Exhibit 10.1
Loan Nos. 07-0004261
07-0024261
07-0034261
07-0044261
07-0054261
07-0064261
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
for a loan in the amount of
$93,574,000.00
among
VALLEY HEALTH HOLDINGS LLC,
SKY HOLDINGS AZ LLC,
TERRACE HOLDINGS AZ LLC,
ENSIGN HIGHLAND LLC,
PLAZA HEALTH HOLDINGS LLC,
RILLITO HOLDINGS LLC,
MOUNTAINVIEW COMMUNITYCARE LLC
MEADOWBROOK HEALTH ASSOCIATES LLC
CEDAR AVENUE HOLDINGS LLC,
GRANADA INVESTMENTS LLC
GOLFVIEW HOLDINGS LLC
ARROW TREE HEALTH HOLDINGS LLC
TROUSDALE HEALTH HOLDINGS LLC
ENSIGN BELLFLOWER LLC
ANSON HEALTH HOLDINGS LLC
and
HILLENDAHL HEALTH HOLDINGS LLC
as Borrowers
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent and a Lender
and
THE OTHER FINANCIAL INSTITUTIONS WHO ARE OR HEREAFTER
BECOME PARTIES TO THIS AGREEMENT
as Lenders
Dated as of November 10, 2009

 

 

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              ARTICLE I INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES     2
 
 
           
Section 1.1
  Incorporation of Recitals     2  
 
           
Section 1.2
  Incorporation of Exhibits and Schedules     2  
 
           
Section 1.3
  Definitions     2  
 
           
Section 1.4
  Amendment and Restatement; No Novation     3  
 
           
Section 1.5
  Effectiveness of Existing Loan Documents     3  
 
            ARTICLE II LOAN TERMS     3  
 
           
Section 2.1
  Disbursements     3  
 
           
Section 2.2
  Interest Rate; Late Charge     4  
 
           
Section 2.3
  Terms of Payment     5  
 
           
Section 2.4
  Maturity     6  
 
           
Section 2.5
  Prepayment     6  
 
           
Section 2.6
  Ten Project Loan Capital Adequacy; Increased Costs; Illegality     10  
 
           
Section 2.7
  Six Project Loan Capital Adequacy; Increased Costs; Illegality     11  
 
           
Section 2.8
  Sources and Uses     12  
 
           
Section 2.9
  Security     12  
 
           
Section 2.10
  Release of Collateral     12  
 
            ARTICLE III INSURANCE, CONDEMNATION, AND IMPOUNDS     15  
 
           
Section 3.1
  Insurance     15  
 
           
Section 3.2
  Use and Application of Insurance Proceeds     17  
 
           
Section 3.3
  Condemnation Awards     18  
 
           
Section 3.4
  Insurance Impounds     18  
 
           
Section 3.5
  Real Estate Tax Impounds     19  
 
           
Section 3.6
  Replacement Reserves     20  
 
            ARTICLE IV LEASING MATTERS     21  
 
           
Section 4.1
  Representations and Warranties on Leases     21  
 
           
Section 4.2
  Standard Lease Form; Approval Rights     21  
 
           
Section 4.3
  Covenants     21  
 
           
Section 4.4
  Tenant Estoppels     22  
 
           
Section 4.5
  Security Deposits     22  

 

ii

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              ARTICLE V REPRESENTATIONS AND WARRANTIES     23  
 
           
Section 5.1
  Organization and Power     23  
 
           
Section 5.2
  Members     23  
 
           
Section 5.3
  Borrowers’ Operating Agreement     23  
 
           
Section 5.4
  Corporate Documents     23  
 
           
Section 5.5
  Validity of Loan Documents     24  
 
           
Section 5.6
  Liabilities; Litigation     24  
 
           
Section 5.7
  Taxes and Assessments     24  
 
           
Section 5.8
  Other Agreements; Defaults     24  
 
           
Section 5.9
  Compliance with Law     25  
 
           
Section 5.10
  Condemnation     25  
 
           
Section 5.11
  Access     25  
 
           
Section 5.12
  Flood Hazard     25  
 
           
Section 5.13
  Property     25  
 
           
Section 5.14
  Location of Borrowers     26  
 
           
Section 5.15
  Margin Stock     26  
 
           
Section 5.16
  Tax Filings     26  
 
           
Section 5.17
  Solvency     26  
 
           
Section 5.18
  Full and Accurate Disclosure     27  
 
           
Section 5.19
  Single Purpose Entity     27  
 
           
Section 5.20
  No Broker     27  
 
           
Section 5.21
  Reserved     27  
 
           
Section 5.22
  Labor Disputes     27  
 
           
Section 5.23
  Employees     27  
 
           
Section 5.24
  ERISA (Borrower)     27  
 
           
Section 5.25
  Intellectual Property     28  
 
           
Section 5.26
  Anti-Terrorism and Anti-Money Laundering Compliance     28  
 
           
Section 5.27
  Master Lease     30  
 
           
Section 5.28
  Property Management     30  
 
            ARTICLE VI FINANCIAL REPORTING; NOTICES     30  
 
           
Section 6.1
  Financial Statements     30  
 
           
Section 6.2
  Audits     32  
 
           
Section 6.3
  Books and Records/Audits     32  
 
           
Section 6.4
  Notice of Litigation or Default     32  
 
           
Section 6.5
  Bank Accounts     33  

 

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              ARTICLE VII COVENANTS     33  
 
           
Section 7.1
  Inspection     33  
 
           
Section 7.2
  Due on Sale and Encumbrance; Transfers of Interests     33  
 
           
Section 7.3
  Taxes; Charges     34  
 
           
Section 7.4
  Control; Management     35  
 
           
Section 7.5
  Operation; Maintenance; Inspection     35  
 
           
Section 7.6
  Taxes on Security     35  
 
           
Section 7.7
  Single Purpose Entity; Legal Existence; Name, Etc     36  
 
           
Section 7.8
  Affiliate Transactions     36  
 
           
Section 7.9
  Limitation on Other Debt     36  
 
           
Section 7.10
  Further Assurances     36  
 
           
Section 7.11
  Estoppel Certificates     37  
 
           
Section 7.12
  Notice of Certain Events     37  
 
           
Section 7.13
  Indemnification     37  
 
           
Section 7.14
  Use of Proceeds, Revenues     38  
 
           
Section 7.15
  Bank Accounts; Notices to Tenants and Residents     38  
 
           
Section 7.16
  Compliance with Laws and Contractual Obligations     38  
 
           
Section 7.17
  Notice of Money Laundering     39  
 
           
Section 7.18
  Anti-Terrorism and Anti-Money Laundering Compliance     39  
 
           
Section 7.19
  Employees     41  
 
           
Section 7.20
  Post-Closing Obligations     41  
 
           
Section 7.21
  Representations and Warranties     41  
 
           
Section 7.22
  Cooperation     41  
 
           
Section 7.23
  Master Leases     42  
 
           
Section 7.24
  Property Management Agreements     42  
 
            ARTICLE VIII Health Care Matters     42  
 
           
Section 8.1
  Healthcare Laws     42  
 
           
Section 8.2
  Representations, Warranties and Covenants Regarding Healthcare Matters     44
 
 
           
Section 8.3
  Cooperation     47  
 
           
Section 8.4
  Business and Operations     48  
 
           
Section 8.5
  Severability of Covenants     48  

 

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              ARTICLE IX EVENTS OF DEFAULT     48  
 
           
Section 9.1
  Payments     48  
 
           
Section 9.2
  Certain Covenants     48  
 
           
Section 9.3
  Sale, Encumbrance, Etc     48  
 
           
Section 9.4
  Covenants     49  
 
           
Section 9.5
  Representations and Warranties     49  
 
           
Section 9.6
  Other Encumbrances     49  
 
           
Section 9.7
  Involuntary Bankruptcy or Other Proceeding     49  
 
           
Section 9.8
  Voluntary Petitions, etc     49  
 
           
Section 9.9
  Default Under the Accounts Receivable Loan Documents     50  
 
           
Section 9.10
  False Reports     50  
 
           
Section 9.11
  Reserved     50  
 
           
Section 9.12
  Money Laundering     50  
 
           
Section 9.13
  Loan Documents     50  
 
           
Section 9.14
  Default Under Operating Agreement     50  
 
           
Section 9.15
  Master Leases     50  
 
           
Section 9.16
  Operations     51  
 
           
Section 9.17
  Criminal Act     51  
 
            ARTICLE X REMEDIES     51  
 
           
Section 10.1
  Remedies — Insolvency Events     51  
 
           
Section 10.2
  Remedies — Other Events     51  
 
           
Section 10.3
  Agent’s Right to Perform the Obligations     52  
 
            ARTICLE XI MISCELLANEOUS     52  
 
           
Section 11.1
  Notices     52  
 
           
Section 11.2
  Amendments and Waivers     54  
 
           
Section 11.3
  Limitation on Interest     54  
 
           
Section 11.4
  Invalid Provisions     55  
 
           
Section 11.5
  Reimbursement of Expenses; Portfolio Administration Fee     55  
 
           
Section 11.6
  Approvals; Third Parties; Conditions     56  
 
           
Section 11.7
  Lender Not in Control; No Partnership     56  
 
           
Section 11.8
  Time of the Essence     57  
 
           
Section 11.9
  Successors and Assigns     57  
 
           
Section 11.10
  Renewal, Extension or Rearrangement     57  

 

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Section 11.11
  Waivers; Forbearance     57  
 
           
Section 11.12
  Cumulative Rights     58  
 
           
Section 11.13
  Singular and Plural     58  
 
           
Section 11.14
  Phrases     58  
 
           
Section 11.15
  Exhibits and Schedules     58  
 
           
Section 11.16
  Titles of Articles, Sections and Subsections     58  
 
           
Section 11.17
  Promotional Material     58  
 
           
Section 11.18
  Survival     59  
 
           
Section 11.19
  WAIVER OF JURY TRIAL     59  
 
           
Section 11.20
  Waiver of Punitive or Consequential Damages     60  
 
           
Section 11.21
  Governing Law     60  
 
           
Section 11.22
  Entire Agreement     60  
 
           
Section 11.23
  Counterparts     60  
 
           
Section 11.24
  Venue     60  
 
           
Section 11.25
  Sale of Loan, Participation     61  
 
           
Section 11.26
  Limitation on Liability of Agent’s and Lender’s Officers, Employees, etc    
61  
 
           
Section 11.27
  Effectiveness of Facsimile Documents and Signatures     61  
 
           
Section 11.28
  Joint and Several Liability     61  
 
           
Section 11.29
  Agency     65  
 
           
Section 11.30
  Patriot Act     66  
 
           
Section 11.31
  California Waivers     66  
 
           
Section 11.32
  Additional Waivers     67  
 
           
Section 11.33
  Arizona Waiver     68  

 

-vi-

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LIST OF EXHIBITS AND SCHEDULES TO LOAN AGREEMENT
Exhibits:

     
Exhibit A-1
  Ten Project Borrowers
Exhibit A-2
  Six Project Borrowers
Exhibit B-1
  Desert Sky Project
Exhibit B-2
  Desert Terrace Project
Exhibit B-3
  Highland Manor Project
Exhibit B-4
  North Mountain Medical and Rehabilitation Center Project
Exhibit B-5
  Park Manor Project
Exhibit B-6
  Catalina Project
Exhibit B-7
  Park View Gardens Project
Exhibit B-8
  Sabino Project
Exhibit B-9
  Upland Project
Exhibit B-10
  Camarillo Project
Exhibit B-11
  Cambridge Project
Exhibit B-12
  Arbor Glen Project
Exhibit B-13
  Brookfield Project
Exhibit B-14
  Rose Villa Project
Exhibit B-15
  Northern Oaks Project
Exhibit B-16
  Golden Acres Project
Exhibit C
  Intellectual Property
Exhibit D
  Form of Interest Holder Agreement
Exhibit E
  Provider Payment/Reimbursement Programs
Exhibit F
  Governmental Approvals
Exhibit G
  Required Repairs

Schedules:

     
Schedule 2.1
  Advance Conditions
Schedule 2.3(a)
  Ten Project Loans Principal Payments
Schedule 2.3(b)
  Six Project Loan Principal Payments
Schedule 2.9
  Sources and Uses
Schedule 3.2(a)
  Allocated Loan Amounts
Schedule 5.6
  Litigation
Schedule 5.14
  Locations
Schedule 6.1
  Compliance Certificate
Schedule I
  Certain Definitions

 

vii

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FOURTH AMENDED AND RESTATED LOAN AGREEMENT
This Fourth Amended and Restated Loan Agreement is entered into as of
November 6, 2009 among GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (in its individual capacity, “GECC” and in its capacity as agent for
the Lenders, together with its successors, “Agent”), the financial institutions
other than GECC who are or hereafter become parties to this Agreement (together
with GECC collectively, or individually, as the context may require, “Lender”),
and VALLEY HEALTH HOLDINGS LLC, SKY HOLDINGS AZ LLC, TERRACE HOLDINGS AZ LLC,
ENSIGN HIGHLAND LLC, PLAZA HEALTH HOLDINGS LLC, RILLITO HOLDINGS LLC,
MEADOWBROOK HEALTH ASSOCIATES LLC, MOUNTAINVIEW COMMUNITYCARE LLC, CEDAR AVENUE
HOLDINGS LLC, GRANADA INVESTMENTS LLC, each a Nevada limited liability company,
the Borrowers executing a “Ten Project Note,” as defined hereinbelow, each of
which Borrowers are listed on Exhibit A-1 with corresponding Project name, and
each a signatory to this Agreement (each a “Ten Project Borrower” and
collectively, the “Ten Project Borrowers”), GOLFVIEW HOLDINGS LLC, ARROW TREE
HEALTH HOLDINGS LLC, TROUSDALE HEALTH HOLDINGS LLC, ENSIGN BELLFLOWER LLC, ANSON
HEALTH HOLDINGS LLC and HILLENDAHL HEALTH HOLDINGS LLC, each a Nevada limited
liability company, the Borrowers executing a “Six Project Note,” as defined
hereinbelow, each of which Borrowers are listed on Exhibit A-2 with
corresponding Project name, and each a signatory to this Agreement (each a “Six
Project Borrower” and collectively, the “Six Project Borrowers”; the Ten Project
Borrowers and Six Project Borrowers are each individually a “Borrower” and
collectively, the “Borrowers”).
RECITALS
A. On or about December 29, 2006, Lender made the Ten Project Loan (as defined
herein) to the Ten Project Borrowers, which Ten Project Loan is governed by that
certain Third Amended and Restated Loan Agreement dated as of December 29, 2006
(the “Existing Loan Agreement”). This Agreement restates and supersedes the
Existing Loan Agreement in its entirety.
B. Lender and Agent have agreed to amend and restate the Ten Project Loan and to
make additional advances to Six Project Borrowers subject to the terms and
conditions contained herein (the Ten Project Loan, as amended and restated
hereby, together with the Six Project Loan (defined below) and additional
amounts to be advanced pursuant to the terms hereof are collectively referred to
as the “Loans”). The Ten Project Loan is evidenced by that certain Consolidated
Amended and Restated Promissory Note dated as of December 29, 2006 in the face
amount of Sixty-Four Million Six Hundred Ninety-Two Thousand One Hundred and
Eleven and 67/100 Dollars ($64,692,111.67) (said note and all amendments thereto
and substitutions therefor are hereinafter referred to collectively as the “Ten
Project Note”). Lender has severally agreed to make the Six Project Loan,
subject to the terms and conditions contained herein, in the original principal
amount of Forty Million and XX/100 Dollars ($40,000,000.00) (“Six Project
Loan”), which is to be evidenced by that certain Six Project Promissory Note
executed of even date herewith by the Six Project Borrowers (said note and all
amendments thereto and substitutions therefor are hereinafter referred to
collectively as the “Six Project Note”; and collectively with the Ten Project
Note, the “Notes”). The terms and provisions of the Notes are hereby
incorporated herein by reference in this Agreement.

 

 

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

 

C. On the Restatement Date, each Borrower will be the owner of its respective
real property more particularly described on Exhibit B-1 through B-16 attached
hereto (each a “Property” and collectively, the “Properties”), and the
improvements located thereon (the “Improvements”) including a skilled nursing
facility. Each Property along with its respective Improvements is referred to
herein as a “Project” and collectively as the “Projects”; each Property
described on Exhibit B-1 through B-10 attached hereto and the Improvements
located thereon are sometimes referred to herein as a “Ten Project Loan Project”
and collectively as the “Ten Project Loan Projects”; and each Property described
on Exhibit B-11 through B-16 attached hereto and the Improvements located
thereon are sometimes referred to herein as a “Six Project Loan Project” and
collectively as the “Six Project Loan Projects”.
D. Six Project Borrowers will use the proceeds of the Six Project Loan for the
purpose of refinancing the Six Project Loan Projects.
E. Borrowers’ obligations under the Loans will be secured by, among other
things, the Security Documents. This Agreement, the Notes, the Security
Documents, the Environmental Indemnity, the Business Associate Agreement, the
Subordination Agreements and any other documents evidencing or securing the
Loans or executed by Borrowers, Guarantor or Master Tenant in connection
therewith, and any modifications, renewals and extensions thereof, are referred
to herein collectively as the “Loan Documents”.
NOW, THEREFORE, in consideration of the foregoing and the mutual conditions and
agreements contained herein, the parties agree as follows:
ARTICLE I
INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES
Section 1.1 Incorporation of Recitals.
The foregoing preambles and all other recitals set forth herein are made a part
hereof by this reference.
Section 1.2 Incorporation of Exhibits and Schedules.
Exhibits A-1 through G and Schedules 2.1 through 6.1 and Schedule I to this
Agreement, attached hereto are incorporated in this Agreement and expressly made
a part hereof by this reference.
Section 1.3 Definitions.
All terms defined in Schedule I or otherwise in this Agreement shall, unless
otherwise defined therein, have the same meanings when used in any other Loan
Document, or any certificate or other document made or delivered pursuant
hereto. The words “hereof”, “herein”, and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole. The
words “include” and “include(s)” when used in this Agreement and the other Loan
Documents means “include(s), without limitation,” and the word “including” means
“including, but not limited to.”

 

-2-

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Section 1.4 Amendment and Restatement; No Novation.
This Agreement constitutes an amendment and restatement of the Existing Loan
Agreement effective from and after the Restatement Date. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby are not intended by the parties to be, and shall not constitute, a
novation or an accord and satisfaction of the Indebtedness, the Obligations, or
any other obligations owing to the Lender or the Agent under the Existing Loan
Agreement, the Ten Project Note or any other “Loan Document” as defined in the
Existing Loan Agreement (the “Existing Loan Documents”). On the Restatement
Date, the credit facilities and the terms and conditions thereof described in
the Existing Loan Agreement shall be amended and replaced by the credit
facilities and the terms and conditions thereof described herein, and all
Indebtedness, Obligations, obligations of the Borrowers under the June 2006
First Funding, June 2006 Second Funding, June 2006 Third Funding, December 2006
Funding, and other obligations of the Borrowers and any other Person outstanding
as of such date under the Existing Loan Agreement shall be deemed to be
Indebtedness and Obligations outstanding under the corresponding facilities
described herein without further action by any Person. The Schedules and
Exhibits attached to this Agreement and made a part hereof shall be deemed to
replace the Schedules and Exhibits to the Existing Loan Agreement.
Section 1.5 Effectiveness of Existing Loan Documents.
Borrowers and each other Loan Party hereby acknowledge that the Existing Loan
Documents previously executed by the Borrowers, or any Loan Party and delivered
to GECC, Agent and/or Lender, are and shall remain in full force and effect, and
Borrowers and each other Loan Party hereby ratifies, confirms and approves the
Six Project Note and each of the other Loan Documents and all of the terms and
provisions thereof, and agrees that the Six Project Note and each of the other
Loan Documents constitutes a valid and binding obligation of Borrowers or the
Loan Parties, as applicable, enforceable by Agent and Lender in accordance with
its terms.
ARTICLE II
LOAN TERMS
Section 2.1 Disbursements.
(a) Six Project Loan Funding. The Six Project Loan shall be funded in one
advance and repaid in accordance with this Agreement and the other Loan
Documents. On the Restatement Date, and subject to the terms, provisions and
conditions of this Agreement (including, without limitation Borrowers’
satisfaction of the conditions to the Six Project Loan described in Schedule 2.1
attached hereto) and the other Loan Documents, Lender shall disburse to
Borrowers from the proceeds of the Six Project Loan. Once repaid, the Six
Project Loan may not be reborrowed.

 

-3-

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(b) Loans outstanding on the Restatement Date. As of the Restatement Date, the
Lender has previously made loans to certain of the Borrowers in an aggregate
amount equal to $55,895,000.00, comprised of the following: (i) a ‘Loan’ in the
amount of $27,292,571.16 made on June 30, 2006 (the “June 2006 First Funding”),
(ii) a ‘Loan’ in the amount of $3,929,184.85 made on August 8, 2006 (the
“June 2006 Second Funding”), and (iii) a ‘Loan’ in the amount of $8,573,243.99
made on October 16, 2006 (the “June 2006 Third Funding”), and (iv) a ‘Loan’ in
the amount of $16,100,000.00 made on December 29, 2006 (the “December 2006
Funding”; and collectively with the June 2006 First Funding, the June 2006
Second Funding, the June 2006 Third Funding, the “Ten Project Loans”). As of the
Restatement Date, the aggregate amount of such ‘Loans’ remaining outstanding on
the Restatement Date is $53,281,759.43. The Borrowers hereby acknowledge that
all Obligations in respect of ‘Loans’ outstanding under, pursuant to and as
defined in the Existing Loan Agreement shall be deemed to have been made to the
Borrowers as ‘Loans’ under this Agreement, and shall constitute a portion of the
Obligations hereunder.
Section 2.2 Interest Rate; Late Charge.
(a) Ten Project Loan Interest. Unless otherwise specified to the contrary in
this Agreement, the outstanding principal balance of the Ten Project Loan shall
bear interest at the following rates: (i) the June 2006 First Funding, of which
the outstanding principal balance as of the date hereof is $26,010,875.89, shall
bear interest at a rate per annum of seven and one-half percent (7.5%) (the
“June 2006 First Funding Interest Rate”), (ii) the June 2006 Second Funding, of
which the outstanding principal balance as of the date hereof is $3,730,365.26,
shall bear interest at a rate per annum of seven and eighteen one hundredths
percent (7.18%) (the “June 2006 Second Funding Interest Rate”), (iii) the
June 2006 Third Funding, of which the outstanding principal balance as of the
date hereof is $8,141,099.92, shall bear interest at a rate per annum of seven
and six one hundredths percent (7.06%) (the “June 2006 Third Funding Interest
Rate”), and (iv) the December 2006 Funding, of which the outstanding principal
balance as of the date hereof is $15,399,418.36, shall bear interest at a rate
per annum of six and ninety-five one hundredths percent (6.95%) (the
“December 2006 Funding Interest Rate” and, collectively with the June 2006 First
Funding Interest Rate, the June 2006 Second Funding Interest Rate, the June 2006
Third Funding Interest Rate, and the December 2006 Funding Interest Rate, the
“Ten Project Interest Rates”)
(b) Six Project Loan Interest. Unless otherwise specified to the contrary in
this Agreement, the outstanding principal balance of the Six Project Loan shall
bear interest at the following rates: (i) $20,000,000.00 of the Six Project Loan
(the “Fixed Rate Funding”) at a fixed rate of interest equal to five and
eighty-five one hundredths percent (5.85%) per annum in excess of the “Five
(5) Year Swap Rate”, for a total interest rate on the Restatement Date for the
Fixed Rate Funding in the amount of eight and forty-nine one hundredths percent
(8.49%) (the “Fixed Rate”) and (ii) $20,000,000.00 of the Six Project Loan (the
“Floating Rate Funding”) (A) from the Restatement Date until November 10, 2012,
at a fixed rate of interest equal to five and eighty-five one hundredths percent
(5.85%) per annum in excess of the “Three (3) Year Swap Rate”, for a total
interest rate on the Restatement Date for the Floating Rate Funding in the
amount of seven and sixty-four one hundredths percent (7.64%) and
(B) thereafter, at a floating rate of interest equal to five and three quarters
percent (5.75%) per annum in excess of the LIBOR Rate (the “Floating Rate” and
collectively with the Fixed Rate, the “Six Project Interest Rates” and
collectively with the Ten Project Interest Rates, the “Interest Rates”).

 

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(c) Interest shall be computed on the basis of a fraction, the denominator of
which is three hundred sixty (360) and the numerator of which is the actual
number of days elapsed from the Restatement Date or the date on which the
immediately preceding payment was due. If Borrowers fail to pay any installment
of interest or principal within five (5) days after the date on which the same
is due, Borrowers shall pay to Agent a late charge on such past due amount, as
liquidated damages and not as a penalty, equal to the greater of (a) interest at
the Default Rate on such amount from the date when due until paid, and (b) five
percent (5%) of such amount, but not in excess of the maximum amount of interest
allowed by applicable law. The foregoing late charge is intended to compensate
Agent for the expenses incident to handling any such delinquent payment and for
the losses incurred by Agent as a result of such delinquent payment. Borrowers
agree that, considering all of the circumstances existing on the date this
Agreement is executed, the late charge represents a reasonable estimate of the
costs and losses Agent will incur by reason of late payment. Borrowers and Agent
further agree that proof of actual losses would be costly, inconvenient,
impracticable and extremely difficult to fix. Acceptance of the late charge
shall not constitute a waiver of the Event of Default arising from the overdue
installment, and shall not prevent Agent from exercising any other rights or
remedies available to Agent or Lender with respect to such Event of Default.
While any Event of Default exists, the Loans shall bear interest at the Default
Rate.
Section 2.3 Terms of Payment.
(a) Payments of Ten Project Loans.
(i) Interest. Continuing on December 1, 2009, and on the first day of each month
thereafter until the Ten Project Loans Maturity Date, Ten Project Borrowers
shall pay interest for the Ten Project Loan in arrears on the first day of each
month until all amounts due under the Loan Documents are paid in full at the
applicable Ten Project Interest Rates. If the first day of a month is not a
Business Day, then the applicable payment due hereunder shall be made on the
first Business Day immediately following the first day of such month.
(ii) Principal Amortization Payments. Continuing on December 1, 2009 and on the
first (1st) day of each month thereafter until the Ten Project Loans Maturity
Date, Ten Project Borrowers shall make a monthly principal amortization payment
in accordance with Schedule 2.3(a) attached hereto. If the first day of a month
is not a Business Day, then the applicable payment due hereunder shall be made
on the first Business Day immediately following the first day of such month.
(b) Payments of Six Project Loan.
(i) Interest. Commencing on December 1, 2009, and on the first day of each month
thereafter until the Six Project Loan Maturity Date, Six Project Borrowers shall
pay interest for the Six Project Loan in arrears on the first day of each month
until all amounts due under the Loan Documents are paid in full at the
applicable Six Project Interest Rate. If the first day of a month is not a
Business Day, then the applicable payment due hereunder shall be made on the
first Business Day immediately following the first day of such month.

 

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(ii) Principal Amortization Payments. Commencing on December 1, 2009 and on the
first (1st) day of each month thereafter until the Six Project Loan Maturity
Date, Six Project Borrowers shall make a monthly principal amortization payment
in accordance with Schedule 2.3(b) attached hereto. If the first day of a month
is not a Business Day, then the applicable payment due hereunder shall be made
on the first Business Day immediately following the first day of such month.
Section 2.4 Maturity.
(a) Ten Project Loans. The Ten Project Loans shall mature and Ten Project
Borrowers shall pay to Agent all outstanding principal, accrued and unpaid
interest, default interest, late charges and any other amounts due under the
Loan Documents on the Ten Project Loans Maturity Date.
(b) Six Project Loan. The Six Project Loan shall mature and Six Project
Borrowers shall pay to Agent all outstanding principal, accrued and unpaid
interest, default interest, late charges and any other amounts due under the
Loan Documents on the Six Project Loan Maturity Date.
Section 2.5 Prepayment.
(a) Ten Project Loans.
(i) No Prepayments. Borrowers may not prepay any of the outstanding principal
balance of the Ten Project Loans prior to the Ten Project Loans Maturity Date;
provided, however, Defeasance pursuant to Section 2.5(a)(ii) below shall be
available at any time (the “Open Period”) subject to the terms and conditions
provided therein. If the Ten Project Loans are accelerated by Agent in
accordance with the terms of this Agreement for any reason, Ten Project
Borrowers shall pay to Agent the Make Whole Breakage Amount and all other
amounts outstanding under the Loan Documents together with a prepayment premium
(“Prepayment Premium”) equal to one percent (1%) of the outstanding balance of
the Ten Project Loan. Notwithstanding anything to the contrary, if Defeasance
occurs during the Open Period in accordance with Section 2.5(a)(ii), no Make
Whole Breakage Amount or Prepayment Premium shall be due and payable by Ten
Project Borrowers to Agent. Notwithstanding anything to the contrary, provided
no Event of Default has occurred and is continuing, Ten Project Borrowers may
prepay the Ten Project Loans in full, but not in part, at any time during the
six (6) month period immediately preceding the scheduled Ten Project Loans
Maturity Date, without payment of a Prepayment Premium or Make Whole Breakage
Amount, upon thirty (30) days prior written notice to Agent.
(ii) Defeasance. At any time during the Open Period, so long as no default or
Event of Default is then continuing, Ten Project Borrowers may obtain the
release of the Ten Project Loan Projects from the lien of the Security Documents
upon the satisfaction of the following conditions precedent (“Defeasance”):
(A) not less than thirty (30) days prior written notice to Agent specifying the
first day of a calendar month (or if not a Business Day, the first Business Day
of such calendar month) (the “Defeasance Release Date”) on which the Defeasance
Deposit (hereinafter defined) is to be made;

 

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(B) the payment to Agent of interest accrued and unpaid on the principal balance
of the Ten Project Loan to and including the Defeasance Release Date;
(C) the payment to Agent of all other sums with respect to the Ten Project
Loans, not including scheduled interest or principal payments, due under the Ten
Project Note, the Security Documents and the other Loan Documents;
(D) the payment to Agent of the Defeasance Deposit and a $5,000 non-refundable
processing fee;
(E) the delivery by Ten Project Borrowers to Agent at Ten Project Borrowers’
sole cost and expense of:
(1) a security agreement in form and substance reasonably satisfactory to Agent,
creating a first priority lien in favor of Agent on the Defeasance Deposit and
the U.S. Obligations (hereinafter defined) purchased on behalf of Ten Project
Borrowers with the Defeasance Deposit in accordance with this Section 2.5(a)(ii)
(the “Security Agreement”);
(2) releases of the Ten Project Loan Projects from the lien of the Security
Documents (for execution by Agent) in a form appropriate for the jurisdiction in
which each Ten Project Loan Project is located and otherwise reasonably
acceptable to Agent;
(3) an officer’s certificate of Ten Project Borrowers certifying that the
requirements set forth in Section 2.5(a)(ii)(E) have been satisfied;
(4) an opinion of counsel in form and substance, and rendered by counsel,
reasonably satisfactory to Agent, at Ten Project Borrowers’ expense, stating,
among other things, that Agent has a perfected first priority security interest
in the Defeasance Deposit and the U.S. Obligations purchased by or on behalf of
Ten Project Borrowers and pledged to Agent and as to enforceability of the
Assignment Agreement, the Security Agreement and other documents delivered in
connection therewith, and if required by the Agent, a substantive
non-consolidation opinion with respect to the Successor Ten Project Borrower, in
form and substance, and rendered by counsel, reasonably satisfactory to Agent;
and
(5) such other certificates, documents, opinions or instruments as Agent may
reasonably request; and

 

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(F) Agent shall have received, at Ten Project Borrowers’ expense, a certificate
from a nationally or regionally recognized independent certified public
accountant acceptable to Agent, in form and substance reasonably satisfactory to
Agent, certifying that the U.S. Obligations purchased with the Defeasance
Deposit will generate sufficient sums to satisfy the obligations of Ten Project
Borrowers under this Agreement, the Ten Project Note and this Section 2.5(a)(ii)
as and when such obligations become due.
In connection with the conditions set forth above, Ten Project Borrowers hereby
appoint Agent as their agent and attorney in fact for the purpose of using the
Defeasance Deposit to purchase or cause to be purchased U.S. Obligations which
provide payments on or prior to, but as close as possible to, all successive
scheduled Payment Dates after the Defeasance Release Date upon which interest
and principal payments are required under this Agreement and the Ten Project
Note, including the amounts due on the Ten Project Maturity Date, and in amounts
equal to the scheduled payments due on such dates under this Agreement and the
Ten Project Note plus Agent’s reasonable estimate of administrative expenses and
applicable federal income taxes associated with or to be incurred by the
Successor Ten Project Borrower during the remaining term of, and applicable to,
the Ten Project Loans (the “Scheduled Defeasance Payments”). Ten Project
Borrowers, pursuant to the Security Agreement or other appropriate document,
shall authorize and direct that the payments received from the U.S. Obligations
may be made directly to Agent and applied to satisfy the obligations of Ten
Project Borrowers under this Agreement, the Ten Project Note and this
Section 2.5(a)(ii).
Upon compliance with the requirements of this Section 2.5(a)(ii), the Guaranty
with respect to the Ten Project Borrowers shall be released (except as to
obligations thereunder arising from circumstances existing or occurring prior to
the Defeasance and which obligations would otherwise survive the repayment of
the Ten Project Loan) and the Ten Project Loan Projects shall be released of
record from the lien of the Security Documents and the pledged U.S. Obligations
shall be the sole source of collateral securing the repayment of the Ten Project
Loans and the Ten Project Note. Any portion of the Defeasance Deposit in excess
of the amount necessary to purchase the U.S. Obligations required by the
preceding paragraph and to otherwise satisfy the Ten Project Borrowers’
obligations under this Section 2.5(a)(ii) shall be remitted to Ten Project
Borrowers with the release of the Ten Project Loan Projects from the lien of the
applicable Security Documents. In connection with such release, a successor
entity meeting Agent’s then applicable single purpose entity requirements and
otherwise reasonably acceptable to Agent, adjusted, as applicable, for the
Defeasance contemplated by this Section 2.5(a)(ii) (the “Successor Ten Project
Borrower”), shall be established by Ten Project Borrowers subject to Agent’s
approval (or at Agent’s option, by Agent) and Ten Project Borrowers shall
transfer and assign all obligations, rights and duties under and to the Ten
Project Note together with the pledged U.S. Obligations to such Successor Ten
Project Borrower pursuant to an assignment and assumption agreement in form and
substance reasonably satisfactory to Agent (the “Assignment Agreement”). Such
Successor Ten Project Borrower shall assume the obligations of the Ten Project
Borrowers under the Ten Project Note, the Security Agreement and the other Loan
Documents and Ten Project Borrowers shall be relieved of their obligations
thereunder, except (i) that Ten Project Borrowers shall be required to perform
their obligations pursuant to this Section 2.5(a), including maintenance of the
Successor Ten Project Borrower, if applicable, and (ii) for those obligations of
Ten Project Borrowers which survive repayment of the Ten Project Loan. Ten
Project Borrowers shall pay $1,000.00 to any such Successor Ten Project Borrower
as consideration for assuming the obligations under the Ten Project Note, the
Security Agreement and the other Loan Documents pursuant to the Assignment
Agreement. Ten Project Borrowers shall pay all reasonable costs and expenses
incurred by Agent or Lender in connection with this Section 2.5(a), including
Agent’s and Lender’s reasonable attorneys’ fees and expenses, and any
administrative and tax expenses associated with or incurred by the Successor Ten
Project Borrower.

 

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(iii) Application of Payments. All payments received by Agent or Lender under
the Loan Documents on the Ten Project Loan shall be applied: first, to any fees,
expenses and indemnification payments due to Agent or Lender under the Loan
Documents for the Ten Project Loan; second, to any Default Rate interest or late
charges; third, to other accrued and unpaid interest; fourth, to the principal
sum and other amounts due under the Loan Documents for the Ten Project Loan, and
fifth to the Prepayment Premium.
(b) Six Project Loan.
(i) Lock-Out Period. Except as set forth herein, the Six Project Loan is closed
to prepayment in whole or in part. Notwithstanding the foregoing, the Six
Project Loan may be prepaid in whole or in part, on or after November 6, 2010,
provided the Six Project Borrowers pay to Agent with such prepayment all accrued
interest and all other outstanding amounts then due and unpaid under the Loan
Documents, including, without limitation, the pro rata portion of the Exit Fee
and, if applicable, the SWAP Termination Fee. Additionally, (A) the Fixed Rate
Funding may be prepaid in whole but not in part, up to ninety (90) days prior to
the maturity of the “Five (5) Year Swap” provided the Six Project Borrowers pay
to Agent with such prepayment all accrued interest and all other outstanding
amounts then due and unpaid under the Loan Documents, including, without
limitation, the pro rata portion of the Exit Fee but excluding the SWAP
Termination Fee which shall not be due in such circumstance and (B) the Floating
Rate Funding may be prepaid in whole but not in part, up to ninety (90) days
prior to the maturity of the “Three (3) Year Swap” provided the Six Project
Borrowers pay to Agent with such prepayment all accrued interest and all other
outstanding amounts then due and unpaid under the Loan Documents, including,
without limitation, the pro rata portion of the Exit Fee but excluding the SWAP
Termination Fee which shall not be due in such circumstance.
(ii) Involuntary Prepayment. If the Six Project Loan is accelerated by Agent in
accordance with the terms of this Agreement for any reason, Six Project
Borrowers shall pay the Agent the Exit Fee in addition to the other amounts due
hereunder, and, if applicable, the SWAP Termination Fee.
(iii) Application of Payments. All payments received by Agent or Lender under
the Loan Documents on the Six Project Loan shall be applied: first, to any fees,
expenses and indemnification payments due to Agent or Lender under the Loan
Documents for the Six Project Loan; second, to any Default Rate interest or late
charges; third, to other accrued and unpaid interest; fourth, to the principal
sum and other amounts due under the Loan Documents for the Six Project Loan, and
fifth to the Exit Fee and, if applicable, the SWAP Termination Fee.

 

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(iv) Interest Rate Protection. In the event the Six Project Borrowers, in their
sole discretion, decide to enter into a Hedge Agreement with respect to the Six
Project Loan, any such Hedge Agreement shall be provided by either Lender (or an
Affiliate of Lender) or a bank or other financial institution whose long-term
debt rating is equal to or greater than “A”. The Six Project Loan Projects shall
not be pledged or encumbered in any manner to secure any obligation under the
Hedge Agreement. The Six Project Borrowers shall not enter into any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement pertaining to fluctuations in interest rates, or any
swaps, caps or collar agreements or similar arrangements providing for
protection against fluctuations in currency exchange rates, either generally or
under specific contingencies, other than the Hedge Agreement described by this
Section, and not for speculative purposes.
(v) LIBOR Breakage Amount. Upon any payment of the Six Project Loan on any day
that is not the last day of the LIBOR Period applicable thereto (regardless of
the source of such prepayment and whether voluntary, by acceleration or
otherwise), the Six Project Borrowers shall pay Agent, for the benefit of
Lenders the LIBOR Breakage Amount. For purposes of calculating the LIBOR
Breakage Amount payable to the Lenders under this Section 2.5(b)(v), each Lender
shall be deemed to have actually funded the Six Project Loan through the
purchase of a deposit bearing interest at LIBOR in an amount equal to the amount
of the Six Project Loan and having a maturity and repricing characteristics
comparable to the relevant LIBOR Period; provided, however, that each Lender may
fund the Six Project Loan in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this Section 2.5(b)(v).
Section 2.6 Ten Project Loan Capital Adequacy; Increased Costs; Illegality.
(a) If Agent determines that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by Lender
with any request or directive regarding capital adequacy, reserve requirements
or similar requirements (whether or not having the force of law), in each case,
adopted after the Restatement Date, from any central bank or other governmental
authority increases or would have the effect of increasing the amount of
capital, reserves or other funds required to be maintained by Lender and thereby
reducing the rate of return on Lender’s capital as a consequence of its
obligations hereunder, then the Ten Project Borrowers shall from time to time
upon demand by Agent, pay to Lender, additional amounts sufficient to compensate
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by Agent to the Ten
Project Borrowers shall, absent manifest error, be final, conclusive and binding
for all purposes. Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, Lender shall, to the extent not inconsistent with such
Lender’s internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by the
Ten Project Borrowers pursuant to this Section 2.6(a).

 

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(b) If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law), in each case adopted after
the Restatement Date, there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining the Ten Project Loan, then
the Ten Project Borrowers shall from time to time, upon demand by Agent, pay to
Lender, additional amounts sufficient to compensate Lender for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Ten Project Borrowers by Agent, shall be conclusive and binding on the Ten
Project Borrowers for all purposes, absent manifest error. Lender agrees that,
as promptly as practicable after it becomes aware of any circumstances referred
to above which would result in any such increased cost, Lender shall, to the
extent not inconsistent with such Lender’s internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 2.6(b).
Section 2.7 Six Project Loan Capital Adequacy; Increased Costs; Illegality.
(a) If Agent determines that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by Lender
with any request or directive regarding capital adequacy, reserve requirements
or similar requirements (whether or not having the force of law), in each case,
adopted after the Restatement Date, from any central bank or other governmental
authority increases or would have the effect of increasing the amount of
capital, reserves or other funds required to be maintained by Lender and thereby
reducing the rate of return on Lender’s capital as a consequence of its
obligations hereunder, then the Six Project Borrowers shall from time to time
upon demand by Agent, pay to Lender, additional amounts sufficient to compensate
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by Agent to the Six
Project Borrowers shall, absent manifest error, be final, conclusive and binding
for all purposes. Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, Lender shall, to the extent not inconsistent with such
Lender’s internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by the
Six Project Borrowers pursuant to this Section 2.7(a).
(b) If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law), in each case adopted after
the Restatement Date, there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining the Six Project Loan, then
the Six Project Borrowers shall from time to time, upon demand by Agent, pay to
Lender, additional amounts sufficient to compensate Lender for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Six Project Borrowers by Agent, shall be conclusive and binding on the Six
Project Borrowers for all purposes, absent manifest error. Lender agrees that,
as promptly as practicable after it becomes aware of any circumstances referred
to above which would result in any such increased cost, Lender shall, to the
extent not inconsistent with such Lender’s internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 2.7(b).

 

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(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for Lender to agree to
make or to make or to continue to fund or maintain the portion of the Six
Project Loan bearing interest computed by reference to the Libor Rate, then,
unless Lender is able to make or to continue to fund or to maintain such portion
of the Six Project Loan at another office of Lender without, in Lender’s
opinion, adversely affecting it or such portion of the Six Project Loan or the
income obtained therefrom, on notice thereof and demand therefor by Lender to
the Six Project Borrowers, the interest rate on such portion of the Six Project
Loan shall be converted to a rate determined by substituting the Base Rate for
the Libor Rate in the calculation thereof.
Section 2.8 Sources and Uses.
The sources and uses of funds for the contemplated transaction are as described
on Schedule 2.9 attached hereto. Borrowers shall deliver such information and
documentation as Agent shall request to verify that the sources and uses are as
indicated on Schedule 2.9. A reduction in the amounts necessary for any of the
uses may, at Agent’s election, result in an equal reduction in the amount of the
Six Project Loan.
Section 2.9 Security.
The Loans and all other indebtedness and obligations under the Loan Documents
shall be secured by the following (collectively, the “Collateral”): (a) the
mortgaged property and other collateral as set forth in the Security Documents,
and (b) any other collateral or security described in this Agreement, the other
Loan Documents or required by Agent or Lender in connection with the Loans.
Section 2.10 Release of Collateral. Subject to the conditions set forth in
Section 2.11(a) and Section 2.11(b) below, Borrowers may obtain from Agent the
release (each of the following shall be referred to herein as a “Release”) from
the lien of the Security Document (and the release of all other collateral
exclusively relating to such Release Project, as defined below) with respect to
individual Projects (any such Project for which a Release is obtained being
referred to herein as a “Release Project” and collectively, the “Release
Projects”) and the Release Project(s) shall not be included in the Collateral
for any period thereafter for purposes of the Loan Documents.
(a) Ten Project Release Projects. Ten Project Borrowers may obtain a release of
a Release Project that is a Ten Project Loan Project (“Ten Project Loan Release
Projects”) so long as: (i) Borrowers obtain Releases under this Section 2.11(a)
not more often than one (1) time in any six (6) month period, (ii) no less than
four (4) Ten Project Loan Release Projects must remain subject to the Ten
Project Loan after each such Release, and (iii) upon satisfaction of the below
conditions:

 

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(A) Any Release of Ten Project Loan Projects under this Section 2.11(a) shall be
subject to Ten Project Borrower’s satisfaction of the terms and conditions of
Section 2.5(a)(ii), as such terms and conditions are modified by this
Section 2.11(a), and any payments made by Ten Project Borrowers to Agent for any
such Release shall be applied towards the partial Defeasance of the Ten Project
Loan as set forth herein;
(B) The Defeasance Deposit to be paid by Borrower to Agent for such Ten Project
Loan Release Project shall be an amount equal to the sum of (A), (B) and (C), as
follows:
(1) the Yield Maintenance Amount, as determined by Agent, which is sufficient to
Defease a portion of the principal balance of the Ten Project Loan equal to the
Allocated Loan Amount for the applicable Ten Project Loan Release Project;
(2) any costs and expenses incurred or to be incurred in the purchase of U.S.
Obligations necessary to meet the Scheduled Defeasance Payments (including
Agent’s estimate of administrative expenses and applicable federal, state or
local income taxes associated with or to be incurred by the Successor Ten
Project Borrower during the remaining term of, and applicable to, the Ten
Project Loan) to Defease the applicable portion of the principal balance of the
Ten Project Loan as set forth herein; and
(3) any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with such Release or otherwise required to accomplish
the following, all as reasonably estimated by Agent;
(C) As of the date of such proposed Release, the Project Yield, measured solely
with respect to the remaining Ten Project Loan Projects is equal to or greater
than sixteen percent (16%);
(D) As of the date of such proposed Release, the Debt Service Coverage Ratio,
measured solely with respect to the remaining Ten Project Loan Projects is equal
to or greater than 2.10:1.00;
(E) As of the date of such proposed Release, no Material Adverse Change has
occurred (other than a Material Adverse Change related solely to the applicable
Ten Project Loan Release Project(s) such that the requested Release would have
the effect of curing the Material Adverse Change with respect to the remaining
Ten Project Loan Projects following such Release);
(F) As of the date of such proposed Release of any Ten Project Loan Release
Project, (i) no default or Event of Default shall have occurred and shall be
continuing under any of the Loan Documents (other than a default or Event of
Default related solely to the applicable Ten Project Loan Release Project(s)
such that the requested Release would have the effect of curing the default or
Event of Default, as applicable, with respect to the remaining Ten Project Loan
Projects following such Release) and (ii) the Borrowers shall be in compliance
with Section 9.16 hereof both before and after giving effect to such proposed
Release;

 

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(G) If requested by Agent, the Successor Ten Project Borrower(s) and the
remaining Ten Project Borrowers shall executed one or more new promissory notes,
substantially in the form of the Ten Project Note, to separate the portion of
the Ten Project Loan being Defeased from the portion of the Ten Project Loan not
being Defeased; and
(H) Ten Project Borrowers shall have paid Agent all of Agent’s reasonable
out-of-pocket fees and expenses, including reasonable attorneys’ fees and
expenses, incurred in connection with such Release.
Notwithstanding anything contained in Section 2.5(a)(ii), the Guaranty shall not
be released in connection with Releases under this Section 2.11(a) except in
connection with the payment in full of all Obligations hereunder.
(b) Six Project Loan Release Projects. Six Project Borrowers may obtain a
release of a Release Project that is a Six Project Loan Project (“Six Project
Loan Release Projects”) so long as: (i) Borrowers do not to obtain Releases
under this Section 2.11(b) prior to December 1, 2011, (ii) no less than two
(2) Six Project Loan Release Projects must remain subject to the Six Project
Loan after each such Release, unless paid in full, and (iii) upon satisfaction
of the below conditions:
(A) The amount to be paid by Six Project Borrowers to Agent for such Six Project
Loan Release Project (any such amount a “Six Project Release Price”) shall be
(i) for the first two (2) such Releases, an amount equal to at least one hundred
and fifty percent (150%) of the Allocated Loan Amount for each such Six Project
Loan Release Project plus the pro rata portion of the Exit Fee due with respect
to such Six Project Loan Release Project(s) and (ii) for the remaining four
(4) such Releases, an amount equal to at least one hundred and ten percent
(110%) of the Allocated Loan Amount for each such Six Project Loan Release
Project plus the pro rata portion of the Exit Fee due with respect to such Six
Project Loan Release Project(s);
(B) As of the date of such proposed Release, the Project Yield, measured solely
with respect to the remaining Projects is equal to or greater than twenty
percent (20%);
(C) As of the date of such proposed Release, no Material Adverse Change has
occurred (other than a Material Adverse Change related solely to the applicable
Six Project Loan Release Project(s) such that the requested Release would have
the effect of curing the Material Adverse Change with respect to the remaining
Six Project Loan Projects following such Release);

 

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(D) As of the date of such proposed Release of any Six Project Loan Release
Project, (i) no default or Event of Default shall have occurred and shall be
continuing under any of the Loan Documents (other than a default or Event of
Default related solely to the applicable Six Project Loan Release Project(s)
such that the requested Release would have the effect of curing the default or
Event of Default, as applicable, with respect to the remaining Six Project Loan
Projects following such Release) and (ii) the Borrowers shall be in compliance
with Section 9.16 hereof both before and after giving effect to such proposed
Release;
(E) Six Project Borrowers shall have paid Agent all of Agent’s reasonable
out-of-pocket fees and expenses, including reasonable attorneys’ fees and
expenses, incurred in connection with such Release;
(F) Any amounts in excess of the Allocated Loan Amount received by Agent in
accordance with Section 2.11(b)(A) above, shall be applied by Agent to the
remaining amount of the Six Project Loan and allocated to the then remaining Six
Project Loan Projects in Agent’s sole discretion; provided, however that upon
receipt by Agent of payment by the Six Project Borrowers of the Six Project
Release Price for the first such Release following the Restatement Date, Six
Project Borrowers may designate to Agent in writing one (1) of the remaining
five (5) Six Project Loan Projects to be excluded from the allocation by Agent
of any such excess proceeds from the Six Project Release Price for such first
Project;
(G) Any Release under this Section 2.11(b) shall be subject to Six Project
Borrowers’ satisfaction of the following:
(1) not less than thirty (30) days prior written notice to Agent specifying the
first day of a calendar month (or if not a Business Day, the first Business Day
of such calendar month) (the “Release Date”) on which the Release is to occur;
(2) the payment to Agent of interest accrued and unpaid on the principal balance
of the Six Project Loan to and including the Release Date;
(3) the payment to Agent of all other sums, not including scheduled interest or
principal payments, due under the Six Project Note, the Security Documents and
the other Loan Documents; and
(4) the delivery by Borrowers to Agent at Six Project Borrowers’ sole cost and
expense of releases of the Six Project Loan Projects from the lien of the
Security Documents (for execution by Agent) in a form appropriate for the
jurisdiction in which each Six Project Loan Project is located and otherwise
reasonably acceptable to Agent.
Notwithstanding anything herein to the contrary, the Guaranty shall not be
released in connection with Six Project Releases under this Section 2.11(b)
except in connection with the payment in full of all Obligations hereunder.

 

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ARTICLE III
INSURANCE, CONDEMNATION, AND IMPOUNDS
Section 3.1 Insurance. Borrowers shall maintain (or cause to be maintained)
insurance as follows:
(a) Casualty; Business Interruption. Borrowers shall keep the Projects insured
against damage by fire and the other hazards covered by a standard extended
coverage and all-risk insurance policy for the full insurable value thereof on a
replacement cost claim recovery basis (without reduction for depreciation or
co-insurance and without any exclusions or reduction of policy limits for acts
of domestic and foreign terrorism and other specified action/inaction), and
shall maintain boiler and machinery insurance, acts of domestic and foreign
terrorism endorsement coverage and such other casualty insurance as reasonably
required by Agent. Agent reserves the right to require from time to time the
following additional insurance: flood; earthquake/sinkhole; windstorm; worker’s
compensation; and/or building law or ordinance. Borrowers shall keep the
Projects insured against loss by flood if any Project is located currently or at
any time in the future in an area identified by the Federal Emergency Management
Agency as an area having special flood hazards and in which flood insurance has
been made available under the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of
1994 (as such acts may from time to time be amended) in an amount at least equal
to the lesser of (i) the maximum amount of the Loans or (ii) the maximum limit
of coverage available under said acts. Any such flood insurance policy shall be
issued in accordance with the requirements and current guidelines of the Federal
Insurance Administration. Borrowers shall maintain business interruption
insurance, including use and occupancy, rental income loss and extra expense,
for all periods covered by Borrowers’ property insurance for a limit equal to
twelve (12) calendar months’ exposure, all without any exclusions or reduction
of policy limits for acts of domestic and foreign terrorism or other specified
action/inaction. Borrowers shall not maintain any separate or additional
insurance which is contributing in the event of loss unless it is properly
endorsed and otherwise reasonably satisfactory to Agent in all respects. The
proceeds of insurance paid on account of any damage or destruction to any
Project shall be paid to Agent to be applied as provided in Section 3.2.
(b) Liability. Borrowers shall maintain (i) commercial general liability
insurance with respect to each Project providing for limits of liability in the
amount approved by Agent for both injury to or death of a person and for
property damage per occurrence, (ii) umbrella liability coverage in the amount
and to the extent required by Agent, and (iii) other liability insurance as
reasonably required by Agent. In addition, Borrowers shall cause each Operator
to maintain (A) worker’s compensation insurance and employer’s liability
insurance covering employees at the Projects employed by Borrowers or Master
Tenants (in the amounts required by applicable Laws) and (B) professional
liability insurance. Notwithstanding anything to the contrary contained herein,
from and after the date hereof, insurance coverage for terrorism, terrorist acts
or similar perils (collectively, “Terrorism”) may be required by Agent if such
coverage is (1) customarily obtained by owners of property similar to the
Projects in use, character and applicable geographic metropolitan location, and
(2) readily available at a cost which, in Agent’s opinion, exercised reasonably,
is commercially reasonable.

 

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(c) Form and Quality. All insurance policies shall be endorsed in form and
substance acceptable to Agent to name Agent as an additional insured, loss payee
or mortgagee thereunder, as its interest may appear, with loss payable to Agent,
without contribution, under a standard New York (or local equivalent) mortgagee
clause. All such insurance policies and endorsements shall be fully paid for and
contain such provisions and expiration dates and be in such form and issued by
such insurance companies licensed to do business in the state in which the
applicable Project is located, with a rating of “A IX” or better as established
by Best’s Rating Guide and “AA” or better by Standard & Poor’s Ratings Group.
Each policy shall provide that such policy may not be canceled or materially
changed except upon thirty (30) days’ prior written notice of intention of
non-renewal, cancellation or material change to Agent and that no act or thing
done by Borrowers shall invalidate any policy as against Agent. Blanket policies
shall be permitted only if (i) Agent receives appropriate endorsements and/or
duplicate policies containing Agent’s right to continue coverage on a pro rata
pass-through basis and that coverage will not be affected by any loss on other
properties covered by the policies and (ii) the policy contains a sublimit equal
to the replacement cost of the Projects in an amount approved by Agent which is
expressly allocated for each Project, and any such policy shall in all other
respects comply with the requirements of this Section.
(d) Premiums. In the event Borrowers fail to provide Agent with evidence of the
insurance coverage required by this Agreement, Borrowers authorize Agent to pay
the premiums for such policies (the “Insurance Premiums”) at Borrowers’ expense
to protect Agent’s interests in the Projects. This insurance may, but need not,
protect Borrowers’ interests. The coverage purchased by Agent may not pay any
claim made by any Borrower or any claim that is made against any Borrower in
connection with the Projects. If Agent purchases insurance for the Projects,
Borrowers shall, on demand, reimburse Agent for all expenses incurred in
connection therewith.
(e) Assignments. Borrowers shall assign the policies or proofs of insurance to
Agent, in such manner and form that Agent and its successors and assigns shall
at all times have and hold the same as security for the payment of the Loans. If
requested by Agent, Borrowers shall deliver copies of all original policies
certified to Agent by the insurance company or authorized agent as being true
copies, together with the endorsements required hereunder. If Borrowers elect to
obtain any insurance which is not required under this Agreement, all related
insurance policies shall be endorsed in compliance with Section 3.1(c), and such
additional insurance shall not be canceled without prior notice to Agent. From
time to time upon Agent’s request, Borrowers shall identify to Agent all
insurance maintained by Borrowers with respect to the Projects. The proceeds of
insurance policies coming into the possession of Agent shall not be deemed trust
funds, and Agent shall be entitled to apply such proceeds as herein provided.
(f) Adjustments. Borrowers shall give immediate written notice of any loss to
the insurance carrier and to Agent. Borrowers hereby irrevocably authorize and
empower Lender, as attorney in fact for Borrowers coupled with an interest, to
notify any of Borrowers’ insurance carriers to add Agent as a loss payee,
mortgagee insured or additional insured, as the case may be, to any policy
maintained by Borrowers (regardless of whether such policy is required under
this Agreement), to make proof of loss, to adjust and compromise any claim under
insurance policies, to appear in and prosecute any action arising from such
insurance policies, to collect and receive insurance proceeds, and to deduct
therefrom Agent’s reasonable expenses incurred in the collection of such
proceeds. Nothing contained in this Section 3.l(e), however, shall require Agent
to incur any expense or take any action hereunder.

 

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Section 3.2 Use and Application of Insurance Proceeds.
(a) Notice; Repair Obligation. If any Project shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a “Casualty”), Borrowers shall give
prompt notice thereof to Agent. Following the occurrence of a Casualty,
Borrowers, regardless of whether insurance proceeds are available, shall
promptly proceed to restore, repair, replace or rebuild the same to be of at
least equal value and of substantially the same character as prior to such
damage or destruction, all to be effected in accordance with applicable law.
(b) Application of Insurance Proceeds. Agent shall apply insurance proceeds to
costs of restoring the damaged Project or to the payment of the applicable Loan
as follows:
(i) Agent shall apply the insurance proceeds to restoration provided (A) no
Event of Default or Potential Default exists, (B) Borrowers promptly commence
and are diligently pursuing restoration of the damaged Project and (C) the loss
does not exceed 35% of the Allocated Loan Amount set forth on Schedule 3.2 for
such Project(s) affected by such loss; and
(ii) if the conditions set forth in (i) above are not satisfied, in Lender’s
reasonable discretion, Agent may apply any insurance proceeds it may receive to
amounts owing under the Loan Documents in such order and manner as Agent in its
sole discretion determines, or allow all or a portion of such proceeds to be
used for the restoration of the damaged Project.
(c) Disbursement of Insurance Proceeds. Insurance proceeds applied to
restoration will be disbursed on receipt of reasonably satisfactory plans and
specifications, contracts and subcontracts, schedules, budgets, lien waivers and
architects’ certificates, and otherwise in accordance with prudent commercial
construction lending practices for construction loan advances (including
appropriate retainages to ensure that all work is completed in a workmanlike
manner).
Section 3.3 Condemnation Awards.
Borrowers shall immediately notify Agent of the institution of any actual or
threatened commencement of any proceeding for the condemnation or other taking
of any Project or any portion thereof. Agent may participate in any such
proceeding and Borrowers will deliver to Agent all instruments necessary or
required by Agent to permit such participation. Without Agent’s prior consent,
Borrowers (a) shall not agree to any compensation or award, and (b) shall not
take any action or fail to take any action which would cause the compensation to
be determined. All awards and compensation for the taking or purchase in lieu of
condemnation of the Projects or any part thereof are hereby assigned to and
shall be paid to Agent. Borrowers authorize Agent to collect and receive such
awards and compensation, to give proper receipts and acquittances therefor, and
in Agent’s sole discretion, (a) to apply the same (after deduction of Lender’s
reasonable costs and expenses, if any in collecting the same) toward the payment
of the Loans in such order and manner as Agent may elect, notwithstanding that
the Loans may not then be due and payable, or (b) to make the same available to
Borrowers for the restoration or repair of the Projects. If the net proceeds of
the condemnation award are made available to Borrower for restoration or repair,
such proceeds shall be disbursed upon satisfaction of and in accordance with the
terms and conditions set forth in Section 3.2. Borrowers, upon request by Agent,
shall execute all instruments requested to confirm the assignment of the awards
and compensation to Agent, free and clear of all liens, charges or encumbrances.

 

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Section 3.4 Insurance Impounds.
The Ten Project Borrowers have previously deposited with Agent, a sum of money
(the “Ten Project Insurance Impound”) equal to one-sixth (1/6th) of the annual
charges for Insurance Premiums relating to the insurance coverages for the Ten
Project Loan Projects required by this Agreement. At or before the advance of
the Six Project Loan, the Six Project Borrowers shall deposit with Agent a sum
of money, which will be sufficient to establish a reserve (the “Six Project
Insurance Impound” and collectively with the Ten Project Insurance Impound, the
“Insurance Impound”) equal to approximately 1/6 of the annual charges for
Insurance Premiums relating to the insurance coverages for the Six Project Loan
Projects in Agent’s sole but reasonable estimation. Deposits shall be made on
the basis of Agent’s estimate from time to time of the charges for the current
year. All funds so deposited shall be held by Agent. These sums may be
commingled with the general funds of Agent, and shall not be deemed to be held
in trust for the benefit of Borrowers. Borrowers hereby grant to Agent for the
benefit of Lender and Agent a security interest in all funds so deposited with
Agent for the purpose of securing the Loans. While an Event of Default exists,
the funds deposited may be applied in payment of the charges for which such
funds have been deposited, or to the payment of the Loans or any other charges
affecting the security of Agent, as Agent may elect, but no such application
shall be deemed to have been made by operation of law or otherwise until
actually made by Agent. If at any time the amount on deposit in the Insurance
Impound with Agent is insufficient to maintain a reserve equal to approximately
1/6 of the annual charges for Insurance Premiums relating to the insurance
coverages for the Projects in Agent’s sole but reasonable estimation, Borrowers
shall deposit any deficiency with Agent immediately upon demand. On the
applicable Maturity Date, the monies then remaining on deposit with Agent
attributable to the then maturing Six Project Loan or Ten Project Loan, as
applicable, shall, at Agent’s option, be applied against the Obligations or if
no Potential Default is continuing, returned to applicable Borrowers.
Section 3.5 Real Estate Tax Impounds.
The Ten Project Borrowers have previously deposited and shall continue to
deposit with Agent, monthly on each Payment Date, a sum of money (the “Ten
Project Tax Impound”) equal to one twelfth (1/12th) of the annual charges for
real estate taxes, assessments, franchise taxes and changes, impositions and
other charges and obligations (collectively, the “Taxes”) relating to the Ten
Project Loan Projects which will be sufficient to make payments of Taxes
relating to the Ten Project Loan Projects thirty (30) days prior to the date any
delinquency or penalty becomes due with respect to such payments and maintain a
reserve equal to approximately 1/6 of such annual Taxes. At or before the
advance of the Six Project Loan, the Six Project Borrowers shall deposit with
Agent a sum of money (the “Six Project Tax Impound” and collectively with the
Ten Project Tax Impound, the “Tax Impound”) which,

 

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together with the monthly installments on each Payment Date equal to one twelfth
(1/12th) of the annual charges for Taxes relating to the Six Project Loan
Projects, will be sufficient to make payments of Taxes relating to the Six
Project Loan Projects thirty (30) days prior to the date any delinquency or
penalty becomes due with respect to such payments and maintain a reserve equal
to approximately 1/6 of the annual Taxes relating to the Six Project Loan
Projects, in Agent’s sole but reasonable estimation. Deposits shall be made on
the basis of Agent’s estimate from time to time of the Taxes for the current
year (after giving effect to any reassessment or, at Agent’s election, on the
basis of the Taxes for the prior year, with adjustments when the Taxes are fixed
for the then current year). All funds so deposited shall be held by Agent. These
sums may be commingled with Agent’s general funds and shall not be deemed to be
held in trust for the benefit of Borrowers. Borrowers hereby grant to Agent for
the benefit of Lender and Agent a security interest in all funds so deposited
with Agent for the purpose of securing the Loans. While an Event of Default
exists, the funds deposited may be applied in payment of the charges for which
such funds have been deposited, or to the payment of the Loans or any other
charges affecting the security of Agent, as Agent may elect, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Agent. Borrowers shall furnish Agent with bills for the
Taxes for which such deposits are required at least thirty (30) days prior to
the date on which the Taxes first become payable. If at any time the amount on
deposit with Agent, together with amounts to be deposited by Borrowers before
such Taxes are payable, is insufficient to pay such Taxes and maintain such
reserves, the applicable Borrowers shall deposit any deficiency with Agent
immediately upon demand. Agent shall pay such Taxes when the amount on deposit
with Agent is sufficient to pay such Taxes and Agent has received a bill for
such Taxes. The obligation of Borrowers to pay the Taxes, as set forth in the
Loan Documents, is not affected or modified by the provision of this paragraph.
On the applicable Maturity Date, the monies then remaining on deposit with Agent
attributable to the then maturing Six Project Loan or Ten Project Loan, as
applicable, shall, at Agent’s option, be applied against the Obligations or if
no Potential Default is continuing, returned to applicable Borrowers.
Section 3.6 Replacement Reserves.
(a) Deposits. On each Payment Date, (i) the Ten Project Borrowers shall pay to
Agent an amount equal to the product of Thirty Dollars ($30) multiplied by the
number of Residential Units in the Ten Project Loan Projects (the “Ten Project
Replacement Reserve”) and (ii) the Six Project Borrowers shall pay to Agent an
amount equal to the product of Thirty Dollars ($30) multiplied by the number of
Residential Units in the Six Project Loan Projects (the “Six Project Replacement
Reserve” and collectively with the Ten Project Replacement Reserve, the
“Replacement Reserve“).
(b) Pledge and Disbursement of Funds. Borrowers hereby grant to Agent for the
benefit of Lender and Agent a security interest in the Replacement Reserve for
the purpose of securing the Loans. On the applicable Maturity Date and on the
date of any Release, the monies then remaining on deposit with Agent
attributable to the Release Project or the then maturing Six Project Loan or Ten
Project Loan, as applicable, shall, at Agent’s option, be applied against the
Obligations or if no Potential Default is continuing, returned to the applicable
Borrowers. The Replacement Reserve may be commingled with the general funds of
the Agent, and these sums shall not be deemed to be held in trust for the
benefit of Borrowers. So long as no Event of Default hereunder or under any of
the other Loan Documents has occurred and is continuing, Borrowers may request,
from time to time, Agent to disburse funds from the Replacement Reserve (which
request will include a reasonably detailed description of the capital
expenditures at the Projects which Borrowers intend to pay for with such funds),
which request shall not be unreasonably denied by Agent. If requested by Agent,
each disbursement request will be accompanied by copies of invoices, lien
waivers and other evidence reasonably required by Agent. If an Event of Default
occurs, Agent shall have the right to apply all or any portion of the
Replacement Reserve to the Obligations evidenced by the Loan Documents in such
order as Agent in its sole discretion determines.

 

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ARTICLE IV
LEASING MATTERS
Section 4.1 Representations and Warranties on Leases.
Borrowers represent and warrant to Agent with respect to Leases of the Projects
that: (a) the rent roll separately delivered to Agent at or prior to the
Restatement Date is true and correct as of the date hereof, and the Leases are
valid and in and full force and effect; (b) the Leases (including amendments)
are in writing, and there are no oral agreements with respect thereto; (c) the
copies of the Master Leases delivered to Agent are true and complete; (d) no
Borrower has any knowledge of any notice of termination or default with respect
to any Master Lease or any other non-residential Lease; (e) no Borrower has
assigned or pledged any of the Leases, the rents or any interests therein,
except to Agent; (f) no tenant or other party has an option to purchase all or
any portion of any Project; (g) no Master Tenant has the right to terminate its
Lease prior to expiration of the stated term of such Master Lease (unless due to
casualty or condemnation of the Project); (i) no tenant has prepaid more than
one month’s rent in advance (except for bona fide security deposits not in
excess of an amount equal to two month’s rent); and (j) all existing Leases
(other than the Master Leases) are subordinate to the Security Documents either
pursuant to their terms or a recorded subordination agreement.
Section 4.2 Standard Lease Form; Approval Rights.
(a) Borrowers shall not and shall not permit any Master Tenant to, without
Agent’s prior written consent, enter into or amend (in any material respect) any
Lease or other rental or occupancy agreement or concession agreement with
respect to a Project except as expressly permitted hereunder.
(b) All Leases and other rental arrangements shall be on a standard lease form,
which forms shall be reasonably acceptable to Agent and shall not be modified in
a manner materially adverse to Agent and Lenders without Agent’s prior written
consent. Any non-residential lease form in excess of 15% of the total square
footage of any Project shall provide that (a) the lease is subordinate to the
Security Document, (b) the tenant shall attorn to Agent, and (c) that any
cancellation, surrender, or amendment of any such material lease without the
prior written consent of Agent shall be voidable by Agent.

 

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(c) Notwithstanding anything contained in the Loan Documents, Borrowers shall
have the right to enter into or to permit any Master Tenant to, amend and/or
modify non- residential Leases without Agent’s consent; provided that (i) the
economic terms of the Lease conform to those of the market, (ii) the initial
term is not longer than five (5) years, and (iii) the leased premises are not
greater than (A) 15% of the square footage of any applicable Ten Project Loan
Project and (B) 10% of the square footage of any applicable Six Project Loan
Project.
(d) Borrowers shall have the right to enter into, amend or terminate and to
permit any Master Tenant to enter into, amend or terminate any residential Lease
so long as such residential Lease (i) has a term of no more than one (1) year,
(ii) is at market rates, and (iii) on the form previously approved by Agent
without any material modifications.
Section 4.3 Covenants.
Borrowers shall or shall cause Master Tenants to: (a) perform the obligations
which any Borrower or Master Tenant is required to perform under the Leases in
all material respects; (b) enforce the obligations to be performed by the
tenants under the Leases in all material respects; (c) promptly furnish to Agent
any notice of default or termination received by any Borrower or Master Tenant
from any non-residential tenant, and any notice of default or termination given
by any Borrower or Master Tenant to any non-residential tenant; (d) not collect,
without Agent’s prior written consent, any rents for more than one month in
advance of the time when the same shall become due, except for bona fide
security deposits not in excess of an amount equal to two months rent; (e) not
enter, without Agent’s prior written consent, into any ground lease or master
lease (other than the Master Leases) of any part of the Projects; (f) not
further assign or encumber any Lease; (g) not, except with Agent’s prior written
consent, cancel or accept surrender or termination of any non-residential Lease;
and (h) not, except with Agent’s prior written consent, modify or amend any
non-residential Lease (except for minor modifications and amendments entered
into in the ordinary course of business, consistent with prudent property
management practices, not affecting the economic terms of the Lease). Any action
in violation of clauses (e), (f), (g), and (h) of this Section 4.3 shall be void
at the election of Agent. Borrowers will not suffer or permit any breach or
default to occur in any of any Borrower’s or Master Tenant’s obligations under
any of the Leases nor suffer or permit the same to terminate by reason of any
failure of any Borrower to meet any requirement of any Lease.
Section 4.4 Tenant Estoppels.
At Agent’s request, Borrowers shall obtain and furnish to Agent, written
estoppels in form and substance satisfactory to Agent, executed by each Master
Tenant and by each tenant under other non-residential Leases in the Projects and
confirming the term, rent, and other provisions and matters relating to the
Leases.
Section 4.5 Security Deposits.
(a) Existence of Security Deposits. None of any Borrower nor any Master Tenant
has collected or is in receipt of any security deposit from any tenant of any
Project, except as described on the rent rolls previously provided to Agent at
or prior to the Restatement Date. Borrowers and/or Master Tenants, as applicable
shall hold, in trust, all tenant security deposits in a segregated account, and,
to the extent required by applicable law, shall not commingle any such funds
with any other funds of Borrowers or Master Tenants, as applicable.

 

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(b) Lien on Security Deposits. Borrowers or Master Tenants shall at all times
have on deposit with Agent, as cash collateral for the Loans and all amounts
payable under the Loan Documents, an amount of cash equal to the aggregate
amount of security deposits which are or may become refundable to tenants of the
Projects from time to time. Agent agrees to allow Borrowers or Master Tenants,
if applicable, to use such funds solely to repay such amounts to tenants of the
Projects, as and when the same are due; provided Agent may, but shall not be
obligated to, pay such amounts directly to the tenants upon Agent’s receipt of
evidence reasonably satisfactory to Agent that such amounts are due; and
provided further, upon payment in full of the Loans and all other amounts due
Agent under the Loan Documents, Agent shall pay any remaining amounts on deposit
with Agent pursuant to this Section 4.5(b) to Borrowers or Master Tenants, if
applicable. Agent shall not be obligated to pay Borrowers or any Master Tenant,
if applicable, interest on any amounts on deposit with Agent pursuant to this
Section 4.5(b).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrowers represents and warrants to Agent that:
Section 5.1 Organization and Power.
Each Borrower and Guarantor (other than a natural person) is duly organized,
validly existing and in good standing under the laws of the state of its
formation or existence, and is in compliance with all legal requirements
applicable to doing business in the state of its formation. Each Borrower and
Guarantor (other than a natural person and to the extent required by law) is in
good standing under the laws of and is in compliance with legal requirements
applicable to doing business in the state where each Project is located. No
Borrower is a “foreign person” within the meaning of § 1445(f)(3) of the
Internal Revenue Code. Each Borrower and the Guarantor has only one state of
incorporation or organization.
Section 5.2 Members.
Guarantor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with its principal place of business at
27101 Puerta Real, Suite 450, Mission Viejo, California 92691. Guarantor is the
sole managing member of each Borrower and owns one hundred percent (100%) of the
membership interests in each Borrower free and clear of all liens, claims, and
encumbrances. Guarantor has full right, power and authority to execute the Loan
Documents on its own behalf and on behalf of each Borrower.
Section 5.3 Borrowers’ Operating Agreement.
A true and complete copy of the operating agreement creating each Borrower and
any and all amendments thereto (collectively, the “Operating Agreement”) have
been furnished to Agent. The Operating Agreement constitutes the entire
agreement among the members of each Borrower and is binding upon and enforceable
against each of the members in accordance with its terms. There are no other
agreements, oral or written, among any of the members relating to any Borrower.
No breach exists under the Operating Agreement and no condition exists which,
with the giving of notice or the passage of time would constitute a breach under
the Operating Agreement.

 

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Section 5.4 Corporate Documents.
A true and complete copy of the articles of incorporation and by-laws of
Guarantor and all other documents creating and governing Guarantor
(collectively, the “Incorporation Documents”) have been furnished to Agent.
There are no other agreements, oral or written, among any of the shareholders of
Guarantor relating to Guarantor. The Incorporation Documents were duly executed
and delivered, are in full force and effect, and binding upon and enforceable in
accordance with their terms. The Incorporation Documents constitute the entire
understanding among the shareholders of Guarantor. No breach exists under the
Incorporation Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time would constitute a breach under
the Incorporation Documents.
Section 5.5 Validity of Loan Documents.
The execution, delivery and performance by each Borrower and Guarantor of the
Loan Documents: (a) are duly authorized and do not require the consent or
approval of any other party or governmental authority which has not been
obtained; and (b) will not violate any law or result in the imposition of any
lien, charge or encumbrance upon the assets of any such party, except as
contemplated by the Loan Documents. The Loan Documents constitute the legal,
valid and binding obligations of each Borrower and Guarantor, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, or similar laws generally affecting the enforcement of creditors’
rights.
Section 5.6 Liabilities; Litigation.
(a) The financial statements delivered by Borrowers, Guarantor and, Master
Tenants are true and correct with no significant change since the date of
preparation. Except as disclosed in such financial statements, there are no
liabilities (fixed or contingent) affecting any Project, any Borrower, Guarantor
or any Master Tenant. Except as disclosed in such financial statements or on
Schedule 5.6, there is no litigation, administrative proceeding, investigation
or other legal action (including any proceeding under any state or federal
bankruptcy or insolvency law) pending or, to the knowledge of any Borrower,
threatened, against any Project, any Borrower, Guarantor or any Master Tenant
which if adversely determined could have a material adverse effect on such
party, any Project or the Loans.
(b) No Borrower, Guarantor, nor any Master Tenant is contemplating either the
filing of a petition by it under state or federal bankruptcy or insolvency laws
or the liquidation of all or a major portion of its assets or property, and no
Borrower, Guarantor nor any Master Tenant has knowledge of any Person
contemplating the filing of any such petition against it.

 

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Section 5.7 Taxes and Assessments.
There are no unpaid or outstanding real estate or other taxes or assessments on
or against the Projects or any part thereof, except general real estate taxes
not due or payable. Copies of the current general real estate tax bills with
respect to the Projects have been delivered to Agent. Each Project is comprised
of one or more parcels, each of which constitutes a separate tax lot and none of
which constitutes a portion of any other tax lot. There are no pending or, to
Borrowers’ best knowledge, proposed, special or other assessments for public
improvements or otherwise affecting any Project, nor are there any contemplated
improvements to any Project that may result in such special or other
assessments.
Section 5.8 Other Agreements; Defaults.
No Borrower, Guarantor nor any Master Tenant is a party to any agreement or
instrument or subject to any court order, injunction, permit, or restriction
which might adversely affect any Project or the business, operations, or
condition (financial or otherwise) of any Borrower or Guarantor or any Master
Tenant. Neither any Borrower nor Guarantor nor any Master Tenant is in violation
of any agreement which violation would have an adverse effect on any Project,
any Borrower, Guarantor or any Master Tenant or any Borrower’s or Guarantor’s or
any Master Tenant business, properties, or assets, operations or condition,
financial or otherwise.
Section 5.9 Compliance with Law.
Each Borrower, Guarantor and each Master Tenant has all requisite licenses,
permits, franchises, qualifications, certificates of occupancy or other
governmental authorizations to own, lease and operate the Projects and carry on
its business, and each Project is in compliance, in all material respects, with
all applicable legal requirements and is free of structural defects, and all
building systems contained therein are in good working order, subject to
ordinary wear and tear. No Project constitutes, in whole or in part, a legally
non conforming use under applicable legal requirements.
Section 5.10 Condemnation.
To Borrower’s knowledge, as of the date hereof, no condemnation is pending nor
has any condemnation been threatened with respect to all or any portion of any
Project or for the relocation of roadways providing access to any Project.
Section 5.11 Access.
Each Project has adequate rights of access to public ways and is served by
adequate water, sewer, sanitary sewer and storm drain facilities. All public
utilities necessary or convenient to the full use and enjoyment of each Project
are located in the public right-of-way abutting the applicable Project, and all
such utilities are connected so as to serve such Project without passing over
other property, except to the extent such other property is subject to a
perpetual easement for such utility benefiting such Project. All roads necessary
for the full utilization of each Project for its current purpose have been
completed and dedicated to public use and accepted by all governmental
authorities.

 

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Section 5.12 Flood Hazard.
Except as noted in any zoning reports delivered in connection herewith, no
Project is situated in an area designated as having special flood hazards as
defined by the Flood Disaster Protection Act of 1973, as amended, or as a
wetlands by any governmental entity having jurisdiction over any Project.
Section 5.13 Property.
A fee in each Project is, or contemporaneously with the initial funding of the
Loans will be, owned by the respective Borrower free and clear of all liens,
claims, encumbrances, covenants, conditions and restrictions, security interests
and claims of others, except only such exceptions to title as have been approved
by Agent. To the best of Borrowers’ knowledge, the Projects are in material
compliance with all zoning requirements, building codes, subdivision improvement
agreements, declarations, ground leases, and all covenants, conditions and
restrictions of record. Except as set forth in the exceptions to title approved
by Agent, the zoning and subdivision approval of the Projects and the right and
ability to, use or operate the Projects are not in any way dependent on or
related to any real estate other than the Properties where the same are to be
made. Except as previously disclosed to Agent in writing, to the best of
Borrowers’ knowledge, as of the date hereof, (i) there are no, nor are there any
alleged or asserted, violations of law, regulations, ordinances, codes, permits,
licenses, declarations, ground leases, covenants, conditions, or restrictions of
record, or other agreements relating to the Projects, or any part thereof,
(ii) the Projects are in good condition and repair with no deferred maintenance
and are free from damage caused by fire or other casualty, (iii) there is no
latent or patent structural or other significant defect or deficiency in the
Projects, (iv) design and as-built conditions of the Projects are such that no
drainage or surface or other water will drain across or rest upon either the
Project or land of others except in areas designated for such purpose and for
which a benefiting or burdening easement has been established, and (v) none of
the Improvements on the Projects create an encroachment over, across or upon any
of the Projects’ boundary lines, rights of way or easements, and no buildings or
other improvements on adjoining land create such an encroachment.
Section 5.14 Location of Borrowers.
Each Borrower’s principal place of business and chief executive offices are
located at the address stated in Schedule 5.14, and except as otherwise set
forth on Schedule 5.14, each Borrower at all times has maintained its principal
place of business and chief executive office at such location.
Section 5.15 Margin Stock.
No part of proceeds of the Loans will be used for purchasing or acquiring any
“margin stock” within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
Section 5.16 Tax Filings.
Each Borrower and Guarantor have filed (or have obtained effective extensions
for filing) all federal, state and local tax returns required to be filed and
have paid or made adequate provision for the payment of all federal, state and
local taxes, charges and assessments payable by each Borrower and each
Guarantor, respectively. Each Borrower and Guarantor believe that their
respective tax returns properly reflect the income and taxes of such Borrower
and Guarantor, respectively, for the periods covered thereby, subject only to
reasonable adjustments recognized by the Internal Revenue Service or other
applicable tax authority upon audit.

 

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Section 5.17 Solvency.
After giving effect to the Loans, the fair saleable value of each Borrower’s
assets exceeds and will, immediately following the making of the Loans, exceed
any Borrower’s total liabilities, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities. The fair saleable value of
each Borrower’s assets is and will, immediately following the making of the
Loans, be greater than such Borrower’s probable liabilities, including the
maximum amount of its contingent liabilities on its Debts as such Debts become
absolute and matured, no Borrower’s assets constitute and, immediately following
the making of the Loans will not constitute, unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. No Borrower
intends to, nor believes that it will, incur Debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Debts as they mature (taking into account the timing and amounts of cash to be
received by such Borrower and the amounts to be payable on or in respect of
obligations of such Borrower).
Section 5.18 Full and Accurate Disclosure.
No statement of fact made by or on behalf of any Borrower or Guarantor or any
Master Tenant in this Agreement or in any of the other Loan Documents contains
any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no fact presently known to any Borrower which has not been disclosed to Agent
which adversely affects, nor as far as any Borrower can foresee, might adversely
affect, any Project or the business, operations or condition (financial or
otherwise) of any Borrower or Guarantor. All information supplied by Borrowers
regarding any other Collateral is accurate and complete in all material
respects. All evidence of each Borrower’s and Guarantor’s identity provided to
Agent is genuine, and all related information is accurate in all material
respects.
Section 5.19 Single Purpose Entity.
Each Borrower is and has at all times since its formation been a Single Purpose
Entity.
Section 5.20 No Broker.
No brokerage commission or finder’s fee is owing to any broker or finder arising
out of any actions or activity of any Borrower in connection with the Loans.

 

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Section 5.21 Reserved
Section 5.22 Labor Disputes.
To the best of each Borrower’s knowledge, there are no strikes, boycotts, or
labor disputes which could reasonably be anticipated to have a material adverse
effect on the operation of any Project.
Section 5.23 Employees.
No Borrower has any employees.
Section 5.24 ERISA (Borrower).
(a) No Borrower is an “employee benefit plan” as defined in Section 3(3) of
ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(b) Borrowers are not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; (c) the assets of the
Borrowers do not constitute “plan assets” of one or more plans within the
meaning of 29 C.F.R. Section 2510.3-101; and (d) one or more of the following
circumstances is true: (i) Equity interests in Borrowers are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2) or are
securities issued by an investment company registered under the Investment
Company Act of 1940; (ii) Less than twenty-five percent (25%) of the value of
any class of equity interests in Borrower are held by “benefit plan investors”
within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or (iii) Borrowers
each qualify as an “operating company”, a “venture capital operating company”,
or a “real estate operating company” within the meaning of 29 C.F.R.
Section 2510.3-101(c), (d) or (e). Borrowers shall deliver to Agent such
certifications and/or other evidence periodically requested by Agent, in its
reasonable discretion, to verify these representations and warranties. Failure
to deliver these certifications or evidence, breach of these representations and
warranties, or consummation of any transaction which would cause the Loan
Documents or any exercise of Agent’s or Lender’s rights under the Loan Documents
to (1) constitute a non-exempt prohibited transaction under ERISA or (2) violate
ERISA or any state statute regulating governmental plans (collectively, a
“Violation”), which failure continues for thirty (30) days after written notice,
shall be an Event of Default. Notwithstanding anything in the Loan Documents to
the contrary, no sale, assignment, or transfer of any direct or indirect right,
title, or interest in Borrowers or the Projects (including creation of a junior
lien, encumbrance or leasehold interest) shall be permitted which would negate
Borrowers’ representations in this section or cause a Violation. At least
fifteen (15) days before consummation of any of the foregoing, Borrowers shall
obtain from the proposed transferee or lienholder (1) a certification to Agent
that the representations and warranties of this subparagraph will be true after
consummation and (2) an agreement to comply with this section.
Section 5.25 Intellectual Property.
Except as set forth on Exhibit C, Borrowers have no interest in any trademarks,
copyrights, patents or other intellectual property with respect to the Projects.

 

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Section 5.26 Anti-Terrorism and Anti-Money Laundering Compliance.
(a) Compliance with Anti-Terrorism Laws. Borrowers represent and warrant to
Agent that they are not, and, after making due inquiry, that no Person who owns
a controlling interest in or otherwise controls Borrowers is, (i) listed on the
Specially Designated Nationals and Blocked Persons List (the “SDN List”)
maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury, and/or on any other similar list (“Other Lists” and, collectively with
the SDN List, the “Lists”) maintained by the OFAC pursuant to any authorizing
statute, Executive Order or regulation (collectively, “OFAC Laws and
Regulations”); or (ii) a Person (a “Designated Person”) either (A) included
within the term “designated national” as defined in the Cuban Assets Control
Regulations, 31 C.F.R. Part 515, or (B) designated under Sections 1(a), 1(b),
1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published
September 25, 2001) or similarly designated under any related enabling
legislation or any other similar Executive Orders (collectively, the “Executive
Orders”). The OFAC Laws and Regulations and the Executive Orders are
collectively referred to in this Amendment as the “Anti-Terrorism Laws”.
Borrowers represent and warrant that they require, and have taken reasonable
measures to ensure compliance with the requirement, that no Person who owns any
other direct interest in Borrowers is or shall be listed on any of the Lists or
is or shall be a Designated Person. This Section 5.26 shall not apply to any
Person to the extent that such Person’s interest in the Borrowers is through a
U.S. Publicly-Traded Entity. As used in this Agreement, “U.S. Publicly-Traded
Entity” means a Person (other than an individual) whose securities are listed on
a national securities exchange, or quoted on an automated quotation system, in
the United States, or a wholly-owned subsidiary of such a Person.
(b) Funds Invested in Borrowers. Borrowers represent and warrant that they have
taken reasonable measures appropriate to the circumstances (and in any event as
required by law), with respect to each holder of a direct or indirect interest
in any Borrower, to assure that funds invested by such holders in Borrowers are
derived from legal sources (“Anti-Money Laundering Measures”). The Anti-Money
Laundering Measures have been undertaken in accordance with the Bank Secrecy
Act, 31 U.S.C. §§ 5311 et seq. (“BSA”), and all applicable laws, regulations and
government guidance on BSA compliance and on the prevention and detection of
money laundering violations under 18 U.S.C. §§ 1956 and 1957 (collectively with
the BSA, “Anti-Money Laundering Laws”).
(c) No Violation of Anti-Money Laundering Laws. Borrowers represent and warrant
to Agent, to its actual knowledge after making due inquiry, that neither
Borrowers nor any holder of a direct or indirect interest in any Borrower (i) is
under investigation by any governmental authority for, or has been charged with,
or convicted of, money laundering under 18 U.S.C. §§ 1956 and 1957, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (ii) has been assessed civil or criminal
penalties under any Anti-Money Laundering Laws, (iii) has had any of its funds
seized or forfeited in an action under any Anti-Money Laundering Laws, or
(iv) has failed to take such steps and implement such policies as are reasonably
necessary to ensure that each Borrower is not promoting, facilitating or
otherwise furthering, intentionally or unintentionally, the transfer, deposit or
withdrawal of criminally derived property, or of money or monetary instruments
which are (or which such Borrower suspects or has reason to believe are) the
proceeds of any illegal activity or which are intended to be used to promote or
further any illegal activity.
(d) Borrower Compliance with Anti-Money Laundering Laws. Borrowers represent,
warrant to Agent that they have taken reasonable measures appropriate to the
circumstances (in any event as required by law), to ensure that Borrowers are in
compliance with all current and future Anti-Money Laundering Laws and laws,
regulations and government guidance for the prevention of terrorism, terrorist
financing and drug trafficking.

 

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(e) Business Activities. To the best of each Borrower’s knowledge, as of the
Restatement Date and at all times during the term of the Loans, all earnings
from the Projects are and will be derived from lawful business activities of
Tenants of the Projects or other permissible sources under U.S. law.
(f) Repayment of Loan. On each Applicable Maturity Date, Borrowers will take
reasonable steps to verify that funds used to repay such Loan in full (whether
in connection with a refinancing, asset sale or otherwise) are from sources
permissible under U.S. law and to the extent such funds originate outside the
United States, permissible under the laws of the jurisdiction in which they
originated.
(g) Trading with the Enemy Act and International Emergency Economic Powers Act.
Each Borrower is and at all times shall be in compliance with the Office of
Foreign Assets Control sanctions and regulations promulgated under the authority
granted by the Trading with the Enemy Act (“TWEA”), 50 U.S.C. App. Section 1 et
seq. and the International Emergency Economic Powers Act (“IEEPA”), 50 U.S.C.
Section 1701 et seq., as the TWEA and the IEEPA may apply to such Borrower’s
activities.
(h) Patriot Act. Each Borrower is and at all times shall be in compliance with
(i) the Patriot Act and all rules and regulations promulgated under the Patriot
Act applicable to Borrowers and (ii) other federal or state laws relating to
“know your customer” and other anti-money laundering rules and regulations.
Section 5.27 Master Lease.
A true, correct and complete copy of each Master Lease, together with all
amendments thereto, has been delivered to Agent; and each Master Lease, and all
amendments thereto is in full force and effect as of the Restatement Date.
Section 5.28 Property Management.
Each Project is managed by the applicable Master Tenant, and there is no
agreement in place between any Borrowers or any Master Tenant with a third party
for the provision of management services at any Project.
ARTICLE VI
FINANCIAL REPORTING; NOTICES
Section 6.1 Financial Statements. Borrowers shall furnish to Agent and shall
cause the Loan Parties to furnish to Agent such financial statements and other
financial information as Agent may from time to time request. All such financial
statements shall show all material contingent liabilities and shall accurately
and fairly present the results of operations and the financial condition of
Borrowers at the dates and for the period indicated and shall be sufficient to
permit Agent to calculate and/or verify Borrowers’ calculation of Net Operating
Income. Without limitation of the foregoing, Borrowers shall furnish to Agent
and shall cause Loan Parties and Master Tenants to furnish to Agent the
following statements:

 

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(a) Monthly Reports.
(i) Borrowers shall deliver or cause to be delivered to Agent on or prior to the
twenty-fifth (25th) day of each fiscal month used by Master Tenants and/or
Borrowers in preparing financial reports (each, a “fiscal month”) the following
reports in respect of the Projects:
(A) Statements of the operations of the Projects (including a current occupancy
report by financial class and operating statement) as of the last day of the
immediately preceding fiscal month;
(B) For the preceding fiscal month and fiscal year-to-date (i) a cash summary
detailing all cash activity and reconciling beginning and end cash balances, and
(ii) for Borrowers and Master Tenants, aged accounts receivable and accounts
payable;
(C) Statements of Net Operating Income.
(ii) Upon request by Agent, Borrowers shall deliver or cause to be delivered to
Agent the following (together with the foregoing, such reports are hereinafter
collectively referred to as the “Monthly Reports”):
(A) A true, correct and complete copy of the check register showing all paid
invoices, indicating date paid, amount paid and check number; and
(B) Evidence of the timely payment of all taxes and insurance premiums not paid
from the Insurance Impound or Tax Impound.
(iii) The Monthly Reports shall (a) be certified by the chief financial
representative of Borrowers as true, correct and complete, (b) be derived from
the books and records maintained by Borrowers and/or Master Tenants at the
Projects or the Guarantor’s principal office, and (c) be accompanied with copies
of supporting documentation to the extent that Agent shall request.
(iv) Each financial statement required to be delivered or caused to be delivered
by Borrowers and/or Master Tenants to Agent under this Agreement shall be
accompanied by a Compliance Certificate. Each report or other information
required to be delivered or caused to be delivered by Borrowers and/or Master
Tenants to Agent under this Agreement and required hereunder to be certified by
the chief financial representative of Borrowers shall also certify that: (a) all
of the covenants set forth in Article VII are fully performed and (b) the
representations and warranties set forth in the this Loan Agreement, the
Security Documents and in the other Loan Documents are and remain true, correct
and complete except as disclosed in writing in the certificate. Each financial
statement, report or other information required to be delivered by Borrowers to
Agent under this Agreement shall show all material contingent liabilities, shall
be prepared in accordance with Accounting Standards and shall accurately and
fairly present the results of operations and the financial condition of the
person(s) referred to therein as of the dates and for the period indicated.

 

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(b) Annual Statements. Within ninety (90) days after the end of each fiscal
year, Borrowers shall deliver or cause to be delivered to Agent a balance sheet
and financial statements of each Borrower and Master Tenant, certified as true
and correct in all respects, and prepared in accordance with Accounting
Standards and fairly presenting the financial condition(s) of the person(s)
referred to therein as of the date(s) indicated.
(c) Securities and Exchange Reporting. Borrowers shall deliver or cause to be
delivered to Agent (i) Guarantor’s quarterly report on Form 10-Q, when and as
filed with the Securities and Exchange Commission via EDGAR; (ii) Guarantor’s
annual report on Form 10-K, when and as filed with the Securities and Exchange
Commission via EDGAR; (iii) promptly and upon receipt thereof, copies of any
reports submitted by Guarantor by its independent accountants in connection with
any annual audit of the books and copies of each management control letter
provided to Guarantor by independent accountants; (iv) as soon as available,
copies of all proxy statements and related notices provided by Guarantor to all
of its stockholders; and (v) such additional information, reports or statements
as Agent may from time to time request.
Section 6.2 Audits.
If Borrowers fail to furnish or cause to be furnished promptly any report
required by Section 6.1, or if Agent reasonably deems such reports to be
unacceptable or unreliable, Agent may elect (in addition to exercising any other
right and remedy) to conduct an audit of all books and records of Borrowers, and
Loan Parties and Master Tenants which in any way pertain to the Projects and to
prepare such reports. Such audit shall be made and such reports shall be
prepared by an independent firm of certified public accountants to be selected
by Agent or another auditor of Agent’s choice (which may be an affiliate of
Agent). Borrowers shall pay all reasonable expenses of the audit and other
services, which expenses shall be immediately due and payable with interest
thereon at the Default Rate.
Section 6.3 Books and Records/Audits.
Borrowers shall keep and maintain or cause to be kept and maintained at all
times at the Projects or at the Borrower’s principal office, or such other place
as Agent may approve in writing, complete and accurate books of accounts and
records adequate to reflect the results of the operation of the Projects and to
provide the financial statements required to be provided to Agent pursuant to
Section 6.1 above and copies of all written contracts, correspondence, reports
of Agent’s independent consultant, if any, and other documents affecting the
Projects. Agent and its designated agents shall have the right to inspect and
copy any of the foregoing. Additionally, Agent may audit and determine, in
Agent’s sole and absolute discretion, the accuracy of Borrowers’ records and
computations. The costs and expenses of the audit shall be paid by Borrowers if
the audit discloses a monetary variance in any financial information or
computation equal to or greater than the greater of: (i) five percent (5%); or
(ii) Five Thousand and No/100 Dollars ($5,000.00) more than any computation
submitted by Borrowers.

 

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Section 6.4 Notice of Litigation or Default.
Borrowers shall promptly provide Agent with:
(a) written notice of any litigation, arbitration, or other proceeding or
governmental investigation (including any survey results or inspection reports
from any Governmental Authority) pending or, to any Borrower’s or Guarantor’s
knowledge, threatened against or relating to any Borrower, the Guarantor, any
Master Tenant (but (i) with respect to matters affecting only Guarantor, only
such matters which could reasonably be expected to have a material adverse
effect on the financial condition of the Guarantor and (ii) with respect to
matters affecting only a Master Tenant, only such matters which pertain to a
Project or which could reasonably be expected to have a material adverse effect
on such Master Tenant’s financial condition), or any Project; provided, that
with respect to any such litigation, arbitration or other proceeding relating
solely to a monetary claim of less than $250,000, Borrowers shall not be
required to provide notice (written or otherwise) of such claim in accordance
with the terms of this Section 6.4.
(b) a copy of all notices of default and violations of laws, regulations, codes,
ordinances and the like received by any Borrower, the Guarantor or any Master
Tenant relating to (i) Guarantor, if (A) potentially material to the business
operations of such Guarantor or (B) relating to the DOJ Investigation, or
(ii) any Borrower, the Collateral or the Projects; and
(c) a copy of all notices sent to or received from any Master Tenant under any
Master Lease.
Section 6.5 Bank Accounts.
Borrower shall, and shall cause the Master Tenants to, provide Agent with the
following information with respect to each of the accounts from which payments
will be made to Agent pursuant to the Loan Documents: (i) bank name; (ii) bank’s
ABA number; (iii) bank account number; and (iv) the name in which the bank
account is held.
ARTICLE VII
COVENANTS
Each Borrower covenants and agrees with Agent as follows:
Section 7.1 Inspection.
Subject to the rights of tenants under the Leases, Agent and its authorized
agents may enter upon and inspect the Projects at all reasonable times upon
notice given orally or in writing to Borrowers.
Section 7.2 Due on Sale and Encumbrance; Transfers of Interests.
(a) Except as permitted hereby, without the prior written consent of Agent, no
Borrower nor any other Person having a direct or indirect ownership or
beneficial interest in any Borrower shall

 

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(i) create, or permit the creation of, any new direct or indirect ownership
interest in any Borrower, or
(ii) sell, transfer, or permit the sale or transfer of (A) all or any part of
the Projects, or any interest therein (other than Leases permitted hereunder),
or (B) any direct or indirect ownership interest in any Borrower (including any
interest in the profits, losses or cash distributions in any way relating to the
Projects, any Borrower or Guarantor), or
(iii) encumber, alienate, grant a Lien or grant any other interest in any
Project or any part thereof (other than Leases, easements or other restrictions
permitted hereunder) or take or fail to take any other action which would result
in a Lien against the Projects or the interest of any Borrower in any Project or
any ownership interest in any Borrower, whether voluntarily or involuntarily
except Liens in favor of Agent for the benefit of Lender and Agent, or
(iv) enter into any easement or other agreement granting rights in or
restricting the use or development of any Project (provided that Agent’s consent
thereto shall not be unreasonably withheld or delayed), or
(b) (i) As used in this Section 7.2, “Change in Control” shall mean a change
(voluntary or involuntary, by operation of law or otherwise) in the Person or
Persons which directly or indirectly control Guarantor as of the Restatement
Date , as described in subparagraphs (A) through (C) below:
(A) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities (or other equity interests) of Guarantor representing thirty-five
percent (35%) or more of the combined voting power of the then-outstanding
securities (or equity interests) of Guarantor (but not in the case of any such
Person who, as of the date of this Agreement, holds such thirty-five percent
(35%) interest); or
(B) the stockholders (or holders of equity interests) of Guarantor approve a
merger or consolidation of Guarantor with any other corporation (or other
entity), other than as part of a corporate restructuring which does not result
in a material (i.e., thirty-five percent (35%) or more) change in the ultimate
stockholders (or holders of equity interests) of Guarantor; or
(C) the stockholders (or holders of voting equity interests) of Guarantor
approve a plan of complete liquidation of Guarantor or an agreement for the sale
or disposition by Guarantor of all or substantially all of the assets of
Guarantor.
(D) the creation or issuance of new stock (or other voting equity interests),
other than stock or stock option grants to employees, officers and directors of
Guarantor, in one or a series of transactions by which an aggregate of more than
fifty percent (50%) of the stock (or other voting equity interests) of Guarantor
shall be vested in a party or parties who are not stockholders (or holders of
voting equity interests) of Guarantor as of the date of this Agreement.

 

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(ii) For purposes of this Section 7.2, the term “Person” shall have the meaning
ascribed thereto in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”).
(iii) For purposes of this Section 7.2, the term “Beneficial Owner” shall have
the meaning ascribed thereto in Rule 13d-3 of the Exchange Act.
Section 7.3 Taxes; Charges.
Borrowers shall pay before any fine, penalty, interest or cost may be added
thereto, and shall not enter into any agreement to defer, any Taxes that may
become a Lien upon any Project or become payable during the term of the Loans,
and will promptly furnish Agent with evidence of such payment; however,
Borrowers’ compliance with Section 3.5 of this Agreement relating to impounds
for taxes and assessments shall, with respect to payment of such taxes and
assessments, be deemed compliance with this Section 7.3. Borrowers shall not
suffer or permit the joint assessment of any Project with any other real
property constituting a separate tax lot or with any other real or personal
property. Borrowers shall pay when due all Taxes, claims and demands of
mechanics, materialmen, laborers and others which, if unpaid, might result in a
Lien on any Project (collectively, the “Charges”); however, Borrowers may
contest, in good faith by appropriate proceedings, the amount or validity of any
such Charges or Liens so long as (a) Borrowers have given prior written notice
to Agent of the intent to so contest or object to any such Charges or Liens,
(b) such contest stays the enforcement or collection of the Charges or any Lien
created, (c) Borrowers provide Agent with a bond or other security satisfactory
to Agent (including an endorsement to Agent’s Title Policies insuring against
such claim, demand or lien) assuring the discharge of Borrowers’ obligations for
such claims, demands or lien, including interest and penalties, and
(d) Borrowers are diligently contesting the same by appropriate legal
proceedings in good faith and at their own expense and concludes such contest
prior to the tenth (10th) day preceding the earlier to occur of the Applicable
Maturity Date or the date on which a Project is scheduled to be sold for
non-payment.
Section 7.4 Control; Management.
Except as permitted in Section 7.2, there shall be no change in the control of
any of the Borrowers, the Guarantor or the Master Tenants without the written
consent of Agent. Each Borrower that, as Landlord, has entered into a Master
Lease, shall not terminate or amend the applicable Master Lease in any material
respect without Agent’s prior written approval, which approval may be withheld
or conditioned in Agent’s sole discretion. Any change in ownership or control of
the applicable Master Tenant shall be cause for Agent to re-approve such Master
Tenant and Master Lease. Borrowers and/or Master Tenants shall hold and maintain
all necessary licenses, certifications and permits required by law.
Section 7.5 Operation; Maintenance; Inspection.
Each Borrower shall observe and comply with (or cause observance and compliance
with) all legal requirements applicable to the ownership, use and operation of
the Projects. Borrowers shall maintain (or cause to be maintained) the Projects
in good condition and promptly repair any damage or casualty, including, without
limitation, emergency call systems and generators.

 

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Section 7.6 Taxes on Security.
Borrowers shall pay all taxes, charges, filing, registration and recording fees,
excises and levies payable with respect to the Notes or the Liens created or
secured by the Loan Documents, other than income, franchise and doing business
taxes imposed on Agent or Lender. If there shall be enacted any law
(a) deducting the Loans from the value of any Project for the purpose of
taxation, (b) affecting any Lien on the Projects, or (c) changing existing laws
of taxation of mortgages, deeds of trust, security deeds, or debts secured by
real property, or changing the manner of collecting any such taxes, Borrowers
shall promptly pay to Agent, on demand, all taxes, costs and charges for which
Agent or Lender is or may be liable as a result thereof; however, if such
payment would be prohibited by law or would render the Loans usurious, then
instead of collecting such payment, Lender may declare all amounts owing under
the Loan Documents to be immediately due and payable.
Section 7.7 Single Purpose Entity; Legal Existence; Name, Etc.
Each Borrower and each Master Tenant shall preserve and keep in full force and
effect its existence as a Single Purpose Entity, and shall preserve and keep in
full force and effect its entity status, franchises, rights and privileges under
the laws of the state of its formation, and all qualifications, licenses and
permits applicable to the ownership, use and operation of the Projects. Neither
any Borrower nor any Master Tenant shall wind up, liquidate, dissolve,
reorganize, merge, or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of all or substantially all of its assets,
or acquire all or substantially all of the assets of the business of any Person,
or permit any subsidiary or Affiliate of Borrowers to do so. No Borrower will
amend or terminate or permit the amendment or termination of any Borrower’s
membership agreement without the prior written consent of Agent, which consent
shall not be unreasonably withheld or delayed. Each Borrower and each Master
Tenant shall conduct business only in its own name and no Borrower shall change
its name, identity, or organizational structure, the location of its chief
executive office or principal place of business or its state of organization
unless Borrowers (a) shall have obtained the prior written consent of Agent to
such change, which consent shall not be unreasonably withheld or delayed, and
(b) shall have taken all actions necessary or requested by Agent to file or
amend any financing statement or continuation statement to assure perfection and
continuation of perfection of security interests under the Loan Documents. Each
Borrower and each Master Tenant shall maintain its separateness as an entity,
including maintaining separate books, records, and accounts and observing
corporate and partnership formalities independent of any other entity, shall pay
its obligations with its own funds and shall not commingle funds or assets with
those of any other Borrower or entity.

 

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Section 7.8 Affiliate Transactions.
Without the prior written consent of Agent, no Borrower shall engage in any
transaction (other than the applicable Master Lease) affecting any Project with
any Affiliate of any Borrower, other than on an arms-length basis and at market
rates; provided, however, that prior to entering into any material agreement
with any Affiliate, the applicable Borrower shall deliver a copy thereof to
Agent which shall be satisfactory to Agent in Agent’s reasonable discretion and
which shall provide that such agreement provide that Agent shall have the right
to terminate such agreement without payment or other liability after the
occurrence of an Event of Default..
Section 7.9 Limitation on Other Debt.
No Borrower shall, without the prior written consent of Agent, which consent
shall not be unreasonably withheld or delayed, incur any Debt, except for Debt
arising hereunder and under the Loan Documents and unsecured trade payables in
the ordinary course of business.
Section 7.10 Further Assurances.
Borrowers shall promptly (a) cure any defects in the execution and delivery of
the Loan Documents, (b) provide, and cause each Loan Party to provide, Lender
such additional information and documentation on each Borrower’s and each Loan
Party’s legal or beneficial ownership, policies, procedures, and sources of
funds as Lender deems necessary or prudent to enable Lender to comply with
Anti-Money Laundering Laws as now in existence or hereafter amended, and
(c) execute and deliver, or cause to be executed and delivered, all such other
documents, agreements and instruments as Agent may reasonably request to further
evidence and more fully describe the collateral for the Loans, to correct any
omissions in the Loan Documents, to perfect, protect or preserve any liens
created under any of the Loan Documents, or to make any recordings, file any
notices, or obtain any consents, as may be necessary or appropriate in
connection therewith. Each Borrower grants Agent an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Agent under the Loan Documents, at
law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 7.10. From time to time upon the
written request of Agent, Borrowers shall deliver to Agent a schedule of the
name, legal domicile address and jurisdiction of organization, if applicable,
for Guarantor and each holder of a legal interest in Borrowers.
Section 7.11 Estoppel Certificates.
Borrowers, within ten (10) days after request, shall furnish to Agent a written
statement, duly acknowledged, setting forth the amount due on the Loans, the
terms of payment of the Loans, the date to which interest has been paid, whether
any offsets or defenses exist against the Loans and, if any are alleged to
exist, the nature thereof in detail, and such other matters as Agent reasonably
may request.

 

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Section 7.12 Notice of Certain Events.
Borrowers shall promptly notify Agent of (a) any Potential Default or Event of
Default, together with a detailed statement of the steps being taken to cure
such Potential Default or Event of Default; (b) any notice of default received
by any Borrower or any Master Tenant under other obligations relating to any
Project or otherwise material to any Borrower’s business, including any notices
of violations of any laws, regulations, codes or ordinances; (c) any threatened
or pending legal, judicial or regulatory proceedings, including any dispute
between any Borrower or any Master Tenant and any governmental authority,
affecting any Borrower, Guarantor or any Project; (d) a copy of each notice of
default or termination given or made to any Master Tenant by any Borrower or
received by any Borrower from any Master Tenant; and (e) a copy of each notice
of default or termination under any license or permit necessary for the
operation of the Projects in the manner required by this Agreement; and in the
case of clauses (b), (d) or (e), promptly provide Agent with copies of such
notices referred to therein.
Section 7.13 Indemnification.
Borrowers shall, and hereby do, indemnify, defend and hold Agent and Lenders
harmless from and against any and all losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever, including the reasonable fees
and actual expenses of Agent’s and Lender’s counsel, in connection with (a) any
inspection, review or testing of or with respect to any Project, (b) any
investigative, administrative, mediation, arbitration, or judicial proceeding,
whether or not Agent or a Lender is designated a party thereto, commenced or
threatened at any time (including after the repayment of the Loans) in any way
related to the execution, delivery or performance of any Loan Document or to any
Project, (c) any proceeding instituted by any Person claiming a Lien, (d) any
brokerage commissions or finder’s fees claimed by any broker or other party in
connection with the Loans, any Project, or any of the transactions contemplated
in the Loan Documents, (e) ownership of the Security Documents, the Projects or
any interest therein or receipt of any rents, (f) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Projects or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways, (g) any use, non-use or
condition in, on or about the Projects or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways,
(h) performance of any labor or services or the furnishing of any materials or
other property in respect of the Projects or any part thereof, and (i) the
failure of any Person to file timely with the Internal Revenue Service an
accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection
with this Agreement, or to supply a copy thereof in a timely fashion to the
recipient of the proceeds of the transaction in connection with which this
Agreement is made, including, in each case of subsections (a) through (i) above,
those arising from the joint, concurrent, or comparative negligence of Agent or
Lender, except to the extent any of the foregoing is caused by an indemnitee’s
gross negligence or willful misconduct. Any amounts payable to Agent or Lender
by reason of the application of this Section shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Agent or Lender until paid.
Section 7.14 Use of Proceeds, Revenues.
All proceeds of the Loans shall be used for proper business purposes related to
the operation of the Borrowers’ business and no portion of the proceeds of the
Loans shall be distributed to the direct or indirect owners of Borrowers outside
the ordinary course of business. No portion of the proceeds of the Loans shall
be used by Borrowers in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation U, Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Act of 1933 or the Securities
Exchange Act of 1934. Except as otherwise specifically provided in the Loan
Documents, operating revenues, and other Project proceeds received by Borrowers
shall be applied to the Indebtedness then due and payable, operating expenses or
other Project capital improvements, repairs or replacements before distribution
by Borrowers to any member of any Borrower.

 

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Section 7.15 Bank Accounts; Notices to Tenants and Residents.
Borrowers shall deliver to Agent, in form acceptable to Agent, an undated letter
of direction to Master Tenant pursuant to which each such Master Tenant is
irrevocably directed to make all payments directly to Agent or an Approved Bank
Account. Upon the occurrence of an Event of Default, Agent shall have the right
to date and deliver such letters of direction.
Section 7.16 Compliance with Laws and Contractual Obligations.
(a) Borrowers will (to the extent applicable to Borrowers) comply in all
material respects with and (to the extent applicable to Master Tenants) will
cause Master Tenants to comply in all material respects with (i) the
requirements of all applicable laws, rules, regulations and order of any
governmental authority (including, without limitation, laws, rules, regulations
and orders relating to all building, zoning, density, land use, covenants,
conditions and restrictions, subdivision requirements, taxes, employer and
employee contributions, securities, employee retirement and welfare benefits,
environmental protection matters, employee health and safety, quality and safety
standards, accreditation standards and requirements of the applicable state
department of health or other applicable state regulatory agency (each a “State
Regulator”), quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting) as are now in effect and
which may be imposed upon any Borrower, Master Tenant or the maintenance, use or
operation of the Projects or the provision of services to the occupants of the
Projects and (ii) the obligations, covenants and conditions contained in all
other material contractual obligations of any Borrower, and as it relates to any
Project or Master Tenant; and
(b) Borrowers will maintain and obtain and will cause Master Tenants to maintain
and obtain, all licenses, qualifications and permits now held or hereafter
required to be held by any Borrower Master Tenant for which the loss,
suspension, revocation or failure to obtain or renew, could reasonably be
expected to have a material adverse effect upon the financial condition of any
Borrower or the ability to operate the Projects in compliance with the
requirements of the Loan Documents and as it has been operated prior to the date
hereof.
Section 7.17 Notice of Money Laundering.
If a tenant under any Lease is charged with crimes involving money laundering or
predicate crimes to money laundering, and such charges are not dismissed without
further investigation within thirty (30) days, then Borrowers shall give notice
of such charges to Agent’s and upon Agent’s request, Borrowers shall exclude
from the debt service rents from said tenant or resident.

 

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Section 7.18 Anti-Terrorism and Anti-Money Laundering Compliance.
(a) Compliance with Anti-Terrorism Laws. Borrowers covenant to Agent and Lender
that they shall not be, and, after making due inquiry, that no Person who owns a
controlling interest in or otherwise controls Borrowers shall be, (i) listed on
the Lists; or (ii) a Designated Person. Borrowers also shall require, and shall
take reasonable measures to ensure compliance with the requirement, that no
Person who owns any other direct interest in Borrowers shall be listed on any of
the Lists or is or shall be a Designated Person. This Section 7.20 shall not
apply to any Person to the extent that such Person’s interest in the Borrowers
is through a U.S. Publicly-Traded Entity.
(b) Compliance by Interest Holders. Borrowers shall require each Person that
proposes to become a partner, member or shareholder in Borrowers after the date
hereof and that is not a U.S. Publicly-Traded Entity to sign, and to deliver to
Borrowers (and Borrowers shall deliver to Agent), (i) an Interest Holder
Certification and Agreement, substantially in the form attached as Exhibit D
(“Interest Holder Agreement”) and (ii) if requested by Agent, Borrowers shall
deliver to Agent a schedule of the name, legal domicile address and (for
entities) place of organization of each holder of a direct or indirect legal or
beneficial interest in Borrowers.
(c) Anti-Terrorism Policies. To the extent required by law, Borrowers agree to
adopt and maintain adequate policies, procedures and controls to ensure that it
is in compliance with all Anti-Terrorism Laws and related government guidance
(such policies, procedures and controls are collectively referred to in this
Agreement as “Borrower Anti-Terrorism Policies”). Borrowers further agree to
make the Borrower Anti-Terrorism Policies, and the respective policies,
procedures and controls for Persons who are or are to become partners, members
or shareholders in Borrowers (such policies, procedures and controls are
collectively referred to as “Investor Anti-Terrorism Policies”), together with
the information collected thereby concerning Borrowers and such partners,
members or shareholders (but not information about indirect members that do not
have the power to direct the management or policies of Borrowers, whether
through the ownership of voting stock, agreement or otherwise), available to
Agent for review and inspection by Agent from time to time during normal
business hours and upon reasonable prior notice, and Borrowers agree to deliver
copies of the same to Agent from time to time upon request. Agent and Lender
will keep the Borrower Anti-Terrorism Policies and the Investor Anti-Terrorism
Policies, and the information collected thereby, confidential subject to
customary exceptions for legal process, auditors, regulators, or as otherwise
reasonably required by Agent and Lender for enforcement of its rights and/or in
connection with reasonable business us in the management, administration and
disposition of its assets and investments. Borrowers consent to the disclosure
to U.S. regulators and law enforcement authorities by Agent or Lender or any of
their affiliates or agents of such information about Borrowers and the owners of
direct and indirect interests in Borrowers that Agent or Lender reasonably deems
necessary or appropriate to comply with applicable Anti-Terrorism Laws and
Anti-Money Laundering Laws.
(d) Funds Invested in Borrowers. Borrowers covenant that they will take
Anti-Money Laundering Measures in accordance with Anti-Money Laundering Laws
with respect to each holder of a direct or indirect interest in any Borrower.

 

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(e) Borrower Compliance with Anti-Money Laundering Laws. Borrowers covenant to
Agent and Lender that they shall take reasonable measures appropriate to the
circumstances (in any event as required by law), to ensure that Borrowers are in
compliance with all current and future Anti-Money Laundering Laws and laws,
regulations and government guidance for the prevention of terrorism, terrorist
financing and drug trafficking.
(f) Notification of Agent; Quarantine Steps. Borrowers shall immediately notify
Agent if Borrowers obtain actual knowledge that any holder of a direct or
indirect interest in any Borrower, or any director, manager or officer of any of
such holder, (i) has been listed on any of the Lists, (ii) has become a
Designated Person, (iii) is under investigation by any governmental authority
for, or has been charged with or convicted of, money laundering drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (iv) has been assessed civil penalties
under any Anti-Money Laundering Laws, or (v) has had funds seized or forfeited
in an action under any Anti-Money Laundering Laws.
Section 7.19 Employees.
No Borrower shall have any employees while any portion of the Loans are
outstanding.
Section 7.20 Post-Closing Obligations.
(a) Asbestos Surveys/O&M Plans. Six Project Borrowers shall engage a qualified
environmental consultant acceptable to Agent, to conduct an asbestos survey of
for each of the Six Project Loan Projects (excluding the Cambridge and Golden
Acres Projects) and create and implement an O&M plan for any confirmed ACM
discovered in such surveys and shall provide Agent with such surveys and O&M
plans, which shall be in form and substance satisfactory to the Agent, within
ninety (90) days after the Restatement Date.
(b) Required Repairs. Within ninety (90) days (or such shorter time period as is
specified on Exhibit G) after the date hereof, Six Project Borrowers shall
provide Agent with reasonably satisfactory evidence that the repairs listed on
Exhibit G attached hereto have been completed.
(c) Lease Agreements. Within ninety (90) days after the date hereof, Six Project
Borrowers shall provide Agent amendments to the Master Leases for each of the
Projects (excluding The NMMRC Project) which shall amend the rental amounts to
be consistent with the debt service for each Project, which amendments shall be
in form and substance satisfactory to the Agent
(d) Insurance. Within five (5) days after the date hereof, Borrowers shall
provide Agent with evidence satisfactory to Agent in its sole discretion that
the insurance policies have been paid for the current policy period.
Section 7.21 Representations and Warranties.
Except for those representations and warranties which are expressly made only as
of the date hereof, Borrowers will cause all representations and warranties to
remain true and correct all times during the term of this Agreement and while
any portion of the Loans remains outstanding.

 

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Section 7.22 Cooperation.
Borrowers acknowledge that Lender and its successors and assigns may (a) sell,
transfer or assign this Agreement, the Notes and the other Loan Documents to one
or more investors as a whole loan, in a rated or unrated public offering or
private placement, (b) participate the Loans to one or more investors in a rated
or unrated public offering or private placement, (c) deposit the Loan Documents
with a trust, which trust may sell certificates to investors evidencing an
ownership interest in the trust assets in a rated or unrated public offering or
private placement, or (d) otherwise sell the Loans or interest therein to
investors in a rated or unrated public offering or private placement (the
transactions referred to in clauses (a) through (d) are hereinafter referred to
as “Secondary Market Transactions”). Borrowers shall cooperate in good faith
with Agent and Lender in effecting any such Secondary Market Transaction and
shall cooperate in good faith to implement all requirements reasonably imposed
by the participants involved in any Secondary Market Transaction (including
without limitation, an institutional purchaser, participant or investor)
including, without limitation, all structural or other changes to the Loans,
modifications to any documents evidencing or securing the Loans, delivery of
opinions of counsel reasonably acceptable to such other purchasers, participants
or investors may reasonably require at no third party professional expense
unless otherwise required by the Loan Documents; provided, however, that
Borrowers shall not be required to modify any documents evidencing or securing
the Loans which would (i) modify the interest rate payable under the Notes,
(ii) modify the stated maturity of the Notes, (iii) modify the amortization of
principal of the Notes, (iv) modify or conflict with any other material terms or
covenants of the Loans, (v) conflict with any Master Lease or (vi) increase the
Borrowers’ liability or obligations under the Loan Documents. Borrowers shall
provide all such information and documents relating to Borrowers, Loan Parties,
the Projects and the Master Tenants. Borrowers acknowledge that certain
information regarding the Loans and the Loan Parties and the Projects may be
included in a private placement memorandum, prospectus or other disclosure
documents, and such information may be disclosed to investment banking firms,
Rating Agencies, accounting firms, law firms and other third-party advisory
firms involved with the Loans and the Loan Documents or the applicable Secondary
Market Transaction. Agent, Lender and all of the aforesaid third-party advisors
and professional firms shall be entitled to rely on the information supplied by,
or on behalf of, Borrowers and Borrowers indemnify Agent and Lender as to any
losses, claims, damages or liabilities that arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such information or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information, or
in light of the circumstances under which they were made, not misleading. Agent
and Lender shall have the right (but shall be under no obligation) to make
available to any party for the purpose of granting participations in or selling,
transferring, assigning or conveying all or any part of the Loans (including any
governmental agency or authority and any prospective bidder at any foreclosure
sale of the Projects) any and all information which Agent or Lender may have
with respect to the Projects, any Borrower and Guarantor, whether provided by
Borrowers, Guarantor, or any third party, or obtained as a result of any
environmental assessments. Borrowers and Guarantor agree that Lender shall have
no liability whatsoever as a result of delivering any such information to any
third party, and Borrowers and the Guarantor, on behalf of themselves and their
successors and assigns, hereby release and discharge Agent and Lender from any
and all liabilities, claims, damages, or causes of action arising out of,
connected with or incidental to the delivery of any such information to any
third party.

 

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Section 7.23 Master Leases.
Borrowers shall not, without Agent’s prior written consent, which consent shall
not be unreasonably withheld or delayed, amend or terminate any Master Lease.
Section 7.24 Property Management Agreements.
Without Agent’s prior written consent, Borrowers shall not, nor shall Borrowers
permit any Master Tenant to, enter into, amend or terminate any agreement for
the provision of management services for any Project.
ARTICLE VIII
HEALTH CARE MATTERS
Section 8.1 Healthcare Laws.
(a) Without limiting the generality of any other provision of this Agreement,
each Borrower and each Master Tenant and their employees and contractors (other
than contracted agencies) in the exercise of their duties on behalf of any
Borrower or any Master Tenant (with respect to its operation of the Projects)
shall be in compliance in all material respects with all applicable Laws
relating to resident healthcare and/or resident healthcare information, the
establishment, construction, ownership, operation, use or occupancy of the
Projects or any part thereof as a skilled nursing facility, assisted living
facility or other healthcare facility, including without limitation the Health
Insurance Portability and Accountability Act of 1996, as amended, and the rules
and regulations promulgated thereunder (“HIPAA”) (collectively, “Healthcare
Laws”). Each Borrower and each Master Tenant has maintained and shall continue
to maintain in all material respects all records required to be maintained by
any Governmental Authority or otherwise under the Healthcare Laws and to
Borrower’s knowledge and except for the DOJ Investigation there are no presently
existing circumstances which would result or could reasonably be expected to
result in material violations of the Healthcare Laws. Each Borrower and each
Master Tenant have and will maintain all Governmental Approvals necessary under
applicable Laws to own and/or operate the Projects, as applicable (including
such Governmental Approvals as are required under such Healthcare Laws, except
where the failure to maintain any of such could not reasonably be expected to
have a material adverse effect on the business or operations of the relevant
Project); or, if applicable Licenses have been applied for, but not yet issued
to, such Borrower or Master Tenant, such Person has entered into applicable
agreements with the prior operator of the Projects to operate the Projects under
the current licenses.

 

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(b) Each Borrower represents that neither Borrower nor Master Tenant (with
respect to its operations of the Projects) is (i) a “covered entity” within the
meaning of HIPAA or submits claims or reimbursement requests to Third Party
Payor Programs “electronically” (within the meaning of HIPAA) or (ii) is subject
to the “Administrative Simplification” provisions of HIPAA. If any Borrower or
Master Tenant at any time becomes a “covered entity” or subject to the
“Administrative Simplification” provisions of HIPAA with respect to its
operation of the Projects, then such Persons (x) will promptly undertake all
necessary surveys, audits, inventories, reviews, analyses and/or assessments
(including any necessary risk assessments) of all areas of its business and
operations required by HIPAA and/or that could be adversely affected by the
failure of such Person(s) to be HIPAA Compliant (as defined below); (y) will
promptly develop a detailed plan and time line for becoming HIPAA Compliant (a
“HIPAA Compliance Plan”); and (z) will implement those provisions of such HIPAA
Compliance Plan in all material respects necessary to ensure that such Person(s)
are or become HIPAA Compliant. For purposes hereof, “HIPAA Compliant” shall mean
that each Borrower and each Master Tenant, as applicable (A) are or will be in
material compliance with each of the applicable requirements of the so-called
“Administrative Simplification” provisions of HIPAA on and as of each date that
any party thereof, or any final rule or regulation thereunder, becomes effective
in accordance with its or their terms, as the case may be (each such date, a
“HIPAA Compliance Date”) if and to the extent such Borrower and/or Master Tenant
are subjected to such provisions, rules or regulations, and (B) are not and will
take all steps necessary to avoid becoming, as of any date following any such
HIPAA Compliance Date, the subject of any civil or criminal penalty, process,
claim, action or proceeding, or any administrative or other regulatory review,
survey, process or proceeding (other than routine surveys or reviews conducted
by any government health plan or other accreditation entity) that could result
in any of the foregoing or that could reasonably be expected to materially
adversely affect any Borrower’s or Master Tenant’s business, operations, assets,
properties or condition (financial or otherwise), in connection with any actual
or potential violation by any Borrower or Master Tenant of the then effective
provisions of HIPAA.
(c) If and to the extent required under applicable Laws, each Borrower and each
Master Tenant has and shall maintain in full force and effect a valid
certificate of need (“CON”) or similar certificate, license, or approval issued
by the State Regulator for the requisite number of Residential Units in the
Projects, and a provider agreement or other required documentation of approved
provider status for each provider payment or reimbursement program listed in
Exhibit E hereto, if applicable. All required Government Approvals necessary for
operation of the Projects are listed on Exhibit F hereto (collectively with the
CON, if applicable, the “Licenses”). Each Borrower and each Master Tenant shall
operate the Projects in a manner such that the Licenses shall remain in full
force and effect. True and complete copies of the Licenses have been delivered
to Agent.
Section 8.2 Representations, Warranties and Covenants Regarding Healthcare
Matters. Each Borrower represents, warrants covenants and agrees with Lender
that:
(a) Each Borrower, together with each Master Tenant is using and operating the
Projects as assisted living, skilled nursing, Alzheimer’s and/or independent
senior housing facilities, having the number of Residential Units as set forth
in Exhibits B-1 through B-16 attached hereto (as modified by Borrower from time
to time with Agent’s consent, such consent not to be unreasonably withheld).
Each Borrower and each Master Tenant (and the operation of the Projects) is in
compliance in all material respects with all applicable provisions of the laws,
ordinances, statutes, regulations, orders, standards, policies, restrictions or
rules of any Governmental Authority having jurisdiction over the ownership, use,
occupancy or operation of

 

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the Projects, including (i) staffing requirements, (ii) health and fire safety
codes, including quality and safety standards, (iii) accepted professional
standards and principles that apply to professionals providing services at the
Projects; (iv) federal, state or local laws, rules, regulations or published
interpretations or policies relating to the prevention of fraud and abuse,
(v) insurance, reimbursement and cost reporting requirements, (vi) government
payment program requirements and disclosure of ownership and related information
requirements; (vii) requirements of applicable Government Authorities, including
those relating to the Projects’ physical structure and environment, licensing,
quality and adequacy of nursing and personal care, distributions of
pharmaceuticals, rate setting, equipment, personnel, operating policies and
services and fee splitting, and (viii) any other applicable laws, regulations or
agreements for reimbursement for the type of care or services provided by Master
Tenant with respect to the Projects.
(b) All material Governmental Approvals necessary for using and operating the
Projects for the uses described in Section 8.17(a) above, including all required
CONS (collectively, the “Licenses”) are held by Borrower or Master Tenant in the
name of Borrower, Master Tenant or the applicable Project, as required under
applicable law, and are in full force and effect.
(c) The Licenses:
(i) Are not now and will not be transferred to any location other than the
Projects or pledged as collateral security for any loan or indebtedness, other
than the Loans; and
(ii) Shall be timely renewed as required from time to time in order to continue
each Project’s licensure uninterrupted and in full force and effect throughout
the term of the Loans, and are held free from, and Borrowers shall cause Master
Tenants to ensure that they remain free from, restrictions or known conflicts
which would materially impair the use or operation of the Projects for the uses
described in Section 8.2(a) above, and Borrowers shall cause Master Tenants to
ensure that the Licenses shall not become provisional, probationary or
restricted in any way.
(d) No Borrower or Master Tenant shall do (or voluntarily suffer to be done) any
of the following:
(i) Rescind, withdraw, revoke, amend, modify, supplement, or otherwise alter the
nature, tenor or scope of the Licenses for the Projects without Agent’s consent;
(ii) Amend or otherwise change any Project’s authorized units/beds capacity
and/or the number of units/beds approved by the State Regulator without Agent’s
prior written consent, which consent shall not be unreasonably withheld or
delayed;
(iii) Replace or transfer all or any part of any Project’s licensed units or
beds to another site or location; or
(iv) Voluntarily transfer or encourage the transfer of any resident of any
Project to any other facility, unless such transfer is at the request of the
resident or is for reasons relating to the health, required level of medical
care or safety of the resident to be transferred.

 

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(e) If and when any Borrower or Master Tenant participates in any Medicare or
Medicaid or other Third-Party Payor Programs with respect to any Project, the
Project will remain in substantial compliance with all requirements for
participation in Medicare and Medicaid, including the Medicare and Medicaid
Patient Protection Act of 1987, as it may be amended, and such other third party
payor programs. Each Project is and will remain in conformance in all material
respects with all insurance, reimbursement and cost reporting requirements, and,
if applicable, have a current provider agreement that is in full force and
effect under Medicare and Medicaid.
(f) Except for the DOJ Investigation, there is no threatened, existing or
pending, and during the term of the Loans there shall be no, existing or pending
revocation, suspension, termination, probation, or nonrenewal materially and
adversely affecting any Borrower, Master Tenant or Project or any participation
or provider agreement with any governmental third-party payor, including
Medicare or Medicaid (“Government Payor Program”), and except for the DOJ
Investigation, there is no threatened or pending revocation, suspension,
termination, probation, restriction, limitation or nonrenewal affecting any
Borrower, Master Tenant or Project under any participation or provider agreement
with Blue Cross and/or Blue Shield, and any other private commercial insurance
managed care and employee assistance program (“Commercial Payor Programs” and
together with Government Payor Programs, the “Third-Party Payor Programs”) to
which any Borrower or Master Tenant may presently be subject with respect to any
Project, or at any time hereafter is subject. No Borrower or Master Tenant,
other than in the normal course of business, shall change the terms of any of
the Government Payor Programs now or hereinafter in effect or their normal
billing payment or reimbursement policies and procedures with respect thereto
(including the amount and timing of finance charges, fees and write-offs). All
Medicaid, Medicare and private insurance cost reports and financial reports
submitted by any Borrower or Master Tenant, if any, are and will be materially
accurate and complete and have not been and will not be misleading in any
material respects. Borrowers shall cause Master Tenants to remain at all times
certified to participate in and be reimbursed for services under, the Government
Payor Programs, without probation, restriction or suspension.
(g) Except for the DOJ Investigation, none of any Borrower, any Project or any
Master Tenant is, with respect to the Projects, the subject of any proceeding
action, suit, audit, sanction or investigation by any Governmental Authority, or
any other third party or any patient, employee or resident (including, but not
limited to, whistleblower suits, or suits brought pursuant to federal or state
“false claims acts” and Medicaid, Medicare or state fraud and/or abuse laws),
which if adversely determined, could reasonably be expected to have a material
adverse effect on the business or operations of Borrower, master Tenant or the
Project, as the case may be, and no notice of any violation which has not been
previously resolved to the satisfaction of the applicable Governmental Authority
has been issued by a Governmental Authority that would, directly or indirectly,
or with the passage of time (each a “Material Violation”):

 

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(i) Have a material adverse impact on Borrowers’ or Master Tenant’s ability to
accept and/or retain patients or residents or operate the Projects for their
current use or result in the imposition of a fine, a sanction, a lower rate
certification or a lower reimbursement rate for services rendered to eligible
patients or residents;
(ii) Modify, limit or annul or result in the transfer, suspension, revocation or
imposition of probationary use of any of the Licenses; or
(iii) If applicable, affect any Borrower’s or Master Tenant’s continued
participation in the Medicaid or Medicare programs or any other of the
Third-Party Payor Programs, or any successor programs thereto, at then current
rate certifications.
(h) Other than for any of such which could not reasonably be expected to have a
material adverse effect on the business or operations of the Project, no Project
has received a notice of violation at a level that under applicable Law requires
the immediate or accelerated filing of a plan of corrections, and no statement
of charges or deficiencies has been made or penalty enforcement action has been
undertaken against any Project, Borrower or Master Tenant or against any
officer, director, partner, member or stockholder of Borrower or Master Tenant,
by any Governmental Authority during the last five calendar years, and there
have been no violations over the past five years which have threatened any
Project’s, Master Tenant’s or Borrower’s certification for participation in
Medicare or Medicaid or the other Third-Party Payor Programs.
(i) Other than for any of such which could not reasonably be expected to have a
material adverse effect on the business or operations of the Project, there are
no current, pending or outstanding Medicaid, Medicare or Third-Party Payor
Program reimbursement audits or appeals pending at the Projects.
(j) Other than for any of such which could not reasonably be expected to have a
material adverse effect on the business or operations of the Project, there are
no current or pending Medicaid or Medicare or Third-Party Payor Programs
recoupment efforts at any Project. No Borrower or Master Tenant is a participant
in any federal program whereby any Governmental Authority may have the right to
recover funds by reason of the advance of federal funds, including those
authorized under the Hill-Burton Act (42 U.S.C. 291, et seq.), as it may be
amended.
(k) There are no and there will remain no resident care agreements with
residents which deviate in any material adverse respect from the form agreements
referenced in Section 5.2 of this Loan Agreement or, to Borrower’s knowledge,
which conflict with any Healthcare Laws.
(l) All patient or resident records at the Projects, including patient or
resident trust fund accounts, are true and correct in all material respects, and
will remain true and correct in all material respects.
(m) There are no material threatened or pending labor disputes at the Projects.

 

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Section 8.3 Cooperation.
From time to time, upon the request of Agent, regardless of whether or not an
Event of Default hereunder or under the other Loan Documents is then continuing,
Borrowers shall, and shall cause Master Tenants to complete, execute and deliver
to Agent any applications, notices, documentation, and other information
necessary or desirable, in Agent’s judgment, to permit Agent or its designee
(including a receiver) to obtain, maintain or renew any one or more of the
Licenses for the Projects (or to become the owner of the existing Licenses for
the Projects) and to the extent permitted by applicable Laws to obtain any other
provider agreements or Governmental Approvals then necessary or desirable for
the operation of the Projects by Agent or its designee for their current use
(including, without limitation, any applications for change of ownership of the
existing Licenses or change of control of the owner of the existing Licenses).
To the extent permitted by applicable Laws, (i) Agent is hereby authorized
(without the consent of Borrowers or Master Tenants) to submit any such
applications, notices, documentation or other information which Borrowers caused
to be delivered to Agent in accordance with the above provisions to the
applicable Governmental Authorities, or to take such other steps as Agent may
deem advisable to obtain, maintain or renew any License or other Governmental
Approvals in connection with the operation of the Projects for their current
use, and Borrowers agree to cooperate and to cause Master Tenants to cooperate
with Agent in connection with the same and (ii) Borrowers, upon demand by Agent,
shall take any action and cause Master Tenants to take any action necessary or
desirable, in Agent’s sole judgment, to permit Agent or its designee (including
a receiver) to use, operate and maintain the Projects for their current use. If
Borrowers fail to comply with the provisions of this Section 8.3 for any reason
whatsoever, Borrowers hereby irrevocably appoint Agent and its designee as
Borrowers’ attorney-in-fact, with full power of substitution, to take any action
and execute any documents and instruments necessary or desirable in Agent’s sole
judgment to permit Agent or its designee to undertake Borrowers’ obligations
under this Section 8.3, including obtaining any Licenses or Governmental
Approvals then required for the operation of the Projects by Agent or its
designee for their current use. The foregoing power of attorney is coupled with
an interest and is irrevocable and Agent may exercise its rights thereunder in
addition to any other remedies which Agent may have against Borrowers or
Guarantors as a result of a Borrower’s breach of the obligations contained in
this Section 8.3.
Section 8.4 Business and Operations.
Borrowers will continue to engage only in the businesses currently conducted by
them on the date hereof, as and to the extent the same are necessary for the
ownership and leasing of the Projects. Borrowers shall at all times cause the
Projects to be maintained in accordance with the Project’s use as a senior
housing facility.
Section 8.5 Severability of Covenants.
Any representations, warranties or covenants made by Borrowers or Master Tenant
regarding such entities or their Affiliates (as contrasted with the Projects)
shall be deemed to have been made solely on behalf of such entity, and no
Borrower or Master Tenant shall be deemed to be making such representations or
covenants or warranties regarding any other entity.

 

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ARTICLE IX
EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default:
Section 9.1 Payments.
Failure of Borrowers to pay within five (5) days after the date when due any of
the payment obligations of Borrowers due under the Loan Documents, or Borrowers’
failure to pay the Ten Project Loan or the Six Project Loan, as applicable, at
the Applicable Maturity Date, whether by acceleration or otherwise.
Section 9.2 Certain Covenants.
Borrowers’ failure to (a) maintain insurance as required under Section 3.1 of
this Agreement; (b) maintain its status as a Single Purpose Entity as required
by Section 7.7; (c) obtain Agent’s prior written approval of a change in any
Borrower’s State of organization or legal name; and (d) permit inspections as
required by Section 7.1 and (e) strictly comply with the provisions of
Section 8.1(c) (licenses and other matters), Section 8.2(b) and (c) (licenses),
Section 8.2(i) (Material Violation and Material Deficiency), Section 7.21
(employees) and Section 7.25 (Master Leases).
Section 9.3 Sale, Encumbrance, Etc.
The sale, transfer, conveyance, pledge, mortgage or assignment of any part or
all of any Project, or any interest therein, or of any interest in any Master
Tenant or any Borrower, in violation of Section 7.2 of this Agreement or the
occurrence of a Change of Control with respect to the Guarantor, in violation of
Section 7.2 of this Agreement.
Section 9.4 Covenants.
Borrowers’ failure to perform or observe any of the agreements and covenants
contained in this Agreement or in any of the other Loan Documents, and the
continuance of such failure for ten (10) days after notice by Agent to Borrowers
pursuant to Section 11.1 hereof, however, subject to any shorter period for
curing any failure by Borrowers as specified in any of the other Loan Documents,
Borrowers shall have an additional sixty (60) days to cure such failure if
(a) such failure does not involve the failure to make payments on a monetary
obligation; (b) such failure cannot reasonably be cured within ten (10) days;
(c) Borrowers commenced to cure such failure promptly after written notice
thereof and are diligently undertaking to cure such default, and (d) Borrowers
have provided Agent with security reasonably satisfactory to Agent against any
interruption of payment or impairment of collateral as a result of such
continuing failure; provided that the notice and cure provisions of this
Section 9.4 do not apply to the Events of Default described in any other section
of this Article IX (for which no notice or cure period shall apply).

 

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Section 9.5 Representations and Warranties.
Any representation or warranty made in any Loan Document proves to be untrue in
any material respect when made or deemed made.
Section 9.6 Other Encumbrances.
Any default under any document or instrument, other than the Loan Documents,
evidencing or creating a Lien on any Project or any part thereof.
Section 9.7 Involuntary Bankruptcy or Other Proceeding.
Commencement of an involuntary case or other proceeding against any Borrower,
Guarantor or any Master Tenant (each, a “Bankruptcy Party”) which seeks
liquidation, reorganization or other relief with respect to it or its debts or
other liabilities under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeks the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any of its property, and such
involuntary case or other proceeding shall remain undismissed or unstayed for a
period of sixty (60) days; or an order for relief against a Bankruptcy Party
shall be entered in any such case under the Federal Bankruptcy Code.
Section 9.8 Voluntary Petitions, etc.
Commencement by a Bankruptcy Party of a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its Debts or other liabilities under any bankruptcy, insolvency or other similar
law or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official for it or any of its property, or consent by a Bankruptcy
Party to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or the making by a Bankruptcy Party of a general assignment for the benefit of
creditors, or the failure by a Bankruptcy Party, or the admission by a
Bankruptcy Party in writing of its inability to pay its debts generally as they
become due, or any action by a Bankruptcy Party to authorize or effect any of
the foregoing.
Section 9.9 Default Under the Accounts Receivable Loan Documents.
The occurrence of a default and the expiration of any cure period applicable
thereto under any of the Accounts Receivable Loan Documents.
Section 9.10 False Reports.
Any statement, report or certificate made or delivered to Agent by Borrowers,
Guarantor or any Master Tenant is not materially true and complete when made or
delivered.
Section 9.11 Reserved.
Section 9.12 Money Laundering.
(a) Guarantor is listed on the Lists or (i) is convicted or (ii) pleads nolo
contendere to charges involving money laundering or predicate crimes to money
laundering.

 

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(b) Any Borrower or Guarantor is charged with crimes involving money laundering
or predicate crimes to money laundering, and such Borrower does not, within
thirty (30) days, obtaining the dismissal of such charges without further
investigation.
(c) If a tenant under any Lease is listed on the Lists or (i) is convicted, or
(ii) pleads nolo contendere to charges involving money laundering or predicate
crimes to money laundering, and proceeds from the rents of such tenant are used
to pay debt service and Borrowers fail to give Agent such representations and
verifications as Agent shall reasonably request that such rents are not being
used to pay debt service.
Section 9.13 Loan Documents.
The occurrence of a default under any of the other Loan Documents, which
continues uncured beyond any applicable notice and grace periods provided under
such Loan Document, or the occurrence of an “Event of Default” as defined in any
other Loan Document.
Section 9.14 Default Under Operating Agreement.
The occurrence of a default under any of the Operating Agreements, which remains
uncured beyond any applicable grace or cure periods available to Borrowers.
Section 9.15 Master Leases.
The occurrence of a default under any Master Lease which continues uncured
beyond any applicable notice and grace period provided under such Master Lease.
Section 9.16 Operations.
(a) Commencing with the calendar quarter beginning on October 1, 2009 and
continuing each calendar quarter thereafter, the average occupancy of the
Projects collectively for any calendar quarter is less than seventy-four and six
tenths percent (74.6%);
(b) Commencing with the calendar quarter beginning on October 1, 2009 and
continuing each calendar quarter thereafter, the Debt Service Coverage Ratio (as
determined at the end of any calendar quarter) for the Projects collectively for
any calendar quarter is less than 1:80:1:00; or
(c) Commencing with the calendar quarter beginning on October 1, 2009 and
continuing each calendar quarter thereafter, the Project Yield (as determined at
the end of any calendar quarter) for the Projects collectively for any calendar
quarter is less than eighteen percent (18%).
Section 9.17 Criminal Act.
Any Borrower, any Master Tenant or Guarantor shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any material portion
of the Collateral.

 

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ARTICLE X
REMEDIES
Section 10.1 Remedies — Insolvency Events.
Upon the occurrence of any Event of Default described in Section 9.7 or 9.8, the
obligations of Lender to advance amounts hereunder shall immediately terminate,
and all amounts due under the Loan Documents immediately shall become due and
payable, all without written notice and without presentment, demand, protest,
notice of protest or dishonor, notice of intent to accelerate the maturity
thereof, notice of acceleration of the maturity thereof, or any other notice of
default of any kind, all of which are hereby expressly waived by Borrowers;
however, if the Bankruptcy Party under Section 9.7 or 9.8 is other than a
Borrower, then all amounts due under the Loan Documents shall become immediately
due and payable at Lender’s election, in Agent’s sole discretion.
Section 10.2 Remedies — Other Events.
Except as set forth in Section 10.1 above, while any Event of Default exists,
Agent may (a) by written notice to Borrowers, declare the entire Loan to be
immediately due and payable without presentment, demand, protest, notice of
protest or dishonor, notice of intent to accelerate the maturity thereof, notice
of acceleration of the maturity thereof, or other notice of default of any kind,
all of which are hereby expressly waived by Borrowers, (b) terminate the
obligation, if any, of Lender to advance amounts hereunder, and (c) exercise all
rights and remedies therefore under the Loan Documents and at law or in equity.
Section 10.3 Agent’s Right to Perform the Obligations.
If Borrowers shall fail, refuse or neglect to make any payment or perform any
act required by the Loan Documents, then while any Event of Default exists, and
without notice to or demand upon Borrowers and without waiving or releasing any
other right, remedy or recourse Agent or Lender may have because of such Event
of Default, Agent may (but shall not be obligated to) make such payment or
perform such act for the account of and at the expense of Borrowers, and shall
have the right to enter upon the Projects for such purpose and to take all such
action thereon and with respect to the Projects as it may deem necessary or
appropriate. If Agent shall elect to pay any sum due with reference to the
Projects, Agent may do so in reliance on any bill, statement or assessment
procured from the appropriate governmental authority or other issuer thereof
without inquiring into the accuracy or validity thereof. Similarly, in making
any payments to protect the security intended to be created by the Loan
Documents, Agent shall not be bound to inquire into the validity of any apparent
or threatened adverse title, lien, encumbrance, claim or charge before making an
advance for the purpose of preventing or removing the same. Additionally, if any
Hazardous Materials (as defined in the Environmental Indemnity) affect or
threaten to affect any Project, Agent may (but shall not be obligated to) give
such notices and take such actions as it deems necessary or advisable in order
to abate the discharge of any Hazardous Materials or remove the Hazardous
Materials. In exercising any rights under the Loan Documents or taking any
actions provided for therein, Agent may act through its employees, agents or
independent contractors as authorized by Agent. Borrowers shall, and hereby do,
indemnify, defend and hold Agent and Lender from and against any and all losses,
expenses, damages, claims and causes of action, liabilities, obligations,
penalties, judgments, suits, or disbursements of any kind or nature whatsoever,
including reasonable attorneys’ fees, incurred or accruing by reason of any acts
performed by Agent or Lender pursuant to the provisions of this Section 10.3,
including those arising from the joint, concurrent, or comparative negligence of
Agent or Lender, except as a result of Agent or Lender’s gross negligence or
willful misconduct. All sums paid by Agent or Lender pursuant to this Section
10.3, and all other sums expended by Agent or Lender to which they shall be
entitled to be indemnified, together with interest thereon at the Default Rate
from the date of such payment or expenditure until paid, shall constitute
additions to the Loans, shall be secured by the Loan Documents and shall be paid
by Borrowers to Agent upon demand.

 

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ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices.
Any notice required or permitted to be given under this Agreement shall be in
writing and either shall be mailed by certified mail, postage prepaid, return
receipt requested, or sent by overnight air courier service, or personally
delivered to a representative of the receiving party, or sent by telecopy
(provided an identical notice is also sent simultaneously by mail, overnight
courier, or personal delivery as otherwise provided in this Section 11.1). All
such communications shall be mailed, sent or delivered, addressed to the party
for whom it is intended at its address set forth below.

     
 
If to Borrowers:  c/o Ensign Facility Services, Inc.
27101 Puerta Real, Suite 450
Mission Viejo, California 92691
Attention: General Counsel
Facsimile: (949) 487-9400
 
   
 
If to Agent:  General Electric Capital Corporation
Loan No. 07-0004261
2 Bethesda Metro Center, Suite 600
Bethesda, Maryland 20814
Attention: Ensign Portfolio Manager
Facsimile: (301) 347-3150
 
   
 
With a copy to:  General Electric Capital Corporation
Loan No. 07-0004261
500 West Monroe Street
Chicago, Illinois 60661
Attention: Brian Beckwith
Jeff Muchmore
Facsimile: (866) 207-0498
(866) 254-1971

 

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And a copy to:  General Electric Capital Corporation
Loan No. 07-0004261
5804 Trailridge Drive
Austin, Texas 78731
Attention: Diana Pennington
Senior Executive Vice President,
Chief Counsel, Real Estate
Facsimile: (866) 221-0433

Notices shall be deemed given on the earliest of (1) when actually delivered,
(2) on the first Business Day after deposit with an overnight air courier
service for delivery on the next Business Day, or (3) on the third Business Day
after deposit in the United States mail, postage prepaid, in each case to the
address of the intended addressee (except as otherwise provided in the Security
Document), and any communication so delivered in person shall be deemed to be
given when receipted for by, or actually received by Agent or Borrowers, as the
case may be. If given by telecopy, a notice shall be deemed given and received
when the telecopy is transmitted to the party’s telecopy number specified above,
and confirmation of complete receipt is received by the transmitting party
during normal business hours or on the next Business Day if not confirmed during
normal business hours, and an identical notice is also sent simultaneously by
mail, overnight courier, or personal delivery as otherwise provided in this
Section 11.1. If given by electronic mail, a notice shall be deemed given and
received when the electronic mail is transmitted to the recipient’s electronic
mail address specified above and electronic confirmation of receipt (either by
reply from the recipient or by automated response to a request for delivery
receipt) is received by the sending party during normal business hours or on the
next Business Day if not confirmed during normal business hours, and an
identical notice is also sent simultaneously by mail, overnight courier or
personal delivery as otherwise provided in this Section 11.1. Except for
telecopy and electronic mail notices sent as expressly described above, no
notice hereunder shall be effective if sent or delivered by electronic means.
Either party may designate a change of address by written notice to the other by
giving at least ten (10) days prior written notice of such change of address.
Section 11.2 Amendments and Waivers.
No amendment or waiver of any provision of the Loan Documents shall be effective
unless in writing and signed by the party against whom enforcement is sought.
This Agreement and the other Loan Documents shall not be executed, entered into,
altered, amended, or modified by electronic means. Without limiting the
generality of the foregoing, Borrowers, Agent and Lender hereby agree that the
transactions contemplated by this Agreement shall not be conducted by electronic
means, except as specifically set forth in Section 11.1 regarding notices. Any
reference to a Loan Document, whether in this Agreement or in any other Loan
Document, shall be deemed to be a reference to such Loan Document as it may
hereafter from time to time be amended, modified, supplemented and restated in
accordance with the terms hereof.

 

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Section 11.3 Limitation on Interest.
It is the intention of the parties hereto to conform strictly to applicable
usury laws. Accordingly, all agreements between Borrowers, Agent and Lender with
respect to the Loans are hereby expressly limited so that in no event, whether
by reason of acceleration of maturity or otherwise, shall the amount paid or
agreed to be paid to Lender or charged by Lender for the use, forbearance or
detention of the money to be lent hereunder or otherwise, exceed the maximum
amount allowed by law. If either Loan would be usurious under applicable law,
then, notwithstanding anything to the contrary in the Loan Documents: (a) the
aggregate of all consideration which constitutes interest under applicable law
that is contracted for, taken, reserved, charged or received under the Loan
Documents shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be credited on the applicable
Note pro rata by the holder thereof (or, if such Note has been paid in full,
refunded to applicable Borrowers); and (b) if maturity is accelerated by reason
of an election by Agent or Lender, or in the event of any prepayment, then any
consideration which constitutes interest may never include more than the maximum
amount allowed by applicable law. In such case, excess interest, if any,
provided for in the Loan Documents or otherwise, to the extent permitted by
applicable law, shall be amortized, prorated, allocated and spread from the date
of advance until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess interest shall
be cancelled automatically as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited on the Notes pro rata (or, if the
Notes have been paid in full, refunded to Borrowers). The terms and provisions
of this Section 11.3 shall control and supersede every other provision of the
Loan Documents. The Loan Documents are contracts made under and shall be
construed in accordance with and governed by the laws of the State of New York,
except that (1) if at any time the laws of the United States of America permit
Lender to contract for, take, reserve, charge or receive a higher rate of
interest than is allowed by the laws of the State of New York (whether such
federal laws directly so provide or refer to the law of any state), then such
federal laws shall to such extent govern as to the rate of interest which Lender
may contract for, take, reserve, charge or receive under the Loan Documents and
(2) to the extent otherwise specified in any of the Loan Documents.
Section 11.4 Invalid Provisions.
If any provision of any Loan Document is held to be illegal, invalid or
unenforceable, such provision shall be fully severable; the Loan Documents shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part thereof; the remaining provisions thereof shall
remain in full effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom; and in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as a part of such Loan Document a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible to be legal, valid and
enforceable.

 

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Section 11.5 Reimbursement of Expenses; Portfolio Administration Fee.
(a) Borrowers shall pay all expenses incurred by Agent and Lenders in connection
with the Loans, including, without limitation, (i) out-of-pocket costs and
expenses of Agent and Lender in connection with (a) the negotiation,
preparation, execution and delivery of the Loan Documents and the documents and
instruments referred to therein; (b) due diligence with respect to the
Collateral and the creation, perfection or protection of Agent’s liens in the
Collateral (including, without limitation, fees and expenses for title and lien
searches, premiums for title insurance and endorsements thereto, amended or
replacement Security Documents, Uniform Commercial Code financing statements or
other collateral security instruments, title insurance premiums and filing and
recording fees, third party due diligence expenses for the Projects plus travel
expenses, accounting firm fees, costs of the appraisals (including any
appraisals required to comply with FIRREA) and Site Assessments (and the
environmental consultant), the engineering reports, audit costs and costs and
fees incurred in connection with arranging, setting up, servicing any pledged
accounts or similar collateral); (c) the negotiation, preparation, execution and
delivery of any amendment, waiver, restructuring, workout or consent relating to
any of the Loan Documents, (d) the settlement of or dispute regarding
condemnation and casualty awards and (e) the preservation of rights under and
enforcement of the Loan Documents and the documents and instruments referred to
therein, including any communications or discussions relating to any action that
any Borrower shall from time to time request Agent to take, as well as any
restructuring or rescheduling of the Loans, (ii) the fees, expenses and other
charges of counsel to Agent and the Lender in connection with all of the
foregoing, (iii) all fees and expenses of any servicer appointed by Agent to
service and administer the Loans and its counsel, and (iv) Agent’s or Lender’s
reasonable travel and other out-of-pocket expenses in connection with site
visits to the Projects. Borrowers shall, upon request, promptly reimburse Agent
and Lender for all amounts expended, advanced or incurred by Agent and Lender to
collect the Notes, or to enforce the rights of Agent and Lender under this
Agreement or any other Loan Document, or to defend or assert the rights and
claims of Agent and Lender under the Loan Documents or with respect to the
Projects (by litigation or other proceedings), which amounts will include all
court costs, attorneys’ fees and expenses, fees of auditors and accountants, and
investigation expenses as may be incurred by Agent and Lender in connection with
any such matters (whether or not litigation is instituted), together with
interest at the Default Rate on each such amount from the date of disbursement
until the date of reimbursement to Agent, all of which shall constitute part of
the Loans and shall be secured by the Loan Documents.
(b) Borrowers shall also pay to Agent on the first (1st) day of each month
during the term of the Six Project Loan, in addition to all other amounts due
under the Loan Documents, a collateral monitoring fee of $150/Six Project Loan
Project, which fee shall be deemed to be fully earned when due and
nonrefundable.
Section 11.6 Approvals; Third Parties; Conditions.
All approval rights retained or exercised by Agent with respect to leases,
contracts, plans, studies and other matters are solely to facilitate Lender’s
credit underwriting, and shall not be deemed or construed as a determination
that Agent or Lender has passed on the adequacy thereof for any other purpose
and may not be relied upon by Borrowers or any other Person. This Agreement is
for the sole and exclusive use of Agent, Lender and Borrowers and may not be
enforced, nor relied upon, by any Person other than Agent, Lender and Borrowers.
All conditions of the obligations of Agent or Lender hereunder, including the
obligation to make advances, are imposed solely and exclusively for the benefit
of Agent and Lender, and their respective successors and assigns, and no other
Person shall have standing to require satisfaction of such conditions or be
entitled to assume that Lender will refuse to make advances in the absence of
strict compliance with any or all of such conditions, and no other Person shall,
under any circumstances, be deemed to be a beneficiary of such conditions, any
and all of which may be freely waived in whole or in part by Agent or Lender, as
applicable, at any time in Agent’s or Lender’s sole discretion.

 

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Section 11.7 Lender Not in Control; No Partnership.
None of the covenants or other provisions contained in this Agreement shall, or
shall be deemed to, give Agent or Lender the right or power to exercise control
over the affairs or management of Borrowers, the power of Agent and Lender being
limited to the rights to exercise the remedies referred to in the Loan
Documents. The relationship between Borrowers, on the one hand, and Agent and
Lender, on the other hand, is, and at all times shall remain, solely that of
debtor and creditor. No covenant or provision of the Loan Documents is intended,
nor shall it be deemed or construed, to create a partnership, joint venture,
agency or common interest in profits or income between Agent and Lender, on the
one hand, and Borrowers, on the other hand, or to create an equity in the
Projects in Lender or Agent. Neither Agent nor Lender either undertakes or
assumes any responsibility or duty to Borrowers or to any other person with
respect to the Projects or the Loans, except as expressly provided in the Loan
Documents; and notwithstanding any other provision of the Loan Documents
(a) Neither Agent nor Lender is nor shall be construed as, a partner, joint
venturer, alter ego, manager, controlling person or other business associate or
participant of any kind of Borrowers or its stockholders, members, or partners
and neither Agent nor Lender intends to ever assume such status; (b) Neither
Agent nor Lender shall in any event be liable for any Debts, expenses or losses
incurred or sustained by Borrowers; and (c) neither Agent nor Lender shall be
deemed responsible for or a participant in any acts, omissions or decisions of
Borrowers or their stockholders, members, or partners. Agent, and Lender, on the
one hand, and Borrowers, on the other hand, disclaim any intention to create any
partnership, joint venture, agency or common interest in profits or income
between Agent and Lender, on the one hand, and Borrowers, on the other hand, or
to create an equity in the Projects in Agent or Lender, or any sharing of
liabilities, losses, costs or expenses.
Section 11.8 Time of the Essence.
Time is of the essence with respect to this Agreement.
Section 11.9 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of Agent, Lender
and Borrowers and the respective successors and assigns of Agent, Lender and
Borrowers, provided that neither any Borrower nor any other Guarantor shall,
without the prior written consent of Agent, assign any rights, duties or
obligations hereunder.
Section 11.10 Renewal, Extension or Rearrangement.
All provisions of the Loan Documents shall apply with equal effect to each and
all promissory notes and amendments thereof hereinafter executed which in whole
or in part represent a renewal, extension, increase or rearrangement of the
Loans. For portfolio management purposes, Agent and Lender may elect to divide
the Loans into two or more separate loans evidenced by separate promissory notes
so long as the payment and other obligations of Borrowers are not effectively
increased or otherwise modified. Borrowers agree to cooperate with Agent and to
execute such documents as Agent reasonably may request to effect such division
of the Loans.

 

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Section 11.11 Waivers; Forbearance.
No advance of Loan proceeds hereunder shall constitute a waiver of any of the
conditions of Lender’s obligation to make advances nor, in the event Borrower is
unable to satisfy any such condition, shall any such advance have the effect of
precluding Lender or Agent from thereafter requiring such condition to be
satisfied prior to any future advance to which such condition otherwise applies.
No course of dealing on the part of Agent or Lender, or their respective
officers, employees, consultants or agents, nor any failure or delay by Agent or
Lender with respect to exercising any right, power or privilege of Agent or
Lender under any of the Loan Documents, shall operate as a waiver thereof. Any
forbearance by Agent or Lender in exercising any right or remedy under any of
the Loan Documents, or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any right or remedy. Agent’s acceptance of
payment of any sum secured by any of the Loan Documents after the due date of
such payment shall not be a waiver of Agent’s or Lender’s right to either
require prompt payment when due of all other sums so secured or to declare a
Potential Default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by Agent or Lender
shall not be a waiver of Agent’s or Lender’s right to accelerate the maturity of
the Loans, nor shall Agent’s or Lender’s receipt of any awards, proceeds, or
damages under this Agreement or the Security Document operate to cure or waive
Borrowers’ or any Guarantor’s Potential Default in payment of sums secured by
any of the Loan Documents.
Section 11.12 Cumulative Rights.
Rights and remedies of Agent and Lender under the Loan Documents shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
Section 11.13 Singular and Plural.
Words used in this Agreement and the other Loan Documents in the singular, where
the context so permits, shall be deemed to include the plural and vice versa.
The definitions of words in the singular in this Agreement and the other Loan
Documents shall apply to such words when used in the plural where the context so
permits and vice versa.
Section 11.14 Phrases.
When used in this Agreement and the other Loan Documents, the phrase “including”
shall mean “including, but not limited to,” the phrase “satisfactory to Agent”
or “satisfactory to Lender” shall mean “in form and substance satisfactory to
Agent in all respects” or “in form and substance satisfactory to Lender in all
respects” (as applicable), (unless otherwise modified) the phrase “with Agent’s
consent”, “with Agent’s approval”, “with Lender’s consent” or “with Lender’s
approval” shall mean such consent or approval at Agent’s or Lender’s discretion
(as applicable), and the phrase “acceptable to Agent” or “acceptable to Lender”
shall mean “acceptable to Agent at Agent’s sole discretion” or “acceptable to
Lender at Lender’s sole discretion” (as applicable).

 

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Section 11.15 Exhibits and Schedules.
The exhibits and schedules attached to this Agreement are incorporated herein
and shall be considered a part of this Agreement for the purposes stated herein.
Section 11.16 Titles of Articles, Sections and Subsections.
All titles or headings to articles, sections, subsections or other divisions of
this Agreement and the other Loan Documents or the exhibits hereto and thereto
are only for the convenience of the parties and shall not be construed to have
any effect or meaning with respect to the other content of such articles,
sections, subsections or other divisions, such other content being controlling
as to the agreement between the parties hereto.
Section 11.17 Promotional Material.
Borrowers authorize Agent and Lender to issue press releases, advertisements and
other promotional materials in connection with Lender’s own promotional and
marketing activities, and describing the Loans in general terms or in detail and
Lender’s and Agents participation in the Loans. All references to Lender or
Agent contained in any press release, advertisement or promotional material
issued by any Borrower or Affiliate of Borrowers shall be approved in writing by
Agent in advance of issuance.
Section 11.18 Survival.
All of the representations, warranties, covenants, and indemnities hereunder,
and under the indemnification provisions of the other Loan Documents shall
survive the repayment in full of the Loans and the release of the liens
evidencing or securing the Loans, and shall survive the transfer (by sale,
foreclosure, conveyance in lieu of foreclosure or otherwise) of any or all
right, title and interest in and to the Projects to any party, whether or not an
Affiliate of Borrowers.
Section 11.19 WAIVER OF JURY TRIAL.
BORROWERS, AGENT AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT AND ANY OF THE OTHER LOAN DOCUMENTS AND THE BUSINESS
RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY MADE BY BORROWERS, AGENT AND LENDER, AND BORROWERS ACKNOWLEDGE
THAT NONE OF LENDER, AGENT OR ANY PERSON ACTING ON BEHALF OF LENDER OR AGENT HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS
TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWERS,
AGENT AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
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LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
WITHOUT LIMITING THE APPLICABILITY OF THE PROVISIONS OF SECTION 11.21 BELOW, IF
ANY ACTION OR PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA BY OR
AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY, THE PARTIES HERETO HEREBY AGREE THAT (A) THE COURT SHALL, AND
IS HEREBY DIRECTED TO, MAKE A GENERAL REFERENCE PURSUANT TO CALIFORNIA CODE OF
CIVIL PROCEDURE SECTION 638 (“SECTION 638”) TO A REFEREE OR REFEREES TO HEAR AND
DETERMINE ALL OF THE ISSUES IN SUCH ACTION OR PROCEEDING (WHETHER OF FACT OR OF
LAW) AND TO REPORT A STATEMENT OF DECISION, PROVIDED THAT AT THE OPTION OF
LENDER, ANY SUCH ISSUES PERTAINING TO A “PROVISIONAL REMEDY” AS DEFINED IN
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8 SHALL BE HEARD AND DETERMINED
BY THE COURT, AND (B) BORROWERS AND GUARANTOR SHALL BE SOLELY RESPONSIBLE TO PAY
ALL FEES AND EXPENSES OF ANY REFEREE APPOINTED IN SUCH ACTION OR PROCEEDING. THE
PARTIES HERETO INTEND THAT THIS PARAGRAPH CREATE A REFERENCE AGREEMENT WITHIN
THE MEANING OF SECTION 638.
Section 11.20 Waiver of Punitive or Consequential Damages.
Neither Agent, Lender nor any Borrower shall be responsible or liable to the
other or to any other Person for any punitive, exemplary or consequential
damages which may be alleged as a result of the Loans or the transaction
contemplated hereby, including any breach or other Potential Default by any
party hereto. Borrowers represent and warrant to Agent and Lender that as of the
Restatement Date no Borrower or Guarantor has any claim against Agent or Lender
in connection with the Loans.
Section 11.21 Governing Law.
The laws of the State of Illinois and of the United States of America shall
govern the rights and duties of the parties hereto and the validity,
construction, enforcement and interpretation of the Loan Documents, except to
the extent otherwise specified in any of the Loan Documents.
Section 11.22 Entire Agreement.
This Agreement and the other Loan Documents embody the entire agreement and
understanding between Agent, Lender and Borrowers and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements among the
parties. If any conflict or inconsistency exists between (a) the Proposal Letter
and any previous agreement with respect to the Loans and (b) this Agreement or
any of the other Loan Documents, the terms of this Agreement and the other Loan
Documents shall control.

 

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Section 11.23 Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall
constitute an original, but all of which shall constitute one document.
Section 11.24 Venue.
EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES
THAT, SUBJECT TO AGENT OR LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWERS BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWERS,
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE
TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
Section 11.25 Sale of Loan, Participation.
Lender or Agent, at any time and without the consent of Borrowers or Guarantor
may grant participations in or sell, transfer, assign and convey all or any
portion of its right, title and interest in and to the Loans, this Agreement and
the other Loan Documents, any guaranties given in connection with the Loans and
any collateral given to secure the Loans. Agent and Lender shall have the right
(but shall be under no obligation) to make available to any party for the
purpose of granting participations in or selling, transferring, assigning or
conveying all or any part of the Loans (including any governmental agency or
authority and any prospective bidder at any foreclosure sale of any Project) any
and all information which Agent or Lender may have with respect to the Projects
and Borrowers, whether provided by Borrowers, Guarantor or any third party or
obtained as a result of any environmental assessments. Each Borrower and each
Guarantor agrees that Agent and Lender shall have no liability whatsoever as a
result of delivering any such information to any third party, and Borrowers and
the other Loan Parties, on behalf of themselves and their successors and
assigns, hereby release and discharge Agent and Lender from any and all
liability, claims, damages, or causes of action, arising out of, connected with
or incidental to the delivery of any such information to any third party.
Section 11.26 Limitation on Liability of Agent’s and Lender’s Officers,
Employees, etc.
Any obligation or liability whatsoever of Agent or Lender which may arise at any
time under this Agreement or any other Loan Document shall be satisfied, if at
all, out of the Agent’s or Lender’s assets only. No such obligation or liability
shall be personally binding upon, nor shall resort for the enforcement thereof
be had to, the property of any of Agent’s or Lender’s shareholders, directors,
officers, employees or agents, regardless of whether such obligation or
liability is in the nature of contract, tort or otherwise.

 

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Section 11.27 Effectiveness of Facsimile Documents and Signatures.
The Loan Documents may be transmitted and/or signed by facsimile. The
effectiveness of any such documents and signatures shall, subject to applicable
law, have the same force and effect as manually signed originals and shall be
binding on all parties to the Loan Documents. Agent may also require that any
such documents and signatures be confirmed by a manually signed original
thereof; provided, however, that the failure to request or deliver the same
shall not limit the effectiveness of any facsimile document or signature.
Section 11.28 Joint and Several Liability.
(a) Cross-Guaranty. Each Borrower hereby agrees that each such Borrower is, and
each such Borrowers’ heirs, personal representatives, successors and assigns
are, jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lender and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, the Loans, Indebtedness and all other obligations
of Borrowers hereunder and under the Loan Documents (collectively, the
“Obligations”) owed or hereafter owing to Agent and Lender by each other
Borrower. Each Borrower agrees that its guaranty obligation hereunder is a
continuing guaranty of payment and performance and not of collection, that its
obligations under this Section 11.28 shall not be discharged until payment and
performance, in full, of the Obligations has occurred, and that its obligations
under this Section 11.28 shall be absolute and unconditional, irrespective of,
and unaffected by:
(i) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document or any other
agreement, document or instrument to which any other Borrower is or may become a
party;
(ii) the absence of any action to enforce this Agreement (including this Section
11.28) or any other Loan Document or the waiver or consent by Agent and Lenders
with respect to any of the provisions thereof;
(iii) the existence, value or condition of, or failure to perfect any Lien or
any security for the Obligations or any action, or the absence of any action, by
Agent and Lenders in respect thereof (including the release of any such
security);
(iv) the insolvency of any other Borrower;
(v) the institution of any proceeding under the Federal Bankruptcy Code, or any
similar proceeding, by or against a Borrower or Agent’s election in any such
proceeding of the application of Section 1111(b)(2) of the Federal Bankruptcy
Code;
(vi) any borrowing or grant of a security interest by any Borrower as
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(vii) the disallowance, under Section 502 of the Federal Bankruptcy Code, of all
or any portion of Agent’s claim(s) for repayment of any of the Obligations; or
(viii) any other action or circumstances that might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor other than the
payment and performance, in full, of the Obligations.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
(b) Waivers by Borrowers. Each Borrower expressly waives all rights it may have
now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Agent or Lender to marshall assets or to proceed
in respect of the Obligations guaranteed hereunder against any other Borrower,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower. It is agreed among each Borrower, Agent and Lender that the
foregoing waivers are of the essence of the transaction contemplated by this
Agreement and the other Loan Documents and that, but for the provisions of this
Section 11.28 and such waivers, Agent and Lender would decline to enter into
this Agreement.
(c) Benefit of Guaranty. Each Borrower agrees that the provisions of this
Section 11.28 are for the benefit of Agent and Lender and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
(d) Subordination of Subrogation, Etc. Notwithstanding anything to the contrary
in this Agreement or in any other Loan Document, and except as set forth in
Section 11.28(g), each Borrower hereby expressly and irrevocably subordinates to
payment of the Obligations any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification or set
off and any and all defenses available to a surety, guarantor or accommodation
co-obligor until the Obligations are indefeasibly paid in full in cash. Each
Borrower acknowledges and agrees that this subordination is intended to benefit
Agent and Lender and shall not limit or otherwise affect such Borrower’s
liability hereunder or the enforceability of this Section 11.28, and that Agent,
Lender and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 11.28(d).
(e) Election of Remedies. If Agent or any Lender may, under applicable Law,
proceed to realize its benefits under any of the Loan Documents giving Agent or
such Lender a Lien upon any Collateral, whether owned by any Borrower or by any
other Person, either by judicial foreclosure or by non-judicial sale or
enforcement, Agent or any Lender may, at its sole option, determine which of its
remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 11.28. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable Laws pertaining to “election of
remedies” or the like, each Borrower hereby consents to such action by Agent or
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such action by Agent or such Lender shall result in a full or partial loss of
any rights of subrogation that each Borrower might otherwise have had but for
such action by Agent or such Lender. Any election of remedies that results in
the denial or impairment of the right of Agent or any Lender to seek a
deficiency judgment against any Borrower shall not impair any other Borrower’s
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee’s sale or at any private sale
permitted by law or the Loan Documents, Agent or such Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 11.28,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which Agent or
any Lenders might otherwise be entitled but for such bidding at any such sale.
(f) Limitation. Each Borrower’s liability under this Section 11.28 (which
liability is in any event in addition to amounts for which such Borrower is
primarily liable under Sections 2.1, 2.2, 2.3, 2.4 and 2.5 hereto) shall be
limited to an amount not to exceed as of any date of determination the greater
of:
(i) the net amount of all advances under any Loan to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(ii) the amount that could be claimed by Agent and any Lender from such Borrower
under this Section 11.28 without rendering such claim voidable or avoidable
under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law after taking into account, among other things,
such Borrower’s right of contribution and indemnification from each other
Borrower under Section 11.28(g) below.
(g) Contribution with Respect to Guaranty Obligations.
(i) To the extent that any Borrower shall make a payment under this
Section 11.28 of all or any of the Obligations (other than that portion of the
Loans made to that Borrower for which it is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments then previously
or concurrently made by any other Borrower, exceeds the amount that such
Borrower would otherwise have paid if each Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payment in the same proportion that such
Borrower’s “Allocable Amount” (as defined below) (as determined immediately
prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each
of the Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the
Obligations, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.

 

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(ii) As of any date of determination, the “Allocable Amount” of any Borrower
shall be equal to the maximum amount of the claim that could then be recovered
from such Borrower under this Section 11.28 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(iii) This Section 11.28(g) is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 11.28(g) is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 11.28(a) above. Nothing contained in this
Section 11.28(g) shall limit the liability of any Borrower to pay all or any
part of the Loans made directly or indirectly to that Borrower and accrued
interest, fees and expenses with respect thereto for which such Borrower shall
be primarily liable.
(iv) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
(v) The rights of the indemnifying Borrowers against other Borrowers under this
Section 11.28(g) shall be exercisable upon the full and indefeasible payment of
the Obligations.
(h) Liability Cumulative. The liability of Borrowers under this Section 11.28 is
in addition to and shall be cumulative with all liabilities of each Borrower to
Agent and Lender under this Agreement and the other Loan Documents to which such
Borrower is a party or in respect of any Obligations or obligation of the other
Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
(i) Agent Authority. Agent is hereby authorized, without notice or demand and
without affecting the liability of any Borrower hereunder, to, at any time and
from time to time: (i) renew, extend or otherwise increase the time for payment
of the Obligations; (ii) with the written agreement of any Borrower, accelerate
or otherwise change the terms relating to the Obligations or otherwise modify,
amend or change the terms of any promissory note or other agreement, document or
instrument now or hereafter executed by such Borrower and delivered to Agent;
(iii) accept partial payments of the Obligations; (iv) take and hold security or
collateral for the payment of the Obligations or for the payment of any
guaranties of the Obligations and exchange, enforce, waive and release any such
security or collateral; (v) subject to the terms of the Notes and this
Agreement, apply such security or collateral and direct the order or manner of
sale thereof that Agent, in its sole discretion, may determine; and (vi) settle,
release, compromise, collect or otherwise liquidate the Obligations and any
security or collateral therefor in any manner, without affecting or impairing
the obligations of any Borrower. Except as specifically provided in this
Agreement or any of the other Loan Documents, Agent shall have the exclusive
right to determine the time and manner of application of any payments or
credits, whether received from any Borrower or any other source, and such
determination shall be binding on all Borrowers. Subject to the terms of the
Notes and this Agreement, all such payments and credits may be applied, reversed
and reapplied, in whole or in part, to any of the Obligations that Agent shall
determine in its sole discretion without affecting the validity or
enforceability of the Obligations of the other Borrowers.

 

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Section 11.29 Agency.
Both GECC and the other Lender agree that GECC shall act as agent for each
Lender in all dealings with Borrowers, Guarantor and Master Tenants under or in
connection with this Loan Agreement and each of the other Loan Documents,
including without limitation, granting any consents or waivers, taking any
enforcements actions, sending or receiving notices, dealing with collateral,
granting releases, accepting payments or otherwise. Borrowers, Guarantor, Master
Tenants and all Loan Parties may rely without question upon any document signed
by GECC as agent for each Lender hereunder or under any other Loan Documents.
References to “Lender” in this Agreement and in the other Loan Documents shall
refer to each of GECC and the other financial institutions who are or hereafter
become parties to this Agreement as Lenders, individually, or to all of GECC and
the other financial institutions who are or hereafter become parties to this
Agreement, collectively, as the context may require; provided any and all grants
of security interests to a Lender under this Agreement or any other Loan
Document shall be deemed to be a grant to GECC as agent for each Lender.
Section 11.30 Patriot Act. Agent hereby notifies the Loan Parties that pursuant
to the requirements of the Patriot Act, it is required to obtain, verify and
record information that identifies each Loan Party, which information includes
the name and address of each Loan Party and other information that will allow
Agent to identify each Loan Party in accordance with the Patriot Act.
Section 11.31 California Waivers. EXCEPT AS OTHERWISE EXPRESSLY PERMITTED IN THE
NOTES, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, EACH BORROWER HEREBY
EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY HAVE UNDER LAW, PURSUANT TO CALIFORNIA
CIVIL CODE SECTION 2954.10 OR OTHERWISE, TO PREPAY THE NOTES, IN WHOLE OR IN
PART, WITHOUT PENALTY, UPON ACCELERATION OF ANY APPLICABLE MATURITY DATE, AND
(B) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF ALL OR ANY PORTION OF THE
PRINCIPAL AMOUNT OF (I) THE PRE-RESTATMENT DATE NOTE IS MADE, INCLUDING, WITHOUT
LIMITATION, UPON OR FOLLOWING ANY ACCELERATION OF THE TEN PROJECT LOANS MATURITY
DATE BY AGENT OR LENDER ON ACCOUNT OF ANY DEFAULT BY ANY BORROWER, INCLUDING,
WITHOUT LIMITATION, ANY TRANSFER, DISPOSITION, OR FURTHER ENCUMBRANCE PROHIBITED
OR RESTRICTED BY THE LOAN AGREEMENT, THEN EACH TEN PROJECT BORROWER SHALL BE
OBLIGATED TO PAY CONCURRENTLY WITH SUCH PREPAYMENT THE PREPAYMENT PREMIUM AND
THE MAKE WHOLE BREAKAGE AMOUNT, IF ANY, AND (II) THE RESTATMENT DATE NOTE IS
MADE, INCLUDING, WITHOUT LIMITATION, UPON OR FOLLOWING ANY ACCELERATION OF THE
SIX PROJECT LOAN MATURITY DATE BY AGENT OR LENDER ON ACCOUNT OF ANY DEFAULT BY
ANY BORROWER, INCLUDING, WITHOUT LIMITATION, ANY TRANSFER, DISPOSITION, OR
FURTHER ENCUMBRANCE

 

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PROHIBITED OR RESTRICTED BY THE LOAN AGREEMENT, THEN EACH SIX PROJECT BORROWER
SHALL BE OBLIGATED TO PAY CONCURRENTLY WITH SUCH PREPAYMENT THE EXIT FEE, IF
ANY. BY INITIALING THIS PROVISION IN THE SPACE PROVIDED BELOW, EACH BORROWER
HEREBY DECLARES THAT (1) EACH OF THE FACTUAL MATTERS SET FORTH IN THIS PARAGRAPH
IS TRUE AND CORRECT, (2) LENDER’S AGREEMENT TO MAKE THE LOANS EVIDENCED BY THE
NOTES AT THE APPLICABLE INTEREST RATE AND FOR THE TERM SET FORTH IN THE LOAN
AGREEMENT CONSTITUTES ADEQUATE CONSIDERATION FOR THIS WAIVER AND AGREEMENT, AND
HAS BEEN GIVEN INDIVIDUAL WEIGHT BY EACH BORROWER, AGENT AND LENDER, (3) EACH
BORROWER IS A SOPHISTICATED AND KNOWLEDGEABLE REAL ESTATE INVESTOR WITH
COMPETENT AND INDEPENDENT LEGAL COUNSEL, AND (4) EACH BORROWER FULLY UNDERSTANDS
THE EFFECT OF THIS WAIVER AND AGREEMENT.
INITIALS OF DANIEL H. WALKER ON BEHALF OF EACH BORROWER:                     .
Section 11.32 Additional Waivers.
Each Borrower hereby waives, to the maximum extent permitted by California Civil
Code Section 2856 and/or other applicable law, all suretyship rights and
defenses which might otherwise be available to such Borrower under or pursuant
to California Civil Code Sections 2787 through 2855 inclusive.
(a) Each Borrower hereby waives all rights and defenses that such Borrower may
have because the Borrowers’ debt is secured by real property. This means, among
other things:
(A) Agent may collect from any Borrower without first foreclosing on any real or
personal property collateral pledged by the other Borrowers;
(B) If Agent forecloses on any real property collateral pledged by the
Borrowers:
(1) The amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price.
(2) Agent may collect from such Borrower even if Agent, by foreclosing on the
real property collateral, has destroyed any right such Borrower may have to
collect from other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses
Borrowers may have because the Borrowers’ debt is secured by real property.
These rights and defenses include, but are not limited to, any rights or
defenses based upon Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure.

 

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(b) Each Borrower hereby waives all rights and defenses arising out of an
election of remedies by Agent or Lender, even though that election of remedies,
such as non-judicial foreclosure with respect to security for a guaranteed
obligation, has destroyed Borrowers’ rights of subrogation and reimbursement
against Borrowers by the operation of Section 580d of the California Code of
Civil Procedure or otherwise.
Without limiting the generality of the foregoing, each Borrower hereby
expressly: (a) waives any and all benefits which might otherwise be available to
it under California Civil Code Sections 2809, 2810, 2819, 2839, 2845 through
2847, 2849, 2850, 2899 and 3433, and California Code of Civil Procedure
Sections 580a, 580b, 580d and 726, or any similar statutes of other states; (b)
acknowledges that Section 2856 of the California Civil Code authorizes and
validates waivers of a borrower’s or guarantor’s rights of subrogation and
reimbursement and certain other rights and defenses available to such Borrower
under California law; and (c) waives all rights of subrogation, reimbursement,
indemnification and contribution and all other rights and defenses that are or
may become available by reason of Sections 2787 to 2855, inclusive, of the
California Civil Code.
Section 11.33 Arizona Waiver.
Without limiting the generality of the foregoing or any other provision hereof,
each Borrower further expressly waives, to the extent permitted by law, (i) the
benefits of any statutory or other provision limiting the liability of a surety,
including without limitation, any and all rights and defenses which might
otherwise be available to Borrowers under Arizona Revised Statutes
Section 121641 et seq. and Rule 17(f) of the Arizona Rules of Civil Procedure;
and (b) the benefits of any statutory provision limiting the right of Agent or
Lender to recover a deficiency judgment, or to otherwise proceed against any
person or entity obligated for payment of the Indebtedness, after any
foreclosure or trustee’s sale of any security for the Indebtedness, including
without limitation the benefits to Borrowers of Arizona Revised Statutes
Sections 33 814 and 12 1566.
[Signatures appear on the following page.]

 

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EXECUTED as of the date first written above.

            BORROWERS:

SKY HOLDINGS AZ LLC, a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        TERRACE HOLDINGS AZ LLC, a
Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        ENSIGN HIGHLAND LLC, a Nevada
limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        VALLEY HEALTH HOLDINGS LLC, a
Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member and manager               By:   /s/ Daniel Walker  
      Daniel H. Walker        Assistant Secretary   

 

 

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

 

         

            PLAZA HEALTH HOLDINGS LLC, a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member and manager               By:   /s/ Daniel Walker  
      Daniel H. Walker        Assistant Secretary        RILLITO HOLDINGS LLC, a
Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware corporation, its sole member    
          By:   /s/ Daniel Walker         Daniel H. Walker        Assistant
Secretary        MOUNTAINVIEW COMMUNITY CARE LLC, a Nevada limited liability
company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        MEADOWBROOK HEALTH ASSOCIATES
LLC, a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary   

 

 

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

 

            CEDAR AVENUE HOLDINGS LLC, a Nevada a Nevada limited liability
company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        GRANADA INVESTMENTS LLC,
a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        GOLFVIEW HOLDINGS LLC, a
Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        ARROW TREE HEALTH HOLDINGS
LLC,
a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary   

 

 

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

 

            TROUSDALE HEALTH HOLDINGS LLC, a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        ENSIGN BELLFLOWER LLC, a
Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        ANSON HEALTH HOLDINGS LLC, a
Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary        HILLENDAHL HEALTH HOLDINGS
LLC, a Nevada limited liability company
      By:   The Ensign Group, Inc., a Delaware
corporation, its sole member               By:   /s/ Daniel Walker        
Daniel H. Walker        Assistant Secretary   

 

 

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

 

EXECUTED as of the date first written above.

            LENDER:

GECC:

GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
      By:   /s/ David Harper         Name:   David Harper        Its:   Duly
Authorized Signatory   

 

 

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EXHIBIT A-1
Ten Project Borrowers

      Borrower   Project Name
 
   
1. Sky Holdings AZ LLC
  Desert Sky Health and Rehabilitation Center Project
 
   
2. Terrace Holdings AZ LLC
  The Desert Terrace Nursing Center Project
 
   
3. Ensign Highland LLC
  The Highland Manor Health and Rehabilitation Center Project
 
   
4. Valley Health Holdings LLC
  The NMMRC Project
 
   
5. Plaza Health Holdings LLC
  The Park Manor Project
 
   
6. Rillito Holdings LLC
  The Catalina Project
 
   
7. Mountainview Communitycare LLC
  The Park View Gardens Project
 
   
8. Meadowbrook Health Associates LLC
  The Sabino Project
 
   
9. Cedar Avenue Holdings LLC
  The Upland Project
 
   
10. Granada Investments LLC
  The Camarillo Project

Exhibit A-1

 

 

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EXHIBIT A-2
Six Project Borrowers

      Borrower   Project Name
 
   
1. Golfview Holdings LLC
  The Cambridge Project
 
   
2. Arrow Tree Health Holdings LLC
  The Arbor Glen Project
 
   
3. Trousdale Health Holdings LLC
  The Brookfield Project
 
   
4. Ensign Bellflower LLC
  The Rose Villa Project
 
   
5. Anson Health Holdings LLC
  The Northern Oaks Project
 
   
6. Hillendahl Health Holdings LLC
  The Golden Acres Project

 

 

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EXHIBIT B-1
The Desert Sky Health and Rehabilitation Center Project

     
Borrower:
  Sky Holdings AZ LLC
 
   
Name of Facility:
  Desert Sky Health and Rehabilitation Center and Desert Sky Assisted Living
 
   
Address of Land:
  5125 North 58th Avenue, Glendale, Arizona
 
   
Master Tenant:
  Glendale Healthcare Associates LLC
 
   
Number of Licensed Beds/Units:
  189 SNF beds; 103 ALF Units
 
   
Number of Parking Spaces:
  118
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-2
The Desert Terrace Nursing Center Project

     
Borrower:
  Terrace Holdings AZ LLC
 
   
Name of Facility:
  Desert Terrace Nursing Center
 
   
Address of Land:
  2509 North 24th Street, Phoenix, Arizona
 
   
Master Tenant:
  24th Street Healthcare Associates LLC
 
   
Number of Licensed Beds/Units:
  108 beds
 
   
Number of Parking Spaces:
  51
 
   
Legal Description of Land:
  Attached.

 

 

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EXHIBIT B-3
The Highland Manor Health and Rehabilitation Center Project

     
Borrower:
  Ensign Highland LLC
 
   
Name of Facility:
  Highland Manor Health and Rehabilitation Center
 
   
Address of Land:
  4635 North 14th Street, Phoenix, Arizona
 
   
Master Tenant:
  Highland Healthcare LLC
 
   
Number of Licensed Beds/Units:
  107 beds
 
   
Number of Parking Spaces:
  32
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-4
The NMMRC Project

     
Borrower:
  Valley Health Holdings LLC
 
   
Name of Facility:
  North Mountain Medical and Rehabilitation Center
 
   
Address of Land:
  9155 N. 3rd Street, Phoenix, Arizona
 
   
Master Tenant:
  Radiant Hills Health Associates LLC
 
   
Number of Licensed Beds/Units:
  155
 
   
Number of Parking Spaces:
  101
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-5
The Park Manor Project

     
Borrower:
  Plaza Health Holdings LLC
 
   
Name of Facility:
  Park Manor Rehabilitation Center
 
   
Address of Land:
  1710 Plaza Way, Walla Walla, Washington
 
   
Master Tenant:
  Manor Park Healthcare LLC
 
   
Number of Licensed Beds/Units:
  79
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-6
The Catalina Project

     
Borrower:
  Rillito Holdings LLC
 
   
Name of Facility:
  Catalina Care and Rehabilitation Center
 
   
Address of Land:
  2611 N. Warren Avenue, Tucson, Arizona
 
   
Master Tenant:
  Presidio Health Associates LLC
 
   
Number of Licensed Beds/Units:
  102
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-7
The Park View Gardens Project

     
Borrower:
  Mountainview Communitycare LLC
 
   
Name of Facility:
  Park View Gardens at Montgomery
 
   
Address of Land:
  3751 Montgomery Drive, Santa Rosa, California
 
   
Master Tenant:
  Ensign Montgomery LLC
 
   
Number of Licensed Beds/Units:
  116
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-8
The Sabino Project

     
Borrower:
  Meadowbrook Health Associates LLC
 
   
Name of Facility:
  Sabino Canyon Rehabilitation and Care Center
 
   
Address of Land:
  5830 E. Pima, Tucson, Arizona
 
   
Master Tenant:
  Ensign Sabino LLC
 
   
Number of Licensed Beds/Units:
  112
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-9
The Upland Project

     
Borrower:
  Cedar Avenue Holdings LLC
 
   
Name of Facility:
  Upland Rehabilitation and Care Center
 
   
Address of Land:
  1221 East Arrow Highway, Upland, California
 
   
Master Tenant:
  Upland Community Care, Inc.
 
   
Number of Licensed Beds/Units:
  206
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-10
The Camarillo Project

     
Borrower:
  Granada Investments LLC
 
   
Name of Facility:
  Camarillo Healthcare Center
 
   
Address of Land:
  205 Granada Street, Camarillo, California
 
   
Master Tenant:
  Camarillo Community Care, Inc.
 
   
Number of Licensed Beds/Units:
  114
 
   
Legal Description of Land:
  Attached

 

 

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EXHIBIT B-11
The Cambridge Project

     
Borrower:
  Golfview Holdings LLC
 
   
Name of Facility:
  Cambridge Health and Rehabilitation Center
 
   
Address of Land:
  1106 Golfview Drive, Richmond, Texas 77469
 
   
Master Tenant:
  Richmond Senior Services, Inc.
 
   
Number of Licensed Beds/Units:
  118
 
   
Number of Parking Spaces:
  45
 
   
Legal Description of Land:
   

BEING ALL OF A CALLED 4.6479 ACRE TRACT OF LAND DESCRIBED IN A DEED DATED
JANUARY 01, 1996 FROM LLOYD HOBBS TO HOBBS & CURRY FAMILY LIMITED PARTNERSHIP,
RECORDED IN VOLUME 2731, PAGE 1904 OF THE FORT BEND COUNTY OFFICIAL RECORDS
(FBCOR), LOCATED IN THE JANE H. LONG LEAGUE, ABSTRACT 55, FORT BEND COUNTY,
TEXAS; SAID 4.6424 ACRE TRACT BEING MORE PARTICULARLY DESCRIBED BY METES AND
BOUNDS AS FOLLOWS: (Bearings based on South 40 deg. 17 min. 30 sec. East along
the southwest right- of-way line of Dowling Drive and the northeast line of a
tract of land recorded in Volume 2419, Page 558 FBCOR).
BEGINNING, at a found 1 inch iron pipe with cap for the most northerly corner of
the herein described tract, being the most northerly corner of said Hobbs &
Curry tract and the most easterly corner of a called 1.866 acre tract of land as
described in a deed dated June 30, 1992 from Resolution Trust Corporation to
Wolverine Thompson Road, L.P., recorded in Volume 2419, Page 558 FBCOR, also
being on the southwest right-of-way line of Dowling Drive (60 feet wide per
Volume 494, Page 199 of the Fort Bend County Deed Records (FBCDR);
THENCE, South 40 deg. 17 min. 30 sec. East, along the southwest right-of-way
line of said Dowling Drive, a distance of 265.53 feet (called South 40 deg. 13
min. 36 sec. East, 266.46 feet) to a set 5/8 inch iron rod with cap stamped
“LANDTECH CONSULTANTS”, for the most easterly corner of the herein described
tract, being the most easterly corner of said Hobbs & Curry tract, also being on
the northwest right-of-way line of Golfview Drive (60 feet wide per Volume 494,
Page 199 FBCDR);
THENCE, South 23 deg. 06 min. 04 sec. West, along the northwest right-of-way
line of said Golfview Drive, a distance of 424.95 feet (called South 23 deg. 14
min. 45 sec. West, 424.28 feet) to a found 3/4 inch iron pipe, for the southeast
corner of the herein described tract, being the southeast corner of said Hobbs &
Curry tract and the most easterly corner of a called 2.0 acre tract of land as
described in a deed dated June 14, 1968 from Conrad P. Harness to Dr. C.N.
McDonald, et al, recorded in Volume 503, Page 509 FBCDR;

 

 

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

 

THENCE, South 88 deg. 49 min. 12 sec. West, along the south line of said Hobbs &
Curry tract and the north line of said 2.0 acre tract, a distance of 194.02 feet
(called South 88 deg. 47 min. 11 sec. West, 194.36 feet), to a found 5/8 inch
iron rod with cap, for the southerly southwest corner of the herein described
tract, being the southerly southwest corner of said Hobbs & Curry tract and the
southeast corner of a called 0.3621 acre tract of land as described in a deed
dated October 19, 1983 from Ronald J. Lightfoot to Charles N. McDonald, et al,
recorded in Book 1315, Page 142 FBCOR;
THENCE, North 19 deg. 35 min. 18 sec. West, along the southerly west line of
said Hobbs & Curry tract and the east line said 0.3621 acre tract, a distance of
189.80 feet (called North 19 deg. 40 min. 05 sec. West, 189.70 feet) to a 5/8
inch iron rod with cap found for an interior corner of the herein described
tract, being an interior corner of said Hobbs & Curry tact and the northeast
corner of said 0.3621 acre tract;
THENCE, South 70 deg. 26 min. 33 sec. West, along the westerly south line of
said Hobbs & Curry tract and the north line of said 0.3621 acre tract, passing
at a distance of 90.55 feet a found 5/8 inch iron rod with cap, for the
northwest corner said 0.3621 acre tract and the northeast corner of a 0.5050
acre tract of land as described in a deed dated October 26, 1979 from Ronald J.
Lightfoot to Barbara Rosetti, recorded in Volume 871, Page 382 FBCDR, in all a
total distance of 257.61 feet (called South 70 deg. 19 min. 55 sec. West, 257.49
feet) to a found 1/2 inch iron rod, for the westerly southwest corner of the
herein described tract, being the westerly southwest corner of said Hobbs &
Curry tract and the most westerly corner of said Rosetti tract, also being on
the northeast right-of-way line of Thompson Road (100 feet wide);
THENCE, North 19 deg. 59 min. 04 sec. West, along the northeast right-of-way
line of said Thompson Road, a distance of 40.32 feet (called North 19 deg. 42
min. 37 sec. West, 40.00 feet) to a found 3/4 inch iron rod for the westerly
northwest corner of the herein described tract, being the westerly northwest
corner of said Hobbs & Curry tract and the most southerly corner of a called
0.5239 acre tract of land as described in a deed dated July 02, 2001, from The
Colonies Shopping Center, Ltd. to FNR Foodmart Inc., recorded under File
No. 2001060031 of the Fort Bend County official Public Records (FBCOR);
THENCE, North 70 deg. 23 min. 37 sec. East, along the south line of said FNR
Foodmart tract, a distance of 257.83 feet (called North 70 deg. 19 min. 55 sec.
East, 257.52 feet) to a found 3/4 inch iron pipe, for an interior point of the
herein described tract, being an interior corner of said Hobbs & Curry tract and
the most easterly corner of a called 0.6176 acre tract of land as described in a
deed dated June 4, 1985 from Barry Putterman, Substitute Trustee to Berg
Development Co., Inc., recorded in Volume 1689, Page 629 FBCOR;

 

 

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

 

THENCE, North 19 deg. 36 min. 23 sec. West, along the northerly west line of
said Hobbs & Curry tract and the most east line of said Berg tract, a distance
of 212.49 feet (called North 19 deg. 40 min. 05 sec. West, 212.41 feet) to a set
“X” in concrete, for the northerly northwest corner of the herein described
tract, being the northerly northwest corner of said Hobbs & Curry tract and the
most northerly corner of said Berg tract, also being on the south line of a
called 1.426 acre tract of land as described in a deed dated June 30, 1992, from
Reliable Life Insurance Company to Wolverine Thompson Road, L.P., recorded in
Volume 2419, Page 562 FBCOR;
THENCE, North 61 deg. 54 min. 02 sec. East, along the northwesterly line of said
Hobbs & Curry tract and the southeasterly line of the said Wolverine Thompson
Road, L.P. tracts, passing at a distance of 17.99 feet a found 1/2 inch iron rod
the most easterly corner of said 1.426 acre tract and the most southerly corner
of said 1.866 acre tract, in all a total distance of 382.68 feet (called North
61 deg. 51 min. 10 sec. East, 383.87 feet) to the POINT OF BEGINNING and
containing 4.6424 acres (202,224 square foot) of land more or less.

 

 

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EXHIBIT B-12
The Arbor Glen Project

     
Borrower:
  Arrow Tree Health Holdings LLC
 
   
Name of Facility:
  Arbor Glen Care Center
 
   
Address of Land:
  1033 East Arrow Highway, Glendora, California 91740
 
   
Master Tenant:
  Ensign San Dismas LLC
 
   
Number of Licensed Beds/Units:
  98
 
   
Number of Parking Spaces:
  63
 
   
Legal Description of Land:
   

LOT 6 OF TRACT NO. 48083, IN THE CITY OF GLENDORA, IN THE COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1174, PAGE(S) 91 TO 93
INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

 

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EXHIBIT B-13
The Brookfield Project

     
Borrower:
  Trousdale Health Holdings LLC
 
   
Name of Facility:
  Brookfield Health Care Center
 
   
Address of Land:
  9300 Telegraph Road, Downey, California 90240
 
   
Master Tenant:
  Downey Community Care LLC
 
   
Number of Licensed Beds/Units:
  70
 
   
Number of Parking Spaces:
  32
 
   
Legal Description of Land:
   

THAT PORTION OF THE RANCHO SANTA GERTRUDES, IN THE CITY OF DOWNEY, IN THE COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA, BEGINNING AT THE INTERSECTION OF OLD
TELEGRAPH ROAD, “SO-CALLED”, WITH THE NORTHERLY PROLONGATION OF THE EASTERLY
LINE OF TRACT NO. 23734, AS PER MAP RECORDED IN BOOK 628, PAGES 25 AND 26 OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE SOUTHERLY,
ALONG SAID PROLONGATION, TO THE NORTHEASTERLY CORNER OF LOT 10 OF SAID TRACT NO.
23734; THENCE EASTERLY, ALONG THE EASTERLY PROLONGATION OF THE NORTHERLY LINE OF
SAID LOT 10, TO THE WESTERLY LINE OF THE LAND DESCRIBED IN THE DEED TO F. L.
ALLES, RECORDED IN BOOK 568, PAGE 33 OF DEEDS, IN SAID RECORDER’S OFFICE; THENCE
NORTHERLY, ALONG SAID WESTERLY LINE OF THE LAND OF ALLES, TO THE NORTHWESTERLY
CORNER THEREOF, BEING ALSO A POINT IN SAID SOUTHERLY LINE OF OLD TELEGRAPH ROAD;
THENCE WESTERLY, ALONG SAID SOUTHERLY LINE, TO THE POINT OF BEGINNING.

 

 

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EXHIBIT B-14
The Rose Villa Project

     
Borrower:
  Ensign Bellflower LLC
 
   
Name of Facility:
  Rose Villa Health Care Center
 
   
Address of Land:
  9028 Rose Street, Bellflower, California 90706
 
   
Master Tenant:
  Bell Villa Care Associates LLC
 
   
Number of Licensed Beds/Units:
  53
 
   
Number of Parking Spaces:
  20
 
   
Legal Description of Land:
   

THAT PORTION OF LOT 6 IN BLOCK 30, CALIFORNIA CO-OPERATIVE COLONY TRACT, IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 21 PAGES
15 AND 16 OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST PROLONGATION OF THE CENTER LINE OF
ROSE AVENUE, AS SHOWN ON MAP TRACT NO. 5023, RECORDED IN BOOK 58 PAGE 1 OF MAPS,
WITH THE CENTER LINE OF LAKEWOOD BOULEVARD, FORMERLY CERRITOS AVENUE, 60 FEET
WIDE, AS SHOWN ON SAID MAP; THENCE NORTH 89 DEGREES 42 MINUTES 20 SECONDS EAST,
ALONG A LINE THAT PASSES THROUGH THE POINT OF INTERSECTION OF THE CENTER LINE OF
CLARK AVENUE, WITH THE WEST PROLONGATION OF THE CENTERLINE OF ROSE AVENUE, AS
SAID AVENUES ARE SHOWN ON MAP OF BELLFLOWER ACRES, SHEET NO. 1, RECORDED IN BOOK
16 PAGE 136 OF MAPS, 30 FEET TO A POINT IN THE WEST LINE OF SAID LOT & TO THE
POINT OF BEGINNING; THENCE NORTH 89 DEGREES 42 MINUTES 20 SECONDS EAST, 425
FEET; THENCE PARALLEL WITH THE CENTER LINE OF LAKEWOOD BOULEVARD, SOUTH 0
DEGREES 16 MINUTES 10 SECONDS EAST, 230.45 FEET TO A POINT IN THE NORTH LINE OF
LOT 3, TRACT NO. 8084 SHEET NO. 4, RECORDED IN BOOK 171 PAGE 27 OF MAPS; THENCE
THEREON SOUTH 89 DEGREES 47 MINUTES 26 SECONDS WEST, 425 FEET TO THE WEST LINE
OF SAID LOT 6; THENCE ALONG SAID WEST LINE, NORTH 0 DEGREES 16 MINUTES 10
SECONDS WEST, 229.83 FEET TO THE POINT OF BEGINNING.
EXCEPT THE NORTH 30 FEET THEREOF.
ALSO EXCEPT THE WESTERLY 250 FEET THEREOF.

 

 

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EXHIBIT B-15
The Northern Oaks Project

     
Borrower:
  Anson Health Holdings LLC
 
   
Name of Facility:
  Northern Oaks
 
   
Address of Land:
  2722 Old Anson Road, Abilene, Texas 79603
 
   
Master Tenant:
  Northern Oaks Healthcare, Inc.
 
   
Number of Licensed Beds/Units:
  96
 
   
Number of Parking Spaces:
  91
 
   
Legal Description of Land:
   

Tract 1:
Lots 1 and 2, Block 1, Section 1, SHADY OAKS LODGE, a subdivision of 6.12 acres
out of the North 1/2 of Subdivision No. 3, of Steffens Subdivision of Merchant’s
Pasture out of the James R. Shipman Survey No. 85, in the city of Abilene,
Taylor county, Texas, according to the map or plat thereof recorded in cabinet
2, Slide 123-A, Plat Records of Taylor county, Texas; SAVE AND EXCEPT that
certain tract of land conveyed to the city of Abilene, Texas, by deed recorded
in Volume 1699, Page 274, Official Public Records, Taylor county, Texas.
Tract 2:
A 30’ easement across the East 30’ of Lot 3, Block 1, Section 1, Shady Oaks
Lodge, a subdivision in the City of Abilene, Taylor County, Texas, more
particularly described in the deed dated February 1, 1981, recorded in Volume
1178, Page 570, Deed Records, Taylor County, Texas, reference to which
instrument is hereby made for all purposes.

 

 

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EXHIBIT B-16
The Golden Acres Project

     
Borrower:
  Hillendahl Health Holdings LLC
 
   
Name of Facility:
  Golden Acres
 
   
Address of Land:
  2525 Centerville Road, Dallas, Texas 75228
 
   
Master Tenant:
  Pomerado Ranch Healthcare, Inc.
 
   
Number of Licensed Beds/Units:
  264 skilled nursing beds and 39 independent living units
 
   
Number of Parking Spaces:
  227
 
   
Legal Description of Land:
   

BEING a 22.67 acre tract of land situated in the J. W. Davis Survey, Abstract
No. 411 in the City of Dallas Block 5714, Dallas County, Texas, and being all of
a tract of land conveyed to 2525 Capital Group, L.L.C, by deed recorded in
Document No. 20070356958, Official Public Records, Dallas County, Texas, and
being more particularly described as follows:
BEGINNING at a 1/2 inch iron rod found for corner at the Southwest corner of
said 2525 Capital Group, L.L.C. tract and lying in the North right of way line
of Centerville Road (83 foot right of way);
THENCE North 01 degree 11 minutes 10 seconds East, along the West line of said
2525 Capital Group, L.L.C. tract, passing at 20 feet the Southeast corner of
Casa View Heights Addition, an Addition to the City of Dallas, according to the
map thereof recorded in Volume 16, Page 191, Map Records, Dallas County, Texas,
and continuing a total distance of 437.34 feet to a 1/2 inch iron rod found for
corner, said corner being the most Southerly Northwest corner of said 2525
Capital Group, L.L.C. tract and being the Southwest corner of a tract of land
conveyed to ECHAD, Inc., by Deed recorded in Volume 84116, Page 2397, Deed
Records, Dallas County, Texas;
THENCE South 88 degrees 49 minutes 46 seconds East, along the South line of said
ECHAD tract (Volume 84116, Page 2397), a distance of 176.69 feet to a 1/2 inch
iron rod found for corner;
THENCE North 45 degrees 32 minutes 57 seconds East, along the Southeast line of
said ECHAD tract (Volume 84116, Page 2397) and the Northwest line of said 2525
Capital Group, L.L.C. tract, a distance of 231.94 feet to a 5/8 inch iron rod
set for corner with yellow plastic cap stamped “DC&A”;
THENCE South 44 degrees 27 minutes 02 seconds East, a distance of 27.50 feet to
a 5/8 inch iron rod set for corner with yellow plastic cap stamped “DC&A”;

 

 

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THENCE North 45 degrees 32 minutes 58 seconds East, a distance of 131.08 feet to
a 1/2 inch iron rod found for corner;
THENCE North 44 degrees 27 minutes 02 seconds West, a distance of 22.50 feet to
a 5/8 inch iron rod set for corner with yellow plastic cap stamped “DC&A”, said
corner being the Northeast corner of said ECHAD tract (Volume 84116, Page 2397)
and the Southeast corner of a tract of land conveyed to ECHAD, Inc., by Deed
recorded in Volume 80191, Page 583, Deed Records, Dallas County, Texas;
THENCE North 45 degrees 35 minutes 24 seconds East, along the Southeast line of
said ECHAD tract (Volume 80191, Page 583), and said Northwest line of said 2525
Capital Group, L.L.C. tract, a distance of 180.45 feet to a 1/2 inch iron rod
found for corner;
THENCE North 45 degrees 22 minutes 06 seconds East, along said Southeast line of
ECHAD tract (Volume 80191, Page 583) and said Northwest line of 2525 Capital
Group, L.L.C. tract, a distance of 217.46 feet to a 1/2 inch iron rod found for
corner, said corner being the Northeast corner of said ECHAD tract (Volume
80191, Page 583) and the most Northern Northwest corner of said 2525 Capital
Group, L.L.C. tract, said corner also lying in the Southwest right of way line
of Ruidosa Avenue (50 foot right of way);
THENCE South 53 degrees 09 minutes 37 seconds East, along said Southwest right
of way line of Ruidosa Avenue, a distance of 61.24 feet to a 5/8 inch iron rod
set for corner with yellow plastic cap stamped “DC&A”, said corner being the
beginning of a curve to the left with a delta angle of 37 degrees 01 minute 09
seconds, a radius of 174.43 feet and a chord bearing and distance of South 71
degrees 38 minutes 40 seconds East, 110.75 feet;
THENCE along said curve to the left and said Southwest right of way line of
Ruidosa Avenue, an arc length of 112.70 feet to a 1/2 inch iron rod found for
corner;
THENCE North 89 degrees 48 minutes 37 seconds East, along the South right of way
line of Ruidosa Avenue and the North line of said 2525 Capital Group, L.L.C.
tract, a distance of 160.71 feet to a 5/8 inch iron rod set for corner with
yellow plastic cap stamped “DC&A”, said corner being the most Northern Northeast
corner of said 2525 Capital Group, L.L.C. tract and the Northwest corner of a
tract of land conveyed to the City of Dallas, by Deed recorded in Volume
2001056, Page 9747, Deed Records, Dallas County, Texas;
THENCE South 00 degrees 11 minutes 23 seconds East, along the West line of said
City of Dallas tract, a distance of 200.00 feet to a 5/8 inch iron rod set for
corner with yellow plastic cap stamped “DC&A”, said corner being the Southwest
corner of said City of Dallas tract;
THENCE North 89 degrees 48 minutes 37 seconds East, along the South line of said
City of Dallas tract, a distance of 330.00 feet to a point for corner, said
corner lying in the West right of way line of Shiloh Road (120 foot right of
way) and being the most Southerly Northeast corner of said 2525 Capital Group,
L.L.C. tract;

 

 

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THENCE South 00 degrees 11 minutes 23 seconds East, along the East line of said
2525 Capital Group, L.L.C. tract and said West right of way line of Shiloh Road,
a distance of 450.17 feet to a 5/8 inch iron rod set for corner with yellow
plastic cap stamped “DC&A”, said corner being the beginning of a curve to the
left with a delta angle of 18 degrees 15 minutes 06 seconds, a radius of 610. 51
feet and a chord bearing and distance of South 27 degrees 22 minutes 39 seconds
East, 193.66 feet;
THENCE along said curve to the left, an arc length of 194.48 feet to a 5/8 inch
iron rod set for corner with yellow plastic cap stamped “DC&A”, said corner
lying in the Southwest right of way line of Shiloh Road;
THENCE South 53 degrees 32 minutes 51 seconds West, a distance of 4.50 feet to a
5/8 inch iron rod set for corner with yellow plastic cap stamped “DC&A”, said
corner being the beginning of a curve to the right with a delta angle of 16
degrees 38 minutes 17 seconds, a radius of 341.65 feet and a chord bearing and
distance of South 58 degrees 49 minutes 53 seconds West 98.86 feet;
THENCE along said curve to the right, an arc length of 99.21 feet to a 5/8 inch
iron rod set for corner with yellow plastic cap stamped “DC&A”;
THENCE South 00 degrees 11 minutes 23 seconds East, a distance of 27.76 feet to
a point for corner;
THENCE North 89 degrees 34 minutes 03 seconds West, along the South line of said
2525 Capital Group, L.L.C. tract and said North right of way line of Centerville
Road, a distance of 1379.85 feet to the POINT OF BEGINNING and containing
987,519 square feet or 22.67 acres of land.

 

 

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EXHIBIT C
Intellectual Property
Upland Community Care, Inc. holds registered trade name “Upland Rehabilitation
and Care Center.”

 

 

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EXHIBIT D
Interest Holder Certificate and Agreement
Date:                     

To:  
General Electric Capital Corporation, as Agent
500 West Monroe Street
Suite 1500
Chicago, Illinois 60661

Re:  
Fourth Amended and Restated Loan Agreement dated as of November 10, 2009 among
Valley Health Holdings LLC, Sky Holdings AZ LLC, Terrace Holdings AZ LLC, Ensign
Highland LLC, Plaza Health Holdings LLC, Rillito Holdings LLC, Meadowbrook
Health Associates LLC, Mountainview Communitycare LLC, Cedar Avenue Holdings
LLC, Granada Investments LLC, Golfview Holdings LLC, Arrow Tree Health Holdings
LLC, Trousdale Health Holdings LLC, Ensign Bellflower LLC, Anson Health Holdings
LLC and Hillendahl Health Holdings LLC, each a Nevada limited liability company
(collectively, the “Borrowers”), and General Electric Capital Corporation, a
Delaware corporation, as Agent and, in its individual capacity as a Lender,
“GECC”, and the other financial institutions who are or become parties to said
Loan Agreement as lenders (collectively with GECC, the “Lender”), (as it may be
amended from time to time, the “Loan Agreement”)

To induce Agent and Lender to enter into the Loan Agreement with Borrowers, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned represents, warrants, covenants and
agrees for the benefit of Agent and Lender as follows:
1. The undersigned members (collectively, “Owners” and in their individual
capacity, “Owner”) represent and warrant to Agent and Lender that the Owners
own, in the aggregate, 100% of the direct ownership interests in Borrowers, and
that neither Borrowers nor any Owner is or shall be and, after due inquiry, that
no Person who owns a controlling interest in or otherwise controls Borrowers or
any Owner, is or shall be, (a) listed on the Specially Designated Nationals and
Blocked Persons List (the “SDN List”) maintained by the Office of Foreign Assets
Control (“OFAC”), Department of the Treasury, and/or on any other similar
publicly-available United States government list (“Other Lists” and,
collectively with the SDN List, the “Lists”) maintained by the OFAC pursuant to
any authorizing statute, Executive Order or regulation (collectively, “OFAC Laws
and Regulations”); or (b) a Person (a “Designated Person”) either (i) included
within the term “designated national” as defined in the Cuban Assets Control
Regulations, 31 C.F.R. Part 515, or (ii) designated under Sections 1(a), 1(b),
1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49,079 (published
September 25, 2001), or similarly designated under any related enabling
legislation or any other similar Executive Orders (collectively, the “Executive
Orders”). The OFAC Laws and Regulations and the Executive Orders are
collectively referred to in this Agreement as the “Anti Terrorism Laws”. Each
Owner and Borrowers shall required, and shall take reasonable measures to ensure
compliance with such requirement, that no Person who owns any other direct
interest in any Owner or Borrowers is or

 

 

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shall be listed on any of the Lists or is or shall be a Designated Person. This
Section 1 shall not apply to any Person to the extent that such Person’s
interest in the Borrowers is through a U.S. Publicly-Traded Entity. As used in
this Agreement “U.S. Publicly-Traded Entity” means a Person (other than an
individual) whose securities are listed on a national securities exchange, or
quoted on an automated quotation system, in the United States, or a wholly-owned
subsidiary of such a Person. From time to time upon the written request of
Agent, each Owner shall deliver to Borrowers a schedule of the name, legal
domicile address and (for entities) place of organization of each holder of a
controlling ownership interest in such Owner.
2. Each Owner represents and warrants that all evidence of identity provided by
it to Borrowers is genuine and that all related information is accurate and that
it has acquired, or is acquiring, and shall hold, its interest in Borrowers for
its own account, risk and beneficial interest and without the obligation or
intention to sell, distribute, assign or transfer all or a portion of such
interest to any other Person.
3. Each Owner represents and warrants that it has taken, and agrees that it
shall continue to take, reasonable measures appropriate to the circumstances
(and in any event as required by law), with respect to each holder of a
controlling ownership interest in such Owner and Borrowers, to assure that funds
invested by such holders in Borrowers are derived from legal sources (the “Anti
Money Laundering Measures”). The Anti Money Laundering Measures have been and
shall be undertaken in accordance with the Bank Secrecy Act, 31 U.S.C. §§ 5311
et seq. (“BSA”), to the extent applicable and all applicable laws, regulations
and government guidance on BSA compliance and on the prevention and detection of
money laundering violations under 18 U.S.C. §§ 1956 and 1957 (collectively,
“Anti Money Laundering Laws”).
4. Each Owner represents and warrants, to its knowledge after making due
inquiry, that neither it nor any holder of a controlling ownership interest in
any Owner or in Borrowers (a) is under investigation by any governmental
authority for, or has been charged with, or convicted of, money laundering under
18 U.S.C. §§ 1956 and 1957, drug trafficking, terrorist related activities,
other money laundering predicate crimes or any violation of the BSA, (b) has
been assessed civil penalties under Anti Money Laundering Laws, or (c) has had
its funds seized or forfeited in an action under any Anti Money Laundering Laws.
5. Each Owner shall immediately notify Agent if such Owner obtains actual
knowledge that Borrowers, any Owner, or any holder of a direct or indirect
interest in Borrowers or any Owner, or any director, manager or officer of any
of them, (a) has been listed on any of the Lists, (b) has become a Designated
Person, (c) is under investigation by any governmental authority for, or has
been charged with or convicted of, money laundering, drug trafficking, terrorist
related activities, other money laundering predicate crimes, or any violation of
the BSA, (d) has been assessed civil penalties under any Anti Money Laundering
Laws, or (e) has had funds seized or forfeited in an action under any Anti Money
Laundering Laws.
6. Each Owner acknowledges and agrees that if any of the representations or
warranties of the undersigned set forth herein are false, misleading or
incorrect in any material respect as of the date made, Agent, in addition to all
of its other rights and remedies, may declare that an Event of Default exists
under the Loan Agreement. Each Owner agrees to notify Borrowers and Agent
promptly of any change in facts or circumstances that causes any of the
representations or warranties contained herein to the untrue.

 

2

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7. Each Owner represents and warrants that it has taken, and agrees that it
shall continue to take, reasonable measures, appropriate to the circumstances
(and in any event as required by law), to ensure that it and Borrowers are and
shall be in compliance with all current and future applicable Anti-Money
Laundering Laws, and other applicable laws, regulations and government guidance
for the prevention of terrorism, terrorist financing and drug trafficking.
8. In addition to the representations, warranties and covenants regarding full
compliance with Anti-Terrorism Laws and Anti-Money Laundering Laws, each Owner
represents and warranties that it is, and agrees that it shall remain, in
compliance in all material respects with all other laws and requirements
applicable to it, its business and its assets, the violation of which would have
a material adverse effect on its ability to perform its obligations under the
Borrowers’ operating agreement or on the Borrowers’ ability to perform its
obligations under the Loan Agreement.
9. Each Owner shall cause to be made, all payments owed by Borrowers to Agent by
check or wire transfer drawn on an account owned by Borrowers, or by an Owner or
another Person approved in writing in advance by Agent, and maintained at a
banking institution organized under the laws of the United States or one of its
constituent States, or at a federally regulated U.S. branch or agency of a
foreign bank, or at a federally regulated securities broker dealer.
10. If the applicable Anti-Money Laundering Measures do not provide, in Agent’s
reasonable determination, adequate means to assure that Persons that are listed
on any of the Lists, or that are Designated Persons, or whose funds are not
derived from legal sources, are excluded from becoming or being direct or
indirect investors in any Owner or Borrowers, Agent shall notify Borrowers of
its determination in accordance with the notice provisions in the Loan
Agreement. If such inadequate Anti-Money Laundering Measures are not modified in
a commercially reasonable manner to Agent’s reasonable satisfaction within
thirty (30) days following notice to Borrowers of Agent’s determination, each of
the undersigned acknowledges that Agent, in addition to all of its other rights
and remedies, may declare that an Event of Default exists.
11. No transfer of any direct interest in Borrowers or of any controlling
ownership interest in Owner shall be effective unless and until the transferor
has provided a written certification to Borrowers that, after making due
inquiry, (a) the transferee or any Person who owns a controlling interest in, or
otherwise controls, the transferee is not listed on any of the Lists and is not
a Designated Person, and the transferee has taken reasonable measures to assure
that no holder of any other controlling ownership interest in the transferee is
so listed or is so designated; provided, however, that none of the foregoing
shall apply to any Person which is, or to the extent that such interest is
through, a U.S. Publicly Traded Entity, and (b) the funds for investment in
Owner or Borrowers are derived from legal sources.

 

3

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12. Each Owner acknowledges and agrees that if at any time Borrowers or Agent
reasonably believes that such Owner has breached its representations and
warranties or its agreements set forth herein, Borrowers have the right or may
be obligated to block such Owner’s investment in Borrowers, to prohibit
additional investments, to segregate the assets constituting such Owner’s the
investment in accordance with applicable Anti-Terrorism Laws, to decline any
redemption request or to redeem the Investor’s investment. Each Owner further
acknowledges that it will have no claim against Borrowers, Lender or Agent or
any of their respective affiliates or agents for any form of damages as a result
of any of the foregoing actions.
13. Each Owner shall require each Person that proposes to become a holder of any
direct interest in Borrowers or of any controlling ownership interest in Owner
to sign an agreement substantially in the form of this Agreement and to deliver
the same to Borrowers.
14. Capitalized terms used in this Agreement and not defined in this Agreement
shall have the meanings assigned to them in the Loan Agreement. Any notice sent
to Agent under this Agreement shall be sent in accordance with the notice
provisions set forth in the Loan Agreement.
15. The undersigned acknowledges that (a) Lender is relying on this Agreement
and its rights hereunder in entering into the Loan Agreement and in advancing
proceeds of the Loans, and (b) any terms hereof applying to more than one of the
undersigned are made on a joint and several basis hereunder. This Agreement may
be executed in counterparts.
[Remainder of page intentionally blank; signature page follows]

 

4

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IN WITNESS WHEREOF, each of the undersigned have executed and delivered this
Agreement as of the date set forth above.

            OWNER:
                     

 

 

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EXHIBIT E
Provider Payment/Reimbursement Programs
With respect to each Project:
1. A Medicaid Provider Agreement or the state equivalent thereof; and

2. A Medicare Provider Agreement

 

 

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EXHIBIT F
Governmental Approvals

1.  
Arizona Department of Health Services, Nursing Care Institution License
No. NCI-345 with respect to the Desert Sky Healthcare and Rehabilitation Center
Project.

2.  
Arizona Department of Health Services, Nursing Care Institution License
No. NCI-237 with respect to the Desert Terrace Nursing Center Project.

3.  
Arizona Department of Health Services, Nursing Care Institution License
No. NCI-159 with respect to the Highland Manor Health and Rehabilitation Center
Project.

4.  
Arizona Department of Health Services, Nursing Care Institution License
No. NCI-2637 with respect to the NMMRC Project.

5.  
Nursing Home License No. 1342 issued by the Washington Department of Social and
Health Services with respect to the Park Manor Project

6.  
Arizona Department of Health Services, Nursing Care Institution License
No. NCI-2634 with respect to the Catalina Project.

7.  
State of California Department of Health Services License No. 010000062 with
respect to the Park View Gardens Project.

8.  
Arizona Department of Health Services, Nursing Care Institution License
No. NCI-279 with respect to the Sabino Project.

9.  
State of California Department of Health Services License No. 240000215 with
respect to the Upland Project.

10.  
State of California Department of Health Services License No. 050000087 with
respect to the Camarillo Project.

11.  
State of California Department of Health Services License No. 950000090 with
respect to the Arbor Glen Project.

12.  
State of California Department of Health Services License No. 940000135 with
respect to the Brookfield Project.

13.  
State of California Department of Health Services License No. 950000017 with
respect to the Rose Villa Project.

14.  
Texas Department of Aging and Disability Services License No. 128065 with
respect to the Cambridge Project.

15.  
Texas Department of Aging and Disability Services License No. 127959 with
respect to the Golden Acres Project.

16.  
Texas Department of Aging and Disability Services License No. 12142 with respect
to the Northern Oaks Project.

 

 

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EXHIBIT G
Required Repairs
IMMEDIATE REPAIRS

         
1. Arbor Glen, CA
       
Kitchen Floors
  $ 15,000  
Kitchen Hood-Sprinkler
  $ 15,000  
 
  $ 30,000  
 
       
2. Rose Villa, CA
       
Under Slab-RA Vents
  $ 5,000  
Fresh Air PK Units
  $ 7,500  
ADA
  $ 50  
 
  $ 12,550  
 
       
3. Cambridge, TX
       
Earth Work at Dumpster
  $ 500  
Pad at Dumpster
  $ 1,200  
Concrete Service Drive
  $ 5,000  
Canopy/Awnings
  $ 5,000  
Asphalt
  $ 1,125  
ADA
  $ 500  
 
  $ 13,325  
 
       
4. Northern Oaks, TX
       
Asphalt Overlay
  $ 26,276  
Sidewalk
  $ 2,500  
ADA
  $ 885  
 
  $ 29,661  
 
       
5. Golden Acres, TX
       
Roof Leaks
  $ 3,000  
 
       
Total
  $ 88,536.00  

 

 

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SCHEDULE 2.1
Advance Conditions
The Six Project Loan shall be subject to the terms of the Proposal Letter, as
clarified or modified by this Agreement and Agent’s receipt, review, approval
and/or confirmation of the following items, at Borrowers’ cost and expense, each
in form and content satisfactory to Agent in its sole discretion:

  1.  
Loan Documents. The following Loan Documents:
    (a)  
the Loan Agreement executed by Borrowers;
    (b)  
the Six Project Note;
    (c)  
the Security Documents executed by Borrowers;
    (d)  
such Uniform Commercial Code financing statements as Agent may require;
    (e)  
a Fourth Amended and Restated Environmental Indemnity Agreement executed by
Borrowers and a Fourth Amended and Restated Environmental Indemnity Agreement
executed by Guarantor (collectively, the “Environmental Indemnity”);
    (f)  
a Fourth Amended and Restated Guaranty of Payment and Performance executed by
Guarantor (the “Guaranty”);
    (g)  
a Subordination and Attornment Agreement executed by each Master Tenant (the
“Subordination Agreements”);
    (h)  
the Third Amended and Restated Business Associate Agreement executed by Master
Tenants (the “Business Associate Agreement”); and
    (i)  
such Assignment of Leases and Rents, executed by Borrowers or Affiliates of
Borrowers for the benefit of Lender, and pertaining to leases of space in the
Projects (the “Assignment of Leases and Rents”) as Agent may require.
    2.  
Loan Origination Fee. The loan origination fee of $400,000, which fee shall be
non-refundable, shall be deemed fully earned upon receipt.
    3.  
Title Insurance Policies. An ALTA (or equivalent) mortgagee policy or policies
of title insurance in the maximum amount of the Loans, with reinsurance and
endorsements as Agent may require, containing no exceptions to title (printed or
otherwise) which are unacceptable to Agent, and insuring that the Security
Documents are a first-priority Lien on the Projects and related collateral (the
“Title Policies”).

 

 

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

 

  4.  
Organizational and Authority Documents. Certified copies of all documents
evidencing the formation, organization, valid existence, good standing, and due
authorization of and for each Borrower and each Guarantor for the execution,
delivery, and performance of the Loan Documents by each Borrower and each
Guarantor, as applicable.
    5.  
Legal Opinions. Legal opinions issued by counsel for each Borrower and
Guarantor, opining as to the due organization, valid existence and good standing
of Borrowers and Guarantor, and the due authorization, execution, delivery,
enforceability and validity of the Loan Documents with respect to, Borrowers and
Guarantor that the Loans, as reflected in the Loan Documents is not usurious; to
the extent that Agent is not otherwise satisfied, that each Project and its use
is in full compliance with all legal requirements; that the Loan Documents do
not create or constitute a partnership, a joint venture or a trust or fiduciary
relationship between Borrowers and Agent; and as to such other matters as Agent
and Agent’s counsel reasonably may specify.
    6.  
Searches. Current Uniform Commercial Code, tax, judgment lien and litigation
searches for Borrowers, Loan Parties, Master Tenants Borrowers’ partners and
members, and the immediately preceding owner of the Projects.
    7.  
Insurance. Evidence of insurance as required by this Agreement, and conforming
in all respects to the requirements of Agent.
    8.  
Survey. Three (3) originals of a current “as built” survey of each Project,
dated or updated to a date not earlier than forty-five (45) days prior to the
Restatement Date, prepared by a registered land surveyor in accordance with the
American Land Title Association/ American Congress on Surveying and Mapping
Standards and containing Agent’s approved form of certification in favor of
Agent and the title insurer. The surveyor shall certify that no portion of any
Project is in a flood hazard area as identified by the Secretary of Housing and
Urban Development (or, if any portion of any Project is in such a flood hazard
area, then the survey shall certify to the hazard designation of the affected
portion of the property,) and shall conform to Agent’s current survey
requirements. The surveys shall be sufficient for the title insurer to remove
the general survey exception.
    9.  
Property Condition Report. A current engineering report or architect’s
certificate with respect to each Project, covering, among other matters,
inspection of heating and cooling systems, roof and structural details and
showing no failure of compliance with building plans and specifications,
applicable legal requirements (including requirements of the Americans with
Disabilities Act) and fire, safety and health standards. As requested by Agent,
such report shall also include an assessment of the Project’s tolerance for
earthquake and seismic activity.

 

 

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

 

  10.  
Environmental Reports. A current Site Assessment for each Project.
    11.  
Leases. All leases of, subleases of, and occupancy agreements affecting the
Projects or any part thereof now existing or hereafter executed (including the
Master Leases and all patient and resident care agreements and service
agreements which include an occupancy agreement) and all amendments,
modifications or supplements thereto (“Leases”) shall be in form and substance,
with tenants and for uses acceptable to Agent. On the Restatement Date: (a) the
Master Leases shall be, in full force and effect; (b) Borrowers shall have
submitted revised and updated financials and census data to Agent; and (c) Agent
shall have received subordination agreements in form and substance acceptable to
Agent the Master Tenants.
    12.  
Master Leases. A copy of each Master Lease, certified by Borrowers as being
true, correct and complete.
    13.  
Tax and Insurance Impounds. Borrowers’ deposit with Agent of the amount required
by Agent to impound for taxes and assessments, insurance premiums and to fund
any other required escrows or reserves.
    14.  
Compliance With Laws. Evidence that each Project and the operation thereof
comply with all legal requirements, including that all requisite certificates of
occupancy, building permits, and other licenses, certificates, approvals or
consents required of any governmental authority have been issued without
variance or condition and that there is no litigation, action, citation,
injunctive proceedings, or like matter pending or threatened with respect to the
validity of such matters. If title insurance with respect to any Project
described in item 3 above does not include a Zoning 3.1 (with parking)
endorsement because such an endorsement is not available in the State where the
Project is located, then Borrowers shall furnish to Agent a zoning letter from
the applicable municipal agency with respect to such Project. Borrowers shall,
upon request of Agent, furnish Agent with utility letters from applicable
service providers.
    15.  
No Casualty or Condemnation. No condemnation or adverse zoning or usage change
proceeding shall have occurred or shall have been threatened against any
Project; no Project shall have suffered any significant damage by fire or other
casualty which has not been repaired; no law, regulation, ordinance, moratorium,
injunctive proceeding, restriction, litigation, action, citation or similar
proceeding or matter shall have been enacted, adopted, or threatened by any
governmental authority, which would have, in Agent’s judgment, a material
adverse effect on Borrowers, Guarantor or any Project.
    16.  
Audit Requirements. The annualized Net Operating Income of the Projects equals
or exceeds $24,786,000.

 

 

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

 

  17.  
Broker’s Fees. All fees and commissions payable to real estate brokers, mortgage
brokers, or any other brokers or agents in connection with the Loans or the
acquisition of the Projects have been paid, such evidence to be accompanied by
any waivers or indemnifications deemed necessary by Agent.
    18.  
Costs and Expenses. Payment of Agent’s costs and expenses in underwriting,
documenting, and closing the transaction, including fees and expenses of Agent’s
inspecting engineers, consultants and counsel.
    19.  
Representations and Warranties. The representations and warranties contained in
this Loan Agreement and in all other Loan Documents are true and correct.
    20.  
No Defaults. No Potential Default or Event of Default shall have occurred or
exist.
    21.  
Appraisal. Agent shall obtain an appraisal report for each Project, in form and
content acceptable to Agent, prepared by an independent MAI appraiser in
accordance with the Financial Institutions Reform, Recovery and Enforcement Act
(“FIRREA”) and the regulations promulgated pursuant to such act.
    22.  
Other Items. Agent shall have received such other items as Agent may reasonably
require.

 

 

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

 

SCHEDULE 2.3(A)
Ten Project Loans Principal Payments

          Date   Principal  
11/1/2009
    70,965.84  
12/1/2009
    82,140.93  
1/1/2010
    71,921.02  
2/1/2010
    72,369.65  
3/1/2010
    104,881.69  
4/1/2010
    73,475.76  
5/1/2010
    84,585.07  
6/1/2010
    74,461.89  
7/1/2010
    85,545.35  
8/1/2010
    75,460.18  
9/1/2010
    75,930.92  
10/1/2010
    86,975.86  
11/1/2010
    76,947.32  
12/1/2010
    87,965.62  
1/1/2011
    77,976.25  
2/1/2011
    78,462.70  
3/1/2011
    110,419.47  
4/1/2011
    79,641.47  
5/1/2011
    90,589.15  
6/1/2011
    80,703.62  
7/1/2011
    91,623.46  
8/1/2011
    81,778.87  
9/1/2011
    82,289.07  
10/1/2011
    93,167.36  
11/1/2011
    83,383.87  
12/1/2011
    94,233.46  
1/1/2012
    84,492.17  
2/1/2012
    85,019.32  
3/1/2012
    106,102.31  
4/1/2012
    86,212.03  
5/1/2012
    96,987.49  
6/1/2012
    87,355.20  
7/1/2012
    98,100.69  
8/1/2012
    88,512.47  
9/1/2012
    89,064.74  
10/1/2012
    99,765.42  
11/1/2012
    90,243.09  
12/1/2012
    100,912.88  
1/1/2013
    91,435.97  
2/1/2013
    92,006.51  

 

 

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

 

          Date   Principal  
3/1/2013
    122,729.01  
4/1/2013
    93,346.79  
5/1/2013
    103,935.23  
6/1/2013
    94,577.94  
7/1/2013
    105,134.11  
8/1/2013
    95,824.28  
9/1/2013
    96,422.24  
10/1/2013
    106,930.06  
11/1/2013
    97,691.32  
12/1/2013
    108,165.88  
1/1/2014
    98,976.05  
2/1/2014
    99,593.70  
3/1/2014
    129,624.77  
4/1/2014
    101,024.47  
5/1/2014
    111,411.67  
6/1/2014
    102,350.32  
7/1/2014
    112,702.76  
8/1/2014
    103,692.51  
9/1/2014
    104,339.63  
10/1/2014
    114,639.94  
11/1/2014
    105,706.36  
12/1/2014
    115,970.84  
1/1/2015
    107,089.95  
2/1/2015
    107,758.30  
3/1/2015
    137,045.33  
4/1/2015
    109,286.46  
5/1/2015
    119,457.10  
6/1/2015
    110,714.21  
7/1/2015
    120,847.43  
8/1/2015
    112,159.56  
9/1/2015
    112,859.59  
10/1/2015
    122,936.58  
11/1/2015
    114,331.41  
12/1/2015
    124,369.82  
1/1/2016
    115,821.38  
2/1/2016
    116,544.30  
3/1/2016
    135,777.69  
4/1/2016
    118,119.42  
5/1/2016
    128,058.55  
6/1/2016
    119,656.11  

 

 

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

 

SCHEDULE 2.3(B)
Six Project Loan Principal Payments

                  Period   Date     Principal Payment  
0
    11/6/2009          
1
    12/1/2009       29,026.76  
2
    1/1/2010       32,668.52  
3
    2/1/2010       32,895.13  
4
    3/1/2010       60,059.78  
5
    4/1/2010       33,541.50  
6
    5/1/2010       42,732.02  
7
    6/1/2010       34,071.17  
8
    7/1/2010       43,248.17  
9
    8/1/2010       34,608.12  
10
    9/1/2010       34,848.24  
11
    10/1/2010       44,005.41  
12
    11/1/2010       35,395.87  
13
    12/1/2010       44,539.07  
14
    1/1/2011       35,951.03  
15
    2/1/2011       36,200.51  
16
    3/1/2011       63,066.08  
17
    4/1/2011       36,890.85  
18
    5/1/2011       45,995.90  
19
    6/1/2011       37,466.58  
20
    7/1/2011       46,556.94  
21
    8/1/2011       38,050.23  
22
    9/1/2011       38,314.33  
23
    10/1/2011       47,383.06  
24
    11/1/2011       38,909.63  
25
    12/1/2011       47,963.17  
26
    1/1/2012       39,513.13  
27
    2/1/2012       39,787.42  
28
    3/1/2012       57,573.50  
29
    4/1/2012       40,464.23  
30
    5/1/2012       49,478.10  
31
    6/1/2012       41,089.11  
32
    7/1/2012       50,087.04  
33
    8/1/2012       41,722.59  
34
    9/1/2012       42,012.27  
35
    10/1/2012       50,986.65  
36
    11/1/2012       42,658.45  
37
    12/1/2012       51,616.34  
38
    1/1/2013       43,313.52  
39
    2/1/2013       43,614.28  
40
    3/1/2013       69,809.05  
41
    4/1/2013       44,403.26  
42
    5/1/2013       53,316.63  
43
    6/1/2013       45,082.34  
44
    7/1/2013       53,978.38  
45
    8/1/2013       45,770.76  
46
    9/1/2013       46,088.66  
47
    10/1/2013       54,959.03  
48
    11/1/2013       46,790.93  
49
    12/1/2013       55,643.38  
50
    1/1/2014       47,502.87  
51
    2/1/2014       47,832.83  
52
    3/1/2014       73,645.91  
53
    4/1/2014       48,677.95  
54
    5/1/2014       57,482.27  
55
    6/1/2014       49,415.87  
56
    7/1/2014       58,201.35  
57
    8/1/2014       50,163.93  
58
    9/1/2014       50,512.45  
59
    10/1/2014       59,269.96  
60
    11/1/2014       51,275.61  

 

 

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SCHEDULE 2.9
Sources and Uses
See attached.

 

 

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

 

SCHEDULE 3.2(A)
Allocated Loan Amount

              Allocated Loan   Project   Amount  
The Desert Sky Health and Rehabilitation Center Project
  $ 5,901,000  
The Desert Terrace Nursing Center Project
  $ 3,247,000  
The Highland Manor Health and Rehabilitation Center Project
  $ 2,605,000  
The NMMRC Project
  $ 12,520,000  
The Catalina Project
  $ 2,339,000  
The Park Manor Project
  $ 4,181,000  
The Park View Gardens Project
  $ 6,780,000  
The Sabino Project
  $ 3,665,000  
The Upland Project
  $ 6,588,000  
The Camarillo Project
  $ 5,747,000  
Golfview Holdings LLC
  $ 9,161,000  
Arrow Tree Health Holdings LLC
  $ 4,519,000  
Trousdale Health Holdings LLC
  $ 5,729,000  
Ensign Bellflower LLC
  $ 4,945,000  
Anson Health Holdings LLC
  $ 5,098,000  
Hillendahl Health Holdings LLC
  $ 10,548,000  

 

 

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SCHEDULE 5.6
Litigation
None.

 

 

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

 

SCHEDULE 5.14
Locations
With respect to each Borrower:
27101 Puerta Real, Suite 450
Mission Viejo, California 92691

 

 

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SCHEDULE I
Certain Definitions
As used herein, the following terms have the meanings indicated:
“Accounting Period” means (i) general accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable on
the date so indicated and consistently applied or (ii) if required by the United
States Securities and Exchange Commission, International Financial Reporting
Standards as adopted by the International Accounting Standards Board.
“Accounts Receivable Loan” means the revolving loan made by GECC to Master
Tenants as set forth in the Accounts Receivable Loan Documents .
“Accounts Receivable Loan Documents” means that certain Second Amended and
Restated Loan and Security Agreement, as amended, restated, supplemented and
modified from time to time among GECC and the Guarantor, as a Borrower, each of
the Master Tenants, as Borrowers, and the other Borrowers party thereto dated as
of February 21, 2008 and all documents, instruments and certificates now or
hereafter executed by any Master Tenant or their Affiliates, including
Guarantor, as such documents, instruments and certificates may be amended from
time to time.
“Affiliate” means (a) any corporation in which any Borrower or any partner,
shareholder, director, officer, member, or manager of any Borrower or Guarantor
directly or indirectly owns or controls more than ten percent (10%) of the
beneficial interest, (b) any general or limited partnership, joint venture,
limited liability company or limited liability partnership in which any Borrower
or any partner, shareholder, director, officer, member, or manager of any
Borrower is a partner, joint venturer or member, (c) any trust as to which any
Borrower or any partner, shareholder, director, officer, member or manager of
any Borrower is a trustee or beneficiary, (d) any entity of any type which is
directly or indirectly owned or controlled by any Borrower or any partner,
shareholder, director, officer, member or manager of any Borrower or by
Guarantor, (e) any partner, shareholder, director, officer, member, manager or
employee of any Borrower or Guarantor, (f) any Person related by birth, adoption
or marriage to any partner, shareholder, director, officer, member, manager, or
employee of any Borrower or Guarantor, (g) Guarantor, (h) any Person which owns
or controls, directly or indirectly, more than ten percent (10%) of the
beneficial interests of any Borrower or Guarantor or (i) any entity of which
more than ten percent (10%) of the beneficial interests are owned or controlled,
directly or indirectly, by an Affiliate as defined in clauses (a) through (h).
“Agent” has the meaning assigned to such term in the introductory paragraph of
this Agreement.
“Agreement” means this Loan Agreement, as amended from time to time.

 

1

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“Allocated Loan Amount” shall be the amount set forth for each Project on
Schedule 3.2(a) as such amounts for the Six Project Loan Projects may be reduced
from time to time in accordance with Section 2.10(b)(F).
“Anti-Money Laundering Laws” has the meaning assigned to such term in Sections
5.26(b).
“Anti-Money Laundering Measures” has the meaning assigned to such term in
Section 5.26(b).
“Anti-Terrorism Laws” has the meaning assigned to such term in Section 5.26(a).
“Applicable Maturity Date” means, with respect to the Ten Project Loans, the Ten
Project Loans Maturity Date, and, with respect to the Six Project Loan, the Six
Project Loan Maturity Date.
“Approved Bank Account” shall mean an account maintained at a bank reasonably
approved by Agent, as to which account, Borrowers, said bank and Agent shall
have entered into an agreement in form and substance reasonably acceptable to
Agent to ensure Agent that Agent has “control” of such account as such term is
defined in the Uniform Commercial Code as in effect in the applicable state and
as to a Borrower’s right, title and interest in such amounts in such account
Agent has a perfected first security interest (all costs and expenses of
negotiating, documenting and maintaining such bank account, agreement and
perfected security interest shall be paid for by Borrowers).
“Assignment Agreement” has the meaning assigned to such term in
Section 2.5(a)(ii).
“Assignment of Leases and Rents” has the meaning assigned to such term in
Schedule 2.1.
“ASTM” means the American Society for Testing and Materials.
“Bankruptcy Party” has the meaning assigned to such term in Section 8.7.
“Base Rate” means, at any time, a rate per annum equal to the sum of (a) the
higher of (i) the rate last quoted by The Wall Street Journal as the “base rate
on corporate loans posted by at least 75% of the nation’s largest banks” in the
United States or, if The Wall Street Journal ceases to quote such rate, the
highest per annum interest rate published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the
“bank prime loan” rate or, if such rate is not longer quoted therein, any
similar rate quoted therein (as determined by Lender) or any similar release by
the Federal Reserve Board (as determined by Lender) and (ii) the sum of 0.5% per
annum and the Federal Funds Rate, plus (b) one percent (1%).
“Borrower” and “Borrowers” have the meaning assigned to such terms in the
introductory paragraph of this Agreement.

 

2

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“Borrower Anti-Terrorism Policies” has the meaning assigned to such term in
Section 7.20(c).
“Borrowers’ Equity” has the meaning assigned to such term in Schedule 2.1.
“Business Associate Agreement” has the meaning assigned to such term in
Schedule 2.1.
“Business Day” means a day other than a Saturday, a Sunday, or a legal holiday
on which national banks located in the State of New York or Illinois are not
open for general banking business.
“BSA” has the meaning assigned to such term in Section 5.26(b).
“Collateral” has the meaning assigned to such term in Section 2.4.
“Collateral Assignments” has the meaning assigned to such term in Schedule 2.1.
“Commencement Date” has the meaning assigned to such term in Section 7.17.
“Compliance Certificate” means the compliance certificate in the form of
Schedule 6.1 attached hereto.
“CON” has the meaning assigned to such term in Section 8.1(c).
“Control” or “controls”: When used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contractor or otherwise; and the terms “Controlling”
and “Controlled” have the meanings correlative to the foregoing.
“December 2006 Funding” has the meaning assigned to such term in Section 2.1(b).
“December 2006 Funding Interest Rate” has the meaning assigned to such term in
Section 2.2.
“Debt” means, for any Person, without duplication, the aggregate of: (a) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (b) all unfunded amounts under a loan agreement, letter
of credit, or other credit facility for which such Person would be liable, if
such amounts were advanced under the credit facility, (c) all amounts required
to be paid by such Person as a guaranteed payment to partners or a preferred or
special dividend, including any mandatory redemption of shares or interests,
(d) all indebtedness guaranteed by such Person, directly or indirectly, (e) all
obligations under leases that constitute capital leases for which such Person is
liable, and (f) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss.

 

3

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

 

“Debt Service” means the aggregate interest, principal, and other payments due
under the Loans, and on any other outstanding permitted Debt relating to the
Projects (if any) for the period of time for which calculated.
“Debt Service Coverage Ratio” means the ratio of (i) Net Operating Income
(calculated in accordance with Schedule II attached hereto) from the Projects
for a particular period, to (ii) payments of interest due on the Loans (which
shall be assumed to be at the greater of actual interest or seven percent (7%)
per year) for the same period plus amortization due during the same period.
“Default Rate” means the lesser of (a) the maximum rate of interest allowed by
applicable law, and (b) five percent (5%) per annum in excess of the applicable
Interest Rate.
“Defeasance” has the meaning assigned to such term in Section 2.5(a)(ii).
“Defeasance Deposit” shall mean an amount equal to the Yield Maintenance Amount,
any costs and expenses incurred or to be incurred in the purchase of U.S.
Obligations necessary to meet the Scheduled Defeasance Payments (including
Agent’s estimate of administrative expenses and applicable federal, state or
local income taxes associated with or to be incurred by the Successor Ten
Project Borrower during the remaining term of, and applicable to, the Ten
Project Loan) and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Ten Project Note
or otherwise required to accomplish the agreements set forth in
Section 2.5(a)(ii) of this Agreement, all as reasonably estimated by Agent.
“Defeasance Release Date” has the meaning assigned to such term in
Section 2.5(a)(ii).
“Designated Person” has the meaning assigned to such term in Section 5.26(a).
“DOJ Investigation” means that certain U.S. Department of Justice (“DOJ”)
investigation pursuant to which on December 17,2008, representatives of the DOJ
served search warrants on Guarantor’s service center and six (6) skilled nursing
facilities in Southern California, none of which is a Project and pursuant to
which on May 4, 2009, a second subpoena was served requesting additional patient
records on the same patients covered by the December 17, 2008 search warrants,
as such DOJ investigation is more specifically described in the 10Q of the
Guarantor for the period ended June 30, 2009 which was filed on August 6, 2009
and as such DOJ investigation stands on the Restatement Date.
“Environmental Indemnity” has the meaning assigned to such term in Schedule 2.1.
“Event of Default” has the meaning assigned to such term in Article IX.
“Executive Order” has the meaning assigned to such term in Section 5.26(a).

 

4

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“Exit Fee” means, a $400,000 fee due on the Restatement Date but payable on the
Repayment Date, whether by acceleration, prepayment, at maturity or otherwise.
“Extension Notice” has the meaning assigned to such term in Section 2.4.
“Expenses” has the meaning assigned to such term in Schedule II.
“Federal Bankruptcy Code” shall mean Chapter 11 of Title II of the United States
Code (11 U.S.C. § 101, et seq.), as amended.
“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 United States
Reserve System arranged by federal funds brokers, as determined by Lender in its
sole discretion.
“FIRREA” has the meaning assigned to such term in Schedule 2.1.
“GECC” has the meaning assigned to such term in the introductory paragraph of
this Agreement.
“Governmental Approvals” means, collectively, all consents, licenses and permits
and all other authorizations or approvals required from any Governmental
Authority to operate the Projects.
“Governmental Authority” means any federal, state, county or municipal
government or political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body (including, without limitation, the State
Regulator), or any court, administrative tribunal, or public body, including but
not limited to all such authorities relating to the quality and adequacy of
medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies, additions to facilities and services and fee
splitting.
“Guarantor” means The Ensign Group, Inc., the sole and managing member of each
Borrower.
“Hazardous Materials” has the definition given to such term in the Environmental
Indemnity.
“Healthcare Laws” has the meaning assigned to such term in Section 8.1(a).
“Hedge Agreement” means any interest rate hedge agreement now or hereafter
entered into by Borrower pursuant to Section 2.7 of this Agreement, as the same
may be renewed, extended, amended or replaced from time to time.
“HIPAA” has the meaning assigned to such term in Section 8.1(a).
“HIPAA Compliance Plan” has the meaning assigned to such term in Section 8.1(a).

 

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“HIPAA Compliance Date” has the meaning assigned to such term in Section 8.1(a).
“Indebtedness” means all payment obligations of each Borrower and Guarantor to
Agent and Lender under the Loans or any of the Loan Documents.
“Insurance Impound” has the meaning assigned to such term in Section 3.4.
“Interest Period” means each period commencing on the first day of a calendar
month and ending on the last day of the month that is one month thereafter;
provided, however, no Interest Period shall end after the Applicable Maturity
Date.
“Interest Rates” has the meaning assigned to such term in Article II.
“Investor Anti-Terrorism Policies” has the meaning assigned to such term in
Section 7.20(c).
“June 2006 First Funding” has the meaning assigned to such term in
Section 2.1(b).
“June 2006 First Funding Interest Rate” has the meaning assigned to such term in
Section 2.2.
“June 2006 Second Funding” has the meaning assigned to such term in
Section 2.1(b).
“June 2006 Second Funding Interest Rate” has the meaning assigned to such term
in Section 2.2.
“June 2006 Third Funding” has the meaning assigned to such term in
Section 2.1(b).
“June 2006 Third Funding Interest Rate” has the meaning assigned to such term in
Section 2.2.
“Laws” means, collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations and guidances and judicial opinions or
presidential authority in the applicable jurisdiction, including but not limited
to quality and safety standards, accreditation standards and requirements of the
State Regulator, each as it may be amended from time to time.
“Leases” has the meaning assigned to such term in Schedule 2.1.
“LIBOR” means, with respect to any Interest Period, the offered rate, as
determined by Lender, for deposits in U.S. Dollars for a ninety (90) day period
appearing on the Reuters Screen LIBOR01 page as of 11:00 a.m. (London Time) on
the second full LIBOR Business Day next preceding the first day of each Interest
Period. In the event that such rate does not appear on the Reuters Screen
LIBOR01 page at such time, the “LIBOR” shall be determined by reference to such
other comparable publicly available service for displaying the offered rate for
deposit in U.S. Dollars in the London interbank market as may be selected by
Lender in its reasonable discretion and, in the absence of availability, such
other method to determine such offered rate as may be selected by Lender in its
reasonable discretion.

 

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“LIBOR Breakage Amount” means an amount, as reasonably calculated by Lender,
equal to the amount of any losses, expenses, liabilities (including, without
limitation, any loss (including interest paid) and lost opportunity cost in
connection with the re-employment of such funds) that Lender may sustain as a
result of any payment of the Loans on any day that is not the last day of the
LIBOR Period applicable thereto (regardless of the source of such prepayment and
whether voluntary, by acceleration or otherwise).
“LIBOR Business Day” means a Business Day on which banks in the City of London
are generally open for interbank or foreign exchange transactions.
“LIBOR Rate” means, the greater of (a) two percent (2%) and (b) with respect to
any Interest Period, an interest rate per annum determined as the ratio of
(i) LIBOR to (ii) the difference between the number one and the Reserve
Requirements with respect to such Interest Period. If at any time the remaining
term of the Loans, as extended, is less than a full Interest Period, then the
LIBOR Rate during such remaining term shall be equal to the rate reasonably
determined by Lender in a manner consistent with the foregoing with respect to
such remaining term.
“Licenses” has the meaning assigned to such term in Section 8.1(a).
“Lien” means any interest, or claim thereof, in the Projects securing an
obligation owed to, or a claim by, any Person other than the owner of the
Projects, whether such interest is based on common law, statute or contract,
including the lien or security interest arising from a deed of trust, mortgage,
assignment, encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
“Lien” shall include reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting the Projects.
“Lists” has the meaning assigned to such term in Section 5.26(a).
“Loan” means the June 2006 First Funding, June 2006 Second Funding, June 2006
Third Funding, December Funding, Six Project Loan, and all other amounts payable
under this Agreement and the other Loan Documents.
“Loan Documents” means: (a) this Agreement, (b) the Notes, (c) the Guaranty,
(d) any letter of credit provided to Agent in connection with the Loans, (e) the
Security Documents, (f) the Environmental Indemnity Agreement, (g) the
Subordination Agreements, (h) the Assignment of Leases and Rents, (i) the
Business Associate Agreement, (j) the Uniform Commercial Code financing
statements, and (k) all other documents evidencing, securing, governing or
otherwise pertaining to the Loans, and all amendments, modifications, renewals,
substitutions and replacements of any of the foregoing.
“Loan Parties” means Guarantor and Master Tenants.

 

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“Make Whole Breakage Amount” means, as calculated by Agent, the greater of
(i) one percent (1%) of the amount being prepaid and (ii) the excess, if any, of
(A) the sum of the net present values of each scheduled interest and principal
payment of the Ten Project Loan, including the payment of the balance of the Ten
Project Loan (together with accrued interest thereon) on the then scheduled Ten
Project Maturity Date, discounted to the date of the prepayment at an interest
rate equal to the Replacement Treasury Yield plus fifty (50) basis points, over
(B) the amount of principal being prepaid.
“Master Leases” mean those certain leases between each Borrower as landlord and
each Master Tenant, as tenant.
“Master Tenants” means Radiant Hills Health Associates LLC, Glendale Healthcare
Associates LLC, 24th Street Healthcare Associates LLC, Highland Healthcare LLC,
Manor Park Healthcare LLC, Presidio Health Associates LLC, Ensign Sabino LLC,
Ensign Montgomery LLC, Ensign San Dimas LLC (f/k/a Ensign Arden LLC), Downey
Community Care LLC and Bell Villa Care Associates LLC, each a Nevada limited
liability company, and Upland Community Care, Inc., Camarillo Community Care,
Inc., Richmond Senior Services, Inc., Northern Oaks Healthcare Inc. and Pomerado
Ranch Healthcare, Inc., each a Nevada corporation.
“Material Adverse Change” or “material adverse change” means, in Agent’s
reasonable discretion, the business prospects, operations or financial condition
of a Person or property has changed in a manner which could impair the value of
Agent’s and Lender’s security for the Loans, prevent timely repayment of the
Loans or otherwise prevent the applicable Person, Guarantor or any Borrower from
timely performing any of its material obligations under the Loan Documents.
“Medicaid” shall mean Title XIX of the Social Security Act, which was enacted in
1965 to provide a cooperative federal-state program for low income and medically
indigent persons, which is partially funded by the federal government and
administered by the states.
“Medicare” shall mean Title XVIII of the Social Security Act, which was enacted
in 1965 to provide a federally funded and administered health program for the
aged and certain disabled persons.
“Money Market Rate” has the meaning assigned to such term in Section 3.4.
“Monthly Reports” has the meaning assigned to such term in Section 6.1(a).
“Net Operating Income” means, as reasonably determined by Agent, earnings from
the Projects before interest, taxes, amortization, depreciation, rent and
management fees determined in accordance with generally accepted accounting
principles consistently applied for the trailing twelve (12) month period
adjusted for (i) a management fee of five percent (5%) of operating revenue,
(ii) a replacement reserve of $300/bed, (iii) maximum occupancy of 95% and
(iv) excess bad debt expenses, if any, up to a maximum amount of $75,000.
“Notes” has the meaning assigned to such term in Recital A.

 

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“Obligations” has the meaning assigned to such term in Section 11.28.
“OFAC” has the meaning assigned to such term in Section 5.26(a).
“OFAC Laws and Regulations” has the meaning assigned to such term in
Section 5.26(a).
“Other Lists” has the meaning assigned to such term in Section 5.26(a).
“Patriot Act” means the USA Patriot Act of 2001, Pub. L. No. 107-56.
“Payment Date” means the first Business Day of each calendar month and each
Applicable Maturity Date.
“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, limited partnership, limited liability, partnership, limited
partnership, unincorporated organization, real estate investment trust,
government or any agency or political subdivision thereof, or any other form of
entity.
“Potential Default” means the occurrence of any event or condition which, with
the giving of notice, the passage of time, or both, would constitute an Event of
Default.
“Project” and “Projects” have the meanings assigned to such terms in Recital B.
“Project Yield” means the ratio, expressed as a percentage, of (a) annualized
Net Operating Income from the Projects, as determined by Agent for a particular
period, to (b) the outstanding principal balance of the Loans.
“Property” and “Properties” have the meanings assigned to such terms in Recital
B.
“Proposal Letter” means that certain letter dated as of August 11, 2009 by GE
Healthcare Financial Services, Inc. and acknowledged and agreed to by the
Borrowers.
“Release Date” has the meaning assigned to such term in Section 2.11.
“Repayment Date” means the date upon which the entire principal balance of the
Loans and all interest thereon and other sums due pursuant to the Loan
Documents, including, without limitation, the Exit Fee, in any, have been paid
in full.
“Replacement Deposit” has the meaning assigned to such term in Section 3.6.
“Replacement Reserve” has the meaning assigned to such term in Section 3.6.

 

9

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“Replacement Treasury Yield” shall mean the rate of interest equal to the yield
to maturity of the most recently issued U.S. Treasury security as quoted in the
Wall Street Journal on the prepayment date. If the remaining term is less than
one year, the Replacement Treasury Yield will equal the yield for 1-Year
Treasury’s. If the remaining term is 1-Year, 2- Year, etc., then the Replacement
Treasury Yield will equal the yield for the Treasury’s with a maturity equaling
the remaining term. If the remaining term is longer than one year but does not
equal one of the maturities being quoted, then the Replacement Treasury Yield
will equal the yield for Treasury’s with a maturity closest to but not exceeding
the remaining term. If the Wall Street Journal (i) quotes more than one such
rate, the highest of such quotes shall apply, or (ii) ceases to publish such
quotes, the U.S. Treasury security shall be determined from such financial
reporting service or source as Agent shall determine.
“Residential Units” shall mean, collectively, (a) each bed, Alzheimer’s unit
and/or assisted living unit authorized and operational under the Licenses and
(b) each independent living unit comprising the Projects.
“Restatement Date” shall be the date on which the Six Project Loan is funded.
“Scheduled Defeasance Date” has the meaning assigned to such term in Section
2.5(a)(ii).
“Security Agreement” has the meaning assigned to such term in
Section 2.5(a)(ii).
“Security Deposits” means any security deposit from any tenant or occupant of
any Project collected or held by any Borrower or Master Tenant.
“Security Documents” means those certain first priority Deeds of Trust, Security
Agreements and Fixture Filing, (or documents of similar title) executed by
Borrowers for the benefit of Agent, encumbering the Projects.
“Single Purpose Entity” means a Person (other than an individual, a government,
or any agency or political subdivision thereof), which exists solely for the
purpose of owning and operating a Project, conducts business only in its own
name, does not engage in any business or have any assets unrelated to such
Project, does not have any Debt other than as permitted by this Agreement, has
its own separate books, records, and accounts (with no commingling of assets),
holds itself out as being a Person separate and apart from any other Person, and
observes corporate, partnership or limited liability company, as the case may
be, formalities independent of any other Person, and which otherwise constitutes
a single purpose entity as determined by Agent. Without limiting the foregoing,
a Single Purpose Entity (i) does not hold, directly or indirectly, any ownership
interest (legal or equitable) in any real or personal property other than the
interest which it owns in its respective Project and (ii) is not a shareholder
or partner or member of any other entity.
“Site Assessment” means an environmental engineering report for each Project
prepared at Borrowers’ expense by an engineer engaged by Borrowers, or Agent on
behalf of Borrowers, and approved by Agent, and in a manner reasonably
satisfactory to Agent, based upon an investigation relating to and making
appropriate inquiries concerning the existence of Hazardous Materials on or
about each Project, and the past or present discharge, disposal, release or
escape of any such substances, all consistent with ASTM Standard E1527-05 (or
any successor thereto published by ASTM) and good customary and commercial
practice.

 

10

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“Six Project Interest Rate” has the meaning assigned to such term in
Section 2.2.
“Six Project Loan” has the meaning assigned to such term in Recital B.
“Six Project Loan Project” and “Six Project Loan Projects” have the meanings
assigned to such terms in Recital B.
“Six Project Loan Maturity Date” means the earlier of (a) November 6, 2014, or
(b) any earlier date on which the entire Loan is required to be paid in full,
whether at maturity, by acceleration or otherwise, under this Agreement or any
of the other Loan Documents, or any later date to which the same may be extended
in accordance with the terms of the Loan Agreement.
“SND List” has the meaning assigned to such term in Section 5.26(a).
“Social Security Act” shall mean 42 U.S.C. 401 et seq., as enacted in 1935, and
amended, restated or otherwise supplemented thereafter from time to time and all
rules and regulations promulgated thereunder.
“Specially Designated National and Blocked Persons” means those Persons that
have been designated by executive order or by the sanction regulations of OFAC
as Persons with whom U.S. Persons may not transact business or must limit their
interactions to types approved by OFAC.
“State Regulator” has the meaning assigned to such term in Section 7.18(a).
“Subordination Agreements” has the meaning assigned to such term in
Schedule 2.1.
“Successor Ten Project Borrower” has the meaning assigned to such term in
Section 2.5(a)(ii)
“Ten Project Borrower” has the meaning assigned to such term in
Section 2.5(a)(ii).
“SWAP Termination Fee” shall mean the amount that Lender reasonably determines
in good faith to be its total losses and costs in connection with a termination
of the hedging arrangements entered into by Lender in connection with the
funding of the Loans and cost of funds rate lock in respect of any such hedging
arrangements, including any loss of bargain, cost of funding and loss or cost
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position.
“Tax Impound” has the meaning assigned to such term in Section 3.5.
“Taxes” has the meaning assigned to such term in Section 3.5.
“Ten Project Loans” has the meaning assigned to such term in Section 2.1(b).

 

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“Ten Project Loans Maturity Date” means the earlier of (a) June 29, 2016, or
(b) any earlier date on which the entire Loan is required to be paid in full,
whether at maturity, by acceleration or otherwise, under this Agreement or any
of the other Loan Documents, or any later date to which the same may be extended
in accordance with the terms of the Loan Agreement.
“Ten Project Loan Project” and “Ten Project Loan Projects” have the meanings
assigned to such terms in Recital B.
“Ten Project Loan Release Project” and “Ten Project Loan Release Projects” have
the meanings assigned to such terms in Section 2.11(a).
“Tenant” means any tenant or occupant of a Project under a Lease.
“Third Party Payor Programs” has the meaning assigned to such term in
Section 8.2(f).
“Title Policies” has the meaning assigned to such term in Schedule 2.1.
“U.S. Obligations” shall mean “Government Securities” as defined in the REMIC
regulations, specifically, Treasury Regulation § 1.860G 2(a)(8)(i), as chosen by
Agent.
“U.S. Person” means any United States citizen, any entity organized under the
laws of the United States or its constituent states or territories, or any
entity, regardless of where organized, having its principal place of business
within the United States or any of its territories.
“U.S. Publicly-Traded Entity” has the meaning assigned to such term in Section
5.26(a).
“Violation” has the meaning assigned to such term in Section 5.24.
“Yield Maintenance Amount” shall mean the amount estimated by Agent which will
be sufficient to purchase U.S. Obligations providing the required Scheduled
Defeasance Payments.

 

12

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SCHEDULE 6.1
Compliance Certificate
Date:                     ,           
General Electric Capital Corporation
2 Bethesda Metro Center, 5th Floor
Bethesda, Maryland 20814
Attention: Ensign Portfolio Manager
Re: Compliance Certificate — Loan No. 07-0004261
Ladies and Gentlemen:
This certificate is given in accordance with Section 6.1 of the Fourth Amended
and Restated Loan Agreement dated as of November 10, 2009 (as amended from time
to time, the “Loan Agreement”), among Valley Health Holdings LLC, Sky Holdings
AZ LLC, Terrace Holdings AZ LLC, Ensign Highland LLC, Plaza Health Holdings LLC,
Rillito Holdings LLC, Meadowbrook Health Associates LLC, Mountainview
Communitycare LLC, Cedar Avenue Holdings LLC, Granada Investments LLC, Golfview
Holdings LLC, Arrow Tree Health Holdings LLC, Trousdale Health Holdings LLC,
Ensign Bellflower LLC, Anson Health Holdings LLC and Hillendahl Health Holdings
LLC, each a Nevada limited liability company (each a “Borrower” and
collectively, the “Borrowers”) and General Electric Capital Corporation
(“Lender”). Capitalized terms used but not otherwise defined herein shall have
the meanings assigned to them in the Loan Agreement.
I hereby certify that:

  1.  
I am an officer of [the general partner/managing member of] each Borrower, and
    2.  
Based on my review of the financial statements delivered with this certificate
in accordance with the Section 6.1 of the Loan Agreement, such (a) financial
statements fairly present the financial condition of the Borrowers as the dates
of such financial statements in all material respects and (b) have been prepared
in accordance with Accounting Standards consistently applied. There have been no
material changes in accounting policies or financial reporting practices of any
Loan Party since                     , 200    [insert date of last year-end
financial statement provided by Borrowers], or, if any such change has occurred,
I have attached a description of such changes.
    3.  
I have reviewed the terms of the Loan Agreement and have made, or caused to be
made under my supervision, a review in reasonable detail of the transactions and
condition of the Borrowers during the accounting period covered by such
financial statements.

 

 

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

 

  4.  
Such review has not disclosed the existence during or at the end of such
accounting period, and I have no knowledge whether arising out of such review or
otherwise, of the existence during or at the end of such accounting period or as
of the date hereof, of any condition or event that constitutes a Potential
Default or an Event of Default, or if any Potential Default or Event or Default
existed or exists, attached as Schedule 1 hereto is a description of the nature
and period of existence thereof and what action Borrowers have taken or propose
to take with respect thereto.
    5.  
Guarantor is in compliance with the covenants contained in the Guaranty
constituting a part of the Loan Documents, except as set forth in Schedule 4
attached hereto.
    6.  
Except as noted on Schedule 2 attached hereto, the undersigned has no knowledge
of any federal or state tax liens having been filed against any Borrower,
Guarantor, any Master Tenant or all or any portion of the Project.
    7.  
Except as noted on Schedule 2 attached hereto, the undersigned has no knowledge
of any failure of any Borrower, Guarantor or any Master Tenant to make required
payments of withholding or other tax obligations of such Borrower, Guarantor or
Master Tenant during the accounting period to which the attached statements
pertain or any subsequent period.
    8.  
With respect to each of the Projects:

  (a)  
there are no current, pending or threatened proceedings relating to a
condemnation or other public taking of the Project;
    (b)  
the Project has suffered no casualty or other damage or loss of the type
typically covered by hazard insurance;
    (c)  
all insurance required to be maintained by Borrowers, Guarantor or any Master
Tenant under the Loan Agreement is in force and premiums therefor have been paid
as and when due and Borrowers, Guarantor or any Master Tenant have made no
claims thereunder; and
    (d)  
the undersigned has no knowledge of any current, pending or threatened changes
to the zoning classification or permitted uses of the Project.

  9.  
All of the other covenants (i.e., those not specifically described in the prior
paragraphs above) set forth in the Loan Agreement and Security Documents are
fully performed and the representations and warranties set forth in the Loan
Agreement and Security Documents are and remain true, correct, and complete
(except as set forth on Schedule 4 attached hereto).

 

2

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  10.  
Except as set forth in the Loan Agreement or on Schedule 5 attached hereto, no
Borrower has received (a) any notice of material default under other obligations
relating to the Project or otherwise material to such Borrower’s business,
including any notices of violations of any laws, regulations, codes or
ordinances; (b) any notice of threatened or pending legal, judicial or
regulatory proceedings, including any dispute between any Borrower and any
governmental authority, materially adversely affecting any Borrower, any Loan
Party or any Project; (c) inquiries, investigations or proceedings concerning
the business affairs, practices, licensing or reimbursement entitlements of any
Borrower, Guarantor or any Master Tenant; (d) any notice of default or
termination given or made to any Master Tenant by any Borrower or received from
any Master Tenant; and (e) any notice of default or termination under any
license or permit necessary for the operation of any Project in the manner
required by the Loan Agreement. If any such notices have been received, they are
listed on Schedule 5 and Borrowers have provided (or are providing concurrently
with this Certificate) Lender with copies of such notices referred to herein.
    11.  
The calculations set forth on Schedule 6 have been made to determine Borrowers’
compliance with Section 9.15 of the Loan Agreement, which calculations are true,
correct, and complete.

[Remainder of Page Intentionally Left Blank]

 

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The forgoing certification and computations are made as of                     ,
20      and delivered this            day of                     , 20     .

            Sincerely,

[Borrower]
      By:           Name:           Its:          [Borrower]
      By:           Name:           Its:     

 

 

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Schedule 1
Description of Defaults or Potential
Defaults and Cures Being Undertaken

 

Schedule 1

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

 

Schedule 2
Tax Liens or Withholding Obligations

 

Schedule 2

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

 

Schedule 3
List of all Deposit Accounts

 

Schedule 3

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

 

Schedule 4
Exceptions to Covenant Compliance

 

Schedule 4 

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Schedule 5
Schedule of Notices of Default, Litigation, etc.

 

Schedule 6 — Page 6 

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Schedule 6
Financial Covenant Analysis
As of:                           , 20     

     
A. NET OPERATING INCOME1 (“NOI”):
   
 
   
(1) Name of Borrower:
  (1)                     
     (a) Calculation Period:
       (a) Trailing  _____  months
     (b) Revenue:
       (b) $                     
     (c) Less Expenses:
(including real estate tax, management fee equal to 5% of operating income
regardless of whether paid) & replacement reserve of $300 per Residential Unit)
       (c) $                     
     (d) Net Operating Income:
       (d) $                     
 
   
(2) Name of Borrower:
  (2)                     
     (a) Calculation Period:
       (a) Trailing  _____  months
     (b) Revenue:
       (b) $                     
     (c) Less Expenses:
(including real estate tax, management fee equal to 5% of operating income
regardless of whether paid) & replacement reserve of $300 per Residential Unit)
       (c) $                     
     (d) Net Operating Income:
       (d) $                     
 
   
(3) Aggregate NOI for all Borrowers:
  (3) $                     

 

      1  
A separate calculation of Net Operating Income for each Borrower is to be
provided.

 

 

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

 

     
B. DEBT SERVICE OF BORROWERS:
   
 
   
(1) Calculation Period:
  (1) Trailing 3 months
(2) Debt Service Calculation:
  (2)
     (a) Interest due on the Loans
       (a) $                     
     (b) Scheduled amortization of principal
       (b) $                     
     (c) Total Debt Service
       (c) $                     
(3) Debt Service Coverage Ratio (Aggregate NOI/Debt Service):
  (3)               :1.00
(4) Required minimum Debt Service Coverage pursuant to Section 9.15:
  (4)               1.80:1.00
(5) In Compliance:
  (5) o Yes     o No
 
   
C. AVERAGE OCCUPANCY RATE:
   
 
   
(1) Calculation Period:
  (1) Trailing 3 months
(2) Average Occupancy Rate for Calculation Period:
  (2)                %
     (a) Aggregate [Borrower Name]:
       (a)                %
     (b) [Borrower Name]:
       (b)                %
(3) Initial Occupancy Rate:
  (3)                %
(4) Required Minimum Occupancy Rate (_____ % of (3) above):
  (4)                %
(5) In Compliance:
  (5) o Yes o No

 

Schedule 6 — Page 2 

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D. PROJECT YIELD:
   
 
   
(1) Calculation Period:
  (2) Trailing 3 months
(2) Aggregate NOI:
  (2) $                     
(3) Outstanding principal balance of Loan:
  (3) $                     
(4) Project Yield for Calculation Period (NOI ¸ Principal Balance of Loan:
  (4) $                     
(5) Required Project Yield:
  (5) 18%
(6) In Compliance:
  (6) o Yes     o No

 

Schedule 6 — Page 3