Exhibit 10.1

SECURED LOAN AGREEMENT

for a loan in the aggregate amount of

$30,000,000.00

MADE BY AND AMONG

CHP BATESVILLE HEALTHCARE OWNER, LLC,

CHP BROADWAY HEALTHCARE OWNER, LLC,

CHP JONESBORO HEALTHCARE OWNER, LLC,

CHP MAGNOLIA HEALTHCARE OWNER, LLC,

CHP MINE CREEK HEALTHCARE OWNER, LLC,

and

CHP SEARCY HEALTHCARE OWNER, LLC,

as Borrowers,

KEYBANK NATIONAL ASSOCIATION,

as Agent,

and

The lending institutions a party hereto from time to time.

Dated as of May 31, 2013

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TABLE OF CONTENTS

 

          Page   ARTICLE 1 INCORPORATION OF RECITALS AND EXHIBITS      2   

1.1

   Incorporation of Recitals      2   

1.2

   Incorporation of Schedule Exhibits      2    ARTICLE 2 DEFINITIONS      2   

2.1

   Defined Terms      2   

2.2

   Other Definitional Provisions      11    ARTICLE 3 BORROWERS’ REPRESENTATIONS
AND WARRANTIES      11   

3.1

   Representations and Warranties      11   

3.2

   Survival of Representations and Warranties      17    ARTICLE 4 LOAN AND LOAN
DOCUMENTS      17   

4.1

   Agreement to Borrow and Lend; Lenders’ Obligation to Disburse      17   

4.2

   Loan Documents      18   

4.3

   Term of the Loan      19   

4.4

   Prepayments      19   

4.5

   Required Principal Payments      19   

4.6

   Late Charge      20    ARTICLE 5 INTEREST      20   

5.1

   Interest Rate      20   

5.2

   Interest Rate Agreement    ARTICLE 6 COSTS OF MAINTAINING LOAN      21   

6.1

   Increased Costs and Capital Adequacy      21   

6.2

   Borrower Withholding      21    ARTICLE 7 LOAN EXPENSE AND ADVANCES      22
  

7.1

   Loan and Administration Expenses      22   

7.2

   Lender’s Attorneys’ Fees and Disbursements      22   

7.3

   Time of Payment of Fees and Expenses      22   

7.4

   Expenses and Advances Secured by Loan Documents      22   

7.5

   Right of Lender to Make Advances to Cure Borrowers’ Defaults      23   

ARTICLE 8 REQUIREMENTS PRECEDENT TO THE OPENING OF THE LOAN AND ANY SUBSEQUENT
DISBURSEMENT

     23   

8.1

   Conditions Precedent to Closing and Opening of the Loan      23    ARTICLE 9
RESERVED      25    ARTICLE 10 BORROWERS’ AGREEMENTS      25   

10.1

   Borrowers further covenant and agree as follows:      25   

 

-i-

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Table of Contents

(continued)

 

          Page  

ARTICLE 11 CASUALTIES AND CONDEMNATION

     31   

11.1

  

Agent’s Election to Apply Proceeds on Indebtedness

     31   

11.2

  

Borrowers’ Obligation to Rebuild and Use of Proceeds Therefor

     31   

ARTICLE 12 ASSIGNMENTS BY BORROWERS

     32   

12.1

  

Prohibition of Assignments and Transfers by Borrowers

     32   

12.2

  

Prohibition of Transfers in Violation of ERISA

     33   

12.3

  

Successors and Assigns

     33   

ARTICLE 13 TIME OF THE ESSENCE

     33   

13.1

  

Time is of the Essence

     33   

ARTICLE 14 EVENTS OF DEFAULT

     33   

14.1

  

Events of Default

     33   

ARTICLE 15 LENDERS’ REMEDIES IN EVENT OF DEFAULT

     35   

15.1

  

Remedies Conferred Upon Lenders

     35   

ARTICLE 16 GENERAL PROVISIONS

     36   

16.1

  

Captions

     36   

16.2

  

Modification; Waiver

     36   

16.3

  

GOVERNING LAW

     36   

16.4

  

Acquiescence Not to Constitute Waiver of Lenders’ Requirements

     36   

16.5

  

Disclaimer by Lenders

     36   

16.6

  

Partial Invalidity; Severability

     36   

16.7

  

Definitions Include Amendments

     36   

16.8

  

Execution in Counterparts

     37   

16.9

  

Entire Agreement

     37   

16.10

  

Waiver of Damages

     37   

16.11

  

Claims Against Lenders

     37   

16.12

  

Jurisdiction

     37   

16.13

  

Set-Offs

     38   

16.14

  

Authorized Representative

     38   

ARTICLE 17 NOTICES

     38   

ARTICLE 18

     39   

ARTICLE 19 ASSIGNMENTS AND PARTICIPATIONS

     39   

19.1

  

Assignments and Participations

     39   

19.2

  

Several Liability

     42   

ARTICLE 20 AGENT

     42   

20.1

  

Appointment

     42   

 

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Table of Contents

(continued)

 

          Page  

20.2

  

Reliance on Agent

     42   

20.3

  

Powers

     42   

20.4

  

Disbursements

     43   

20.5

  

Distribution and Apportionment of Payments

     43   

20.6

  

Consents and Approvals

     44   

20.7

  

Agency Provisions Relating to Collateral

     46   

20.8

  

Lender Actions Against Borrower or the Collateral

     47   

20.9

  

Assignment and Participation

     47   

20.10

  

Ratable Sharing

     47   

20.11

  

General Immunity

     47   

20.12

  

No Responsibility for Loan, Recitals, etc.

     47   

20.13

  

Action on Instructions of Lenders

     48   

20.14

  

Employment of Agents and Counsel

     48   

20.15

  

Reliance on Documents; Counsel

     48   

20.16

  

Agent’s Reimbursement and Indemnification

     48   

20.17

  

Rights as a Lender

     48   

20.18

  

Lenders’ Credit Decisions

     49   

20.19

  

Notice of Events of Default

     49   

20.20

  

Successor Agent

     49   

ARTICLE 21 WAIVER OF JURY TRIAL

     49   

 

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LIST OF EXHIBITS TO LOAN AGREEMENT

 

Exhibit A-1

  

Legal Description of Batesville Land

Exhibit A-2

  

Legal Description of Broadway Land

Exhibit A-3

  

Legal Description of Jonesboro Land

Exhibit A-4

  

Legal Description of Magnolia Land

Exhibit A-5

  

Legal Description of Mine Creek Land

Exhibit A-6

  

Legal Description of Searcy Land

Exhibit B-1

  

Batesville Permitted Exceptions

Exhibit B-2

  

Broadway Permitted Exceptions

Exhibit B-3

  

Jonesboro Permitted Exceptions

Exhibit B-4

  

Magnolia Permitted Exceptions

Exhibit B-5

  

Mine Creek Permitted Exceptions

Exhibit B-6

  

Searcy Permitted Exceptions

Exhibit C

  

Title Requirements

Exhibit D

  

Survey Requirements

Exhibit E

  

Insurance Requirements

Exhibit F

  

Reserved

Exhibit G

  

Form of Covenant Compliance Certificate

Exhibit H

  

Form of Assignment and Assumption Agreement

Schedule I

  

Environmental Documents

Schedule II

  

Minimum Quarterly Rent Coverage Requirements

Schedule III

  

Immediate Repairs

 

-iv-

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SECURED LOAN AGREEMENT

THIS SECURED LOAN AGREEMENT (“Agreement”) is made as of May 31, 2013, by and
among Borrowers, KEYBANK NATIONAL ASSOCIATION, a national banking association,
its successors and/or assigns, as administrative agent (referred to in such
capacity as “Agent” in this Agreement), and the lending institutions a party
hereto from time to time (Agent, as a lender, and each such other lending
institution, and their respective successors and assigns, referred to
individually a “Lender” and collectively, as the “Lenders”).

RECITALS

A. Batesville Borrower intends to acquire fee simple title to a tract of land in
the City of Batesville, State of Arkansas, which land is legally described in
Exhibit A-1 (the “Batesville Land”). In addition, Batesville Borrower proposes
to acquire a 150-bed health care facility (the “Batesville Improvements”)
located on the Batesville Land commonly known as “Batesville Health Care Center”
(the Batesville Land and the Batesville Improvements collectively referred to
herein as the “Batesville Project”).

B. Broadway Borrower intends to acquire fee simple title to a tract of land in
the City of West Memphis, State of Arkansas, which land is legally described in
Exhibit A-2 (the “Broadway Land”). In addition, Broadway Borrower proposes to
acquire a 119-bed health care facility (the “Broadway Improvements”) located on
the Broadway Land commonly known as “Broadway Health Care Center” (the Broadway
Land and the Broadway Improvements collectively referred to herein as the
“Broadway Project”).

C. Jonesboro Borrower intends to acquire fee simple title to a tract of land in
the City of Jonesboro, State of Arkansas, which land is legally described in
Exhibit A-3 (the “Jonesboro Land”). In addition, Jonesboro Borrower proposes to
acquire a 136-bed health care facility (the “Jonesboro Improvements”) located on
the Jonesboro Land commonly known as “Jonesboro Health Care Center” (the
Jonesboro Land and the Jonesboro Improvements collectively referred to herein as
the “Jonesboro Project”).

D. Magnolia Borrower intends to acquire fee simple title to a tract of land in
the City of Magnolia, State of Arkansas, which land is legally described in
Exhibit A-4 (the “Magnolia Land”). In addition, Magnolia Borrower proposes to
acquire a 140-bed health care facility (the “Magnolia Improvements”) located on
the Magnolia Land commonly known as “Magnolia Health Care Center” (the Magnolia
Land and the Magnolia Improvements collectively referred to herein as the
“Magnolia Project”).

E. Mine Creek Borrower intends to acquire fee simple title to a tract of land in
the City of Nashville, State of Arkansas, which land is legally described in
Exhibit A-5 (the “Mine Creek Land”). In addition, Mine Creek Borrower proposes
to acquire a 78-bed health care facility (the “Mine Creek Improvements”) located
on the Mine Creek Land commonly known as “Mine Creek Health Care Center” (the
Mine Creek Land and the Mine Creek Improvements collectively referred to herein
as the “Mine Creek Project”).

F. Searcy Borrower intends to acquire fee simple title to a tract of land in the
City of Searcy, State of Arkansas, which land is legally described in
Exhibit A-6 (the “Searcy Land”). In addition, Searcy Borrower proposes to
acquire a 245-bed health care facility (the “Searcy Improvements”) located on
the Searcy Land commonly known as “Searcy Health Care Center” (the Searcy Land
and the Searcy Improvements collectively referred to herein as the “Searcy
Project”).

G. Borrowers have requested and applied to the Lenders for a loan in the amount
of up to THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) (the “Loan”) to
reimburse Borrowers for a portion of the costs for the acquisition of the
Projects and the closing costs and expenses of Borrowers in connection with the
acquisition of the Projects and the closing of the Loan, and the Lenders are
willing to make the Loan on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

 

SECURED LOAN AGREEMENT

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ARTICLE 1

INCORPORATION OF RECITALS AND EXHIBITS

1.1 Incorporation of Recitals.

The foregoing preambles and all other recitals set forth herein are made a part
hereof by this reference.

1.2 Incorporation of Schedule Exhibits.

Schedules I through III and Exhibits A through H, inclusive, attached hereto are
incorporated herein and expressly made a part hereof by this reference.

ARTICLE 2

DEFINITIONS

2.1 Defined Terms.

The following terms as used herein shall have the following meanings:

Adjusted Base Rate: An interest rate per annum equal to the sum of (a) the Base
Rate, plus (b) the Applicable Margin. Any change in the Adjusted Base Rate shall
be effective immediately from and after a change in the Adjusted Base Rate (or
the Federal Funds Effective Rate, as applicable).

Adjusted LIBOR Rate: For any LIBOR Rate Interest Period, an interest rate per
annum equal to the sum of (i) the rate obtained by dividing (1) the LIBOR Rate
for such LIBOR Rate Interest Period by (2) a percentage equal to one hundred
percent (100%) minus the Reserve Percentage for such LIBOR Rate Interest Period,
and (ii) the Applicable Margin.

Affiliate: With respect to a specified person or entity, any individual,
partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with such person or entity, including, without limitation, any general
or limited partnership in which such person or entity is a partner.

Agreement: This Secured Loan Agreement.

Applicable Margin: Four and one-quarter percent (4.25%).

Applicable Rate: As such term is defined in Section 5.1(a).

Appraisal: A MAI certified appraisal of the Projects performed in accordance
with FIRREA and Agent’s appraisal requirements by an appraiser selected and
retained by Agent.

Assignments of Rents: One or more assignments of leases and rents made by the
Borrowers in favor of Agent for the benefit of the Lenders assigning all of
Borrowers’ respective interest in and to its Operating Lease, all Leases,
subleases and other agreements relating to the use and occupancy of all or any
portion of the Projects, and all present and future Leases, rents, issues and
profits therefrom, as the same may be hereafter amended, restated, supplemented
or otherwise modified pursuant to the terms thereof.

Authorized Representative: As such term is defined in Section 16.14.

Available Beds: 780. For purposes of the calculations set forth herein, this
number shall not be changed without Agent’s prior written consent.

Bankruptcy Code: As such term is defined in Section 14.1(d).

 

SECURED LOAN AGREEMENT

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Base Rate: For any day, a fluctuating interest rate per annum as shall be in
effect from time to time which rate per annum shall at all times be equal to the
greatest of:

 

  (i)

the rate of interest established by Agent, from time to time, as its “prime
rate,” whether or not publicly announced, which interest rate may or may not be
the lowest rate charged by it for commercial loans or other extensions of
credit;

 

  (ii)

the Federal Funds Effective Rate in effect from time to time, determined one
Business Day in arrears, plus 1/2 of 1% per annum; and

 

  (iii)

the Daily LIBOR Rate.

Batesville Borrower: CHP Batesville Healthcare Owner, LLC, a Delaware limited
liability company.

Batesville Mortgage: As such term is defined in Section 4.2(b).

Batesville Operating Lease: That certain Lease Agreement of even date herewith
between Batesville Borrower and Batesville Operator.

Batesville Operator: Batesville Health and Rehab, LLC, an Arkansas limited
liability company.

Batesville Permitted Exceptions: Shall mean (i) as of the date hereof, those
matters listed on Exhibit B-1 hereto to which title to the Batesville Project
may be subject at the Loan Opening, and (ii) at all times thereafter, (a) along
with the liens and security interests created by the Batesville Mortgage or
other Loan Documents. statutory liens for ad valorem taxes, standby fees and
other governmental charges which are not yet delinquent at the time in question
or are being contested in accordance with the requirements of the Loan
Documents; (b) rights of tenants under Leases or residency agreements; (c) other
liens and security interests (if any) in favor of Agent for the benefit of the
Lenders or otherwise approved by Agent; (d) mechanics’ liens being contested in
accordance with the requirements of the Loan Documents, and (e) such other title
exceptions as Agent may reasonably approve in writing.

Borrowers: Batesville Borrower, Broadway Borrower, Jonesboro Borrower, Magnolia
Borrower, Mine Creek Borrower, and Searcy Borrower, jointly and severally, as
applicable.

Breakage Costs: Collectively, (a) the cost to Lenders of re-employing funds
bearing interest at an Adjusted LIBOR Rate, incurred (or expected to be
incurred) in connection with (i) any payment of any portion of a Loan bearing
interest at an Adjusted LIBOR Rate prior to the termination of any applicable
LIBOR Rate Interest Period, or (ii) the conversion of an Adjusted LIBOR Rate to
any other applicable interest rate on a date other than the last day of the
relevant interest period, and (b) any amounts payable by a Borrower under any
Interest Rate Agreement in connection with termination of such Agreement.

Broadway Borrower: CHP Broadway Healthcare Owner, LLC, a Delaware limited
liability company.

Broadway Operating Lease: That certain Lease Agreement of even date herewith
between Broadway Borrower and Broadway Operator.

Broadway Operator: Broadway Health and Rehab, LLC, an Arkansas limited liability
company.

Broadway Mortgage: As such term is defined in Section 4.2(c).

Broadway Permitted Exceptions: Shall mean (i) as of the date hereof, those
matters listed on Exhibit B-2 hereto to which title to the Broadway Project may
be subject at the Loan Opening, and (ii) at all times thereafter, (a) along with
the liens and security interests created by the Broadway Mortgage or other Loan
Documents. statutory liens for ad valorem taxes, standby fees and other
governmental charges which are not yet

 

SECURED LOAN AGREEMENT

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delinquent at the time in question or are being contested in accordance with the
requirements of the Loan Documents; (b) rights of tenants under Leases or
residency agreements; (c) other liens and security interests (if any) in favor
of Agent for the benefit of the Lenders or otherwise approved by Agent;
(d) mechanics’ liens being contested in accordance with the requirements of the
Loan Documents, and (e) such other title exceptions as Agent may reasonably
approve in writing.

Business Day: A day of the year on which banks are not required or authorized to
close in Brooklyn, Ohio.

Buyback Project(s): Shall refer, individually, or collectively, as applicable,
to the Batesville Project, the Mine Creek Project and the Searcy Project.

Change of Control: Shall mean an event or series of events by which:

 

  (i)

Guarantor fails to own 100% of the indirect ownership of Borrowers;

 

  (ii)

any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its capacity
as trustee, agent or other fiduciary or administrator of any such plan) becomes
the “beneficial owner” (as defined in Rule 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all equity interests that such person or group has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time (such right, an “option right”)), directly or indirectly, of
30% or more of the equity interests of Guarantor entitled to vote for members of
the board of directors or equivalent governing body of Guarantor on a
fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right); provided
that, notwithstanding the above, unexercised warrants with respect to equity
interests of Guarantor shall not be deemed to be ownership of equity interests
of Guarantor unless and until such warrants are exercised; or

 

  (iii)

during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of Guarantor cease to be
composed of individuals (a) who were members of that board or equivalent
governing body on the first day of such period, (b) whose election or nomination
to that board or equivalent governing body was approved by individuals referred
to in clause (a) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body or (c) whose
election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (a) and (b) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body (excluding, in the case of both clause (b) and clause
(c), any individual whose initial nomination for, or assumption of office as, a
member of that board or equivalent governing body occurs as a result of an
actual or threatened solicitation of proxies or consents for the election or
removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors);

 

  (iv)

after giving effect to the applicable event or events, (a) the total equity,
direct or indirect, in any Borrower or Guarantor held by a particular person
exceeds twenty-four percent (24%) of the total equity, direct or indirect, in
Guarantor or such Borrower, as the case may be, and (b) such person did not hold
in excess of twenty-four percent (24%) of the total equity, direct or indirect,
in Guarantor or any Borrower as of the date hereof; or

 

  (v)

CNL and its affiliates no longer serve as manager, advisor, or sponsor of the
Borrowers or Guarantor.

 

SECURED LOAN AGREEMENT

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CHP Holding: CHP Senior Living Net Lease Holding, LLC, a Delaware limited
liability company.

CNL: CNL Financial Group, Inc., a Delaware corporation.

Commitment: The maximum amount each Lender has agreed to lend to Borrowers as
part of the Loan (which amounts are set forth below the signature line of each
Lender), subject to modification by each Assignment and Assumption.

Control: As such term is used with respect to any person or entity, including
the correlative meanings of the terms “controlled by” and “under common control
with”, shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of such person or entity,
whether through the ownership of voting securities, by contract or otherwise.

Daily LIBOR Rate: The rate of interest calculated by Agent on a daily basis
equal to the one month rate of interest (rounded upward to the next highest
1/16th of 1%) of the one month London interbank offered rate for deposits in
U.S. Dollars at approximately 11:00 a.m. (London time) on the second preceding
LIBOR Business Day; as determined and adjusted from time to time in Agent’s sole
discretion.

Debt Service Coverage: The ratio of (a) the Lease Income for the applicable
period, to (b) the Pro Forma Debt Service.

Default or default: Any event, circumstance or condition which, if it were to
continue uncured, would, with notice or lapse of time or both, constitute an
Event of Default hereunder.

Default Rate: A rate per annum equal to 5% (500 basis points) over the Adjusted
Base Rate.

Eligible Assignee: (i) Any Lender; (ii) any commercial bank, savings bank,
savings and loan association or similar financial institution which (a) has
total assets of Five Billion Dollars ($5,000,000,000) or more, (b) is “well
capitalized” within the meaning of such term under the regulations promulgated
under the auspices of the Federal Deposit Insurance Corporation Improvement Act
of 1991, (c) in the sole judgment of the Agent, is engaged in the business of
lending money and extending credit, and buying loans or participations in loans
under credit facilities substantially similar to those extended under this
Agreement, and (d) in the sole judgment of the Agent, is operationally and
procedurally able to meet the obligations of a Lender hereunder to the same
degree as a commercial bank; (iii) any insurance company in the business of
writing insurance which (a) has total assets of Five Billion Dollars
($5,000,000,000) or more (b) is “best capitalized” within the meaning of such
term under the applicable regulations of the National Association of Insurance
Commissioners, and (c) meets the requirements set forth in subclauses (c) and
(d) of clause (ii) above; and (iv) any other financial institution having total
assets of Five Billion Dollars ($5,000,000,000) (including a mutual fund or
other fund under management of any investment manager having under its
management total assets of Five Billion Dollars ($5,000,000,000) or more) which
meets the requirement set forth in subclauses (c) and (d) of clause (ii) above;
provided that each Eligible Assignee must (w) be organized under the Laws of the
United States of America, any state thereof or the District of Columbia, or, if
a commercial bank, be organized under the Laws of the United States of America,
any state thereof or the District of Columbia, the Cayman Islands or any country
which is a member of the Organization for Economic Cooperation and Development,
or a political subdivision of such a country, (x) act under the Loan Documents
through a branch, agency or funding office located in the United States of
America, (y) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to the Internal Revenue Code as in effect
from time to time and (z) not be a Borrower or an Affiliate of a Borrower.

Environmental Documents: Collectively, the documents listed on Schedule I
attached hereto.

Environmental Proceedings: As such term is defined in Section 3.1(g).

Environmental Report: As such term is defined in Section 8.1(o).

 

SECURED LOAN AGREEMENT

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ERISA: The Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder from time to time.

Event of Default: As such term is defined in Article 14.

Federal Funds Effective Rate: Shall mean, for any day, the rate per annum
(rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of Cleveland on such day as being the
weighted average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank in substantially the same manner as such Federal
Reserve Bank computes and announces the weighted average it refers to as the
“Federal Funds Effective Rate.”

Final Maturity Date: The date on which the Note matures, whether by
acceleration, lapse of time or otherwise; provided, that such date shall be the
Original Maturity Date, unless earlier accelerated as permitted herein or in any
other Loan Document.

FIRREA: The Financial Institutions Reform, Recovery And Enforcement Act of 1989,
as amended from time to time.

GAAP: Generally Accepted Accounting Principles.

Governmental Approvals: As such term is defined in Section 3.1(n).

Governmental Authority: 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, or any court, administrative tribunal, or public utility.

Gross Revenues: For any period, all revenues of Operator determined on a GAAP
basis derived from the operation, use, leasing and occupancy of the Projects
during such period; provided, however, that in no event shall Gross Revenues
include (i) any loan proceeds, (ii) proceeds or payments under insurance
policies (except proceeds of business interruption insurance);
(iii) condemnation proceeds; (iv) any security deposits received from tenants in
the Projects, unless and until the same are applied to rent or other obligations
in accordance with the tenant’s lease; or (v) any other extraordinary items, in
Agent’s reasonable discretion.

Guarantor: CNL Healthcare Properties, Inc., a Maryland corporation.

Guaranty: As such term is defined in Section 4.2(h).

Hazardous Material: Means and includes gasoline, petroleum, asbestos containing
materials, explosives, radioactive materials or any hazardous or toxic material,
substance or waste which is defined by those or similar terms or is regulated as
such under any Law of any Governmental Authority having jurisdiction over the
Project or any portion thereof or its use, including: (i) any “hazardous
substance” defined as such in (or for purposes of) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.A. § 9601(14)
as may be amended from time to time, or any so-called “superfund” or “superlien”
Law, including the judicial interpretation thereof; (ii) any “pollutant or
contaminant” as defined in 42 U.S.C.A. § 9601(33); (iii) any material now
defined as “hazardous waste” pursuant to 40 C.F.R. Part 260; (iv) any petroleum,
including crude oil or any fraction thereof; (v) natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel; (vi) any
“hazardous chemical” as defined pursuant to 29 C.F.R. Part 1910; and (vii) any
other toxic substance or contaminant that is subject to any other Law or other
past or present requirement of any Governmental Authority, as any such acts and
laws may be amended, modified or supplemented from time to time.

Immediate Repairs: Shall mean those repairs to the Broadway Project and the Mine
Creek Project as detailed in the property condition reports delivered to Agent
and as set forth on Schedule III attached hereto in connection with the closing
of the Loan in an aggregate amount of approximately $109,300.00.

 

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Improvements: The collective reference to the Batesville Improvements, the
Broadway Improvements, the Jonesboro Improvements, the Magnolia Improvements,
the Mine Creek Improvements, and the Searcy Improvements.

Including or including: Including but not limited to.

Indemnity: As such term is defined in Section 4.2(i).

Jonesboro Borrower: CHP Jonesboro Healthcare Owner, LLC, a Delaware limited
liability company.

Jonesboro Operating Lease: That certain Lease Agreement of even date herewith
between Jonesboro Borrower and Jonesboro Operator.

Jonesboro Operator: Jonesboro Health and Rehab, LLC, an Arkansas limited
liability company.

Jonesboro Mortgage: As such term is defined in Section 4.2(d).

Jonesboro Permitted Exceptions: Shall mean (i) as of the date hereof, those
matters listed on Exhibit B-3 hereto to which title to the Jonesboro Project may
be subject at the Loan Opening, and (ii) at all times thereafter, (a) along with
the liens and security interests created by the Jonesboro Mortgage or other Loan
Documents. statutory liens for ad valorem taxes, standby fees and other
governmental charges which are not yet delinquent at the time in question or are
being contested in accordance with the requirements of the Loan Documents;
(b) rights of tenants under Leases or residency agreements; (c) other liens and
security interests (if any) in favor of Agent for the benefit of the Lenders or
otherwise approved by Agent; (d) mechanics’ liens being contested in accordance
with the requirements of the Loan Documents, and (e) such other title exceptions
as Agent may reasonably approve in writing.

Land: The collective reference to the Batesville Land, the Broadway Land, the
Jonesboro Land, the Magnolia Land, the Mine Creek Land, and the Searcy Land.

Late Charge: As such term is defined in Section 4.6.

Laws: Collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
precedential authority in the applicable jurisdiction.

Lease Income: Shall mean all rentals or other income paid to Borrowers under the
Operating Leases between any Borrower and any Operator in connection with the
Projects for any applicable period, but specifically excluding any reserves,
escrows, security deposits or other deposits, taxes, or reimbursements for
amounts paid by Borrowers on Operator’s behalf.

Leases: The collective reference to all Operating Leases and all other leases,
subleases and occupancy agreements affecting a Project or any part thereof now
existing or hereafter executed and all amendments, modifications or supplements
thereto.

LIBOR Adjustment Date: The tenth (10th) day of each calendar month.

LIBOR Business Day: A Business Day on which dealings in U.S. dollars are carried
on in the London Interbank Market.

LIBOR Rate: For any LIBOR Rate Interest Period, the average rate (rounded
upwards to the nearest 1/16th) as shown by Reuters at which deposits in U.S.
dollars are offered by first class banks in the London Interbank Market at
approximately 11:00 a.m. (London time) on the day that is two (2) LIBOR Business
Days prior to the first day of such LIBOR Rate Interest Period with a maturity
approximately equal to such LIBOR Rate Interest Period and in an amount
approximately equal to the amount to which such LIBOR Rate Interest Period
relates, adjusted for reserves and taxes if required by future regulations. If
Reuters no longer reports such rate or Agent determines in good faith that the
rate so reported no longer accurately reflects the rate available to Lenders in
the London Interbank Market, Agent may select a replacement index.

 

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LIBOR Rate Interest Period: With respect to each amount bearing interest at a
LIBOR based rate, a period of one month, to the extent deposits with such
maturity is available to the Lenders, commencing on a LIBOR Business Day
provided, however, that each LIBOR Rate Interest Period shall end on the last
LIBOR Adjustment Date occurring prior to the scheduled end of such LIBOR Rate
Interest Period.

Loan: As such term is defined in Recital F on page 1 of this Agreement.

Loan Amount: The maximum amount of the Loan as set forth in Section 4.1(a) as
reduced by principal payments, if any, made from time to time.

Loan Documents: The collective reference to this Agreement, the documents and
instruments listed in Section 4.2, and all the other documents and instruments
entered into from time to time, evidencing or securing the Loans or any
obligation of payment thereof or performance of Borrowers’ obligations in
connection with the transaction contemplated hereunder and any Interest Rate
Agreements, each as amended from time to time.

Loan Opening Date: The date of this Agreement.

Magnolia Borrower: CHP Magnolia Healthcare Owner, LLC, a Delaware limited
liability company.

Magnolia Operator: Magnolia Health and Rehab, LLC, an Arkansas limited liability
company.

Magnolia Operating Lease: That certain Lease Agreement of even date herewith
between Magnolia Borrower and Magnolia Operator.

Magnolia Mortgage: As such term is defined in Section 4.2(e).

Magnolia Permitted Exceptions: Shall mean (i) as of the date hereof, those
matters listed on Exhibit B-4 hereto to which title to the Magnolia Project may
be subject at the Loan Opening, and (ii) at all times thereafter, (a) along with
the liens and security interests created by the Jonesboro Mortgage or other Loan
Documents. statutory liens for ad valorem taxes, standby fees and other
governmental charges which are not yet delinquent at the time in question or are
being contested in accordance with the requirements of the Loan Documents;
(b) rights of tenants under Leases or residency agreements; (c) other liens and
security interests (if any) in favor of Agent for the benefit of the Lenders or
otherwise approved by Agent; (d) mechanics’ liens being contested in accordance
with the requirements of the Loan Documents, and (e) such other title exceptions
as Agent may reasonably approve in writing.

Material Adverse Change or material adverse change: The business prospects,
operations or financial condition of a person, entity or property has changed in
a manner which could impair the value of Lenders’ security for the Loan, prevent
timely repayment of the Loan or otherwise prevent the applicable person or
entity from timely performing any of its material obligations under the Loan
Documents.

Medicaid: That certain program of medical assistance, funded jointly by the
federal government and the States, for impoverished individuals who are aged,
blind and/or disabled, and/or members of families with dependent children, which
program is more fully described in Title XIX of the Social Security Act (42
U.S.C. §§ 1396 et seq.) and the regulations promulgated thereunder.

Medicare: That certain federal program providing health insurance for eligible
elderly and other individuals, under which physicians, hospitals, skilled
nursing homes, home health care and other providers are reimbursed for certain
covered services they provide to the beneficiaries of such program, which
program is more fully described in Title XVIII of the Social Security Act (42
U.S.C. §§ 1395 et seq.) and the regulations promulgated thereunder.

 

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Mine Creek Borrower: CHP Mine Creek Healthcare Owner, LLC, a Delaware limited
liability company.

Mine Creek Operator: Mine Creek Health and Rehab, LLC, an Arkansas limited
liability company.

Mine Creek Operating Lease: That certain Lease Agreement of even date herewith
between Mine Creek Borrower and Mine Creek Operator.

Mine Creek Mortgage: As such term is defined in Section 4.2(f).

Mine Creek Permitted Exceptions: Shall mean (i) as of the date hereof, those
matters listed on Exhibit B-5 hereto to which title to the Mine Creek Project
may be subject at the Loan Opening, and (ii) at all times thereafter, (a) along
with the liens and security interests created by the Mine Creek Mortgage or
other Loan Documents. statutory liens for ad valorem taxes, standby fees and
other governmental charges which are not yet delinquent at the time in question
or are being contested in accordance with the requirements of the Loan
Documents; (b) rights of tenants under Leases or residency agreements; (c) other
liens and security interests (if any) in favor of Agent for the benefit of the
Lenders or otherwise approved by Agent; (d) mechanics’ liens being contested in
accordance with the requirements of the Loan Documents, and (e) such other title
exceptions as Agent may reasonably approve in writing.

Monthly Excess Cash Flow: The amount by which the monthly Lease Income from the
Projects exceeds all amounts due and payable under the Loan Documents for such
month.

Mortgages: The collective reference to the Batesville Mortgage, the Broadway
Mortgage, the Jonesboro Mortgage, the Magnolia Mortgage, the Mine Creek
Mortgage, and the Searcy Mortgage.

Net Operating Income or NOI: The difference between (i) the Gross Revenues for
the applicable period, less (ii) the Operating Expenses for such period.

Notes: As such term is defined in Section 4.2(a).

Number of Available Bed Days: Shall mean the product of the Available Beds
multiplied by the number of days in the applicable calculation period.

Number of Resident Days: Shall mean the number of days Available Beds were
occupied during the applicable calculation period.

Occupancy: Shall mean the ratio of average Number of Resident Days to average
Number of Available Bed Days.

Opening of the Loan or Loan Opening: The first disbursement of Loan proceeds.

Operating Expenses: For any period, the actual costs and expenses of owning,
operating, managing and maintaining the Projects during such period incurred by
Operator, determined on a GAAP basis, including, (i) the greater of (a) a $500
per Available Bed annual replacement reserve, and (b) the actual capital
expenditures for the Projects during such period, and (ii) a management fee in
an amount equal to five percent (5%), excepting, however, (w) interest expense,
(x) taxes, (y) depreciation and amortization, and (z) Rent Expense for such
period.

Operating Leases: Collectively, the Batesville Operating Lease, the Broadway
Operating Lease, the Jonesboro Operating Lease, the Magnolia Operating Lease,
the Mine Creek Operating Lease, and the Searcy Operating Lease.

Operating Statement: As such term is defined in Section 10.1(m).

 

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Operator(s): Shall mean, individually, or collectively, as applicable, the
Batesville Operator, the Broadway Operator, the Jonesboro Operator, the Magnolia
Operator, the Mine Creek Operator and/or the Searcy Operator.

Original Maturity Date: May 31, 2016.

Permitted Exceptions: The collective reference to the Batesville Permitted
Exceptions, the Broadway Permitted Exceptions, the Jonesboro Permitted
Exceptions, the Magnolia Permitted Exceptions, the Mine Creek Permitted
Exceptions, and the Searcy Permitted Exceptions.

Pro Forma Debt Service: The total annual installments of principal and interest
that would be required for the Loan calculated based upon a twenty-five
(25) year amortization schedule and a per annum interest rate equal to the
greater of (i) Applicable Rate, (ii) six percent (6.00%), and (iii) the yield
per annum as of the date of such calculation on U.S. Treasury securities
selected in good faith by Lender, maturing approximately seven (7) years after
the date of calculation, plus two and one-half percent (2.50%).

Project(s): Shall mean, individually or collectively as applicable, any of the
Batesville Project, the Broadway Project, the Jonesboro Project, the Magnolia
Project, the Mine Creek Project, and/or the Searcy Project.

Project Operating Account(s): As such term is defined in Section 4.1(d).

Reimbursement Contracts: means all third-party reimbursement contracts relating
to any Project which are now or hereafter in effect with respect to residents or
patients qualifying for coverage under the same, including Medicare and
Medicaid, Managed Care Plans and private insurance agreements, and any successor
program or other similar reimbursement program and/or private insurance
agreements, now or hereafter existing.

Release Price: For any Buyback Project, an amount equal to sixty percent
(60%) of the “fee simple” value of the applicable Buyback Project as shown in
the Appraisal delivered to Agent in connection with the closing of the Loan.

Rent Coverage: With respect to any applicable period ending on the applicable
date of determination, the ratio of (a) the Net Operating Income for such
period, to (b) the Rent Expense.

Rent Expense: With respect to any applicable period ending on the applicable
date of determination, the total rent paid by Operators to Borrowers under the
Leases during such period.

Required Lenders: Those Lenders holding at least sixty-six and 67/100th percent
(66.67%) of the total outstanding principal balance of the Loans.

Reserve Percentage: For any LIBOR Rate Interest Period, that percentage which is
specified three (3) Business Days before the first day of such LIBOR Rate
Interest Period by the Board of Governors of the Federal Reserve System (or any
successor) or any other governmental or quasi-governmental authority with
jurisdiction over the Lenders for determining the maximum reserve requirement
(including, but not limited to, any marginal reserve requirement) for the
Lenders with respect to liabilities constituting of or including (among other
liabilities) Eurocurrency liabilities in an amount equal to that portion of the
Loan affected by such LIBOR Rate Interest Period and with a maturity equal to
such LIBOR Rate Interest Period.

Searcy Borrower: CHP Searcy Healthcare Owner, LLC, a Delaware limited liability
company.

Searcy Operator: Searcy Health and Rehab, LLC, an Arkansas limited liability
company.

Searcy Operating Lease: That certain Lease Agreement of even date herewith
between Searcy Borrower and Searcy Operator.

Searcy Mortgage: As such term is defined in Section 4.2(g).

 

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Searcy Permitted Exceptions: Shall mean (i) as of the date hereof, those matters
listed on Exhibit B-5 hereto to which title to the Searcy Project may be subject
at the Loan Opening, and (ii) at all times thereafter, (a) along with the liens
and security interests created by the Searcy Mortgage or other Loan Documents.
statutory liens for ad valorem taxes, standby fees and other governmental
charges which are not yet delinquent at the time in question or are being
contested in accordance with the requirements of the Loan Documents; (b) rights
of tenants under Approved Leases; (c) other liens and security interests (if
any) in favor of Agent for the benefit of the Lenders or otherwise approved by
Agent; (d) mechanics’ liens being contested in accordance with the requirements
of the Loan Documents, and (e) such other title exceptions as Agent may
reasonably approve in writing.

State: The State of Ohio.

Synovus: Synovus Bank, a Georgia banking corporation.

Tenant Deposit Account: As such term is defined in Section 4.1(e).

Title Insurer: Fidelity National Title Insurance Company, or such other title
insurance company licensed in the State as may be approved in writing by Agent.

Title Policies: As such term is defined in Section 8.1(a).

Transfer: As such term is defined in Section 12.1.

2.2 Other Definitional Provisions.

All terms defined in this Agreement shall have the same meanings when used in
the Note, Mortgages, any other Loan Documents, 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.

ARTICLE 3

BORROWERS’ REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties.

To induce each of the Lenders to execute this Agreement and perform its
respective obligations hereunder, Borrowers hereby represent and warrant to the
Lenders as follows:

(a) Batesville Borrower has good and marketable fee simple title in the
Batesville Project, subject only to the Batesville Permitted Exceptions.

(b) Broadway Borrower has good and marketable fee simple title in the Broadway
Project, subject only to the Broadway Permitted Exceptions.

(c) Jonesboro Borrower has good and marketable fee simple title in the Jonesboro
Project, subject only to the Jonesboro Permitted Exceptions.

(d) Magnolia Borrower has good and marketable fee simple title in the Magnolia
Project, subject only to the Magnolia Permitted Exceptions.

(e) Mine Creek Borrower has good and marketable fee simple title in the Mine
Creek Project, subject only to the Mine Creek Permitted Exceptions.

(f) Searcy Borrower has good and marketable fee simple title in the Searcy
Project, subject only to the Searcy Permitted Exceptions.

 

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(g) No litigation or proceedings are pending, or to the best of Borrowers’
knowledge threatened, against any Borrower or Guarantor, which could, if
adversely determined, cause a Material Adverse Change with respect to any
Borrower, Guarantor or any Project. To the best of Borrowers’ knowledge, there
are no pending environmental proceedings, whether civil (including actions by
private parties), criminal, or administrative proceedings, relating to any
Project (collectively, “Environmental Proceedings”), and Borrowers have no
knowledge of any threatened Environmental Proceedings or any facts or
circumstances which may give rise to any future Environmental Proceedings.

(h) Each Borrower is a duly organized and validly existing Delaware limited
liability company and has full power and authority to execute, deliver and
perform all Loan Documents to which such Borrower is a party, and such
execution, delivery and performance have been duly authorized by all requisite
action on the part of such Borrower.

(i) Guarantor is a duly organized and validly existing Maryland corporation and
has full power and authority to execute, deliver and perform all Loan Documents
to which such person is a party, and such execution, delivery and performance
have been duly authorized by all requisite action on the part of such person.

(j) No consent, approval or authorization of or declaration, registration or
filing with any Governmental Authority or nongovernmental person or entity,
including any creditor, partner or member of any Borrower or Guarantor, is
required in connection with the execution, delivery and performance of this
Agreement or any of the Loan Documents other than the recordation of the
Mortgages, the Assignments of Rents and UCC-1 Financing Statements, except for
such consents, approvals or authorizations of or declarations or filings with
any Governmental Authority or non-governmental person or entity where the
failure to so obtain would not have an adverse effect on any Borrower or
Guarantor or which have been obtained as of any date on which this
representation is made or remade.

(k) The execution, delivery and performance of this Agreement, the execution and
payment of the Notes and the granting of the Mortgages and other security
interests under the other Loan Documents have not constituted and will not
constitute, upon the giving of notice or lapse of time or both, a breach or
default under any other agreement to which any Borrower or Guarantor is a party
or may be bound or affected, or a violation of any law or court order which may
affect any Project, any part thereof, any interest therein, or the use thereof.

(l) There is no default under this Agreement or the other Loan Documents, nor
any condition which, after notice or the passage of time or both, would
constitute a default or an Event of Default under said documents.

(m) (i) No condemnation of any portion of any Project, (ii) no condemnation or
relocation of any roadways abutting any Project, and (iii) no proceeding to deny
access to any Project from any point or planned point of access to such Project,
has commenced or, to the best of Borrowers’ knowledge, is contemplated by any
Governmental Authority.

(n) To the best of Borrowers’ knowledge, the use of each Project does not
violate (i) any Laws (including subdivision, zoning, building, environmental
protection and wetland protection Laws), or (ii) any building permits,
restrictions of record, or agreements affecting such Project or any part
thereof. To the best knowledge of Borrowers, no Project violates (i) any Laws
(including subdivision, zoning, building, environmental protection and wetland
protection Laws), or (ii) any building permits, restrictions of record, or
agreements affecting such Project or any part thereof. To the best of Borrowers’
knowledge, neither the zoning authorizations, approvals or variances nor any
other right to own or to use any Project is to any extent dependent upon or
related to any real estate other than the Land applicable to such Project. All
consents, licenses and permits and all other authorizations or approvals
(collectively, “Governmental Approvals”) required for the ownership and use of
each Project have been obtained and remain in full force and effect.

(o) To the best of Borrowers’ knowledge, each Project has adequate water, gas
and electrical supply, storm and sanitary sewerage facilities, other required
public utilities, fire and police protection, and means of access between such
Project and public highways; to the best of Borrowers’ knowledge, none of the
foregoing will be foreseeably delayed or impeded by virtue of any requirements
under any applicable Laws.

 

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(p) No brokerage fees or commissions are payable by or to any person in
connection with this Agreement or the Loan to be disbursed hereunder.

(q) All financial statements and other information previously furnished by any
Borrower or Guarantor to Lender in connection with the Loan are true, complete
and correct and fairly present the financial conditions of the subjects thereof
as of the respective dates thereof and do not fail to state any material fact
necessary to make such statements or information not misleading, and no Material
Adverse Change with respect to any Borrower or Guarantor has occurred since the
respective dates of such statements and information. None of any Borrower, nor
Guarantor has any material liability, contingent or otherwise, not disclosed in
such financial statements.

(r) As of the date hereof and except as disclosed in the Environmental Report,
(i) each Project is in a clean, safe and healthful condition, and, except for
materials used in the ordinary course of construction, maintenance and operation
of such Project, is free of all Hazardous Material and is in compliance with all
applicable Laws; (ii) none of the Borrowers nor, to the best knowledge of
Borrowers, any other person or entity, has ever caused or permitted any
Hazardous Material to be placed, held, located or disposed of on, under, at or
in a manner to affect any Project in violation of any applicable Laws, or any
part thereof, and no Project has ever been used (whether by any Borrower or, to
the best knowledge of Borrowers, by any other person or entity) for any
activities involving, directly or indirectly, the use, generation, treatment,
storage, transportation, or disposal of any Hazardous Material in violation of
any applicable Laws; (iii) no Project, nor any Borrower is subject to any
existing, pending, or, to the best of Borrowers’ knowledge, threatened
investigation or inquiry by any Governmental Authority, and no Project is
subject to any remedial obligations under any applicable Laws pertaining to
health or the environment; and (iv) to the best of Borrowers’ knowledge, there
are no underground tanks, vessels, or similar facilities for the storage,
containment or accumulation of Hazardous Materials of any sort on, under or
affecting any Project.

(s) Each Project is taxed separately without regard to any other property and
for all purposes the Project may be mortgaged, conveyed and otherwise dealt with
as an independent parcel.

(t) None of the Borrowers nor their respective agents have entered into any
Leases, subleases or other arrangements for occupancy of space within each
Project other than the Operating Leases.

(u) Except as set forth on the applicable survey delivered to Agent for each
Project, no portion of the Improvements encroaches upon any property line,
building line, setback line, side yard line or any recorded or visible easement
(or other easement of which any Borrower is aware or has reason to believe may
exist) with respect to such Project.

(v) The Loan is not being made for the purpose of purchasing or carrying “margin
stock” within the meaning of Regulation T, U or X issued by the Board of
Governors of the Federal Reserve System, and each Borrower agrees to execute all
instruments necessary to comply with all the requirements of Regulation U of the
Federal Reserve System.

(w) No Borrower is a party in interest to any plan defined or regulated under
ERISA, and none of the assets of the Borrowers are “plan assets” of any employee
benefit plan covered by ERISA or Section 4975 of the Internal Revenue Code.

(x) No Borrower is a “foreign person” within the meaning of Section 1445 or 7701
of the Internal Revenue Code.

(y) No Borrower uses any trade name other than its actual name set forth herein.
The principal place of business of Borrower is as stated in Article 17.

(z) Each Borrower’s place of organization is the State of Delaware.

(aa) All statements set forth in the Recitals are true and correct.

 

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(bb) No Borrower, nor Guarantor, and, to the best of Borrower knowledge, no
Operator is (or will be) a person with whom any Lender is restricted from doing
business under OFAC (including, those Persons named on OFAC’s Specially
Designated and Blocked Persons list) or under any statute, executive order
(including, the September 23, 2001 Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not and shall not engage in any
dealings or transactions or otherwise be associated with such persons. In
addition, each Borrower hereby agrees to provide Agent with any additional
information that any Lender deems necessary from time to time in order to ensure
compliance with all applicable Laws concerning money laundering and similar
activities.

(cc) Each Operating Lease is in full force and effect. To Borrower’s knowledge,
there are no defaults (either monetarily or non-monetarily) by any Operator or
any Borrower under its Operating Lease.

(dd) No Borrower has entered into this Agreement or any of the other Loan
Documents with the actual intent to hinder, delay, or defraud any creditor, and
each Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of each Borrower’s
assets exceeds and will, immediately following the execution and delivery of the
Loan Documents, be greater than such Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities or its debts as such debts
become absolute and mature. Each Borrower’s assets do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. No Borrower intends to, and does not believe that it will,
incur debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts to be payable on or in
respect of obligations of each Borrower).

(ee) After consultation with counsel concerning the federal anti-kickback law
(42 U.S.C.A. SEC. 1320a-7b(b)), neither any Borrower nor its agent have offered
or given any remuneration or thing of value to any person to encourage referral
to the Projects nor has any Borrower or its agent solicited or received any
remuneration or thing of value in exchange for any Borrower’s agreement to make
referrals or to purchase goods or services for the Projects.

(ff) Except for indirect ownership interests in any Borrower as a result of
ownership of publicly traded shares of stock in Guarantor, no physician or other
healthcare practitioner has an ownership interest in, or financial relationship
with, any Borrower, any Project or, to the best of Borrowers’ knowledge, any
Operator.

(gg) The Batesville Project is duly licensed as a 150-bed skilled nursing
facility under the applicable laws of the State of Arkansas and is currently
operated as a 116 bed skilled nursing facility. Batesville Operator is, or will
be, the lawful owner of all required permits for the operation of the Batesville
Project, including, without limitation, the Certificate of Need, if applicable,
which (a) are in full force and effect, (b) constitute all of the permits,
licenses and certificates required for the use, operation and occupancy thereof,
(c) have not been pledged as collateral for any other loan or indebtedness,
(d) are held free from any restriction or any encumbrance which would materially
adversely affect the use or operation of the Batesville Project and (e) are not
provisional, probationary or restricted in any way. No waivers of any laws,
rules, regulations, or requirements (including, but not limited to, minimum foot
requirements per bed are required for the Batesville Project to operate at the
foregoing licensed bed capacity. All Reimbursement Contracts are in full force
and effect with respect to the Batesville Project. The Batesville Borrower and
the Batesville Operator are in good standing with all the respective agencies
governing such Project’s licenses, program certification and Reimbursement
Contracts. Batesville Borrower is current in the payment of all so-called
provider specific taxes or other assessments with respect to such Reimbursement
Contracts. Batesville Borrower will maintain the Certificate of Need, if
applicable, and/or any required permits in full force and effect. In the event
Lender acquires the Batesville Project through foreclosure or otherwise, neither
Lender nor a subsequent manager, a subsequent lessee or any subsequent purchaser
(through foreclosure or otherwise) must obtain a Certificate of Need prior to
applying for and receiving a license to operate the Batesville Project and
certification to receive Medicare and Medicaid payments (and its successor
programs) for patients having coverage thereunder provided that no service or
bed complement is changed.

 

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(hh) The Broadway Project is duly licensed as a 119-bed skilled nursing facility
under the applicable laws of the State of Arkansas and is currently operated as
a 119 bed skilled nursing facility. Broadway Operator is, or will be, the lawful
owner of all required permits for the operation of the Broadway Project,
including, without limitation, the Certificate of Need, if applicable, which
(a) are in full force and effect, (b) constitute all of the permits, licenses
and certificates required for the use, operation and occupancy thereof, (c) have
not been pledged as collateral for any other loan or indebtedness, (d) are held
free from any restriction or any encumbrance which would materially adversely
affect the use or operation of the Broadway Project and (e) are not provisional,
probationary or restricted in any way. No waivers of any laws, rules,
regulations, or requirements (including, but not limited to, minimum foot
requirements per bed are required for the Broadway Project to operate at the
foregoing licensed bed capacity. All Reimbursement Contracts are in full force
and effect with respect to the Broadway Project. The Broadway Borrower and the
Broadway Operator are in good standing with all the respective agencies
governing such Project’s licenses, program certification and Reimbursement
Contracts. Broadway Borrower is current in the payment of all so-called provider
specific taxes or other assessments with respect to such Reimbursement
Contracts. Broadway Borrower will maintain the Certificate of Need, if
applicable, and/or any required permits in full force and effect. In the event
Lender acquires the Broadway Project through foreclosure or otherwise, neither
Lender nor a subsequent manager, a subsequent lessee or any subsequent purchaser
(through foreclosure or otherwise) must obtain a Certificate of Need prior to
applying for and receiving a license to operate the Broadway Project and
certification to receive Medicare and Medicaid payments (and its successor
programs) for patients having coverage thereunder provided that no service or
bed complement is changed.

(ii) The Jonesboro Project is duly licensed as a 136-bed skilled nursing
facility under the applicable laws of the State of Arkansas and is currently
operated as a 136 bed skilled nursing facility. Jonesboro Operator is, or will
be, the lawful owner of all required permits for the operation of the Jonesboro
Project, including, without limitation, the Certificate of Need, if applicable,
which (a) are in full force and effect, (b) constitute all of the permits,
licenses and certificates required for the use, operation and occupancy thereof,
(c) have not been pledged as collateral for any other loan or indebtedness,
(d) are held free from any restriction or any encumbrance which would materially
adversely affect the use or operation of the Jonesboro Project and (e) are not
provisional, probationary or restricted in any way. No waivers of any laws,
rules, regulations, or requirements (including, but not limited to, minimum foot
requirements per bed are required for the Jonesboro Project to operate at the
foregoing licensed bed capacity. All Reimbursement Contracts are in full force
and effect with respect to the Jonesboro Project. The Jonesboro Borrower and the
Jonesboro Operator are in good standing with all the respective agencies
governing such Project’s licenses, program certification and Reimbursement
Contracts. Jonesboro Borrower is current in the payment of all so-called
provider specific taxes or other assessments with respect to such Reimbursement
Contracts. Jonesboro Borrower will maintain the Certificate of Need, if
applicable, and/or any required permits in full force and effect. In the event
Lender acquires the Jonesboro Project through foreclosure or otherwise, neither
Lender nor a subsequent manager, a subsequent lessee or any subsequent purchaser
(through foreclosure or otherwise) must obtain a Certificate of Need prior to
applying for and receiving a license to operate the Jonesboro Project and
certification to receive Medicare and Medicaid payments (and its successor
programs) for patients having coverage thereunder provided that no service or
bed complement is changed.

(jj) The Magnolia Project is duly licensed as a 140-bed skilled nursing facility
under the applicable laws of the State of Arkansas and is currently operated as
a 140 bed skilled nursing facility. Magnolia Operator is, or will be, the lawful
owner of all required permits for the operation of the Magnolia Project,
including, without limitation, the Certificate of Need, if applicable, which
(a) are in full force and effect, (b) constitute all of the permits, licenses
and certificates required for the use, operation and occupancy thereof, (c) have
not been pledged as collateral for any other loan or indebtedness, (d) are held
free from any restriction or any encumbrance which would materially adversely
affect the use or operation of the Magnolia Project and (e) are not provisional,
probationary or restricted in any way. No waivers of any laws, rules,
regulations, or requirements (including, but not limited to, minimum foot
requirements per bed are required for the Magnolia Project to operate at the
foregoing licensed bed capacity. All Reimbursement Contracts are in full force
and effect with respect to the Magnolia Project. The Magnolia Borrower and the
Magnolia Operator are in good standing with all the respective agencies
governing such Project’s licenses, program certification and Reimbursement
Contracts. Magnolia Borrower is current in the payment of all so-called provider
specific taxes or other assessments with respect to such Reimbursement
Contracts. Magnolia Borrower will maintain the Certificate of Need, if
applicable, and/or any required permits in full force and effect. In the event
Lender acquires the Magnolia Project through foreclosure or otherwise, neither
Lender nor a subsequent manager, a subsequent lessee or any subsequent purchaser
(through foreclosure or otherwise) must obtain a Certificate of Need prior to
applying for and receiving a license to operate the Magnolia Project and
certification to receive Medicare and Medicaid payments (and its successor
programs) for patients having coverage thereunder provided that no service or
bed complement is changed.

 

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(kk) The Mine Creek Project is duly licensed as a 78-bed skilled nursing
facility under the applicable laws of the State of Arkansas and is currently
operated as a 78 bed skilled nursing facility. Mine Creek Operator is, or will
be, the lawful owner of all required permits for the operation of the Mine Creek
Project, including, without limitation, the Certificate of Need, if applicable,
which (a) are in full force and effect, (b) constitute all of the permits,
licenses and certificates required for the use, operation and occupancy thereof,
(c) have not been pledged as collateral for any other loan or indebtedness,
(d) are held free from any restriction or any encumbrance which would materially
adversely affect the use or operation of the Mine Creek Project and (e) are not
provisional, probationary or restricted in any way. No waivers of any laws,
rules, regulations, or requirements (including, but not limited to, minimum foot
requirements per bed are required for the Mine Creek Project to operate at the
foregoing licensed bed capacity. All Reimbursement Contracts are in full force
and effect with respect to the Mine Creek Project. The Mine Creek Borrower and
the Mine Creek Operator are in good standing with all the respective agencies
governing such Project’s licenses, program certification and Reimbursement
Contracts. Mine Creek Borrower is current in the payment of all so-called
provider specific taxes or other assessments with respect to such Reimbursement
Contracts. Mine Creek Borrower will maintain the Certificate of Need, if
applicable, and/or any required permits in full force and effect. In the event
Lender acquires the Mine Creek Project through foreclosure or otherwise, neither
Lender nor a subsequent manager, a subsequent lessee or any subsequent purchaser
(through foreclosure or otherwise) must obtain a Certificate of Need prior to
applying for and receiving a license to operate the Mine Creek Project and
certification to receive Medicare and Medicaid payments (and its successor
programs) for patients having coverage thereunder provided that no service or
bed complement is changed.

(ll) The Searcy Project is duly licensed as a 245-bed skilled nursing facility
under the applicable laws of the State of Arkansas and is currently operated as
a 191 bed skilled nursing facility. Searcy Operator is, or will be, the lawful
owner of all required permits for the operation of the Searcy Project,
including, without limitation, the Certificate of Need, if applicable, which
(a) are in full force and effect, (b) constitute all of the permits, licenses
and certificates required for the use, operation and occupancy thereof, (c) have
not been pledged as collateral for any other loan or indebtedness, (d) are held
free from any restriction or any encumbrance which would materially adversely
affect the use or operation of the Searcy Project and (e) are not provisional,
probationary or restricted in any way. No waivers of any laws, rules,
regulations, or requirements (including, but not limited to, minimum foot
requirements per bed are required for the Searcy Project to operate at the
foregoing licensed bed capacity. All Reimbursement Contracts are in full force
and effect with respect to the Searcy Project. The Searcy Borrower and the
Searcy Operator are in good standing with all the respective agencies governing
such Project’s licenses, program certification and Reimbursement Contracts.
Searcy Borrower is current in the payment of all so-called provider specific
taxes or other assessments with respect to such Reimbursement Contracts. Searcy
Borrower will maintain the Certificate of Need, if applicable, and/or any
required permits in full force and effect. In the event Lender acquires the
Searcy Project through foreclosure or otherwise, neither Lender nor a subsequent
manager, a subsequent lessee or any subsequent purchaser (through foreclosure or
otherwise) must obtain a Certificate of Need prior to applying for and receiving
a license to operate the Searcy Project and certification to receive Medicare
and Medicaid payments (and its successor programs) for patients having coverage
thereunder provided that no service or bed complement is changed.

(mm) No Borrower nor its Operator has granted to any third party the right to
reduce the number of licensed beds in any Project or to apply for approval to
transfer the right to any or all of the licensed beds to any other location.

(nn) Each Project is in compliance with all requirements for participation in
Medicare and Medicaid, including without limitation, the Medicare and Medicaid
Patient Protection Act of 1987. Each Project is in conformance in all material
respects with all insurance, reimbursement and cost reporting requirements and
has a current provider agreement which is in full force and effect under
Medicare and Medicaid.

(oo) There is no threatened or pending revocation, suspension, termination,
probation, restriction, limitation, or nonrenewal affecting any Borrower, any
Project or any participation or provider agreement with any third-party payor,
including Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other
private commercial insurance managed care and employee assistance program (such
programs, the “Third-Party Payors’

 

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Programs”) to which Borrowers or the Projects presently is subject. All Medicare
(if any), Medicaid (if any) and private insurance cost reports and financial
reports submitted by Borrower or Operator are and will be materially accurate
and complete and have not been and will not be misleading in any material
respects. No cost reports for any Project remain “open” or unsettled except as
otherwise disclosed.

(pp) No Borrower nor Guarantor nor, to the best of Borrower’s knowledge, any
Operator or any Project is currently the subject of any proceeding by any
governmental agency, and no notice of any violation has been received by any
Borrower or Guarantor from any federal, state or local government or
quasi-governmental body or agency or any administrative or investigative body
that would, directly or indirectly, or with the passage of time:

(i) have a material adverse impact on a Borrower’s or an Operator’s ability to
accept and/or retain residents or result in the imposition of a fine, a
sanction, a lower rate certification or a lower reimbursement rate for services
rendered to eligible residents;

(ii) modify, limit or annul or result in the transfer, suspension, revocation or
imposition of probationary use of any of the permits; or

(iii) affect a Borrower’s continued participation in the Medicare or Medicaid
programs or any other Third-Party Payors’ Programs, or any successor programs
thereto, at current rate certifications.

3.2 Survival of Representations and Warranties.

Each Borrower agrees that all of the representations and warranties set forth in
Section 3.1 and elsewhere in this Agreement are true as of the date hereof, will
be true at the Loan Opening and, except for matters which have been disclosed by
Borrowers and approved by Agent in writing, at all times thereafter. It shall be
a condition precedent to the Loan Opening that each of said representations and
warranties is true and correct as of the date thereof.

ARTICLE 4

LOAN AND LOAN DOCUMENTS

4.1 Agreement to Borrow and Lend; Lenders’ Obligation to Disburse.

Subject to the terms, provisions and conditions of this Agreement and the other
Loan Documents, Borrowers agree to borrow from the Lenders and each Lender
agrees to lend to Borrowers the Loan, for the purposes and subject to all of the
terms, provisions and conditions contained in this Agreement. If more than one
Lender is a party hereto, the obligations of each such Lender with respect to
the amount it has agreed to loan to Borrowers shall be several (and not joint
and several) and shall be limited to its proportionate share of the Loan and of
each advance.

(a) The maximum aggregate amount of the Loan shall not exceed the lesser of
(i) Thirty Million and No/100 Dollars ($30,000,000.00), and (ii) sixty percent
(60%) of the “leased fee” value of the Projects as determined in the Appraisal,
and (iii) sixty percent (60%) of the “fee simple” value of the Projects as
determined in the Appraisal. The Loan will be funded in a single lump sum
advance on the Loan Opening Date. The Loan is non-revolving, and amounts repaid
hereunder shall not be available for further borrowing hereunder.

(b) Lenders agree, upon Borrowers’ compliance with and satisfaction of all
conditions precedent to the Loan Opening and provided no Material Adverse Change
has occurred with respect to any Borrower, Guarantor or the Projects and no
default or Event of Default has occurred and is continuing hereunder, to open
the Loan.

(c) To the extent that the Lenders may have acquiesced in noncompliance with any
requirements precedent to the Opening of the Loan or precedent to the subsequent
disbursement of the proceeds of the Loan, such acquiescence shall not constitute
a waiver by Lenders, and Lenders may at any time after such acquiescence require
Borrowers to comply with all such requirements.

 

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(d) Borrowers shall open one deposit account for each Project with Agent (each
such account, a “Project Operating Account” and collectively, the “Project
Operating Accounts”). All cash flow from each Project received by Borrowers,
including, without limitation, the Lease Income, but excluding tenant security
deposits referenced in (e) below, shall be deposited in the applicable Project
Operating Account; provided, however, that any Lender may maintain a separate
account in the name of one or more Borrowers for tenant security deposits from
the Projects as agreed to between Agent and such Lender. During the existence of
an Event of Default, all such cash flow shall be available for payment of debt
service on the Loan, and Agent, for the pro rata benefit of the Lenders, is
authorized to pay principal or interest due upon the Notes during the existence
of an Event of Default as well as real estate taxes if the same are not paid by
Borrower or Operator prior to delinquency by debiting funds on deposit in the
Project Operating Accounts. Unless an Event of Default shall exist, Borrowers
shall have access to and may use any or all Monthly Excess Cash Flow then held
in the Project Operating Accounts for any lawful purpose which shall include,
without limitation, payment of the operating expenses for the Projects,
dividends, distributions or any other costs or expenses of Borrowers or
Guarantors.

(e) Borrowers shall open one deposit account for all Projects maintained by
Synovus for the benefit of the Lenders (“Tenant Deposit Account”). All tenant
security deposits under the Leases received by Borrowers shall be deposited in
the tenant Deposit Account, including, without limitation, $458,431.00 on the
date hereof and $76,406.00 per month for the twelve months commencing on the
date hereof. For the avoidance of doubt, the rights of the Lenders in the
security deposits referenced herein are subject to the rights of Operators under
the Leases. Borrowers hereby pledge the Tenant Deposit Account and all amounts
held in therein to Agent for the benefit of the Lenders. The Tenant Deposit
Account shall be a blocked account held by Synovus subject to a control
agreement with Borrowers on Synovus’ form.

4.2 Loan Documents.

Each Borrower agrees that it will, on or before the Loan Opening Date, execute
and deliver or cause to be executed and delivered to Agent the following
documents in form and substance acceptable to Agent:

(a) One or more promissory notes (the “Notes”), in the maximum amount of the
Loan, executed by Borrowers and payable to the order of each Lender in the
amount of such Lender’s Commitment.

(b) An Arkansas Mortgage, Absolute Assignment of Rents, Security Agreement and
Fixture Filing (the “Batesville Mortgage”), executed by Batesville Borrower in
favor of Agent for the benefit of the Lenders securing this Agreement, the
Notes, and all obligations of Borrowers in connection with the Loan, granting a
first priority lien on Batesville Borrower’s fee simple interest in the
Batesville Project, subject only to the Batesville Permitted Exceptions.

(c) An Arkansas Mortgage, Absolute Assignment of Rents, Security Agreement and
Fixture Filing (the “Broadway Mortgage”), executed by Broadway Borrower in favor
of Agent for the benefit of the Lenders securing this Agreement, the Notes, and
all obligations of Borrowers in connection with the Loan, granting a first
priority lien on Broadway Borrower’s fee simple interest in the Broadway
Project, subject only to the Broadway Permitted Exceptions.

(d) An Arkansas Mortgage, Absolute Assignment of Rents, Security Agreement and
Fixture Filing (the “Jonesboro Mortgage”), executed by Jonesboro Borrower in
favor of Agent for the benefit of the Lenders securing this Agreement, the
Notes, and all obligations of Borrowers in connection with the Loan, granting a
first priority lien on Jonesboro Borrower’s fee simple interest in the Jonesboro
Project, subject only to the Jonesboro Permitted Exceptions.

(e) An Arkansas Mortgage, Absolute Assignment of Rents, Security Agreement and
Fixture Filing (the “Magnolia Mortgage”), executed by Magnolia Borrower in favor
of Agent for the benefit of the Lenders securing this Agreement, the Notes, and
all obligations of Borrowers in connection with the Loan, granting a first
priority lien on Magnolia Borrower’s fee simple interest in the Magnolia
Project, subject only to the Magnolia Permitted Exceptions.

 

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(f) An Arkansas Mortgage, Absolute Assignment of Rents, Security Agreement and
Fixture Filing (the “Mine Creek Mortgage”), executed by Mine Creek Borrower in
favor of Agent for the benefit of the Lenders securing this Agreement, the
Notes, and all obligations of Borrowers in connection with the Loan, granting a
first priority lien on Mine Creek Borrower’s fee simple interest in the Mine
Creek Project, subject only to the Mine Creek Permitted Exceptions.

(g) An Arkansas Mortgage, Absolute Assignment of Rents, Security Agreement and
Fixture Filing (the “Searcy Mortgage”), executed by Searcy Borrower in favor of
Agent for the benefit of the Lenders securing this Agreement, the Notes, and all
obligations of Borrowers in connection with the Loan, granting a first priority
lien on Searcy Borrower’s fee simple interest in the Searcy Project, subject
only to the Searcy Permitted Exceptions.

(h) A guaranty ( the “Guaranty”) executed by Guarantor and pursuant to which the
Guarantor guarantees the “Guaranteed Indebtedness” as such term is therein
defined.

(i) An environmental indemnity (“Indemnity”) from Borrowers and Guarantor
indemnifying Agent and the Lenders with regard to all matters related to
Hazardous Materials and other environmental matters.

(j) The Assignments of Rents.

(k) Such UCC financing statements as Agent’s counsel determines are advisable or
necessary to perfect or notify third parties of the security interests intended
to be created by the Loan Documents.

(l) Such other documents, instruments or certificates as Agent and its counsel
may reasonably require, including such documents as Agent in its sole discretion
deems necessary or appropriate to effectuate the terms and conditions of this
Agreement and the Loan Documents, and to comply with the laws of the State.

4.3 Term of the Loan.

Unless the Loan is otherwise earlier accelerated as permitted herein or under
any other Loan Document, all principal, interest and other sums due under the
Loan Documents shall be due and payable in full on the Original Maturity Date.
The terms and provisions of this Section 4.3 shall not constitute a waiver of
the requirement that any modification of the Notes or any of the Loan Documents
shall require the express written approval of Agent, no such approval (either
expressed or implied) having been given as of the date hereof (other than as
expressly set forth herein).

4.4 Prepayments.

Borrowers shall have the right to make prepayments of the Loan, in whole or in
part, without prepayment penalty other than any Breakage Costs which may be due,
upon not less than seven (7) days’ prior written notice to Agent. No prepayment
of all or part of the Loan shall be permitted unless same is made together with
the payment of all interest accrued on the Loan through the date of prepayment
and an amount equal to all Breakage Costs and attorneys’ fees and disbursements
incurred by each Lender as a result of the prepayment.

4.5 Required Principal Payments.

In addition to, and not in lieu of, each monthly interest payment required under
Section 5.1 hereof, commencing May 10, 2015, and continuing on the tenth
(10th) day of each successive month thereafter until the Final Maturity Date,
principal shall be due and payable in monthly installments. Each such
installment shall be in an amount that would be sufficient to fully amortize the
Loan on a twenty-five (25) year amortization schedule at a per annum rate of six
percent (6%). Notwithstanding anything to the contrary, the aggregate
outstanding balance of the Loan plus all accrued but unpaid interest shall be
due and payable on the Final Maturity Date.

 

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4.6 Late Charge.

Any and all amounts due hereunder or under the other Loan Documents which remain
unpaid more than ten (10) days after the date said amount was due and payable
shall incur a fee (the “Late Charge”) of four percent (4%) of said amount, which
payment shall be in addition to all of Lenders’ other rights and remedies under
the Loan Documents, provided that no Late Charge shall apply to the final
payment of principal on the Final Maturity Date.

ARTICLE 5

INTEREST

5.1 Interest Rate.

(a) The Loan will bear interest at the Applicable Rate, unless the Default Rate
is applicable. Except as expressly provided herein, the Adjusted LIBOR Rate
shall be the “Applicable Rate”. Borrower shall pay interest in arrears on the
tenth (10th) day of every calendar month in the amount of all interest accrued
and unpaid. All payments (whether of principal or of interest) shall be deemed
credited to Borrower’s account only if received by 12:00 noon Brooklyn, Ohio,
time on a Business Day; otherwise, such payment shall be deemed received on the
next Business Day.

(b) If Agent determines in its reasonable discretion (i) that Dollar deposits in
an amount approximately equal to the Loan for the designated LIBOR Rate Interest
Period are not generally available at such time in the London interbank market
for deposits in Dollars, (ii) that the rate at which such deposits are being
offered will not adequately and fairly reflect the cost to Lenders of
maintaining a LIBOR Rate on such portion of the Loan or of funding the same for
such LIBOR Rate Interest Period due to circumstances affecting the London
interbank market generally, (iii) that reasonable means do not exist for
ascertaining a LIBOR Rate, or (iv) that an Adjusted LIBOR Rate would be in
excess of the maximum interest rate which Borrower may by law pay, then, in any
such event, Agent shall so notify Borrower and all portions of the Loan bearing
interest at an Adjusted LIBOR Rate that are so affected shall, as of the date of
such notification with respect to an event described in clause (ii) or
(iv) above, or as of the expiration of the applicable LIBOR Rate Interest Period
with respect to an event described in clause (i) or (iii) above, bear interest
at the Adjusted Base Rate (or such lower rate as required by applicable law)
until such time as the situations described above are no longer in effect or can
be avoided, at which time the Loan shall again accrue interest at the Adjusted
LIBOR Rate.

(c) Interest at the Applicable Rate (or Default Rate) shall be calculated for
the actual number of days elapsed on the basis of a 360-day year, including the
first date of the applicable period to, but not including, the date of
repayment.

(d) Borrower shall pay all Breakage Costs incurred from time to time by Lenders
upon demand.

(e) If the introduction of or any change in any Law, regulation or treaty, or in
the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof, shall make it unlawful for Lender to
maintain the Applicable Rate at an Adjusted LIBOR Rate with respect to the Loan
or any portion thereof, or to fund the Loan or any portion thereof in Dollars in
the London interbank market, or to give effect to its obligations regarding the
accrual of interest on the Loan at the Adjusted LIBOR Rate as contemplated by
the Loan Documents, then (1) Agent shall notify Borrower that Lenders are no
longer able to maintain the Applicable Rate at an Adjusted LIBOR Rate, (2) the
Applicable Rate for any portion of the Loan for which the Applicable Rate is
then an Adjusted LIBOR Rate shall automatically be converted to the Adjusted
Base Rate, and (3) Borrower shall pay to Agent the amount of Breakage Costs (if
any) incurred in connection with such conversion. Thereafter, the Loan shall
accrue interest at the Adjusted Base Rate until such time as the situation
described herein is no longer in effect or can be avoided, at which time the
Loan shall again accrue interest at the Adjusted LIBOR Rate.

(f) The Loan shall bear interest at the Default Rate upon the election of the
Lenders at any time at which an Event of Default shall exist.

 

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ARTICLE 6

COSTS OF MAINTAINING LOAN

6.1 Increased Costs and Capital Adequacy.

(a) Borrowers recognize that the cost to the Lenders of maintaining the Loan or
any portion thereof may fluctuate and, Borrowers agree to pay Agent for the pro
rata benefit of the Lenders additional amounts to compensate the Lenders for any
increase in its actual costs incurred in maintaining the Loan or any portion
thereof outstanding or for the reduction of any amounts received or receivable
from Borrowers as a result of:

(i) any change after the date hereof in any applicable Law, regulation or
treaty, or in the interpretation or administration thereof, or by any domestic
or foreign court, (A) changing the basis of taxation of payments under this
Agreement to Agent (other than taxes imposed on all or any portion of the
overall net income or receipts of any Lender), or (B) imposing, modifying or
applying any reserve, special deposit or similar requirement against assets of,
deposits with or for the account of, credit extended by, or any other
acquisition of funds for loans by the Lenders (which includes the Loan or any
applicable portion thereof), or (C) imposing on any Lender, or the London
interbank market generally, any other condition affecting the Loan, provided
that the result of the foregoing is to increase the cost to Lender of
maintaining the Loan or any portion thereof or to reduce the amount of any sum
received or receivable from Borrowers by Lenders under the Loan Documents; or

(ii) the maintenance by any Lender of reserves in accordance with reserve
requirements promulgated by the Board of Governors of the Federal Reserve System
of the United States with respect to “Eurocurrency Liabilities” of a similar
term to that of the applicable portion of the Loan (without duplication for
reserves already accounted for in the calculation of a LIBOR Rate pursuant to
the terms hereof).

(b) If the application of any Law, rule, regulation or guideline adopted or
arising out of the July, 1988 report of the Basel Committee on Banking
Regulations and Supervisory Practices entitled “International Convergence of
Capital Measurement and Capital Standards”, or the adoption after the date
hereof of any other Law, rule, regulation or guideline regarding capital
adequacy, or any change after the date hereof in any of the foregoing, or in the
interpretation or administration thereof by any domestic or foreign Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender, with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on Lender’s capital to a level below that which Lender would have
achieved but for such application, adoption, change or compliance (taking into
consideration the policies of Lender with respect to capital adequacy), then,
from time to time Borrowers shall pay to Lender such additional amounts as will
compensate Lender for such reduction with respect to any portion of the Loan
outstanding.

(c) Any amount payable by Borrowers under subsection (a) or subsection (b) of
this Section 6.1 shall be paid within five (5) days of receipt by Borrowers of a
certificate signed by an authorized officer of Agent setting forth the amount
due and the basis for the determination of such amount, which statement shall be
conclusive and binding upon Borrowers, absent manifest error. Failure on the
part of Agent to demand payment from Borrowers for any such amount attributable
to any particular period shall not constitute a waiver of each Lender’s right to
demand payment of such amount for any subsequent or prior period. Agent shall
use reasonable efforts to deliver to Borrowers prompt notice of any event
described in subsection (a) or (b) above, of the amount of the reserve and
capital adequacy payments resulting therefrom and the reasons therefor and of
the basis of calculation of such amount; provided, however, that any failure by
Agent to so notify Borrowers shall not affect Borrowers’ obligation to pay the
reserve and capital adequacy payment resulting therefrom.

6.2 Borrower Withholding.

If by reason of a change in any applicable Laws occurring after the date hereof,
any Borrower is required by Law to make any deduction or withholding in respect
of any taxes (other than taxes imposed on or measured by the net income of any
Lender or any franchise tax imposed on any Lender), duties or other charges

 

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from any payment due under the Notes, the sums due from such Borrower in respect
of such payment shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, Lender receives and retains a net
sum equal to the sum which it would have received had no such deduction or
withholding been required to be made.

ARTICLE 7

LOAN EXPENSE AND ADVANCES

7.1 Loan and Administration Expenses.

Each Borrower unconditionally agrees to pay all reasonable expenses of the Loan,
including all amounts payable pursuant to Sections 7.2 and 7.3 and any and all
other fees owing to Agent or any Lender pursuant to the Loan Documents, and also
including, without limiting the generality of the foregoing, all recording,
filing and registration fees and charges, mortgage or documentary taxes, all
insurance premiums, title insurance premiums and other charges of each Title
Insurer, printing and photocopying expenses, survey fees and charges, cost of
certified copies of instruments, cost of premiums on surety company bonds and
the Title Policies, at the promulgated rates, if applicable, charges of a Title
Insurer or other escrowee for administering disbursements, all fees and costs of
Agent’s Environmental Report, all appraisal fees, insurance consultant’s fees,
travel related expenses and all costs and expenses incurred by Agent in
connection with the determination of whether or not Borrowers have performed the
obligations undertaken by Borrowers hereunder or have satisfied any conditions
precedent to the obligations of each Lender hereunder and, if any default or
Event of Default occurs hereunder or under any of the Loan Documents or if the
Loan or the Notes or any portion thereof is not paid in full when and as due,
all costs and expenses of Lenders (including, without limitation, court costs
and counsel’s fees and disbursements) incurred in attempting to enforce payment
of the Loan and expenses of Agent and each Lender incurred (including court
costs and counsel’s fees and disbursements) in attempting to realize, while a
default or Event of Default exists, on any security or incurred in connection
with the sale or disposition (or preparation for sale or disposition) of any
security for the Loan. Each Borrower agrees to pay all brokerage, finder or
similar fees or commissions payable in connection with the transactions
contemplated hereby and shall indemnify and hold Agent and the Lenders harmless
against all claims, liabilities, costs and expenses (including reasonable
attorneys’ fees and expenses) arising in relation to any claim by broker, finder
or similar person.

7.2 Lender’s Attorneys’ Fees and Disbursements.

Borrowers agree to pay the reasonable attorneys’ fees of the Lenders and
disbursements incurred in connection with the Loan, including (i) the
preparation of this Agreement, any intercreditor agreements and the other Loan
Documents and the preparation of the closing binders, (ii) the disbursement,
syndication, amendment and administration of the Loan and (iii) the enforcement
of the terms of this Agreement and the other Loan Documents.

7.3 Time of Payment of Fees and Expenses.

Borrowers shall pay all expenses and fees incurred as of the Loan Opening on the
Loan Opening Date (unless sooner required herein). At the time of the Opening of
the Loan, Agent may pay from the proceeds of the initial disbursement of the
Loan all Loan expenses. Agent is hereby authorized, without any specific request
or direction by Borrowers, to make disbursements from time to time in payment of
or to reimburse Agent for all reasonable Loan expenses and fees.

7.4 Expenses and Advances Secured by Loan Documents.

Any and all advances or payments made by any Lender under this Article 7 from
time to time, and any amounts expended by Agent pursuant to this Agreement,
shall, as and when advanced or incurred, constitute additional indebtedness
evidenced by the Notes and secured by the Mortgage and the other Loan Documents.

 

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7.5 Right of Lender to Make Advances to Cure Borrowers’ Defaults.

In the event that any Borrower fails to perform any of such Borrower’s
covenants, agreements or obligations contained in this Agreement or any of the
other Loan Documents (after the expiration of applicable grace periods, except
in the event of an emergency or other exigent circumstances), Agent may (but
shall not be required to) perform any of such covenants, agreements and
obligations, and any amounts expended by Agent in so doing and shall constitute
additional indebtedness evidenced by the Notes and secured by the Mortgages and
the other Loan Documents and shall bear interest at the Default Rate.

ARTICLE 8

REQUIREMENTS PRECEDENT

TO THE OPENING OF THE LOAN AND ANY SUBSEQUENT DISBURSEMENT

8.1 Conditions Precedent to Closing and Opening of the Loan.

Borrowers agree that the obligation of the Lenders’ to open the Loan is
conditioned upon Borrowers’ performance and satisfaction of the following
conditions precedent in form and substance satisfactory to Agent in its
reasonable discretion:

(a) Borrowers shall have furnished to Agent ALTA Mortgagee Title Insurance
Policies, issued by the Title Insurer in the maximum amount of the Loan,
insuring the lien of each Mortgage as a valid first, prior and paramount lien
upon the applicable Project and all appurtenant easements, and subject to no
exceptions other than the applicable Permitted Exceptions (collectively, the
“Title Policies”). The Title Policies shall satisfy the requirements of Exhibit
C attached hereto and made a part hereof;

(b) Borrowers shall have furnished an ALTA plat of survey of each Project
prepared and certified by a surveyor licensed in the State in which the
respective Land is located and otherwise satisfactory to Agent, in triplicate,
showing, through the use of course bearings and distances, (i) all foundations
of the Improvements in place; (ii) the dimensions and locations of all easements
and roads or rights of way and setback lines, if any, affecting each Project, or
required by subsection (i) of this Section and that the same are unobstructed;
(iii) the dimensions, boundaries and square footage of the applicable
Improvements, if any; (iv) that all foundations and other structures are within
the lot lines and in compliance with any restrictions of record or ordinances
relating to the location thereof; (v) the dimensions of all buildings and
improvements, if any, and distance of such buildings and improvements from the
lot lines; (vi) no encroachments by any improvements located on adjoining
property, except as approved by Agent; (vii) whether or not the applicable
Project is located within a flood plain or flood hazard area; (viii) the
location of adjoining streets and utilities and the distance and name of the
nearest intersecting streets; (ix) the dimensions and locations of all exterior
parking areas, if any; and (x) such additional information which may be required
by Agent. Each such survey shall be dated no earlier than ninety (90) days prior
to the Loan Opening, shall be made (and certified to have been made) as set
forth in Exhibit D attached hereto and made a part hereof. Such survey shall
include the legal description of the applicable Land;

(c) Borrowers shall have furnished to Agent prior to the Loan Opening Date
satisfactory evidence that insurance coverages are in effect with respect to
each Project and each Operator and Borrowers, in accordance with the Insurance
Requirements attached hereto as Exhibit E, for which the premiums have been
fully prepaid with endorsements satisfactory to Agent;

(d) Borrowers shall have furnished evidence that no litigation or proceedings
shall be pending or, to the best of Borrowers’ knowledge, threatened which could
or might cause a Material Adverse Change with respect to any Borrower,
Guarantor, or any Project;

(e) Borrowers shall have furnished to Agent an opinion from counsel for
Borrowers and Guarantor covering due authorization, execution and delivery and
enforceability of the Loan Documents and also containing such other legal
opinions as Agent shall require;

(f) Agent shall have obtained one or more Appraisals, which Appraisals must be
satisfactory to Agent in all respects;

(g) Borrowers shall have furnished to Agent a property condition report for each
Project;

 

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(h) Borrowers shall have furnished to Agent current bankruptcy, federal tax lien
and judgment searches and searches of all Uniform Commercial Code financing
statements filed in each place UCC Financing Statements are to be filed
hereunder, demonstrating the absence of adverse claims;

(i) Borrowers shall have furnished to Agent current annual financial statement
of Guarantor, and such other persons or entities connected with the Loan as
Agent may request, each in form and substance and certified by Borrowers or
Guarantor, as applicable, as acceptable to Agent. Guarantor shall provide such
other additional financial information Agent reasonably requires;

(j) Borrowers shall have furnished to Agent legible copies of all title
exception documents cited in the Title Policy and all other legal documents
affecting each Project or the use thereof;

(k) Intentionally Deleted;

(l) Agent has received evidence that no portion of the Projects is located in an
area designated by the Secretary of Housing and Urban Development as a special
flood hazard area, or flood hazard insurance acceptable to Agent in its sole
discretion;

(m) If any Title Policy does not include a zoning endorsement, Borrowers shall
have furnished to Agent a zoning report for each Project in form satisfactory to
Agent;

(n) Borrowers shall have furnished to Agent proof satisfactory to Agent of
authority, formation, organization and good standing in the state of its
incorporation or formation and, if applicable, qualification as a foreign entity
in good standing in the state of its incorporation or formation, of all
corporate, partnership, trust and limited liability company entities (including
each Borrower and Guarantor) executing any Loan Documents, whether in their own
name or on behalf of another entity. Borrower shall also provide certified
resolutions in form and content satisfactory to Agent, authorizing execution,
delivery and performance of the Loan Documents, and such other documentation as
Agent may reasonably require to evidence the authority of the persons executing
the Loan Documents;

(o) Borrowers shall have furnished an environmental report (“Environmental
Report”) for each Project prepared at Borrowers’ expense by a qualified
environmental consultant approved by Agent. The environmental survey shall, at a
minimum, (a) demonstrate the absence of any existing or potential Hazardous
Material contamination or violations of environmental Laws at each Project,
except as acceptable to Agent in its sole and absolute discretion, (b) include
the results of all sampling or monitoring to confirm the extent of existing or
potential Hazardous Material contamination at any Project, including the results
of leak detection tests for each underground storage tank located at such
Project, if any, (c) describe response actions appropriate to remedy any
existing or potential Hazardous Material contamination, and report the estimated
cost of any such appropriate response, (d) confirm that any prior removal of
Hazardous Material or underground storage tanks from any Project was completed
in accordance with applicable Laws, and (e) confirm whether or not the Land is
located in a wetlands district;

(p) Intentionally Deleted;

(q) Intentionally Deleted;

(r) Borrowers shall have delivered to Agent a copy of the executed Operating
Lease for each Project between the applicable Borrower and the applicable
Operator along with a subordination, non-disturbance and attornment agreement
fully executed between the applicable parties on Agent’s form;

(s) Intentionally Deleted;

(t) There shall be no uncured Default or Event of Default by any Borrower
hereunder;

(u) Borrowers shall have delivered to Agent copies of the current renewed
licenses for each Project that expire as of June 30, 2014; and

 

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(v) Borrowers shall have furnished to Agent such other materials, documents,
papers or requirements regarding any Project, any Borrower and Guarantor as
Agent shall reasonably request.

The conditions contained in this Section 8.1 are for the sole benefit of the
Lenders, and Agent, on behalf of the Lenders, may, in its sole discretion, waive
Borrowers’ compliance with any one (1) or more conditions; provided, that, in no
event shall the waiver of one (1) condition by Agent constitute the waiver of
any other condition listed above.

ARTICLE 9

RESERVED

ARTICLE 10

BORROWERS’ AGREEMENTS

10.1 Borrowers further covenant and agree as follows:

(a) Opening of Loan on the Loan Opening Date. All conditions precedent to the
Opening of the Loan shall be complied with on or prior to the Loan Opening Date.
If such conditions are not complied with as of the Loan Opening Date, Agent may
at its sole option terminate the obligation of the Lenders to fund the Loan by
written notice to Borrowers.

(b) Inspection by Agent. Borrowers will cooperate with Agent in arranging for
inspections by representatives of Agent from time to time provided, that unless
an Event of Default exists, upon twenty-four (24) hours prior notice to
Borrowers. Such inspection shall include an examination of (i) the Improvements,
and (ii) all books, contracts and records with respect to the Improvements.

(c) Mechanics’ Liens and Contest Thereof. Borrowers will not suffer or permit
any mechanics’ lien claims to be filed or otherwise asserted against any
Project, and will promptly discharge the same in case of the filing of any
claims for lien or proceedings for the enforcement thereof, provided, however,
that Borrowers shall have the right to contest in good faith and with reasonable
diligence the validity of any such lien or claim upon furnishing to the Title
Insurer such security or indemnity as it may require to induce said Title
Insurer to issue an endorsement to the Title Policy insuring against all such
claims or liens; and provided further, that the aggregate amount of liens so
insured against at any time shall not exceed $25,000.00 for any one Project or
$150,000.00 in the aggregate without Agent’s prior written consent.

(d) Settlement of Mechanics’ Lien Claims. If Borrowers shall fail promptly
either (i) to discharge any such lien, or (ii) to contest claims asserted and
give security or indemnity in the manner provided in subsection (c) of this
Section, or having commenced to contest the same, and having given such security
or indemnity, shall fail to prosecute such contest with diligence, or to
maintain such indemnity or security so required by the Title Insurer for its
full amount, or upon adverse conclusion of any such contest, to cause any
judgment or decree to be satisfied and lien to be released, then and in any such
event Agent may, at its election (but shall not be required to), procure the
release and discharge of any such claim and any judgment or decree thereon and,
further, may in its sole discretion effect any settlement or compromise of the
same, or may furnish such security or indemnity to the Title Insurer, and any
amounts so expended by Agent or any Lender, including premiums paid or security
furnished in connection with the issuance of any surety company bonds, shall be
deemed to constitute disbursement of the proceeds of the Loan hereunder. In
settling, compromising or discharging any claims for lien, Agent shall not be
required to inquire into the validity or amount of any such claim.

(e) Renewal of Insurance. Borrowers shall maintain, or cause the Operators to
maintain, insurance policies to be maintained in compliance with Exhibit E at
all times. Borrowers shall timely pay, or cause the Operators to pay, all
premiums on all insurance policies required hereunder, and as and when
additional insurance is required by Agent, from time to time, and as and when
any policies of insurance may expire, furnish to Agent, premiums prepaid,
additional and renewal insurance policies with companies, coverage and in
amounts satisfactory to Agent in accordance with Section 8.1(c).

 

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(f) Payment of Taxes. Borrowers shall pay, or cause to be paid, all real estate
taxes and assessments and charges of every kind upon the Projects before the
same become delinquent, provided, however, that Borrowers shall have the right
to pay such tax under protest or to otherwise contest any such tax or
assessment, but only if (i) such contest has the effect of preventing the
collection of such taxes so contested and also of preventing the sale or
forfeiture of the Project or any part thereof or any interest therein,
(ii) Borrowers have notified Agent of their intent to contest such taxes, and
(iii) Borrowers have deposited security in form and amount satisfactory to
Agent, in its sole discretion. If Borrowers fail to commence such contest or,
having commenced to contest the same, and having deposited such security
required by Agent for its full amount, shall thereafter fail to prosecute such
contest in good faith or with due diligence, or, upon adverse conclusion of any
such contest, shall fail to pay such tax, assessment or charge, Agent, on behalf
of the Lenders, may, at its election (but shall not be required to), pay and
discharge any such tax, assessment or charge, and any interest or penalty
thereon, and any amounts so expended by Agent shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Notes). Borrowers shall
furnish to Agent evidence that taxes are paid at least five (5) days prior to
the last date for payment of such taxes and before imposition of any penalty or
accrual of interest.

(g) Escrow Accounts. During the continuance of an Event of Default, Borrowers
shall, following the written request of Agent and for so long as such Event of
Default is continuing, make insurance and tax escrow deposits, in amounts
reasonably determined by Agent from time to time as being needed to pay taxes
and insurance premiums when due, in an interest bearing escrow account held by
Agent in Agent’s name and under its sole dominion and control. All payments
deposited in the escrow account, and all interest accruing thereon, are pledged
as additional collateral for the Loan. Notwithstanding Agent’s holding of the
escrow account, nothing herein shall obligate Agent or any Lender to pay any
insurance premiums or real property taxes with respect to any portion of the
Projects, provided that, so long as no Event of Default exists, Agent shall make
available to Borrowers such funds as may be deposited in the escrow account from
time to time for Borrowers’ payment of insurance premiums or real property taxes
due with respect to the Projects.

(h) Personal Property. All of Borrowers’ personal property, fixtures,
attachments and equipment delivered upon, attached to or used in connection with
the operation of the Projects shall always be located at the applicable Project
and shall be kept free and clear of all liens, encumbrances and security
interests.

(i) Operating Leases. Each Borrower shall maintain its Operating Lease in full
force and effect and timely perform all of its obligations thereunder and not
permit the termination or any material amendment of any Operating Lease unless
the prior written consent of Lenders is first obtained. Upon the occurrence of
default by an Operator under an Operating Lease that is not cured within
applicable notice and cure periods, upon Lenders’ request, Borrowers shall
promptly engage oversight management services from a management company
reasonably acceptable to the Lenders. In the event that bankruptcy or insolvency
proceedings are instituted by or against any Operator, each Borrower shall (to
the extent permitted by the applicable bankruptcy court having jurisdiction over
such proceedings), upon written instruction received from Agent, terminate the
Operating Lease.

(j) Defaults Under Leases. Borrowers will not suffer or permit any breach or
material default to occur in any of Borrowers’ obligations under any of the
Leases nor suffer or permit the same to terminate by reason of any failure of
Borrowers to meet any requirement of any Lease, which default or failure results
in a Material Adverse Change, including, without limitation, under any Operating
Lease between any of the Borrowers and any Operator.

(k) Agent’s Attorneys’ Fees for Enforcement of Agreement. In case of any default
or Event of Default hereunder, Borrowers (in addition to Agent’s reasonable
attorneys’ fees, if any, to be paid pursuant to Section 7.3) will pay Agent’s
reasonable attorneys’ and paralegal fees (including, without limitation, any
attorney and paralegal fees and costs incurred in connection with any litigation
or bankruptcy or administrative hearing and any appeals therefrom) in connection
with the enforcement of this Agreement; without limiting the generality of the
foregoing, if at any time or times hereafter Agent or any Lender employs counsel
(whether or not any suit has been or shall be filed and whether or not other
legal proceedings have been or shall be instituted) for advice or other
representation with respect to the Projects, this Agreement, or any of the other
Loan Documents, or to protect, collect, lease, sell, take possession of, or
liquidate the Project, or to attempt to enforce any security interest or lien in
any portion of the Project, or to enforce any rights of Agent and each Lender or
any of Borrowers’ obligations

 

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hereunder, then in any of such events all of the reasonable attorneys’ fees
arising from such services, and any expenses, costs and charges relating
thereto, shall constitute an additional liability owing by Borrowers to Agent
and/or the applicable Lender, on a joint and several basis, payable on demand.

(l) Appraisals. Agent shall have the right to obtain a new or updated Appraisal
of any Project from time to time. Borrowers shall cooperate with Agent in this
regard. If the Appraisal is obtained to comply with any applicable law or
regulatory requirement, or bank policy promulgated to comply therewith, or an
Event of Default exists, Borrowers shall pay for any such Appraisal upon Agent’s
request.

(m) Furnishing Information. Borrowers shall provide Lender or shall cause
Guarantor or Operator to provide to Agent the following financial statements and
information on a continuing basis during the term of the Loan:

(i) Within ninety (90) days after the end of each Fiscal Year of each Project,
Borrowers unaudited financial statements prepared in accordance with GAAP, and
certified by an officer of Borrower, which statements shall be prepared in
accordance with GAAP, and shall include a balance sheet and a statement of
income and expenses for the year then ended, and shall be certified as true and
correct by a financial officer of Borrowers.

(ii) Within ninety (90) days after the end of each calendar year, audited
financial statements of the Guarantor on a GAAP basis (which include balance
sheet, income statement, cash flow statement and all supporting notes);

(iii) Within forty-five (45) days after the end of each quarter, unaudited
interim financial statements of the operations of the Projects, certified as
true and correct by a financial officer of the Borrowers or Operators, prepared
in accordance with GAAP, which statements shall include a balance sheet and
statement of income and expenses for the quarter then ended and for the fiscal
year to date, which such statements shall be accompanied by a covenant
compliance certificate in the form attached hereto as Exhibit G;

(iv) Within forty-five (45) days after the end of each quarter, quarterly census
information by payor-class of the Projects as of the end of such quarter on an
average basis for such year through the end of such quarter, certified by the
chief financial officer of Borrowers or Operator to be true and correct.

(v) Within sixty (60) days after the end of each quarter, unaudited interim
financial statements of the operations of the Guarantor, certified as true and
correct by a financial officer of the Guarantor, prepared in accordance with
GAAP, which statements shall include a balance sheet and statement of income and
expenses for the quarter then ended and for the Fiscal Year to date.

(vi) If and to the extent applicable, within ten (10) days after filing or
receipt, all Medicaid cost reports and any amendments thereto filed with respect
to the Projects and all responses, audit reports, or other inquiries with
respect to such cost reports (based on availability and applicability).

(vii) Within ten (10) days after receipt, copies of all licensure survey reports
and statements of deficiencies (with plans of correction attached thereto)
(based on availability and applicability).

(viii) Within three (3) days after receipt, any and all notices (regardless of
form) from any and all licensing agency, that any Project’s license or
certification is being downgraded to a substandard category, revoked or
suspended, or that action is pending or being considered to downgrade to a
substandard category, revoke or suspend a Project’s license or certification.

(ix) If requested by Lender, within one hundred twenty (120) days after the end
of the Projects’ Fiscal Year, and more frequently, if reasonably requested by
Lender (but in no event more often than twice during any calendar year), an aged
accounts receivable report for any Project by the account age classifications of
30 days, 60 days, 90 days, 120 days, and over 120 days.

 

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Lender reserves the right to require that the annual and/or quarterly financial
statements of Borrowers, or Guarantor be audited and prepared by a nationally
recognized accounting firm or independent certified public accounting firm
acceptable to Lender, at their respective sole cost and expense, if (i) an Event
of Default exists, or (ii) if Lender has reasonable grounds to believe that the
unaudited financial statements do not accurately represent the financial
condition of Borrowers or Guarantor as the case may be. Lender further reserves
the right to require such other financial information of Borrowers, Guarantor,
and/or the Projects, at such other times (including monthly or more frequently)
as it shall deem necessary. All financial statements must be in the form and
detail as Lender shall from time to time reasonably request. Borrowers shall
during regular business hours permit Agent or any of its agents or
representatives (after twenty-four hours prior notice to Borrowers unless an
Event of Default exists) to have access to and examine all of its books and
records regarding the development and operation of each Project.

(n) Lost Note. Upon any Lender’s furnishing to Borrowers an affidavit to such
effect, Borrowers shall, if the applicable Note is mutilated, destroyed, lost or
stolen, deliver to such Lender, in substitution therefor, a new note containing
the same terms and conditions as the such Note.

(o) INDEMNIFICATION. BORROWERS SHALL INDEMNIFY AGENT, EACH LENDER AND EACH
AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND
CONSULTANTS (EACH, AN “INDEMNIFIED PARTY”) AND DEFEND AND HOLD EACH INDEMNIFIED
PARTY HARMLESS FROM AND AGAINST ALL CLAIMS, INJURY, DAMAGE, LOSS AND LIABILITY,
COST AND EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES, COSTS AND EXPENSES) OF
ANY AND EVERY KIND TO ANY PERSONS OR PROPERTY BY REASON OF (I) THE OPERATION OR
MAINTENANCE OF THE PROJECT; (II) ANY BREACH OF REPRESENTATION OR WARRANTY,
DEFAULT OR EVENT OF DEFAULT; OR (III) ANY OTHER MATTER ARISING IN CONNECTION
WITH THE LOAN, ANY BORROWER OR PROJECT (EXPRESSLY INCLUDING, WITHOUT LIMITATION,
TO THE EXTENT CAUSED BY THE NEGLIGENCE OF THE INDEMNIFIED PARTY). NO INDEMNIFIED
PARTY SHALL, HOWEVER, BE ENTITLED TO BE INDEMNIFIED AGAINST ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

(p) No Additional Debt. Except for the Loan, no Borrower shall incur any
indebtedness (whether personal or nonrecourse, secured or unsecured) other than
customary trade payables paid within sixty (60) days after they are incurred and
equipment lease financing in the ordinary course of business; provided, however,
Borrowers shall be permitted to enter into recourse debt with the consent of
Agent, which consent shall not be unreasonably withheld by Agent.

(q) Compliance With Laws. Each Borrower shall comply with all applicable
requirements (including applicable Laws) of any Governmental Authority having
jurisdiction over such Borrower or any applicable Project.

(r) Organizational Documents. No Borrower shall, without the prior written
consent of Agent, permit or suffer (i) a material amendment or modification of
its organizational documents, (ii) the admission of any new member, partner or
shareholder, or (iii) any dissolution or termination of its existence.

(s) Furnishing Reports. Within thirty (30) days from receipt thereof, Borrowers
shall provide Agent with copies of all inspections, reports, test results and
other information received by any Borrower, which relate to any Project or any
part thereof in any material respect.

(t) Management Contracts. Borrowers shall not and shall not permit its Operators
to, enter into, modify in any material respect, amend in any material respect,
terminate or cancel any management agreement (or any other contract related to
the management or operation of any Project) for any Project (except that the
Interim Agreements (as defined below) may terminate by their express terms) or
agreements with agents or brokers, without the prior written approval of Agent,
which approval shall not be unreasonably withheld by Agent. Pursuant to
applicable law, the licenses and permits required for Operator to operate the
Projects as a skilled nursing facility (the “Operator Permits”) may not be
transferred or new Operator Permits issued prior to August 1st of any calendar
year and application of such transfer or issuance cannot be made more than
thirty (30) days prior to August 1, 2013.

 

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Accordingly, as of the date hereof, the Operators have not been issued Operator
Permits. Borrower agrees to cause Operator to apply for the issuance of new
Operator Permits (the “New Operator Permits”) in a timely manner. Furthermore,
as is customary practice in the State of Arkansas, in order for the Operators to
operate the Projects during the period prior to the issuance of the New Operator
Permits, (i) each Operator, as a sublessor, and each of the existing holders of
the Operating Permits (the “Existing Permit Holders”), as a sublessee, have
entered a Sublease Agreement of even date herewith with respect to each Project
(individually, a “Sublease” and collectively, the “Subleases”) and (ii) each
Existing Permit Holder and an affiliate of Operator, as a manager, have entered
into a Management Agreement of even date herewith with respect to each Project
(individually, a “Management Agreement” and collectively, the “Management
Agreements”) (the Subleases and Management Agreements being collectively
referred to as the “Interim Agreements”), which Interim Agreements shall
terminate upon issuance of the New Operator Permits. Lender and Borrower
acknowledge the foregoing arrangement with respect to the Operator Permits and
issuance of New Operator Permits.

(u) Furnishing Notices. Borrowers shall provide Agent with copies of all
material notices pertaining to any Project received by any Borrower from any
Operator, any Governmental Authority or insurance company within seven (7) days
after such notice is received.

(v) Alterations. Without the prior written consent of Agent, which consent will
be not be unreasonably withheld, Borrowers shall not make, or permit to be made,
any material alterations to any Project, other than alterations and improvements
in the ordinary course of business and the Immediate Repairs.

(w) Distributions. At all times while any indebtedness under the Loan remains
outstanding, Borrowers shall not make any distributions to partners, members or
shareholders; provided, however, so long as no Event of Default exists as of the
date of any such distribution and after giving effect thereto, Borrowers shall
have access to and may use any or all Monthly Excess Cash Flow for any cash
distribution. If an Event of Default occurs, Agent, for the pro rata benefit of
the Lenders, may take all Monthly Excess Cash Flow and apply the same to the
aggregate outstanding balance under the Loan Documents. Notwithstanding the
foregoing, Borrowers shall be permitted to make equity distributions as, and in
an amount, necessary to maintain REIT status whether or not an Event of Default
exists.

(x) Minimum Occupancy. Borrowers shall not permit the aggregate Occupancy level
for the Projects to be less than seventy-five percent (75%) of the number
Available Beds based upon the average trailing twelve (12) months. Such covenant
shall be tested on a quarterly basis commencing on September 30, 2013, and
continuing on the last day of each quarter thereafter until the Final Maturity
Date. The initial calculation shall be based upon a trailing three months with
each successive test aggregating the prior period or periods until a trailing
twelve months is achieved. If the foregoing covenant is not achieved for any
quarter during the term of the Loan for which it is tested, Borrowers shall
submit to Agent within thirty (30) days following such failure, a written plan
of correction reasonably satisfactory to the Agent, detailing the Borrowers’
plan to bring the Projects into compliance with such covenant. If the Projects
fail to achieve the required level for a second consecutive quarter, upon
request by Agent, Borrowers shall (1) promptly retain a marketing consultant
satisfactory to the Agent to advise the Borrowers regarding the Projects,
(2) obtain and submit the recommendations or reports of such marketing
consultant to Agent within thirty (30) days following the engagement of the
marketing consultant, and (3) promptly implement the recommendations of the
foregoing marketing consultant. Notwithstanding any provision herein to the
contrary, Agent agrees that failure of the Projects to achieve the occupancy
covenant shall not, in and of itself, constitute an Event of Default so long as
Borrowers provide Agent with evidence satisfactory to Agent that a marketing
plan submitted to and approved by Lender is being timely implemented to correct
the non-compliance.

(y) Minimum Debt Service Coverage. Borrowers shall not permit the Debt Service
Coverage to be less than 1.45 to 1.0 at all times. Such covenant shall be tested
on a quarterly basis commencing on September 30, 2013, and continuing on the
last day of each quarter thereafter until the Final Maturity Date. The initial
calculation shall be based upon a trailing three months with each successive
test aggregating the prior period or periods until a trailing twelve months is
achieved.

(z) Minimum Rent Coverage. Borrowers shall not permit the Rent Coverage to be
less than that set forth in Schedule II attached hereto. Such covenant shall be
tested on a quarterly basis in accordance with such Schedule and for the periods
therein set forth.

 

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(aa) Lien Searches. Without limiting the obligations of the Borrowers hereunder,
Borrowers agree, within ten (10) days of Lender’s written demand, to reimburse
Agent for all expenses not to exceed $2,000 in any twelve (12) month period
incurred by Agent in periodically (up to two (2) times per year) verifying the
performance of each Borrower of its obligations under the Loan Documents and the
security and priority of the Mortgages, including without limitation expenses
incurred by Agent for title searches, title updates and endorsements, tax and
judgment lien searches, litigation searches, and UCC searches.

(bb) REIT Status. Guarantor shall maintain its status as a real estate
investment trust at all times that any portion of the Loan is outstanding.

(cc) Immediate Repairs. Borrowers shall promptly commence the Immediate Repairs
and shall complete the same prior to September 1, 2013.

(dd) Conduct of Operations. Borrowers shall conduct, or cause Operator to
conduct, the operation of each Project at all times in a manner consistent with
the level of operation of other similar skilled nursing facilities, including
without limitation, the following:

(i) to maintain the standard of care for the residents of the Project at all
times at a level necessary to ensure quality care for the residents of the
Project in accordance with customary and prudent industry standards;

(ii) to operate the Project in a prudent manner and in substantial compliance
with applicable laws and regulations relating thereto and cause all permits,
Reimbursement Contracts, and any other agreements necessary for the use and
operation of the Project or, if applicable, as may be necessary for
participation in reimbursement programs (if any) to remain in effect without
reduction in the number of licensed units authorized for applicable
reimbursement programs;

(iii) to maintain sufficient inventory and equipment of types and quantities at
the Project to enable each Borrower and Operator to perform operations of the
Projects adequately;

(iv) to keep all improvements and equipment located on or used or useful in
connection with each Project in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all needed and
proper repairs, renewals, replacements, additions, and improvements thereto to
keep the same in good operating condition;

(v) to maintain sufficient cash in the operating accounts of the Projects in
order to satisfy the working capital needs of the Projects;

(vi) to keep all required permits current and in full force and effect; and

(vii) to cause all current Operator Permits to be transferred to Operator by the
applicable Governmental Authorities on or before August 31, 2013, with copies of
such licenses delivered promptly to Agent.

(ee) Periodic Surveys. Borrowers shall furnish or cause each Operator to furnish
to Agent, within twenty (20) days of receipt, a copy of any licensing agency
survey or report and any statement of deficiencies and/or any other report
indicating that any action is pending or being considered to downgrade any
Project to a substandard category, and within the time period required by the
particular agency for furnishing a plan of correction also furnish or cause to
be furnished to Agent a copy of the plan of correction generated from such
survey or report for any Project, and correct or cause to be corrected any
deficiency, the curing of which is a condition of continued licensure or for
full participation in a reimbursement program pursuant to any Reimbursement
Contract for existing residents or for new residents to be admitted with
coverage, by the date required for cure by such agency (plus extensions granted
by such agency).

 

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(ff) Fraud and Abuse.

(i) Anti-Kickback Law. After consultation with counsel concerning the federal
anti-kickback law (42 U.S.C.A. SEC. 1320a-7b(b)), neither Borrowers nor their
agents shall offer or give any remuneration or thing of value to any person to
encourage referral to the Projects nor will Borrowers or their agents solicit or
receive any remuneration or thing of value in exchange for Borrowers’ agreement
to make referrals or to purchase goods or services for the Projects.

(ii) Relationships. Except for indirect ownership interests in any Borrower as a
result of ownership of publicly traded shares of stock of Guarantor, Borrowers
will not allow a physician or other healthcare practitioner to have an ownership
interest in, or financial relationship with, a Borrower or any Project.

ARTICLE 11

CASUALTIES AND CONDEMNATION

11.1 Agent’s Election to Apply Proceeds on Indebtedness.

(a) Subject to the provisions of Section 11.1(b) below, the Lenders may elect to
collect, retain and apply upon the indebtedness of Borrowers under this
Agreement or any of the other Loan Documents all proceeds of insurance or
condemnation (individually and collectively referred to as “Proceeds”) after
deduction of all expenses of collection and settlement, including reasonable
attorneys’ and adjusters’ fees and charges. Any proceeds remaining after
repayment of the indebtedness under the Loan Documents shall be paid by Agent to
Borrowers.

(b) Notwithstanding anything in Section 11.1(a) to the contrary, in the event of
any casualty to any Improvements or any condemnation of part of any Project,
Agent and the Lenders agree to make available the Proceeds to restoration of
such Improvements if (i) no Event of Default exists, (ii) all Proceeds are
deposited with Agent, (iii) in Agent’s reasonable judgment, the amount of
Proceeds available for restoration of the applicable Improvements is sufficient
to pay the full and complete costs of such restoration, (iv) if the cost of
restoration exceeds ten percent (10%) of the Loan Amount, in Agent’s sole
determination after completion of restoration the Loan Amount will not exceed
(A) 60% of the aggregate “leased fee” value of the Projects, and (B) 75% of the
“leased fee” value of the applicable Project, (v) in Agent’s reasonable
determination, the applicable Project can be restored to an architecturally and
economically viable project in compliance with applicable Laws, (vi) each
Guarantor reaffirms its Guaranty in writing, and (vii) in Agent’s reasonable
determination, such restoration is likely to be completed no later than three
months prior to the Final Maturity Date.

11.2 Borrowers’ Obligation to Rebuild and Use of Proceeds Therefor.

In case the Lenders do not elect to apply or does not have the right to apply
the Proceeds to the indebtedness, as provided in Section 11.1 above, Borrower
shall:

(a) Proceed with diligence to make settlement with insurers or the appropriate
governmental authorities and cause the Proceeds to be deposited with Agent;

(b) In the event of any delay in making settlement with insurers or the
appropriate governmental authorities or effecting collection of the Proceeds,
deposit with Agent the full amount required to complete construction as
aforesaid;

(c) In the event the Proceeds are insufficient to assure the Lenders that the
Loan will be in balance, promptly deposit with Agent any amount necessary to
place the Loan in balance; and

(d) Promptly proceed with the assumption of construction of such Improvements,
including the repair of all damage resulting from such fire, condemnation or
other cause and restoration to its former condition.

Any request by Borrowers for a disbursement by Agent of Proceeds and funds
deposited by Borrowers shall be treated by Agent as if such request were for an
advance of the Loan hereunder, and the disbursement thereof shall be conditioned
upon Borrower’s compliance with and satisfaction of the same conditions
precedent as would be applicable under this Agreement for an advance of the
Loan.

 

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ARTICLE 12

ASSIGNMENTS BY BORROWERS

12.1 Prohibition of Assignments and Transfers by Borrowers; Partial Releases.

(a) Borrowers shall not assign or attempt to assign its rights under this
Agreement and any purported assignment shall be void. Without the prior written
consent of Agent, in Agent’s sole discretion, Borrowers shall not suffer or
permit the sale, transfer, lease (other than the Operating Leases and in the
ordinary course of business pursuant to residency agreements and without
material deviation from the pro forma rents previously provided by Borrowers to
Agent), conveyance, alienation, pledge, assignment, encumbrance, hypothecation
or other disposition (a “Transfer”) of (i) all or any portion of any Project or
any portion of any other security for the Loan, (ii) all or any portion of any
Borrower’s right, title and interest in and to any Project or any portion of any
other security for the Loan, or (iii) any interest in Guarantor or any Borrower
or any interest in any entity which holds an interest in, or directly or
indirectly controls, any Borrower. Notwithstanding the provisions hereof to the
contrary, Agent and the Lenders acknowledge that CHP Holding owns one hundred
percent (100%) of the direct ownership interests in each Borrower. Further, any
third party or combination of third parties which is not under common Control
with, or an Affiliate of, CHP Holding shall be permitted to acquire direct or
indirect ownership interests in Guarantor or any Borrower so long as no Change
of Control occurs.

(b) Notwithstanding the foregoing, Borrowers shall have the right at any time to
obtain release of any Buyback Project from the liens securing the Notes upon
making the respective payments set out hereunder and upon compliance with the
following terms and conditions:

(i) No Event of Default or event which with the passing of time and/or giving of
notice will constitute an Event of Default exists or will exist after giving
effect to the proposed release;

(ii) Borrowers deliver to Agent for the benefit of the Lenders the Release Price
for the applicable Project to be applied to the aggregate outstanding principal
balance under the Notes;

(iii) Agent shall have received evidence satisfactory to Agent that (a) the
aggregate “as-is” value of the remaining Projects (based upon the Appraisals
delivered to Agent in connection with the closing of the Loan) on a fee simple
basis exceeds the aggregate Loan Amount, after giving effect to any pay down of
the Loan in connection with the applicable release, such that the Loan Amount
shall be less than or equal to sixty percent (60%) of the aggregate “as is”
value for the remaining Projects on a fee simple basis, and (b) the Rent
Coverage for the remaining Projects is in excess of 1.40 to 1.00 for the six
month period immediately preceding the applicable date of determination;

(iv) All partial release documents shall be prepared at the expense of Borrowers
and shall be in form and substance satisfactory to Agent. Borrowers shall
present to Agent a written request for a partial release, specifically
identifying the Project to be released, together with an appropriate partial
release document required to be paid in order to entitle Borrowers to such
partial release, or escrow arrangements satisfactory to Agent for delivery of
any partial release. Agent will execute, acknowledge and return the partial
release documents to Borrowers within five (5) business days after Agent’s
receipt of the above specified items. In connection with and at the time of the
partial release of a Project, Agent shall further release the applicable
Borrower from any and all liabilities and obligations under the Loan Documents
which accrue from and after the date of such release, subject to any indemnity
obligations that expressly survive payment in full; and

(v) Borrowers shall reimburse Agent for all out-of-pocket fees and costs,
including, without limitation, reasonable legal fees in connection with the
granting of such partial releases and shall provide Agent with any and all
information reasonably requested by Agent with respect to the Project to be
released.

 

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12.2 Prohibition of Transfers in Violation of ERISA.

In addition to the prohibitions set forth in Section 12.2 above, no Borrower
shall assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose
of its interest or rights in this Agreement or in the Project, or attempt to do
any of the foregoing or suffer any of the foregoing, nor shall any party owning
a direct or indirect interest in Borrower assign, sell, pledge, encumber,
transfer, hypothecate or otherwise dispose of any of its rights or interest
(direct or indirect) in Borrower, attempt to do any of the foregoing or suffer
any of the foregoing, if such action would cause the Loan, or the exercise of
any of the Lenders’ rights in connection therewith, to constitute a prohibited
transaction under ERISA or the Internal Revenue Code or otherwise result in any
Lender being deemed in violation of any applicable provision of ERISA. Borrower
agrees to indemnify and hold Agent and each Lender free and harmless from and
against all losses, costs (including reasonable attorneys’ fees and expenses),
taxes, damages (including consequential damages) and expenses Agent or any
Lender may suffer by reason of the investigation, defense and settlement of
claims and in obtaining any prohibited transaction exemption under ERISA
necessary or desirable in Lender’s sole judgment or by reason of a breach of the
foregoing prohibitions. The foregoing indemnification shall be a recourse
obligation of Borrower and shall survive repayment of the Notes, notwithstanding
any limitations on recourse contained herein or in any of the Loan Documents.

12.3 Successors and Assigns.

Subject to the foregoing restrictions on transfer and assignment contained in
this Article 12, this Agreement shall inure to the benefit of and shall be
binding on the parties hereto and their respective successors and permitted
assigns.

ARTICLE 13

TIME OF THE ESSENCE

13.1 Time is of the Essence.

Borrowers agree that time is of the essence under this Agreement.

ARTICLE 14

EVENTS OF DEFAULT

14.1 Events of Default.

The occurrence of any one or more of the following shall constitute an “Event of
Default” as said term is used herein:

(a) Failure of Borrowers (i) (x) to pay the aggregate outstanding balance under
the Notes on the Final Maturity Date, (y) to make any scheduled payment of
principal (other than that required on the Final Maturity Date) or interest
within ten (10) days after the date when due or (z) to observe or perform any of
the other covenants or conditions by any Borrower to be performed under the
terms of this Agreement or any other Loan Document concerning the payment of
money, for a period of ten (10) days after written notice from Lender that the
same is due and payable; or (ii) for a period of thirty (30) days after written
notice from Lender, to observe or perform any non-monetary covenant or condition
contained in this Agreement or any other Loan Documents; provided that if any
such failure concerning a non-monetary covenant or condition is susceptible to
cure and cannot reasonably be cured within said thirty (30) day period, then
Borrowers shall have an additional sixty (60) days, so long as Borrowers have
commenced and is diligently pursuing a cure of the applicable default, and
provided further that if a different notice or grace period is specified under
any other paragraph of this Article 14 with respect to a particular breach, the
specific provision shall control. No cure period shall be afforded to Borrowers’
failure to observe or perform any covenants or conditions contained in
Section 10.1(m), (p), (r), (w), (x), (z) or (bb).

(b) Any Transfer or other disposition in violation of Sections 12.2 or 12.3.

 

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(c) If any warranty, representation, statement, report or certificate made now
or hereafter by any Borrower or Guarantor is materially untrue or materially
incorrect at the time made or delivered, provided that if such breach is
reasonably susceptible of cure, then no Event of Default shall exist so long as
Borrowers cure said breach (i) within the notice and cure period provided in
(a)(i) above for a breach that can be cured by the payment of money or
(ii) within the notice and cure period provided in (a)(ii) above for any other
breach.

(d) Any Borrower or Guarantor shall commence a voluntary case concerning any
Borrower or Guarantor under Title 11 of the United States Code entitled
“Bankruptcy” as now or hereafter in effect, or any successor thereto or any
other present or future bankruptcy or insolvency statute (the “Bankruptcy
Code”); or an involuntary proceeding is commenced against any Borrower or
Guarantor under the Bankruptcy Code and relief is ordered against any Borrower
or Guarantor, or the petition is controverted but not dismissed or stayed within
sixty (60) days after the commencement of the case, or a custodian (as defined
in the Bankruptcy Code) is appointed for or takes charge of all or substantially
all of the property of any Borrower or Guarantor; or any Borrower or Guarantor
commences any other proceedings under any reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar Law of any jurisdiction whether now or hereafter in effect relating
to any Borrower or Guarantor; or there is commenced against any Borrower or
Guarantor any such proceeding which remains undismissed or unstayed for a period
of ninety (90) days; or any Borrower or Guarantor fails to controvert in a
timely manner any such case under the Bankruptcy Code or any such proceeding, or
any order of relief or other order approving any such case or proceeding is
entered; or any Borrower or Guarantor by any act or failure to act indicates its
consent to, approval of, or acquiescence in any such case or proceeding or the
appointment of any custodian or the like of or for it for any substantial part
of its property or suffers any such appointment to continue undischarged or
unstayed for a period of ninety (90) days.

(e) Any Borrower or Guarantor shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or shall consent to the appointment of a receiver or trustee or
liquidator of all of its property or the major part thereof or if all or a
substantial part of the assets of any Borrower or Guarantor are attached,
seized, subjected to a writ or distress warrant, or are levied upon, or come
into the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors.

(f) If any Borrower is enjoined, restrained or in any way prevented by any court
order from operating any Project.

(g) One or more final, unappealable judgments are entered against any Borrower
in amounts aggregating in excess of $50,000, and said judgments are not paid,
stayed or bonded over within thirty (30) days after entry.

(h) If any Borrower shall fail to pay any debt owed by it or is in default under
any agreement with Lender or any other party which failure to pay or default
would have a Material Adverse Change to Borrowers, the Projects or Borrowers’
ability to perform their obligations under this Agreement, and such failure or
default continues after any applicable grace or cure period specified in the
instrument or agreement relating thereto.

(i) If a Material Adverse Change occurs with respect to any Borrower, any
Project or Guarantor.

(j) The occurrence of an event of default by any Borrower under any Lease with
the Operator beyond any applicable notice and/or cure period.

(k) The occurrence of a payment or other material event of default by any
Operator under any Lease with the Operator beyond any applicable notice and/or
cure period, and the continuation of the same for a period of thirty (30) days.
Prior to the expiration of such thirty (30) day period, Borrowers shall present
to Lender a course of action to remedy such default (such as waiver,
modification or termination of the lease and replacement of the tenant) and
obtain Lender’s approval thereto. So long as Borrowers follow the approved
course of action and meet any deadlines in connection therewith, such default
shall be deemed cured.

(l) The occurrence of any other event or circumstance denominated as an Event of
Default herein or under any of the other Loan Documents and the expiration of
any applicable grace or cure periods, if any, specified for such Event of
Default herein or therein, as the case may be.

 

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(m) The failure of Borrowers to correct or to cause its Operator to correct,
within the time deadlines set by any applicable Medicare, Medicaid or licensing
agency, any deficiency which would result in the following actions by such
agency with respect to any Project:

(i) a termination of any Reimbursement Contract or any permit; or

(ii) a ban on new admissions generally or, if applicable, on admission of
patients otherwise qualifying for Medicare or Medicaid coverage;

(n) The assessment against any Borrower, Operator, or any Project of any fines
or penalties by any state or any Medicare, Medicaid, health or licensing agency
having jurisdiction over such Persons or the Project in excess of $25,000, which
are not paid or discharged within thirty (30) days following such assessment;
provided, however, Borrower shall not be in default if Borrower or Operator is
in good faith disputing such assessment.

ARTICLE 15

LENDERS’ REMEDIES IN EVENT OF DEFAULT

15.1 Remedies Conferred Upon Lenders.

Upon the occurrence of any Event of Default that is continuing, Agent may, and
at the request of Required Lenders shall, pursue any one or more of the
following remedies concurrently or successively, it being the intent hereof that
none of such remedies shall be to the exclusion of any other:

(a) Take possession of the Projects and do anything which is necessary or
appropriate in its sole judgment to fulfill the obligations of Borrowers under
this Agreement and the other Loan Documents, including either the right to avail
itself of and procure performance of existing contracts or let any contracts
with the same contractors or others. Without restricting the generality of the
foregoing and for the purposes aforesaid, each Borrower hereby appoints and
constitutes Agent its lawful attorney-in-fact with full power of substitution in
the Projects to pay, settle or compromise all existing bills and claims, which
may be liens or security interests, or to avoid such bills and claims becoming
liens against the Projects; to execute all applications and certificates in the
name of each Borrower prosecute and defend all actions or proceedings in
connection with the Improvements or the Projects; to take action and require
such performance as it deems necessary under any of the bonds to be furnished
hereunder and to make settlements and compromises with the surety or sureties
thereunder, and in connection therewith, to execute instruments of release and
satisfaction; and to do any and every act which any Borrower might do in its own
behalf; it being understood and agreed that this power of attorney shall be a
power coupled with an interest and cannot be revoked;

(b) Declare the Notes to be immediately due and payable;

(c) Use and apply any monies or letters of credit deposited by any Borrower with
Agent, regardless of the purposes for which the same was deposited, to cure any
such default or to apply on account of any indebtedness under this Agreement
which is due and owing to Lenders;

(d) Exercise or pursue any other remedy or cause of action permitted under this
Agreement or any other Loan Documents, or conferred upon Lenders by operation of
Law.

Notwithstanding the foregoing, upon the occurrence of any Event of Default under
Section 14(d), all amounts evidenced by the Notes shall automatically become due
and payable, without any presentment, demand, protest or notice of any kind to
Borrowers.

 

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ARTICLE 16

GENERAL PROVISIONS

16.1 Captions.

The captions and headings of various Articles, Sections and subsections of this
Agreement and Exhibits pertaining hereto are for convenience only and are not to
be considered as defining or limiting in any way the scope or intent of the
provisions hereof.

16.2 Modification; Waiver.

No modification, waiver, amendment or discharge of this Agreement or any other
Loan Document shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, waiver, amendment or
discharge is sought.

16.3 GOVERNING LAW.

EXCEPT AS SET FORTH IN THE MORTGAGE, ALL OF THE LOAN DOCUMENTS SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO
WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAWS.

16.4 Acquiescence Not to Constitute Waiver of Lenders’ Requirements.

Each and every covenant and condition for the benefit of the Lenders contained
in this Agreement may be waived by the Lenders, provided, however, that to the
extent that the Lenders may have acquiesced in any noncompliance with any
construction or nonconstruction conditions precedent to the Opening of the Loan
or to any subsequent disbursement of Loan proceeds, such acquiescence shall not
be deemed to constitute a waiver by the Lenders of such requirements with
respect to any future disbursements of Loan proceeds.

16.5 Disclaimer by Lenders.

This Agreement is made for the sole benefit of Borrowers and the Lenders, and no
other person or persons shall have any benefits, rights or remedies under or by
reason of this Agreement, or by reason of any actions taken by Agent or the
Lenders pursuant to this Agreement. Neither Agent nor any Lender shall be liable
for any debts or claims accruing in favor of any such parties against any
Borrower or others or against the Project. The Lenders, by making the Loan or
taking any action pursuant to any of the Loan Documents, shall not be deemed a
partner or a joint venturer with any Borrower or any fiduciary of Borrower.

16.6 Partial Invalidity; Severability.

If any of the provisions of this Agreement, or the application thereof to any
person, party or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision or provisions to persons, parties or circumstances other than those as
to whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.

16.7 Definitions Include Amendments.

Definitions contained in this Agreement which identify documents, including, but
not limited to, the Loan Documents, shall be deemed to include all amendments
and supplements to such documents from the date hereof, and all future
amendments and supplements thereto entered into from time to time to satisfy the
requirements of this Agreement or otherwise with the consent of Agent (and, to
the extent applicable, the Required Lenders). Reference to this Agreement
contained in any of the foregoing documents shall be deemed to include all
amendments and supplements to this Agreement.

 

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16.8 Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

16.9 Entire Agreement.

This Agreement, taken together with all of the other Loan Documents and all
certificates and other documents delivered by Borrowers to the Lenders, embody
the entire agreement and supersede all prior agreements, written or oral,
relating to the subject matter hereof.

16.10 Waiver of Damages.

In no event shall Agent or any Lender be liable to any Borrower for punitive,
exemplary or consequential damages, including, without limitation, lost profits,
whatever the nature of a breach by Agent or any Lender of its obligations under
this Agreement or any of the Loan Documents, and each Borrower for itself and
Guarantor waive all claims for punitive, exemplary or consequential damages.

16.11 Claims Against Lenders.

Neither Agent nor any Lender shall not be in default under this Agreement, or
under any other Loan Documents, unless a written notice specifically setting
forth the claim of any Borrower shall have been given to Agent within three
(3) months after such Borrower first had knowledge of the occurrence of the
event which such Borrower alleges gave rise to such claim and such person does
not remedy or cure the default, if any there be, promptly thereafter. Each
Borrower waives any claim, set-off or defense against Agent or any Lender
arising by reason of any alleged default by Agent or any Lender as to which such
Borrower does not give such notice timely as aforesaid. Each Borrower
acknowledges that such waiver is or may be essential to the Lenders’ ability to
enforce its remedies without delay and that such waiver therefore constitutes a
substantial part of the bargain between the Lenders and Borrowers with regard to
the Loan.

16.12 Jurisdiction.

TO THE GREATEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY WAIVES ANY AND ALL
RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY THE LENDERS. WITH RESPECT TO ANY
SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A “PROCEEDING”),
EACH BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF CLEVELAND, COUNTY OF
CUYAHOGA, STATE OF OHIO, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY
TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES
ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH
COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT
SHALL PRECLUDE AGENT ON BEHALF OF THE LENDERS FROM BRINGING A PROCEEDING IN ANY
OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE
JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION.
EACH BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF
SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN
ANY PROCEEDING IN ANY STATE OF OHIO OR UNITED STATES COURT SITTING IN THE CITY
OF CLEVELAND, COUNTY OF CUYAHOGA, STATE OF OHIO MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO SUCH BORROWER AT THE
ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT;
EXCEPT THAT IF A BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE
DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

 

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16.13 Set-Offs.

After the occurrence and during the continuance of an Event of Default, each
Borrower hereby irrevocably authorizes and directs each Lender from time to time
to charge such Borrower’s accounts and deposits with such Lender (or its
Affiliates), and to pay over to such Lender an amount equal to any amounts from
time to time due and payable to such Lender hereunder, under the Notes or under
any other Loan Document. Each Borrower hereby grants to Agent for the benefit of
the Lenders a security interest in and to all such accounts and deposits
maintained by such Borrower with each Lender (or its Affiliates).

16.14 Authorized Representative.

Borrowers hereby appoint Steven M. Wortman, Senior Vice President of Borrowers,
as their “Authorized Representative” for purposes of dealing with Agent on
behalf of Borrowers in respect of any and all matters in connection with this
Agreement, the other Loan Documents, and the Loan. The Authorized Representative
shall have the power, in his discretion, to give and receive all notices,
monies, approvals, and other documents and instruments, and to take any other
action on behalf of Borrowers. All actions by the Authorized Representative
shall be final and binding on Borrowers. The Lenders may rely on the authority
given to the Authorized Representative until actual receipt by Agent on behalf
the Lenders of a duly authorized resolution substituting a different person as
the Authorized Representative. No more than one person shall serve as Authorized
Representative at any given time.

ARTICLE 17

NOTICES

Any notice, demand, request or other communication which any party hereto may be
required or may desire to give hereunder shall be in writing and shall be deemed
to have been properly given (a) if hand delivered, when delivered; (b) if mailed
by United States Certified Mail (postage prepaid, return receipt requested),
three Business Days after mailing (c) if by Federal Express or other reliable
overnight courier service, on the next Business Day after delivered to such
courier service or (d) if by telecopier on the day of transmission so long as
copy is sent on the same day by overnight courier as set forth below:

 

  If to Borrowers:     

c/o CNL Healthcare Properties, Inc.

450 South Orange Avenue

Orlando, Florida 32801

Attention: Joseph T. Johnson, Senior Vice President and Chief Financial Officer

Attention: Holly J. Greer, Esq., Senior Vice President and General Counsel

Telephone:  (407) 540-7500

Facsimile:   (407) 540-2544

 

With a courtesy copy to:

    

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

215 North Eola Drive

Orlando, Florida 32801

Attention: Peter L. Lopez, Esq.

Telephone:  (407) 843-4600

Facsimile:   (407) 843-4444

 

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If to Agent:

    

KeyBank National Association

Real Estate Capital-Healthcare

Mailcode: OH-01-51-0311

4910 Tiedeman Road, 3rd Floor

Brooklyn, Ohio 44144

Attention: Amy MacLearie, Closer

Telephone:  (216) 813-6935

Facsimile:   (216) 357-6383

 

With copies to:

    

Synovus Bank

800 Shades Creek Parkway, Suite 325

Birmingham, Alabama 35209

Telephone:  (205) 868-4752

Facsimile:   (205) 868-                    

    

Gail Livingston Mills, Esq.

Burr & Forman LLP

420 North 20th Street, Suite 3400

Birmingham, Alabama 35203

Telephone:  (205) 458-5300

Facsimile:   (205) 244-5681

    

Alfred G. Kyle, Esq.

Bracewell & Giuliani LLP

1445 Ross Avenue, Suite 3800

Dallas, Texas 75202

Telephone:  (214) 758-1660

Facsimile:   (214) 758-8360

 

And, if required under any applicable intercreditor agreement:

 

Capital Finance, LLC

1422 Clarkview Road

Baltimore, MD 21209

Attention: Account Manager for Perennial Transaction

or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice.

ARTICLE 18

RESERVED

ARTICLE 19

ASSIGNMENTS AND PARTICIPATIONS

19.1 Assignments and Participations.

(a) Each Lender shall have the right to assign, transfer, sell, negotiate,
pledge or otherwise hypothecate this Agreement and any of its rights and
security hereunder and under the other Loan Documents to any other Eligible
Assignee with the prior written consent of the Agent and with the prior written
consent of Borrower, which consents by the Agent and the Borrowers shall not be
unreasonably withheld, conditioned or delayed (provided that no consent of
Borrower shall be required if the Eligible Assignee is also a Lender as of the
date

 

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hereof or if an Event of Default then exists) and no consent of the Agent shall
be required if the Eligible Assignee is also a Lender; provided, however, that
(i) the parties to each such assignment shall execute and deliver to Agent, for
its approval and acceptance, an Assignment and Assumption Agreement
substantially in the form of Exhibit H attached hereto (the “Assignment and
Assumption”), (ii) each such assignment shall be of a constant, and not a
varying, percentage of the assigning Lender’s rights and obligations under this
Agreement, (iii) if the potential assignee is not already a Lender hereunder, at
least ten (10) days prior to the date of the assignment, the potential assignee
shall deliver to Agent all information reasonably necessary for Agent to
successfully complete the Agent’s Patriot Act Customer Identification Process
and OFAC Review Process, (iv) unless the Agent and, so long as no Event of
Default exists, Borrowers otherwise consent, the aggregate amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment shall in no event be less than Five Million Dollars ($5,000,000),
(v) the Agent shall receive from the assigning Lender a processing fee of Three
Thousand Five Hundred Dollars ($3,500), and (vi) if the assignment is less than
the assigning Lender’s entire interest in the Loan, the assigning Lender must
retain at least a Ten Million Dollar ($10,000,000.00) interest in the Loan. The
Agent may designate any Eligible Assignee accepting an assignment of a specified
portion of the Loan to be a Co-Agent, an “Arranger” or similar title, but such
designation shall not confer on such Assignee the rights or duties of the Agent.
Upon such execution, delivery, approval and acceptance, and upon the effective
date specified in the applicable Assignment and Assumption, (a) the Eligible
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Assumption, have the rights and obligations of a Lender hereunder and under the
other Loan Documents, and Borrowers hereby agree that all of the rights and
remedies of Lenders in connection with the interest so assigned shall be
enforceable against Borrowers by an Eligible Assignee with the same force and
effect and to the same extent as the same would have been enforceable but for
such assignment, and (b) the assigning Lender thereunder shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Assumption, relinquish its
rights and be released from its obligations hereunder and thereunder.

(b) By executing and delivering an Assignment and Assumption, the assigning
Lender thereunder and the Eligible Assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) except as provided in
such Assignment and Assumption, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
or any other instrument or document furnished in connection therewith; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers or the
performance or observance by each Borrower of any of its obligations under any
Loan Document or any other instrument or document furnished in connection
therewith; (iii) such Eligible Assignee confirms that it has received a copy of
this Agreement together with such financial statements, Loan Documents and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into the Assignment and Assumption and to become
a Lender hereunder; (iv) such Eligible Assignee will, independently and without
reliance upon Agent, the assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such Eligible Assignee appoints and authorizes the Agent to take
such action as the Agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vi) such Eligible Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

(c) Agent shall maintain a copy of each Assignment and Assumption delivered to
and accepted by it and shall record in its records the names and address of each
Lender and the Commitment of, and Percentage of the Loan owing to, such Lender
from time to time. Borrowers, the Agent and Lenders may treat each entity whose
name is so recorded as a Lender hereunder for all purposes of this Agreement.

(d) Upon receipt of an Assignment and Assumption executed by an assigning Lender
and an Eligible Assignee, Agent shall, if such Assignment and Assumption has
been properly completed and consented to if required herein, accept such
Assignment and Assumption, and record the information contained therein in its
records, and the Agent shall use its best efforts to give prompt notice thereof
to Borrowers (provided that neither the Agent nor the Lenders shall be liable
for any failure to give such notice).

 

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(e) Borrowers shall, at no cost or expense to Borrowers, use reasonable efforts
to cooperate with Agent and each Lender in connection with the assignment of
interests under this Agreement or the sale of participations herein.

(f) Anything in this Agreement to the contrary notwithstanding, and without the
need to comply with any of the formal or procedural requirements of this
Agreement, including this Section, any Lender may at any time and from time to
time pledge and assign all or any portion of its rights under all or any of the
Loan Documents to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from its obligations hereunder. To
facilitate any such pledge or assignment, the Agent shall, at the request of
such Lender, enter into a letter agreement with the Federal Reserve Bank in, or
substantially in, the form of the exhibit to Appendix C to the Federal Reserve
Bank of New York Operating Circular No. 12.

(g) Anything in this Agreement to the contrary notwithstanding, any Lender may
assign all or any portion of its rights and obligations under this Agreement to
another branch or Affiliate of such Lender without first obtaining the approval
of any Agent or the Borrowers, provided that (i) such Lender remains liable
hereunder unless the Borrowers and Agent shall otherwise agree, (ii) at the time
of such assignment such Lender is not a Defaulting Lender, (iii) such Lender
gives the Agent and Borrower at least fifteen (15) days prior written notice of
any such assignment; (iv) the parties to each such assignment execute and
deliver to Agent an Assignment and Assumption, and (v) the Agent receives from
the assigning Lender a processing fee of One Thousand Five Hundred Dollars
($1,500).

(h) Each Lender shall have the right, without the consent of the Borrowers, to
sell participations to one or more Eligible Assignees in or to all or a portion
of its rights and obligations under the Loan and the Loan Documents; provided,
however, that (i) such Lender’s obligations under this Agreement (including
without limitation its Commitment to Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations (iii) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
with regard to any and all payments to be made under this Agreement and (iv) the
holder of any such participation shall not be entitled to voting rights under
this Agreement or the other Loan Documents (but such holder may contract with
the Lender selling such Eligible Assignee its interest in such Lender’s share of
the Loan as to voting of such Lender’s interest under Section 20.6(b) [but not
under any other section of this Agreement], provided that any such agreement by
a Lender shall bind only such Lender alone and not Borrowers, the other Lenders
or the Agent).

(i) No Eligible Assignee of any rights and obligations under this Agreement
shall be permitted to subassign such rights and obligations. No participant in
any rights and obligations under this Agreement shall be permitted to sell
subparticipations of such rights and obligations.

(j) Borrowers acknowledge and agree that Lenders may provide to any Eligible
Assignee or participant originals or copies of this Agreement, any other Loan
Document and any other documents, instruments, certificates, opinions, insurance
policies, letters of credit, reports, requisitions and other materials and
information of every nature or description, and may communicate all oral
information, at any time submitted by or on behalf of Borrowers or received by
any Lender in connection with the Loan or with respect to Borrowers, provided
that prior to any such delivery or communication, such Eligible Assignees or
participants shall agree to preserve the confidentiality of any of the foregoing
to the same extent that such Lender agreed to preserve such confidentiality. In
order to facilitate assignments to Eligible Assignees and sales to Eligible
Assignees, Borrowers shall execute such further documents, instruments or
agreements as Lenders may reasonably require; provided, that no Borrower shall
be required (i) to execute any document or agreement which would materially
decrease its rights, or materially increase its obligations, relative to those
set forth in this Agreement or any of the other Loan Documents (including
financial obligations, personal recourse, representations and warranties and
reporting requirements), or (ii) to expend more than incidental sums of money or
incidental administrative time for which it does not receive reasonable
reimbursement in order to comply with any requests or requirements of any Lender
in connection with such assignment or sale arrangement. In addition, Borrowers
agrees to cooperate fully with Lenders in the exercise of Lenders’ rights
pursuant to this Section, including providing such information and documentation
regarding Borrower as any Lender or any potential Eligible Assignee or
participant may reasonably request and to meet with potential Eligible
Assignees.

 

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19.2 Several Liability.

Anything in this Agreement contained to the contrary notwithstanding, the
obligations of each Lender to Borrowers under this Agreement are several and not
joint and several; each Lender shall only be obligated to fund its Percentage of
each disbursement to be made hereunder up to the amount of its Commitment.
During any time, and only during such time, as Agent is the sole Lender and has
not assigned any portion or portions of its interest in the Loan to another
Lender pursuant to an Assignment and Assumption Agreement, Agent in its
individual capacity shall be liable for all of the obligations of the Lender
under this Agreement and the other Loan Documents. From and after the date that
Agent as the sole Lender assigns any portion or portions of its interest in the
Loan to another Lender pursuant to an Assignment and Assumption Agreement, then
Agent shall act as the administrative agent on behalf of itself as a Lender and
the other Lenders.

ARTICLE 20

AGENT

20.1 Appointment.

KeyBank National Association is hereby appointed as Agent hereunder and under
each other Loan Document, and each Lender hereby irrevocably authorizes the
Agent to act as agent for such Lender and to take such actions as such Lender is
obligated or entitled to take under the provisions of this Agreement and the
other Loan Documents. Agent agrees to act as such upon the express conditions
contained in this Article in substantially the same manner that it would act in
dealing with a loan held for its own account. Agent shall not have a fiduciary
relationship with respect to any Lender by reason of this Agreement.

The provisions of this Article are solely for the benefit of the Agent and the
Lenders, and Borrowers shall not have any rights to rely on or enforce any of
the provisions hereof except as provided in Section 20.2 below. In performing
its functions and duties under this Agreement, the Agent shall act solely as
agent of Lender and does not assume, and shall not be deemed to have assumed,
any obligations toward or relationship of agency or trust with or for the
Borrowers.

20.2 Reliance on Agent.

All acts of and communications by the Agent, as agent for the Lenders, shall be
deemed legally conclusive and binding; and Borrower or any third party
(including any court) shall rely on any and all communications or acts of the
Agent with respect to the exercise of any rights or the granting of any consent,
waiver or approval on behalf of a Lender in all circumstances where an action by
such Lender is required or permitted pursuant to this Agreement or the
provisions of any other Loan Document or by applicable law without the right or
necessity of making any inquiry of any individual Lender as to the authority of
Agent with respect to such matter. In no event shall any of the foregoing limit
the rights or obligations of any Lender with respect to any other Lender
pursuant to this Article 20.

20.3 Powers.

The Agent shall have and may exercise such powers under the Loan Documents as
are specifically delegated to the Agent by the terms of each thereof, together
with such powers as are reasonably incidental thereto or are otherwise necessary
or desirable in connection with the administration of the Loan, and may exercise
all other powers of Lenders as are not made subject to the consent of the
Required Lenders pursuant to Section 20.6(a) or to the consent of all Lenders
pursuant to Section 20.6(b). Without limiting the foregoing, the Agent may
consent to or execute easements, plats, dedications, release of minor portions
of the collateral and similar documents. The Agent shall not be considered, or
be deemed, a separate agent of the Lenders hereunder, but is, and shall be
deemed, acting in its contractual capacity as Agent, exercising such rights and
powers under the Loan Documents as are specifically delegated to the Agent or
Agent is otherwise entitled to take hereunder. Agent shall have no implied
duties to the Lenders, or any obligation to the Lenders to take any action
except any action specifically provided by the Loan Documents to be taken by the
Agent.

 

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20.4 Disbursements.

(a) At least one (1) Business Day (by 11:00 a.m. Cleveland time) prior to the
date the Loan is to be disbursed hereunder pursuant to this Agreement (or at
least two (2) LIBOR Business Days [by 11:00 a.m. Cleveland time] for such
disbursement to be made at the Adjusted LIBOR Rate), the Agent shall notify each
Lender of the proposed disbursement. Each Lender shall make available to Agent
(or the funding Lender or entity designated by the Agent), the amount of such
Lender’s Percentage of such disbursement (with respect to such Lender, such
amount being referred to herein as an “Advance”) in immediately available funds
not later than 11:00 a.m. (Cleveland time) on the date such disbursement is to
be made (such date being referred to herein as a “Funding Date”). Unless the
Agent shall have been notified by any Lender prior to such time for funding in
respect of any Advance that such Lender does not intend to make available to the
Agent such Lender’s Advance, the Agent may assume that such Lender has made such
amount available to the Agent and the Agent, in its sole discretion, may, but
shall not be obligated to, make available to Borrowers a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Lender on or prior to the respective Funding Date, such Lender agrees to pay and
Borrowers agree to repay to Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to Borrowers until the date such amount is paid or repaid to Agent, at
(A) in the case of such Lender, the Federal Funds Effective Rate, and (B) in the
case of Borrowers, the interest rate applicable at the time to a disbursement
made on such Funding Date. If such Lender shall pay to Agent such corresponding
amount, such amount so paid shall constitute such Lender’s Advance, and if both
such Lender and Borrowers shall have paid and repaid, respectively, such
corresponding amount, Agent shall promptly return to Borrowers such
corresponding amount in same day funds.

(b) Requests by the Agent for funding by the Lenders of disbursements of the
Loan will be made by facsimile. Each Lender shall make its Advance available to
the Agent in dollars and in immediately available funds to such Lender and
account as the Agent may designate, not later than Noon (Cleveland time) on the
Funding Date. Nothing in this Section 20.4 shall be deemed to relieve any Lender
of its obligation hereunder to make any Advance on any Funding Date, nor shall
any Lender be responsible for the failure of any other Lender to perform its
obligations to make any Advance hereunder, and the Commitment of any Lender
shall not be increased or decreased as a result of the failure by any other
Lender to perform its obligation to make any Advances hereunder.

20.5 Distribution and Apportionment of Payments.

(a) Subject to Section 20.5(b), payments actually received by Agent for the
account of the Lenders shall be paid to them promptly after receipt thereof by
Agent, but in any event within one (1) Business Day, provided that, if any such
payments are not distributed to the Lenders within one (1) Business Day after
Agent’s receipt thereof, Agent shall pay to such Lenders interest thereon, at
the lesser of (i) the Federal Funds Effective Rate and (ii) if the applicable
payment represents repayment of a portion of the principal of the Loan, the rate
of interest applicable to such portion of the Loan, from the date of receipt of
such funds by Agent until such funds are paid in immediately available funds to
such Lenders provided such funds are received by Agent not later than 11:00 A.M.
(Cleveland time) on the date of receipt. All payments of principal and interest
in respect of the Loan, all payments of the fees described in this Agreement
(but not in any separate fee letter except to the extent expressly set forth
therein), and all payments in respect of any other obligations of Borrower under
the Loan Documents shall be allocated among such of Lenders as are entitled
thereto, in proportion of their respective Percentages or otherwise as provided
herein in the other Loan Documents, as the case may be. The Agent shall
distribute to each Lender at its primary address set forth herein or in its
Assignment and Assumption, or at such other address as a Lender may request in
writing, such funds as it may be entitled to receive, provided that the Agent
shall in any event not be bound to inquire into or determine the validity, scope
or priority of any interest or entitlement of any Lender and may suspend all
payments and seek appropriate relief (including without limitation instructions
from the Required Lenders, or all Lenders, as applicable, or an action in the
nature of interpleader) in the event of any doubt or dispute as to any
apportionment or distribution contemplated hereby. The order of priority herein
is set forth solely to determine the rights and priorities of the Lenders as
among themselves and may at any time or from time to time be changed by the
Lenders as they may elect, in writing, without necessity of notice to or consent
of or approval by Borrowers.

 

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(b) If a Lender (a “Defaulting Lender”) defaults in making any Advance or paying
any other sum payable by it hereunder, such sum together with interest thereon
at the Default Rate from the date such amount was due until repaid (such sum and
interest thereon as aforesaid referred to, collectively, as the “Lender Default
Obligation”) shall be payable by the Defaulting Lender (i) to any Lender(s)
which elect, at their sole option (and with no obligation to do so), to fund the
amount which the Defaulting Lender failed to fund or (ii) to Agent or any other
Lender which under the terms of this Agreement is entitled to reimbursement from
the Defaulting Lender for the amounts advanced or expended. Notwithstanding any
provision hereof to the contrary, until such time as a Defaulting Lender has
repaid the Lender Default Obligation in full, all amounts which would otherwise
be distributed to the Defaulting Lender shall instead be applied first to repay
the Lender Default Obligation (to be applied first to interest at the Default
Rate and then to principal) until the Lender Default Obligation has been repaid
in full (whether by such application or by cure by the Defaulting Lender),
whereupon such Lender shall no longer be a Defaulting Lender. Any interest
collected from Borrowers on account of principal advanced by any Lender(s) on
behalf of a Defaulting Lender shall be paid to the Lender(s) who made such
advance and shall be credited against the Defaulting Lender’s obligation to pay
interest on the amount advanced at the Default Rate. If no other Lender makes an
advance a Defaulting Lender failed to fund, a portion of the indebtedness of
Borrowers to the Defaulting Lender equal to the Lender Default Obligation shall
be subordinated to the indebtedness of Borrowers to all other Lenders and shall
be paid only after the indebtedness of Borrowers to all other Lenders is paid.
The provisions of this Section shall apply and be effective regardless of
whether an Event of Default occurs and is then continuing, and notwithstanding
(i) any other provision of this Agreement to the contrary or (ii) any
instruction of Borrowers as to their desired application of payments. No
Defaulting Lender shall have the right to vote on matters which are subject to
the consent or approval of Required Lenders or all Lenders and while any Lender
is a Defaulting Lender the requisite percentage of Lenders which constitutes the
Required Lenders shall be calculated exclusive of the Percentage of the
Defaulting Lender. The Agent shall be entitled to (i) withhold or set off, and
to apply to the payment of the Lender Default Obligation any amounts to be paid
to such Defaulting Lender under this Agreement, and (ii) bring an action or suit
against such Defaulting Lender in a court of competent jurisdiction to recover
the Lender Default Obligation and, to the extent such recovery would not fully
compensate the Lenders for the Defaulting Lender’s breach of this Agreement, to
collect damages. In addition, the Defaulting Lender shall indemnify, defend and
hold Agent and each of the other Lenders harmless from and against any and all
claims, actions, liabilities, damages, costs and expenses (including attorneys’
fees and expenses), plus interest thereon at the Default Rate, for funds
advanced by Agent or any other Lender on account of the Defaulting Lender or any
other damages such persons may sustain or incur by reason of or as a direct
consequence of the Defaulting Lender’s failure or refusal to abide by its
obligations under this Agreement.

(c) At least five Business Days prior to the first date on which interest or
fees are payable hereunder for the account of any Lender, each Lender that is
not incorporated under the laws of the United States of America, or a state
thereof, agrees that it will deliver to the Agent two duly completed copies of
United States Internal Revenue Service Form W-8 BEN or W-8 ECI, certifying in
either case that such Lender is entitled to receive payments under this
Agreement and the Note without deduction or withholding of any United States
federal income taxes. Each Lender which so delivers a Form W-8 BEN or W-8 ECI
further undertakes to deliver the Agent two additional copies of such form (or a
successor form) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent forms
so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Agent, in each case certifying
that such Lender is entitled to receive payments under this Agreement and the
Note without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.

20.6 Consents and Approvals.

(a) Each of the following shall require the approval or consent of the Required
Lenders:

(i) The exercise of any rights and remedies under the Loan Documents following
an Event of Default, provided that absent any direction from the Required
Lenders, Agent may exercise any right or remedy under the Loan Documents as
Agent may determine in good faith to be necessary or appropriate to protect the
Lenders or the collateral securing the Loan;

 

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(ii) Appointment of a successor Agent;

(iii) Approval of Post-Default Plan (defined in Section 20.7(d)); and

(iv) Except as referred to in subsection (b) below, approval of any amendment or
modification of this Agreement or any of the other Loan Documents, or issuance
of any waiver of any material provision of this Agreement or any of the other
Loan Documents;

(b) Each of the following shall require the approval or consent of all the
Lenders:

(i) Extension of the Maturity Date (beyond any extension permitted herein) or
forgiveness of all or any portion of the principal amount of the Loan or any
accrued interest thereon, or any other amendment of this Agreement or the other
Loan Documents which would reduce the interest rate options or the rate at which
fees are calculated or forgive any loan fee, or extend the time of payment of
any principal, interest or fees;

(ii) Reduction of the percentage specified in the definition of Required
Lenders;

(iii) Increasing the amount of the Loan or any non-consenting Lender’s
Commitment;

(iv) Release of any lien on any material collateral (except as Borrowers are
entitled to under the Loan Documents); and

(v) Amendment of the provisions of this Section 20.6.

(c) In addition to the required consents or approvals referred to in subsections
(a) and (b) above, the Agent may at any time request instructions from the
Required Lenders with respect to any actions or approvals which, by the terms of
this Agreement or of any of the Loan Documents, the Agent is permitted or
required to take or to grant without instructions from any Lenders, and if such
instructions are promptly requested, the Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever for refraining from taking any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Required Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against any Agent
as a result of such Agent acting or refraining from acting under this Agreement
or any of the other Loan Documents in accordance with the instructions of the
Required Lenders or, where applicable, all Lenders. The Agent shall promptly
notify each Lender at any time that the Required Lenders have instructed the
Agent to act or refrain from acting pursuant hereto.

(d) Each Lender authorizes and directs the Agent to enter into the Loan
Documents other than this Agreement for the benefit of the Lenders. Each Lender
agrees that any action taken by the Agent at the direction or with the consent
of the Required Lenders in accordance with the provisions of this Agreement or
any other Loan Document, and the exercise by the Agent at the direction or with
the consent of the Required Lenders of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all Lenders, except for actions specifically
requiring the approval of all Lenders. All communications from the Agent to the
Lenders requesting Lenders’ determination, consent, approval or disapproval
(i) shall be given in the form of a written notice to each Lender, (ii) shall be
accompanied by a description of the matter or item as to which such
determination, approval, consent or disapproval is requested, or shall advise
each Lender where such matter or item may be inspected, or shall otherwise
describe the matter or issue to be resolved, (iii) shall include, if reasonably
requested by a Lender and to the extent not previously provided to such Lender,
written materials and a summary of all oral information provided to the Agent by
Borrower in respect of the matter or issue to be resolved, and (iv) shall
include the Agent’s recommended course of action or determination in respect
thereof. Each Lender shall reply promptly, but in any event within ten
(10) Business Days after receipt of the request therefor from the Agent (the
“Lender Reply Period”). Unless a Lender shall give written notice to the Agent
that it objects to the recommendation or determination of the Agent (together
with a written explanation of the

 

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reasons behind such objection) within the Lender Reply Period, such Lender shall
be deemed to have approved of or consented to such recommendation or
determination. With respect to decisions requiring the approval of the Required
Lenders or all Lenders, the Agent shall upon receiving the required approval or
consent follow the course of action or determination recommended to the Lenders
by the Agent or such other course of action recommended by the Required Lenders.

20.7 Agency Provisions Relating to Collateral.

(a) The Agent is hereby authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, at any time and
from time to time, to take any action with respect to any collateral for the
Loan or any Loan Document which may be necessary to preserve and maintain such
collateral or to perfect and maintain perfected the liens upon such collateral
granted pursuant to this Agreement and the other Loan Documents.

(b) Except as provided in this Agreement, the Agent shall have no obligation
whatsoever to any Lender or to any other person or entity to assure that any
collateral exists or is owned by any Borrower or is cared for, protected or
insured or has been encumbered or that the liens granted herein or in any of the
other Loan Documents or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority.

(c) Should the Agent commence any proceeding or in any way seek to enforce the
Agent’s or the Lenders’ rights or remedies under the Loan Documents,
irrespective of whether as a result thereof the Agent shall acquire title to any
collateral, each Lender, upon demand therefor from time to time, shall
contribute its share (based on its Percentage) of the reasonable costs and/or
expenses of any such enforcement or acquisition, including, but not limited to,
fees of receivers or trustees, court costs, title company charges, filing and
recording fees, appraisers’ fees and fees and expenses of attorneys to the
extent not otherwise reimbursed by Borrowers. Without limiting the generality of
the foregoing, each Lender shall contribute its share (based on its Percentage)
of all reasonable costs and expenses incurred by the Agent (including reasonable
attorneys’ fees and expenses) if the Agent employs counsel for advice or other
representation (whether or not any suit has been or shall be filed) with respect
to any collateral for the Loan or any part thereof, or any of the Loan
Documents, or the attempt to enforce any security interest or lien on any
collateral, or to enforce any rights of the Agent or the Lenders or any of
Borrowers’ or any other party’s obligations under any of the Loan Documents, but
not with respect to any dispute between Agent and any other Lender(s). It is
understood and agreed that in the event the Agent determines it is necessary to
engage counsel for Lender from and after the occurrence of a Default or Event of
Default, said counsel shall be selected by the Agent and written notice of such
selection, together with a copy of such counsel’s engagement letter and fee
estimate, shall be delivered to the Lenders.

(d) In the event that all or any portion of the collateral for the Loan is
acquired by the Agent as the result of the exercise of any remedies hereunder or
under any other Loan Document, or is retained in satisfaction of all or any part
of Borrowers’ obligations under the Loan Documents, title to any such collateral
or any portion thereof shall be held in the name of the Agent or a nominee or
subsidiary of Agent, as agent, for the ratable benefit of the Agent and the
Lenders. The Agent shall prepare a recommended course of action for such
collateral (the “Post-Default Plan”), which shall be subject to the approval of
the Required Lenders. The Agent shall administer the collateral in accordance
with the Post-Default Plan, and upon demand therefor from time to time, each
Lender will contribute its share (based on its Percentage) of all reasonable
costs and expenses incurred by the Agent pursuant to the Post-Default Plan,
including without limitation, any operating losses and all necessary operating
reserves. To the extent there is net operating income from such collateral, the
Agent shall, in accordance with the Post-Default Plan, determine the amount and
timing of distributions to Lenders. All such distributions shall be made to
Lenders in accordance with their respective Percentages. In no event shall the
provisions of this subsection or the Post-Default Plan require the Agent or any
Lender to take an action which would cause such Lender to be in violation of any
applicable regulatory requirements.

 

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20.8 Lender Actions Against Borrower or the Collateral.

Each Lender agrees that it will not take any action, nor institute any actions
or proceedings, against any Borrower or any other person hereunder or under any
other Loan Documents with respect to exercising claims against such Borrower or
rights in any collateral without the consent of the Required Lenders. With
respect to any action by the Agent to enforce the rights and remedies of the
Agent and Lenders with respect to such Borrower and any collateral in accordance
with the terms of this Agreement, each Lender hereby consents to the
jurisdiction of the court in which such action is maintained.

20.9 Assignment and Participation.

No Lender shall be permitted to assign or sell all or any portion of its rights
and obligations under this Agreement to any Borrower or any Affiliate of any
Borrower.

20.10 Ratable Sharing.

Subject to Sections 20.4 and 20.5, Lenders agree among themselves that (i) with
respect to all amounts received by them which are applicable to the payment of
the Loan, equitable adjustment will be made so that, in effect, all such amounts
will be shared among them ratably in accordance with their Percentages, whether
received by voluntary payment, by the exercise of the right of set-off or
bankers’ lien, by counterclaim or cross action or by the enforcement of any or
all of the Loan Documents or any collateral and (ii) if any of them shall by
voluntary payment or by the exercise of any right of counterclaim, set-off,
bankers’ lien or otherwise, receive payment of a proportion of the aggregate
amount of the Loan held by it which is greater than its Percentage of the
payments on account of the Loan, the one receiving such excess payment shall
purchase, without recourse or warranty, an undivided interest and participation
(which it shall be deemed to have done simultaneously upon the receipt of such
payment) in such obligations owed to the others so that all such recoveries with
respect to such obligations shall be applied ratably in accordance with their
Percentages; provided, that if all or part of such excess payment received by
the purchasing party is thereafter recovered from it, those purchases shall be
rescinded and the purchase prices paid for such participations shall be returned
to that party to the extent necessary to adjust for such recovery, but without
interest except to the extent the purchasing party is required to pay interest
in connection with such recovery. Borrowers agree that any Lender so purchasing
a participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including the right
of set-off) with respect to such participation as fully as if such Lender were
the direct creditor of Borrowers in the amount of such participation.

20.11 General Immunity.

Neither Agent nor any of its directors, officers, agents or employees shall be
liable to Borrowers or any Lender for any action taken or omitted to be taken by
it or them hereunder or under any other Loan Document or in connection herewith
or therewith, except for its or their own gross negligence or willful
misconduct. In the absence of gross negligence, the Agent shall not be liable
for any apportionment or distribution of payments made by it in good faith
pursuant to Section 20.5, and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Lender to whom payment was due, but not made, shall be to recover from the
recipients of such payments any payment in excess of the amount to which they
are determined to have been entitled.

20.12 No Responsibility for Loan, Recitals, etc..

Neither Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (i) any
statement, warranty or representation made in connection with any Loan Document
or any use of the Loan; (ii) the performance or observance of any of the
covenants or agreements of any party to any Loan Document; (iii) the
satisfaction of any condition specified in this Agreement, except receipt of
items purporting to be the items required to be delivered to any Agent; or
(iv) the validity, effectiveness or genuineness of any Loan Document or any
other instrument or writing furnished in connection therewith, provided that the
foregoing shall not release Agent from liability for its gross negligence or
willful misconduct.

 

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20.13 Action on Instructions of Lenders.

The Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance with written
instructions signed by all the Lenders (or the Required Lenders, if such action
may be directed hereunder by the Required Lenders), and such instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
Lenders. Each Lender, severally to the extent of its Percentage, hereby agrees
to indemnify Agent against and hold it harmless from any and all liability, cost
and expense that it may incur by reason of taking or continuing to take any such
action, provided that the foregoing shall not release Agent from liability for
its gross negligence or willful misconduct.

20.14 Employment of Agents and Counsel.

The Agent may undertake any of its duties as Agent hereunder and under any other
Loan Document by or through employees, agents, and attorneys-in-fact and shall
not be liable to Lenders, except as to money or securities received by them or
their authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder and under any other Loan Document.

20.15 Reliance on Documents; Counsel.

The Agent shall be entitled to rely upon any notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel selected
by the Agent, which counsel may be an employee of Agent, provided that the
foregoing shall not release the Agent from liability for its gross negligence or
willful misconduct. Any such counsel shall be deemed to be acting on behalf of
Lender in assisting the Agent with respect to the Loan, but shall not be
precluded from also representing Agent in any matter in which the interests of
Agent and the other Lenders may differ.

20.16 Agent’s Reimbursement and Indemnification.

Lenders agree to reimburse and indemnify Agent ratably (i) for any amounts
(excluding principal and interest on the Loan and loan fees) not reimbursed by
Borrowers for which Agent is entitled to reimbursement under the Loan Documents,
(ii) for any other expenses incurred by Agent on behalf of Lender, in connection
with the preparation, execution, delivery, administration and enforcement of the
Loan Documents, if not paid by Borrowers, (iii) for any expenses incurred by
Agent on behalf of Lender which may be necessary or desirable to preserve and
maintain collateral or to perfect and maintain perfected the liens upon the
collateral granted pursuant to this Agreement and the other Loan Documents, if
not paid by Borrowers, (iv) for any amounts and other expenses incurred by Agent
on behalf of Lender in connection with any default by any Lender hereunder or
under the other Loan Documents, if not paid by such Lender, and (v) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of Agent.

20.17 Rights as a Lender.

With respect to its Commitment, if any, Agent shall have the same rights, powers
and obligations hereunder and under any other Loan Document as any Lender and
may exercise such rights and powers as though it were not an Agent, and the term
“Lender” or “Lenders” shall, unless the context otherwise indicates, include
Agent in its individual capacities. Borrowers and each Lender acknowledge and
agree that Agent and/or its affiliates may accept deposits from, lend money to,
hold other investments in, and generally engage in any kind of trust, debt,
equity or other transaction or have other relationships, in addition to those
contemplated by this Agreement or any other Loan Document, with Borrowers or any
of their affiliates in which Borrowers or such affiliate are not restricted
hereby from engaging with any other person.

 

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20.18 Lenders’ Credit Decisions.

Each Lender acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial statements and other
information prepared by Borrowers and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also acknowledges that
it will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.

20.19 Notice of Events of Default.

Should Agent receive any written notice of the occurrence of a default or Event
of Default, or should the Agent send Borrowers a notice of Default or Event of
Default, the Agent shall promptly furnish a copy thereof to each Lender.

20.20 Successor Agent.

(a) Agent may resign from the performance of all its functions and duties
hereunder at any time by giving at least thirty (30) days prior written notice
to Lenders and Borrowers. Such resignation shall take effect on the date set
forth in such notice or as otherwise provided below. Such resignation by Agent
as agent shall not affect its obligations hereunder, if any, as a Lender.

(b) Upon resignation by the Agent, or any successor Agent, the Required Lenders
shall appoint a successor Agent with the written consent of Borrowers, which
shall not be unreasonably withheld, conditioned or delayed (provided that no
consent of Borrowers shall be required if an Event of Default then exists). If
no successor Agent shall have been so appointed by the Required Lenders (with
the consent of Borrowers as set forth in the preceding sentence), and shall have
accepted such appointment within thirty (30) days after the retiring Agent’s
giving notice of resignation, then the retiring Agent may appoint a successor
Agent with the consent of Borrower, which shall not unreasonably withheld,
conditioned or delayed (provided that no consent of Borrower shall be required
if an Event of Default then exists). Upon the acceptance of any appointment as
an Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the Agent and the Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents other than
its liability, if any, for duties and obligations accrued prior to its
retirement. After any retiring Agent’s resignation hereunder as an Agent, the
provisions of this Article 20 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
an Agent hereunder and under the other Loan Documents. In the event that Synovus
Bank, in its sole discretion, elects to become successor Agent, the consent of
Borrowers shall not be required.

ARTICLE 21

WAIVER OF JURY TRIAL

EACH BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP
WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

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EXECUTED as of the date first set forth above.

 

BORROWERS:    

CHP BATESVILLE HEALTHCARE OWNER, LLC,

a Delaware limited liability company

      By:  

/s/ Steven M. Wortman

        Steven M. Wortman, Senior Vice President      

CHP BROADWAY HEALTHCARE OWNER, LLC,

a Delaware limited liability company

      By:  

/s/ Steven M. Wortman

        Steven M. Wortman, Senior Vice President      

CHP JONESBORO HEALTHCARE OWNER, LLC,

a Delaware limited liability company

      By:  

/s/ Steven M. Wortman

        Steven M. Wortman, Senior Vice President      

CHP MAGNOLIA HEALTHCARE OWNER, LLC,

a Delaware limited liability company

      By:  

/s/ Steven M. Wortman

        Steven M. Wortman, Senior Vice President      

CHP MINE CREEK HEALTHCARE OWNER, LLC,

a Delaware limited liability company

      By:  

/s/ Steven M. Wortman

        Steven M. Wortman, Senior Vice President      

CHP SEARCY HEALTHCARE OWNER, LLC,

a Delaware limited liability company

      By:  

/s/ Steven M. Wortman

        Steven M. Wortman, Senior Vice President

 

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AGENT:     KEYBANK NATIONAL ASSOCIATION, a national banking association, as
administrative agent on behalf of itself and the other lenders       By:  

/s/ Amy L. MacLearie

        Amy L. MacLearie, AVP-Closing Officer LENDERS:     KEYBANK NATIONAL
ASSOCIATION, a national banking association       By:  

/s/ Amy L. MacLearie

        Amy L. MacLearie, AVP-Closing Officer     SYNOVUS BANK, a Georgia state
banking corporation       By:  

/s/ James C. Thompson

        James C. Thompson, Senior Director

 

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EXHIBIT A-1

Legal Description of Batesville Land

[Intentionally Omitted]

.EXHIBIT A-2

Legal Description of Broadway Land

[Intentionally Omitted]

EXHIBIT A-3

Legal Description of Jonesboro Land

[Intentionally Omitted]

EXHIBIT A-4

Legal Description of Magnolia Land

[Intentionally Omitted]

.EXHIBIT A-5

Legal Description of Mine Creek Land

[Intentionally Omitted]

EXHIBIT A-6

Legal Description of Searcy Land

[Intentionally Omitted]

EXHIBIT B-1

Batesville Permitted Exceptions

[Intentionally Omitted]

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

EXHIBIT B-2

Broadway Permitted Exceptions

[Intentionally Omitted]

EXHIBIT B-3

Jonesboro Permitted Exceptions

[Intentionally Omitted]

EXHIBIT B-4

Magnolia Permitted Exceptions

[Intentionally Omitted]

EXHIBIT B-5

Mine Creek Permitted Exceptions

[Intentionally Omitted]

EXHIBIT B-6

Searcy Permitted Exceptions

[Intentionally Omitted]

EXHIBIT C

Title Requirements

[Intentionally Omitted]

EXHIBIT D

SURVEY REQUIREMENTS

[Intentionally Omitted]

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

EXHIBIT E

 

LOGO [g548292001.jpg]

INSURANCE REQUIREMENTS FOR COMMERCIAL REAL ESTATE LOANS

TERM LOAN – Existing or Completed Building – Health Care Group

[Intentionally Omitted]

EXHIBIT F

RESERVED

EXHIBIT G

FORM OF BORROWERS’ CERTIFICATE OF COMPLIANCE

[Intentionally Omitted]

EXHIBIT H

ASSIGNMENT AND ASSUMPTION AGREEMENT

[Intentionally Omitted]

SCHEDULE I

Environmental Documents

[Intentionally Omitted]

SCHEDULE II

Minimum Quarterly Rent Coverage Requirements

[Intentionally Omitted]

SCHEDULE III

Immediate Repairs

[Intentionally Omitted]