date of such increase (the “Commitment Amount Increase”)
identifying one or more additional Lenders (or additional Commitments for
existing Lender(s)) and the amount of its Commitment (or additional amount of
its Commitment(s)); provided, however, that (i) any increase of the aggregate
amount of the Revolving Credit Commitments to an amount in excess of $40,000,000
will require the approval of all Lenders, (ii) any increase of the aggregate
amount of the Commitments shall be in an amount not less than $5,000,000,
(iii) no Default or Event of Default shall have occurred and be continuing at
the time of the request or the effective date of, or result from, the Commitment
Amount Increase and (iv) all representations and warranties contained in
Section 6 hereof shall be true and correct at the time of such request and on
the effective date of such Commitment Account Increase, except to the extent the
same expressly relates to an earlier date.  The effective date of the Commitment
Amount Increase shall be agreed upon by the Borrower and the Administrative
Agent.  Upon the effectiveness thereof, the new Lender(s) (or, if applicable,
existing Lender(s)) shall advance Loans in an amount sufficient such that after
giving effect to its advance each Lender shall have outstanding its Percentage
of Loans.  It shall be a condition to such effectiveness that (i) if any
Eurodollar Loans are outstanding on the date of such effectiveness, such
Eurodollar Loans shall be deemed to be prepaid on such date and the Borrower
shall pay any amounts owing to the Lenders pursuant to Section 1.11 hereof and
(ii) the Borrower shall not have terminated any portion of the Commitments
pursuant to Section 1.12(a) hereof.  The Borrower agrees to pay any reasonable
expenses of the Administrative Agent relating to any Commitment Amount
Increase.  Notwithstanding anything herein to the contrary, no Lender shall have
any obligation to increase its Commitment and no Lender’s Commitment shall be
increased without its consent thereto, and each Lender may at its option,
unconditionally and without cause, decline to increase its Commitment.

 

SECTION 2.                                     FEES.

 

Section 2.1.           Fees.  (a) Commitment Fee.  The Borrower shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with
their Percentages a commitment fee at the rate per annum equal to the Applicable
Margin for commitment fees as shown in the

 

12

--------------------------------------------------------------------------------

 

definition of Applicable Margin in Section 5.1 hereof, (computed on the basis of
a year of 360 days and the actual number of days elapsed) on the daily Unused
Commitments.  Such commitment fee shall be payable quarterly in arrears on the
last day of each Fiscal Quarter in each year (commencing on September 30, 2008)
and on the Termination Date, unless the Commitments are terminated in whole on
an earlier date, in which event the commitment fee for the period to the date of
such termination in whole shall be paid on the date of such termination.

 

(b)       Letter of Credit Fees.  On the date of issuance or extension, or
increase in the amount, of any Letter of Credit pursuant to Section 1.2 hereof,
the Borrower shall pay to the L/C Issuer for its own account a fronting fee
equal to .125% of the face amount of (or of the increase in the face amount of)
such Letter of Credit.  Quarterly in arrears, on the last day of each Fiscal
Quarter, commencing on September 30, 2008, the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders in accordance with
their Percentages, a letter of credit fee at a rate per annum equal to the
Applicable Margin for Letter of Credit Fee as shown in the definition of
Applicable Margin in Section 5.1 hereof (computed on the basis of a year of
360 days and the actual number of days elapsed) in effect during each day of
such quarter applied to the daily face amount of Letters of Credit outstanding
during such quarter.  In addition, the Borrower shall pay to the L/C Issuer for
its own account the L/C Issuer’s standard issuance, drawing, negotiation,
amendment, and other administrative fees for each Letter of Credit as
established by the L/C Issuer from time to time.

 

(c)       Administrative Agent Fees.  The Borrower shall pay to the
Administrative Agent, for its own use and benefit, the fees agreed to between
the Administrative Agent and the Borrower in an engagement letter dated
April 30, 2008, or as otherwise agreed to in writing between them (without
duplication and pro rata for the administrative fee previously paid to the
Administrative Agent in connection with the Prior Credit Agreement).

 

SECTION 3.                                     PLACE AND APPLICATION OF
PAYMENTS.

 

Section 3.1.           Place and Application of Payments.  All payments of
principal and interest on the Loans and the Reimbursement Obligations, and of
all other Obligations payable by the Borrower under this Agreement and the other
Loan Documents, shall be made by the Borrower to the Administrative Agent by no
later than 12:00 Noon (Chicago time) on the due date thereof at the office of
the Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower) for the benefit of the
Lender or Lenders entitled thereto.  Any payments received after such time shall
be deemed to have been received by the Administrative Agent on the next Business
Day, provided however, that if the Borrower has provided to the Administrative
Agent written authorization to deduct such payments from its operating bank
account maintained at Harris N.A., Chicago, Illinois, by 12:00 Noon (Chicago
Time), such amounts shall be deemed to have been received by the Administrative
Agent upon receipt of such notification.  All such payments shall be made in
U.S. Dollars, in immediately available funds at the place of payment, in each
case without set-off or counterclaim.  The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest on Loans and on Reimbursement Obligations in which the
Lenders have purchased Participating Interests ratably to the Lenders and like
funds relating to the payment of any other amount payable to any Lender to such
Lender, in each case to be

 

13

--------------------------------------------------------------------------------

 

applied in accordance with the terms of this Agreement.  If the Administrative
Agent causes amounts to be distributed to the Lenders in reliance upon the
assumption that the Borrower will make a scheduled payment and such scheduled
payment is not so made, each Lender shall, on demand, repay to the
Administrative Agent the amount distributed to such Lender together with
interest thereon in respect of each day during the period commencing on the date
such amount was distributed to such Lender and ending on (but excluding) the
date such Lender repays such amount to the Administrative Agent, at a rate per
annum equal to:  (i) from the date the distribution was made to the date 2
Business Days after payment by such Lender is due hereunder, the Federal Funds
Rate for each such day and (ii) from the date 2 Business Days after the date
such payment is due from such Lender to the date such payment is made by such
Lender, the Adjusted Base Rate in effect for each such day.

 

Anything contained herein to the contrary notwithstanding (including, without
limitation, Section 1.8(b) hereof), all payments and collections received in
respect of the Obligations, by the Administrative Agent or any of the Lenders
after acceleration or the final maturity of the Obligations or termination of
the Commitments as a result of an Event of Default shall be remitted to the
Administrative Agent and distributed as follows:

 

(a)           first, to the payment of any outstanding costs and expenses
incurred by the Administrative Agent, in protecting, preserving or enforcing
rights under the Loan Documents, and in any event including all costs and
expenses of a character which the Borrower has agreed to pay the Administrative
Agent under Section 13.15 hereof (such funds to be retained by the
Administrative Agent for its own account unless it has previously been
reimbursed for such costs and expenses by the Lenders, in which event such
amounts shall be remitted to the Lenders to reimburse them for payments
theretofore made to the Administrative Agent);

 

(b)           second, to the payment of any outstanding costs and expenses
incurred by the Lenders, in protecting, preserving or enforcing rights under the
Loan Documents, and in any event including all costs and expenses of a character
which the Borrower has agreed to pay the Lenders under Section 13.15 hereof;

 

(c)           third, to the payment of any outstanding interest and fees due
under the Loan Documents to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof;

 

(d)           fourth, to the payment of principal on the Notes, unpaid
Reimbursement Obligations, together with amounts to be held by the
Administrative Agent as collateral security for any outstanding L/C Obligations
pursuant to Section 9.4 hereof (until the Administrative Agent is holding an
amount of cash equal to the then outstanding amount of all such
L/C Obligations), the aggregate amount paid to, or held as collateral security
for, the Lenders and their Affiliates to be allocated pro rata in accordance
with the aggregate unpaid amounts owing to each holder thereof;

 

(e)           fifth, to the payment of all other unpaid Obligations and all
other indebtedness, obligations, and liabilities of the Borrower and its
Subsidiaries secured by

 

14

--------------------------------------------------------------------------------

 

the Collateral Documents to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof; and

 

(f)            finally, to the Borrower or whoever else may be lawfully entitled
thereto.

 

SECTION 4.                                     GUARANTIES.

 

Section 4.1.           Guaranties.  The payment and performance of the
Obligations shall at all times be guaranteed by each direct and indirect
Material Subsidiary of the Borrower (individually a “Guarantor” and collectively
the “Guarantors”) pursuant to Section 12 hereof or pursuant to one or more
guaranty agreements in form and substance acceptable to the Administrative
Agent, as the same may be amended, modified or supplemented from time to time
(individually a “Guaranty” and collectively the “Guaranties”).

 

Section 4.2.           Further Assurances.  In the event the Borrower or any
Guarantor forms or acquires any other Material Subsidiary after the date hereof,
except as otherwise provided in Section 4.1 above, the Borrower shall promptly
upon such formation or acquisition cause such newly formed or acquired Material
Subsidiary to execute an Additional Guarantor Supplement in the form of
Exhibit G attached hereto (the “Additional Guarantor Supplement”) as the
Administrative Agent may then require, and the Borrower shall also deliver to
the Administrative Agent, or cause such Material Subsidiary to deliver to the
Administrative Agent, at the Borrower’s cost and expense, such other
instruments, documents, certificates, and opinions reasonably required by the
Administrative Agent or any Lender in connection therewith.  The Administrative
Agent shall promptly deliver to each Lender a copy of any Guaranty delivered
under this Section and any other materials requested by such Lender in the
possession of the Administrative Agent.

 

SECTION 5.                                     DEFINITIONS; INTERPRETATION.

 

Section 5.1.           Definitions.  The following terms when used herein shall
have the following meanings:

 

“Acquired Business” means the entity, Property or assets acquired by the
Borrower or a Subsidiary in an Acquisition, after the date hereof.

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any Person (other than
a Person that is a Subsidiary), or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the
Borrower or the Subsidiary is the surviving entity.

 

“Additional Guarantor Supplement” is defined in Section 4.2 hereof.

 

15

--------------------------------------------------------------------------------

 

“Adjusted Base Rate” is defined in Section 1.3(a) hereof.

 

“Adjusted Base Rate Loan” means a Loan bearing interest at a rate specified in
Section 1.3(a) hereof.

 

“Adjusted LIBOR” is defined in Section 1.3(b) hereof.

 

“Administrative Agent” means Bank of Montreal, Chicago Branch and any successor
pursuant to Section 11.7 hereof.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

 “Affiliate” means any Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person.  A Person
shall be deemed to control another Person for the purposes of this definition if
such Person possesses, directly or indirectly, the power to direct, or cause the
direction of, the management and policies of the other Person, whether through
the ownership of voting securities, common directors, trustees or officers, by
contract or otherwise; provided that, in any event for purposes of this
definition, any Person that owns, directly or indirectly, 20% or more of the
securities having the ordinary voting power for the election of directors or
governing body of a corporation or 20% or more of the partnership or other
ownership interest of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.

 

“Agreement” means this Amended and Restated Credit Agreement, as the same may be
amended, modified, restated or supplemented from time to time pursuant to the
terms hereof.

 

“ALF’s” is defined in the definition of Capitalization Rate.

 

“Applicable Margin” means, with respect to Loans, Reimbursement Obligations, and
the commitment fees and letter of credit fee payable under Section 2.1 hereof,
until the first Pricing Date, the rates per annum shown opposite Level I below,
and thereafter from one Pricing Date to the next the Applicable Margin means the
rates per annum determined in accordance with the following schedule:

 

16

--------------------------------------------------------------------------------

 

LEVEL

 

MAXIMUM TOTAL
INDEBTEDNESS/TOTAL
ASSET VALUE RATIO FOR
SUCH PRICING DATE

 

APPLICABLE MARGIN FOR
ADJUSTED BASE RATE
LOANS UNDER REVOLVING
CREDIT AND
REIMBURSEMENT
OBLIGATIONS SHALL BE:

 

APPLICABLE MARGIN FOR
EURODOLLAR LOANS
UNDER REVOLVING
CREDIT AND LETTER OF
CREDIT FEE SHALL BE:

 

APPLICABLE
MARGIN FOR
COMMITMENT FEE
SHALL BE:

 

 

 

 

 

 

 

 

 

 

 

IV

 

Greater than .45 to 1.0

 

1.50

%

2.50

%

0.40

%

 

 

 

 

 

 

 

 

 

 

III

 

Less than or equal to .45 to 1.0 but greater than .35 to 1.0

 

1.00

%

2.00

%

.0.35

%

 

 

 

 

 

 

 

 

 

 

II

 

Less than or equal to .35 to 1.0 but greater than .25 to 1.0

 

0.75

%

1.75

%

0.35

%

 

 

 

 

 

 

 

 

 

 

I

 

Less than or equal to .25 to 1.0

 

0.50

%

1.50

%

0.30

%

 

For purposes hereof, the term “Pricing Date” means, for any Fiscal Quarter of
the Borrower ending on or after September 30, 2008, the date on which the
Administrative Agent is in receipt of the Borrower’s most recent financial
statements and current Compliance Certificate (and, in the case of the year-end
financial statements, audit report) for the Fiscal Quarter then ended, pursuant
to Section 8.5 hereof.  The Applicable Margin shall be established based on the
Maximum Total Indebtedness/Total Asset Value Ratio for the most recently
completed Fiscal Quarter and the Applicable Margin established on a Pricing Date
shall remain in effect until the next Pricing Date.  If the Borrower has not
delivered its financial statements, including a Compliance Certificate, by the
date such financial statements (and, in the case of the year-end financial
statements, audit report) are required to be delivered under Section 8.5 hereof,
until such financial statements and audit report are delivered, the Applicable
Margin shall be the highest Applicable Margin (i.e., Level IV shall apply).  If
the Borrower subsequently delivers such financial statements before the next
Pricing Date, the Applicable Margin established by such late delivered financial
statements shall take effect from the date of delivery until the next Pricing
Date.  In all other circumstances, the Applicable Margin established by such
financial statements shall be in effect from the Pricing Date that occurs
immediately after the end of the Fiscal Quarter covered by such financial
statements until the next Pricing Date.  Each determination of the Applicable
Margin made by the Administrative Agent in accordance with the foregoing shall
be conclusive and binding on the Borrower and the Lenders if reasonably
determined.

 

“Application” is defined in Section 1.2(b) hereof.

 

“Approved Fund” means any Fund that has been approved by Borrower (such approval
not to be unreasonably withheld or delayed and such approval not to be required
if an Event of Default has occurred and is continuing) and is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

“Assets Under Development” means any real property under construction.

 

17

--------------------------------------------------------------------------------

 

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 13.12 hereof), and accepted by the Administrative Agent, in
substantially the form of Exhibit H or any other form approved by the
Administrative Agent.

 

“Authorized Representative” means those persons shown on the list of officers
provided by the Borrower pursuant to Section 7.2 hereof or on any update of any
such list provided by the Borrower to the Administrative Agent, or any further
or different officers of the Borrower so named by any Authorized Representative
of the Borrower in a written notice to the Administrative Agent.

 

“Borrower” is defined in the introductory paragraph of this Agreement.

 

“Borrowing” means the total of Loans of a single type advanced, continued for an
additional Interest Period, or converted from a different type into such type by
the Lenders on a single date and, in the case of Eurodollar Loans, for a single
Interest Period.  Borrowings of Loans are made and maintained ratably from each
of the Lenders according to their Percentages.  A Borrowing is “advanced” on the
day Lenders advance funds comprising such Borrowing to the Borrower, is
“continued” on the date a new Interest Period for the same type of Loans
commences for such Borrowing, and is “converted” when such Borrowing is changed
from one type of Loans to the other, all as determined pursuant to Section 1.5
hereof.

 

“Borrowing Base” means, at any date of its determination, an amount equal to 50%
of the Borrowing Base Value on such date minus the outstanding principal amount
of all Unsecured Debt of the Borrower on such date that is pari passu in rank to
the indebtedness under the Credit Agreement other than the Obligations.

 

“Borrowing Base Certificate” means the certificate in the form of Exhibit E
hereto, or in such other form acceptable to the Administrative Agent, to be
delivered to the Administrative Agent and the Lenders pursuant to Sections 7.2
and 8.5 hereof.

 

“Borrowing Base Determination Date” means each date on which the Borrowing Base
is certified to the Administrative Agent, as follows:

 

                   (a)        Quarterly.  On the 50th day following each
calendar quarter (except when such calendar quarter ends on December 31, in
which event it shall be on the 60th day.

 

                   (b)        Property Adjustments.  Following each addition or
deletion of an Eligible Property (an “Adjustment Event”), the Borrowing Base
shall be adjusted accordingly.

 

                   (c)        Notice of Borrowing Base Change.  Promptly
following any date the Borrowing Base is re-determined in accordance with the
preceding paragraphs, the Administrative Agent shall give notice to the Lenders
and the Borrower of the new Borrowing Base.

 

18

--------------------------------------------------------------------------------

 

“Borrowing Base Requirements” means collectively that (a) no more than 10% of
the Borrowing Base Value may be comprised of Eligible Properties which are
leased by Borrower pursuant to a Qualified Ground Lease; (b) no more than 20% of
the Borrowing Base Value may be comprised of Eligible Properties which are
neither SNF’s or ALF’s; (c) no more than 15% of the Borrowing Base Value may be
comprised of Eligible Properties which are not 100% owned by Borrower and/or any
Guarantor (exclusive of Eligible Properties attributable to (a) above) and
(d) no more than 10% of the Borrowing Base Value may be comprised of any one
Eligible Property.

 

“Borrowing Base Value” means, at any date of its determination, an amount equal
to the sum of the following on such date (a) Eligible Properties owned more than
four quarters valued at the Calculated Value and (b) Eligible Properties owned
for less than four quarters valued at the Investment Amount.

 

“Business Day” means any day (other than a Saturday or Sunday) on which banks
are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or conversion
into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar
deposits in the interbank eurodollar market in London, England and Nassau,
Bahamas.

 

“Calculated Value” means the quotient of the Eligible Property NOI for each
applicable Eligible Property divided by its applicable Capitalization Rate with
the resulting quotient multiplied by owner’s percentage ownership of such
Eligible Property.

 

“Capital Lease” means any lease of Property which in accordance with GAAP is
required to be capitalized on the balance sheet of the lessee.

 

“Capitalized Lease Obligation” means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.

 

“Capitalization Rate” means 8.5% for assisted living facilities (“ALF’s”) and
12% for skilled nursing facilities (“SNF’s”).

 

“Change of Control” means any of (a) the acquisition by any “person” or “group”
(as such terms are used in sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) at any time of beneficial ownership of 50% or more of
the outstanding capital stock or other equity interests of the Borrower on a
fully-diluted basis, (b) any “Change of Control” (or words of like import), as
defined in any agreement or indenture relating to any issue of Indebtedness for
Borrowed Money in excess of $10,000,000 shall occur or (c) during any
twelve (12) month period on or after the date hereof, individuals who at the
beginning of such period constituted the Board of Directors of the Borrower
(together with any new directors whose election by the Board of Directors or
whose nomination for election by the shareholders of the Borrower was approved
by a vote of at least a majority of the members of the Board of Directors then
in office who either were members of the Board of Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office.

 

19

--------------------------------------------------------------------------------

 

“Closing Date” means the date of this Agreement or such later Business Day upon
which each condition described in Section 7.2 shall be satisfied or waived in a
manner acceptable to the Administrative Agent in its discretion.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute thereto.

 

“Collateral Account” is defined in Section 9.4 hereof.

 

“Compliance Certificate” is defined in Section 8.5(c) hereof.

 

“Commitment” means, as to any Lender, the obligation of such Lender to make
Loans and to participate in Letters of Credit issued for the account of the
Borrower hereunder in an aggregate principal or face amount at any one time
outstanding not to exceed the amount set forth opposite such Lender’s name on
Schedule 1 attached hereto and made a part hereof, as the same may be reduced or
modified at any time or from time to time pursuant to the terms hereof.  The
Commitments of the Lenders aggregate $80,000,000 on the date hereof.

 

“Commonly Controlled Entity” means an entity, whether or not incorporated, that
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or that is part of a group that includes the Borrower and is treated as a
single employer under Section 414(b), (c) or (m) of the Code.

 

“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.

 

“Credit Event” means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.

 

“Credit Facility Debt Service” means, for any Fiscal Quarter, all interest and
Letter of Credit fees payable on the Loans or Letters of Credit or as part of
the Obligations.

 

“Debt Service” means, for any Fiscal Quarter, the sum of (a) Interest Expense
and (b) the greater of (i) zero or (ii) scheduled principal amortization paid on
Total Indebtedness (exclusive of any balloon payments or prepayments of
principal paid on such Total Indebtedness) less amortized principal payments
received on mortgage loans receivable or its REMIC Certificate investments
(exclusive of any balloon payments or prepayments of principal received on
mortgage loans receivable or on the underlying mortgage loans of investments in
REMIC Certificates).

 

20

--------------------------------------------------------------------------------

 

“Default” means any event or condition the occurrence of which would, with the
passage of time or the giving of notice, or both, constitute an Event of
Default.

 

“Defined Benefit Plan” is defined in Section 4.14(j) of the Code.

 

“EBITDA” means, for any period, determined on a consolidated basis of the
Borrower and its Subsidiaries, in accordance with GAAP, the sum of net income
(or loss) plus: (i) depreciation and amortization expense; (ii) Interest
Expense; (iii) income tax expense; (iv) extraordinary, unrealized or
non-recurring losses, including impairment charges and reserves, minus: 
(v) funds received by the Borrower or a Subsidiary as rent but which are
reserved for capital expenses; (vi) unrealized gains on the sale of assets; and,
(vii) income tax benefits.

 

“Effective Date” means the date all of the conditions precedent set forth in
Section 7.2 have been satisfied.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, (ii) the L/C Issuer, and (iii) unless an Event
of Default has occurred and is continuing, the Borrower (each such approval not
to be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include the Borrower or any Guarantor
or any of the Borrower’s or such Guarantor’s Affiliates or Subsidiaries.

 

“Eligible Line of Business” means any business engaged in as of the date of this
Agreement by the Borrower or any of its Subsidiaries.

 

“Eligible Property” means, as of any Borrowing Base Determination Date, any
Property owned by the Borrower or a Material Subsidiary which satisfies the
following conditions which would permit such Property to be included in the
Borrowing Base:

 

                   (a)        Is real property majority owned in fee simple, or
100% leased by Borrower or a Material Subsidiary pursuant to a Qualified Ground
Lease; provided that for any Property owned less than 100%, the Borrower or
Material Subsidiary shall have the unilateral right to (i) sell, transfer or
otherwise dispose of such Property and (ii) to create a Lien on such Property as
security for Indebtedness for Borrowed Money;

 

                   (b)        Currently in service (not under development or
non-stabilized);

 

                   (c)        Senior Housing Asset located in the United States;

 

                   (d)        Neither the Property nor the ownership interest is
subject to any Lien (other than Permitted Liens or Liens in favor of the
Borrower or a Material Subsidiary) or to any negative pledge;

 

                   (e)        If such Property is owned by a Material
Subsidiary, (i) none of the Borrower’s beneficial ownership interest in such
Material Subsidiary is subject to any Lien (other than certain Permitted Liens
or Liens in favor of the Borrower or a Material

 

21

--------------------------------------------------------------------------------

 

Subsidiary) or to any negative pledge, (ii) the Material Subsidiary has the
unilateral right to sell, transfer or otherwise dispose of such Property and to
create a Lien on such Property as security for Indebtedness for Borrowed Money,
and (iii) the Material Subsidiary has provided a Guaranty to the Administrative
Agent pursuant to Section 4.1 hereof;

 

                    (f)        That such Property, based on the Borrower’s or a
Material Subsidiary’s actual knowledge, is free of all material structural
defects or major architectural deficiencies, material title defects, material
environmental conditions or other adverse matters which, individually or
collectively, materially impair the value of such Property;

 

                   (g)        The lessee of the Property under such lease is not
more than 60 days past due with respect to any monthly rent payment obligations
under such lease, and,

 

                   (h)        For each such Property, the Borrower shall have
delivered to the Administrative Agent a copy, certified as true and correct by
the Borrower, of each of the following: if the Property Owner is not the
Borrower, the Property Owner’s articles of incorporation, by-laws, partnership
agreements, operating agreements, as applicable, and certificates of existence,
good standing and authority to do business from each appropriate state
authority, and partnership, corporate or limited liability company, as
applicable, authorizations authorizing the execution, delivery and performance
of the Additional Guarantor Supplement all certified to be true and complete by
a duly authorized officer of such Property Owner.

 

“Eligible Property NOI” means, for any given period, the aggregate Property NOI
attributable to the Eligible Properties owned by the Borrower or a Material
Subsidiary for a period in excess of four Fiscal Quarters and defined for each
such Eligible Property or pool of such Eligible Properties under a master Lease
as the lesser of (i) Property NOI divided by 1.15, or (ii) the related Lease
payment on such Eligible Property or pool of Eligible Properties due to the
Borrower or a Material Subsidiary for such period.

 

“Environmental Claim” means any investigation, notice, violation, demand,
allegation, action, suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding or claim (whether administrative, judicial or private in
nature) arising (a) pursuant to, or in connection with an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any abatement, removal, remedial, corrective or response
action in connection with a Hazardous Material, Environmental Law or order of a
governmental authority or (d) from any actual or alleged damage, injury, threat
or harm to health, safety, natural resources or the environment.

 

“Environmental Law” means any current or future Legal Requirement pertaining to
(a) the protection of health, safety and the indoor or outdoor environment,
(b) the conservation, management or use of natural resources and wildlife,
(c) the protection or use of surface water or groundwater, (d) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation
or handling of, or exposure to, any Hazardous Material or (e) pollution
(including any Release to air, land, surface water or groundwater), and any
amendment, rule, regulation, order or directive issued thereunder.

 

22

--------------------------------------------------------------------------------

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or any successor statute thereto.

 

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of the Borrower’s controlled group, or is under common control with the
Borrower, within the meaning of Sections 414 and 4001 of the Code and the
regulations promulgated and rulings issued thereunder.

 

“Eurodollar Loan” means a Loan bearing interest at the rate specified in
Section 1.3(b) hereof.

 

“Eurodollar Reserve Percentage” is defined in Section 1.3(b) hereof.

 

“Event of Default” means any event or condition identified as such in
Section 9.1 hereof.

 

“Event of Loss” means, with respect to any Property, any of the following: 
(a) any total loss, destruction or damage of such Property or (b) any total
condemnation, seizure, or taking, by exercise of the power of eminent domain or
otherwise, of such Property, or confiscation of such Property or the requisition
of the use of such Property.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.

 

“Fiscal Quarter” means each of the three-month periods ending on March 31,
June 30, September 30 and December 31.

 

“Fiscal Year” means the twelve-month period ending on December 31.

 

“Fixed Charges” means, for any Fiscal Quarter, Debt Service for such quarter,
plus Preferred Dividends for such quarter, plus $400 per bed for any Property on
which the Lease of such Property does not require the tenant to pay for all
capital expenditures.

 

“Foreign Subsidiary” means each Subsidiary which (a) is organized under the laws
of a jurisdiction other than the United States of America or any state thereof,
(b) conducts substantially all of its business outside of the United States of
America, and (c) has substantially all of its assets outside of the United
States of America.

 

23

--------------------------------------------------------------------------------

 

“Former Plan” means any employee benefit plan in respect of which the Borrower
or a Commonly Controlled Entity has engaged in a transaction described in
Section 4069 or Section 4212(c) of ERISA.

 

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

 

“Funds From Operations” or “FFO” means, for any period reported, as determined
on a consolidated basis of the Borrower, the sum of net income or (loss), plus: 
(i) depreciation and amortization expense; (ii) realized losses from
extraordinary or non-recurring items; (iii) realized losses on sales of real
estate or other assets; (iv) impairment charges or other loss reserves; and
(v) provisions for income taxes for such period; minus: (i) gains (whether
realized or unrealized) on sales of real estate or other assets; and,
(ii) income tax benefits for such period.

 

“Future Property” means any Property which the Borrower or any Subsidiary of the
Borrower acquires after the date hereof.

 

“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

 

“Governmental Authority” means any foreign governmental authority, the United
States of America, any state of the United States of America and any subdivision
of any of the foregoing, and any agency, department, commission, board,
authority or instrumentality, bureau or court having jurisdiction over any
Lender, the Borrower, any Subsidiaries of the Borrower or any of their
respective Properties.

 

“Guarantor” and “Guarantors” each is defined in Section 4.1 hereof.

 

“Guaranty” and “Guaranties” each is defined in Section 4.1 hereof.

 

“Hazardous Material” means any substance, chemical, compound, product, solid,
gas, liquid, waste, byproduct, pollutant, contaminant or material which is
hazardous or toxic, and includes, without limitation, (a) asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof) and (b) any material classified or regulated as “hazardous” or “toxic”
or words of like import pursuant to an Environmental Law.

 

“Hazardous Material Activity” means any activity, event or occurrence involving
a Hazardous Material, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation, handling
of or corrective or response action to any Hazardous Material.

 

24

--------------------------------------------------------------------------------

 

“Hostile Acquisition” means the acquisition of the capital stock or other equity
interests of a Person through a tender offer or similar solicitation of the
owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition) by resolutions of the Board of Directors of
such Person or by similar action if such Person is not a corporation, and as to
which such approval has not been withdrawn.

 

“Indebtedness for Borrowed Money” means for any Person (without duplication)
(a) all indebtedness created, assumed or incurred in any manner by such Person
representing money borrowed (including by the issuance of debt securities),
(b) all indebtedness for the deferred purchase price of property or services
(other than trade accounts payable arising in the ordinary course of business),
(c) all indebtedness secured by any Lien upon Property of such Person, whether
or not such Person has assumed or become liable for the payment of such
indebtedness, (d) all Capitalized Lease Obligations of such Person, and (e) all
obligations of such Person on or with respect to letters of credit, bankers’
acceptances and other extensions of credit whether or not representing
obligations for borrowed money.

 

“Improvements” for any Property means all buildings, structures, fixtures,
tenant improvements and other improvements of every kind and description now or
hereafter located in or on or attached to the Land for such Property; and all
additions and betterments thereto and all renewals, substitutions and
replacements thereof.

 

“Initial Properties” means collectively the Properties listed on Schedule 1.1
and “Initial Property” means any of such Properties.

 

“Insolvency” means, with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Interest Expense” means, with respect to a Person for any period of time
(a) the interest expense whether paid, accrued or capitalized (without deduction
of consolidated interest income) of such Person for such period.  Interest
Expense shall exclude any amortization of (i) deferred financing fees, including
the write-off such fees relating to the early retirement of such related
Indebtedness for Borrowed Money, and (ii) debt discounts (but only to the extent
such discounts do not exceed 3.0% of the initial face principal amount of such
debt).

 

“Interest Period” is defined in Section 1.6 hereof.

 

“Investment Amount” means for any Property acquired after the date hereof, the
product of (i) the percentage interest of such Property owned by the Borrower or
Guarantor and (ii) the aggregate purchase price paid by the Borrower or
Guarantor for such Property (giving effect to any securities used to purchase a
Property at the fair market value of the securities at the time of purchase
based upon the price at which such securities could be exchanged into the
Borrower’s common stock assuming such exchange occurred on the date of acquiring
the Property).

 

“Land” for any Property means the real property upon which the Improvements are
located, together with all rights, title and interests appurtenant to such real
property, including without limitation all rights, title and interests to
(a) all strips and gores within or adjoining such

 

25

--------------------------------------------------------------------------------

 

property, (b) the streets, roads, sidewalks, alleys, and ways adjacent thereto,
(c) all of the tenements, hereditaments, easements, reciprocal easement
agreements, rights-of-way and other rights, privileges and appurtenances
thereunto belonging or in any way pertaining thereto, (d) all reversions and
remainders, (e) all air space rights, and all water, sewer and wastewater
rights, (e) all mineral, oil, gas, hydrocarbon substances and other rights to
produce or share in the production of anything related to such property, and
(f) all other appurtenances appurtenant to such property, including without
limitation, any now or hereafter belonging or in anywise appertaining thereto.

 

“L/C Issuer” means the Administrative Agent, or any other Lender requested by
the Borrower and approved by the Administrative Agent in its sole discretion
with respect to any Letter of Credit.

 

“L/C Obligations” means the aggregate undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations.

 

“L/C Sublimit” means $10,000,000 as reduced pursuant to the terms hereof.

 

“Lease” means any lease, tenancy agreement, contract or other agreement for the
use or occupancy of a Property or any portion thereof.

 

“Legal Requirement” means any treaty, convention, statute, law, regulation,
ordinance, license, permit, governmental approval, injunction, judgment, order,
consent decree or other requirement of any governmental authority, whether
federal, state, or local.

 

“Lenders” means and includes Bank of Montreal, Chicago Branch, Key Bank National
Association and the other financial institutions from time to time party to this
Agreement, including any new Lender pursuant to Section 1.14 hereof and each
assignee Lender pursuant to Section 13.12 hereof.

 

“Lending Office” is defined in Section 10.4 hereof.

 

“Letter of Credit” is defined in Section 1.2(a) hereof.

 

“LIBOR” is defined in Section 1.3(b) hereof.

 

“Lien” means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.

 

“Loan” is defined in Section 1.2 hereof and, as so defined, includes an Adjusted
Base Rate Loan or a Eurodollar Loan, each of which is a “type” of Loan
hereunder.

 

“Loan Documents” means this Agreement, the Notes, the Applications, the
Guaranties, and each other instrument or document to be delivered hereunder or
thereunder or otherwise in connection therewith.

 

26

--------------------------------------------------------------------------------

 

“Material Adverse Effect” means a material and adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower or any Guarantor to perform its obligations under the
Loan Documents to which it is a party or (c) the validity or enforceability of
any of the Loan Documents or the rights or remedies of the Administrative Agent
or the Lenders thereunder; provided, however, that the sale of assets of one or
more Guarantors in accordance with the terms of this Agreement shall not be
deemed in and of itself to cause a Material Adverse Effect absent the presence
of the factors set forth above.

 

“Material Subsidiary” means, each Subsidiary that owns a Property included in
the Borrowing Base Value and Education Property Investors, Inc.

 

“Medical Office Buildings” means a medical office building that contains one or
more physicians’ offices and examination rooms, and may also include pharmacies,
hospital ancillary service space and day-surgery operating rooms.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a Plan that is a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.

 

“Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA and subject to Title IV thereof, that (a) is
maintained by the Borrower or an ERISA Affiliate and at least one Person other
than the Borrower and its ERISA Affiliates or (b) was so maintained previously,
but is not currently maintained by the Borrower or its ERISA Affiliates, and in
respect of which the Borrower or an ERISA Affiliate would still have liability
under Section 4063, 4064 or 4069 of ERISA in the event such plan has been or
were to be terminated.

 

“Note” is defined in Section 1.10 hereof.

 

“Obligations” means all obligations of the Borrower to pay principal and
interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Borrower or any of its Subsidiaries arising under or in
relation to any Loan Document, in each case whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired.

 

“Participating Interest” is defined in Section 1.2(d) hereof.

 

“Participating Lender” is defined in Section 1.2(d) hereof.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding
to any or all of its functions under ERISA.

 

27

--------------------------------------------------------------------------------

 

“Percentage” means, for each Lender, the percentage of the Commitments
represented by such Lender’s Credit Commitment or, if the Commitments have been
terminated, the percentage held by such Lender (including through participation
interests in Reimbursement Obligations) of the aggregate principal amount of all
Loans and L/C Obligations then outstanding.

 

“Permitted Acquisition” means any Acquisition with respect to which all of the
following conditions shall have been satisfied:

 

                   (a)        the Acquired Business is in an Eligible Line of
Business and has its primary operations within the United States of America;

 

                   (b)        the Acquisition shall not be a Hostile
Acquisition;

 

                   (c)        the investment or acquisition is an asset
associated with an Eligible Line of Business which may include but is not
limited to sale/leaseback transactions, mortgage loans, lines of credit or other
financings, etc.;

 

                   (d)        if a new Material Subsidiary is formed or acquired
as a result of or in connection with the Acquisition, the Borrower shall have
complied with the requirements of Section 4 hereof in connection therewith; and

 

                   (e)        after giving effect to the Acquisition, no Default
or Event of Default shall exist, including with respect to the financial
covenants contained in Section 8.21 hereof, further provided however, that if
such Acquisition together with any other Acquisitions made during the
then-current Fiscal Quarter and the preceding three Fiscal Quarters of the
Borrower have an aggregate cost exceeding $100,000,000, then for such
Acquisition and thereafter for any additional Acquisition in such then-current
Fiscal Quarter for an aggregate cost exceeding $20,000,000, the Borrower shall
provide to the Administrative Agent covenant calculations for the covenants
contained in Section 8.21, showing that the projected effect of the Acquisition,
in terms of additional asset value, liabilities incurred if any, additional
revenues and expenses associated therewith have been contemplated and have been
projected into the expected operating results and financial position of the
Borrower for the Fiscal Quarter in which the Acquisition occurs, and
demonstrating that such Acquisition is not reasonably expected to cause a
violation of the Section 8.21 covenants for such Fiscal Quarter.

 

“Permitted Lien” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding has been commenced: 
(a) Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 8.3; (b) Liens imposed by law, such
as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and
other similar Liens arising in the ordinary course of business securing
obligations that are not overdue or that are being contested in good faith and
by proper proceedings and as to which appropriate reserves are being maintained;
(c) pledges or deposits to secure obligations under workers’ compensation laws
or similar legislation or to secure public or statutory obligations;
(d) easements, rights of way and other encumbrances on title to real

 

28

--------------------------------------------------------------------------------

 

property that do not materially and adversely affect the value of such property
or the use of such property for its present purposes; (e) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of like nature incurred in the ordinary course of business;
(f) Liens in favor of the United States of America for amounts paid to the
Borrower or any Subsidiary as progress payments under government contracts
entered into by it; (g) attachment, judgment and other similar Liens arising in
connection with court, reference or arbitration proceedings, provided that the
same have been in existence less than 20 days, that the same have been
discharged or that execution or enforcement thereof has been stayed pending
appeal; and (h) Liens on Properties not included in the Borrowing Base Value.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.

 

“Plan” means any employee pension benefit plan covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code that
either (a) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (b) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.

 

“Preferred Dividends” means any dividend paid (or payable), as the case may be,
in cash on any preferred equity security issued by the Borrower.

 

“Prime Rate” shall mean the rate of interest per annum publicly announced by the
Administrative Agent from time to time as its U.S. prime rate in effect at its
office in Chicago, Illinois; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective.  The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate charged to any customer.  The Administrative
Agent may make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.

 

“Prior Credit Agreement” is defined in the first paragraph of the Preliminary
Statements on Page 1 of this Agreement.

 

“Property or Properties” means, as to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and its subsidiaries
under GAAP, including any Eligible Property owned by the Borrower or any of its
Subsidiaries.

 

“Property Net Operating Income” or “Property NOI” means, with respect to a
Property and for the four most recently ended Fiscal Quarters, the sum of the
following (without duplication):  (a) all revenues received in the ordinary
course of operating such Property (including proceeds of rent loss insurance but
excluding pre-paid rents and revenues and security deposits except to the extent
applied in satisfaction of tenants’ obligations for rent) minus (b) all

 

29

--------------------------------------------------------------------------------

 

expenses (whether paid or accrued) directly related to the operation or
maintenance of such Property, including but not limited to payroll expenses,
taxes, assessments and other similar charges, insurance, utilities, maintenance,
repair and landscaping expenses but not including any management fees (in
accordance with the computation of EBITDA plus rent and management fees).  All
amounts due to the Borrower or Guarantor, whether as rent or mortgage payments
for the property, will be excluded from the calculation of (b) above.

 

“Property Owner” means the Person who owns fee or leasehold title interest (as
applicable) in, and to a Property.

 

“Qualified Ground Lease” means each of the ground leases or subground leases set
forth on Schedule 1.1 hereto and for a Future Property means any ground lease
(a) which is a direct ground lease granted by the fee owner of real property,
(b) which may be transferred and/or assigned without the consent of the lessor
(or as to which the lease expressly provides that (i) such lease may be
transferred and/or assigned with the consent of the lessor and (ii) such consent
shall not be unreasonably withheld or delayed) or subject to certain reasonable
pre-defined requirements, (c) which has a remaining term (including any renewal
terms exercisable at the sole option of the lessee) of at least twenty (20)
years, (d) under which no material default has occurred and is continuing,
(e) with respect to which a Lien may be granted without the consent of the
lessor, (f) which contains lender protection provisions acceptable to the
Administrative Agent, including, without limitation, provisions to the effect
that (i) the lessor shall notify any holder of a Lien in such lease of the
occurrence of any default by the lessee under such lease and shall afford such
holder the option to cure such default, and (ii) in the event that such lease is
terminated, such holder shall have the option to enter into a new lease having
terms substantially identical to those contained in the terminated lease and
(g) which is otherwise acceptable in form and substance to the Administrative
Agent.

 

“RCRA” means the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.

 

“Real Property” for any Senior Housing Asset means the Land and the Improvements
for such Senior Housing Asset, including without limitation, parking rights and
any and all real property rights to other ancillary functions necessary for the
operation of such Senior Housing Asset.

 

“Rehabilitation Assets” means healthcare facilities which are used primarily for
the provision of services to patients requiring rehabilitative or restorative
care, including some or all of the following services but not limited to
physical therapy, occupational therapy, speech therapy and other related
services.

 

“Reimbursement Obligation” is defined in Section 1.2(c) hereof.

 

“REIT” means a real estate investment trust under Sections 856-860 of the Code.

 

30

--------------------------------------------------------------------------------

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migration, dumping, or disposing
into the indoor or outdoor environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks or other
receptacles containing or previously containing any Hazardous Material.

 

“REMIC” means Real Estate Mortgage Investment Conduit.

 

“REMIC Certificates” means individually or collectively a certificated
beneficial interest in a REMIC.

 

“Reorganization” means, with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the 30-day notice period is waived
under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg. §4043.

 

“Required Lenders” means, as of the date of determination thereof, Lenders whose
outstanding Loans and interests in Letters of Credit and Unused Commitments
constitute more than 66-2/3% of the sum of the total outstanding Loans,
interests in Letters of Credit, and Unused Commitments of the Lenders.

 

“Responsible Officer” means the Chief Executive Officer, President, Executive
Vice President, Chief Operating Officer, Chief Financial Officer, or Treasurer
of any Person.

 

“Revolving Credit” means the credit facility for making Loans and issuing
Letters of Credit described in Sections 1.1 and 1.2 hereof.

 

“Rolling Period” means, as of any date, the four Fiscal Quarters ending on or
immediately preceding such date.

 

“S&P” means Standard & Poor’s Ratings Services Group, a division of The
McGraw-Hill Companies, Inc.

 

“Secured Debt” means as of any date of determination, the aggregate principal
amount of all indebtedness outstanding of the Borrower and its Subsidiaries,
evidenced by notes, bonds, debentures or similar instruments and capital lease
obligations that are secured by a Lien (other than certain Permitted
Encumbrances).

 

“Secured Recourse Debt” means Secured Debt that is recourse for payment to the
Borrower or its Subsidiaries.

 

“Senior Housing Assets” means any Property on which the improvements consist
only of one or more of the following:  (a) senior apartments, (b) independent
living facilities, (c) congregate communities, (d) assisted living facilities,
(e) nursing homes, (f) hospitals and

 

31

--------------------------------------------------------------------------------

 

(g) other Property primarily used for senior citizen residences or health care
services, together with other improvements incidental thereto.

 

“Significant Lease” means any Lease under which the Borrower or one of its
Subsidiaries is the lessor and which Lease provides for minimum rent payments of
$1,000,000 or more during any calendar year.

 

“Single Employer Plan” means any Plan that is covered by Title IV of ERISA but
is not a Multiemployer Plan.

 

“SNF’s” is defined in the definition of Capitalization Rate.

 

“Stock” means shares of capital stock, beneficial or partnership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or non-voting, and includes,
without limitation, common stock, but excluding any preferred stock or other
preferred equity security.

 

“Stock Equivalents” means all securities (other than Stock) convertible into or
exchangeable for Stock at the option of the holder, and all warrants, options or
other rights to purchase or subscribe for any stock, whether or not presently
convertible, exchangeable or exercisable.

 

“Subsidiary” means, as to any particular parent corporation or organization, any
other corporation or organization more than 50% of the outstanding Voting Stock
of which is at the time directly or indirectly owned by such parent corporation
or organization or by any one or more other entities which are themselves
subsidiaries of such parent corporation or organization.  Unless otherwise
expressly noted herein, the term “Subsidiary” means a Subsidiary of the Borrower
or of any of its direct or indirect Subsidiaries.

 

“Tangible Net Worth” means for each applicable period, total stockholders’
equity on the Borrower’s consolidated balance sheet as reported in its Form 10-K
or 10-Q less all amounts appearing on the assets side of its consolidated
balance sheet representing an intangible asset under GAAP.

 

“Termination Date” means July 17, 2011, or such earlier date on which the
Commitments are terminated in whole pursuant to Section 1.12, 9.2 or 9.3 hereof.

 

“Total Asset Value” means the book value, without giving effect to depreciation,
of all assets of the Borrower and its Subsidiaries at such time; less (a) the
amount, if any, of the Borrower’s investment in any unconsolidated subsidiary,
joint venture or other similar entity, and (b) all amounts appearing on the
assets side of its consolidated balance sheet separately identifiable as
intangible assets under GAAP.

 

“Total Indebtedness” means, as of a given date, all liabilities of the Borrower
and its Subsidiaries which would, in conformity with GAAP, be properly
classified as a liability on a consolidated balance sheet of the Borrower and
its Subsidiaries as of such date, excluding any amounts categorized as accrued
expenses, accrued dividends, deposits held, deferred revenues, minority
interests and other liabilities not directly associated with the borrowing of
money.

 

32

--------------------------------------------------------------------------------

 

“Unconsolidated Affiliates” means an Affiliate of the Borrower whose financial
statements are not required to be consolidated with the financial statements of
the Borrower in accordance with GAAP.

 

 “Unfunded Vested Liabilities” means, for any Plan at any time, the amount (if
any) by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of a member of the Controlled Group to the PBGC or the Plan under Title IV of
ERISA.

 

“Unsecured Debt” means, with respect to a Person as of any given date, the
aggregate principal amount of all Total Indebtedness of such Person outstanding
at such date that is not Secured Indebtedness (excluding Total Indebtedness
associated with Unconsolidated Affiliates that is not guaranteed by the Borrower
or a Subsidiary of the Borrower) and in the case of the Borrower shall include
(without duplication) Total Indebtedness that does not constitute Secured
Indebtedness.

 

“Unsecured Debt Service” means, for a given period, Debt Service with respect to
Unsecured Debt.

 

“Unused Commitments” means, at any time, the difference between the Commitments
then in effect and the aggregate outstanding principal amount of Loans and L/C
Obligations.

 

“U.S. Dollars” and “$” each means the lawful currency of the United States of
America.

 

“Voting Stock” of any Person means capital stock or other equity interests of
any class or classes (however designated) having ordinary power for the election
of directors or other similar governing body of such Person, other than stock or
other equity interests having such power only by reason of the happening of a
contingency.

 

“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

“Wholly-owned Subsidiary” means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors’ qualifying shares as
required by law) or other equity interests are owned by the Borrower and/or one
or more Wholly-owned Subsidiaries within the meaning of this definition.

 

Section 5.2.      Interpretation.  The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined.  The
words “hereof”, “herein”, and “hereunder” and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.  All references to time of day herein
are references to Chicago, Illinois, time unless otherwise specifically
provided.  Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such principles
are inconsistent with the specific provisions of this Agreement.

 

33

--------------------------------------------------------------------------------

 

Section 5.3.      Change in Accounting Principles.  If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Lenders may by notice to the Lenders and the Borrower,
respectively, require that the Lenders and the Borrower negotiate in good faith
to amend such covenants, standards, and term so as equitably to reflect such
change in accounting principles, with the desired result being that the criteria
for evaluating the financial condition of the Borrower and its Subsidiaries
shall be the same as if such change had not been made.  No delay by the Borrower
or the Required Lenders in requiring such negotiation shall limit their right to
so require such a negotiation at any time after such a change in accounting
principles.  Until any such covenant, standard, or term is amended in accordance
with this Section 5.3, financial covenants shall be computed and determined in
accordance with GAAP in effect prior to such change in accounting principles. 
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.

 

SECTION 6.                                     REPRESENTATIONS AND WARRANTIES.

 

The Borrower represents and warrants to the Administrative Agent and the Lenders
as follows:

 

Section 6.1.      Organization and Qualification.  The Borrower is duly
organized, validly existing, and in good standing as a corporation under the
laws of the State of Maryland, has full and adequate power to own its Property
and conduct its business as now conducted, and is duly licensed or qualified and
in good standing in each jurisdiction in which the nature of the business
conducted by it or the nature of the Property owned or leased by it requires
such licensing or qualifying.

 

Section 6.2.      Subsidiaries.  Each Subsidiary is duly organized, validly
existing, and in good standing under the laws of the jurisdiction in which it is
organized, has full and adequate power to own its Property and conduct its
business as now conducted, and is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the nature of the Property owned or leased by it requires such licensing
or qualifying.  Schedule 6.2 hereto identifies each Subsidiary as of the date
hereof and as updated from time to time as provided in Section 8.5(j), the
jurisdiction of its organization, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned by the
Borrower and the other Subsidiaries and, if such percentage is not 100%
(excluding directors’ qualifying shares as required by law), a description of
each class of its authorized capital stock and other equity interests and the
number of shares of each class issued and outstanding.  All of

 

34

--------------------------------------------------------------------------------

 

the outstanding shares of capital stock and other equity interests of each
Subsidiary are validly issued and outstanding and fully paid and nonassessable
and all such shares and other equity interests indicated on Schedule 6.2 as
owned by the Borrower or another Subsidiary are owned, beneficially and of
record, by the Borrower or such Subsidiary free and clear of all Liens.  Neither
the Borrower or any of its Subsidiaries has committed or is obligated to issue
Stock Equivalents in any of the Borrower’s Subsidiaries to any Person not owned
by the Borrower or its Subsidiaries.

 

Section 6.3.      Authority and Validity of Obligations.  The Borrower has full
right and authority to enter into this Agreement and the other Loan Documents
executed by it, to make the borrowings herein provided for, to issue its Notes
in evidence thereof, and to perform all of its obligations hereunder and under
the other Loan Documents executed by it.  Each Material Subsidiary has full
right and authority to enter into the Loan Documents executed by it, to
guarantee the Obligations and to perform all of its obligations under the Loan
Documents executed by it.  The Loan Documents delivered by the Borrower and by
each Material Subsidiary have been duly authorized, executed, and delivered by
such Person and constitute valid and binding obligations of such Person
enforceable against it in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors’ rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and this Agreement and the other Loan Documents
do not, nor does the performance or observance by the Borrower or any Subsidiary
of any of the matters and things herein or therein provided for, (a) contravene
or constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Borrower or any Material Subsidiary or any
provision of the organizational documents (e.g., charter, certificate or
articles of incorporation and by-laws, certificate or articles of association
and operating agreement, partnership agreement, or other similar organizational
documents) of the Borrower or any Material Subsidiary, (b) contravene or
constitute a default under any covenant, indenture or agreement of or affecting
the Borrower or any Material Subsidiary or any of its Property or (c) result in
the creation or imposition of any Lien on any Property of the Borrower or any
Material Subsidiary.

 

Section 6.4.      Use of Proceeds; Margin Stock.  The Borrower shall use the
proceeds of the Revolving Credit for refinancing its existing indebtedness, for
its general working capital purposes and for such other legal and proper
purposes as are consistent with all applicable laws.  Neither the Borrower nor
any Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Loan or any other extension of credit made hereunder will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.  Margin stock (as
hereinabove defined) constitutes less than 25% of the assets of the Borrower and
its Subsidiaries which are subject to any limitation on sale, pledge or other
restriction hereunder.

 

35

--------------------------------------------------------------------------------

 

Section 6.5.                                          Financial Reports.   The
consolidated balance sheet of the Borrower and its Subsidiaries as at
December 31, 2007, and the related consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for the fiscal year
then ended, and accompanying notes thereto, which financial statements are
accompanied by the audit report of Ernst & Young, LLP, independent public
accountants, and the unaudited interim consolidated balance sheet of the
Borrower and its Subsidiaries as at March 31, 2008 and the related consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the three (3) months then ended, heretofore furnished to the
Administrative Agent and the Lenders, fairly present the consolidated financial
condition of the Borrower and its Subsidiaries as at said dates and the
consolidated results of their operations and cash flows for the periods then
ended in conformity with GAAP applied on a consistent basis.  Neither the
Borrower nor any Subsidiary has contingent liabilities which are material to it
other than as indicated on such financial statements or, with respect to future
periods, on the financial statements furnished pursuant to Section 8.5 hereof.

 

Section 6.6.                                          No Material Adverse
Change.  Since March 31, 2008, there has been no event which could reasonably be
expected to have a Material Adverse Effect on the Borrower or its Subsidiaries,
taken as a whole, except those occurring in the ordinary course of business.

 

Section 6.7.                                          Full Disclosure.  The
statements and information furnished to the Administrative Agent and the Lenders
in connection with the negotiation of this Agreement and the other Loan
Documents and the commitments by the Lenders to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a material
fact or omit a material fact necessary to make the material statements contained
herein or therein not misleading, the Administrative Agent and the Lenders
acknowledging that as to any projections furnished to the Administrative Agent
and the Lenders, the Borrower only represents that the same were prepared on the
basis of information and estimates the Borrower believed to be reasonable.

 

Section 6.8.                                          Trademarks, Franchises,
and Licenses.  The Borrower and its Subsidiaries own, possess, or have the right
to use all necessary patents, licenses, franchises, trademarks, trade names,
trade styles, copyrights, trade secrets, know how, and confidential commercial
and proprietary information to conduct their businesses as now conducted,
without known conflict with any patent, license, franchise, trademark, trade
name, trade style, copyright or other proprietary right of any other Person.

 

Section 6.9.                                          Governmental Authority and
Licensing.  The Borrower and its Subsidiaries have received all licenses,
permits, and approvals of all federal, state, and local governmental
authorities, if any, necessary to conduct their businesses, in each case where
the failure to obtain or maintain the same could reasonably be expected to have
a Material Adverse Effect.  No investigation or proceeding which, if adversely
determined, could reasonably be expected to result in revocation or denial of
any material license, permit or approval is pending or, to the knowledge of the
Borrower, threatened.

 

Section 6.10.                                   Good Title.  The Borrower and
its Subsidiaries have good and defensible title (or valid leasehold interests)
to their assets as reflected on the most recent consolidated balance sheet  of
the Borrower and its Subsidiaries furnished to the Administrative Agent and the
Lenders (except for sales of assets in the ordinary course of business), subject
to no Liens other than such thereof as are permitted by Section 8.8 hereof.

 

36

--------------------------------------------------------------------------------

 

Section 6.11.                                   Litigation and Other
Controversies.  There is no litigation or governmental or arbitration proceeding
or labor controversy pending, nor to the knowledge of the Borrower threatened,
against the Borrower or any Subsidiary which if adversely determined,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Section 6.12.                                   Taxes. Each of the Borrower and
its Subsidiaries has filed, or there has been filed on its behalf, all tax
returns (federal, state, local and foreign) required to be filed thereby and has
paid all taxes shown thereon to be due, including interest, additions to taxes
and penalties, or has provided adequate reserves in accordance with GAAP for
payment thereof, except where the failure to so file or pay would not cause a
Material Adverse Effect on the Borrower and its Subsidiaries taken as whole.

 

Section 6.13.                                   Approvals.  No authorization,
consent, license or exemption from, or filing or registration with, any court or
governmental department, agency or instrumentality, nor any approval or consent
of any other Person, is or will be necessary to the valid execution, delivery or
performance by the Borrower or any Subsidiary of any Loan Document, except for
such approvals which have been obtained prior to the date of this Agreement and
remain in full force and effect.

 

Section 6.14.                                   Affiliate Transactions.  Neither
the Borrower nor any Subsidiary is a party to any contracts or agreements with
any of its Affiliates (other than with Wholly-owned Subsidiaries) on terms and
conditions which are less favorable to the Borrower or such Subsidiary than
would be usual and customary in similar contracts or agreements between Persons
not affiliated with each other.

 

Section 6.15.                                   Investment Company; Public
Utility Holding Company.  Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, or a “public
utility holding company” within the meaning of the Public Utility Holding
Company Act of 1935, as amended.

 

Section 6.16.                                   ERISA.  During the 5-year period
before each date as of which this representation is made or deemed made with
respect to any Plan (or, with respect to (f) and (h) below, as of the date on
which such representation is made or deemed made), none of the following events
or conditions, either individually or in the aggregate, has occurred and could
reasonably be expected to have a Material Adverse Effect:  (a) a Reportable
Event; (b) an “accumulated funding deficiency” (within the meaning of
Section 412 of the Code or Section 302 of ERISA); (c) noncompliance with the
applicable provisions of ERISA or the Code; (d) termination of a Single Employer
Plan; (e) a Lien on the property of the Borrower or any Subsidiary in favor of
the PBGC or a Plan; (f) a complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any Commonly Controlled Entity; (g) a liability of the
Borrower or a Commonly Controlled Entity under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the annual valuation date most closely preceding the date on which
this representation is made or deemed made; (h) the Reorganization or Insolvency
of any Multiemployer Plan; and (i) an event or condition with respect to which
the Borrower or any Commonly Controlled Entity could reasonably be expected to
incur any liability in respect of a Former Plan.  Neither the Borrower nor any
Subsidiary maintains or participates in any Defined Benefit Plan or Multiple
Employer Plan.

 

37

--------------------------------------------------------------------------------

 

Section 6.17.                                   Compliance with Laws.  (a) The
Borrower and its Subsidiaries are in compliance with the requirements of all
federal, state and local laws, rules and regulations applicable to or pertaining
to their Property or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances), where any
such non-compliance, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

(b)                                 Without limiting the representations and
warranties set forth in Section 6.17(a) above, except for such matters,
individually or in the aggregate, which could not reasonably be expected to
result in a Material Adverse Effect, the Borrower represents and warrants that
to the actual knowledge of each respectively that the Borrower and its
Subsidiaries, and each of the Properties owned by them: (i) comply in all
material respects with all applicable Environmental Laws; (ii) the tenants of
the Borrower and its Subsidiaries have obtained all governmental approvals
required for the operation of the Properties under any applicable Environmental
Law; (iii) the Borrower and its Subsidiaries have no actual knowledge of any
other Person who has, caused any Release, threatened Release or disposal of any
Hazardous Material at, on, about, or off any of the Properties in any material
quantity and, to the actual the knowledge of the Borrower, none of the
Properties are adversely affected by any Release, threatened Release or disposal
of a Hazardous Material originating or emanating from any other property;
(iv) none of the Properties contain or have contained any:  (1) underground
storage tanks in which any Hazardous Material is being or has been treated,
stored or disposed of on any Property owned by the Borrower or any Subsidiary,
in each case in any manner not in compliance in all material respects with all
applicable Environmental Laws, (2) material amounts of asbestos containing
building material, (3) landfills or dumps, (4) hazardous waste management
facility as defined pursuant to RCRA or any comparable state law, or (5) site on
or nominated for the National Priority List promulgated pursuant to CERCLA or
any state remedial priority list promulgated or published pursuant to any
comparable state law; (v) the Borrower and its Subsidiaries have not used a
material quantity of any Hazardous Material and have conducted no Hazardous
Material Activity at any of the Properties; (vi) the Borrower and its
Subsidiaries have no material liability for response or corrective action,
natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable
state law; (vii) the Borrower and its Subsidiaries are not subject to, have no
notice or actual knowledge of and are not required to give any notice of any
Environmental Claim involving the Borrower or any Subsidiary or any of their
Properties, and there are no conditions or occurrences at any of their
Properties which could reasonably be anticipated to form the basis for an
Environmental Claim against the Borrower or any Subsidiary or such Property;
(viii) none of the Properties are subject to any, and the Borrower has no actual
knowledge of any imminent restriction on the ownership, occupancy, use or
transferability of their Properties in connection with any (1) Environmental Law
or (2) Release, threatened Release or disposal of a Hazardous Material; and
(ix) there are no conditions or circumstances at any of their Properties which
pose an unreasonable risk to the environment or the health or safety of Persons.

 

38

--------------------------------------------------------------------------------

 

Section 6.18.                                   Other Agreements.  Neither the
Borrower nor any Subsidiary is in default under the terms of any covenant,
indenture or agreement of or affecting such Person or any of its Property, which
default if uncured could reasonably be expected to have a Material Adverse
Effect.  Neither Borrower nor any Subsidiary shall enter into an amendment or
modification of any contract or agreement which could reasonably be expected to
have a Material Adverse Effect.

 

Section 6.19.                                   Solvency.  The Borrower and its
Subsidiaries are solvent, able to pay their debts as they become due, and have
sufficient capital to carry on their business and all businesses in which they
are about to engage.

 

Section 6.20.                                   No Broker Fees. No broker’s or
finder’s fee or commission will be payable with respect hereto or any of the
transactions contemplated thereby; and the Borrower hereby agrees to indemnify
the Administrative Agent and the Lenders against, and agree that they will hold
the Administrative Agent and the Lenders harmless from, any claim, demand, or
liability for any such broker’s or finder’s fees alleged to have been incurred
in connection herewith or therewith and any expenses (including reasonable
attorneys’ fees) arising in connection with any such claim, demand, or
liability.

 

Section 6.21.                                   No Default.  No Default or Event
of Default has occurred and is continuing.

 

Section 6.22.                                   Stock of the Borrower.  As of
June 30, 2008, the entire outstanding capital stock of the Borrower consists of
(i) Series C Cumulative Convertible Preferred Stock, 2,000,000 shares;
(ii) Series E Cumulative Convertible Preferred Stock, 70,835 shares;
(iii) Series F Cumulative Preferred Stock, 6,003,700 shares; and (iv) Common
Stock, 23,091,225 shares; all of which are duly and validly issued and
outstanding, fully paid and nonassessable as of the Effective Date.  The
issuance and sale of such Stock of the Borrower either (i) has been registered
under applicable federal and state securities laws or (ii) was issued pursuant
to an exemption therefrom.  The Borrower meets the requirements for taxation as
a REIT under the Code.

 

Section 6.23.                                   Condition of Property;
Casualties; Condemnation.  As of the Effective Date, to the actual knowledge of
the Borrower or its Material Subsidiaries, each Property owned by them, in all
material respects (a) is in good repair, working order and condition, normal
wear and tear excepted, (b) is free of structural defects, (c) is not subject to
material deferred maintenance and (d) has and will have all building systems
contained therein in good repair, working order and condition, normal wear and
tear excepted.  To the actual knowledge of the Borrower or of any of its
Material Subsidiaries, none of the Properties owned by them is currently
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by a Governmental Authority, riot, activities
of armed forces or acts of God or of any public enemy.  No condemnation or other
like proceedings that has had, or could reasonably be expected to result in, a
Material Adverse Change, are pending and served nor, to the actual knowledge of
the Borrower, threatened against any Property owned by it in any manner
whatsoever.  No casualty has occurred to any such Property that could reasonably
be expected to have a Material Adverse Effect.

 

39

--------------------------------------------------------------------------------

 

Section 6.24.                                   Legal Requirements and Zoning. 
To the actual knowledge of the Borrower and its Subsidiaries, the use and
operation of each Property owned by the Borrower and its Subsidiaries
constitutes a legal use under applicable zoning regulations (as the same may be
modified by special use permits or the granting of variances) and complies in
all material respects with all Legal Requirements, and does not violate in any
material respect any material approvals, material restrictions of record or any
material agreement affecting any such Property (or any portion thereof).

 

Section 6.25.                                   Qualified Ground Leases.  The
only material leases of Eligible Properties for which either the Borrower or a
Guarantor is a lessee are the Qualified Ground Leases.  The Property Owner for a
Real Property subject to a Qualified Ground Lease is the lessee under such
Qualified Ground Lease and no consent is necessary to such Person being the
lessee under such Qualified Ground Lease which has not already been obtained. 
The Qualified Ground Leases are in full force and effect and no defaults exist
thereunder.

 

Section 6.26.                                   No Defaults; Landlord is in
Compliance with Leases.  Schedule 6.26 hereto identifies each Significant Lease
in existence on the date hereof, the Property which is demised pursuant to each
Significant Lease and the name of each landlord and lessee under each
Significant Lease.  As of the Effective Date: (i) none of the tenants under
Significant Leases on Properties owned by the Borrower, Material Subsidiaries or
any other Subsidiary of the Borrower are in default for a period in excess of
60 days on the monthly minimum rent payments due under such Significant Leases
and (ii) no other tenants on other Leases that in the aggregate generate more
than $4,000,000 in annual contractual rents payable to the Borrower or its
Subsidiaries are in default for a period in excess of 60 days on the monthly
minimum rent payments due under such Leases.

 

SECTION 7.                                                 CONDITIONS PRECEDENT.

 

The obligation of each Lender to advance, continue or convert any Loan (other
than the continuation of, or conversion into, an Adjusted Base Rate Loan) or of
the L/C Issuer to issue, extend the expiration date (including by not giving
notice of non-renewal) of or increase the amount of any Letter of Credit under
this Agreement, shall be subject to the following conditions precedent:

 

Section 7.1.                                          All Credit Events.  At the
time of each Credit Event hereunder:

 

(a)                                  each of the representations and warranties
set forth herein and in the other Loan Documents shall be and remain true and
correct as of said time, except to the extent the same expressly relate to an
earlier date (in which case the same shall be true and correct as of such
earlier date);

 

(b)                                 the Borrower and each Subsidiary shall be in
compliance with all of the terms and conditions hereof and of the other Loan
Documents, and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Credit Event;

 

40

--------------------------------------------------------------------------------

 

(c)                                  in the case of a Borrowing the
Administrative Agent shall have received the notice required by Section 1.5
hereof and a Borrowing Base Certificate in the form attached hereto as
Exhibit E, in the case of the issuance of any Letter of Credit the L/C Issuer
shall have received a duly completed Application for such Letter of Credit
together with any fees called for by Section 2.1 hereof, and, in the case of an
extension or increase in the amount of a Letter of Credit, a written request
therefor in a form acceptable to the L/C Issuer together with fees called for by
Section 2.1 hereof; and

 

(d)                                 such Credit Event shall not violate any
order, judgment or decree of any court or other authority or any provision of
law or regulation applicable to the Administrative Agent, the L/C Issuer, or any
Lender (including, without limitation, Regulation U of the Board of Governors of
the Federal Reserve System) as then in effect.

 

Each request for a Borrowing hereunder and each request for the issuance of,
increase in the amount of, or extension of the expiration date of, a Letter of
Credit shall be deemed to be a representation and warranty by the Borrower on
the date on such Credit Event as to the facts specified in
subsections (a) through (c), both inclusive, of this Section.

 

Section 7.2.                                          Initial Credit Event. 
Before or concurrently with the initial Credit Event:

 

(a)                                  the Administrative Agent shall have
received for each Lender this Agreement duly executed by the Borrower and its
Material Subsidiaries, as Guarantors, and the Lenders;

 

(b)                                 the Administrative Agent shall have received
for each Lender such Lender’s duly executed Notes of the Borrower dated the date
hereof and otherwise in compliance with the provisions of Section 1.10 hereof;

 

(c)                                  the Administrative Agent shall have
received for each Lender copies of the Borrower’s and each Material Subsidiary’s
articles of incorporation and bylaws (or comparable organizational documents)
and any amendments thereto, certified in each instance by its Secretary or
Assistant Secretary;

 

(d)                                 the Administrative Agent shall have received
for each Lender copies of resolutions of the Borrower’s and each Material
Subsidiary’s Board of Directors (or similar governing body) authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby, together with specimen signatures of the
persons authorized to execute such documents on the Borrower’s and each Material
Subsidiary’s behalf, all certified in each instance by its Secretary or
Assistant Secretary;

 

(e)                                  the Administrative Agent shall have
received for each Lender copies of the certificates of good standing for the
Borrower and each Material Subsidiary from the office of the secretary of the
state of its incorporation or organization and of each state in which it is
qualified to do business as a foreign corporation or organization;

 

41

--------------------------------------------------------------------------------

 

(f)                                    the Administrative Agent shall have
received for each Lender a list of the Borrower’s Authorized Representatives;

 

(g)                                 the Administrative Agent shall have received
for itself and for the Lenders the initial fees called for by Section 2.1
hereof;

 

(h)                                 each Lender shall have received a Borrowing
Base Certificate containing calculations of the Borrowing Base as of
March 31, 2008, and Schedule 1.1 (form of which is attached hereto) and a
Compliance Certificate;

 

(i)                                     the Administrative Agent shall have
received for each Lender the favorable written opinion of counsel (attached as
Exhibit I hereto) to the Borrower and each Material Subsidiary, in form and
substance satisfactory to the Administrative Agent; and

 

(j)                                     the Administrative Agent shall have
received for the account of the Lenders such other agreements, instruments,
documents, certificates, and opinions as the Administrative Agent may reasonably
request.

 

Section 7.3.                                          Eligible Property
Additions and Deletions to the Borrowing Base.  As of March 31, 2008, the
Borrower represents to the Required Lenders and the Administrative Agent that
the Initial Properties qualify as Eligible Properties and that the information
provided on Schedule 1.1 is true and correct.

 

Upon not less than 10 Business Days prior written notice from the Borrower to
the Administrative Agent, the Borrower can designate that a Property be added
(subject to the other requirements for a Property qualifying as an Eligible
Property) or deleted as an Eligible Property.  Such notice shall be accompanied
by a Borrowing Base Certificate setting forth the components of the Borrowing
Base as of the addition or deletion of the designated Property as an Eligible
Property, and (x) with respect to an addition, the certificate required above
and (y) with respect to a deletion, Borrower’s certification in such detail as
reasonably required by the Administrative Agent that such deletion shall not
(A) cause the Eligible Properties in the aggregate to violate the Borrowing Base
Requirements, (B) cause a Default, or (C) cause or result in the Borrower
failing to comply with any of the financial covenants contained herein.  Each
addition shall be an Eligible Property in a minimum amount equal to $5,000,000
Borrowing Base Value, or shall be comprised of more than one qualifying Eligible
Properties that in the aggregate have a minimum amount equal to $5,000,000
Borrowing Base Value, and all such additions shall be subject to approval by the
Required Lenders.

 

Notwithstanding anything contained in this Agreement to the contrary, the
Required Lenders in their reasonable discretion may (a) at the Borrower’s
request, add a Property as an Eligible Property despite the failure of such
Property to otherwise qualify as an Eligible Property and (b) upon five
(5) Business Days’ prior written notice to the Borrower, designate that a
Property is no longer an Eligible Property upon their determination that such
Property ceases to meet the criteria set forth in the definition of Eligible
Property, provided however, that if during

 

42

--------------------------------------------------------------------------------

 

such five (5) Business Day Period the Borrower can satisfy those requirements
deemed unsatisfied by the Required Lenders, such Property shall remain an
Eligible Property.

 

Furthermore, if no Default exists at the time of any deletion of a Property from
qualifying as an Eligible Property, any Material Subsidiary which owned such
Property, but that does not otherwise own any other Eligible Property, shall be
released from its obligations under its Guaranty.

 

SECTION 8.                                                 COVENANTS.

 

The Borrower agrees that, so long as any credit is available to or in use by the
Borrower hereunder, except to the extent compliance in any case or cases is
waived in writing pursuant to the terms of Section 13.13 hereof:

 

Section 8.1.                                          Maintenance of Business. 
(i) The Borrower shall, and shall cause each Material Subsidiary to, preserve
and maintain its existence, except as otherwise provided in
Section 8.10(c) hereof.  The Borrower shall, and shall cause each Material
Subsidiary to, preserve and keep in force and effect all licenses, permits,
franchises, approvals, patents, trademarks, trade names, trade styles,
copyrights, and other proprietary rights necessary to the proper conduct of its
business.

 

(ii)(a) the Common Stock of the Borrower shall at all times be duly listed on
the New York Stock Exchange, Inc., the American Stock Exchange or the National
Association of Securities Dealers Automated Quotation and (b) the Borrower shall
timely file all reports required to be filed by it with the New York Stock
Exchange, Inc., the American Stock Exchange or the National Association of
Securities Dealers Automated Quotation and the Securities and Exchange
Commission.

 

Section 8.2.                                          Maintenance of
Properties.  The Borrower and each Material Subsidiary shall cause each of its
tenants to, maintain, preserve, and keep its Property in working order and
condition (ordinary wear and tear excepted) and to maintain the value of such
Property in all material respects, except to the extent that, in the reasonable
business judgment of such Person, any such Property is no longer necessary for
the proper conduct of the business of such Person.

 

Section 8.3.                                          Taxes and Assessments. 
The Borrower and each Material Subsidiary shall cause its tenants to duly pay
and discharge, all taxes, rates, assessments, fees, and governmental charges
upon or against it or its Property, that individually or collectively would
materially impair the value of such Property, and in each case before the same
become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings
which prevent enforcement of the matter under contest and adequate reserves are
provided therefor.

 

Section 8.4.                                          Insurance.  The Borrower
and each Material Subsidiary shall maintain or cause its tenants to maintain
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar Properties in the same general areas in
which the Borrower or such Subsidiary owns such Properties.

 

43

--------------------------------------------------------------------------------

 

Section 8.5.                                          Financial Reports.  The
Borrower shall, and shall cause each Subsidiary to, maintain a standard system
of accounting in accordance with GAAP and shall furnish to the Administrative
Agent, each Lender and each of their duly authorized representatives such
information respecting the business and financial condition of the Borrower and
each Subsidiary as the Administrative Agent or such Lender may reasonably
request; and without any request, shall furnish to the Administrative Agent and
the Lenders the following:

 

(a)                                  as soon as available, and in any event
within 50 days after the last day of each Fiscal Quarter, a Borrowing Base
Certificate showing the computation of the Borrowing Base in reasonable detail
as of the close of business on the last day of such Fiscal Quarter, prepared by
the Borrower and certified to by its chief financial officer or another officer
of the Borrower acceptable to the Administrative Agent;

 

(b)                                 as soon as available, and in any event
within 45 days after the close of each of the first three (3) Fiscal Quarters of
each Fiscal Year of the Borrower a copy of the consolidated balance sheet of the
Borrower and its Subsidiaries as of the last day of such Fiscal Quarter and the
consolidated statements of income, and cash flows of the Borrower and its
Subsidiaries for the Fiscal Quarter and for the fiscal year-to-date period then
ended, each in reasonable detail showing in comparative form the figures for the
corresponding date and period in the previous fiscal year, prepared by the
Borrower in accordance with GAAP and certified to by its chief financial officer
or another officer of the Borrower acceptable to the Administrative Agent (the
delivery of the Borrower’s Form 10-Q shall satisfy this requirement);

 

(c)                                  with each of the financial statements
furnished to the Lenders pursuant to subsections (b) and (d) hereof, a written
certificate (“Compliance Certificate”) in the form attached hereto as Exhibit F
signed by the chief financial officer of the Borrower or another officer of the
Borrower acceptable to the Administrative Agent to the effect that to the best
of such officer’s knowledge and belief no Default or Event of Default has
occurred during the period covered by such statements or, if any such Default or
Event of Default has occurred during such period, setting forth a description of
such Default or Event of Default and specifying the action, if any, taken by the
Borrower or any Subsidiary to remedy the same.  Such certificate shall also set
forth the calculations supporting such statements in respect of Section 8.21
hereof; and

 

(d)                                 as soon as available, and in any event
within 90 days after the close of each fiscal year of the Borrower, a copy of
the consolidated balance sheet of the Borrower and its Subsidiaries as of the
last day of the fiscal year then ended and the consolidated statements of
income, retained earnings, and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, and accompanying notes thereto, each in
reasonable detail showing in comparative form the figures for the previous
fiscal year, accompanied in the case of the consolidated financial statements by
an unqualified opinion of Ernst & Young, LLP or another firm of independent
public accountants of

 

44

--------------------------------------------------------------------------------

 

recognized national standing, selected by the Borrower and reasonably
satisfactory to the Administrative Agent and the Required Lenders, to the effect
that the consolidated financial statements have been prepared in accordance with
GAAP and present fairly in accordance with GAAP the consolidated financial
condition of the Borrower and its Subsidiaries as of the close of such fiscal
year and the results of their operations and cash flows for the fiscal year then
ended and that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances (the delivery of the Borrower’s Form 10-K shall
satisfy this requirement);

 

(e)                                  promptly after receipt thereof, any
additional written reports, management letters or other detailed information
contained in writing concerning significant aspects of the Borrower’s or any
Subsidiary’s operations and financial affairs given to it by its independent
public accountants;

 

(f)                                    promptly after the sending or filing
thereof, copies of each financial statement, report, notice or proxy statement
sent by the Borrower or any Subsidiary to its stockholders or other equity
holders, and copies of each regular, periodic or special report, registration
statement or prospectus (including all Form 10-K, Form 10-Q and Form 8-K
reports) filed by the Borrower or any Subsidiary with any securities exchange or
the Securities and Exchange Commission or any successor agency;

 

(g)                                 as soon as available, and in any event
within 90 days after  the end of each fiscal year of the Borrower, a copy of the
Borrower’s  consolidated projections of revenues, expenses and balance sheet on
a quarter-by-quarter basis, with such projections in reasonable detail prepared
by the Borrower and in form satisfactory to the Administrative Agent (which
shall include a summary of all significant assumptions made in preparing such
business plan);

 

(h)                                 notice of any Change of Control;

 

(i)                                     promptly after knowledge thereof shall
have come to the attention of any responsible officer of the Borrower, written
notice of any threatened or pending litigation or governmental or arbitration
proceeding or labor controversy against the Borrower or any Subsidiary which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect or of the occurrence of any Default or Event of Default hereunder;

 

(j)                                     within 45 days of the end of each of the
first 3 Fiscal Quarters and within 90 days after the close of the last Fiscal
Quarter of the year (i) a list of all newly formed or acquired Subsidiaries
during such quarter (such list shall contain the information relative to such
new Subsidiaries as set forth in Schedule 6.2 hereto); (ii) a list of newly
executed Significant Leases or Qualified Ground Leases during such quarter (upon
receipt of which Schedule 1.1 and/or Schedule 6.26 shall be deemed amended to
include

 

45

--------------------------------------------------------------------------------

 

references to such Significant Lease and/or Qualified Ground Leases); (iii) a
copy of any notice of a material default or any other material notice (including
without limitation property condition reviews) received by the Borrower or any
Guarantor from any ground lessor under a Qualified Ground Lease or a Lease
during such quarter and (iv) a schedule showing for such quarter (a) any
Significant Lease that was or is continuing to be in default with respect to
monthly minimum rent payments in excess of 60 days, and (b) any other Leases
that in the aggregate generate more than $4,000,000 in annual contractual rents
payable to the Borrower or its Subsidiaries that were or are continuing to be in
default for a period in excess of 60 days on the monthly minimum rent payments
due under such Leases; and

 

(k)                                  promptly after knowledge thereof shall have
come to the attention of any responsible officer of the Borrower, written notice
to each Lender if a Lease of any Property included in the Borrowing Base Value
is more than thirty (30) days past due.

 

Section 8.6.                                          Inspection.  The Borrower
shall, and shall cause each Subsidiary to, permit the Administrative Agent, each
Lender, and each of their duly authorized representatives and agents to visit
and inspect any of its Property, corporate books, and financial records, to
examine and make copies of its books of accounts and other financial records,
and to discuss its affairs, finances, and accounts with, and to be advised as to
the same by, its officers, employees and independent public accountants (and by
this provision the Borrower hereby authorizes such accountants to discuss with
the Administrative Agent and such Lenders the finances and affairs of the
Borrower and its Subsidiaries) at such reasonable times and intervals as the
Administrative Agent or any such Lender may designate and, so long as no Default
or Event of Default exists, with reasonable prior notice to the Borrower.

 

Section 8.7.                                          Office of Foreign Asset
Control.  Neither Borrower nor any Guarantor is (or will be) a person with whom
a Lender is restricted from doing business under regulations of the Office of
Foreign Asset Control (“OFAC”) of the Department of the Treasury of the United
States of America (including, those Persons named on OFAC’s Specially Designated
and Blocked Persons list) or under any statute, executive order (including, the
September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action and is not and shall not engage in any dealings or
transactions or otherwise be associated with such persons.  In addition,
Borrower hereby agrees to provide to any Lender with any additional information
that the Lender deems necessary from time to time in order to ensure compliance
with all applicable Laws concerning money laundering and similar activities.

 

Section 8.8.                                          Liens.  The Borrower shall
not, nor shall it permit any Subsidiary to, create, incur or permit to exist any
Lien of any kind on any Property owned by any such Person; provided, however,
that the foregoing shall not apply to nor operate to prevent any Permitted
Liens.

 

Section 8.9.                                          Investments, Acquisitions,
Loans and Advances.  The Borrower shall not, nor shall it permit any Subsidiary
to, directly or indirectly, make, retain or have outstanding any investments or
acquire all or any substantial part of the assets or business of any other
Person or division thereof; provided, however, that the foregoing shall not
apply to nor operate to prevent:

 

46

--------------------------------------------------------------------------------

 

(a)                                  investments in direct obligations of the
United States of America or of any agency or instrumentality thereof whose
obligations constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one year of the
date of issuance thereof;

 

(b)                                 investments in commercial paper rated at
least P-1 by Moody’s and at least A-1 by S&P maturing within one year of the
date of issuance thereof;

 

(c)                                  investments in certificates of deposit
issued by any Lender or by any United States commercial bank having capital and
surplus of not less than $100,000,000 which have a maturity of one year or less;

 

(d)                                 investments in repurchase obligations with a
term of not more than 7 days for underlying securities of the types described in
subsection (a) above entered into with any bank meeting the qualifications
specified in subsection (c) above, provided all such agreements require physical
delivery of the securities securing such repurchase agreement, except those
delivered through the Federal Reserve Book Entry System;

 

(e)                                  investments in money market funds that
invest solely, and which are restricted by their respective charters to invest
solely, in investments of the type described in the immediately preceding
subsections (a), (b), (c), and (d) above;

 

(f)                                    the Borrower’s investments from time to
time in its Subsidiaries, and investments made from time to time by a Subsidiary
in one or more of its Subsidiaries;

 

(g)                                 intercompany advances made from time to time
among the Borrower and its Subsidiaries in the ordinary course of business to
finance working capital needs;

 

(h)                                 investments in Permitted Acquisitions;

 

(i)                                     investments held by the Borrower and its
Subsidiaries as of the date of this Agreement;

 

(j)                                     investments in Medical Office Buildings
in an amount not to exceed $50,000,000 in the aggregate at any one time
outstanding;

 

(k)                                  investments in real properties that are not
Senior Housing Assets and are not otherwise permitted under this Section 8.9 in
an amount not to exceed $10,000,000 in the aggregate at any one time
outstanding;

 

(l)                                     investments in joint ventures in an
amount not to exceed $30,000,000 in the aggregate at any one time outstanding
excluding investments in joint ventures existing prior to the date of this
Agreement;

 

47

--------------------------------------------------------------------------------

 

(m)                               Assets Under Development in an amount not to
exceed $30,000,000 in the aggregate at any one time outstanding excluding Assets
Under Development existing prior to the date of this Agreement;

 

(n)                                 investments in Rehabilitation Assets, in an
amount not to exceed $50,000,000 in the aggregate at any one time outstanding,
excluding Rehabilitation Assets existing prior to the date of this Agreement;

 

(o)                                 investments in REMIC’s pertaining to issues
for which the Borrower is both the issuer and the servicer in an amount not to
exceed $10,000,000 in the aggregate at any one time outstanding excluding
investments in REMIC’s of the Borrower existing prior to the date of this
Agreement;

 

(p)                                 investments in publicly traded debt or
equity instruments issued by companies engaged in the healthcare industry in an
amount not to exceed $30,000,000 in addition to investments in publicly traded
debt or equity instruments held by the Borrower prior to the date of this
Agreement; and

 

(q)                                 investments received in connection with a
workout of any obligation owed to Borrower or its Subsidiaries.

 

Investments of the type described in Sections (j), (k), (l), (m), (n), (o),
(p) and (q) immediately preceding shall at no time exceed $80,000,000 in the
aggregate at any one time outstanding.  In determining the amount of
investments, acquisitions, loans, and advances permitted under this Section,
investments and acquisitions shall always be taken at the original cost thereof
(regardless of any subsequent appreciation or depreciation therein), and loans
and advances shall be taken at the principal amount thereof then remaining
unpaid.

 

Section 8.10.                                   Mergers, Consolidations and
Sales.  The Borrower will not merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or a series
of transactions) any of its Property (whether now owned or hereafter acquired)
to, or acquire all or substantially all of the assets of, any Person, or permit
any Subsidiary to do so; provided, however, that the Borrower may merge or
consolidate with another Person, including a Subsidiary, if (A) the Borrower is
the surviving corporation, (B) the Borrower will be in pro forma compliance with
all provisions of this Agreement upon and after such merger or consolidation and
(C) the Borrower will not engage in any material line of business substantially
different from that engaged in on the Closing Date and; further provided,
however, that so long as no Default or Event of Default exists this
Section shall not apply to nor operate to prevent:

 

(a)                                  the sale, transfer, lease or other
disposition of Property of the Borrower and its Subsidiaries to one another in
the ordinary course of its business;

 

(b)                                 the merger of any Subsidiary with and into
the Borrower or any other Subsidiary, provided that, in the case of any merger
involving the Borrower, the Borrower is the corporation surviving the merger;

 

48

--------------------------------------------------------------------------------

 

(c)                                  the sale, transfer or other disposition of
any tangible personal property that, in the reasonable business judgment of the
Borrower or its Subsidiary, has become obsolete or worn out, and which is
disposed of in the ordinary course of business; and

 

(d)                                 the sale, transfer, lease or other
disposition of Property of the Borrower or any Subsidiary (including any
disposition of Property as part of a sale and leaseback transaction) aggregating
for the Borrower and its Subsidiaries not more than $100,000,000 during any
fiscal year of the Borrower; further provided however, that if such disposition
during such Fiscal Quarter exceeds $5,000,000 and together with any other
dispositions made during the preceding three Fiscal Quarters of the Borrower in
the aggregate exceed $50,000,000, then for such disposition(s) the Borrower
shall provide to the Administrative Agent covenant calculations for the
covenants contained in Section 8.21, showing that the projected effect of such
disposition(s) have been contemplated and have been projected into the expected
operating results and financial position of the Borrower for the Fiscal Quarter
in which the disposition occurs, and demonstrating that such disposition(s) are
not reasonably expected to cause a violation of the Section 8.21 covenants
applicable to the Fiscal Quarter.

 

Section 8.11.                                   Maintenance of Material
Subsidiaries.  The Borrower shall not assign, sell or transfer, nor shall it
permit any Material Subsidiary to issue, assign, sell or transfer, any shares of
capital stock or other equity interests of a Material Subsidiary; provided,
however, that the foregoing shall not operate to prevent (a) Liens on the
capital stock or other equity interests of Material Subsidiaries granted to the
Administrative Agent, (b) the issuance, sale, and transfer to any person of any
shares of capital stock of a Material Subsidiary solely for the purpose of
qualifying, and to the extent legally necessary to qualify, such person as a
director of such Material Subsidiary, and (c) any transaction permitted by
Section 8.10(b) above.

 

Section 8.12.                                   Intentionally Omitted.

 

Section 8.13.                                   ERISA.  The Borrower shall, and
shall cause each Subsidiary to, promptly pay and discharge all obligations and
liabilities arising under ERISA of a character which if unpaid or unperformed
could reasonably be expected to result in the imposition of a Lien against any
of its Property.  The Borrower shall, and shall cause each Subsidiary to,
promptly notify the Administrative Agent and each Lender of:  (a) the occurrence
of any reportable event (as defined in ERISA) with respect to a Plan,
(b) receipt of any notice from the PBGC of its intention to seek termination of
any Plan or appointment of a trustee therefor, (c) its intention to terminate or
withdraw from any Plan, and (d) the occurrence of any event with respect to any
Plan which would result in the incurrence by the Borrower or any Subsidiary of
any material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower or any Subsidiary with respect to any
post-retirement Welfare Plan benefit.

 

Section 8.14.                                   Compliance with Laws.  (a) The
Borrower shall, and shall cause each Subsidiary to, comply in all respects with
the requirements of all federal, state, and local laws, rules, regulations,
ordinances and orders applicable to or pertaining to its Property or business
operations, where any such non-compliance, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or result in a
Lien upon any of its Property.

 

49

--------------------------------------------------------------------------------

 

(b)                                 Without limiting the agreements set forth in
Section 8.14(a) above, for each of its owned Properties, respectively, the
Borrower shall, and shall cause each Subsidiary to require that each tenant and
subtenant, if any, of any of the Properties or any part thereof, at all times,
do the following to the extent the failure to do so, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect:
(i) comply in all material respects with all applicable Environmental Laws;
(ii) obtain and maintain in full force and effect all material governmental
approvals required by any applicable Environmental Law for operations at each of
the Properties and (iii) cause to be cured any material violation by it or at
any of the Properties of applicable Environmental Laws.

 

Section 8.15.                                   Burdensome Contracts With
Affiliates.  The Borrower shall not, nor shall it permit any Subsidiary to,
enter into any contract, agreement or business arrangement with any of its
Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions
which are less favorable to the Borrower or such Subsidiary than would be usual
and customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.

 

Section 8.16.                                   No Changes in Fiscal Year.  The
fiscal year of the Borrower and its Subsidiaries ends on December 31st of each
year; and the Borrower shall not, nor shall it permit any Subsidiary to, change
its fiscal year from its present basis.

 

Section 8.17.                                   Intentionally Omitted.

 

Section 8.18.                                   Change in the Nature of
Business.  The Borrower shall not, nor shall it permit any Subsidiary to, engage
in any business or activity if as a result the general nature of the business of
the Borrower and its Subsidiaries would be changed in any material respect from
the general nature of the business engaged in by it as of the Closing Date.  As
of the Closing Date, the general nature of the business of the Borrower and its
Subsidiaries is primarily the business of the acquisition, financing and
ownership of Senior Housing Assets and other business activities incidental
thereto.

 

Section 8.19.                                   Use of Loan Proceeds.  The
Borrower shall use the credit extended under this Agreement solely for the
purposes set forth in, or otherwise permitted by, Section 6.4 hereof.

 

Section 8.20.                                   No Restrictions.  Except as
provided herein, the Borrower shall not, nor shall it permit any Subsidiary
(except for bankruptcy remote subsidiaries established in connection with
(i) any securitization or participation transaction or with any Permitted Lien
or (ii) any ownership of fee simple real estate Properties not exceeding
$200,000,000 individually or in the aggregate) to, directly or indirectly create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of the Borrower or any
Subsidiary to:  (a) pay dividends or make any other distributions on any
Subsidiary’s capital stock or other equity interests owned by the Borrower or
any other Subsidiary, (b) pay any indebtedness owed to the Borrower or any other
Subsidiary, (c) make loans or advances to the Borrower or any other Subsidiary,
(d) transfer any of its Property to the Borrower or any other Subsidiary
provided however, that the foregoing does not impose any limitation on transfers
of property that is subject to a Permitted Lien or (e) guarantee the Obligations
and/or grant Liens on its assets to the Administrative Agent as required by the
Loan Documents.

 

50

--------------------------------------------------------------------------------

 

Section 8.21.                                   Financial Covenants. 
(a) Maximum Total Indebtedness to Total Asset Value Ratio.  As of the last day
of each Fiscal Quarter of the Borrower, the Borrower shall not permit the ratio
of Total Indebtedness to Total Asset Value to be greater than .50 to 1.0.

 

(b)                                 Maximum Secured Debt to Total Asset Value
Ratio.  As of the last day of each Fiscal Quarter of the Borrower, the Borrower
shall not permit the ratio of Secured Debt to Total Asset Value to be greater
than .35 to 1.0

 

(c)                                  Minimum EBITDA to Interest Expense Ratio. 
As of the last day of each Rolling Period of the Borrower, the Borrower shall
not permit the ratio of EBITDA to Interest Expense to be less than 2.50 to 1.0.

 

(d)                                 Minimum EBITDA to Fixed Charges Ratio.  As
of the last day of each Rolling Period of the Borrower, the Borrower shall not
permit the ratio of EBITDA to Fixed Charges to be less than 1.50 to 1.0.

 

(e)                                  Maximum Secured Recourse Debt to Total
Asset Value Ratio.  As of the last day of each Rolling Period of the Borrower,
the Borrower shall not permit the ratio of Secured Recourse Debt to Total Asset
Value to be greater than .10 to 1.00.

 

(f)                                    Maintenance of Net Worth.  The Borrower
shall at all times maintain a Tangible Net Worth of not less than the sum of
(a) $400,000,000 plus (b) 85% of the aggregate net proceeds received by the
Borrower or any of its Subsidiaries after the Closing Date in connection with
any offering of Stock or Stock Equivalents of the Borrower or the Subsidiaries
that results in an increase of Tangible Net Worth.

 

(g)                                 Floating Rate Debt.  On any date, the
Borrower and its Subsidiaries shall not, on a consolidated basis, have
outstanding floating rate debt that is neither at a fixed rate or hedged
pursuant to a derivative contract greater than 40% of Total Asset Value.

 

Section 8.22.                                   Borrowing Base Covenants. 
(a) The Borrower shall cause the Eligible Properties in the Borrowing Base to at
all times comply with the Borrowing Base Requirements; provided that if the
requirements of clauses (a), (b), (c) or (d) of the definition of Borrowing Base
Requirements are not met, then within 2 Business Days of notice of such failure
either (i) the Borrower shall have cured such failure or (ii) for Borrowing Base
purposes the Borrower shall have lowered the Borrowing Base Value of those
Eligible Properties that contributed to such failure to the point that such
failure no longer exists.

 

(b)                                 Minimum Borrowing Base Value.  The Borrower
shall at all times maintain a Borrowing Base Value of not less than $50,000,000.

 

(c)                                  Minimum Eligible Property NOI to Credit
Facility Debt Service Ratio.  As of the last day of each Fiscal Quarter of the
Borrower, the Borrower shall not permit the ratio of Eligible Property NOI to
the sum of (i) Unsecured Debt Service with respect to indebtedness that is pari
passu in rank to the indebtedness under the Credit Agreement, plus (ii) Credit
Facility Debt Service, to be less than 2.25 to 1.0.

 

51

--------------------------------------------------------------------------------

 

SECTION 9.                                                 EVENTS OF DEFAULT AND
REMEDIES.

 

Section 9.1.                                          Events of Default.  Any
one or more of the following shall constitute an “Event of Default” hereunder:

 

(a)                                  default in the payment when due of all or
any part of the principal on any Note (whether at the stated maturity thereof or
at any other time provided for in this Agreement) or of any Reimbursement
Obligation payable hereunder or under any other Loan Document;

 

(b)                                 default within three (3) Business Days of
when due in the payment of all or any part of the interest on any Note (whether
at the stated maturity thereof or at any other time provided for in this
Agreement) or of any fee or other Obligation payable hereunder or under any
other Loan Document;

 

(c)                                  default in the observance or performance of
any covenant set forth in Sections 8.1, 8.8, 8.9, 8.10, 8.11, 8.21 or 8.22
hereof;

 

(d)                                 default in the observance or performance of
any other provision hereof or of any other Loan Document which is not remedied
within 30 days after the earlier of (i) the date on which such failure shall
first become known to any officer of the Borrower or (ii) written notice thereof
is given to the Borrower by the Administrative Agent;

 

(e)                                  any representation or warranty made herein
or in any other Loan Document or in any certificate furnished to the
Administrative Agent or the Lenders pursuant hereto or thereto or in connection
with any transaction contemplated hereby or thereby proves untrue in any
material respect as of the date of the issuance or making or deemed making
thereof;

 

(f)                                    any event occurs or condition exists
(other than those described in subsections (a) through (e) above) which is
specified as an event of default under any of the other Loan Documents, or any
of the Loan Documents shall for any reason not be or shall cease to be in full
force and effect or is declared to be null and void;

 

(g)                                 default shall occur under any Indebtedness
for Borrowed Money issued, assumed or guaranteed by the Borrower or any
Subsidiary aggregating in excess of $10,000,000 or under any indenture,
agreement or other instrument under which the same may be issued, and such
default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated), or any such Indebtedness
for Borrowed Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);

 

(h)                                 any judgment or judgments, writ or writs or
warrant or warrants of attachment, or any similar process or processes, shall be
entered or filed against the Borrower or any Subsidiary, or against any of its
Property, in an aggregate amount in excess of $10,000,000 (except to the extent
fully covered by insurance pursuant to which the insurer has accepted liability
therefor in writing), and which remains undischarged, unvacated, unbonded or
unstayed for a period of 30 days;

 

52

--------------------------------------------------------------------------------

 

(i)                                     the Borrower or any Subsidiary, or any
member of its Controlled Group, shall fail to pay when due an amount or amounts
aggregating in excess of $10,000,000 which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$10,000,000 (collectively, a “Material Plan”) shall be filed under Title IV of
ERISA by the Borrower or any Subsidiary, or any other member of its Controlled
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan or a proceeding shall be
instituted by a fiduciary of any Material Plan against the Borrower or any
Subsidiary, or any member of its Controlled Group, to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30
days thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;

 

(j)                                     any Change of Control shall occur;

 

(k)                                  the Borrower or any Material Subsidiary
shall (i) have entered involuntarily against it an order for relief under the
United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its Property,
(v) institute any proceeding seeking to have entered against it an order for
relief under the United States Bankruptcy Code, as amended, to adjudicate it
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (vi) take any corporate action in furtherance of
any matter described in parts (i) through (v) above, or (vii) fail to contest in
good faith any appointment or proceeding described in Section 9.1(l) hereof;

 

(l)                                     a custodian, receiver, trustee,
examiner, liquidator or similar official shall be appointed for the Borrower or
any Subsidiary, or any substantial part of any of its Property, or a proceeding
described in Section 9.1(k)(v) shall be instituted against the Borrower or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days;

 

(m)                               default or event of default has occurred under
any Qualified Ground Lease;

 

(n)                                 there shall be a determination from the
applicable Governmental Authority from which no appeal can be taken that the
Borrower’s tax status as a REIT has been lost; or

 

53

--------------------------------------------------------------------------------

 

(o)                                 the Borrower at any time hereafter fails to
cause the Common Stock of the Borrower to be duly listed on the New York Stock
Exchange, Inc., the American Stock Exchange or the National Association of
Securities Dealers Automated Quotation.

 

Section 9.2.                                          Non-Bankruptcy Defaults. 
When any Event of Default other than those described in subsection (k) or (l) of
Section 9.1 hereof has occurred and is continuing, the Administrative Agent
shall, by written notice to the Borrower: (a) if so directed by the Required
Lenders, terminate the remaining Commitments and all other obligations of the
Lenders hereunder on the date stated in such notice (which may be the date
thereof); (b) if so directed by the Required Lenders declare the principal of
and the accrued interest on all outstanding Notes to be forthwith due and
payable and thereupon all outstanding Notes, including both principal and
interest thereon, shall be and become immediately due and payable together with
all other amounts payable under the Loan Documents without further demand,
presentment, protest or notice of any kind; and (c) if so directed by the
Required Lenders, demand that the Borrower immediately pay to the Administrative
Agent the full amount then available for drawing under each or any Letter of
Credit, and the Borrower agrees to immediately make such payment and
acknowledges and agrees that the Lenders would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the
Administrative Agent, for the benefit of the Lenders, shall have the right to
require the Borrower to specifically perform such undertaking whether or not any
drawings or other demands for payment have been made under any Letter of
Credit.  The Administrative Agent, after giving notice to the Borrower pursuant
to Section 9.1(d) or this Section 9.2, shall also promptly send a copy of such
notice to the other Lenders, but the failure to do so shall not impair or annul
the effect of such notice.

 

Section 9.3.                                          Bankruptcy Defaults.  When
any Event of Default described in subsections (k) or (l) of Section 9.1 hereof
has occurred and is continuing, then all outstanding Notes shall immediately
become due and payable together with all other amounts payable under the Loan
Documents without presentment, demand, protest or notice of any kind, the
obligation of the Lenders to extend further credit pursuant to any of the terms
hereof shall immediately terminate and the Borrower shall immediately pay to the
Administrative Agent the full amount then available for drawing under all
outstanding Letters of Credit, the Borrower acknowledging and agreeing that the
Lenders would not have an adequate remedy at law for failure by the Borrower to
honor any such demand and that the Lenders, and the Administrative Agent on
their behalf, shall have the right to require the Borrower to specifically
perform such undertaking whether or not any draws or other demands for payment
have been made under any of the Letters of Credit.

 

Section 9.4.                                          Collateral for Undrawn
Letters of Credit.  (a) If the prepayment of the amount available for drawing
under any or all outstanding Letters of Credit is required under
Section 1.8(b) or under Section 9.2 or 9.3 above, the Borrower shall forthwith
pay the amount required to be so prepaid, to be held by the Administrative Agent
as provided in subsection (b) below.

 

(b)                                 All amounts prepaid pursuant to
subsection (a) above shall be held by the Administrative Agent in one or more
separate collateral accounts (each such account, and the credit balances,
properties, and any investments from time to time held therein, and any

 

54

--------------------------------------------------------------------------------

 

substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the “Collateral Account”) as security for,
and for application by the Administrative Agent (to the extent available) to,
the reimbursement of any payment under any Letter of Credit then or thereafter
made by the Administrative Agent, and to the payment of the unpaid balance of
any other Obligations.  The Collateral Account shall be held in the name of and
subject to the exclusive dominion and control of the Administrative Agent for
the benefit of the Administrative Agent, the Lenders, and the L/C Issuer.  If
and when requested by the Borrower, the Administrative Agent shall invest funds
held in the Collateral Account from time to time in direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America with a remaining maturity of one
year or less, provided that the Administrative Agent is irrevocably authorized
to sell investments held in the Collateral Account when and as required to make
payments out of the Collateral Account for application to amounts due and owing
from the Borrower to the L/C Issuer, the Administrative Agent or the Lenders;
provided, however, that if (i) the Borrower shall have made payment of all such
obligations referred to in subsection (a) above and (ii) no Letters of Credit,
Commitments, Loans or other Obligations remain outstanding hereunder, then the
Administrative Agent shall release to the Borrower any remaining amounts held in
the Collateral Account.

 

Section 9.5.                                          Notice of Default.  The
Administrative Agent shall give notice to the Borrower under
Section 9.1(d) hereof promptly upon being requested to do so by any Lender and
shall thereupon notify all the Lenders thereof.

 

Section 9.6.                                          Expenses.  The Borrower
agrees to pay to the Administrative Agent and each Lender, and any other holder
of any Note outstanding hereunder, all costs and expenses reasonably incurred or
paid by the Administrative Agent and such Lender or any such holder, including
reasonable attorneys’ fees and court costs, in connection with any Default or
Event of Default hereunder or in connection with the enforcement of any of the
Loan Documents (including all such costs and expenses incurred in connection
with any proceeding under the United States Bankruptcy Code involving the
Borrower or any Subsidiary as a debtor thereunder).

 

SECTION 10.                                           CHANGE IN CIRCUMSTANCES.

 

Section 10.1.                                   Change of Law.  Notwithstanding
any other provisions of this Agreement or any Note, if at any time any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for any Lender to make or continue to maintain any Eurodollar Loans or to
perform its obligations as contemplated hereby, such Lender shall promptly give
notice thereof to the Borrower and such Lender’s obligations to make or maintain
Eurodollar Loans under this Agreement shall be suspended until it is no longer
unlawful for such Lender to make or maintain Eurodollar Loans.  The Borrower
shall prepay on demand the outstanding principal amount of any such affected
Eurodollar Loans, together with all interest accrued thereon and all other
amounts then due and payable to such Lender under this Agreement; provided,
however, subject to all of the terms and conditions of this Agreement, the
Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Lender by means of Adjusted Base Rate Loans from such
Lender, which Adjusted Base Rate Loans shall not be made ratably by the Lenders
but only from such affected Lender.

 

55

--------------------------------------------------------------------------------

 

Section 10.2.                                   Unavailability of Deposits or
Inability to Ascertain, or Inadequacy of, LIBOR.  If on or prior to the first
day of any Interest Period for any Borrowing of Eurodollar Loans:

 

(a)                                  the Administrative Agent determines that
deposits in U.S. Dollars (in the applicable amounts) are not being offered to it
in the interbank eurodollar market for such Interest Period, or that by reason
of circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR, or

 

(b)                                 the Required Lenders advise the
Administrative Agent that (i) LIBOR as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Lenders of funding their
Eurodollar Loans for such Interest Period or (ii) that the making or funding of
Eurodollar Loans become impracticable,

 

then the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Lenders, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make Eurodollar Loans shall be suspended.

 

Section 10.3.                                   Increased Cost and Reduced
Return.  (a) If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:

 

(i)                                     shall subject any Lender (or its Lending
Office) to any tax, duty or other charge with respect to its Eurodollar Loans,
its Notes, its Letter(s) of Credit, or its participation in any thereof, any
Reimbursement Obligations owed to it or its obligation to make Eurodollar Loans,
issue a Letter of Credit, or to participate therein, or shall change the basis
of taxation of payments to any Lender (or its Lending Office) of the principal
of or interest on its Eurodollar Loans, Letter(s) of Credit, or participations
therein or any other amounts due under this Agreement or any other Loan Document
in respect of its Eurodollar Loans, Letter(s) of Credit, any participation
therein, any Reimbursement Obligations owed to it, or its obligation to make
Eurodollar Loans, or issue a Letter of Credit, or acquire participations therein
(except for changes in the rate of tax on the overall net income of such Lender
or its Lending Office imposed by the jurisdiction in which such Lender’s
principal executive office or Lending Office is located); or

 

(ii)                                  shall impose, modify or deem applicable
any reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the

 

56

--------------------------------------------------------------------------------

 

Board of Governors of the Federal Reserve System, but excluding with respect to
any Eurodollar Loans any such requirement included in an applicable Eurodollar
Reserve Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Lender (or its Lending Office) or shall impose on any
Lender (or its Lending Office) or on the interbank market any other condition
affecting its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligation owed to it, or its
obligation to make Eurodollar Loans, or to issue a Letter of Credit, or to
participate therein;

 

and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Lender to be material, then, within 15 days after
demand by such Lender (with a copy to the Administrative Agent), the Borrower
shall be obligated to pay to such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduction.

 

(b)                                 If, after the date hereof, any Lender or the
Administrative Agent shall have determined that the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has had the effect of reducing the rate of
return on such Lender’s or such corporation’s capital as a consequence of its
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender’s or such corporation’s policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Lender (with a copy
to the Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.

 

(c)                                  A certificate of a Lender claiming
compensation under this Section 10.3 and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive if reasonably
determined.  In determining such amount, such Lender may use any reasonable
averaging and attribution methods.

 

Section 10.4.                                   Lending Offices.  Each Lender
may, at its option, elect to make its Loans hereunder at the branch, office or
affiliate specified on the appropriate signature page hereof (each a “Lending
Office”) for each type of Loan available hereunder or at such other of its
branches, offices or affiliates as it may from time to time elect and designate
in a written notice to the Borrower and the Administrative Agent.  To the extent
reasonably possible, a Lender shall designate an alternative branch or funding
office with respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under Section 10.3 hereof or to avoid the unavailability
of Eurodollar Loans under Section 10.2 hereof, so long as such designation is
not otherwise disadvantageous to the Lender.

 

57

--------------------------------------------------------------------------------

 

Section 10.5.                                   Discretion of Lender as to
Manner of Funding.  Notwithstanding any other provision of this Agreement, each
Lender shall be entitled to fund and maintain its funding of all or any part of
its Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder with respect to
Eurodollar Loans shall be made as if each Lender had actually funded and
maintained each Eurodollar Loan through the purchase of deposits in the
interbank eurodollar market having a maturity corresponding to such Loan’s
Interest Period, and bearing an interest rate equal to LIBOR for such Interest
Period.

 

SECTION 11.                                           THE ADMINISTRATIVE AGENT.

 

Section 11.1.                                   Appointment and Authorization of
Administrative Agent.  Each Lender hereby appoints Bank of Montreal, Chicago
Branch, as the Administrative Agent under the Loan Documents and hereby
authorizes the Administrative Agent to take such action as Administrative Agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto.  The Lenders expressly agree that
the Administrative Agent is not acting as a fiduciary of the Lenders in respect
of the Loan Documents, the Borrower or otherwise, and nothing herein or in any
of the other Loan Documents shall result in any duties or obligations on the
Administrative Agent or any of the Lenders except as expressly set forth herein.

 

Section 11.2.                                   Administrative Agent and its
Affiliates.  The Administrative Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise or refrain from exercising such rights and power as though it were not
the Administrative Agent, and the Administrative Agent and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as if it were not
the Administrative Agent under the Loan Documents.  The term “Lender” as used
herein and in all other Loan Documents, unless the context otherwise clearly
requires, includes the Administrative Agent in its individual capacity as a
Lender.  References in Section 1 hereof to the Administrative Agent’s Loans, or
to the amount owing to the Administrative Agent for which an interest rate is
being determined, refer to the Administrative Agent in its individual capacity
as a Lender.

 

Section 11.3.                                   Action by Administrative Agent. 
If the Administrative Agent receives from the Borrower a written notice of an
Event of Default pursuant to Section 8.5 hereof, the Administrative Agent shall
promptly give each of the Lenders written notice thereof.  The obligations of
the Administrative Agent under the Loan Documents are only those expressly set
forth therein.  Without limiting the generality of the foregoing, the
Administrative Agent shall not be required to take any action hereunder with
respect to any Default or Event of Default, except as expressly provided in
Sections 9.2 and 9.5.  Unless and until the Required Lenders give such
direction, the Administrative Agent may (but shall not be obligated to) take or
refrain from taking such actions as it deems appropriate and in the best
interest of all the Lenders.  In no event, however, shall the Administrative
Agent be required to take any action in violation of applicable law or of any
provision of any Loan Document, and the Administrative Agent shall in

 

58

--------------------------------------------------------------------------------

 

all cases be fully justified in failing or refusing to act hereunder or under
any other Loan Document unless it first receives any further assurances of its
indemnification from the Lenders that it may require, including prepayment of
any related expenses and any other protection it requires against any and all
costs, expense, and liability which may be incurred by it by reason of taking or
continuing to take any such action.  The Administrative Agent shall be entitled
to assume that no Default or Event of Default exists unless notified in writing
to the contrary by a Lender or the Borrower.  In all cases in which the Loan
Documents do not require the Administrative Agent to take specific action, the
Administrative Agent shall be fully justified in using its discretion in failing
to take or in taking any action thereunder.  Any instructions of the Required
Lenders, or of any other group of Lenders called for under the specific
provisions of the Loan Documents, shall be binding upon all the Lenders and the
holders of the Obligations.

 

Section 11.4.                                   Consultation with Experts.  The
Administrative Agent may consult with legal counsel, independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

 

Section 11.5.                                   Liability of Administrative
Agent; Credit Decision.  Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection with the Loan Documents:  (i) with the consent or
at the request of the Required Lenders or (ii) in the absence of its own gross
negligence or willful misconduct.  Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify:  (i) any statement, warranty or
representation made in connection with this Agreement, any other Loan Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of the Borrower or any Subsidiary contained herein or in any other
Loan Document; (iii) the satisfaction of any condition specified in Section 7
hereof, except receipt of items required to be delivered to the Administrative
Agent; or (iv) the validity, effectiveness, genuineness, enforceability,
perfection, value, worth or collectibility hereof or of any other Loan Document
or of any other documents or writing furnished in connection with any Loan
Document; and the Administrative Agent makes no representation of any kind or
character with respect to any such matter mentioned in this sentence.  The
Administrative Agent may execute any of its duties under any of the Loan
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders, the Borrower, or any other Person for the default
or misconduct of any such agents or attorneys-in-fact selected with reasonable
care.  The Administrative Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, other document or statement
(whether written or oral) believed by it to be genuine or to be sent by the
proper party or parties.  In particular and without limiting any of the
foregoing, the Administrative Agent shall have no responsibility for confirming
the accuracy of any compliance certificate or other document or instrument
received by it under the Loan Documents.  The Administrative Agent may treat the
payee of any Note as the holder thereof until written notice of transfer shall
have been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent.  Each Lender acknowledges that it has
independently and without reliance on the Administrative Agent or any other
Lender, and based upon such information, investigations and inquiries as it
deems appropriate, made its own credit analysis and decision to extend credit to
the Borrower in the manner set forth in the Loan Documents.  It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Borrower and its Subsidiaries, and the Administrative Agent shall have no
liability to any Lender with respect thereto.

 

59

--------------------------------------------------------------------------------

 

Section 11.6.                         Indemnity.  The Lenders shall ratably, in
accordance with their respective Percentages, indemnify and hold the
Administrative Agent, and its directors, officers, employees, agents, and
representatives harmless from and against any

liabilities, losses, costs or expenses suffered or incurred by it under any Loan
Document or in connection with the transactions contemplated thereby, regardless
of when asserted or arising, except to the extent they are promptly reimbursed
for the same by the Borrower and except to the extent that any event giving rise
to a claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified.  The obligations of the Lenders under this
Section shall survive termination of this Agreement.  The Administrative Agent
shall be entitled to offset amounts received for the account of a Lender under
this Agreement against unpaid amounts due from such Lender to the Administrative
Agent hereunder (whether as fundings of participations, indemnities or
otherwise), but shall not be entitled to offset against amounts owed to the
Administrative Agent by any Lender arising outside of this Agreement and the
other Loan Documents.

 

Section 11.7.                                   Resignation or Removal of
Administrative Agent and Successor Administrative Agent.  The Administrative
Agent may resign at any time by giving written notice thereof to the Lenders and
the Borrower.  The Administrative Agent may be removed for gross negligence  or
willful misconduct at any time by written notice from the Required Lenders to
the Administrative Agent and the Borrower.  Upon any such resignation or removal
of the Administrative Agent, the Required Lenders shall have the right to
appoint a successor Administrative Agent from the Lenders or if no Lender is
willing to serve as Administrative Agent, a third party.  If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent’s giving of notice of resignation then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which may be any Lender hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000.  Upon the
acceptance of its appointment as the Administrative Agent hereunder, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent under the Loan
Documents, and the retiring Administrative Agent shall be discharged from its
duties and obligations thereunder.  After any retiring Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 11 and all protective provisions of the other Loan Documents shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent, but no successor Administrative Agent shall in any event
be liable or responsible for any actions of its predecessor.  If the
Administrative Agent resigns or is removed and no successor is appointed, the
rights and obligations of such Administrative Agent shall be automatically
assumed by the Required Lenders and the Borrower shall be directed to make all
payments due each Lender hereunder directly to such Lender.

 

60

--------------------------------------------------------------------------------

 

Section 11.8.                                   L/C Issuer.  The L/C Issuer
shall act on behalf of the Lenders with respect to any Letters of Credit issued
by it and the documents associated therewith.  The L/C Issuer shall have all of
the benefits and immunities (i) provided to the Administrative Agent in this
Section 11 with respect to any acts taken or omissions suffered by the
L/C Issuer in connection with Letters of Credit issued by it or proposed to be
issued by it and the Applications pertaining to such Letters of Credit as fully
as if the term “Administrative Agent”, as used in this Section 11, included the
L/C Issuer with respect to such acts or omissions and (ii) as additionally
provided in this Agreement with respect to such L/C Issuer.

 

Section 11.9.                                   Designation of Additional
Agents.  The Administrative Agent shall have the continuing right, for purposes
hereof, at any time and from time to time to designate one or more of the
Lenders (and/or its or their Affiliates) as “syndication agents,” “documentation
agents,” “arrangers,” or other designations for purposes hereto, but such
designation shall have no substantive effect, and such Lenders and their
Affiliates shall have no additional powers, duties or responsibilities as a
result thereof.

 

SECTION 12.                                           THE GUARANTEES.

 

Section 12.1.                                   The Guarantees.  To induce the
Lenders to provide the credits described herein and in consideration of benefits
expected to accrue to the Borrower by reason of the Commitments and for other
good and valuable consideration, receipt of which is hereby acknowledged, each
Material Subsidiary party hereto (including any Material Subsidiary formed or
acquired after the Closing Date executing an Additional Guarantor Supplement in
the form attached hereto as Exhibit G or such other form acceptable to the
Administrative Agent) hereby unconditionally and irrevocably guarantee jointly
and severally to the Administrative Agent, the Lenders, and their Affiliates,
the due and punctual payment of all present and future Obligations, including,
but not limited to, the due and punctual payment of principal of and interest on
the Notes, the Reimbursement Obligations, and the due and punctual payment of
all other Obligations now or hereafter owed by the Borrower under the Loan
Documents as and when the same shall become due and payable, whether at stated
maturity, by acceleration, or otherwise, according to the terms hereof and
thereof (including interest which, but for the filing of a petition in
bankruptcy, would otherwise accrue on any such indebtedness, obligation, or
liability).  In case of failure by the Borrower or other obligor punctually to
pay any Obligations guaranteed hereby, each Guarantor hereby unconditionally
agrees to make such payment or to cause such payment to be made punctually as
and when the same shall become due and payable, whether at stated maturity, by
acceleration, or otherwise, and as if such payment were made by the Borrower or
such obligor.

 

Section 12.2.                                   Guarantee Unconditional.  The
obligations of each Guarantor under this Section 12 shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged, or otherwise affected by:

 

(a)                                  any extension, renewal, settlement,
compromise, waiver, or release in respect of any obligation of the Borrower or
other obligor or of any other guarantor under this Agreement or any other Loan
Document or by operation of law or otherwise;

 

(b)                                 any modification or amendment of or
supplement to this Agreement or any other Loan Document;

 

61

--------------------------------------------------------------------------------

 

(c)                                  any change in the corporate existence,
structure, or ownership of, or any insolvency, bankruptcy, reorganization, or
other similar proceeding affecting, the Borrower or other obligor, any other
guarantor, or any of their respective assets, or any resulting release or
discharge of any obligation of the Borrower or other obligor or of any other
guarantor contained in any Loan Document;

 

(d)                                 the existence of any claim, set-off, or
other rights which the Borrower or other obligor or any other guarantor may have
at any time against the Administrative Agent, any Lender, or any other Person,
whether or not arising in connection herewith;

 

(e)                                  any failure to assert, or any assertion of,
any claim or demand or any exercise of, or failure to exercise, any rights or
remedies against the Borrower or other obligor, any other guarantor, or any
other Person or Property;

 

(f)                                    any application of any sums by whomsoever
paid or howsoever realized to any obligation of the Borrower or other obligor,
regardless of what obligations of the Borrower or other obligor remain unpaid;

 

(g)                                 any invalidity or unenforceability relating
to or against the Borrower or other obligor or any other guarantor for any
reason of this Agreement or of any other Loan Document or any provision of
applicable law or regulation purporting to prohibit the payment by the Borrower
or other obligor or any other guarantor of the principal of or interest on any
Note or any Reimbursement Obligation or any other amount payable under the Loan
Documents; or

 

(h)                                 any other act or omission to act or delay of
any kind by the Administrative Agent, any Lender, or any other Person or any
other circumstance whatsoever that might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the obligations of any
Guarantor under this Section 12.

 

Section 12.3.                                   Discharge Only upon Payment in
Full; Reinstatement in Certain Circumstances.  Each Guarantor’s obligations
under this Section 12 shall remain in full force and effect until the
Commitments are terminated, all Letters of Credit have expired, and the
principal of and interest on the Notes and all other amounts payable by the
Borrower and the Guarantors under this Agreement and all other Loan Documents
and, if then outstanding and unpaid.  If at any time any payment of the
principal of or interest on any Note or any Reimbursement Obligation or any
other amount payable by the Borrower or other obligor or any Guarantor under the
Loan Documents is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy, or reorganization of the Borrower or other obligor or of
any guarantor, or otherwise, each Guarantor’s obligations under this Section 12
with respect to such payment shall be reinstated at such time as though such
payment had become due but had not been made at such time.

 

Section 12.4.                                   Subrogation.  Each Guarantor
agrees it will not exercise any rights which it may acquire by way of
subrogation by any payment made hereunder, or otherwise, until all the
Obligations shall have been paid in full subsequent to the termination of all
the Commitments

 

62

--------------------------------------------------------------------------------

 

and expiration of all Letters of Credit.  If any amount shall be paid to a
Guarantor on account of such subrogation rights at any time prior to the later
of (x) the payment in full of the Obligations and all other amounts payable by
the Borrower hereunder and the other Loan Documents and (y) the termination of
the Commitments and expiration of all Letters of Credit, such amount shall be
held in trust for the benefit of the Administrative Agent and the Lenders (and
their Affiliates) and shall forthwith be paid to the Administrative Agent for
the benefit of the Lenders (and their Affiliates) or be credited and applied
upon the Obligations, whether matured or unmatured, in accordance with the terms
of this Agreement.

 

Section 12.5.                                   Waivers.  Each Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest, and any
notice not provided for herein, as well as any requirement that at any time any
action be taken by the Administrative Agent, any Lender, or any other Person
against the Borrower or other obligor, another guarantor, or any other Person.

 

Section 12.6.                                   Limit on Recovery. 
Notwithstanding any other provision hereof, the right of recovery against each
Guarantor under this Section 12 shall not exceed $1.00 less than the lowest
amount which would render such Guarantor’s obligations under this Section 12
void or voidable under applicable law, including, without limitation, fraudulent
conveyance law.

 

Section 12.7.                                   Stay of Acceleration.  If
acceleration of the time for payment of any amount payable by the Borrower or
other obligor under this Agreement or any other Loan Document, is stayed upon
the insolvency, bankruptcy or reorganization of the Borrower or such obligor,
all such amounts otherwise subject to acceleration under the terms of this
Agreement or the other Loan Documents, shall nonetheless be payable by the
Guarantors hereunder forthwith on demand by the Administrative Agent made at the
request of the Required Lenders.

 

Section 12.8.                                   Benefit to Guarantors.  The
Borrower and the Guarantors are engaged in related businesses and integrated to
such an extent that the financial strength and flexibility of the Borrower has a
direct impact on the success of each Guarantor.  Each Guarantor will derive
substantial direct and indirect benefit from the extensions of credit hereunder.

 

Section 12.9.                                   Guarantor Covenants.  Each
Guarantor shall take such action as the Borrower is required by this Agreement
to cause such Guarantor to take, and shall refrain from taking such action as
the Borrower is required by this Agreement to prohibit such Guarantor from
taking.

 

SECTION 13.                                           MISCELLANEOUS.

 

Section 13.1.                                   Withholding Taxes.  (a) Payments
Free of Withholding.  Except as otherwise required by law and subject to
Section 13.1(b) hereof, each payment by the Borrower and the Guarantors under
this Agreement or the other Loan Documents shall be made without withholding for
or on account of any present or future taxes (other than overall net income
taxes on the recipient) imposed by or within the jurisdiction in which the
Borrower or such Guarantor is domiciled, any jurisdiction from which the
Borrower or such Guarantor makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein.  If any such withholding is
so required, the Borrower or such Guarantor shall make the withholding, pay the

 

63

--------------------------------------------------------------------------------

 

amount withheld to the appropriate governmental authority before penalties
attach thereto or interest accrues thereon, and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
each Lender and the Administrative Agent free and clear of such taxes (including
such taxes on such additional amount) is equal to the amount which that Lender
or the Administrative Agent (as the case may be) would have received had such
withholding not been made.  If the Administrative Agent or any Lender pays any
amount in respect of any such taxes, penalties or interest, the Borrower or such
Guarantor shall reimburse the Administrative Agent or such Lender for that
payment on demand in the currency in which such payment was made.  If the
Borrower or such Guarantor pays any such taxes, penalties or interest, it shall
deliver official tax receipts evidencing that payment or certified copies
thereof to the Lender or Administrative Agent on whose account such withholding
was made (with a copy to the Administrative Agent if not the recipient of the
original) on or before the thirtieth day after payment.

 

(b)                                 U.S. Withholding Tax Exemptions.  Each
Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) shall submit to the Borrower and the
Administrative Agent on or before the date the initial Credit Event is made
hereunder or, if later, the date such financial institution becomes a Lender
hereunder, two duly completed and signed copies of (i) either Form W-8 BEN
(relating to such Lender and entitling it to a complete exemption from
withholding under the Code on all amounts to be received by such Lender,
including fees, pursuant to the Loan Documents and the Obligations) or
Form W-8 ECI (relating to all amounts to be received by such Lender, including
fees, pursuant to the Loan Documents and the Obligations) of the United States
Internal Revenue Service or (ii) solely if such Lender is claiming exemption
from United States withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of “portfolio interest”, a Form W-8 BEN, or any
successor form prescribed by the Internal Revenue Service, and a certificate
representing that such Lender is not a bank for purposes of Section 881(c) of
the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code).  Thereafter and from time to time, each Lender
shall submit to the Borrower and the Administrative Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) and such other certificates as may be (i) requested by the Borrower
in a written notice, directly or through the Administrative Agent, to such
Lender and (ii) required under then-current United States law or regulations to
avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents or the Obligations.  Upon the request of the Borrower or the
Administrative Agent, each Lender that is a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and
the Administrative Agent a certificate to the effect that it is such a United
States person.

 

(c)                                  Inability of Lender to Submit Forms.  If
any Lender determines, as a result of any change in applicable law, regulation
or treaty, or in any official application or interpretation thereof, that it is
unable to submit to the Borrower or the Administrative Agent any form or
certificate that such Lender is obligated to submit pursuant to
subsection (b) of this Section 13.1 or that such Lender is required to withdraw
or cancel any such form or certificate previously

 

64

--------------------------------------------------------------------------------

 

submitted or any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Borrower and Administrative
Agent of such fact and the Lender shall to that extent not be obligated to
provide any such form or certificate and will be entitled to withdraw or cancel
any affected form or certificate, as applicable.

 

Section 13.2.                                   No Waiver, Cumulative Remedies. 
No delay or failure on the part of the Administrative Agent or any Lender or on
the part of the holder or holders of any of the Obligations in the exercise of
any power or right under any Loan Document shall operate as a waiver thereof or
as an acquiescence in any default, nor shall any single or partial exercise of
any power or right preclude any other or further exercise thereof or the
exercise of any other power or right.  The rights and remedies hereunder of the
Administrative Agent, the Lenders and of the holder or holders of any of the
Obligations are cumulative to, and not exclusive of, any rights or remedies
which any of them would otherwise have.

 

Section 13.3.                                   Non-Business Days.  If any
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date of such payment shall be extended to the next succeeding Business
Day on which date such payment shall be due and payable.  In the case of any
payment of principal falling due on a day which is not a Business Day, interest
on such principal amount shall continue to accrue during such extension at the
rate per annum then in effect, which accrued amount shall be due and payable on
the next scheduled date for the payment of interest.

 

Section 13.4.                                   Documentary Taxes.  The Borrower
agrees to pay on demand any documentary, stamp or similar taxes payable in
respect of this Agreement or any other Loan Document, including interest and
penalties, in the event any such taxes are assessed, irrespective of when such
assessment is made and whether or not any credit is then in use or available
hereunder.

 

Section 13.5.                                   Survival of Representations. 
All representations and warranties made herein or in any other Loan Document or
in certificates given pursuant hereto or thereto shall survive the execution and
delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with respect to the date as of which they were made as
long as any credit is in use or available hereunder.

 

Section 13.6.                                   Survival of Indemnities.  All
indemnities and other provisions relative to reimbursement to the Lenders of
amounts sufficient to protect the yield of the Lenders with respect to the Loans
and Letters of Credit, including, but not limited to, Sections 1.11, 10.3, and
13.15 hereof, shall survive the termination of this Agreement and the other Loan
Documents and the payment of the Obligations.

 

Section 13.7.                                   Sharing of Set-Off.  Each Lender
agrees with each other Lender a party hereto that if such Lender shall receive
and retain any payment, whether by set-off or application of deposit balances or
otherwise, on any of the Loans or Reimbursement Obligations in excess of its
ratable share of payments on all such Obligations then outstanding to the
Lenders, then such Lender shall purchase for cash at face value, but without
recourse, ratably from each of the other Lenders such amount of the Loans or
Reimbursement Obligations, or participations therein, held

 

65

--------------------------------------------------------------------------------

 

by each such other Lenders (or interest therein) as shall be necessary to cause
such Lender to share such excess payment ratably with all the other Lenders;
provided, however, that if any such purchase is made by any Lender, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Lender, the related purchases from the other Lenders shall be rescinded ratably
and the purchase price restored as to the portion of such excess payment so
recovered, but without interest.  For purposes of this Section, amounts owed to
or recovered by the L/C Issuer in connection with Reimbursement Obligations in
which Lenders have been required to fund their participation shall be treated as
amounts owed to or recovered by the L/C Issuer as a Lender hereunder.

 

Section 13.8.                                   Notices.  Except as otherwise
specified herein, all notices hereunder and under the other Loan Documents shall
be in writing (including, without limitation, notice by telecopy) and shall be
given to the relevant party at its address or telecopier number set forth below,
or such other address or telecopier number as such party may hereafter specify
by notice to the Administrative Agent and the Borrower given by courier, by
United States certified or registered mail, by telecopy or by other
telecommunication device capable of creating a written record of such notice and
its receipt.  Notices under the Loan Documents to the Lenders and the
Administrative Agent shall be addressed to their respective addresses or
telecopier numbers set forth on the signature pages hereof, and to the Borrower
or any Guarantor to:

 

LTC Properties, Inc.

 

 

31365 Oak Crest Drive

 

 

Suite 200

 

 

Westlake Village, California 91361

Attention:

 

Chief Financial Officer

Telephone:

 

(805) 981-8655

Telecopy:

 

(805) 981-8663

 

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or on the signature pages hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by mail, 5 days
after such communication is deposited in the mail, certified or registered with
return receipt requested, addressed as aforesaid or (iii) if given by any other
means, when delivered at the addresses specified in this Section or on the
signature pages hereof; provided that any notice given pursuant to Section 1
hereof shall be effective only upon receipt.

 

Section 13.9.                                   Counterparts.  This Agreement
may be executed in any number of counterparts, and by the different parties
hereto on separate counterpart signature pages, and all such counterparts taken
together shall be deemed to constitute one and the same instrument.

 

Section 13.10.                            Successors and Assigns.  This
Agreement shall be binding upon the Borrower and the Guarantors and their
successors and assigns, and shall inure to the benefit of the Administrative
Agent and each of the Lenders and the benefit of their respective successors and
assigns, including any subsequent holder of any of the Obligations.  The
Borrower and the Guarantors may not assign any of their rights or obligations
under any Loan Document without the written consent of all of the Lenders.

 

66

--------------------------------------------------------------------------------

 

Section 13.11.         Participants.  Each Lender shall have the right at its
own cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments held by such Lender at any time and from time to time to one
or more other Persons; provided that no such participation shall relieve any
Lender of any of its obligations under this Agreement, and, provided, further
that no such participant shall have any rights under this Agreement except as
provided in this Section, and the Administrative Agent shall have no obligation
or responsibility to such participant.  Any agreement pursuant to which such
participation  is granted shall provide that the granting Lender shall retain
the sole right and responsibility to enforce the obligations of the Borrower
under this Agreement and the other Loan Documents including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
the Loan Documents, except that such agreement may provide that such Lender will
not agree to any modification, amendment or waiver of the Loan Documents that
would reduce the amount of or postpone any fixed date for payment of any
Obligation in which such participant has an interest.  Any party to which such a
participation has been granted shall have the benefits of Section 1.11 and
Section 10.3 hereof.  The Borrower authorizes each Lender to disclose to any
participant or prospective participant under this Section any financial or other
information pertaining to the Borrower or any Subsidiary.

 

Section 13.12.         Assignments.  (a) Any Lender may at any time assign to
one or more Eligible Assignees all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it); provided that any such assignment shall
be subject to the following conditions:

 

(i)       Minimum Amounts.  (A) In the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Loans and
participation interest in L/C Obligations at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and (B) in any case not described in subsection
(a)(i)(A) of this Section, the aggregate amount of the Commitment (which for
this purpose includes Loans and participation interest in L/C Obligations
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans and participation interest in L/C
Obligations of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent or, if “Effective Date” is specified in
the Assignment and Acceptance, as of the Effective Date) shall not be less than
$5,000,000, unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise consents (each
such consent not to be unreasonably withheld or delayed);

 

(ii)      Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned.

 

(iii)     Required Consents.        No consent shall be required for any
assignment except to the extent required by Section 13.12(a)(i)(B) and, in
addition:

 

67

--------------------------------------------------------------------------------

 

(a)        the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has
occurred and is continuing at the time of such assignment or (y) such assignment
is to a Lender or an Affiliate of a Lender;

 

(b)        the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments to a Person
that is not a Lender, an Affiliate of a Lender or an Approved Fund with respect
to a Lender; and

 

(c)        the consent of the L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding).

 

(iv)     Assignment and Acceptance.    The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and the assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

(v)      No Assignment to Borrower.    No such assignment shall be made to the
Borrower or any of its Affiliates or Subsidiaries.

 

(vi)     No Assignment to Natural Persons.      No such assignment shall be made
to a natural person.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 13.12(b) hereof, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 13.6 and 13.15 with respect to facts and circumstances
occurring prior to the effective date of such assignment.  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 13.11 hereof.  The address for notices to such assignee
Lender shall be as specified in the Assignment and Acceptance executed by it. 
Promptly upon the effectiveness of any such Assignment and Acceptance, the
Borrower shall execute and deliver replacement Notes to the assignee Lender and
the assigning Lender in the respective amounts of their Commitments (or assigned
principal amounts, as applicable) after giving effect to the reduction
occasioned by such assignment (all such Notes to constitute “Notes” for all
purposes of the Loan Documents), and the assignee Lender shall thereafter
surrender to the Borrower its old Notes.  The Borrower authorizes each Lender to
disclose to any purchaser or prospective purchaser of an interest in the Loans
and interest in Letters of Credit owed to it or its Commitments under this
Section any financial or other information pertaining to the Borrower or any
Subsidiary.

 

68

--------------------------------------------------------------------------------

 

(b)       Register.  The Administrative Agent, acting solely for this purpose as
an agent of the Borrower, shall maintain at one of its offices in Chicago,
Illinois, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

(c)       Any Lender may at any time pledge or grant a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any such pledge or grant to a Federal Reserve Bank, and this
Section shall not apply to any such pledge or grant of a security interest;
provided that no such pledge or grant of a security interest shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or
secured party for such Lender as a party hereto; provided further, however, the
right of any such pledgee or grantee (other than any Federal Reserve Bank) to
further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.

 

Section 13.13.      Amendments.  Any provision of this Agreement or the other
Loan Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Required
Lenders, and (c) if the rights or duties of the Administrative Agent or the
L/C Issuer are affected thereby, the Administrative Agent or such L/C Issuer, as
applicable; provided that:

 

(i)         no amendment or waiver pursuant to this Section 13.13 shall
(A) increase any Commitment of any Lender without the consent of such Lender or
(B) reduce the amount of or postpone the date for any scheduled payment of any
principal of or interest on any Loan or of any Reimbursement Obligation or of
any fee payable hereunder without the consent of the Lender to which such
payment is owing or which has committed to make such Loan or Letter of Credit
(or participate therein) hereunder;

 

(ii)        no amendment or waiver pursuant to this Section 13.13 shall, unless
signed by each Lender, increase the aggregate Commitments of the Lenders, change
the definitions of Termination Date or Required Lenders, change the provisions
of this Section 13.13, release any material guarantor (except as otherwise
provided for in the Loan Documents), or affect the number of Lenders required to
take any action hereunder or under any other Loan Document; and

 

(iii)       no amendment to Section 12 hereof shall be made without the consent
of the Guarantor(s) affected thereby.

 

69

--------------------------------------------------------------------------------

 

Section 13.14.      Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.

 

Section 13.15.     Costs and Expenses; Indemnification.  (a) The Borrower agrees
to pay all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, negotiation, syndication, and administration of
the Loan Documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, in connection with the
preparation and execution of the Loan Documents, and any amendment, waiver or
consent related thereto, whether or not the transactions contemplated herein are
consummated.  The Borrower further agrees to indemnify the Administrative Agent,
each Lender, and their respective directors, officers, employees, agents,
financial advisors, and consultants against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor, whether or not the
indemnified Person is a party thereto, or any settlement arrangement arising
from or relating to any such litigation) which any of them may pay or incur
arising out of or relating to any Loan Document or any of the transactions
contemplated thereby or the enforcement or preservation of any rights or
remedies under the Loan Documents or the direct or indirect application or
proposed application of the proceeds of any Loan or Letter of Credit, other than
those which arise from the gross negligence or willful misconduct of the party
claiming indemnification.  The Borrower, upon demand by the Administrative Agent
or a Lender at any time, shall reimburse the Administrative Agent or such Lender
for any legal or other expenses incurred in connection with investigating or
defending against any of the foregoing (including any settlement costs relating
to the foregoing) except if the same is directly due to the gross negligence or
willful misconduct of the party to be indemnified.  The obligations of the
Borrower under this Section shall survive the termination of this Agreement.

 

(b)       The Borrower unconditionally agrees to forever indemnify, defend and
hold harmless, and covenants not to sue for any claim for contribution against,
the Administrative Agent and the Lenders for any damages, costs, loss or
expense, including without limitation, response, remedial or removal costs,
arising out of any of the following:  (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by the
Borrower or any Subsidiary or otherwise occurring on or with respect to its
Property (whether owned or leased), (ii) the operation or violation of any
environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by the Borrower or any Subsidiary or otherwise occurring
on or with respect to its Property (whether owned or leased), (iii) any claim
for personal injury or property damage in connection with the Borrower or any
Subsidiary or otherwise occurring on or with respect to its Property (whether
owned or leased), and (iv) the inaccuracy or breach of any environmental
representation, warranty or covenant by the Borrower or any Subsidiary made
herein or in any other Loan Document evidencing or securing any Obligations or
setting forth terms and conditions applicable thereto or otherwise relating
thereto, except for damages arising from the willful misconduct or gross
negligence of the party claiming indemnification.  This indemnification shall
survive the payment and satisfaction of all Obligations and the termination of
this Agreement, and shall remain in force beyond the expiration of any
applicable statute of limitations and payment or satisfaction in full of any
single claim under this indemnification.  This indemnification shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of Administrative Agent and the Lenders directors, officers, employees, agents,
and collateral trustees, and their successors and assigns.

 

70

--------------------------------------------------------------------------------

 

Section 13.16.     Set-off.  In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Lender and each subsequent holder of
any Obligation is hereby authorized by the Borrower and each Guarantor at any
time or from time to time, without notice to the Borrower or such Guarantor or
to any other Person, any such notice being hereby expressly waived, to set-off
and to appropriate and to apply any and all deposits (general or special,
including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust accounts, and in
whatever currency denominated) and any other indebtedness at any time held or
owing by that Lender or that subsequent holder to or for the credit or the
account of the Borrower or such Guarantor, whether or not matured, against and
on account of the Obligations of the Borrower or such Guarantor to that Lender
or that subsequent holder under the Loan Documents, including, but not limited
to, all claims of any nature or description arising out of or connected with the
Loan Documents, irrespective of whether or not (a) that Lender or that
subsequent holder shall have made any demand hereunder or (b) the principal of
or the interest on the Loans or Notes and other amounts due hereunder shall have
become due and payable pursuant to Section 9 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.

 

Section 13.17.     Entire Agreement.  The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.

 

Section 13.18.     Governing Law.  This Agreement and the other Loan Documents
(except as otherwise specified therein), and the rights and duties of the
parties hereto, shall be construed and determined in accordance with the
internal laws of the State of New York.

 

Section 13.19.     Severability of Provisions.  Any provision of any Loan
Document which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.  All rights,
remedies and powers provided in this Agreement and the other Loan Documents may
be exercised only to the extent that the exercise thereof does not violate any
applicable mandatory provisions of law, and all the provisions of this Agreement
and other Loan Documents are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement or the other Loan
Documents invalid or unenforceable.

 

Section 13.20.     Excess Interest.  Notwithstanding any provision to the
contrary contained herein or in any other Loan Document, no such provision shall
require the payment or permit the collection of any amount of interest in excess
of the maximum amount of interest permitted by applicable law to be charged for
the use or detention, or the forbearance in the collection, of all or any
portion of the Loans or other obligations outstanding under this Agreement or
any other Loan Document (“Excess Interest”).  If any Excess Interest is provided
for, or is adjudicated to be

 

71

--------------------------------------------------------------------------------

 

provided for, herein or in any other Loan Document, then in such event (a) the
provisions of this Section shall govern and control, (b) neither the Borrower
nor any guarantor or endorser shall be obligated to pay any Excess Interest,
(c) any Excess Interest that the Administrative Agent or any Lender may have
received hereunder shall, at the option of the Administrative Agent, be
(i) applied as a credit against the then outstanding principal amount of
Obligations hereunder and accrued and unpaid interest thereon (not to exceed the
maximum amount permitted by applicable law), (ii) refunded to the Borrower, or
(iii) any combination of the foregoing, (d) the interest rate payable hereunder
or under any other Loan Document shall be automatically subject to reduction to
the maximum lawful contract rate allowed under applicable usury laws (the
“Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed
to have been, and shall be, reformed and modified to reflect such reduction in
the relevant interest rate, and (e) neither the Borrower nor any guarantor or
endorser shall have any action against the Administrative Agent or any Lender
for any damages whatsoever arising out of the payment or collection of any
Excess Interest.  Notwithstanding the foregoing, if for any period of time
interest on any of Borrower’s Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on the Borrower’s Obligations shall remain at the Maximum Rate until the Lenders
have received the amount of interest which such Lenders would have received
during such period on the Borrower’s Obligations had the rate of interest not
been limited to the Maximum Rate during such period.

 

Section 13.21.     Construction.  Nothing contained herein shall be deemed or
construed to permit any act or omission which is prohibited by the terms of any
Collateral Document, the covenants and agreements contained herein being in
addition to and not in substitution for the covenants and agreements contained
in the Collateral Documents.

 

Section 13.22.     Lender’s Obligations Several.  The obligations of the Lenders
hereunder are several and not joint.  Nothing contained in this Agreement and no
action taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders a partnership, association, joint venture or other entity.

 

Section 13.23.     Submission to Jurisdiction; Waiver of Jury Trial.  The
Borrower and the Guarantors hereby submit to the nonexclusive jurisdiction of
the Federal Courts located in New York, New York and of any New York State court
sitting in the City of New York for purposes of all legal proceedings arising
out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby.  The Borrower and the Guarantors
irrevocably waive, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.  THE BORROWER, THE GUARANTORS,
THE ADMINISTRATIVE AGENT, AND THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

72

--------------------------------------------------------------------------------

 

Section 13.24.     Amendment and Restatement.  This Agreement shall become
effective on the Closing Date and shall supersede all provisions of the Prior
Credit Agreement as of such date.  From and after the Closing Date, all
references made to the Prior Credit Agreement in any Loan Document or in any
other instrument or document shall, without more, be deemed to refer to this
Agreement.

 

Section 13.25.     USA Patriot Act.  L/C Issuer and each Lender that is subject
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”) hereby notifies the Borrower that
pursuant to the requirements of the Act, it is required to obtain, verify, and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such L/C
Issuer or such Lender to identify the Borrower in accordance with the Act.

 

Section 13.26.     Equalization of Outstanding Obligations.  (a) Equalization of
Outstanding Obligations.  Upon the satisfaction of the conditions precedent set
forth in Section 7.2 hereof, all Loans and Letters of Credit outstanding under,
and as defined in, the Prior Credit Agreement shall remain outstanding as part
of the initial Borrowing of Loans and issuance of Letters of Credit under this
Agreement and, in connection therewith, the Borrower shall be deemed to have
repaid all outstanding Eurodollar Loans on the Closing Date and shall pay to
each Lender who is currently a party to the Prior Credit Agreement any
compensation due such Lender under Section 1.11 of the Prior Credit Agreement as
a result thereof.  On the Closing Date, the Lenders each agree to make such
purchases and sales of interests in the outstanding Loans and interests in
outstanding Letters of Credit between themselves so that each Lender is then
holding its Percentage of outstanding Loans and L/C Obligations.  Such purchases
and sales shall be arranged through the Administrative Agent and each Lender
hereby agrees to execute such further instruments and documents, if any, as the
Agent may reasonably request in connection therewith.

 

(b)       Return of Notes.  The Lenders under the Prior Credit Agreement agree
to return to the Borrower promptly after the Closing Date the Notes issued
under, and as defined in, the Prior Credit Agreement, which Notes are replaced
by certain Notes issued hereunder.

 

Section 13.27.     Departing Lenders.  The commitments of the Departing Lenders
under the Prior Credit Agreement are hereby terminated and the Departing Lenders
cease to be Lenders under the Credit Agreement.

 

[SIGNATURE PAGES TO FOLLOW]

 

73

--------------------------------------------------------------------------------

 

This Amended and Restated Credit Agreement is entered into between us for the
uses and purposes hereinabove set forth as of the date first above written.

 

 

“BORROWER”

 

 

 

LTC PROPERTIES, INC.

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

 

 

 

 

“GUARANTORS”

 

 

 

LTC WEST, INC.

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

 

 

FLORIDA-LTC, INC.

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

--------------------------------------------------------------------------------

 

 

LTC GP I, INC.

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

 

 

LTC GP VI, INC.

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

 

 

 

 

NORTH CAROLINA REAL ESTATE

 

 

INVESTMENTS, LLC

 

 

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

--------------------------------------------------------------------------------

 

 

EDUCATION PROPERTY INVESTORS, INC.

 

 

 

 

 

By

/s/ Wendy Simpson

 

 

Name:

Wendy Simpson

 

 

Title:

CEO & President

 

 

 

 

 

By

/s/ Pamela Shelley-Kessler

 

 

Name:

Pamela Shelley-Kessler

 

 

Title:

SVP & Chief Financial Officer

 

--------------------------------------------------------------------------------

 

 

“LENDERS”

 

 

 

BANK OF MONTREAL, Chicago Branch, as

 

 

L/C Issuer and as Administrative Agent

 

 

 

 

 

 

 

By

/s/ David L. Mistic

 

 

Name:

David L. Mistic

 

 

Title:

Vice President

 

 

 

Address:

 

 

 

115 South LaSalle Street

 

Chicago, Illinois  60603

 

Attention:

David L. Mistic

 

Telecopy:

(312) 293-5068

 

Telephone:

(312) 461-1402

 

--------------------------------------------------------------------------------

 

 

BMO CAPITAL MARKETS FINANCING, INC.

 

 

 

 

 

 

 

By

/s/ David L. Mistic

 

 

Name:

David L. Mistic

 

 

Title:

Vice President

 

 

 

Address:

 

 

 

115 South LaSalle Street

 

Chicago, Illinois  60603

 

Attention:

David L. Mistic

 

Telecopy:

(312) 293-5068

 

Telephone:

(312) 461-1402

 

--------------------------------------------------------------------------------

 

 

KEY BANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By

/s/ Laura Conway

 

 

Name:

Laura Conway

 

 

Title:

Vice President

 

 

 

Address:

 

 

 

Laura Conway

 

127 Public Square

 

Mail Code OH-01-27-0848

 

Cleveland, OH  44114

 

Telecopy:

(216) 689-3630

 

Telephone:

(216) 689-5970

 

 

 

 

With a copy to:

 

 

 

Denise J. Jones

 

800 Superior Avenue

 

Mail Code OH-01-02-0628

 

Cleveland, OH  44114

 

Telecopy:

(216) 828-7498

 

Telephone:

(216) 828-7521

 

--------------------------------------------------------------------------------

 

 

RAYMOND JAMES BANK, FSB

 

 

 

 

 

 

 

By

/s/ Steven F. Paley

 

 

Name:

Steven F. Paley

 

 

Title:

Sr. Vice President

 

 

 

Address:

 

 

 

710 Carillon Parkway

 

St. Petersburg, FL  33716

 

Attention:

Steven F. Paley

 

Telecopy:

(727) 567-8830

 

Telephone:

(727) 567-1720

 

--------------------------------------------------------------------------------

 

 

ROYAL BANK OF CANADA

 

 

 

 

 

 

 

By

/s/ Dan LePage

 

 

Name:

Dan LePage

 

 

Title:

Authorized Signatory

 

 

 

Address:

 

 

 

One Liberty Plaza, 3rd Floor

 

165 Broadway

 

New York, New York  10006-1404

 

Attention:

Dan LePage

 

Telecopy:

(212) 428-6459

 

Telephone:

(212) 428-6605

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

NOTICE OF PAYMENT REQUEST

 

[Date]

 

[Name of Lender]

[Address]

 

Attention:

 

Reference is made to the Second Amended and Restated Credit Agreement, dated as
of                             , 2008, among LTC Properties, Inc., the
Guarantors from time to time party thereto, the Lenders party thereto, and Bank
of Montreal, Chicago Branch, as Administrative Agent (the “Credit Agreement”). 
Capitalized terms used herein and not defined herein have the meanings assigned
to them in the Credit Agreement.  [The Borrower has failed to pay its
Reimbursement Obligation in the amount of $                        .  Your
Percentage of the unpaid Reimbursement Obligation is
$                          ] or
[                                                     has been required to
return a payment by the Borrower of a Reimbursement Obligation in the amount of
$                              .  Your Percentage of the returned Reimbursement
Obligation is $                              .]

 

 

Very truly yours,

 

 

 

BANK OF MONTREAL, Chicago Branch,

 

as L/C Issuer

 

 

 

 

 

By

 

     Name

 

 

     Title

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

NOTICE OF BORROWING

 

Date:                         ,            

 

To:                       BANK OF MONTREAL, Chicago Branch, as Administrative
Agent for the Lenders parties to the Second Amended and Restated Credit
Agreement dated as of                           , 2008 (as extended, renewed,
amended or restated from time to time, the “Credit Agreement”), among LTC
PROPERTIES, INC., certain Guarantors which are signatories thereto, certain
Lenders which are signatories thereto, and BANK OF MONTREAL, Chicago Branch, as
Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, LTC Properties, Inc. (the “Borrower”), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 1.5 of the Credit
Agreement, of the Borrowing specified below:

 

1.      The Business Day of the proposed Borrowing is                       ,
        .

 

2.       The aggregate amount of the proposed Borrowing is
$                            .

 

3.       The Borrowing is being advanced under the Revolving Credit.

 

4.       The Borrowing is to be comprised of $                       of
[Adjusted Base Rate] [Eurodollar] Loans.

 

[5.       The duration of the Interest Period for the Eurodollar Loans included
in the Borrowing shall be                          months.]

 

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the proposed Borrowing, before and
after giving effect thereto and to the application of the proceeds therefrom:

 

(a)     the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on and as
of such date (except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct as of such date); and

 

--------------------------------------------------------------------------------

 

(b)     no Default or Event of Default has occurred and is continuing or would
result from such proposed Borrowing.

 

 

LTC PROPERTIES, INC.

 

 

 

 

 

By

 

     Name

 

 

     Title

 

 

 

 

 

 

 

 

By

 

     Name

 

 

     Title

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT C

 

NOTICE OF CONTINUATION/CONVERSION

 

Date:                          ,       

 

To:                  BANK OF MONTREAL, Chicago Branch, as Administrative Agent
for the Lenders parties to the Second Amended and Restated Credit Agreement
dated as of                   , 2008 (as extended, renewed, amended or restated
from time to time, the “Credit Agreement”), among LTC PROPERTIES, INC., certain
Guarantors which are signatories thereto, certain Lenders which are signatories
thereto, and BANK OF MONTREAL, Chicago Branch, as Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, LTC Properties, Inc. (the “Borrower”), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 1.5 of the Credit
Agreement, of the [conversion] [continuation] of the Loans specified herein,
that:

 

1.     The conversion/continuation Date is                     ,         .

 

2.     The aggregate amount of the Loans to be [converted] [continued] is
$                            .

 

3.      The Loans are to be [converted into] [continued as] [Eurodollar]
[Adjusted Base Rate] Loans.

 

4.     [If applicable:]  The duration of the Interest Period for the Loans
included in the [conversion] [continuation] shall be                    months.

 

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the proposed conversion/continuation date,
before and after giving effect thereto and to the application of the proceeds
therefrom:

 

(a)     the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on and as
of such date (except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct as of such date);
provided, however, that this condition shall not apply to the conversion of an
outstanding Eurodollar Loan to an Adjusted Base Rate Loan; and

 

--------------------------------------------------------------------------------

 

(b)     no Default or Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation].

 

 

LTC PROPERTIES, INC.

 

 

 

 

 

By

 

     Name

 

 

     Title

 

 

 

 

 

 

 

 

By

 

     Name

 

 

     Title

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT D

 

NOTE

 

U.S. $

 

 

,

 

FOR VALUE RECEIVED, the undersigned, LTC PROPERTIES, INC., a Maryland
corporation (the “Borrower”), hereby promises to pay to the order of
                                         (the “Lender”) on the Termination Date
of the hereinafter defined Credit Agreement, at the principal office of Bank of
Montreal, Chicago Branch as Administrative Agent, in Chicago, Illinois, in
immediately available funds, the principal sum of
                                       Dollars ($                    ) or, if
less, the aggregate unpaid principal amount of all Loans made by the Lender to
the Borrower pursuant to the Credit Agreement, together with interest on the
principal amount of each Loan from time to time outstanding hereunder at the
rates, and payable in the manner and on the dates, specified in the Credit
Agreement.

 

This Note is one of the Notes referred to in the Second Amended and Restated
Credit Agreement dated as of                         , 2008, among the Borrower,
the Guarantors party thereto, the Lenders party thereto, and Bank of Montreal,
Chicago Branch, as Administrative Agent for the Lenders (the “Credit
Agreement”), and this Note and the holder hereof are entitled to all the
benefits provided for thereby or referred to therein, to which Credit Agreement
reference is hereby made for a statement thereof.  All defined terms used in
this Note, except terms otherwise defined herein, shall have the same meaning as
in the Credit Agreement.  This Note shall be governed by and construed in
accordance with the internal laws of the State of New York.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be
made hereon, and this Note may be declared due prior to the expressed maturity
hereof, all in the events, on the terms and in the manner as provided for in the
Credit Agreement.

 

The Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.

 

 

LTC PROPERTIES, INC.

 

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

 

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

--------------------------------------------------------------------------------

 

EXHIBIT E

 

BORROWING BASE CERTIFICATE

 

To:

Bank of Montreal, Chicago Branch, as Administrative Agent under, and the Lenders
party to, the Credit Agreement described below.

 

 

 

Pursuant to the terms of the Second Amended and Restated Credit Agreement dated
as of                         , 2008, among us

(the “Credit Agreement”), we submit this Borrowing Base Certificate to you and
certify that the information set forth below and on any attachments to this
Certificate is true, correct and complete as of the date of this Certificate.

 

1.

Borrowing Base Value

 

$                      

2.

Line 1 multiplied by 50%

 

$                      

3.

Unsecured Debt (other than Obligations)

 

($                      )

4.

Borrowing Base (Line 2 minus by Line 3 above)

 

$                      

 

 

 

 

 

The Borrower represents and warrants that the aggregate principal amount of
Loans and L/C Obligations on the date hereof,

including any Loans to be made or Letters of Credit to be issued on the date
hereof, do not exceed the Borrowing Base set forth above.

 

 

 

The foregoing certifications, together with the computations set forth in
Schedule I hereto are made and delivered this

             day of                                      20      .

 

 

LTC PROPERTIES, INC.

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

 

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

--------------------------------------------------------------------------------

 

SCHEDULE I

CALCULATIONS

 

--------------------------------------------------------------------------------

 

EXHIBIT F

 

COMPLIANCE CERTIFICATE

 

To:

Bank of Montreal, Chicago Branch, as Administrative Agent under, and the Lenders
party to, the Credit Agreement described below

 

This Compliance Certificate is furnished to the Administrative Agent and the
Lenders pursuant to that certain Second Amended and Restated Credit Agreement
dated as of                           , 2008, among us (the “Credit
Agreement”).  Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.               I am the duly elected                          of
                                                                      ;

 

2.               I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;

 

3.               The examinations described in paragraph 2 did not disclose, and
I have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Compliance Certificate, except as set forth below;

 

4.               The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this Compliance
Certificate are true, correct and complete as of the date and for the periods
covered thereby; and

 

5.               The Schedule I hereto sets forth financial data and
computations evidencing the Borrower’s compliance with certain covenants of the
Credit Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance with the
relevant Sections of the Credit Agreement.

 

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

--------------------------------------------------------------------------------

 

The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this              day of
                                     20      .

 

 

 

 

 

 

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

2

--------------------------------------------------------------------------------

 

SCHEDULE I

TO COMPLIANCE CERTIFICATE

 

COMPLIANCE CALCULATIONS

FOR SECOND AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF
                              , 2008

 

CALCULATIONS AS OF                           ,      

 

A.

Maximum Total Indebtedness to Total Asset Value (Section 8.21(a))

 

 

 

1.

Total Indebtedness

 

$               

 

2.

Total Asset Value

 

               

 

3.

Ratio of Line A1 to A2

 

    :1.0

 

4.

Line A3 ratio must not exceed

 

.50:1.0

 

5.

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

B.

Maximum Secured Debt to Total Asset Value (Section 8.21(b))

 

 

 

1.

Secured Debt

 

$               

 

2.

Total Asset Value

 

               

 

3.

Ratio of Line B1 to B2

 

    :1.0

 

4.

Line B3 ratio must not exceed

 

.35:1.0

 

5.

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

C.

Minimum EBITDA to Interest Expense Ratio (Section 8.21(c))

 

 

 

1.

Net Income for the last 4 quarters

 

$               

 

2.

Depreciation and Amortization Expense for last 4 quarters

 

               

 

3.

Interest Expense for last 4 quarters

 

               

 

4.

Income Tax Expense for last 4 quarters

 

               

 

5.

Extraordinary, unrealized or non-recurring losses, including impairment charges
and reserves for the last 4 quarters

 

               

 

6.

Sum of Lines C1 through C5

 

               

 

--------------------------------------------------------------------------------

 

 

7.

The funds received by the Borrower’s Subsidiaries rent by which are reserved for
capital expenses for the last 4 quarters

 

               

 

8.

Unrealized gains of the sale of assets for the last 4 quarters

 

               

 

9.

Income tax benefits of the last 4 quarters

 

               

 

10.

Sum of Lines C7 through C9

 

               

 

11.

Line 6 minus Line 10 (“EBITDA”)

 

               

 

12.

Interest Expense

 

 

 

13.

Ratio of Line C11 to C12

 

    :1.0

 

14.

Line C13 ratio shall not be less than

 

2.50:1.0

 

15.

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

D.

Minimum EBITDA to Fixed Charges Ratio (Section 8.21(d))

 

 

 

1.

 

EBITDA

 

$               

 

2.

 

Fixed Charges

 

 

 

3.

 

Ratio of Line D1 to D2

 

    :1.0

 

4.

 

Line D3 ratio shall not be less than

 

1.50:1.0

 

5.

 

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

 

E.

 

Maximum Secured Recourse Debt to Total Asset Value Ratio (Section 8.21(e))

 

 

 

 

1.

 

Secured Recourse Debt

 

$               

 

 

2.

 

Total Asset Value

 

$               

 

 

3.

 

Ratio of Line E1 to Line E2

 

    :1.0

 

 

4.

 

Line E3 shall not exceed

 

.10:1.0

 

 

5.

 

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

 

 

F.

 

Tangible Net Worth (Section 8.21(f))

 

 

 

 

1.

 

Tangible Net Worth

 

$               

 

 

2.

 

Line F1 shall not be less than

 

$               

 

 

3.

 

The Borrower is in compliance (circle yes or no)

 

yes/no

 

2

--------------------------------------------------------------------------------

 

G.

 

Floating Rate Debt (Section 8.21(g))

 

 

 

 

1.

 

Total Asset Value

 

$                  

 

 

2.

 

Total unhedged Floating Rate Debt outstanding

 

$                  

 

 

3.

 

Percentage of unhedged Floating Rate Debt outstanding to Total Asset Value

 

%

 

 

4.

 

Line G3 shall not exceed

 

40

%

 

 

5.

 

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

 

 

H.

 

Minimum Borrowing Base Value (Section 8.22(b))

 

 

 

 

1.

 

Borrowing Base Value

 

$                  

 

 

2.

 

Line H1 shall not be less than

 

$50,000,000

 

 

3.

 

The Borrower is in compliance (circle yes or no)

 

yes/no

 

 

 

 

 

 

 

I.

 

Minimum Eligible Property NOI to Credit Facility Debt Service Ratio
(Section 8.22(c))

 

 

 

 

1.

 

Eligible Property NOI

 

$                  

 

 

2.

 

pari passu Unsecured Debt Service plus Credit Facility Debt Service

 

$                  

 

 

3.

 

Ratio of Line I1 to I2

 

           :1.0

 

 

4.

 

Line I3 ratio shall not be less than

 

      2.25:1.0

 

 

5.

 

The Borrower is in compliance (circle yes or no)

 

       yes/no

 

3

--------------------------------------------------------------------------------

 

EXHIBIT G

 

ADDITIONAL GUARANTOR SUPPLEMENT

 

                            ,      

 

Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders named
in the Second Amended and Restated Credit Agreement dated as of
                      , 2008, among LTC Properties, Inc., as Borrower, the
Guarantors referred to therein, the Lenders from time to time party thereto, and
the Administrative Agent (the “Credit Agreement”)

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement described above.  Terms not defined
herein which are defined in the Credit Agreement shall have for the purposes
hereof the meaning provided therein.

 

The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of
incorporation or organization] hereby elects to be a “Guarantor” for all
purposes of the Credit Agreement, effective from the date hereof.  The
undersigned confirms that the representations and warranties set forth in
Section 6 of the Credit Agreement are true and correct as to the undersigned as
of the date hereof and the undersigned shall comply with each of the covenants
set forth in Section 8 of the Credit Agreement applicable to it.

 

Without limiting the generality of the foregoing, the undersigned hereby agrees
to perform all the obligations of a Guarantor under, and to be bound in all
respects by the terms of, the Credit Agreement, including without limitation
Section 12 thereof, to the same extent and with the same force and effect as if
the undersigned were a signatory party thereto.

 

The undersigned acknowledges that this Agreement shall be effective upon its
execution and delivery by the undersigned to the Administrative Agent, and it
shall not be necessary for the Administrative Agent or any Lender, or any of
their Affiliates entitled to the benefits hereof, to execute this Agreement or
any other acceptance hereof.  This Agreement shall be construed in accordance
with and governed by the internal laws of the State of New York.

 

 

Very truly yours,

 

 

 

[NAME OF SUBSIDIARY GUARANTOR]

 

 

 

By

 

 

 Name

 

 

 Title

 

 

--------------------------------------------------------------------------------

 

EXHIBIT H

 

ASSIGNMENT AND ACCEPTANCE

 

Dated                       ,   

 

Reference is made to the Second Amended and Restated Credit Agreement dated as
of                         , 2008 (the “Credit Agreement”) among LTC
Properties, Inc., the Guarantors party thereto, the Lenders party thereto, and
Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders (the
“Administrative Agent”).  Terms defined in the Credit Agreement are used herein
with the same meaning.

 

                                                                                                            
(the “Assignor”) and                                                    (the
“Assignee”) agree as follows:

 

1.               The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a               %
interest in and to all of the Assignor’s rights and obligations under the Credit
Agreement as of the Effective Date (as defined below), including, without
limitation, such percentage interest in the Assignor’s Commitments as in effect
on the Effective Date and the Loans, if any, owing to the Assignor on the
Effective Date and the Assignor’s Percentage of any outstanding L/C Obligations.

 

2.               The Assignor (i) represents and warrants that as of the date
hereof (A) its Credit Commitment is $                              , (B) the
aggregate outstanding principal amount of Loans made by it under the Credit
Agreement that have not been repaid is $                      , and (C) the
aggregate principal amount of Assignor’s Percentage of outstanding L/C
Obligations is $                      ; (ii) represents and warrants that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim, lien, or
encumbrance of any kind; (iii) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto; and
(iv) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of their
respective obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto.

 

3.               The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to Section 8.5(b) and (c) thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to

 

--------------------------------------------------------------------------------

 

enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action as Administrative Agent on its behalf
and to exercise such powers under the Credit Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (v) specifies as its lending office (and address for notices) the
offices set forth beneath its name on the signature pages hereof.

 

4.               As consideration for the assignment and sale contemplated in
Annex 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in
Federal funds an amount equal to $                                (1).  It is
understood that commitment and/or letter of credit fees accrued to the Effective
Date with respect to the interest assigned hereby are for the account of the
Assignor and such fees accruing from and including the date hereof are for the
account of the Assignee.  Each of the Assignor and the Assignee hereby agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party’s interest therein and shall
promptly pay the same to such other party.

 

5.               The effective date for this Assignment and Acceptance shall be
                       (the “Effective Date”).  Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent and, if required, the
Borrower.

 

6.               Upon such acceptance and recording, as of the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.

 

7.               Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments under the
Credit Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee.  The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.

 

--------------------------------------------------------------------------------

*

 

Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.

 

2

--------------------------------------------------------------------------------

 

8.     In accordance with Section 13.12 of the Credit Agreement, the Assignor
and the Assignee request and direct that the Administrative Agent prepare and
cause the Borrower to execute and deliver to the Assignee the relevant Notes
payable to the Assignee in the amount of its Commitments and new Notes to the
Assignor in the amount of its Commitments after giving effect to this
assignment.

 

9.     This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.

 

 

[Assignor Lender]

 

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

 

 

 

[Assignee Lender]

 

 

 

 

 

By

 

 

 Name

 

 

 Title

 

 

 

 

 

Lending office (and address for notices):

 

Accepted and consented this
         day of

 

 

 

 

 

 

By

 

 

 

Name

 

 

 

Title

 

 

 

Accepted and consented to by the Administrative

  Agent and L/C Issuer this        day of

 

BANK OF MONTREAL, Chicago Branch, as

  Administrative Agent and L/C Issuer

 

 

By

 

 

 

Name

 

 

 

Title

 

 

 

3

--------------------------------------------------------------------------------

 

ANNEX I

TO ASSIGNMENT AND ACCEPTANCE

 

PRINCIPAL AMOUNT

 

TYPE OF LOAN

 

INTEREST RATE

 

MATURITY DATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT I

 

OPINION OF COUNSEL

 

--------------------------------------------------------------------------------

 

EXHIBIT J

 

COMMITMENT AMOUNT INCREASE REQUEST

 

                         ,     

 

To:

Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders
parties to the Second Amended and Restated Credit Agreement dated as of
                        , 2008 (as extended, renewed, amended or restated from
time to time, the “Credit Agreement”), among LTC Properties, Inc., the
Guarantors party thereto, the Lenders party thereto, and Bank of Montreal,
Chicago Branch, as Administrative Agent.

 

Ladies and Gentlemen:

 

The undersigned, LTC Properties, Inc. (the “Borrower”) hereby refers to the
Credit Agreement and requests that the Administrative Agent consent to an
increase in the aggregate Commitments (the “Commitment Amount Increase”), in
accordance with Section 1.14 of the Credit Agreement, to be effected by [an
increase in the Commitment of [name of existing Lender] [the addition of [name
of new Lender] (the “New Lender”) as a Lender under the terms of the Credit
Agreement].  Capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.

 

After giving effect to such Commitment Amount Increase, the Revolving Credit
Commitment of the [Lender] [New Lender] shall be $                          .

 

[Include paragraphs 1-4 for a New Lender]

 

1.     The New Lender hereby confirms that it has received a copy of the Loan
Documents and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the Loans and other extensions of credit thereunder. 
The New Lender acknowledges and agrees that it has made and will continue to
make, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, its own credit analysis and decisions relating to the Credit
Agreement.  The New Lender further acknowledges and agrees that the
Administrative Agent has not made any representations or warranties about the
credit worthiness of the Borrower or any other party to the Credit Agreement or
any other Loan Document or with respect to the legality, validity, sufficiency
or enforceability of the Credit Agreement or any other Loan Document or the
value of any security therefor.

 

2.     Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Administrative Agent, the New Lender (i) shall
be deemed automatically to have become a party to the Credit Agreement and have
all the rights and

 

--------------------------------------------------------------------------------

 

obligations of a “Lender” under the Credit Agreement as if it were an original
signatory thereto and (ii) agrees to be bound by the terms and conditions set
forth in the Credit Agreement as if it were an original signatory thereto.

 

3.     The New Lender shall deliver to the Administrative Agent an
Administrative Questionnaire.

 

[4.     The New Lender has delivered, if appropriate, to the Borrower and the
Administrative Agent (or is delivering to the Borrower and the Administrative
Agent concurrently herewith) the tax forms referred to in Section 13.1 of the
Credit Agreement.]*

 

THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

The Commitment Amount Increase shall be effective when the executed consent of
the Administrative Agent is received or otherwise in accordance with
Section 1.14 of the Credit Agreement, but not in any case prior to
                                      ,         .  It shall be a condition to
the effectiveness of the Commitment Amount Increase that all expenses referred
to in Section 1.14 of the Credit Agreement shall have been paid.

 

The Borrower hereby certifies that no Default or Event of Default has occurred
and is continuing.

 

--------------------------------------------------------------------------------

*

Insert bracketed paragraph if New Lender is organized under the law of a
jurisdiction other than the United States of America or a state thereof.

 

2

--------------------------------------------------------------------------------

 

Please indicate the Administrative Agent’s consent to such Commitment Amount
Increase by signing the enclosed copy of this letter in the space provided
below.

 

 

 

Very truly yours,

 

 

 

LTC PROPERTIES, INC.

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

[NEW OR EXISTING LENDER INCREASING
COMMITMENTS]

 

 

 

 

 

By

 

 

 

Name

 

 

 

Title

 

 

The undersigned hereby consents on
this      day of                           ,           
to the above-requested Commitment
Amount Increase.

 

BANK OF MONTREAL,
as Administrative Agent

 

 

By

 

 

 

Name

 

 

 

Title

 

 

 

3

--------------------------------------------------------------------------------

 

SCHEDULE 1.0

 

COMMITMENTS

 

NAME OF LENDER

 

CREDIT COMMITMENT

 

 

 

 

 

BMO Capital Markets Financing, Inc.

 

$

30,000,000

 

 

 

 

 

Key Bank National Association

 

$

30,000,000

 

 

 

 

 

Raymond James Bank, FSB

 

$

10,000,000

 

 

 

 

 

Royal Bank of Canada

 

$

10,000,000

 

 

 

 

 

TOTAL

 

$

80,000,000

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 1.1

 

INITIAL PROPERTIES, INITIAL INVESTMENT AMOUNT
AND INITIAL BORROWING BASE VALUE

 

--------------------------------------------------------------------------------

 

SCHEDULE 6.2

 

SUBSIDIARIES

 

--------------------------------------------------------------------------------

 

SCHEDULE 6.26

 

SIGNIFICANT LEASES

 

--------------------------------------------------------------------------------