Exhibit 10.4
 
 
 
 
 
 
 
AMENDED AND RESTATED LOAN AGREEMENT

for a loan in the amount of

$18,000,000.00

among

RSC OAKLEAF GREENVILLE, LLC
and
RSC OAKLEAF LEXINGTON, LLC,
as Borrowers

and

GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and a Lender

and

THE OTHER FINANCIAL INSTITUTIONS WHO ARE OR
HEREAFTER BECOME PARTIES TO THIS AGREEMENT

as Lenders

Oakleaf Village at Greenville
Greer, South Carolina

Oakleaf Village at Lexington
Lexington, South Carolina

Dated as of April 30, 2010
 
 
 
 
 
 
 
 

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TABLE OF CONTENTS

 
Page
   
Article I               Incorporation of Recitals, Exhibits and Schedules
2
 
Section 1.1
Incorporation of Recitals
2
 
Section 1.2
Incorporation of Exhibits and Schedules
2
 
Section 1.3
Definitions
2
       
Article II             Loan Terms
3
 
Section 2.1
Disbursements
3
 
Section 2.2
Interest Rate; Late Charge
2
 
Section 2.3
[Payments
4
 
Section 2.4
Maturity
5
 
Section 2.5
Prepayment
5
 
Section 2.6
Defeasance
6
 
Section 2.7
Reserved
6
 
Section 2.8
Application of Payments
6
 
Section 2.9
Reserved
6
 
Section 2.10
Sources and Uses
7
 
Section 2.11
Security
7
       
Article III            Insurance, Condemnation, and Impounds
8
 
Section 3.1
Insurance
8
 
Section 3.2
Disposition of Insurance Proceeds
11
 
Section 3.3
Condemnation Awards
11
 
Section 3.4
Insurance Impounds
12
 
Section 3.5
Real Estate Tax Impounds
12
 
Section 3.6
Replacement Reserves
13
       
Article IV            Leasing Matters
13
 
Section 4.1
Representations and Warranties on Leases
14
 
Section 4.2
Approval Rights
14
 
Section 4.3
Covenants
15
 
Section 4.4
Tenant Estoppels
15
 
Section 4.5
Security Deposits
16
       
Article V             Representations and Warranties
16
 
Section 5.1
Organization and Power
16
 
Section 5.2
Owners of Borrower
16

 
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TABLE OF CONTENTS
(continued)

     
Page
         
Section 5.3
Borrowers’ Articles
17
 
Section 5.4
Corporate Documents
17
 
Section 5.5
Validity of Loan Documents
17
 
Section 5.6
Liabilities; Litigation
18
 
Section 5.7
Taxes and Assessments
18
 
Section 5.8
Other Agreements; Defaults
18
 
Section 5.9
Compliance with Law
19
 
Section 5.10
Condemnation
19
 
Section 5.11
Access
19
 
Section 5.12
Flood Hazard
19
 
Section 5.13
Property
19
 
Section 5.14
Location of Borrowers
20
 
Section 5.15
Margin Stock
20
 
Section 5.16
Tax Filings
20
 
Section 5.17
Solvency
20
 
Section 5.18
Full and Accurate Disclosure
21
 
Section 5.19
Single Purpose Entity
21
 
Section 5.20
No Broker
21
 
Section 5.21
Reserved
21
 
Section 5.22
Labor Disputes
21
 
Section 5.23
Employees/ERISA
21
 
Section 5.24
ERISA (Borrower)
21
 
Section 5.25
Intellectual Property
22
 
Section 5.26
Anti-Terrorism and Anti-Money Laundering Compliance
22
 
Section 5.27
Reserved
22
 
Section 5.28
Master Lease
24
 
Section 5.29
Property Management Agreement
24
       
Article VI            Financial Reporting; Notices
24
 
Section 6.1
Financial Statements
24
 
Section 6.2
Audits
26
 
Section 6.3
Books and Records/Audits
26
 
Section 6.4
Notice of Litigation or Default
27
       
Article VII           Covenants
27
 
Section 7.1
Inspection
27

 
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TABLE OF CONTENTS
(continued)

     
Page
         
Section 7.2
Due on Sale and Encumbrance; Transfers of Interests
27
 
Section 7.3
Taxes; Charges
28
 
Section 7.4
Control; Management
29
 
Section 7.5
Operation; Maintenance; Inspection
29
 
Section 7.6
Taxes on Security
29
 
Section 7.7
Single Purpose Entity; Legal Existence; Name, Etc
30
 
Section 7.8
Affiliate Transactions
30
 
Section 7.9
Limitation on Other Debt
30
 
Section 7.10
Further Assurances
30
 
Section 7.11
Estoppel Certificates
30
 
Section 7.12
Notice of Certain Events
31
 
Section 7.13
Indemnification
31
 
Section 7.14
Use of Proceeds, Revenues
31
 
Section 7.15
Bank Accounts; Notices to Tenants and Residents
32
 
Section 7.16
Reserved
 
 
Section 7.17
Reserved
 
 
Section 7.18
Compliance with Laws and Contractual Obligations
32
 
Section 7.19
Notice of Money Laundering
32
 
Section 7.20
Anti-Terrorism and Anti-Money Laundering Compliance
33
 
Section 7.21
Employees
33
 
Section 7.22
Development of Adjacent Parcel at Lexington
33
 
Section 7.23
Representations and Warranties
33
 
Section 7.24
Cooperation
34
 
Section 7.25
Master Leases
34
 
Section 7.26
Property Management Agreements
35
 
Section 7.27
Operating and Financial Covenants
35
   
Article VIII         Health Care Matters
36
 
Section 8.1
Healthcare Laws
36
 
Section 8.2
Representations, Warranties and Covenants Regarding Healthcare Matters
37
 
Section 8.3
Cooperation
40
Article IX           Events of Default
40
 
Section 9.1
Payments
40
 
Section 9.2
Certain Covenants
40

 
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TABLE OF CONTENTS
(continued)

     
Page
         
Section 9.3
Sale, Encumbrance, Etc
41
 
Section 9.4
Covenants
41
 
Section 9.5
Representations and Warranties
41
 
Section 9.6
Other Encumbrances
41
 
Section 9.7
Involuntary Bankruptcy or Other Proceeding
41
 
Section 9.8
Voluntary Petitions, etc
42
 
Section 9.9
Management Agreement
42
 
Section 9.10
False Reports
42
 
Section 9.11
Control
42
 
Section 9.12
Money Laundering
42
 
Section 9.13
Loan Documents
43
 
Section 9.14
Reserved
43
 
Section 9.15
Master Leases
43
       
Article X             Remedies
43
 
Section 10.1
Remedies - Insolvency Events
43
 
Section 10.2
Remedies - Other Events
43
 
Section 10.3
Agent’s Right to Perform the Obligations
44
       
Article XI           Miscellaneous
44
 
Section 11.1
Notices
44
 
Section 11.2
Amendments and Waivers
46
 
Section 11.3
Limitation on Interest
46
 
Section 11.4
Invalid Provisions
47
 
Section 11.5
Reimbursement of Expenses; Portfolio Administration Fee
47
 
Section 11.6
Approvals; Third Parties; Conditions
48
 
Section 11.7
Lender Not in Control; No Partnership
48
 
Section 11.8
Time of the Essence
48
 
Section 11.9
Successors and Assigns
49
 
Section 11.10
Renewal, Extension or Rearrangement
49
 
Section 11.11
Waivers; Forbearance
49
 
Section 11.12
Cumulative Rights
49
 
Section 11.13
Singular and Plural
50
 
Section 11.14
Phrases
50
 
Section 11.15
Exhibits and Schedules
50
 
Section 11.16
Titles of Articles, Sections and Subsections
50

 
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TABLE OF CONTENTS
(continued)

     
Page
         
Section 11.17
Promotional Material
50
 
Section 11.18
Survival
50
 
Section 11.19
WAIVER OF JURY TRIAL
51
 
Section 11.20
Waiver of Punitive or Consequential Damages
51
 
Section 11.21
Governing Law
51
 
Section 11.22
Entire Agreement
51
 
Section 11.23
Counterparts
52
 
Section 11.24
Venue
52
 
Section 11.25
Sale of Loan, Participation
52
 
Section 11.26
Limitation on Liability of Agent’s and Lender’s Officers, Employees, etc
52
 
Section 11.27
Effectiveness of Facsimile Documents and Signatures
53
 
Section 11.28
Joint and Several Liability
53
 
Section 11.29
Agency
54
 
Section 11.30
Transfer of Projects and Assumption of Loan
55
 
Section 11.31
Post-Closing Obligations of Borrowers
 

 
 
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LIST OF EXHIBITS AND SCHEDULES TO LOAN AGREEMENT
 
Exhibits:
 
Exhibit A-1
RSC Oakleaf Greenville, LLC Project
Exhibit A-2
RSC Oakleaf Lexington, LLC Project
Exhibit B
Form of Interest Holder Agreement
Exhibit C
Intellectual Property
Exhibit D
Ownership of Borrowers
Exhibit E
Provider Payment/Reimbursement Programs
Exhibit F
Governmental Approvals

 
Schedules:
 
Schedule 2.1
Advance Conditions
Schedule 2.3
Payment Schedule
Schedule 2.10
Sources and Uses
Schedule 7.2
Compliance Certificate
Schedule 7.26
Post-Closing Requirements
Schedule I
Certain Definitions
Schedule II
Calculation of Net Operating Income

 
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LOAN AGREEMENT
 
This Amended and Restated Loan Agreement is entered into as of April 30, 2010
among GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its
individual capacity, “GECC” and in its capacity as agent for the Lenders,
together with its successors, “Agent”), the financial institutions other than
GECC who are or hereafter become parties to this Agreement (together with GECC
collectively, or individually, as the context may require, “Lender”), and RSC
OAKLEAF GREENVILLE, LLC and RSC OAKLEAF LEXINGTON, LLC, each a Florida limited
liability company (each a “Borrower” and collectively, the “Borrowers”).
 
RECITALS
 
 
(A)
  Lender and the Borrowers have previously entered into that certain Loan
Agreement, dated as of January 10, 2006, (as amended to the date hereof, the
“Existing Loan Agreement”), pursuant to which Lender agreed to extend a loan in
the original principal amount of Thirteen Million Five Hundred Thousand and
00/100 Dollars ($13,500,000.00) (the “Existing Loan”) to the Borrowers, which is
evidenced by that certain Promissory Note dated January 10, 2006 and executed by
the Borrowers (the “Existing Note”).

 
 
(B)
  Borrowers have requested that the Existing Loan Agreement be amended and
restated as set forth below, which shall among other things, (a) extend and
continue certain existing indebtedness and obligations of the Borrowers owing to
the Lender in connection with the Existing Loan Agreement, (b) provide an
additional loan to the Borrowers  in the original principal amount of Five
Million and 00/100 Dollars ($5,000,000.00)  pursuant to the amendment and
restatement of the Existing Note and (c) allow the current principals of the
Borrowers to transfer 80% of the indirect ownership interests of the Borrowers
to entities directly or indirectly owned by the Cornerstone Principal (as
hereinafter defined).

 
 
(C)
  Pursuant to the Existing Loan Agreement and the other documents executed in
connection therewith (the "Existing Loan Documents"), Borrowers have granted to
Lender a security interest in all or substantially all of their assets,
including, without limitation, certain real property, as more particularly
described on Exhibit A-1 through Exhibit A-2 attached hereto (each a “Property”
and, collectively, the “Properties”) and the Improvements located thereon (the
“Improvements”) comprised of assisted living and/or Alzheimer's units.  Each
Property, along with its respective Improvements, is referred to herein as a
“Project” and are collectively referred to herein as the “Projects”.

 
 
(D)
  It is the intent of the parties hereto that this Agreement not constitute a
novation of the obligations and liabilities existing under the Existing Loan
Agreement, which remain outstanding or evidence repayment of any such
obligations and liabilities and that this Agreement amend and restate in its
entirety the Existing Loan Agreement and re-evidence the obligations of the
Borrowers outstanding thereunder as Obligations of the Borrowers under this
Agreement which will remain secured by, among other things, the Security
Documents.

 
 

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NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged by each of the parties hereto, the parties hereby agree as
follows:
 
ARTICLE I
 
INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES
 
Section 1.1  Incorporation of Recitals.
 
The foregoing preambles and all other recitals set forth herein are made a part
hereof by this reference.
 
Section 1.2  Incorporation of Exhibits and Schedules.
 
Exhibits A-1 through F and Schedules 2.1 through 11.31 and Schedules I and II to
this Agreement, attached hereto are incorporated in this Agreement and expressly
made a part hereof by this reference.
 
Section 1.3  Definitions.
 
All terms defined in Schedule I or otherwise in this Agreement shall, unless
otherwise defined therein, have the same meanings when used in any other Loan
Document, or any certificate or other document made or delivered pursuant
hereto.  The words “hereof”, “herein”, and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole.  The words “include” and “include(s)” when used in this Agreement and the
other Loan Documents means “include(s), without limitation,” and the word
“including” means “including, but not limited to.”
 
Section 1.4  Amendment and Restatement; No Novation.
 
This Agreement constitutes an amendment and restatement of the Existing Loan
Agreement effective from and after the Restatement Date.  The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby are not intended by the parties to be, and shall not constitute, a
novation or an accord and satisfaction of the Indebtedness, the Obligations, or
any other obligations owing to the Lender under the Existing Loan Agreement, the
Existing Note or any other “Loan Document” as defined in the Existing Loan
Agreement (the “Existing Loan Documents”).  On the Restatement Date, the credit
facilities and the terms and conditions thereof described in the Existing Loan
Agreement shall be amended and replaced by the credit facilities and the terms
and conditions thereof described herein, and all Indebtedness, Obligations,
obligations of the Borrowers under the Existing Loan, and other obligations of
the Borrowers and any other Person outstanding as of such date under the
Existing Loan Agreement shall be deemed to be Indebtedness and Obligations
outstanding under the corresponding facilities described herein without further
action by any Person.  The Schedules and Exhibits attached to this Agreement and
made a part hereof shall be deemed to replace the Schedules and Exhibits to the
Existing Loan Agreement.
 
 
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Section 1.5  Effectiveness of Existing Loan Documents.
 
Borrowers and each other Loan Party hereby acknowledge that the Existing Loan
Documents previously executed by the Borrowers, or any Loan Party and delivered
to Lender, are and shall remain in full force and effect, and Borrowers and each
other Loan Party hereby ratifies, confirms and approves the Loan Documents and
all of the terms and provisions thereof, and agrees that the Loan Documents
constitute valid and binding obligations of Borrowers or the Loan Parties, as
applicable, enforceable by Lender in accordance with its terms.
 
ARTICLE II
 
LOAN TERMS
 
Section 2.1  Disbursements.
 
(a)           Initial Loan.  As of the Restatement Date, the Lender has
previously made a loan to the Borrowers in an aggregate amount equal to
$13,500,000.00 (the “Initial Loan”). As of the Restatement Date, the aggregate
amount of such Initial Loan remaining outstanding on the Restatement Date is
$12,901,988.00.  The Borrowers hereby acknowledge that all Obligations in
respect of Initial Loan outstanding under, pursuant to and as defined in the
Existing Loan Agreement shall be deemed to have been made to the Borrowers as a
Loan under this Agreement, and shall constitute a portion of the Obligations
hereunder.
 
(b)           Restatement Date Loan.  On the Restatement Date, and subject to
the terms, provisions and conditions of this Agreement (including, without
limitation Borrowers’ satisfaction of the conditions to the advance described in
Schedule 2.1 attached hereto) and the other Loan Documents, Lender shall
disburse to Borrowers from the proceeds of the Loan the amount of Five Million
Ninety-eight Thousand Twelve and No/100 Dollars ($5,098,012.00) (the
“Restatement Date Loan”). The Loan shall be repaid in accordance with this
Agreement and the other Loan Documents.
 
Section 2.2  Interest Rate; Late Charge.
 
(a)           Restatement Date Loan.  The outstanding principal balance of the
Restatement Date Loan shall bear interest at a rate of interest equal to five
and forty-five hundredths percent (5.45%) per annum in excess of the Libor Rate
(the “Contract Rate”).
 
(b)           Initial Loan.  The outstanding principal balance of the Initial
Loan (including any amounts added to principal in respect of the Initial Loan
under the Loan Documents) shall bear interest (i) prior to the Swap Termination
Date, at the rate of six and sixty-two hundredths percent (6.62%) per annum
(“Swap Rate”) and (ii) thereafter at the Contract Rate.
 
 
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(c)           Calculation of Interest; Default Rate; Late Charge.  Interest
shall be computed on the basis of a fraction, the denominator of which is three
hundred sixty (360) and the numerator of which is the actual number of days
elapsed from the date of the initial advance or the date on which the
immediately preceding payment was due.  If Borrowers fail to pay any installment
of interest or principal within ten (10) days after the date on which the same
is due, except with respect to the payment due at the Maturity Date (as
hereinafter defined), Borrowers shall pay to Agent a late charge on such past
due amount, as liquidated damages and not as a penalty, equal to the greater of
(a) interest at the Default Rate on such amount from the date when due until
paid, and (b) five percent (5%) of such amount, but not in excess of the maximum
amount of interest allowed by applicable law.  The foregoing late charge is
intended to compensate Lender for the expenses incident to handling any such
delinquent payment and for the losses incurred by Lender as a result of such
delinquent payment.  Borrowers agree that, considering all of the circumstances
existing on the date this Agreement is executed, the late charge represents a
reasonable estimate of the costs and losses Lender will incur by reason of late
payment.  Borrowers and Lender further agree that proof of actual losses would
be costly, inconvenient, impracticable and extremely difficult to
fix.  Acceptance of the late charge shall not constitute a waiver of the Event
of Default arising from the overdue installment, and shall not prevent Lender
from exercising any other rights or remedies available to Lender with respect to
such Event of Default.  While any Event of Default exists, the Loan shall bear
interest at the Default Rate.
 
Section 2.3  Payments.
 
(a)           Restatement Date.  Borrowers shall pay a payment of interest only
on the date hereof for the period from the date hereof through the last day of
the current month computed (i) at the Swap Rate, for the Initial Loan and (ii)
at the Contract Rate, for the Restatement Date Loan.
 
(b)           Interest Payments.  Commencing on June 1, 2010 and continuing on
the first (1st) day of each calendar month thereafter (each, a "Payment Date")
until and including the Maturity Date, Borrowers shall pay interest in arrears
on (i) the Initial Loan, at the Swap Rate in the amount shown on Part 1 of
Schedule 2.3 on each Payment Date prior to the Swap Termination Date and on each
Payment Date thereafter, at the Contract Rate and (ii) the Restatement Date
Loan, at the Contract Rate, in each case until all amounts due under the Loan
Documents are paid in full.  If the first day of a month is not a Business Day,
then the applicable payment due hereunder shall be made on the first Business
Day immediately following the first day of such month.
 
(c)           Principal Amortization Payments.  Commencing on June 1, 2010, and
continuing on each Payment Date thereafter until and including the Maturity
Date, in addition to the interest payments required under ‎Section 2.3(a) above,
Borrowers shall make a monthly principal amortization payment on (i) the Initial
Loan prior to the Swap Termination Date, based upon a 25-year amortization
schedule in the amount shown on Part 1 of Schedule 2.3, and (ii) on the
Restatement Date Loan,  based upon a 30-year amortization schedule in the amount
shown on Part 2 of Schedule 2.3 and (iii) the Initial Loan on and after the Swap
Termination Date, based upon a 30-year amortization schedule in the amount shown
on Part 3 of Schedule 2.3.  If the first day of a month is not a Business Day,
then the applicable payment due hereunder shall be made on the first Business
Day immediately following the first day of such month.
 
 
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Section 2.4  Maturity.
 
The Loan shall mature and Borrowers shall pay to Agent all outstanding
principal, accrued and unpaid interest, and any other amounts due under the Loan
Documents on the Maturity Date.
 
Section 2.5  Prepayment.
 
(a)           Voluntary Prepayment.  Borrowers may voluntarily prepay the Loan
in whole but not in part prior to the Maturity Date; provided that, the
Borrowers pay to Agent with such prepayment all accrued interest and all other
outstanding amounts then due and unpaid under the Loan Documents, including,
without limitation, the Exit Fee and, if applicable, the Swap Termination Fee.
 
(b)           Exit Fee.  When the Loan is repaid for any reason and at any time
(whether by voluntary prepayment by Borrowers, by reason of the occurrence of an
Event of Default, upon the maturity of the Loan or otherwise), Borrowers shall
pay to Agent, as compensation for the cost of Agent and Lender making funds
available to Borrowers under this Agreement, the Exit Fee.
 
(c)           Conditions of Voluntary Prepayment.  In the event of any such
voluntary prepayment permitted hereunder, Borrowers shall give Agent and the
Lender written notice (or telephonic notice promptly confirmed in writing) of
its intent to prepay, which notice shall be given at least thirty (30) days’
prior to the date upon which prepayment is to be made and shall specify the
Payment Date on which such prepayment is to be made.  If any such notice is
given, the Loan and all other amounts as aforesaid shall be due and payable on
the Payment Date specified therein (unless such notice is revoked by Borrowers
not less than two (2) Business Days prior to the date specified therein in which
event Borrowers shall immediately reimburse Agent and the Lender for any
out-of-pocket costs incurred in connection with the giving of such notice and
its revocation).
 
(d)           Casualty and Condemnation Proceeds.  Anything herein or any other
Loan Document to the contrary notwithstanding, any prepayment of any of the
principal balance of the Loan as a result of the application of insurance or
condemnation proceeds by Agent to such principal pursuant to ‎Section 3.2 hereof
shall be at “par” and no Exit Fee or Swap Termination Fee shall be due with
respect to any such principal that is prepaid.
 
(e)           Character of Prepayment Fees.  The Exit Fee and, if applicable,
Swap Termination Fee do not constitute a penalty, but rather represent the
reasonable estimate, agreed to between Borrowers and Lender, of fair
compensation for the loss that may be sustained by Lender due to the payment of
the principal Indebtedness prior to the Maturity Date and/or the increased cost
and expense to Lender resulting from an acceleration of the Loan.  Any Exit Fee
or Swap Termination Fee shall be paid without prejudice to the right of Agent to
collect on behalf of Lender any of the amounts owing under the Note, this Loan
Agreement or the other Loan Documents or otherwise, to enforce any of its rights
or remedies arising out of an Event of Default.
 
 
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Section 2.6  Application of Payments.
 
All payments received by Agent or Lender under the Loan Documents shall be
applied: first, to any fees, expenses and indemnification payments due to Agent
or Lender under the Loan Documents; second, to any Default Rate interest or late
charges; third, to other accrued and unpaid interest; fourth, to the principal
sum and other amounts due under the Loan Documents, and fifth to the Exit Fee
and, if any, the Swap Termination Fee.
 
Section 2.7  Sources and Uses.
 
The sources and uses of funds for the contemplated transaction are as described
on Schedule 2.10 attached hereto.  Borrowers shall deliver such information and
documentation as Agent shall request to verify that the sources and uses are as
indicated on Schedule 2.10.  A reduction in the amounts necessary for any of the
uses may, at Agent’s election, shall result in an equal reduction in the amount
of the Loan.
 
Section 2.8  Security.
 
(a)           Collateral.  The Loan and all other indebtedness and obligations
under the Loan Documents shall be secured by the liens and security interests
granted to Lender in the following (collectively, the “Collateral”):  (a) the
Projects and other collateral as set forth in the Security Document, (b) all of
the deposit accounts for the Projects, (c) a first priority security interest in
all of the Security Deposits for the Projects and (d) any other collateral or
security described in this Agreement, the other Loan Documents or required by
Agent or Lender pursuant to the Loan Documents in connection with the Loan.
 
Section 2.9  Capital Adequacy; Increased Costs; Illegality.
 
If Lender determines that any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other governmental authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by Lender and thereby reducing the rate
of return on Lender's capital as a consequence of its obligations hereunder,
then Borrowers shall from time to time upon demand by Lender, pay to Lender,
additional amounts sufficient to compensate Lender for such reduction.  A
certificate as to the amount of that reduction and showing the basis of the
computation thereof submitted by Lender to Borrowers shall, absent manifest
error, be final, conclusive and binding for all purposes.  Lender agrees that,
as promptly as practicable after it becomes aware of any circumstances referred
to above which would result in any such increased cost, Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 2.9(a).
 
 
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If, due to either (i) the introduction of or any change in any law or regulation
(or any change in the interpretation thereof) or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), in each case adopted after the Closing
Date, there shall be any increase in the cost to Lender of agreeing to make or
making, funding or maintaining the Loan, then Borrowers shall from time to time,
upon demand by Lender, pay to Lender, additional amounts sufficient to
compensate Lender for such increased cost.  A certificate as to the amount of
such increased cost, submitted to Borrower by Lender, shall be conclusive and
binding on Borrowers for all purposes, absent manifest error.  Lender agrees
that, as promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 2.8(b).
 
Notwithstanding anything to the contrary contained herein, if the introduction
of or any change in any law or regulation (or any change in the interpretation
thereof) shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for Lender to agree to make or to
make or to continue to fund or maintain any Loan bearing interest computed by
reference to the Libor Rate, then, unless Lender is able to make or to continue
to fund or to maintain the Loan at another office of Lender without, in Lender's
opinion, adversely affecting it or its Loan or the income obtained therefrom, on
notice thereof and demand therefor by Lender to Borrowers, (i) the obligation of
Lender to agree to make or to make or to continue to fund or maintain the Loan
shall terminate and (ii) Borrowers shall prepay in full the Loan, together with
interest accrued thereon, but without payment of the Acceleration Exit Fee,
within thirty (30) days following Lender's demand for payment unless Lender
determines a replacement index and spread to approximate the Contract Rate
before such change in law or regulation.  Lender will use best efforts to
determine such replacement index and spread and will notify Borrowers of the
index and spread to be used and the same shall be applied to the Loan effective
as of the date Lender determined that the Libor Rate was no longer available.
 
Section 2.10  Libor Breakage Amount.  Upon any payment of the Loan on any day
that is not the last day of the Libor Interest Period applicable thereto
(regardless of the source of such prepayment and whether voluntary, by
acceleration or otherwise), Borrowers shall pay the Libor Breakage Amount.  For
purposes of calculating the Libor Breakage Amount payable to Lender under this
Section 2.10, Lender shall be deemed to have actually funded the Loan through
the purchase of a deposit bearing interest at the Libor Rate in an amount equal
to the amount of the Loan and having a maturity and repricing characteristics
comparable to the relevant Libor Interest Period; provided, however, that Lender
may fund the Loan in any manner it sees fit, and the foregoing assumption shall
be utilized only for the calculation of amounts payable under this Section 2.10.
 
 
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ARTICLE III
 
INSURANCE, CONDEMNATION, AND IMPOUNDS
 
Section 3.1  Insurance.
 
Borrowers shall maintain insurance as follows:
 
(a)           Property.  Borrowers shall keep the Projects insured against
damage by fire and the other hazards covered by a standard extended coverage and
“special perils” insurance policy (including a separate policy for broad form
boiler and machinery coverage (without exclusion for explosion)) for the full
insurable value thereof, with the term “full insurable value” to mean the actual
replacement cost of the improvements and the personal property located at the
Projects (without taking into account depreciation or co-insurance), and shall
maintain such other casualty insurance as reasonably required by Agent,
including, without limitation, ordinance or law coverage, in amounts and in
form  and with carrier(s) approved by Agent as of the Closing Date which
carrier(s), amounts and form shall not be changed without the prior written
consent of Agent.  Borrowers shall keep the Projects insured against loss by
flood if any Project is located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968, the Flood Disaster Protection Act of 1973 and the National Flood Insurance
Reform Act of 1994 (and any successor acts thereto) in an amount at least equal
to the amount approved by Agent as of the Closing Date.  The proceeds of
insurance paid on account of any damage or destruction to any Project shall be
paid to Agent to be applied as provided in ‎Section 3.2.
 
(b)           Liability.  Borrowers shall maintain (a) commercial general
liability insurance with respect to the Projects; (b) worker’s compensation
insurance and employer’s liability insurance covering employees at the Projects
employed by Borrowers or Property Manager or Master Tenants (to the extent
required, and in the amounts required by applicable laws); (c) business
interruption insurance, including use and occupancy, rental income loss and
extra expense, against all periods covered by Borrowers’ property insurance; (d)
umbrella liability, (e) builder’s risk insurance, as applicable, and (f)
Terrorism insurance (subject to the requirements of this ‎Section 3.1(a)).  All
of the above shall be maintained at all times during the term of the Loan with
coverages, in the amounts and forms and with limits and carrier(s) approved by
Agent as of the Closing Date which carrier(s), amounts, limits and form shall
not be changed or reduced without the prior written consent of Agent.
 
(c)           Terrorism Insurance.  Without limiting the foregoing and
notwithstanding anything to the contrary contained in this Agreement, if on the
Closing Date, terrorism, terrorist acts or similar perils (collectively,
“Terrorism”) is an exclusion from coverage in the insurance policies described
in ‎Section 3.1(a) and ‎(b) above, then Borrowers shall, upon Agent’s request,
obtain a separate policy or policies insuring specifically against
Terrorism.  However, after the date hereof, Terrorism coverage shall not be
required unless such coverage is (i) customarily obtained by owners of property
similar to the Projects in use, character and geographic location, and (ii)
readily available at a cost which, in Agent’s opinion, exercised reasonably, is
commercially reasonable.
 
(d)           Other Insurance.  Borrowers shall maintain such other insurance
with respect to the Projects as reasonably required by Agent and is customary
with respect to similar Projects.
 
 
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(e)           Form and Quality.  All insurance policies shall be endorsed in
form and substance acceptable to Agent to name Agent as an additional insured,
loss payee or mortgagee thereunder, as its interest may appear, with loss
payable to Agent, without contribution, under a standard New York (or local
equivalent) mortgagee clause.  All such insurance policies and endorsements
shall be fully paid for and contain such provisions and expiration dates and be
in such form and issued by such insurance companies licensed to do business in
the State where each Project is located, with a rating of “A IX” or better as
established by Best’s Rating Guide (or an equivalent rating approved in writing
by Agent).  Each policy shall provide that such policy may not be cancelled or
materially changed except upon thirty (30) days’ prior written notice of
intention of non-renewal, cancellation or material change to Agent and that no
act or thing done by Borrowers shall invalidate any policy as against
Agent.  Borrowers shall assign the policies or proofs of insurance to Agent, in
such manner and form such that Agent and its successors and assigns shall at all
times have and hold the same as security for the payment of the Loan.  Borrowers
shall deliver copies of all original policies certified to Agent by the
insurance company or authorized agent as being true copies, together with the
endorsements required hereunder.  The proceeds of insurance policies coming into
the possession of Agent shall not be deemed trust funds, and Agent shall be
entitled to apply such proceeds as herein provided.  Borrowers shall not
maintain any separate or additional property insurance which is contributing in
the event of loss unless it is properly endorsed and otherwise satisfactory to
Agent in all respects.
 
(f)           Agent’s Right to Purchase Insurance.  In the event Borrowers fail
to provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may purchase insurance at Borrowers’ expense to protect Agent’s
interests in the Projects.  This insurance may, but need not, protect Borrowers’
interests.  The coverage purchased by Agent may not pay any claim made by any
Borrower or any claim that is made against any Borrower in connection with the
Projects.  Borrowers may later cancel any insurance purchased by Agent, but only
after providing Agent with evidence that Borrowers have obtained insurance as
required by this Agreement.  If Agent purchases insurance for the Projects,
Borrowers will be responsible for the costs of that insurance, including
interest and other charges imposed by Agent in connection with the placement of
the insurance, until the effective date of the cancellation or expiration of the
insurance.  The costs of the insurance may be added to the Loan.  The costs of
the insurance may be more than the cost of insurance Borrowers are able to
obtain on their own.
 
Section 3.2  Disposition of Insurance Proceeds.
 
(a)           Notice of Loss; Adjustments.  Borrowers shall give immediate
written notice of any loss to Agent.  Borrowers hereby irrevocably authorize and
empower Agent, as attorney-in-fact for Borrowers coupled with an interest, to
make proof of loss, to adjust and compromise any claim under insurance policies,
to appear in and prosecute any action arising from such insurance policies, to
collect and receive insurance proceeds, and to deduct therefrom Agent’s expenses
incurred in the collection of such proceeds.  Notwithstanding the foregoing,
provided no Event of Default or Potential Default exists, (i) Borrowers shall
have the right to exercise the rights specified in the prior sentence with
respect to claims of $250,000 or less (herein, a “Minor Claim”) and (ii) with
respect to all claims other than Minor Claims, Agent and Borrowers shall jointly
and reasonably agree on the prompt adjustment and compromise of such loss, to
collect and receive such proceeds or awards and to endorse any check in payment
thereof.  Furthermore, with respect to Minor Claims, Agent agrees that insurance
proceeds may be made available directly to the Borrowers provided that no Event
of Default is then in existence and so long as Borrowers promptly commence and
diligently pursue to completion any required restoration work utilizing such
insurance proceeds.  Nothing contained in this ‎Section 3.2, however, shall
require Agent to incur any expense or take any action hereunder.
 
 
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(b)           Use and Application.  Except as set forth hereinbelow or in case
of a Minor Claim, Agent, in its absolute discretion, may decide whether and to
what extent, if any, proceeds of insurance will be made available to Borrowers
for repair or restoration of the Projects.  Notwithstanding the foregoing, Agent
agrees to make insurance proceeds available to Borrowers for repair or
restoration provided the following conditions are satisfied:
 
(i)           the cost to repair the affected Project or Projects (as determined
by Agent) is not more than twenty five percent (25%) of the replacement value of
the affected improvements (for projects containing multiple phases or stand
alone structures, such calculation to be based on the damaged phase or
structure, not the Project or Projects as a whole);
 
(ii)           no Event of Default or Potential Default exists;
 
(iii)          Agent determines that there are sufficient funds available to
restore and repair the Projects to a condition substantially the same as existed
prior to the casualty;
 
(iv)         Agent determines that the Net Operating Income of the Projects
during restoration plus the collectible proceeds of business interruption
insurance will be sufficient to pay Debt Service;
 
(v)           Agent determines that after restoration the Debt Service Coverage
Ratio will be at least 1.15:1.00 and the Project Yield will be at least nine
percent (9%);
 
(vi)          Agent determines that restoration and repair of the affected
Project or Projects to a condition approved by Agent will be completed within
nine (9) months after the date of loss or casualty and in any event ninety (90)
days prior to the Maturity Date; and
 
(vii)        Borrowers promptly commence and are diligently pursuing restoration
of the affected Project or Projects.
 
(c)           Application to Loan Balance.  If the conditions set forth in
‎Section 3.2(b) above are not satisfied or an Event of Default or Potential
Default exists (regardless of whether the loss relates to a Minor Claim), Agent
may, in Agent’s sole discretion, elect to either (i) apply (without payment of
any Exit Fee as to the principal prepaid with such proceeds) any insurance
proceeds it may receive to the payment of the Loan in whatever order Agent
elects or (ii) allow all or a portion of such proceeds to be used for the
restoration of the affected Project or Projects.  Any principal reduction
resulting from an early involuntary prepayment as a result of a condemnation
proceeding or insurance settlement will cause a re-calculation of debt service
payments based upon the reduced Loan balance, the remaining amortization
schedule and the Interest Rate.
 
 
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(d)           Disbursements of Proceeds.  Insurance proceeds applied to
restoration will be disbursed on receipt of satisfactory plans and
specifications, contracts and subcontracts, schedules, budgets, lien waivers and
architects’ certificates, and otherwise in accordance with prudent commercial
construction lending practices for construction loan advances, including, as
applicable, the advance conditions under Part C of Schedule 2.1 with respect to
disbursement of insurance proceeds.
 
Section 3.3  Condemnation Awards.
 
Borrowers shall immediately notify Agent of the institution of any proceeding
for the condemnation or other taking of any Project or any portion
thereof.  With respect to any claim other than a Minor Claim, Agent may
participate in any such proceeding and Borrowers will deliver to Agent all
instruments necessary or required by Agent to permit such
participation.  Without Agent’s prior consent, with respect to any claim other
than a Minor Claim, Borrowers (a) shall not agree to any compensation or award,
and (b) shall not take any action or fail to take any action which would cause
the compensation to be determined.  All awards and compensation for the taking
or purchase in lieu of condemnation of the Projects or any part thereof are
hereby assigned to and shall be paid to Agent.  Borrowers authorize Agent to
collect and receive such awards and compensation, to give proper receipts and
acquittances therefor.  Agent agrees that proceeds of any Minor Claim may be
made available directly to the Borrowers provided that no Event of Default is
then in existence and so long as Borrowers promptly commence and diligently
pursue to completion any required restoration work utilizing such
proceeds.  With respect to any other claim associated with a condemnation or
taking of any Project, Agent may elect, in Agent’s sole discretion, to either
(a) apply the proceeds of any claim related to the same (after deduction of
Lender’s reasonable costs and expenses, if any in collecting the same) toward
the payment of the Loan in such order and manner as Agent may elect,
notwithstanding that the Loan may not then be due and payable (but without
payment of any Exit Fee with respect to the amount so applied), or (b) make the
same available to Borrowers for the restoration or repair of the Projects.  If
the net proceeds of the condemnation award are made available to Borrowers for
restoration or repair, such proceeds shall be disbursed upon satisfaction of and
in accordance with the terms and conditions set forth in ‎Section
3.2.  Borrowers, upon request by Agent, shall execute all instruments requested
to confirm the assignment of the awards and compensation to Agent, free and
clear of all liens, charges or encumbrances.
 
 
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Section 3.4  Insurance Impounds.
 
Borrowers shall deposit (or shall cause Master Tenant to deposit) with Agent,
monthly on each Payment Date, a sum of money (the “Insurance Impound”) equal to
one twelfth (1/12th) of the annual charges for insurance premiums relating to
the insurance coverages required by this Agreement.  At or before the initial
advance of the Loan, Borrowers shall deposit with Agent a sum of money which
together with the monthly installments will be sufficient to make each of such
payments thirty (30) days prior to the date any delinquency or penalty becomes
due with respect to such payments.  Deposits shall be made on the basis of
Agent’s estimate from time to time of the charges for the current year.  All
funds so deposited shall be held by Agent.  These sums may be commingled with
the general funds of Agent, and shall not be deemed to be held in trust for the
benefit of Borrowers.  So long as no Potential Default or Event of Default
exists hereunder, Agent shall credit for Borrowers’ account interest on such
funds held by Agent from time to time at the money market account rate announced
from time to time by the Northern Trust Company or any other national banking
association selected by Agent in its sole discretion (the “Money Market
Rate”).  All interest paid on such funds shall be deemed to be a part of the
Insurance Impound and shall be applied in accordance with this ‎Section
3.4.  Borrowers hereby grant to Agent for the benefit of Lender and Agent a
security interest in all funds so deposited with Agent for the purpose of
securing the Loan.  While an Event of Default exists, the funds deposited may be
applied in payment of the charges for which such funds have been deposited, or
to the payment of the Loan or any other charges affecting the security of Agent,
as Agent may elect, but no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Agent.  Borrowers shall
furnish Agent with bills for the charges for which such deposits are required at
least thirty (30) days prior to the date on which the charges first become
payable.  If at any time the amount on deposit with Agent, together with amounts
to be deposited by Borrowers before such charges are payable, is insufficient to
pay such charges, Borrowers shall deposit any deficiency with Agent immediately
upon demand.  Agent shall pay such charges when the amount on deposit with Agent
is sufficient to pay such charges and Agent has received a bill for such
charges.
 
Section 3.5  Real Estate Tax Impounds.
 
Borrowers shall deposit (or shall cause Master Tenant to deposit) with Agent,
monthly on each Payment Date, a sum of money (the “Tax Impound”) equal to one
twelfth (1/12th) of the annual charges for real estate taxes, assessments,
franchise taxes and changes, impositions and other charges and obligations
relating to the Projects (collectively, the “Taxes”).  At or before the initial
advance of the Loan, Borrowers shall deposit with Agent a sum of money which
together with the monthly installments will be sufficient to make each of such
payments thirty (30) days prior to the date any delinquency or penalty becomes
due with respect to such payments.  Deposits shall be made on the basis of
Agent’s estimate from time to time of the charges for the current year (after
giving effect to any reassessment or, at Agent’s election, on the basis of the
charges for the prior year, with adjustments when the charges are fixed for the
then current year).  All funds so deposited shall be held by Agent.  These sums
may be commingled with Agent’s general funds and shall not be deemed to be held
in trust for the benefit of Borrowers.  So long as no Potential Default or Event
of Default exists hereunder, Agent shall credit for Borrowers’ account interest
on such funds held by Agent from time to time at the Money Market Rate.  All
interest paid on such funds shall be deemed to be a part of the Tax Impound and
shall be applied in accordance with this ‎Section 3.5.  Borrowers hereby grant
to Agent for the benefit of Lender and Agent a security interest in all funds so
deposited with Agent for the purpose of securing the Loan.  While an Event of
Default exists, the funds deposited may be applied in payment of the charges for
which such funds have been deposited, or to the payment of the Loan or any other
charges affecting the security of Agent, as Agent may elect, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Agent.  Borrowers shall furnish Agent with bills for the
charges for which such deposits are required at least thirty (30) days prior to
the date on which the charges first become payable.  If at any time the amount
on deposit with Agent, together with amounts to be deposited by Borrowers before
such charges are payable, is insufficient to pay such charges, Borrowers shall
deposit any deficiency with Agent immediately upon demand.  Agent shall pay such
charges when the amount on deposit with Agent is sufficient to pay such charges
and Agent has received a bill for such charges.  The obligation of Borrowers to
pay the Taxes, as set forth in the Security Documents, is not affected or
modified by the provision of this paragraph.
 
 
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Section 3.6  Replacement Reserves.
 
(a)           Deposits.  Borrowers shall deposit (or shall cause Master Tenant
to deposit) with Agent monthly on each Payment Date, an amount equal to the
product of Thirty Dollars ($30.00) multiplied by the sum of the maximum number
of beds and/or assisted living facility units (collectively, the “Licensed
Beds”) authorized under the Licenses or otherwise included in the Projects (the
“Replacement Deposit”).  Provided no Potential Default or Event of Default
exists hereunder, Agent shall credit for Borrowers’ account interest on the sum
of the Replacement Deposit held by Agent from time to time, which interest shall
accrue monthly at the Money Market Rate.  The undisbursed amount of the
Replacement Deposit and any interest earned thereon is hereinafter referred to
as the “Replacement Reserve”.  Borrowers hereby grant to Agent for the benefit
of Lender and Agent a security interest in the Replacement Reserve for the
purpose of securing the Loan.  On the Maturity Date, the monies then remaining
on deposit with Agent shall, at Agent’s option, be applied against the
Indebtedness or if no Potential Default or Event of Default exists hereunder,
returned to Borrowers.  The Replacement Reserve may be commingled with the
general funds of the Agent, and these sums shall not be deemed to be held in
trust for the benefit of Borrowers.
 
(b)           Disbursements.  So long as no Potential Default or Event of
Default exists hereunder, Borrowers may request, from time to time, Agent to
disburse funds from the Replacement Reserve (which request will include a
reasonably detailed description of the capital expenditures at the Projects
which Borrowers intend to pay for with such funds), which request shall not be
unreasonably denied by Agent.  If requested by Agent, each disbursement request
will be accompanied by copies of invoices, lien waivers and other evidence
reasonably required by Agent.
 
(c)           Application to Loan.  If an Event of Default occurs, Agent shall
have the right to apply all or any portion of the Replacement Reserve to the
obligations evidenced by the Loan Documents in such order as Agent in its sole
discretion determines.
 
ARTICLE IV
 
LEASING MATTERS
 
Section 4.1  Representations and Warranties on Leases.
 
(a)           Leases.  To the knowledge of Borrowers, Borrowers represent and
warrant to Agent with respect to Leases of the Projects that:  (i) the rent roll
separately delivered to Agent at or prior to Closing is true and correct as of
the date hereof, and the Leases are valid and in and full force and effect; (ii)
the Leases (including amendments) are in writing, and there are no oral
agreements with respect thereto; (iii) the copies of the Leases delivered to
Agent are true and complete; (iv) neither the landlord nor, to Borrowers’
knowledge, any tenant is in default under any of the Leases; (v) no Borrower has
any knowledge of any notice of termination or default with respect to any Lease;
(vi) no Borrower has assigned or pledged any of the Leases, the rents or any
interests therein, except to Agent; (vii) no tenant or other party has an option
to purchase all or any portion of the Projects; (viii) no tenant has the right
to terminate its Lease prior to expiration of the stated term of such Lease
(unless due to casualty or condemnation of the Project); and (ix) no tenant has
prepaid more than one month’s rent in advance (except for bona fide security
deposits not in excess of an amount equal to two month’s rent).
 
 
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(b)           Master Lease.  Borrowers represent and warrant to Agent with
respect to each Master Lease that:  (i)  the Master Lease is valid and in and
full force and effect; (ii) the Master Lease (including amendments) is in
writing, and there are no oral agreements with respect thereto; (iii) the copy
of the Master Lease delivered to Agent is true and complete; (iv) neither the
Borrowers nor, to the Borrowers’ Knowledge, Master Tenant is in default under
the Master Lease; (v) no Borrower has any knowledge of any notice of termination
or default with respect to the Master Lease; (vi) no Borrower has assigned or
pledged the Master Lease, the rents or any interests therein, except to Agent,
(vii) Master Tenant does not have an option to purchase all or any portion of
the Projects; (viii) except as set forth in the Master Lease, Master Tenant does
not have the right to terminate the Master Lease prior to expiration of the
stated term of such Master Lease (unless due to casualty or condemnation of the
Project); and (ix) Master Tenant has not prepaid more than one month’s rent in
advance.
 
Section 4.2  Approval Rights.
 
(a)           Borrowers shall not and shall not permit any Property Manager or
Master Tenant to, without Agent’s prior written consent, such consent not to be
unreasonably withheld, conditioned or delayed, enter into or amend (in any
material respect) any Lease or other rental or occupancy agreement or concession
agreement with respect to a Project except as expressly permitted hereunder.
 
(b)           Borrowers shall have the right to enter into or to permit any
Property Manager or Master Tenant to, amend and/or modify non-residential Leases
without Agent’s consent provided (i) the economic terms of the Lease conform to
those of the market, (ii) the form of the non-residential Lease is that of the
standard lease form approved by Agent, with no material modifications, (iii) the
initial term is not longer than five (5) years, and (iv) the leased premises are
not greater than 4% of the square footage of the applicable Project.
 
(c)           Anything herein to the contrary notwithstanding, Borrowers,
Property Managers and Master Tenants shall have the right to enter into or amend
any residential Lease so long as such residential Lease (i) has a term of no
more than one (1) year, (ii) is at market rates, and (iii) is on the form
previously approved by Agent without any material modifications.
 
 
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Section 4.3  Covenants.
 
(a)           Borrowers shall or shall cause Property Managers or Master Tenants
to: (a) perform the obligations which any Borrower, Property Manager or Master
Tenant is required to perform under the Leases; (b) enforce the material
obligations to be performed by the tenants under the Leases; (c) promptly
furnish to Agent any notice of default or termination received by any Borrower
from any non-residential tenant, and any notice of default or termination given
by any Borrower, Property Manager or Master Tenant to any non-residential
tenant; (d)  not collect any rents for more than one month in advance of the
time when the same shall become due, except for bona fide security deposits not
in excess of an amount equal to two months rent; (e) not enter into any ground
lease or sub-master lease of any part of the Projects; (f) not further assign or
encumber any Lease; (g) not, except with Agent’s prior written consent, cancel
or accept surrender or termination of any non-residential Lease; and (h) not,
except with Agent’s prior written consent, modify or amend any non-residential
Lease (except for minor modifications and amendments entered into in the
ordinary course of business, consistent with prudent property management
practices, not affecting the economic terms of the Lease), and any action in
violation of clauses (e), (f), (g), and (h) of this ‎Section 4.3 shall be void
at the election of Agent.  Borrowers will not suffer or permit any breach or
default to occur in any of any Borrower’s, Property Manager’s or Master Tenant’s
obligations under any of the Leases nor suffer or permit the same to terminate
by reason of any failure of any Borrower to meet any requirement of any Lease.
 
(b)           Borrowers shall (i)  perform the obligations which Borrowers are
required to perform under the Master Leases; (ii) enforce the material
obligations to be performed by the Master Tenants under the Master Leases; (iii)
promptly furnish to Agent any notice of default or termination received by any
Borrower from any Master Tenant, and any notice of default or termination given
by any Borrower to any Master Tenant under the Master Leases; (iv)  not collect
any rents for more than one month in advance of the time when the same shall
become due under the Master Leases, except for bona fide security deposits not
in excess of an amount equal to two months rent; (v) not enter into any ground
lease or master lease of any part of the Projects other than the Master Lease;
(vi) not further assign or encumber the Master Lease; (vii) not, except with
Agent’s prior written consent, cancel or accept surrender or termination of any
Master Lease; and (viii) not, except with Agent’s prior written consent, modify
or amend any Master Lease, and any action in violation of clauses (v), (vi),
(vii), and (viii) of this ‎Section 4.3 shall be void at the election of
Agent.  Borrowers will not suffer or permit any breach or default to occur in
any of any Borrowers’ obligations under the Master Leases nor suffer or permit
the same to terminate by reason of any failure of any Borrower to meet any
requirement of the Master Leases.
 
Section 4.4  Tenant Estoppels.
 
(a)           At Agent’s request, Borrowers shall obtain and furnish to Agent,
written estoppels in form and substance satisfactory to Agent, executed by
non-residential tenants under Leases in the Projects and confirming the term,
rent, and other provisions and matters relating to the non-residential Leases.
 
(b)           At Agent’s request, Borrowers shall obtain and furnish to Agent, a
written estoppel in form and substance satisfactory to Agent, executed by Master
Tenant and confirming the term, rent and other provisions and matters relating
to the Master Lease.
 
 
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Section 4.5  Security Deposits
 
(a)           Existence of Security Deposits.  None of any Borrower, Property
Manager or Master Tenant has collected or is in receipt of any security deposit
from any tenant of any Project, except as described on the rent rolls previously
provided to Agent at or prior to the Closing Date.  Borrowers, Property Managers
and/or Master Tenants, as applicable shall hold, in trust, all tenant security
deposits in a segregated account, and, to the extent required by applicable law,
shall not commingle any such funds with any other funds of Borrowers, Property
Managers or Master Tenants.
 
(b)           Lien on Security Deposits.  Borrowers, Property Managers and/or
Master Tenants shall at all times have on deposit with Agent, as cash collateral
for the Loan and all amounts payable under the Loan Documents, an amount of cash
equal to the aggregate amount of security deposits which are or may become
refundable to tenants of the Projects from time to time.  Agent agrees to allow
Borrowers, Property Managers or Master Tenants, if applicable, to use such funds
solely to repay such amounts to tenants of the Projects, as and when the same
are due; provided Agent may, but shall not be obligated to, pay such amounts
directly to the tenants upon Agent’s receipt of evidence reasonably satisfactory
to Agent that such amounts are due; and provided further, upon payment in full
of the Loan and all other amounts due Agent under the Loan Documents, Agent
shall pay any remaining amounts on deposit with Agent pursuant to this ‎Section
4.5(b) to Borrowers, or Property Managers or Master Tenants, if
applicable.  Agent shall not be obligated to pay Borrowers, Property Managers or
any Master Tenant, if applicable, interest on any amounts on deposit with Agent
pursuant to this ‎Section 4.5(b).
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES
 
Borrowers represent and warrant to Agent that:
 
Section 5.1  Organization and Power.
 
Each Borrower and each Loan Party (other than a natural person) is duly
organized, validly existing and in good standing under the laws of the state of
its formation or existence, and is in compliance with legal requirements
applicable to doing business in the state of its formation.  Each Borrower and
each Loan Party (other than a natural person and to the extent required by law)
is in good standing under the laws of and is in compliance with legal
requirements applicable to doing business in the state where each Project is
located.  No Borrower is a “foreign person” within the meaning of § 1445(f)(3)
of the Internal Revenue Code.
 
Section 5.2  Owners of Borrower.
 
(a)           Member.  Managing Member is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware with its principal place of business at 1920 Main Street, Suite 400,
Irvine, California 92614.  Managing Member is the sole member of each Borrower
and owns one hundred percent (100%) of the membership interests in each Borrower
free and clear of all liens, claims, and encumbrances.  Managing Member has full
right, power and authority to execute the Loan Documents on its own behalf and
on behalf of each Borrower.
 
 
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(b)           Principals.  Cornerstone Oakleaf Village, LLC and RSC South
Carolina Interests, LLC are the sole members of Managing Member.  The
Cornerstone Principal is the sole member of Cornerstone Oakleaf Village, LLC
with a principal place of business at 1920 Main Street, Suite 400, Irvine,
California 92614 and owns an eighty percent (80%) membership interest in, and is
the managing member of the Managing Member.  The RSC Principals collectively,
directly or indirectly, own one hundred percent (100%) of the sole member of RSC
South Carolina Interests, LLC with a principal place of business at c/o Royal
Senior Care, LLC, 1660 NE Miami Gardens Drive, Suite 8, North Miami Beach,
Florida 33179 and RSC South Carolina Interests, LLC owns a twenty percent (20%)
membership interest in Managing Member.
 
(c)           Ownership of Borrowers.  Exhibit D sets forth the names of each
member of Borrowers and such member’s percentage interest in Borrowers.  All
such interests are free and clear of all liens, claims, encumbrances and rights
of others except as set forth on Exhibit D.
 
(d)           Authority.  Sharon Kaiser and Terry Roussel (or similarly situated
executives employed by Cornerstone Principal and located primarily in the United
States) and, if required with respect to decisions requiring one hundred percent
(100%) consent of the members of the Managing Member, Sean Kanov (or a similarly
situated executive employed by RSC Principals and located primarily in the
United States) (both subject to death or incapacity) shall have authority to
make all material business decisions (including a sale or refinance) for
Borrowers during the term of the Loan.
 
Section 5.3  Borrowers’ Articles.
 
A true and complete copy of the articles of organization creating of each
Borrower and all other documents creating and governing each Borrower
(collectively, the “Articles”) have been furnished to Agent.  There are no other
documents or agreements, oral or written, among any of the members or otherwise
relating to any Borrower.
 
Section 5.4  Corporate Documents.
 
A true and complete copy of the articles of formation and operating agreement of
Managing Member and all other documents creating and governing Managing Member
(collectively, the “Borrower Formation Documents”) have been furnished to
Agent.  There are no other agreements, oral or written, among any of the members
of Managing Member relating to Managing Member.  The Borrower Formation
Documents were duly executed and delivered, are in full force and effect, and
binding upon and enforceable in accordance with their terms.  The Borrower
Formation Documents constitute the entire understanding among the members of
each Managing Member.  No breach exists under the Borrower Formation Documents
and no act has occurred and no condition exists which, with the giving of notice
or the passage of time would constitute a breach under the Borrower Formation
Documents.
 
Section 5.5  Validity of Loan Documents.
 
The execution, delivery and performance by Borrowers and each Loan Party of the
Loan Documents: (a) are duly authorized and do not require the consent or
approval of any other party or governmental authority which has not been
obtained; and (b) will not violate any law or result in the imposition of any
lien, charge or encumbrance upon the assets of any such party, except as
contemplated by the Loan Documents.  The Loan Documents constitute the legal,
valid and binding obligations of Borrowers and each Loan Party, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, or similar laws generally affecting the enforcement of creditors’
rights.
 
 
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Section 5.6  Liabilities; Litigation.
 
(a)           The financial statements delivered by Borrowers and each Loan
Party are true and correct with no significant change since the date of
preparation.  Except as disclosed in such financial statements, there are no
liabilities (fixed or contingent) affecting any Project, any Borrower or any
Loan Party.  Except as disclosed in such financial statements, there is no
litigation, administrative proceeding, investigation or other legal action
(including any proceeding under any state or federal bankruptcy or insolvency
law) pending or, to the knowledge of any Borrower, threatened, against any
Project, any Borrower or any Loan Party, which if adversely determined could
have a material adverse effect on such party, any Project or the Loan.
 
(b)           Neither any Borrower nor any Loan Party, nor any Master Tenant,
nor any Property Manager is contemplating either the filing of a petition by it
under state or federal bankruptcy or insolvency laws or the liquidation of all
or a major portion of its assets or property, and neither any Borrower nor any
Loan Party nor any Master Tenant or Property Manager has knowledge of any Person
contemplating the filing of any such petition against it.
 
Section 5.7  Taxes and Assessments.
 
There are no unpaid or outstanding real estate or other taxes or assessments on
or against the Projects or any part thereof, except general real estate taxes
not due or payable.  Copies of the current general real estate tax bills with
respect to the Projects have been delivered to Agent.  Each Project is comprised
of one or more parcels, each of which constitutes a separate tax lot and none of
which constitutes a portion of any other tax lot.  There are no pending or, to
Borrowers’ best knowledge, proposed, special or other assessments for public
improvements or otherwise affecting any Project, nor are there any contemplated
improvements to any Project that may result in such special or other
assessments.
 
Section 5.8  Other Agreements; Defaults.
 
Neither any Borrower nor any Loan Party nor any Master Tenant nor any Property
Manager is a party to any agreement or instrument or subject to any court order,
injunction, permit, or restriction which might adversely affect any Project or
the business, operations, or condition (financial or otherwise) of any Borrower
or any Loan Party or any Master Tenant or any Property Manager.  Neither any
Borrower nor any Loan Party nor any Master Tenant or any Property Manager is in
violation of any agreement which violation would have an adverse effect on any
Project, any Borrower, any Loan Party, any Master Tenant or any Property Manager
or any Borrower’s or any Loan Party’s, any Master Tenant’s or Property Manager’s
business, properties, or assets, operations or condition, financial or
otherwise.
 
 
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Section 5.9  Compliance with Law.
 
Each Borrower, each Loan Party, each Master Tenant and each Property Manager has
all requisite licenses, permits, franchises, qualifications, certificates of
occupancy or other governmental authorizations to own, lease and operate the
Projects and carry on its business, and each Project is in compliance with all
applicable legal requirements and is free of structural defects, and all
building systems contained therein are in good working order, subject to
ordinary wear and tear.  No Project constitutes, in whole or in part, a legally
non conforming use under applicable legal requirements.
 
Section 5.10  Condemnation.
 
No condemnation has been commenced or, to Borrowers’ knowledge, is contemplated
with respect to all or any portion of any Project or for the relocation of
roadways providing access to any Project.
 
Section 5.11  Access.
 
Each Project has adequate rights of access to public ways and is served by
adequate water, sewer, sanitary sewer and storm drain facilities.  All public
utilities necessary or convenient to the full use and enjoyment of each Project
are located in the public right-of-way abutting the applicable Project, and all
such utilities are connected so as to serve such Project without passing over
other property, except to the extent such other property is subject to a
perpetual easement for such utility benefiting such Project.  All roads
necessary for the full utilization of each Project for its current purpose have
been completed and dedicated to public use and accepted by all governmental
authorities.
 
Section 5.12  Flood Hazard.
 
No portion of the improvements comprising the Projects is located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National
Flood Insurance Act of 1994, as amended, or any successor law, or, if located
within any such area, Borrowers have obtained and will maintain the insurance
prescribed in Section 3.1 hereof.
 
Section 5.13  Property.
 
(a)           Fee Interest.  A fee interest in each Project is, or
contemporaneously with the initial funding of the Loan will be, owned by the
respective Borrower free and clear of all liens, claims, encumbrances,
covenants, conditions and restrictions, security interests and claims of others,
except only such exceptions to title as have been approved by Agent.
 
 
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(b)           Compliance with Zoning, etc.  To the best of Borrowers’ knowledge,
the Projects are in compliance with all zoning requirements, building codes,
subdivision improvement agreements, declarations, ground leases, and all
covenants, conditions and restrictions of record.  Except as set forth in the
exceptions to title approved by Agent, the zoning and subdivision approval of
the Projects and the right and ability to, use or operate the Projects are not
in any way dependent on or related to any real estate other than the Properties
where the same are to be made.  Except as previously disclosed to Agent in
writing, to the best of Borrowers’ knowledge, as of the date hereof, (i) there
are no, nor are there any alleged or asserted, violations of law, regulations,
ordinances, codes, permits, licenses, declarations, ground leases, covenants,
conditions, or restrictions of record, or other agreements relating to the
Projects, or any part thereof, (ii) the Projects are in good condition and
repair with no deferred maintenance and are free from damage caused by fire or
other casualty, (iii) there is no latent or patent structural or other
significant defect or deficiency in the Projects, (iv) design and as-built
conditions of the Projects are such that no drainage or surface or other water
will drain across or rest upon either the Projects or land of others except in
areas designated for such purpose and for which a benefiting or burdening
easement has been established, and (v) none of the Improvements on the Projects
create an encroachment over, across or upon any of the Projects’ boundary lines,
rights of way or easements, and no buildings or other improvements on adjoining
land create such an encroachment.
 
Section 5.14  Location of Borrowers.
 
Each Borrower’s principal place of business and chief executive offices are
located at the address stated in ‎Section 10.1.
 
Section 5.15  Margin Stock.
 
No part of proceeds of the Loan will be used for purchasing or acquiring any
“margin stock” within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
 
Section 5.16  Tax Filings.
 
Each Borrower and each Loan Party have filed (or have obtained effective
extensions for filing) all federal, state and local tax returns required to be
filed and have paid or made adequate provision for the payment of all federal,
state and local taxes, charges and assessments payable by each Borrower and each
Loan Party, respectively.
 
Section 5.17  Solvency.
 
After giving effect to the Loan, the fair saleable value of each Borrower’s
assets exceeds and will, immediately following the making of the Loan, exceed
any Borrower’s total liabilities, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities.  The fair saleable value of
each Borrower’s assets is and will, immediately following the making of the
Loan, be greater than such Borrower’s probable liabilities, including the
maximum amount of its contingent liabilities on its Debts as such Debts become
absolute and matured.  No Borrower’s assets constitute and, immediately
following the making of the Loan will not constitute, unreasonably small capital
to carry out its business as conducted or as proposed to be conducted.  No
Borrower intends to, nor believes that it will, incur Debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Debts as they mature (taking into account the timing and amounts of
cash to be received by such Borrower and the amounts to be payable on or in
respect of obligations of such Borrower).
 
 
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Section 5.18  Full and Accurate Disclosure.
 
No statement of fact made by or on behalf of any Borrower, any Loan Party, any
Master Tenant or any Property Manager in this Agreement or in any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading.  There is no fact presently known to any Borrower which has not
been disclosed to Agent which adversely affects, nor as far as any Borrower can
foresee, might adversely affect, any Project or the business, operations or
condition (financial or otherwise) of any Borrower or any Loan Party.
 
Section 5.19  Single Purpose Entity.
 
Each Borrower is and has at all times since its formation been a Single Purpose
Entity and in compliance with the Single Purpose Entity Requirements.
 
Section 5.20  No Broker.
 
No brokerage commission or finder’s fee is owing to any broker or finder arising
out of any actions or activity of any Borrower in connection with the Loan.
 
Section 5.21  Reserved.
 
Section 5.22  Labor Disputes.
 
To the best of each Borrower’s knowledge, there are no strikes, boycotts, or
labor disputes which could reasonably be anticipated to have a material adverse
effect on the operation of any Project.
 
Section 5.23  Employees/ERISA.
 
No Borrower has any employees.
 
Section 5.24  ERISA (Borrower).
 
(a)           No Borrower is an “employee benefit plan” as defined in Section
3(3) of ERISA, or a “governmental plan” within the meaning of Section 3(32) of
ERISA; (b) no Borrower is subject to state statutes regulating investments
and  fiduciary obligations with respect to governmental plans; (c) the assets of
each Borrower do not constitute “plan assets” of one or more plans within the
meaning of 29 C.F.R. Section 2510.3-101; and (d) one or more of the following
circumstances is true:  (i) equity interests in each Borrower are publicly
offered securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2) or
are securities issued by an investment company registered under the Investment
Company Act of 1940; (ii) less than twenty-five percent (25%) of the value of
any class of equity interests in each Borrower are held by “benefit plan
investors” within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or (iii)
each Borrower qualifies as an “operating company”, a “venture capital operating
company”, or a “real estate operating company” within the meaning of 29 C.F.R.
Section 2510.3-101(c), (d) or (e).  Each Borrower shall deliver to Agent such
certifications and/or other evidence periodically requested by Agent, in its
reasonable discretion, to verify these representations and warranties.  Failure
to deliver these certifications or evidence, breach of these representations and
warranties, or consummation of any transaction which would cause the Loan
Documents or any exercise of Agent’s or Lender’s rights under the Loan Documents
to (1) constitute a non-exempt prohibited transaction under ERISA or (2) violate
ERISA or any state statute regulating governmental plans (collectively, a
“Violation”), which failure continues for thirty (30) days after written notice,
shall be an Event of Default.  Notwithstanding anything in the Loan Documents to
the contrary, no sale, assignment, or transfer of any direct or indirect right,
title, or interest in any Borrower or the Projects (including creation of a
junior lien, encumbrance or leasehold interest) shall be permitted which would
negate any Borrower’s representations in this section or cause a Violation.  At
least fifteen (15) days before consummation of any of the foregoing, each
Borrower shall obtain from the proposed transferee or lienholder (1) a
certification to Agent that the representations and warranties of this
subparagraph will be true after consummation and (2) an agreement to comply with
this section.
 
 
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Section 5.25  Intellectual Property.
 
Except as set forth on Exhibit C, Borrowers have no interest in any trademarks,
copyrights, patents or other intellectual property with respect to the Projects.
 
Section 5.26  Compliance With International Trade Control Laws and OFAC
Regulations.  Each Borrower represents, warrants and covenants to Agent and
Lender that:
 
(a)           It is not now nor shall it be at any time until after the Loan is
fully repaid a Person with whom a U.S. Person, including a Financial
Institution, is prohibited from transacting business of the type contemplated by
this Agreement, whether such prohibition arises under U.S. law, regulation,
executive orders and lists published by the OFAC (including those executive
orders and lists published by OFAC with respect to Specially Designated
Nationals and Blocked Persons) or otherwise.
 
(b)           Each Borrower is and will remain in compliance in all material
respects with all U.S. economic sanctions laws, Executive Orders and
implementing regulations as promulgated by OFAC and all applicable Anti-Money
Laundering Laws.
 
(c)           No Borrower Party and no Person who owns a direct interest in any
Borrower is now nor shall be at any time until after the Loan is fully repaid a
Person with whom a U.S. Person, including a Financial Institution, is prohibited
from transacting business of the type contemplated by this Agreement, whether
such prohibition arises under U.S. law, regulation, executive orders and lists
published by the OFAC (including those executive orders and lists published by
OFAC with respect to Specially Designated Nationals and Blocked Persons) or
otherwise.
 
Section 5.27  Borrowers’ Funds.  Each Borrower represents, warrants and
covenants to Lender that:
 
(a)           It has taken, and shall continue to take until after the Loan is
fully repaid, such measures as are required by law to verify that the funds
invested in each Borrower are derived (i) from transactions that do not violate
U.S. law and, to the extent such funds originate outside the United States, do
not violate the laws of the jurisdiction in which they originated; and (ii) from
permissible sources under U.S. law and to the extent such funds originate
outside the United States, under the laws of the jurisdiction in which they
originated.
 
 
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(b)           To the best of its knowledge, no Borrower, nor any Borrower Party,
nor any holder of a direct interest in any Borrower, nor any Person providing
funds to any Borrower (i) is under investigation by any governmental authority
for, or has been charged with, or convicted of, money laundering, drug
trafficking, terrorist related activities, any crimes which in the United States
would be predicate crimes to money laundering, or any violation of any
Anti-Money Laundering Laws; (ii) has been assessed civil or criminal penalties
under any Anti-Money Laundering Laws; and (iii) has had any of its/his/her funds
seized or forfeited in any action under any Anti-Money Laundering Laws.
 
(c)           Borrowers shall make payments on the Loan using funds invested in
Borrowers, Revenues or insurance proceeds unless otherwise agreed to by Lender.
 
(d)           To the best of each Borrower’s knowledge, as of the Closing Date
and at all times during the term of the Loan, all Revenues are and will be
derived from lawful business activities of Tenants of the Projects or other
permissible sources under U.S. law.
 
(e)           On the Maturity Date, Borrowers will take reasonable steps to
verify that funds used to repay the Loan in full (whether in connection with a
refinancing, asset sale or otherwise) are from sources permissible under U.S.
law and to the extent such funds originate outside the United States,
permissible under the laws of the jurisdiction in which they originated.
 
(f)           Each Borrower is and at all times shall be in compliance with the
Office of Foreign Assets Control sanctions and regulations promulgated under the
authority granted by the Trading with the Enemy Act (“TWEA”), 50 U.S.C. App.
Section 1 et seq. and the International Emergency Economic Powers Act (“IEEPA”),
50 U.S.C. Section 1701 et seq., as the TWEA and the IEEPA may apply to such
Borrower’s activities;
 
(g)           Each Borrower is and at all times shall be a “financial
institution” within the meaning of the Patriot Act, and it is and at all times
shall be in compliance with (i) the Patriot Act and all rules and regulations
promulgated under the Patriot Act applicable to Borrowers and (ii) other federal
or state laws relating to “know your customer” and other anti-money laundering
rules and regulations; and
 
(h)           Each Borrower (i) is not now, nor has ever been, under
investigation by any governmental authority for, nor has been charged with or
convicted for a crime under, 18 U.S.C. Sections 1956 or 1957 or any predicate
offense thereunder, or a violation of the Bank Secrecy Act; (ii) has never been
assessed a civil penalty under any anti-money laundering laws or predicate
offenses thereunder; (iii) has not had any of its funds seized, frozen or
forfeited in any action relating to any anti-money laundering laws or predicate
offenses thereunder; (iv) has taken such steps and implemented such policies as
are reasonably necessary to ensure that each Borrower is not promoting,
facilitating or otherwise furthering, intentionally or unintentionally, the
transfer, deposit or withdrawal of criminally derived property, or of money or
monetary instruments which are (or which such Borrower suspects or has reason to
believe are) the proceeds of any illegal activity or which are intended to be
used to promote or further any illegal activity; and (v) has taken such steps
and implemented such policies as are reasonably necessary to ensure that each
Borrower is in compliance with all laws and regulations applicable to its
business for the prevention of money laundering and with anti terrorism laws and
regulations, with respect both to the source of funds from its investors and
from its operations, and that such steps include the development and
implementation of an anti-money laundering compliance program within the meaning
of Section 352 of the Patriot Act, to the extent any Borrower is required to
develop such a programs under the rules and regulations promulgated pursuant to
Section 352 of the Patriot Act.
 
 
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Section 5.28  Master Lease.
 
A true, correct and complete copy of each Master Lease, together with all
amendments thereto, has been delivered to Agent; and each Master Lease, and all
amendments thereto is in full force and effect as of the Closing Date.
 
Section 5.29  Property Management Agreement.
 
A true, correct and complete copy of each Management Agreement, together with
all amendments thereto, has been delivered to Agent; and each Management
Agreement and all amendments thereto is in full force and effect as of the
Closing Date.
 
ARTICLE VI
 
FINANCIAL REPORTING; NOTICES
 
Section 6.1  Financial Statements.
 
Borrowers shall furnish to Agent and shall cause the Loan Parties to furnish to
Agent such financial statements and other financial information as Agent may
from time to time request.  All such financial statements shall show all
material contingent liabilities and shall accurately and fairly present the
results of operations and the financial condition of Borrowers at the dates and
for the period indicated and shall be sufficient to permit Agent to calculate
and/or verify Borrowers’ calculation of Debt Service Coverage Ratio, Project
Yield and Net Operating Income.  Without limitation of the foregoing, Borrowers
shall furnish to Agent and shall cause Loan Parties, Property Managers and
Master Tenants to furnish to Agent the following statements:
 
(a)           Monthly Reports.
 
(i)           Borrowers shall deliver or cause to be delivered to Agent on or
prior to the twenty-fifth (25th) day of each fiscal month used by Borrowers in
preparing financial reports (each, a “fiscal month”) the following reports in
respect of the Projects:
 
(A)           Statements of the operations of the Projects (including a current
rent roll, operating statement, delinquency report and a schedule of delinquency
of receipts and payments) as of the last day of each fiscal month;
 
(B)           For the preceding fiscal month and fiscal year-to-date (i) a cash
summary detailing all cash activity and reconciling beginning and end cash
balances, and (ii) aged accounts receivable and accounts payable;
 
(C)           Statements of Net Operating Income.
 
 
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(ii)          Upon request by Agent, Borrowers shall deliver or cause to be
delivered to Agent the following (together with the foregoing, such reports are
hereinafter collectively referred to as the “Monthly Reports”):
 
(A)           A true, correct and complete copy of the check register showing
all paid invoices, indicating date paid, amount paid and check number;
 
(B)           A true, correct and complete copy of the cash disbursements
journal; and
 
(C)           Evidence of the timely payment of all taxes and insurance
premiums.
 
(iii)         The Monthly Reports shall (a) be certified by the chief financial
representative of Borrowers as true, correct and complete, (b) be derived from
the books and records maintained by Borrowers, Property Managers and/or Master
Tenants at the Projects, and (c) be accompanied with copies of supporting
documentation to the extent that Agent shall request.
 
(iv)         Each financial statement, report or other information required to
be delivered or caused to be delivered by Borrowers, Property Managers and/or
Master Tenants to Agent under this Agreement and required hereunder to be
certified by the chief financial representative of Borrowers shall also certify
that:  (a) all of the covenants set forth in ‎Article VII are fully performed
and (b) the representations and warranties set forth in the this Loan Agreement,
the Security Documents and in the other Loan Documents are and remain true,
correct and complete except as disclosed in writing in the certificate.  Each
financial statement, report or other information required to be delivered by
Borrowers to Agent under this Agreement shall show all material contingent
liabilities, shall be prepared in accordance with sound accounting practices and
shall accurately and fairly present the results of operations and the financial
condition of the person(s) referred to therein as of the dates and for the
period indicated.
 
(b)           Annual Statements.  Within ninety (90) days after the end of each
fiscal year, Borrowers shall deliver or cause to be delivered to Agent (i) a
balance sheet and financial statements of each Borrower, Loan Party and Master
Tenant, which shall show, if Agent requests, each Loan Party’s and Master
Tenant’s other real estate holdings, including income and expenses, debt service
requirements and occupancy and Borrowers, certified as true and correct in all
material respects, and prepared in accordance with sound accounting practices
and fairly presenting the financial condition(s) of the person(s) referred to
therein as of the date(s) indicated and (ii) the financial information described
in subsections ‎(A) through ‎(C) of ‎Section 6.1(a)(i) above for such calendar
year.
 
(c)           From time to time at Borrowers’ expense, if Lender determines that
obtaining appraisals is necessary in order for Lender to comply with applicable
Laws (including any appraisals required to comply with FIRREA), Borrowers shall
furnish to Lender appraisal reports in form and substance and from appraisers
reasonably satisfactory to Lender stating the then current fair market value of
each Project; provided, that so long as no Event of Default has occurred and is
continuing, Borrowers shall not be obligated to obtain appraisals more than once
per Project per calendar year at Borrowers’ expense.
 
 
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(d)           Compliance Certificate.  Within twenty-five (25) days after the
end of each measurement period applicable to any financial covenant hereunder,
Borrowers shall deliver such financial reports and information as Lender shall
require evidencing compliance with the applicable financial covenants, together
with a fully completed Compliance Certificate executed by an officer of
Borrowers (or of their managing member or general partner), and, if requested by
Lender, back-up documentation as Lender shall reasonably require evidencing
compliance.
 
(e)           All financial statements delivered hereunder shall be prepared,
and all financial covenants contained herein shall be calculated, without giving
effect to any election under Statement of Financial Accounting Standards 159 (or
any similar accounting principle) permitting a Person to value its financial
liabilities at the fair value thereof.
 
Section 6.2  Audits.
 
If Borrowers fail to furnish or cause to be furnished promptly any report
required by ‎Section 6.1, or if Agent reasonably deems such reports to be
unacceptable or unreliable, Agent may elect (in addition to exercising any other
right and remedy) to conduct an audit of all books and records of Borrowers,
Loan Parties, Property Managers and Master Tenants which in any way pertain to
the Projects and to prepare such reports.  Such audit shall be made and such
reports shall be prepared by an independent firm of certified public accountants
to be selected by Agent or another auditor of Agent’s choice (which may be an
affiliate of Agent).  Borrowers shall pay all reasonable expenses of the audit
and other services, which expenses shall be immediately due and payable with
interest thereon at the Default Rate.
 
Section 6.3  Books and Records/Audits.
 
Borrowers shall keep and maintain (or cause to be kept and maintained) at all
times at the Projects, or, with prior notice to Agent, at the corporate offices
of the Borrowers, or such other place as Agent may approve in writing, complete
and accurate books of accounts and records adequate to reflect the results of
the operation of the Projects and to provide the financial statements required
to be provided to Agent pursuant to ‎Section 6.1 above and copies of all written
contracts, correspondence, reports of Agent’s independent consultant, if any,
and other documents affecting the Projects.  Agent and its designated agents
shall have the right to inspect and copy any of the foregoing.  Additionally,
Agent may audit and determine, in Agent’s sole and absolute discretion, the
accuracy of Borrowers’ records and computations.  The costs and expenses of the
audit shall be paid by Borrowers if the audit discloses (a) a monetary variance
in any financial information or computation equal to or greater than the greater
of:  (i) five percent (5%); or (ii) Five Thousand and No/100 Dollars ($5,000.00)
more than any computation submitted by Borrowers or (b) an Event of Default or
Potential Event of Default.
 
 
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Section 6.4  Notice of Litigation or Default.
 
Borrowers shall promptly provide Agent with:

 
(a)           written notice of any litigation, arbitration, or other proceeding
or governmental investigation (including any survey results or inspection
reports from any Governmental Authority) pending or, to any Borrower’s or any
Loan Party’s knowledge, threatened against or relating to any Borrower, Loan
Party, Project, Property Manager or Master Tenant (but with respect to matters
affecting only Managing Member or any Principal, only such matters which could
reasonably be expected to have a material adverse effect on the financial
condition of such Person and with respect to matters affecting only a Property
Manager or a Master Tenant, only such matters which pertain to a Project or
which could reasonably be expected to have a material adverse effect on such
Property Manager’s or Master Tenant’s financial condition), or any Project;
provided, that with respect to any such litigation, arbitration or other
proceeding relating solely to a monetary claim of less than $75,000, Borrowers
shall not be required to provide notice (written or otherwise) of such claim in
accordance with the terms of this ‎Section 6.4;
 
(b)           a copy of all notices of default and violations of laws,
regulations, codes, ordinances and the like received by any Borrower or Loan
Party, Property Manager or Master Tenant relating to (i) any Loan Party, if
potentially material to the business operations of such Loan Party or (ii) any
Borrower, the Collateral or the Projects;
 
(c)           a copy of all notices sent to or received from Property Manager or
any Borrower under any of the Management Agreements; and
 
(d)           a copy of all notices sent to or received from any Master Tenant
under any Master Lease.
 
ARTICLE VII
 
COVENANTS
 
Each Borrower covenants and agrees with Agent as follows:
 
Section 7.1  Inspection.
 
Subject to the rights of tenants under the Leases, Agent and its authorized
agents may enter upon and inspect the Projects at all reasonable times upon
notice given orally or in writing to Borrowers.  Agent, at Borrowers’ expense,
shall retain one or more independent consultants to periodically inspect the
Projects and all documents, drawings, plans, and consultants’ reports relating
thereto.
 
Section 7.2  Due on Sale and Encumbrance; Transfers of Interests.
 
Without the prior written consent of Agent,
 
(a)           No Borrower or Principal nor any other Person having a direct or
indirect ownership or beneficial interest in any Borrower or Principal shall
 
(i)           create, or permit the creation of, any new direct or indirect
ownership interest in any Borrower or Principal, or
 
 
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(ii)           transfer, or permit the transfer of (A) all or any part of the
Projects, or any interest therein (other than Leases permitted hereunder), or
(B)  any direct or indirect ownership interest in any Borrower or any Principal
(including any interest in the profits, losses or cash distributions in any way
relating to the Projects, any Borrower or any Loan Party), or
 
(iii)           subject to Borrowers’ contest rights under ‎Section 7.3,
encumber, alienate, grant a Lien or grant any other interest in any Project or
any part thereof (other than Leases permitted hereunder) or take or fail to take
any other action which would result in a Lien against the Projects or the
interest of any Borrower in any Project, whether voluntarily or involuntarily
except Liens in favor of Agent for the benefit of Lender and Agent, or
 
(iv)           enter into any easement or other agreement granting rights in or
restricting the use or development of any Project.
 
(b)           Notwithstanding the foregoing provisions of this ‎Section 7.2 or
any other provisions of the Loan Documents, direct or indirect ownership
interests in Borrowers may be sold or transferred so long as no Potential
Default or Event of Default exists and after any such transaction (a) Borrowers
continue to be wholly owned by Managing Member, and (b) either Cornerstone
Principal or the RSC Principals holds a Controlling Interest in the Managing
Member.
 
Section 7.3  Taxes; Charges.
 
Borrowers shall pay before any fine, penalty, interest or cost may be added
thereto, and shall not enter into any agreement to defer, any Taxes that may
become a Lien upon any Project or become payable during the term of the Loan,
and will promptly furnish Agent with evidence of such payment; however,
Borrowers’ or Master Tenants’ compliance with ‎Section 3.5 of this Agreement
relating to impounds for taxes and assessments shall, with respect to payment of
such taxes and assessments, be deemed compliance with this ‎Section
7.3.  Borrowers shall not suffer or permit the joint assessment of any Project
with any other real property constituting a separate tax lot or with any other
real or personal property.  Borrowers shall pay or cause to be paid when due all
Taxes, claims and demands of mechanics, materialmen, laborers and others which,
if unpaid, might result in a Lien on any Project (collectively, the “Charges”);
however, Borrowers or Master Tenants may contest, in good faith by appropriate
proceedings, the amount or validity of any such Charges or Liens so long as (a)
Borrowers and/or Master Tenants have given prior written notice to Agent of the
intent to so contest or object to any such Charges or Liens, (b) such contest
stays the enforcement or collection of the Charges or any Lien created, (c)
Borrowers and/or Master Tenants provide Agent with a bond or other security
satisfactory to Agent (including an endorsement to Agent’s Title Policies
insuring against such claim, demand or lien) assuring the discharge of
Borrowers’ and/or Master Tenants’ obligations for such claims, demands or lien,
including interest and penalties, and (d) Borrowers and/or Master Tenants are
diligently contesting the same by appropriate legal proceedings in good faith
and at their own expense and concludes such contest prior to the tenth (10th)
day preceding the earlier to occur of the Maturity Date or the date on which a
Project is scheduled to be sold for non-payment.
 
 
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Section 7.4  Control; Management.
 
There shall be no change in the day-to-day control and management of any
Borrower, Managing Member or any Master Tenant without the written consent of
Agent from that existing as of the Restatement Date, that is, (i) Managing
Member having day-to-day control and management of both Borrowers, (ii)
Cornerstone Oakleaf Village TRS, LLC, a Delaware limited liability company, an
affiliate of both Managing Member and Cornerstone Principal, having day-to-day
control and management of both Master Tenants, and (iii) Cornerstone Principal
having day-to-day control and management over Managing Member.  Neither
Borrowers nor Master Tenants shall terminate or replace any Property Manager or
terminate or amend the Management Agreement without Agent’s prior written
approval; provided, however that the Property Manager may terminate the
Management Agreement pursuant to its terms, subject to the provisions of the
Amended and Restated Subordination of Management Agreement.  Any change in
ownership or control of the manager shall be cause for Agent to re-approve such
manager and management agreement.  Borrowers and Master Tenants shall hold and
maintain all necessary licenses, certifications and permits required by
law.  Each Borrower or Master Tenant, as applicable, shall fully perform all of
its covenants, agreements and obligations under the Management Agreements.
 
Section 7.5  Operation; Maintenance; Inspection.
 
Each Borrower shall observe and comply with (or cause observance and compliance
with) all legal requirements applicable to the ownership, use and operation of
the Projects.  Borrowers shall maintain (or cause to be maintained) the Projects
in good condition and promptly repair any damage or casualty.
 
Section 7.6  Taxes on Security.
 
Borrowers shall pay all taxes, charges, filing, registration and recording fees,
excises and levies payable with respect to the Note or the Liens created or
secured by the Loan Documents, other than income, franchise and doing business
taxes imposed on Agent or Lender.  If there shall be enacted any law (1)
deducting the Loan from the value of any Project for the purpose of taxation,
(2) affecting any Lien on the Projects, or (3) changing existing laws of
taxation of mortgages, deeds of trust, security deeds, or debts secured by real
property, or changing the manner of collecting any such taxes, Borrowers shall
promptly pay to Agent, on demand, all taxes, costs and charges for which Agent
or Lender is or may be liable as a result thereof; however, if such payment
would be prohibited by law or would render the Loan usurious, then instead of
collecting such payment, Lender may declare all amounts owing under the Loan
Documents to be immediately due and payable.
 
 
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Section 7.7  Single Purpose Entity; Legal Existence; Name, Etc.
 
Each Borrower and Master Tenant shall preserve and keep in full force and effect
its existence as a Single Purpose Entity, entity status, franchises, rights and
privileges under the laws of the state of its formation, and all qualifications,
licenses and permits applicable to the ownership, use and operation of the
Projects.  No Borrower, Managing Member or Master Tenant shall wind up,
liquidate, dissolve, reorganize, merge, or consolidate with or into, or convey,
sell, assign, transfer, lease, or otherwise dispose of all or substantially all
of its assets, or acquire all or substantially all of the assets of the business
of any Person, or permit any subsidiary or Affiliate of Borrowers to do so.  No
Borrower will create, amend, terminate or permit the creation, amendment or
termination of any Borrower’s operating agreement without the prior written
consent of Agent.  Each Borrower, Managing Member and Master Tenant shall
conduct business only in its own name and no Borrower shall change its name,
identity, or organizational structure, the location of its chief executive
office or principal place of business or its state of organization unless
Borrowers (a) shall have obtained the prior written consent of Agent to such
change, and (b) shall have taken all actions necessary or requested by Agent to
file or amend any financing statement or continuation statement to assure
perfection and continuation of perfection of security interests under the Loan
Documents.  Each Borrower, Managing Member and Master Tenant shall maintain its
separateness as an entity, including maintaining separate books, records, and
accounts and observing corporate and partnership formalities independent of any
other entity, shall pay its obligations with its own funds and shall not
commingle funds or assets with those of any other Borrower or entity.
 
Section 7.8  Affiliate Transactions.
 
Without the prior written consent of Agent, no Borrower shall engage in any
transaction affecting any Project with an Affiliate of Borrowers, unless the
terms for such services are no less favorable to the Borrowers than those
obtainable from an unrelated party.
 
Section 7.9  Limitation on Other Debt.
 
Neither any Borrower nor any Master Tenant shall, without the prior written
consent of Agent, incur any Debt in excess of $300,000.00, except for trade
payables in the ordinary course of business.
 
Section 7.10  Further Assurances.
 
Borrowers shall promptly (a) cure any defects in the execution and delivery of
the Loan Documents, and (b) execute and deliver, or cause to be executed and
delivered, all such other documents, agreements and instruments as Agent may
reasonably request to further evidence and more fully describe the collateral
for the Loan, to correct any omissions in the Loan Documents, to perfect,
protect or preserve any liens created under any of the Loan Documents, or to
make any recordings, file any notices, or obtain any consents, as may be
necessary or appropriate in connection therewith.
 
Section 7.11  Estoppel Certificates.
 
Borrowers, within ten (10) Business Days after request, shall furnish to Agent a
written statement, duly acknowledged, setting forth the amount due on the Loan,
the terms of payment of the Loan, the date to which interest has been paid,
whether any offsets or defenses exist against the Loan and, if any are alleged
to exist, the nature thereof in detail, and such other matters as Agent
reasonably may request.
 
 
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Section 7.12  Notice of Certain Events.
 
Borrowers shall promptly notify Agent of (a) any Potential Default or Event of
Default, together with a detailed statement of the steps being taken to cure
such Potential Default or Event of Default; (b) any notice of default received
by any Borrower under other obligations relating to any Project or otherwise
material to any Borrower’s business, including any notices of violations of any
laws, regulations, codes or ordinances; (c) any threatened or pending legal,
judicial or regulatory proceedings, including any dispute between any Borrower
and any governmental authority, affecting any Borrower, Managing Member or any
Project; (d) a copy of each notice of default or termination given or made to
any Master Tenant or Property Manager by any Borrower or Master Tenant, as
applicable or received by any Borrower or Master Tenant from any Master Tenant
or Property Manager, as applicable; and (e) a copy of each notice of default or
termination under any license or permit necessary for the operation of the
Projects in the manner required by this Agreement; and in the case of clauses
(b), (d) or (e), promptly provide Agent with copies of such notices referred to
therein.
 
Section 7.13  Indemnification.
 
Borrowers shall indemnify, defend and hold Agent and Lenders harmless from and
against any and all losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements of any kind or
nature whatsoever, including the reasonable fees and actual expenses of Agent’s
and Lender’s counsel, in connection with (a) any inspection, review or testing
of or with respect to any Project, (b) any investigative, administrative,
mediation, arbitration, or judicial proceeding, whether or not Agent or a Lender
is designated a party thereto, commenced or threatened at any time (including
after the repayment of the Loan) in any way related to the execution, delivery
or performance of any Loan Document or to any Project, (c) any proceeding
instituted by any Person claiming a Lien, and (d) any brokerage commissions or
finder’s fees claimed by any broker or other party in connection with the Loan,
any Project, or any of the transactions contemplated in the Loan Documents,
including those arising from the joint, concurrent, or comparative negligence of
Agent or Lender, except to the extent any of the foregoing is caused by an
indemnitee’s gross negligence or willful misconduct.
 
Section 7.14  Use of Proceeds, Revenues.
 
Borrowers shall use the proceeds of the Loan for proper business purposes.  No
portion of the proceeds of the Loan shall be used by Borrowers in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Securities Act of
1933 or the Securities Exchange Act of 1934.  Except as otherwise specifically
provided in the Loan Documents, Revenues and other Project proceeds received by
Borrowers shall be applied to the Indebtedness then due and payable, Expenses or
other Project capital improvements, repairs or replacements before distribution
by Borrowers to any member of any Borrower.
 
 
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Section 7.15  Bank Accounts; Notices to Tenants and Residents.
 
From and after a Potential Default and receipt of notice from Agent so
directing, Borrowers will, and will cause Property Managers and/or Master
Tenants to, (a) cause all rent payments under the Master Leases and Leases to be
deposited with Agent and (b) give irrevocable notices to all current and future
tenants or residents or any other account debtors doing business with Borrowers
or the Projects who pay Borrowers or any Property Manager or any Master Tenant,
as applicable, by direct deposit or wire transfer to make or wire payments to
Agent or an Approved Bank Account.  Borrowers shall deliver to Agent, in form
acceptable to Agent, an undated letter of direction (a) from Borrowers to Master
Tenants to deliver Master Lease payments directly to Agent and (b) from each
Master Tenant and Property Manager to each current and future commercial tenant
of the Projects pursuant to which each such commercial tenant is irrevocably
directed to make all payments directly to Agent or an Approved Bank
Account.  Upon the occurrence of an Event of Default, Agent shall have the right
to date and deliver such letters of direction.
 
Section 7.16  Compliance with Laws and Contractual Obligations.
 
(a)           Borrowers will comply with and will cause Property Managers and
Master Tenants to comply with (i) the requirements of all applicable laws,
rules, regulations and order of any governmental authority (including, without
limitation, laws, rules, regulations and orders relating to all building,
zoning, density, land use, covenants, conditions and restrictions, subdivision
requirements, taxes, employer and employee contributions, securities, employee
retirement and welfare benefits, environmental protection matters, employee
health and safety, quality and safety standards, accreditation standards and
requirements of the applicable state department of health or other applicable
state regulatory agency (each a “State Regulator”), quality and adequacy of
medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies, additions to facilities and services and fee
splitting) as are now in effect and which may be imposed upon any Borrower,
Property Manager or Master Tenant or the maintenance, use or operation of the
Projects or the provision of services to the occupants of the Projects and (ii)
the obligations, covenants and conditions contained in all other material
contractual obligations of any Borrower, and as it relates to any Project, any
Master Tenant or Property Manager; and
 
(b)           Borrowers will maintain or obtain and will cause Master Tenants to
maintain or obtain, all licenses, qualifications and permits now held or
hereafter required to be held by any Borrower or Master Tenant for which the
loss, suspension, revocation or failure to obtain or renew, could reasonably be
expected to have a material adverse effect upon the financial condition of any
Borrower or the ability to operate the Projects in compliance with the
requirements of the Loan Documents and as it has been operated prior to the date
hereof.
 
Section 7.17  Notice of Money Laundering.
 
If a tenant or a resident under any Lease is charged with crimes involving money
laundering or predicate crimes to money laundering, and such charges are not
dismissed without further investigation within thirty (30) days, then Borrowers
shall give notice of such charges to Agent’s and upon Agent’s request, Borrowers
shall exclude from the debt service rents from said tenant or resident.
 
 
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Section 7.18  Anti-Money Laundering Compliance.
 
(a)           Borrower Compliance with Anti-Money Laundering Laws.  Borrowers
covenant to Agent and Lender that they shall take reasonable measures
appropriate to the circumstances (in any event as required by law), to ensure
that Borrowers are in compliance with all current and future Anti-Money
Laundering Laws and laws, regulations and government guidance for the prevention
of terrorism, terrorist financing and drug trafficking.
 
(b)           Notification of Agent; Quarantine Steps.  Borrowers shall
immediately notify Agent if Borrowers obtain actual knowledge that any holder of
a direct or indirect interest in any Borrower, or any director, manager or
officer of any of such holder, (i) has been listed on any of the Lists, (ii) has
become a Designated Person, (iii) is under investigation by any governmental
authority for, or has been charged with or convicted of, money laundering drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (iv) has been assessed civil penalties
under any Anti-Money Laundering Laws, or (v) has had funds seized or forfeited
in an action under any Anti-Money Laundering Laws.
 
Section 7.19  Employees.
 
No Borrower shall have any employees while any portion of the Loan is
outstanding.
 
Section 7.20  Development of Adjacent Parcel at Lexington.  Borrowers will not
permit the development of an assisted living facility, an independent living
facility or an alzheimer’s/dementia facility on the 1.5 acre parcel located
adjacent (to the north) of the Lexington Project and owned by Affiliates of
Borrowers or RSC Principals.
 
Section 7.21  Representations and Warranties.
 
Borrowers will cause all representations and warranties to remain true and
correct all times during the term of this Agreement and while any portion of the
Loan remains outstanding.
 
 
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Section 7.22  Cooperation.
 
Borrowers acknowledge that Lender and its successors and assigns may (a) sell,
transfer or assign this Agreement, the Note and the other Loan Documents to one
or more investors as a whole loan, in a rated or unrated public offering or
private placement, (b) participate the Loan to one or more investors in a rated
or unrated public offering or private placement, (c) deposit the Loan Documents
with a trust, which trust may sell certificates to investors evidencing an
ownership interest in the trust assets in a rated or unrated public offering or
private placement, or (d) otherwise sell the Loan or interest therein to
investors in a rated or unrated public offering or private placement (the
transactions referred to in clauses (a) through (d) are hereinafter referred to
as “Secondary Market Transactions”).  Borrowers shall cooperate in good faith
with Agent and Lender in effecting any such Secondary Market Transaction and
shall cooperate in good faith to implement all requirements reasonably imposed
by the participants involved in any Secondary Market Transaction (including
without limitation, an institutional purchaser, participant or investor)
including, without limitation, all structural or other changes to the Loan,
modifications to any documents evidencing or securing the Loan, delivery of
opinions of counsel reasonably acceptable to such other purchasers, participants
or investors may reasonably require; provided, however, that Borrowers shall not
be required to modify any documents evidencing or securing the Loan which would
(i) modify the interest rate payable under the Note, (ii) modify the stated
maturity of the Note, (iii) modify the amortization of principal of the Note,
(iv) modify or conflict with any other material terms or covenants of the Loan,
(v) conflict with any Master Lease or (vi) increase the Borrowers liability or
obligations under the Loan Documents.  Borrowers shall provide such information
and documents relating to Borrowers, Loan Parties, the Projects and the Master
Tenants.  Borrowers acknowledge that certain information regarding the Loan and
the Loan Parties and the Projects may be included in a private placement
memorandum, prospectus or other disclosure documents.  Lender shall be permitted
to share all such information with the investment banking firms, Rating
Agencies, accounting firms, law firms and other third-party advisory firms
involved with the Loan and the Loan Documents or the applicable Secondary Market
Transaction.  Lender shall have the right (but shall be under no obligation) to
make available to any party for the purpose of granting participations in or
selling, transferring, assigning or conveying all or any part of the Loan
(including any governmental agency or authority and any prospective bidder at
any foreclosure sale of the Projects) any and all information which Lender may
have with respect to the Projects, Borrowers and any Borrower Party, whether
provided by Borrowers, any Borrower Party or any third party, or obtained as a
result of any environmental assessments.  Borrowers and each Borrower Party
agree that Lender shall have no liability whatsoever as a result of delivering
any such information to any third party, and Borrowers and the other Borrower
Parties, on behalf of themselves and their successors and assigns, hereby
release and discharge Lender from any and all liabilities, claims, damages, or
causes of action arising out of, connected with or incidental to the delivery of
any such information to any third party.  Lender shall be permitted to share all
such information with the investment banking firms, Rating Agencies, accounting
firms, law firms and other third-party advisory firms involved with the Loan and
the Loan Documents or the applicable Secondary Market Transaction.  Lender shall
have the right (but shall be under no obligation) to make available to any party
for the purpose of granting participations in or selling, transferring,
assigning or conveying all or any part of the Loan (including any governmental
agency or authority and any prospective bidder at any foreclosure sale of the
Projects) any and all information which Lender may have with respect to the
Projects, Borrowers and any Borrower Party, whether provided by Borrowers, any
Borrower Party or any third party, or obtained as a result of any environmental
assessments.  Borrowers and each Borrower Party agree that Lender shall have no
liability whatsoever as a result of delivering any such information to any third
party, and Borrowers and the other Borrower Parties, on behalf of themselves and
their successors and assigns, hereby release and discharge Lender from any and
all liabilities, claims, damages, or causes of action arising out of, connected
with or incidental to the delivery of any such information to any third party.
 
Section 7.23  Master Leases.
 
Borrowers shall not, without Agent’s prior written consent, amend or terminate
any Master Lease.

 
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Section 7.24  Property Management Agreements.
 
Borrowers shall not, without Agent’s prior written consent, amend or terminate
or permit the amendment or termination of any Management Agreement; provided,
that the applicable Property Manager may terminate the Management Agreement in
accordance with its terms,  subject to the provisions of the Amended and
Restated Subordination of Management Agreement.
 
Section 7.25  Operating and Financial Covenants.
 
The Projects and/or Borrowers shall satisfy each of the following covenants, to
be determined as of the end of each calendar quarter (the “Determination Date”)
during the term of the Loan:
 
(a)           Occupancy.  The Projects shall maintain an average occupancy
during the calendar quarter prior to the Determination Date of not less than 80%
of the occupancy of the Projects (on a combined basis) as of the Restatement
Date.
 
(b)          Debt Service Coverage.  The Projects shall have achieved an
annualized Debt Service Coverage Ratio of at least 1.30 to 1.00 based upon the
trailing twelve (12) full calendar months prior to the Determination Date.
 
(c)           Project Yield.  The Projects shall have achieved a Project Yield
of 11% for the trailing twelve (12) full calendar months prior to the
Determination Date.
 
Upon provision of a Compliance Certificate to Agent and if the Projects are not
in compliance with the financial covenants in 7.25(b) or (c) above as of any
Determination Date, Borrowers shall have thirty (30) days to cure such failure
(the “Covenant Cure Period”) by paying down the Loan (each an “Equity Cure”) in
an amount sufficient to result in Borrower being in pro forma compliance with
the financial covenants in 7.25(b) or (c) above as of such Determination Date
(“Equity Cure Amount”); provided, that the Borrowers shall have the right to
exercise this Cure Right only three (3) times during the term of this Agreement,
and the Cure Right shall not be exercised more than twice during any four (4)
consecutive fiscal quarters..  If Borrowers fail to provide any Equity Cure
Amount not later than the last day of the expiration of the Covenant Cure Period
and provide to Agent evidence reasonably satisfactory to Agent that the Projects
are in pro forma compliance with the above financial covenants for 12-month
period ending on the last day of the Covenant Cure Period, such failure shall
constitute an Event of Default hereunder.
 
Section 7.26  Required Repairs and Post Closing Requirements.
 
Borrowers shall provide evidence reasonably satisfactory to Lender that the
repairs listed on Part A of Schedule III have been completed within ninety (90)
days of the Restatement Date, all of which shall be performed in a manner
satisfactory to Agent and shall be subject to inspection by Agent.  Borrowers
shall also satisfy the Post Closing Requirements within the time periods set
forth on Part B of Schedule III.

 
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ARTICLE VIII
 
HEALTH CARE MATTERS
 
Section 8.1  Healthcare Laws.
 
(a)          Without limiting the generality of any other provision of this
Agreement, each Borrower, Property Manager and Master Tenants and their
employees and contractors (other than contracted agencies) in the exercise of
their duties on behalf of any Borrower, Property Manager or Master Tenants (with
respect to its operation of the Projects) shall be in compliance with all
applicable Laws relating to patient healthcare and/or patient healthcare
information, including without limitation the Health Insurance Portability and
Accountability Act of 1996, as amended, and the rules and regulations
promulgated thereunder (“HIPAA”) (collectively, “Healthcare Laws”).  Each
Borrower, Property Manager and Master Tenant has maintained and shall continue
to maintain in all material respects all records required to be maintained by
such Person any Governmental Authority or otherwise under the Healthcare Laws
and there are no presently existing circumstances which would result or likely
would result in material violations of the Healthcare Laws.  Each Borrower,
Property Manager and Master Tenant has and will maintain all Governmental
Approvals necessary under applicable Laws to own and/or operate the Projects, as
applicable (including such Governmental Approvals as are required under such the
Healthcare Laws).
 
(b)          If (i) any Borrower, Property Manager or Master Tenant is a
“covered entity” within the meaning of the Health Insurance Portability and
Accountability Act of 1996, as amended, and the rules and regulations
promulgated thereunder (“HIPAA”) or submits claims or reimbursement requests to
Third Party Programs “electronically” (within the meaning of HIPAA) or (ii)
Property Manager or Master Tenant (with respect to its operation of the
Projects) is subject to the “Administrative Simplification” provisions of HIPAA,
then such Persons (x) have undertaken or will promptly undertake all necessary
surveys, audits, inventories, reviews, analyses and/or assessments (including
any necessary risk assessments) of all areas of its business and operations
required by HIPAA and/or that could be adversely affected by the failure of such
Person(s) to be HIPAA Compliant (as defined below); (y) have developed or will
promptly develop a detailed plan and time line for becoming HIPAA Compliant (a
“HIPAA Compliance Plan”); and (z) have implemented or will implement those
provisions of such HIPAA Compliance Plan in all material respects necessary to
ensure that such Persons are or become HIPAA Compliant.  For purposes hereof,
“HIPAA Compliant” shall mean that each Borrower, Property Manager and Master
Tenant, as applicable (A) is or will be in compliance with each of the
applicable requirements of the so-called “Administrative Simplification”
provisions of HIPAA on and as of each date that any part thereof, or any final
rule or regulation thereunder, becomes effective in accordance with its or their
terms, as the case may be (each such date, a “HIPAA Compliance Date”) if and to
the extent any Borrower, Master Tenant or Property Manager are subjected to such
provisions, rules or regulations, and (B) is not and could not reasonably be
expected to become, as of any date following any such HIPAA Compliance Date, the
subject of any civil or criminal penalty, process, claim, action or proceeding,
or any administrative or other regulatory review, survey, process or proceeding
(other than routine surveys or reviews conducted by any government health plan
or other accreditation entity) that could result in any of the foregoing or that
could reasonably be expected to adversely affect any Borrower’s, Property
Manager’s or Master Tenant’s business, operations, assets, properties or
condition (financial or otherwise), in connection with any actual or potential
violation by any Borrower, Property Manager or Master Tenant of the then
effective provisions of HIPAA.

 
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(c)           If and to the extent required under applicable Laws, each
Borrower, Master Tenant and/or Property Manager has and shall maintain in full
force and effect a valid certificate of need (“CON”) or similar certificate,
license, or approval issued by the State Regulator for the requisite number of
Licensed Beds in the Projects (as shown on Exhibits A-1 through A-2 attached
hereto), and a provider agreement or other required documentation of approved
provider status for each provider payment or reimbursement program listed in
Exhibit E hereto, if applicable.  All required Government Approvals necessary
for operation of the Projects are listed on Exhibit F hereto (collectively with
the CON, if applicable, the “Licenses”).  Each Borrower, Property Manager and/or
Master Tenant shall operate the Projects in a manner such that the Licenses
shall remain in full force and effect.  True and complete copies of the Licenses
have been delivered to Agent.
 
Section 8.2  Representations, Warranties and Covenants Regarding Healthcare
Matters.
 
Each Borrower represents, warrants covenants and agrees with Agent and Lenders
that:
 
(a)           Borrowers, together with Master Tenants and Property Managers are
using and operating the Projects as assisted living facilities and/or
independent senior housing and/or Alzheimer’s facilities, having the number of
Licensed Beds as set forth in Exhibits A-1 through A-2 attached hereto (as
modified from time to time with Agent’s consent).
 
(b)           All Licenses necessary or desirable for using and operating the
Projects for the uses described in ‎Section 8.2(a) above are held by Master
Tenants in the name of the applicable Master Tenant as required under applicable
law, and are in full force and effect, including, if applicable, the CON.
 
(c)           The Licenses:
 
(i)           Are not now and will not be pledged as collateral security for any
loan or indebtedness, other than the Loan; and
 
(ii)          Shall continue in full force and effect throughout the term of the
Loan and are held free and will remain free from restrictions or known
conflicts, and shall not be provisional, probationary or restricted in any way,
which would materially impair the use or operation of the Projects for the uses
described in ‎Section 8.2(a) above.
 
(d)           No Borrower, Property Manager or Master Tenant shall do (or suffer
to be done) any of the following:
 
(i)           Rescind, withdraw, revoke, or amend the number of Licensed Beds
permitted under Licenses or otherwise amend the Licenses in such a manner that
results in a material adverse effect on the rates charged or otherwise diminish
or impair the nature, tenor or scope of the Licenses without Agent’s consent;

 
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(ii)          Amend or otherwise change any Project’s authorized units/beds
capacity and/or the number of Licensed Beds approved by the State Regulator;
 
(iii)         Replace or transfer all or any part of any Project’s units or beds
to another site or location; or
 
(iv)         Voluntarily transfer or encourage the transfer of any resident of
any Project to any other facility, unless such transfer is at the request of the
resident or is for reasons relating to the health, required level of medical
care or safety of the resident to be transferred.
 
(e)           If and when any Borrower, Property Manager or Master Tenant
participates in any Medicare or Medicaid or other Third-Party Payor Programs
with respect to any Project, said Project will remain in compliance with all
requirements for participation in Medicare and Medicaid, including the Medicare
and Medicaid Patient Protection Act of 1987, as it may be amended, and such
other third party payor programs.  Each Project is and will remain in
conformance in all material respects with all insurance, reimbursement and cost
reporting requirements, and, if applicable, have a current provider agreement
that is in full force and effect under Medicare and Medicaid.
 
(f)           There is no, and during the term of the Loan there shall be no,
threatened, existing or pending revocation, suspension, termination, probation,
restriction, limitation, or nonrenewal affecting any Borrower, Property Manager
or Master Tenant or 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 Payor Programs”) to which
any Borrower, Property Manager or Master Tenant may presently be subject with
respect to any Project, or at any time hereafter is subject.  No Borrower,
Property Manager or Master Tenant, other than in the normal course of business,
shall change the terms of any of the Third-Party Payor Programs now or
hereinafter in effect or their normal billing payment or reimbursement policies
and procedures with respect thereto (including the amount and timing of finance
charges, fees and write-offs).  All Medicaid, Medicare and private insurance
cost reports and financial reports submitted by any Borrower, Property Manager
or Master Tenant, if any, are and will be materially accurate and complete and
have not been and will not be misleading in any material respects.  No cost
reports for any Project remain open or unsettled.
 
(g)           None of any Borrower, any Project or any Property Manager or
Master Tenant is or will be the subject of any proceeding by any Governmental
Authority, and no notice of any violation has been or will be issued by a
Governmental Authority that would, directly or indirectly, or with the passage
of time:
 
(i)           Have a material adverse impact on any Borrower’s or Master
Tenant’s ability to accept and/or retain patients or residents or operate the
Projects for their current use or result in the imposition of a fine, a
sanction, a lower rate certification or a lower reimbursement rate for services
rendered to eligible patients or residents;

 
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(ii)          Modify, limit or annul or result in the transfer, suspension,
revocation or imposition of probationary use of any of the Licenses; or
 
(iii)         If applicable, affect any Borrower’s, Property Manager’s or Master
Tenant’s continued participation in the Medicaid or Medicare programs or any
other of the Third-Party Payors Programs, or any successor programs thereto, at
then current rate certifications.
 
(h)           No statement of charges or deficiencies has been made or penalty
enforcement action has been undertaken against any Project, Borrower, Property
Manager, Master Tenant or Managing Member or against any officer, director,
partner, member or stockholder of any Borrower, Property Manager, Master Tenant
or Managing Member, by any Governmental Authority during the last five calendar
years, and there have been no violations over the past five years which have
threatened any Project’s, Property Manager’s, Master Tenant’s, Managing Member’s
or any Borrower’s certification for participation in Medicare or Medicaid or the
other Third-Party Payor Programs.
 
(i)            To the knowledge of Borrower, there are no current, pending or
outstanding Medicaid, Medicare or Third-Party Payor Programs reimbursement
audits or appeals pending at the Projects, and there are no years that are
subject to audit.
 
(j)            To the knowledge of Borrower, there are no current or pending
Medicaid or Medicare or Third-Party Payor Programs recoupment efforts at the
Projects.  No Borrower, Property Manager, Master Tenant or Managing Member is a
participant in any federal program whereby any Governmental Authority may have
the right to recover funds by reason of the advance of federal funds, including
those authorized under the Hill-Burton Act (42 U.S.C. 291, et seq.), as it may
be amended.
 
(k)           To the knowledge of Borrower, there are no and there will remain
no patient or resident care agreements with patients or residents which deviate
in any material adverse respect from the form agreements which have been
delivered to and approved by Agent pursuant to ‎Section 4.2 of this Loan
Agreement.
 
(l)            In the event any Management Agreement or Master Lease is
terminated or in the event of foreclosure or other acquisition of the Projects
by Agent or its designee or any purchaser at a foreclosure sale or by acceptance
of a deed in lieu of foreclosure, Borrowers, Agent, any subsequent manager or
tenant or any subsequent purchaser need not obtain a CON prior to applying for
and receiving Medicare or Medicaid payments.
 
(m)          All patient or resident records at each Project, including patient
or resident trust fund accounts, are, to Borrower’s knowledge, true and correct
in all material respects, and will remain true and correct in all material
respects.
 
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Section 8.3  Cooperation.

From time to time, upon the request of Agent if a Potential Default exists
hereunder, Borrowers shall, and shall cause Master Tenants to complete, execute
and deliver to Agent any applications, notices, documentation, and other
information necessary or desirable, in Agent’s judgment, to permit Agent or its
designee (including a receiver) to obtain, maintain or renew any one or more of
the Licenses for the Projects (or to become the owner of the existing Licenses
for the Projects) and to the extent permitted by applicable Laws to obtain any
other provider agreements or Governmental Approvals then necessary or desirable
for the operation of the Projects by Agent or its designee for their current use
(including, without limitation, any applications for change of ownership of the
existing Licenses or change of control of the owner of the existing
Licenses).  To the extent permitted by applicable Laws, (i) Agent is hereby
authorized (without the consent of Borrowers or Master Tenants) to submit any
such applications, notices, documentation or other information which Borrowers
caused to be delivered to Agent in accordance with the above provisions to the
applicable Governmental Authorities, or to take such other steps as Agent may
deem advisable to obtain, maintain or renew any License or other Governmental
Approvals in connection with the operation of the Projects for their current
use, and Borrowers agree to cooperate and to cause Master Tenants to cooperate
with Agent in connection with the same and (ii) Borrowers, upon demand by Agent,
shall take any action and cause Master Tenants to take any action necessary or
desirable, in Agent’s sole judgment, to permit Agent or its designee (including
a receiver) to use, operate and maintain the Projects for their current use.  If
Borrowers fail to comply with the provisions of this ‎Section 8.3 for any reason
whatsoever, Borrowers hereby irrevocably appoint Agent and its designee as
Borrowers’ attorney-in-fact, with full power of substitution, to take any action
and execute any documents and instruments necessary or desirable in Agent’s sole
judgment to permit Agent or its designee to undertake Borrowers’ obligations
under this ‎Section 8.3, including obtaining any Licenses or Governmental
Approvals then required for the operation of the Projects by Agent or its
designee for their current use.  The foregoing power of attorney is coupled with
an interest and is irrevocable and Agent may exercise its rights thereunder in
addition to any other remedies which Agent may have against Borrowers,
Guarantors or Principal as a result of a Borrower’s breach of the obligations
contained in this ‎Section 8.3.
 
ARTICLE IX
 
EVENTS OF DEFAULT
 
Each of the following shall constitute an Event of Default:
 
Section 9.1  Payments.
 
Failure of Borrowers to pay within ten (10) days after the date when due any of
the payment obligations of Borrowers due under the Loan Documents, or Borrowers’
failure to pay the Loan at the Maturity Date, whether by acceleration or
otherwise.
 
Section 9.2  Certain Covenants.
 
Borrowers’ failure to (a) maintain insurance as required under ‎Section 3.1 of
this Agreement; (b) maintain its status as a Single Purpose Entity as required
by ‎Section 7.7; (c) permit inspections as required by ‎Section 7.1; (d)
strictly comply with the provisions of ‎Section 7.2(a); (e) to deliver financial
statements and reports as required by ‎Article VI; (f) strictly comply with the
provisions of ‎Section 8.1(c) (licenses and other matters) ‎Section 8.2(b) and
‎(c) (licenses) ‎Section 7.19 (employees), ‎Section 7.23 (Master Leases),
Section 7.24 (Management Agreements), Section 7.25 (Financial Covenants); (g)
failure of Borrower to strictly comply with Section 8 (no additional liens) and
Section 6(f)(iii) (no interference with Agent’s liens on Leases and Rents) of
the Security Documents; and (h) provide Agent with ten (10) days prior written
notice of changes of the state of any Borrower’s formation or any Borrower’s
name.

 
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Section 9.3  Sale, Encumbrance, Etc.
 
The sale, transfer, conveyance, pledge, mortgage or assignment of any part or
all of any Project, or any interest therein, or of any interest in Borrowers or
any Loan Party, in violation of ‎Section 7.2 of this Agreement.
 
Section 9.4  Covenants.
 
Borrowers’ failure to perform or observe any of the agreements and covenants
contained in this Agreement or in any of the other Loan Documents, and the
continuance of such failure for ten (10) days after notice by Agent to
Borrowers; however, subject to any shorter period for curing any failure by
Borrowers as expressly specified in any of the other Loan Documents, Borrowers
shall have an additional thirty (30) days to cure such failure if (a) such
failure does not involve the failure to make payments on a monetary obligation;
(b) such failure cannot reasonably be cured within ten (10) days; (c) Borrowers
commenced to cure such failure promptly after written notice thereof and are
diligently undertaking to cure such default, and (d) Borrowers have provided
Agent with security reasonably satisfactory to Agent against any interruption of
payment or impairment of collateral as a result of such continuing failure;
provided that the notice and cure provisions of this ‎Section 9.4 do not apply
to the Events of Default described in any other section of this ‎Article IX.
 
Section 9.5  Representations and Warranties.
 
Any representation or warranty made in any Loan Document proves to be untrue in
any material respect when made or deemed made.
 
Section 9.6  Other Encumbrances.
 
Any default under any document or instrument, other than the Loan Documents,
evidencing or creating a Lien on any Project or any part thereof, which is not
removed from the Project, by bonding or otherwise in a manner satisfactory to
Agent within forty-five (45) days after Borrowers receive written notice thereof
and otherwise in accordance with the terms hereof.
 
Section 9.7  Involuntary Bankruptcy or Other Proceeding.
 
Commencement of an involuntary case or other proceeding against Borrowers, any
Loan Party or any Master Tenant (each, a “Bankruptcy Party”) which seeks
liquidation, reorganization or other relief with respect to it or its debts or
other liabilities under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeks the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any of its property, and such
involuntary case or other proceeding shall remain undismissed or unstayed for a
period of ninety (90) days; or an order for relief against a Bankruptcy Party
shall be entered in any such case under the Federal Bankruptcy Code.

 
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Section 9.8  Voluntary Petitions, etc.
 
Commencement by a Bankruptcy Party of a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its Debts or other liabilities under any bankruptcy, insolvency or other similar
law or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official for it or any of its property, or consent by a Bankruptcy
Party to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or the making by a Bankruptcy Party of a general assignment for the benefit of
creditors, or the failure by a Bankruptcy Party, or the admission by a
Bankruptcy Party in writing of its inability to pay its debts generally as they
become due, or any action by a Bankruptcy Party to authorize or effect any of
the foregoing.
 
Section 9.9  Management Agreement.
 
The occurrence of a default under the Management Agreement, which remains
uncured beyond any applicable grace or cure periods available to any Borrower.
 
Section 9.10  False Reports.
 
Any statement, report or certificate made or delivered to Agent by Borrowers,
any Loan Party or any Master Tenant is not materially true and complete when
made or delivered.
 
Section 9.11  Control.
 
Subject to the provisions of ‎Section 7.2(b) hereof, the Cornerstone Principal
ceases at any time to control (through their direct or indirect interests,
office or position in Managing Member) the day-to-day management of
Borrowers.  To avoid all doubt, if the RSC Principals shall collectively,
directly or indirectly, own a majority of the Managing Member, then it shall be
an Event of Default if the RSC Principals cease at any time to control (through
their then direct or indirect interests or office or position in Managing
Member) the day-to-day management of Borrower.
 
Section 9.12  Money Laundering.
 
(a)           Any Loan Party is listed on the Lists or (i) is convicted or (ii)
pleads nolo contendere to charges involving money laundering or predicate crimes
to money laundering.
 
(b)           Any Borrower or Loan Party is charged with crimes involving money
laundering or predicate crimes to money laundering, and such Borrower does not,
within thirty (30) days, obtaining the dismissal of such charges without further
investigation.
 
(c)           If a tenant under any Lease is listed on the Lists or (i) is
convicted, or (ii) pleads nolo contendere to charges involving money laundering
or predicate crimes to money laundering, and proceeds from the rents of such
tenant are used to pay debt service and Borrowers fail to give Agent such
representations and verifications as Agent shall reasonably request that such
rents are not being used to pay debt service.

 
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Section 9.13  Loan Documents.
 
The occurrence of a default under any of the other Loan Documents, which
continues uncured beyond any applicable notice and grace periods provided under
such Loan Document, or the occurrence of an “Event of Default” as defined in any
other Loan Document.
 
Section 9.14  Reserved.
 
Section 9.15  Master Leases.
 
The occurrence of a default under any Master Lease which continues uncured
beyond any applicable notice and grace period provided under such Master Lease.
 
ARTICLE X
 
REMEDIES
 
Section 10.1  Remedies - Insolvency Events.
 
Upon the occurrence of any Event of Default described in ‎Section 9.7 and
‎Section 9.8, the obligations of Lender to advance amounts hereunder shall
immediately terminate, and all amounts due under the Loan Documents immediately
shall become due and payable, all without written notice and without
presentment, demand, protest, notice of protest or dishonor, notice of intent to
accelerate the maturity thereof, notice of acceleration of the maturity thereof,
or any other notice of default of any kind, all of which are hereby expressly
waived by Borrowers; however, if the Bankruptcy Party under ‎Section 9.7 and
‎Section 9.8 is other than a Borrower, then all amounts due under the Loan
Documents shall become immediately due and payable at Lender’s election, in
Agent’s sole discretion.
 
Section 10.2  Remedies - Other Events.
 
Except as set forth in ‎Section 10.1 above, while any Event of Default exists,
Agent may (a) by written notice to Borrowers, declare the entire Loan to be
immediately due and payable without presentment, demand, protest, notice of
protest or dishonor, notice of intent to accelerate the maturity thereof, notice
of acceleration of the maturity thereof, or other notice of default of any kind,
all of which are hereby expressly waived by Borrowers, (b) terminate the
obligation, if any, of Lender to advance amounts hereunder, and (c) exercise all
rights and remedies therefore under the Loan Documents and at law or in equity.
 
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Section 10.3  Agent’s Right to Perform the Obligations.

If Borrowers shall fail, refuse or neglect to make any payment or perform any
act required by the Loan Documents, then while any Event of Default exists, and
without notice to or demand upon Borrowers and without waiving or releasing any
other right, remedy or recourse Agent or Lender may have because of such Event
of Default, Agent may (but shall not be obligated to) make such payment or
perform such act for the account of and at the expense of Borrowers, and shall
have the right to enter upon the Projects for such purpose and to take all such
action thereon and with respect to the Projects as it may deem necessary or
appropriate.  If Agent shall elect to pay any sum due with reference to the
Projects, Agent may do so in reliance on any bill, statement or assessment
procured from the appropriate governmental authority or other issuer thereof
without inquiring into the accuracy or validity thereof.  Similarly, in making
any payments to protect the security intended to be created by the Loan
Documents, Agent shall not be bound to inquire into the validity of any apparent
or threatened adverse title, lien, encumbrance, claim or charge before making an
advance for the purpose of preventing or removing the same.  Additionally, if
any Hazardous Materials (as defined in the Environmental Indemnity Agreement)
affect or threaten to affect any Project, Agent may (but shall not be obligated
to) give such notices and take such actions as it deems necessary or advisable
in order to abate the discharge of any Hazardous Materials or remove the
Hazardous Materials.  In exercising any rights under the Loan Documents or
taking any actions provided for therein, Agent may act through its employees,
agents or independent contractors as authorized by Agent.  Borrowers shall
indemnify Agent and Lender for all losses, expenses, damages, claims and causes
of action, including reasonable attorneys’ fees, incurred or accruing by reason
of any acts performed by Agent or Lender pursuant to the provisions of this
‎Section 10.3, including those arising from the joint, concurrent, or
comparative negligence of Agent or Lender, except as a result of Agent or
Lender’s gross negligence or willful misconduct.  All sums paid by Agent or
Lender pursuant to this ‎Section 10.3, and all other sums expended by Agent or
Lender to which they shall be entitled to be indemnified, together with interest
thereon at the Default Rate from the date of such payment or expenditure until
paid, shall constitute additions to the Loan, shall be secured by the Loan
Documents and shall be paid by Borrowers to Agent upon demand.
 
ARTICLE XI
 
MISCELLANEOUS
 
Section 11.1  Notices.
 
Any notice required or permitted to be given under this Agreement shall be in
writing and either shall be mailed by certified mail, postage prepaid, return
receipt requested, or sent by overnight air courier service, or personally
delivered to a representative of the receiving party, or sent by telecopy
(provided an identical notice is also sent simultaneously by mail, overnight
courier, or personal delivery as otherwise provided in this ‎Section 11.1).  All
such communications shall be mailed, sent or delivered, addressed to the party
for whom it is intended at its address set forth below.
 
If to Borrowers:
c/o Cornerstone Oakleaf Village, LLC
 
c/o Cornerstone Healthcare Plus REIT, Inc.
 
Attn:  Sharon C. Kaiser, Chief Financial Officer
 
1920 Main Street, Suite 400
 
Irvine, California 92614
 
Telephone No.:  949.263.4326
 
Telecopy No.:    949.250.0592
   
With a copy to:
Servant Healthcare Investments, LLC
 
Attn: Kevin Maddron
 
1000 Legion Place, Ste. 1750

 
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Orlando, Florida 32801
 
Telephone No.:  407.999.7772
 
Telecopy No.:    407.999.7759
   
With a copy to:
Foley & Lardner LLP
 
111 North Orange Avenue
 
Suite 1800
 
Orlando, Florida 32801
 
Attention:      Michael A. Okaty, Esq.
 
Telephone:    407.244.3229
 
Facsimile:      407.648.1743
   
If to Agent:
General Electric Capital Corporation
 
Loan Nos.  07-0004226
 
                   07-0014226
 
500 West Monroe Street
 
Chicago, Illinois  60661
 
Attention: Michelle R. Kelly
 
Facsimile: (866) 769-9860
   
With a copy to:
General Electric Capital Corporation
 
Loan Nos.   07-0004226
 
                    07-0014226
 
500 West Monroe Street
 
Chicago, Illinois  60661
 
Attention:   Brian Beckwith
 
                    Jeff Muchmore
 
Facsimile:    (866) 207-0498
 
                     (866) 254-1971
   
And a copy to:
General Electric Capital Corporation
 
Loan Nos.   07-0004226
 
                    07-0014226
 
5804 Trailridge Drive
 
Austin, Texas  78731
 
Attention: Diana Pennington, Chief Counsel
 
Facsimile:  (866) 221-0433

 
Notices shall be deemed given when (1) actually delivered, (2) on the first
Business Day after deposit with an overnight air courier service for delivery on
the next Business Day, or (3) on the third Business Day after deposit in the
United States mail, postage prepaid, in each case to the address of the intended
addressee (except as otherwise provided in the Security Document), and any
communication so delivered in person shall be deemed to be given when receipted
for by, or actually received by Agent or Borrowers, as the case may be.  If
given by telecopy, a notice shall be deemed given and received when the telecopy
is transmitted to the party’s telecopy number specified above, and confirmation
of complete receipt is received by the transmitting party during normal business
hours or on the next Business Day if not confirmed during normal business hours,
and an identical notice is also sent simultaneously by mail, overnight courier,
or personal delivery as otherwise provided in this ‎Section 11.1.  Either party
may designate a change of address by written notice to the other by giving at
least ten (10) days prior written notice of such change of address.

 
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Section 11.2  Amendments and Waivers.
 
No amendment or waiver of any provision of the Loan Documents shall be effective
unless in writing and signed by the party against whom enforcement is sought.
 
Section 11.3  Limitation on Interest.
 
It is the intention of the parties hereto to conform strictly to applicable
usury laws.  Accordingly, all agreements between Borrowers, Agent and Lender
with respect to the Loan are hereby expressly limited so that in no event,
whether by reason of acceleration of maturity or otherwise, shall the amount
paid or agreed to be paid to Lender or charged by Lender for the use,
forbearance or detention of the money to be lent hereunder or otherwise, exceed
the maximum amount allowed by law.  If the Loan would be usurious under
applicable law, then, notwithstanding anything to the contrary in the Loan
Documents: (a) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged or
received under the Loan Documents shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any excess shall be
credited on the Note the holder thereof (or, if the Note has been paid in full,
refunded to Borrowers); and (b) if maturity is accelerated by reason of an
election by Agent or Lender, or in the event of any prepayment, then any
consideration which constitutes interest may never include more than the maximum
amount allowed by applicable law.  In such case, excess interest, if any,
provided for in the Loan Documents or otherwise, to the extent permitted by
applicable law, shall be amortized, prorated, allocated and spread from the date
of advance until payment in full so that the actual rate of interest is uniform
through the term hereof.  If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess interest shall
be cancelled automatically as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited on the Note (or, if the Note has
been paid in full, refunded to Borrowers).  The terms and provisions of this
‎Section 11.3 shall control and supersede every other provision of the Loan
Documents.  The Loan Documents are contracts made under and shall be construed
in accordance with and governed by the laws of the State of Illinois, except
that (1) if at any time the laws of the United States of America permit Lender
to contract for, take, reserve, charge or receive a higher rate of interest than
is allowed by the laws of the State of Illinois (whether such federal laws
directly so provide or refer to the law of any state), then such federal laws
shall to such extent govern as to the rate of interest which Lender may contract
for, take, reserve, charge or receive under the Loan Documents and (2) to the
extent otherwise specified in any of the Loan Documents.

 
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Section 11.4  Invalid Provisions.
 
If any provision of any Loan Document is held to be illegal, invalid or
unenforceable, such provision shall be fully severable; the Loan Documents shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part thereof; the remaining provisions thereof shall
remain in full effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom; and in lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as a part of such Loan Document a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible to be legal, valid and
enforceable.
 
Section 11.5  Reimbursement of Expenses; Portfolio Administration Fee.
 
(a)           Borrowers shall pay all expenses incurred by Agent and Lenders in
connection with the Loan, including, without limitation, (i) out-of-pocket costs
and expenses of Agent and Lender in connection with (a) the negotiation,
preparation, execution and delivery of the Loan Documents and the documents and
instruments referred to therein; (b) due diligence with respect to the
Collateral and the creation, perfection or protection of Agent’s liens in the
Collateral (including, without limitation, fees and expenses for title and lien
searches, premiums for title insurance and endorsements thereto, amended or
replacement Security Documents, Uniform Commercial Code financing statements or
other collateral security instruments, title insurance premiums and filing and
recording fees, third party due diligence expenses for the Projects plus travel
expenses, accounting firm fees, costs of the appraisals and Site Assessments
(and the environmental consultant), the engineering reports, audit costs and
costs and fees incurred in connection with arranging, setting up, servicing any
pledged accounts or similar collateral); (c) the negotiation, preparation,
execution and delivery of any amendment, waiver, restructuring, workout or
consent relating to any of the Loan Documents, (d) the settlement of or dispute
regarding condemnation and casualty awards and (e) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein, including any communications or discussions relating to any
action that any Borrower shall from time to time request Agent to take, as well
as any restructuring or rescheduling of the Loan, and (ii) the fees, expenses
and other charges of counsel to Agent and the Lender in connection with all of
the foregoing; provided, in no event shall Borrowers be required to pay such
fees, expenses and other charges in connection with any legal action in which
Borrowers are the prevailing party.  Borrowers shall, upon request, promptly
reimburse Agent and Lender for all amounts expended, advanced or incurred by
Agent and Lender to collect the Note, or to enforce the rights of Agent and
Lender under this Agreement or any other Loan Document, or to defend or assert
the rights and claims of Agent and Lender under the Loan Documents or with
respect to the Projects (by litigation or other proceedings), which amounts will
include all court costs, attorneys’ fees and expenses, fees of auditors and
accountants, and investigation expenses as may be incurred by Agent and Lender
in connection with any such matters (whether or not litigation is instituted),
together with interest at the Default Rate on each such amount from the date of
disbursement until the date of reimbursement to Agent, all of which shall
constitute part of the Loan and shall be secured by the Loan Documents.
 
(b)           Borrowers shall also pay to Agent on the twelfth (12th) day of
each month during the term of the Loan, in addition to all other amounts due
under the Loan Documents, the sum of One Hundred Fifty and No/100 Dollars
($150.00) per Project, which Agent shall apply against the cost of the
administration of the Loan.

 
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Section 11.6  Approvals; Third Parties; Conditions.
 
All approval rights retained or exercised by Agent with respect to leases,
contracts, plans, studies and other matters are solely to facilitate Lender’s
credit underwriting, and shall not be deemed or construed as a determination
that Agent or Lender has passed on the adequacy thereof for any other purpose
and may not be relied upon by Borrowers or any other Person.  This Agreement is
for the sole and exclusive use of Agent, Lender and Borrowers and may not be
enforced, nor relied upon, by any Person other than Agent, Lender and
Borrowers.  All conditions of the obligations of Agent or Lender hereunder,
including the obligation to make advances, are imposed solely and exclusively
for the benefit of Agent and Lender, and their respective successors and
assigns, and no other Person shall have standing to require satisfaction of such
conditions or be entitled to assume that Lender will refuse to make advances in
the absence of strict compliance with any or all of such conditions, and no
other Person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in whole or in part
by Agent or Lender, as applicable, at any time in Agent’s or Lender’s sole
discretion.
 
Section 11.7  Lender Not in Control; No Partnership.
 
None of the covenants or other provisions contained in this Agreement shall, or
shall be deemed to, give Agent or Lender the right or power to exercise control
over the affairs or management of Borrowers, the power of Agent and Lender being
limited to the rights to exercise the remedies referred to in the Loan
Documents.  The relationship between Borrowers, on the one hand, and Agent and
Lender, on the other hand, is, and at all times shall remain, solely that of
debtor and creditor.  No covenant or provision of the Loan Documents is
intended, nor shall it be deemed or construed, to create a partnership, joint
venture, agency or common interest in profits or income between Agent and
Lender, on the one hand, and Borrowers, on the other hand, or to create an
equity in the Projects in Lender or Agent.  Neither Agent nor Lender either
undertakes or assumes any responsibility or duty to Borrowers or to any other
person with respect to the Projects or the Loan, except as expressly provided in
the Loan Documents; and notwithstanding any other provision of the Loan
Documents (a) Neither Agent nor Lender is nor shall be construed as, a partner,
joint venturer, alter ego, manager, controlling person or other business
associate or participant of any kind of Borrowers or its stockholders, members,
or partners and neither Agent nor Lender intends to ever assume such status; (b)
Neither Agent nor Lender shall in any event be liable for any Debts, expenses or
losses incurred or sustained by Borrowers; and (c) neither Agent nor Lender
shall be deemed responsible for or a participant in any acts, omissions or
decisions of Borrowers or their stockholders, members, or partners.  Agent, and
Lender, on the one hand, and Borrowers, on the other hand, disclaim any
intention to create any partnership, joint venture, agency or common interest in
profits or income between Agent and Lender, on the one hand, and Borrowers, on
the other hand, or to create an equity in the Projects in Agent or Lender, or
any sharing of liabilities, losses, costs or expenses.
 
Section 11.8  Time of the Essence.
 
Time is of the essence with respect to this Agreement.

 
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Section 11.9  Successors and Assigns.
 
This Agreement shall be binding upon and inure to the benefit of Agent, Lender
and Borrowers and the respective successors and assigns of Agent, Lender and
Borrowers, provided that neither any Borrower nor any other Loan Party shall,
without the prior written consent of Agent, assign any rights, duties or
obligations hereunder.
 
Section 11.10  Renewal, Extension or Rearrangement.
 
All provisions of the Loan Documents shall apply with equal effect to each and
all promissory notes and amendments thereof hereinafter executed which in whole
or in part represent a renewal, extension, increase or rearrangement of the
Loan.  For portfolio management purposes, Agent and Lender may elect to divide
the Loan into two or more separate loans evidenced by separate promissory notes
so long as the payment and other obligations of Borrowers are not effectively
increased or otherwise modified.  Borrowers agree to cooperate with Agent and to
execute such documents as Agent reasonably may request to effect such division
of the Loan.
 
Section 11.11  Waivers; Forbearance.
 
No advance of Loan proceeds hereunder shall constitute a waiver of any of the
conditions of Lender’s obligation to make advances nor, in the event Borrower is
unable to satisfy any such condition, shall any such advance have the effect of
precluding Lender or Agent from thereafter requiring such condition to be
satisfied prior to any future advance to which such condition otherwise
applies.  No course of dealing on the part of Agent or Lender, or their
respective officers, employees, consultants or agents, nor any failure or delay
by Agent or Lender with respect to exercising any right, power or privilege of
Agent or Lender under any of the Loan Documents, shall operate as a waiver
thereof.  Any forbearance by Agent or Lender in exercising any right or remedy
under any of the Loan Documents, or otherwise afforded by applicable law, shall
not be a waiver of or preclude the exercise of any right or remedy.  Agent’s
acceptance of payment of any sum secured by any of the Loan Documents after the
due date of such payment shall not be a waiver of Agent’s or Lender’s right to
either require prompt payment when due of all other sums so secured or to
declare a Potential Default for failure to make prompt payment.  The procurement
of insurance or the payment of taxes or other liens or charges by Agent or
Lender shall not be a waiver of Agent’s or Lender’s right to accelerate the
maturity of the Loan, nor shall Agent’s or Lender’s receipt of any awards,
proceeds, or damages under this Agreement or the Security Document operate to
cure or waive Borrowers’ or any Principal’s Potential Default in payment of sums
secured by any of the Loan Documents.
 
Section 11.12  Cumulative Rights.
 
Rights and remedies of Agent and Lender under the Loan Documents shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.

 
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Section 11.13  Singular and Plural.
 
Words used in this Agreement and the other Loan Documents in the singular, where
the context so permits, shall be deemed to include the plural and vice
versa.  The definitions of words in the singular in this Agreement and the other
Loan Documents shall apply to such words when used in the plural where the
context so permits and vice versa.
 
Section 11.14  Phrases.
 
When used in this Agreement and the other Loan Documents, the phrase “including”
shall mean “including, but not limited to,” the phrase “satisfactory to Agent”
or “satisfactory to Lender” shall mean “in form and substance satisfactory to
Agent in all respects” or “in form and substance satisfactory to Lender in all
respects” (as applicable), the phrase “with Agent’s consent”, “with Agent’s
approval”, “with Lender’s consent” or “with Lender’s approval” shall mean such
consent or approval at Agent’s or Lender’s discretion (as applicable), and the
phrase “acceptable to Agent” or “acceptable to Lender” shall mean “acceptable to
Agent at Agent’s sole discretion” or “acceptable to Lender at Lender’s sole
discretion” (as applicable).
 
Section 11.15  Exhibits and Schedules.
 
The exhibits and schedules attached to this Agreement are incorporated herein
and shall be considered a part of this Agreement for the purposes stated herein.
 
Section 11.16  Titles of Articles, Sections and Subsections.
 
All titles or headings to articles, sections, subsections or other divisions of
this Agreement and the other Loan Documents or the exhibits hereto and thereto
are only for the convenience of the parties and shall not be construed to have
any effect or meaning with respect to the other content of such articles,
sections, subsections or other divisions, such other content being controlling
as to the agreement between the parties hereto.
 
Section 11.17  Promotional Material.
 
Borrowers authorize Agent and Lender to issue press releases, advertisements and
other promotional materials in connection with Lender’s own promotional and
marketing activities, and describing the Loan in general terms or in detail and
Lender’s and Agents participation in the Loan.  All references to Lender or
Agent contained in any press release, advertisement or promotional material
issued by any Borrower or Affiliate of Borrowers shall be approved in writing by
Agent in advance of issuance.
 
Section 11.18  Survival.
 
All of the representations, warranties, covenants, and indemnities hereunder,
and under the indemnification provisions of the other Loan Documents shall
survive the repayment in full of the Loan and the release of the liens
evidencing or securing the Loan, and shall survive the transfer (by sale,
foreclosure, conveyance in lieu of foreclosure or otherwise) of any or all
right, title and interest in and to the Projects to any party, whether or not an
Affiliate of Borrowers.

 
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Section 11.19  WAIVER OF JURY TRIAL.
 
TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH BORROWER, AGENT AND LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY OR ANY
EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN
ANY WAY RELATING TO THE LOAN OR THE PROJECTS (INCLUDING, WITHOUT LIMITATION, ANY
ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING
THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE).  THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS
AGREEMENT.
 
Section 11.20  Waiver of Punitive or Consequential Damages.
 
Neither Agent, Lender nor any Borrower shall be responsible or liable to the
other or to any other Person for any punitive, exemplary or consequential
damages which may be alleged as a result of the Loan or the transaction
contemplated hereby, including any breach or other Potential Default by any
party hereto.
 
Section 11.21  Governing Law.
 
UNLESS OTHERWISE NOTED THEREIN TO THE CONTRARY, THE LOAN DOCUMENTS AND THE
ENVIRONMENTAL INDEMNITY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES THEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO ILLINOIS’
PRINCIPLES OF CONFLICTS OF LAW) AND APPLICABLE UNITED STATES FEDERAL LAW, EXCEPT
FOR THOSE PROVISIONS IN THE LOAN DOCUMENTS AND THE ENVIRONMENTAL INDEMNITY
PERTAINING TO THE CREATION, PERFECTION OR VALIDITY OF OR EXECUTION ON LIENS OR
SECURITY INTERESTS ON PROPERTY LOCATED IN THE STATES WHERE THE PROJECTS ARE
LOCATED, WHICH PROVISIONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATES WHERE THE PROJECTS ARE LOCATED AND APPLICABLE UNITED
STATES FEDERAL LAW.
 
Section 11.22  Entire Agreement.
 
This Agreement and the other Loan Documents embody the entire agreement and
understanding between Agent, Lender and Borrowers and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof.  Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties.  There are no unwritten oral agreements among the
parties.  If any conflict or inconsistency exists between the Commitment and
this Agreement or any of the other Loan Documents, the terms of this Agreement
and the other Loan Documents shall control.

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

 
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Section 11.27  Effectiveness of Facsimile Documents and Signatures.
 
The Loan Documents may be transmitted and/or signed by facsimile.  The
effectiveness of any such documents and signatures shall, subject to applicable
law, have the same force and effect as manually signed originals and shall be
binding on all parties to the Loan Documents.  Agent may also require that any
such documents and signatures be confirmed by a manually signed original
thereof; provided, however, that the failure to request or deliver the same
shall not limit the effectiveness of any facsimile document or signature.
 
Section 11.28  Joint and Several Liability.
 
(a)           The Indebtedness and all other obligations of Borrowers under the
Loan Documents (collectively, the “Obligations”) shall be the joint and several
obligations and liabilities of Borrowers.  Hence, each Borrower shall be
primarily and directly liable for repayment of the Indebtedness and all other
Obligations.
 
(b)           Notwithstanding any provisions of this Agreement to the contrary,
it is intended that the joint and several nature of the liability of each
Borrower for the Obligations and the liens and security interests granted by
Borrowers to secure the Obligations, not constitute a “Fraudulent Conveyance”
(as defined below).  Consequently, Lender and each Borrower agree that if the
liability of a Borrower for the Obligations, or any liens or security interests
granted by such Borrower securing the Obligations would, but for the application
of this sentence, constitute a Fraudulent Conveyance, the liability of such
Borrower and the liens and security interests securing such liability shall be
valid and enforceable only to the maximum extent that would not cause such
liability or such lien or security interest to constitute a Fraudulent
Conveyance, and the liability of such Borrower and this Agreement shall
automatically be deemed to have been amended accordingly.  For purposes hereof,
“Fraudulent Conveyance” means a fraudulent conveyance under Section 548 of the
Federal Bankruptcy Code or a fraudulent conveyance or fraudulent transfer under
the applicable provisions of any fraudulent conveyance or fraudulent transfer
law or similar law of any state, nation or other governmental unit, as in effect
from time to time.
 
(c)           Agent is hereby authorized, without notice or demand and without
affecting the liability of any Borrower hereunder, to, at any time and from time
to time, (i) renew, extend or otherwise increase the time for payment of the
Obligations; (ii) with the written agreement of any Borrower accelerate or
otherwise change the terms relating to the Obligations or otherwise modify,
amend or change the terms of any promissory note or other agreement, document or
instrument now or hereafter executed by any Borrower and delivered to Agent;
(iii) accept partial payments of the Obligations; (iv) take and hold security or
collateral for the payment of the Obligations or for the payment of any
guaranties of the Obligations and exchange, enforce, waive and release any such
security or collateral; (v) apply such security or collateral and direct the
order or manner of sale thereof Agent, in its sole discretion, may determine;
and (vi) settle, release, compromise, collect or otherwise liquidate the
Obligations and any security or collateral therefor in any manner, without
affecting or impairing the obligations of any Borrower.  Except as specifically
provided in this Agreement or any of the other Loan Documents, Agent shall have
the exclusive right to determine the time and manner of application of any
payments or credits, whether received from any Borrower or any other source, and
such determination shall be binding on all Borrowers.  All such payments and
credits may be applied, reversed and reapplied, in whole or in part, to any of
the Obligations Agent shall determine in its sole discretion without affecting
the validity or enforceability of the Obligations of the other Borrowers.

 
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(d)           Each Borrower hereby agrees that, except as hereinafter provided,
its obligations hereunder shall be unconditional, irrespective of (i) the
absence of any attempt to collect the Obligations from any obligor or other
action to enforce the same; (ii) the waiver or consent by Agent with respect to
any provision of any instrument evidencing the Obligations, or any part thereof,
or any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Agent; (iii) failure by Agent to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against a Borrower or Agent’s
election in any such proceeding of the application of Section 1111(b)(2) of the
Federal Bankruptcy Code; (v) any borrowing or grant of a security interest by a
Borrower as debtor-in-possession, under Section 364 of the Federal Bankruptcy
Code; (vi) the disallowance, under Section 502 of the Federal Bankruptcy Code,
of all or any portion of Agent’s claim(s) for repayment of any of the
Obligations; or (vii) any other circumstance other than payment in full of the
Obligations which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.
 
(e)           Until all Obligations have been paid and satisfied in full, no
payment made by or for the account of a Borrower including, without limitation,
(i) a payment made by such Borrower on behalf of the liabilities of the other
Borrower or (ii) a payment made by any other person under any guaranty, shall
entitle such Borrower, by subrogation or otherwise, to any payment from such
other Borrower or from or out of such other Borrower’s property and such
Borrower shall not exercise any right or remedy against such other Borrower or
any property of such other Borrower by reason of any performance of such
Borrower of its joint and several obligations hereunder.
 
Section 11.29  Agency.
 
Both GECC and the other Lenders agree that GECC shall act as agent for each
Lender in all dealings with Borrowers, Principals and Master Tenants under or in
connection with this Loan Agreement and each of the other Loan Documents,
including without limitation, granting any consents or waivers, taking any
enforcements actions, sending or receiving notices, dealing with collateral,
granting releases, accepting payments or otherwise.  Borrowers, Principals,
Master Tenants and all Loan Parties may rely without question upon any document
signed by GECC as agent for each Lender hereunder or under any other Loan
Documents.  References to “Lender” in this Agreement and in the other Loan
Documents shall refer to each of GECC and the other financial institutions who
are or hereafter become parties to this Agreement as Lenders, individually, or
to all of GECC and the other financial institutions who are or hereafter become
parties to this Agreement, collectively, as the context may require; provided
any and all grants of security interests to a Lender under this Agreement or any
other Loan Document shall be deemed to be a grant to GECC as agent for each
Lender.

 
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Section 11.30  Patriot Act.
 
Lender hereby notifies the Borrower Parties that pursuant to the requirements of
the Patriot Act, it is required to obtain, verify and record information that
identifies each Borrower Party, which information includes the name and address
of each Borrower Party and other information that will allow Lender to identify
each Borrower Party in accordance with the Patriot Act.
 
Signatures Begin on Next Page

 
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EXECUTED as of the date first written above.
 
LENDERS:
 
GECC:
 
GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation
 
By:
/s/ Michelle R. Kelly  
Name: Michelle R. Kelly
 
Title: Duly Authorized Signatory

 
AGENT:
 
GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation
 
By:
/s/ Michelle R. Kelly  
Name: Michelle R. Kelly
 
Title: Duly Authorized Signatory

Signatures Continued on Next Page

 

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BORROWERS:
 
RSC OAKLEAF GREENVILLE, LLC,
a Florida limited liability company
 
By:
Royal Cornerstone South Carolina Portfolio, LLC,
a Delaware limited liability company, its sole member
   
By:
Cornerstone Oakleaf Village, LLC, its Managing Member
   
By:
Cornerstone Healthcare Plus REIT, Inc., its Manager
     
By:
/s/ Terry G. Roussel    
Terry G. Roussel, CEO
 
RSC OAKLEAF LEXINGTON, LLC,
a Florida limited liability company
   
By:
Royal Cornerstone South Carolina Portfolio, LLC,
a Delaware limited liability company, its sole member
   
By:
Cornerstone Oakleaf Village, LLC, its Managing Member
   
By:
Cornerstone Healthcare Plus REIT, Inc., its Manager
     
By:
/s/ Terry G. Roussel    
Terry G. Roussel, CEO

 

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Joinder
 
The undersigned Master Tenants join in the execution of this Agreement solely
for the purpose of evidencing their consent and agreement to the terms of this
Agreement and their agreement to comply with the covenants pertaining to the
operation of the Projects applicable to the Master Tenants set forth in the
Agreement.
 
MASTER TENANTS:
 
RSC GREENVILLE, LLC,
 
a Florida limited liability company
 
By:
Royal Cornerstone South Carolina Tenant
 
Portfolio, LLC, a Delaware limited
 
liability company, its sole member
 
By:
Cornerstone Oakleaf Village TRS, LLC,
its Managing Member
 
By:
Cornerstone Healthcare Plus REIT, Inc.,
 
its Manager
   
By:
/s/ Terry G. Roussel    
Terry G. Roussel, CEO
 
MASTER TENANTS:
 
RSC LEXINGTON, LLC,
 
a Florida limited liability company
 
By:
Royal Cornerstone South Carolina Tenant
 
Portfolio, LLC, a Delaware limited
 
liability company, its sole member
 
By:
Cornerstone Oakleaf Village TRS, LLC,
its Managing Member
 
By:
Cornerstone Healthcare Plus REIT, Inc.,
 
its Manager
     
By:
/s/ Terry G. Roussel    
Terry G. Roussel, CEO

 

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EXHIBIT A-1
 
The Projects
 
Borrower:
RSC Oakleaf Greenville, LLC
   
Name of Facility:
Oakleaf Village at Greenville
   
Address of Land:
1560 Thornblade Blvd.
Greer, South Carolina  29650
   
Master Tenant:
RSC Greenville, LLC
   
Number of Licensed Beds/Units:
 
a.   Assisted Living
a.   66
b.   Alzheimer’s
b.   24
   
Number of Parking Spaces:
51
   
Legal Description of Land:
 

ALL THAT CERTAIN PIECE, PARCEL OR TRACT OF LAND SITUATE, LYING AND BEING IN THE
COUNTY OF GREENVILLE, STATE OF SOUTH CAROLINA, CONTAINING 5.006 ACRES ACCORDING
TO AN “ALTA/ACSM LAND TITLE SURVEY FOR RSC GREENVILLE, LLC, 1560 THORNBLADE
BOULEVARD, GREENVILLE COUNTY, GREENVILLE, SOUTH CAROLINA (OAKLEAF VILLAGE @
THORNBLADE)”, DATED 7/07/04 BY SITE DESIGN, INC. WITH THE FOLLOWING METES AND
BOUNDS TO WIT:

 
A-1-1

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BEGINNING AT AN OLD MAG NAIL LOCATED ON THE NORTHERN RIGHT OF WAY OF THORNBLADE
BOULEVARD AT ITS TERMINUS; THENCE RUNNING ALONG SAID RIGHT OF WAY S 88-21-05 W
55.64 FEET TO AN OLD 5/8” REBAR IRON PIN; THENCE TURNING AND RUNNING N 81-00-31
W 32.56 FEET TO A POINT IN A BRICK WALL AT THE JOINT CORNER OF LOT 61, SECTION
ONE, THE GARDENS AT THORNBLADE; THENCE TURNING AND LEAVING SAID RIGHT OF WAY AND
RUNNING ALONG THE REAR LOT LINES OF LOTS 61, 60, 59, 58, 57, 56, AND 55, SECTION
ONE, THE GARDENS AT THORNBLADE N 14-50-53 E 99.70 FEET TO A POINT IN BRICK WALL;
THENCE TURNING AND RUNNING N 39-24-59 E 360.99 FEET TO POINT AT THE JOINT CORNER
OF WEKIVA SPRINGS PLAZA PROPERTY, NOW OR FORMERLY; THENCE TURNING AND RUNNING
ALONG THE LINE OF SAID WEKIVA SPRINGS PLAZA PROPERTY AND ALSO ALONG THE LINE OF
THORNBLADE, VILLAGE, LLC PROPERTY, NOW OR FORMERLY S 50-47-17 E 260.96 FEET TO
AN OLD 5/8” REBAR IRON PIN, CROSSING OVER AND OLD 1” OPEN TOP IRON PIN AT 0.53
FEET AND AN OLD 3/4” CRIMP TOP IRON PIN AT 119.67 FEET; THENCE TURNING AND
RUNNING S 73-14-35 E 136.25 FEET TO AN OLD 1” CRIMP TOP IRON PIN (BENT) LOCATED
ON THE WESTERN RIGHT OF WAY OF THE PARKWAY (S-23-1025); THENCE TURNING AND
RUNNING ALONG SAID RIGHT OF WAY AND ALONG A CURVE TO THE LEFT HAVING A RADIUS OF
756.20 FEET, AN ARC LENGTH OF 88.52 FEET AND A CHORD BEARING AND DISTANCE OF S
14-54-02 W 88.47 FEET TO AN OLD 3/4” CRIMP TOP IRON PIN; THENCE TURNING AND
RUNNING S 11-29-20 W 316.13 FEET TO AN OLD 1” CRIMP TOP IRON PIN LOCATED AT THE
JOINT CORNER OF SFH PROPERTIES, LLC PROPERTY, NOW OR FORMERLY; THENCE TURNING
AND LEAVING SAID RIGHT OF WAY AND RUNNING ALONG THE LINE OF SAID SFH PROPERTIES,
LLC PROPERTY AND ALSO ALONG THE LINE OF PCH, LTD., LP PROPERTY, NOW OR FORMERLY
AND ALONG THE LINE OF G.H. CONSTRUCTION OF EASLEY, INC. PROPERTY NOW OR FORMERLY
N 78-23-13 W 449.62 FEET TO AN OLD 5/8” REBAR IRON PIN LOCATED ON THE EASTERN
RIGHT OF WAY OF SONIA DRIVE; THENCE TURNING AND RUNNING ALONG SAID RIGHT OF WAY
N 00-01-56 E 47.48 FEET TO AN OLD 5/8” REBAR IRON PIN LOCATED AT THE SOUTHERN
END OF A SIGHT FLARE AT THE INTERSECTION OF SAID EASTERN RIGHT OF WAY OF SONIA
DRIVE AND THE EASTERN TERMINUS OF THORNBLADE BOULEVARD; THENCE TURNING AND
RUNNING ALONG SAID SIGHT FLARE N 48-42-59 E 33.04 FEET TO AN OLD 5/8” REBAR IRON
PIN LOCATED AT THE NORTHERN END OF SAID SIGHT FLARE ON THE EASTERN TERMINUS OF
THORNBLADE BOULEVARD; THENCE TURNING AND RUNNING ALONG SAID EASTERN RIGHT OF WAY
AND TERMINUS OF THORNBLADE BOULEVARD N 01-36-55 E 57.83 FEET TO THE POINT OF
BEGINNING.

 
A-1-2

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

 

EXHIBIT A-2
 
The Projects
 
Borrower:
RSC Oakleaf Lexington, LLC
   
Name of Facility:
Oakleaf Village at Lexington
   
Address of Land:
800 N. Lake Drive
Lexington, South Carolina  29072
   
Master Tenant:
RSC Lexington, LLC
   
Number of Licensed Beds/Units:
 
a.   Assisted Living
a.   66
b.   Alzheimer’s
b.   24
   
Number of Parking Spaces:
51
   
Legal Description of Land:
 

PARCEL 1:  LEXINGTON COUNTY:
 
All that certain piece, parcel or lot of land with improvements thereon, if any,
situate, lying and being near the Town of Lexington, County of Lexington, State
of South Carolina, as shown and delineated on a plat of 18.08 acres, prepared
for Carolina Senior Development, by Civil Engineering of Columbia, dated July
16, 1998 last revised July 28, 1998, recorded in Plat Slide 401 at Plat No. 6.
 
TOGETHER WITH:
 
All that certain piece, parcel or lot of land with improvements thereon, if any,
situate, lying and being near the Town of Lexington, County of Lexington, State
of South Carolina, shown and delineated as the “PROPOSED 50’ R.O.W. FOR FUTURE
ROADWAY” including the circular area of land designated within the R.O.W.
Easement Curve Table as Curve C1 having an arc distance of 261.80’ and chord
bearing S34°03’17”W together with that “50’ INGRESS/EGRESS EASEMENT FOR
LEXINGTON SENIOR DEVELOPMENT, LLC AND LEXINGTON COUNTY SCHOOL DISTRICT #1”
 
LESS AND EXCEPTING THEREFROM that portion of the “PROPOSED 50’ R.O.W. FOR FUTURE
ROADWAY” including the circular area of land designated within the R.O.W.
Easement Curve Table as Curve Cl having an arc distance of 261.80’ and chord
bearing of S34°03’17”W together with that “50’ INGRESS/EGRESS EASEMENT FOR
LEXINGTON SENIOR DEVELOPMENT, LLC AND LEXINGTON COUNTY SCHOOL DISTRICT #1 which
is a part of the 18.080 acres parcel of land owned by Lexington Senior
Development, L.L.C. all as shown on a plat prepared for Lexington Senior
Development, L.L.C. by Civil Engineering of Columbia, dated August 20, 1998,
last revised October 23,1998. and recorded February 5, 1999 in the Office of the
Register of Deeds for Lexington County in Plat Slide 452 at Plat No.6.

 
A-2-1

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

 
 
ALSO LESS AND EXCEPTING:
 
All that certain piece, parcel, or lot of land. with improvements thereon, lying
and being in the County of Lexington, Town of Lexington, State of South Carolina
and being shown and delineated as 4.88 Acres as shown on a plat prepared by
Carolina Surveying Services Inc., R.L.S. dated July 31,2003, and recorded in the
Register of Deeds Office for Lexington County in Plat Slide 730, Page 4, with
said tract having such metes and bounds as are shown on said plat. The metes and
bounds as shown on said plat are incorporated by reference herein.
 
ALSO:
 
Easement Rights as contained in that certain Reciprocal Easement Agreement by
and between Lexington County School District Number One and Lexington
Development, L.L.C dated 2/4/1999 and recorded 2/5/1999 in the Office of the
Register of Deeds for Lexington County in Record Book 5089, page 254, which
agreement is further identified in Schedule B - Section 2, Exception 13 herein.
 
LESS AND EXCEPTING
 
All that certain piece, parcel. or lot of land that consists of 1.5 acres
located on the southeast side of U.S. Route 378 in the Town of Lexington,
Lexington County, South Carolina.
 
Commencing from the center line intersection of U.S. Rte. 378 with S.C. Rte. 6.
Thence S89°33’08E for a distance of 201.26’ to an old #5 rebar property corner
on the southern R.O.W. of 378 this being the point of beginning.
 
Thence from the point of beginning and in a clockwise direction:
 
S39°41’10”E for a distance of 258.61’ to a new #5 rebar, said line being bounded
on the east by lands of now or formerly P&H Properties of Lexington. LLC.
 
Thence, S39°39’12”E for a distance of 90.61’ to a new #5 rebar.  Said line being
bounded on the east by lands of now or formerly Herndon Chevrolet, Inc.
 
Thence, S50°21’41”W for a distance of 180.02’ to an old #5 rebar.  Said line
being bounded on the east by lands of now or formerly Lexington Senior Care
Development LLC.
 
Thence, N39°41’08”W for a distance of 376.35’ to an old #5 rebar.  Said line
being bounded on the west by lands of now or formerly Lexington Senior Care
Development LLC.
 
Thence, N58°52’07”E for a distance of 108.41’ to an old #5 rebar.  Said line
being the southern R.O.W. of U.S. Rte. 378.
 
Thence, N59°00’45”E for a distance of 73.71’ to an old #5 rebar.  Said line
being the southern R.O.W. of U.S. Rte. 378.  This being the point of beginning.

 
A-2-2

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

 

EXHIBIT B
 
Interest Holder Certificate and Agreement

 
B-1

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

 

EXHIBIT C
 
Intellectual Property
 
None.

 
C-1

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

 

EXHIBIT D
 
Ownership of Borrowers
 
Borrower
 
Owners
 
Percentage
of Ownership
 
RSC Oakleaf Greenville, LLC
 
Royal Cornerstone South Carolina Portfolio, LLC
    100 %
RSC Oakleaf Lexington, LLS
 
Royal Cornerstone South Carolina Portfolio, LLC
    100 %

 
D-1

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

 

EXHIBIT E
 
Provider Payment/Reimbursement Programs
 
[TBD]

 
E-1

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

 

EXHIBIT F
 
Licenses/Governmental Approvals
 
[To be updated]
 
Greenville: License No. CRC-1330 granted to RSC Greenville, L.L.C. effective
November 1, 2005, for the facility known as Oakleaf Village at Thornblade and
located at 1560 Thornblade Boulevard, Greer, Greenville County, South Carolina
 
Lexington: License No. CRC-1329 granted to RSC Lexington, L.L.C. effective
November 1, 2005, for the facility known as Oakleaf Village of Lexington and
located at 800 North Lake Drive, Lexington, Lexington County, South Carolina

 
F-1

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

 

SCHEDULE 2.1
 
Advance Conditions
 
Part A – Conditions to Advance of Loan Proceeds
Part B – Application of Insurance Proceeds
 
PART A
 
CONDITIONS TO ADVANCE OF LOAN PROCEEDS

The advance of the Loan proceeds shall be subject to the terms of the Term
Sheet, and Lender’s receipt, review, approval and/or confirmation of the
following items set forth in Part A of this Schedule 2.1 and in the items
specified in the Term Sheet, at Borrowers’ cost and expense, each in form and
content satisfactory to Lender in its sole discretion:
 
 
1.
Loan Documents.  The Loan Documents executed by Borrowers, any Borrower Party
and/or Operator, as applicable.

 
 
2.
Title Insurance Policy.  An ALTA (or equivalent) mortgagee policy or policies of
title insurance in the maximum amount of the Loan, with reinsurance and
endorsements as Lender may require, containing no exceptions to title (printed
or otherwise) which are unacceptable to Lender, and insuring that the Mortgage
creates a first-priority Lien on the Projects and related collateral (the “Title
Policy”).

 
 
3.
Organizational and Authority Documents.  Certified copies of all documents
evidencing the formation, organization, valid existence, good standing, and due
authorization of and for each Borrower and each Borrower Party for the
execution, delivery, and performance of the Loan Documents and the Environmental
Indemnity Agreement by each Borrower and each Borrower Party, as applicable.

 
 
4.
Legal Opinions.  Legal opinions issued by counsel for Borrowers and each
Borrower Party, opining as to the due organization, valid existence and good
standing of Borrowers and each Borrower Party, and the due authorization,
execution, delivery, enforceability and validity of the Loan Documents and
Environmental Indemnity Agreement with respect to Borrowers and each Borrower
Party; that the Loan, as reflected in the Loan Documents, is not usurious; and
as to such other matters as Lender and Lender’s counsel reasonably may specify,
including, with limitation, non-consolidation opinions.

 
 
5.
Searches.  Current Uniform Commercial Code, tax, judgment lien and litigation
searches for Borrowers and each Borrower Party, and the immediately preceding
owner of the Projects.

 
 
6.
Insurance.  Evidence of insurance as required by this Agreement, and conforming
in all respects to the requirements of Lender.

 
Schedule 2.1-1

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

 
 
 
7.
Survey.  Three (3) originals of a current “as built” survey of each Project,
dated or updated to a date not earlier than forty-five (45) days prior to the
Closing Date, prepared by a registered land surveyor in accordance with the
American Land Title Association American Congress on Surveying and Mapping
Standards and containing Lender’s approved form of certification in favor of
Lender and the title insurer (collectively, the “Survey”).  The Survey shall
conform to Lender’s current survey requirements and shall be sufficient for the
title insurer to remove the general survey exception.

 
 
8.
Property Condition Report.  A current engineering report or architect’s
certificate with respect to each Project, covering, among other matters,
inspection of heating and cooling systems, roof and structural details and
showing no failure of compliance with building plans and specifications,
applicable legal requirements (including requirements of the Americans with
Disabilities Act) and fire, safety and health standards (the “Property Condition
Report,” whether one or more).  As requested by Lender, the Property Condition
Report shall also include an assessment of each Project’s tolerance for
earthquake and seismic activity.

 
 
9.
Environmental Reports.  A current Site Assessment (as defined in the
Environmental Indemnity Agreement) for each Project.

 
 
10.
Rent Roll.  A current rent roll or census report for each Project, certified by
Borrowers or the current owner of each Project.  Such rent roll and/or census
report shall include such information as reasonably required by Lender.

 
 
11.
Operating Agreements.  A copy of each fully executed Operating Agreement in form
and substance satisfactory to Lender, certified by Borrowers as being true,
correct and complete.

 
 
12.
Tax and Insurance Impounds.  Borrowers’ deposit with Lender of the amount
required under this Agreement to impound for taxes and assessments, insurance
premiums and to fund any other required escrows or reserves.

 
 
13.
Compliance With Laws.  Evidence that each Project and the operation thereof
comply with all legal requirements, including that all requisite certificates of
occupancy, building permits, and other licenses, certificates, approvals or
consents required of any governmental authority have been issued without
variance or condition and that there is no litigation, action, citation,
injunctive proceedings, or like matter pending or threatened with respect to the
validity of such matters.  If title insurance with respect to the Projects
described in item 3 above does not include a Zoning 3.1 (with parking)
endorsement because such an endorsement is not available in the state where each
Project is located, then Borrowers shall furnish to Lender a zoning letter from
the applicable municipal agency with respect to such Project or a zoning report
that verifies the zoning classification of each Project and such Project’s
compliance with such zoning classification.

 
Schedule 2.1-2
 
 
 

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

 
 
 
14.
No Casualty or Condemnation.  No condemnation or adverse zoning or usage change
proceeding shall have occurred or shall have been threatened against any
Project; no Project shall have suffered any significant damage by fire or other
casualty which has not been repaired; no law, regulation, ordinance, moratorium,
injunctive proceeding, restriction, litigation, action, citation or similar
proceeding or matter shall have been enacted, adopted, or threatened by any
governmental authority, which would have, in Lender’s judgment, a material
adverse effect on Borrowers, any Borrower Party or the Projects.

 
 
15.
Broker’s Fees.  All fees and commissions payable to real estate brokers,
mortgage brokers, or any other brokers or lenders in connection with the Loan or
the acquisition of the Projects have been paid, such evidence to be accompanied
by any waivers or indemnifications deemed necessary by Lender.

 
 
16.
Costs and Expenses.  Payment of Lender’s costs and expenses in underwriting,
documenting, and closing the transaction, including fees and expenses of
Lender’s inspecting engineers, consultants and counsel.

 
 
17.
Representations and Warranties.  The representations and warranties contained in
this Loan Agreement and in all other Loan Documents and Environmental Indemnity
Agreement are true and correct.

 
 
18.
No Defaults.  No Potential Default or Event of Default or default shall have
occurred or exist.

 
 
19.
Appraisal.  Lender shall obtain an appraisal report for each Project, in form
and content acceptable to Lender, prepared by an independent MAI appraiser in
accordance with the Financial Institutions Reform, Recovery and Enforcement Act
(“FIRREA”) and the regulations promulgated pursuant to such act.

 
 
20.
Management.  The Operator and any Operating Agreement for the Projects shall be
satisfactory to Lender in its sole discretion.

 
 
21.
Audit Requirement.  The annualized Net Operating Income of the Projects equals
or exceeds $2,400,000.00 for the trailing twelve (12) months period ending March
31, 2010.

 
 
22.
Other Items.  Lender shall have received such other items as Lender may
reasonably require.

 
Schedule 2.1-3
 
 
 

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

 
 
PART B

 
APPLICATION OF INSURANCE PROCEEDS
 
Insurance proceeds applied to restoration will be advanced in accordance with
‎Section 3.2 and on the following terms and conditions:
 
1.           Each request for such an advance shall specify the amount
requested, shall be on forms satisfactory to Agent, and shall be accompanied by
appropriate invoices, bills paid affidavits, lien waivers, title updates,
endorsements to the title insurance, and other documents as may be required by
Agent.  Such advances may be made, at Agent’s election, either: (a) in
reimbursement for expenses paid by Borrowers, or (b) for payment of expenses
incurred and invoiced but not yet paid by Borrowers, or (c) with respect to
non-residential tenant restorations, by funding allowances for tenant
improvements undertaken to be constructed by non-residential tenants and
completed in accordance with Leases.  Agent, at its option and without further
direction from Borrowers, may disburse any restorations advance to the Person to
whom payment is due or through an escrow satisfactory to Agent.  Borrowers
hereby irrevocably directs and authorizes Agent to so advance the insurance
proceeds.  Agent may, at Borrowers’ expense, conduct an audit, inspection, or
review of the Projects to confirm the amount of the requested restoration
advance.
 
2.           Borrowers shall have submitted and Agent shall have approved (a)
the restorations to be completed, (b) the plans and specifications for such
restorations, which plans and specifications may not be changed without Agent’s
prior written consent, and (c) if requested by Agent, each contract or
subcontract for an amount in excess of Fifty Thousand Dollars ($50,000.00) for
the performance of labor or the furnishing of materials for such restorations.
 
3.           Borrowers shall have submitted and Agent shall have approved the
time schedule for completing the restorations.  After Agent’s approval of a
detailed budget, such budget may not be changed without Agent’s prior written
consent.  If the estimated cost of such restorations exceeds the unadvanced
portion of the amount allocated for such restorations in the approved budget,
then Borrowers shall provide such security as Agent may require to assure the
lien free completion of restorations before the scheduled completion date.
 
4.           All restorations constructed by Borrowers prior to the date any
restorations advance is requested shall be completed to the satisfaction of
Agent and Agent’s engineer and in accordance with the plans and budget for such
restorations, as approved by Agent, and all legal requirements.
 
5.           Borrowers shall not use any portion of any restorations advance for
payment of any other cost except as specifically set forth in a request for
advance approved by Agent in writing.
 
Schedule 2.1-4
 
 
 

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

 
 
6.           Each restorations advance, except for a final restorations advance,
shall be in the amount of actual costs incurred less ten percent (10%) of such
costs as retainage to be advanced as part of a final restorations advance.
 
7.           Agent shall not under any circumstances be obligated to make any
restorations advance after nine (9) months after the casualty or ninety (90)
days prior to the Maturity Date.
 
8.           No funds will be advanced for materials stored at the Projects
unless Borrowers furnish Agent satisfactory evidence that such materials are
properly stored and secured at the Projects.
 
9.           Borrowers shall have delivered evidence satisfactory to Agent, in
its sole discretion, that the amount remaining to be disbursed for such
restorations is sufficient to complete the restorations or, if insufficient,
Borrowers shall have deposited with Agent funds necessary to complete the
restorations (Borrowers’ deposit to be disbursed before any balance of the
additional advance).
 
Schedule 2.1-5
 
 
 

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

 

SCHEDULE 2.3

Payment Schedule

Part 1
 

   
Closing Date
4/30/2010
LIBOR Rate
1.000%
     
End of Accrual
Date
5/1/2010
Spread
5.450%
     
First Payment
Date
6/1/2010
Coupon Rate
6.450%
     
Original
Balance
$5,098,012
Int Conv
Actual/360
     
Maturity Date
4/30/2015
Int Only
Period
0
Months
   
Sub-Interest
Accrual
$913.39
Amort Period
360
Months
       
Fixed/Float
Floating
 

Annual Summary
 
Days
   
Ending
Balance
   
Principal
   
Prepayment
   
Balloon
Amount
     
Year 1
    365       5,041,456.81       56,555       0       0      
Year 2
    366       4,981,090.26       60,367       0       0      
Year 3
    365       4,916,655.49       64,435       0       0      
Year 4
    365       4,847,878.32       68,777       0       0      
Year 5
    364       0.00       73,412       4,774,466       4,774,466      
Year 6
    0       0.00       0       0       0      
Year 7
    0       0.00       0       0       0      
Year 8
    0       0.00       0       0       0      
Year 9
    0       0.00       0       0       0      
Year 10
    0       0.00       0       0       0                                        
       
Period
 
Date
 
Days
   
Ending
Balance
   
Principal
   
Prepayment
   
Balloon
Amount
 
0
 
4/30/2010
            5,098,012.00                          
1
 
6/1/2010
    31       5,093,438.67       4,573.33       0.00       0.00  
2
 
7/1/2010
    30       5,088,840.41       4,598.26       0.00       0.00  
3
 
8/1/2010
    31       5,084,217.09       4,623.32       0.00       0.00  
4
 
9/1/2010
    31       5,079,568.58       4,648.51       0.00       0.00  
5
 
10/1/2010
    30       5,074,894.74       4,673.84       0.00       0.00  
6
 
11/1/2010
    31       5,070,195.42       4,699.32       0.00       0.00  
7
 
12/1/2010
    30       5,065,470.50       4,724.92       0.00       0.00  
8
 
1/1/2011
    31       5,060,719.82       4,750.67       0.00       0.00  
9
 
2/1/2011
    31       5,055,943.26       4,776.56       0.00       0.00  
10
 
3/1/2011
    28       5,051,140.66       4,802.59       0.00       0.00  
11
 
4/1/2011
    31       5,046,311.90       4,828.77       0.00       0.00  
12
 
5/1/2011
    30       5,041,456.81       4,855.08       0.00       0.00  
13
 
6/1/2011
    31       5,036,575.27       4,881.54       0.00       0.00  
14
 
7/1/2011
    30       5,031,667.13       4,908.14       0.00       0.00  
15
 
8/1/2011
    31       5,026,732.24       4,934.89       0.00       0.00  
16
 
9/1/2011
    31       5,021,770.46       4,961.78       0.00       0.00  
17
 
10/1/2011
    30       5,016,781.63       4,988.82       0.00       0.00  
18
 
11/1/2011
    31       5,011,765.62       5,016.01       0.00       0.00  
19
 
12/1/2011
    30       5,006,722.27       5,043.35       0.00       0.00  
20
 
1/1/2012
    31       5,001,651.44       5,070.83       0.00       0.00  
21
 
2/1/2012
    31       4,996,552.98       5,098.47       0.00       0.00  
22
 
3/1/2012
    29       4,991,426.72       5,126.25       0.00       0.00  
23
 
4/1/2012
    31       4,986,272.54       5,154.19       0.00       0.00  
24
 
5/1/2012
    30       4,981,090.26       5,182.28       0.00       0.00  
25
 
6/1/2012
    31       4,975,879.75       5,210.52       0.00       0.00  
26
 
7/1/2012
    30       4,970,640.83       5,238.91       0.00       0.00  
27
 
8/1/2012
    31       4,965,373.37       5,267.46       0.00       0.00  
28
 
9/1/2012
    31       4,960,077.20       5,296.17       0.00       0.00  
29
 
10/1/2012
    30       4,954,752.17       5,325.03       0.00       0.00  
30
 
11/1/2012
    31       4,949,398.12       5,354.05       0.00       0.00  
31
 
12/1/2012
    30       4,944,014.89       5,383.23       0.00       0.00  
32
 
1/1/2013
    31       4,938,602.33       5,412.57       0.00       0.00  
33
 
2/1/2013
    31       4,933,160.26       5,442.06       0.00       0.00  
34
 
3/1/2013
    28       4,927,688.54       5,471.72       0.00       0.00  
35
 
4/1/2013
    31       4,922,187.01       5,501.54       0.00       0.00  
36
 
5/1/2013
    30       4,916,655.49       5,531.52       0.00       0.00  
37
 
6/1/2013
    31       4,911,093.82       5,561.66       0.00       0.00  
38
 
7/1/2013
    30       4,905,501.85       5,591.97       0.00       0.00  
39
 
8/1/2013
    31       4,899,879.40       5,622.45       0.00       0.00  
40
 
9/1/2013
    31       4,894,226.31       5,653.09       0.00       0.00  
41
 
10/1/2013
    30       4,888,542.42       5,683.90       0.00       0.00  
42
 
11/1/2013
    31       4,882,827.55       5,714.87       0.00       0.00  
43
 
12/1/2013
    30       4,877,081.53       5,746.01       0.00       0.00  
44
 
1/1/2014
    31       4,871,304.20       5,777.33       0.00       0.00  
45
 
2/1/2014
    31       4,865,495.39       5,808.81       0.00       0.00  
46
 
3/1/2014
    28       4,859,654.92       5,840.47       0.00       0.00  
47
 
4/1/2014
    31       4,853,782.62       5,872.30       0.00       0.00  
48
 
5/1/2014
    30       4,847,878.32       5,904.30       0.00       0.00  
49
 
6/1/2014
    31       4,841,941.85       5,936.48       0.00       0.00  
50
 
7/1/2014
    30       4,835,973.02       5,968.83       0.00       0.00  
51
 
8/1/2014
    31       4,829,971.67       6,001.36       0.00       0.00  
52
 
9/1/2014
    31       4,823,937.60       6,034.06       0.00       0.00  
53
 
10/1/2014
    30       4,817,870.66       6,066.94       0.00       0.00  
54
 
11/1/2014
    31       4,811,770.65       6,100.01       0.00       0.00  
55
 
12/1/2014
    30       4,805,637.40       6,133.25       0.00       0.00  
56
 
1/1/2015
    31       4,799,470.73       6,166.67       0.00       0.00  
57
 
2/1/2015
    31       4,793,270.45       6,200.28       0.00       0.00  
58
 
3/1/2015
    28       4,787,036.38       6,234.07       0.00       0.00  
59
 
4/1/2015
    31       4,780,768.33       6,268.04       0.00       0.00  
60
 
4/30/2015
    29       0.00       6,302.20       4,774,466.13       4,774,466.13  

 
Schedule 2.3
 
 
 

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

 

Payment Schedule

Part 2
 

   
Closing Date
4/30/2010
LIBOR Rate
0.000%
     
End of Accrual
Date
4/12/2010
Spread
6.620%
     
First Payment
Date
6/1/2010
Coupon Rate
6.620%
     
Original Balance
$12,901,988
Int Conv
Actual/360
     
Maturity Date
1/9/2011
Int Only
Period
0
Months
   
Sub-Interest
Accrual
$42,705.58
Amort Period
300
Months
       
Fixed/Float
Fixed
 

 
Annual Summary
 
Days
   
Ending
Balance
   
Principal
   
Prepayment
   
Balloon
Amount
     
Year 1
    253       0.00       153,403       12,748,585       12,766,012      
Year 2
    0       0.00       0       0       0      
Year 3
    0       0.00       0       0       0      
7Year 4
    0       0.00       0       0       0      
Year 5
    0       0.00       0       0       0      
Year 6
    0       0.00       0       0       0      
Year 7
    0       0.00       0       0       0      
Year 8
    0       0.00       0       0       0      
Year 9
    0       0.00       0       0       0      
Year 10
    0       0.00       0       0       0                                        
       
Period
 
Date
 
Days
   
Ending
Balance
   
Principal
   
Prepayment
   
Balloon
Amount
 
0
 
4/30/2010
            12,901,988.00                          
1
 
6/1/2010
    31       12,885,321.00       16,667.00       0.00       0.00  
2
 
7/1/2010
    30       12,868,560.77       16,760.22       0.00       0.00  
3
 
8/1/2010
    31       12,851,706.81       16,853.97       0.00       0.00  
4
 
9/1/2010
    31       12,834,758.57       16,948.24       0.00       0.00  
5
 
10/1/2010
    30       12,817,715.53       17,043.03       0.00       0.00  
6
 
11/1/2010
    31       12,800,577.17       17,138.36       0.00       0.00  
7
 
12/1/2010
    30       12,783,342.95       17,234.22       0.00       0.00  
8
 
1/1/2011
    31       12,766,012.34       17,330.62       0.00       0.00  

 
Schedule 2.3
 
 
 

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

 

Payment Schedule

Part 3
 

   
Closing Date
1/9/2011
LIBOR Rate
1.000%
     
End of Accrual
Date
1/9/2011
Spread
5.450%
     
First Payment
Date
2/1/2011
Coupon Rate
6.450%
     
Original Balance
$12,766,012
Int Conv
Actual/360
     
Maturity Date
4/30/2015
Int Only
Period
0
Months
   
Sub-Interest
Accrual
$0.00
Amort Period
360
Months
       
Fixed/Float
Floating
 

 
Annual Summary
 
Days
   
Ending
Balance
   
Principal
   
Prepayment
   
Balloon
Amount
     
Year 1
    365       12,624,391.60       141,621       0       0      
Year 2
    366       12,473,226.77       151,165       0       0      
Year 3
    365       12,311,874.63       161,352       0       0      
Year 4
    365       12,139,648.65       172,226       0       0      
Year 5
    119       0.00       59,950       12,079,698       12,079,698      
Year 6
    0       0.00       0       0       0      
Year 7
    0       0.00       0       0       0      
Year 8
    0       0.00       0       0       0      
Year 9
    0       0.00       0       0       0      
Year 10
    0       0.00       0       0       0                                        
       
Period
 
Date
 
Days
   
Ending
Balance
   
Principal
   
Prepayment
   
Balloon
Amount
 
0
 
1/9/2011
            12,766,012.34                          
1
 
2/1/2011
    31       12,754,560.18       11,452.16       0.00       0.00  
2
 
3/1/2011
    28       12,743,045.61       11,514.57       0.00       0.00  
3
 
4/1/2011
    31       12,731,468.29       11,577.32       0.00       0.00  
4
 
5/1/2011
    30       12,719,827.88       11,640.41       0.00       0.00  
5
 
6/1/2011
    31       12,708,124.03       11,703.85       0.00       0.00  
6
 
7/1/2011
    30       12,696,356.40       11,767.63       0.00       0.00  
7
 
8/1/2011
    31       12,684,524.64       11,831.76       0.00       0.00  
8
 
9/1/2011
    31       12,672,628.40       11,896.24       0.00       0.00  
9
 
10/1/2011
    30       12,660,667.33       11,961.07       0.00       0.00  
10
 
11/1/2011
    31       12,648,641.08       12,026.25       0.00       0.00  
11
 
12/1/2011
    30       12,636,549.29       12,091.79       0.00       0.00  
12
 
1/1/2012
    31       12,624,391.60       12,157.69       0.00       0.00  
13
 
2/1/2012
    31       12,612,167.66       12,223.94       0.00       0.00  
14
 
3/1/2012
    29       12,599,877.10       12,290.56       0.00       0.00  
15
 
4/1/2012
    31       12,587,519.56       12,357.54       0.00       0.00  
16
 
5/1/2012
    30       12,575,094.68       12,424.88       0.00       0.00  
17
 
6/1/2012
    31       12,562,602.09       12,492.59       0.00       0.00  
18
 
7/1/2012
    30       12,550,041.41       12,560.67       0.00       0.00  
19
 
8/1/2012
    31       12,537,412.29       12,629.13       0.00       0.00  
20
 
9/1/2012
    31       12,524,714.34       12,697.95       0.00       0.00  
21
 
10/1/2012
    30       12,511,947.19       12,767.15       0.00       0.00  
22
 
11/1/2012
    31       12,499,110.46       12,836.73       0.00       0.00  
23
 
12/1/2012
    30       12,486,203.78       12,906.68       0.00       0.00  
24
 
1/1/2013
    31       12,473,226.77       12,977.02       0.00       0.00  
25
 
2/1/2013
    31       12,460,179.03       13,047.74       0.00       0.00  
26
 
3/1/2013
    28       12,447,060.18       13,118.84       0.00       0.00  
27
 
4/1/2013
    31       12,433,869.85       13,190.34       0.00       0.00  
28
 
5/1/2013
    30       12,420,607.63       13,262.22       0.00       0.00  
29
 
6/1/2013
    31       12,407,273.13       13,334.49       0.00       0.00  
30
 
7/1/2013
    30       12,393,865.97       13,407.16       0.00       0.00  
31
 
8/1/2013
    31       12,380,385.74       13,480.23       0.00       0.00  
32
 
9/1/2013
    31       12,366,832.05       13,553.69       0.00       0.00  
33
 
10/1/2013
    30       12,353,204.50       13,627.55       0.00       0.00  
34
 
11/1/2013
    31       12,339,502.68       13,701.82       0.00       0.00  
35
 
12/1/2013
    30       12,325,726.19       13,776.49       0.00       0.00  
36
 
1/1/2014
    31       12,311,874.63       13,851.57       0.00       0.00  
37
 
2/1/2014
    31       12,297,947.58       13,927.05       0.00       0.00  
38
 
3/1/2014
    28       12,283,944.63       14,002.95       0.00       0.00  
39
 
4/1/2014
    31       12,269,865.37       14,079.26       0.00       0.00  
40
 
5/1/2014
    30       12,255,709.38       14,155.99       0.00       0.00  
41
 
6/1/2014
    31       12,241,476.25       14,233.13       0.00       0.00  
42
 
7/1/2014
    30       12,227,165.55       14,310.70       0.00       0.00  
43
 
8/1/2014
    31       12,212,776.86       14,388.69       0.00       0.00  
44
 
9/1/2014
    31       12,198,309.76       14,467.10       0.00       0.00  
45
 
10/1/2014
    30       12,183,763.82       14,545.94       0.00       0.00  
46
 
11/1/2014
    31       12,169,138.61       14,625.21       0.00       0.00  
47
 
12/1/2014
    30       12,154,433.70       14,704.91       0.00       0.00  
48
 
1/1/2015
    31       12,139,648.65       14,785.05       0.00       0.00  
49
 
2/1/2015
    31       12,124,783.03       14,865.62       0.00       0.00  
50
 
3/1/2015
    28       12,109,836.39       14,946.64       0.00       0.00  
51
 
4/1/2015
    31       12,094,808.30       15,028.09       0.00       0.00  
52
 
4/30/2015
    29       0.00       15,109.99       12,079,698.31       12,079,698.31  

 
Schedule 2.3
 
 
 

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

 

SCHEDULE 2.10

Sources and Uses

[To be provided]

 
Schedule 2.10-1
 
 
 

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

 

SCHEDULE 7.2

COMPLIANCE CERTIFICATE

Compliance Certificate

Date: ________________, ______

General Electric Capital Corporation
500 West Monroe Street
Chicago, Illinois  60661
Attention:           Michelle R. Kelly

Re: Compliance Certificate – Loan Nos. 07-0004226 and 07-0014226

Ladies and Gentlemen:

This certificate is given in accordance with Section 7.2 and Section 9.10 of the
Amended and Restated Loan Agreement dated as of April 30, 2010 (as amended from
time to time, the “Loan Agreement”), among RSC Oakleaf Greenville, LLC and RSC
Oakleaf Lexington, LLC, each a Florida limited liability company  (each a
“Borrower” and collectively, the “Borrowers”) and General Electric Capital
Corporation (“Lender”).  Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to them in the Loan Agreement.

I hereby certify that:

 
1.
I am an officer of the Managing Member of each Borrower, and

 
2.
Based on my review of the financial statements delivered with this certificate
in accordance with the Section 6.1 of the Loan Agreement, such (a) financial
statements fairly present the financial condition of the Borrowers as the dates
of such financial statements in all material respects and (b) have been prepared
in accordance with GAAP consistently applied.  There have been no material
changes in accounting policies or financial reporting practices of any Borrower
since ____________, 200_ [insert date of last year-end financial statement
provided by Borrowers], or, if any such change has occurred, I have attached a
description of such changes.

3.  
I have reviewed the terms of the Loan Agreement and have made, or caused to be
made under my supervision, a review in reasonable detail of the transactions and
condition of the Borrowers during the accounting period covered by such
financial statements.

LOAN AGREEMENT – Schedule 7.2 – Page 2

 
 

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

 

 
4.
Such review has not disclosed the existence during or at the end of such
accounting period, and I have no knowledge whether arising out of such review or
otherwise, of the existence during or at the end of such accounting period or as
of the date hereof, of any condition or event that constitutes a Potential
Default or an Event of Default, or if any Potential Default or Event or Default
existed or exists, attached as Schedule 1 hereto is a description of the nature
and period of existence thereof and what action Borrowers have taken or propose
to take with respect thereto.

 
5.
Cornerstone Principal is in compliance with the covenants contained in the
Agreement of Principal constituting a part of the Loan Documents except as set
forth in Schedule 4 attached hereto.

 
6.
Except as noted on Schedule 2 attached hereto, the undersigned has no knowledge
of any federal or state tax liens having been filed against any Borrower, any
Master Tenant or all or any portion of the Project.

 
7.
Except as noted on Schedule 2 attached hereto, the undersigned has no knowledge
of any failure of any Borrower or any Master Tenant to make required payments of
withholding or other tax obligations of such Borrower or any Master Tenant
during the accounting period to which the attached statements pertain or any
subsequent period.

 
8.
If the Loan Agreement contemplates payments into a lockbox or restricted
account, or directly to Lender, Borrowers and any Master Tenant (as required
under the Loan Agreement or in the Loan Documents) have directed all of its
account debtors, residents and/or lessees, as applicable, to make payments into
such account or to Lender.

 
9.
If the Loan Agreement contemplates a lien on the deposit accounts of the
Borrowers in favor of Lender, Schedule 3 attached hereto contains a complete and
accurate statement of all deposit or investment accounts maintained by Borrowers
or any Master Tenant .

10.
With respect to each of the Projects:

 
(a)
there are no current, pending or threatened proceedings relating to a
condemnation or other public taking of the Project;

 
(b)
the Project has suffered no casualty or other damage or loss of the type
typically covered by hazard insurance;

 
(c)
all insurance required to be maintained by Borrowers, Guarantor or any Operator
under the Loan Agreement is in force;

 
(d)
all real estate taxes or other assessments pertaining to the Project have been
paid as and when due;

 
(e)  
the undersigned has no knowledge of any current, pending or threatened changes
to the zoning classification or permitted uses of the Project; and

LOAN AGREEMENT – Schedule 7.2 – Page 3

 
 

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

 
 
11.
All of the other covenants (i.e., those not specifically described in the prior
paragraphs above) set forth in the Loan Agreement and Security Documents are
fully performed and the representations and warranties set forth in the Loan
Agreement and Security Documents are and remain true, correct, and complete
(except as set forth on Schedule 4 attached hereto).

12.
Except as set forth in the Loan Agreement or on Schedule 5 attached hereto, no
Borrower has received (a) any notice of default under other obligations relating
to the Project or otherwise material to such Borrower’s business, including any
notices of violations of any laws, regulations, codes or ordinances; (b) any
notice of threatened or pending legal, judicial or regulatory proceedings,
including any dispute between any Borrower and any governmental authority,
materially adversely affecting any Borrower or any Project; (c) inquiries,
investigations or proceedings concerning the business affairs, practices,
licensing or reimbursement entitlements of any Borrower, Principal or any Master
Tenant; (d) any notice of default or termination given or made to any Master
Tenant by any Borrower or received from any Master Tenant; and (e) any notice of
default or termination under any license or permit necessary for the operation
of any Project in the manner required by the Loan Agreement.  If any such
notices have been received, they are listed on Schedule 5 and Borrowers have
provided (or are providing concurrently with this Certificate) Lender with
copies of such notices referred to herein.

13.
The calculations set forth on Schedule 6 have been made to determine Borrowers’
compliance with Section 7.25 of the Loan Agreement, which calculations are true,
correct, and complete.

LOAN AGREEMENT – Schedule 7.2 – Page 4

 
 

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

 

The forgoing certification and computations are made as of _____________, 20___
and delivered this _____day of _____________, 20___.
 
Sincerely,
 
BORROWERS:
 
RSC OAKLEAF GREENVILLE, LLC,    
a Florida limited liability company
       
By: 
Royal Cornerstone South Carolina
Portfolio, LLC, a Delaware limited
liability company, its sole member
   
By:
Cornerstone Oakleaf Village, LLC, its
Managing Member
         
By: 
     
Name:
     
Title:
 

 
RSC OAKLEAF LEXINGTON, LLC,
a Florida limited liability company
       
By: 
Royal Cornerstone South Carolina
Portfolio, LLC, a Delaware limited
liability company, its sole member
       
By:
Cornerstone Oakleaf Village, LLC, its
Managing Member
         
By: 
       
Name:
     
Title:
 

 
LOAN AGREEMENT – Schedule 7.2 – Page 5
 
 
 

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

 
 
SCHEDULE 1

Description of Defaults or Potential
Defaults and Cures Being Undertaken

LOAN AGREEMENT – Schedule 7.2 – Page 6

 
 

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

 

SCHEDULE 2

Tax Liens or Withholding Obligations

LOAN AGREEMENT – Schedule 7.2 – Page 7
 
 
 

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

 
 
SCHEDULE 3

List of all Deposit Accounts

LOAN AGREEMENT – Schedule 7.2 – Page 8
 
 
 

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

 

SCHEDULE 4

Exceptions to Covenant Compliance

LOAN AGREEMENT – Schedule 7.2 – Page 9
 
 
 

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

 

Schedule 5

Schedule of Notices of Default, Litigation, etc.

LOAN AGREEMENT – Schedule 7.2 – Page 10
 
 
 

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

 
 
Schedule 6

Financial Covenant Analysis

As of: ____________ __, 20__
 
A.   NET OPERATING INCOME1 (“NOI”):
 
(1)  Name of Borrower:
(1)                                              
   
(a)   Calculation Period:
(a) Trailing 12 months
   
(b)   Revenue:
(b)  $                                            
   
(c)   Less Expenses:
(including real estate tax, management fee of not less than 5% of effective
gross income regardless of whether paid (or actual if higher)) & replacement
reserve of $360 per licensed bed/unit)
(c)  $                                            
   
(d)   Net Operating Income:
(d)  $                                            
   
(2)  Name of Borrower:
(2)                                               
   
(a)   Calculation Period:
(a) Trailing _____ months
   
(b)   Revenue:
(b)  $                                            
   
(c)   Less Expenses:
(including real estate tax, management fee of not less than 5% of effective
gross income regardless of whether paid (or actual if higher)) & replacement
reserve of $360 per licensed bed/unit)
(c)  $                                             
   
(d)   Net Operating Income:
(d)  $                                            
   
(3)  Aggregate NOI for all Borrowers:
(3)  $                                            

 

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

1 A separate calculation of Net Operating Income for each Borrower is to be
provided.
 
LOAN AGREEMENT – Schedule 7.2 – Page 1
 
 
 

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

 

B.  DEBT SERVICE OF BORROWERS:
 
(1)  Calculation Period:
(1)  Trailing 12 months
   
(2)  Debt Service Calculation:
(2)
   
(a)  Interest Expense
(a)  $                                    
   
(b)  Scheduled amortization of principal
(b)  $                                    
   
(c)  Other Payments on Permitted Debt
(c)  $                                    
   
(d)  Total Debt Service
(d)  $                                    
   
(3)  Debt Service Coverage Ratio (Aggregate NOI/Debt Service):
(3)                         :1.00
   
(4)  Required minimum Debt Service Coverage pursuant to Section 7.25:
(4)                  1.30:1.00
   
(5)  In Compliance:
(5)  ¨ Yes            ¨  No
   
C.  AVERAGE OCCUPANCY RATE:
 
(1)  Calculation Period:
(1)  Trailing 3 months
   
(2)  Average Occupancy Rate for Calculation Period:
(2)  _______%
   
(a)  Aggregate [Borrower Name]:
(a)  _______%
   
(b)  [Borrower Name]:
(b)  _______%
   
(3)  Initial Occupancy Rate:
(3)  _______%
   
(4)  Required Minimum Occupancy Rate (80% of (3) above):
(4)  _______%
   
(5)  In Compliance:
(5)  ¨ Yes                ¨  No

 
LOAN AGREEMENT – Schedule 7.2 – Page 2
 
 
 

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D.   PROJECT YIELD:
 
(1)  Calculation Period:
(2)  Trailing _____ months
   
(2)  Aggregate NOI:
(2)  $                                    
   
(3)  Outstanding principal balance of Loan:
(3)  $                                    
   
(4)  Project Yield for Calculation Period (NOI ¸ Principal Balance of Loan:
(4)  $                                    
   
(5)  Required Project Yield:
(5)  11%
   
(6)  In Compliance:
(6)  ¨ Yes        ¨  No

LOAN AGREEMENT – Schedule 7.2 – Page 3

 
 

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SCHEDULE I
 
Certain Definitions
 
As used herein, the following terms have the meanings indicated:
 
“Account Bank” has the meaning assigned to such term in ‎Section 10.3.
 
“Acceptance Notice” has the meaning assigned to such term in Error! Reference
source not found..
 
“Adjusted Actual Rent” has the meaning assigned to such term in Schedule II.
 
“Affiliate” means (a) any corporation in which any Borrower or any partner,
shareholder, director, officer, member, or manager of any Borrower or any Loan
Party directly or indirectly owns or controls more than ten percent (10%) of the
beneficial interest, (b) any general or limited partnership, joint venture,
limited liability company or limited liability partnership in which any Borrower
or any partner, shareholder, director, officer, member, or manager of any
Borrower is a partner, joint venturer or member, (c) any trust as to which any
Borrower or any partner, shareholder, director, officer, member or manager of
any Borrower is a trustee or beneficiary, (d) any entity of any type which is
directly or indirectly owned or controlled by any Borrower or any partner,
shareholder, director, officer, member or manager of any Borrower or by any Loan
Party, (e) any partner, shareholder, director, officer, member, manager or
employee of any Borrower or any Loan Party, (f) any Person related by birth,
adoption or marriage to any partner, shareholder, director, officer, member,
manager, or employee of any Borrower or any Loan Party, (g) any Loan Party, (h)
any Person which owns or controls, directly or indirectly, more than ten percent
(10%) of the beneficial interests of any Borrower or any Loan Party or (i) any
entity of which more than ten percent (10%) of the beneficial interests are
owned or controlled, directly or indirectly, by an Affiliate as defined in
clauses (a) through (h).
 
“Agent” has the meaning assigned to such term in the introductory paragraph of
this Agreement.
 
“Agreement” means this Loan Agreement, as amended from time to time.
 
“Agreement of Principal” means that certain Agreement of Principal dated as of
the date hereof by the Cornerstone Principal in favor of Agent on behalf of the
Lenders, as the same may be amended, restated, supplemented or modified from
time to time.
 
“Anti-Money Laundering Laws” means those laws, regulations and sanctions, state
and federal, criminal and civil, that (a) limit the use of and/or seek the
forfeiture of proceeds from illegal transactions; (b) limit commercial
transactions with designated countries or individuals believed to be terrorists,
narcotics dealers or otherwise engaged in activities contrary to the interests
of the United States; (c) require identification and documentation of the
parties with whom a Financial Institution conducts business; or (d) are designed
to disrupt the flow of funds to terrorist organizations.  Such laws, regulations
and sanctions shall be deemed to include the Patriot Act, the Bank Secrecy Act,
the Trading with the Enemy Act, 50 U.S.C. App. Section 1, et seq., the
International Emergency Economic Powers Act, 50 U.S.C. Section 1701, et seq.,
and the sanction regulations promulgated pursuant thereto by the OFAC, as well
as laws relating to prevention and detection of money laundering in 18 U.S.C.
Sections 1956 and 1957.
 
LOAN AGREEMENT – Schedule I – Page 1

 
 

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“Approved Bank Account” shall mean an account maintained at a bank reasonably
approved by Agent, as to which account, Borrowers, Master Tenants, as
applicable, said bank and Agent shall have entered into an agreement in form and
substance reasonably acceptable to Agent to ensure Agent that Agent has
“control” of such account as such term is defined in the Uniform Commercial Code
as in effect in the applicable state and as to a Borrower’s right, title and
interest in such amounts in such account Agent has a perfected first security
interest (all costs and expenses of negotiating, documenting and maintaining
such bank account, agreement and perfected security interest shall be paid for
by Borrowers).
 
“Bankruptcy Party” shall have the meaning assigned to such term in Section 8.7.
 
“Bank Secrecy Act” means the Bank Secrecy Act, 31 U.S.C. Section 5311, et seq.
 
“Borrower” and “Borrowers” have the meaning assigned to such terms in the
introductory paragraph of this Agreement.
 
“Borrower Anti-Terrorism Policies” has the meaning assigned to such term in
Section 7.20(c).
 
“Borrower Formation Documents” has the meaning assigned to such term in Section
5.4.
 
“Business Day” means a day other than a Saturday, a Sunday, or a legal holiday
on which national banks located in the States of South Carolina or Illinois are
not open for general banking business.
 
“BSA” means the Bank Secrecy Act, 31 U.S.C. Section 5311, et seq.
 
“Charges” has the meaning assigned to such term in Section 7.3.
 
“Collateral” has the meaning assigned to such term in Section 2.4.
 
“Compliance Certificate” means the compliance certificate in the form of
Schedule 7.2 attached hereto.
 
“CON” has the meaning assigned to such term in Section 8.1(c).
 
“Contract Rate” has the meaning assigned in Section 2.2.
 
“Control” or “controls”:  When used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contractor or otherwise; and the terms “Controlling”
and “Controlled” have the meaning correlative to the foregoing.
 
LOAN AGREEMENT – Schedule I – Page 2
 
 
 

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“Controlling Interest” or “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
 
“Cornerstone Principal” means Cornerstone Healthcare Plus REIT Inc.
 
“Debt” means, for any Person, without duplication, the aggregate of:  (a) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (b) all unfunded amounts under a loan agreement, letter
of credit, or other credit facility for which such Person would be liable, if
such amounts were advanced under the credit facility, (c) all amounts required
to be paid by such Person as a guaranteed payment to partners or a preferred or
special dividend, including any mandatory redemption of shares or interests, (d)
all indebtedness guaranteed by such Person, directly or indirectly, (e) all
obligations under leases that constitute capital leases for which such Person is
liable, and (f) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss.
 
“Debt Service” means the aggregate interest, fixed principal, and other payments
due under the Loan, and on any other outstanding permitted Debt relating to the
Projects (if any) for the period of time for which calculated.
 
“Debt Service Coverage Ratio” means the ratio of (i) Net Operating Income
(calculated in accordance with Schedule II attached hereto) from the Projects
for a particular period, to (ii) Debt Service for the same period plus
amortization due during the same period.
 
“Default Rate” means the lesser of (a) the maximum rate of interest allowed by
applicable law, and (b) five percent (5%) per annum in excess of the Interest
Rate.
 
“Defeasance Deposit” has the meaning assigned to such term in Section 2.6(c).
 
“Environmental Indemnity Agreement” means that certain Amended and Restated
Environmental Indemnity Agreement dated as of the date hereof by the Borrowers
and Cornerstone Principal in favor of Agent on behalf of the Lenders, as the
same may be amended, restated, supplemented or modified from time to time.
 
“Event of Default” has the meaning assigned to such term in ‎Article IX.
 
“Exit Fee” means a fee equal to (i) three percent (3%) of any amount voluntarily
prepaid after the Restatement Date but prior to the first anniversary of the
Restatement Date, (ii) two percent (2%) of any amount voluntarily prepaid on or
after the first anniversary of the Restatement Date, but prior to the second
anniversary of the Restatement Date, and (iii) one percent (1%) for any amount
paid on or after the second anniversary of the Restatement Date.
 
“Expenses” has the meaning assigned to such term in Schedule II.
 
LOAN AGREEMENT – Schedule I – Page 3
 
 
 

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“Federal Bankruptcy Code” means Chapter 11 of Title II of the United States Code
(11 U.S.C. § 101, et seq.), as amended.
 
“Financial Institution” means a United States Financial Institution as defined
in 31 U.S.C. 5312, as amended from time to time.
 
“Financing Notice” has the meaning assigned to such term in Section 12.1.
 
“FIRREA” has the meaning assigned to such term in Part A of Schedule 2.1.
 
“Fiscal month” has the meaning assigned to such term in Section 6.1(a).
 
“Force Majeure” means any event, act or condition which causes a delay or
prevents the performance of any act required hereunder by reason of an act of
God (such as tornado, flood, hurricane, etc.); fires and other casualties;
strikes, lockouts or other labor disturbances; war, terrorist acts, riots,
insurrections or civil commotions; embargos, shortages or unavailability of
materials, supplies, labor, equipment and systems; sabotage; vandalism; or other
similar types of events.
 
“Fraudulent Conveyance” has the meaning assigned to such term in Section
11.28(b).
 
“GAAP” means general accepted accounting principles of the Accounting Principles
Board of the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board that are applicable on the date so
indicated and consistently applied.
 
“GECC” has the meaning assigned to such term in the introductory paragraph of
this Agreement.
 
“Governmental Approvals” means, collectively, all consents, licenses and permits
and all other authorizations or approvals required from any Governmental
Authority to operate the Projects.
 
“Governmental Authority” means any federal, state, county or municipal
government or political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body (including, without limitation, the State
Regulator), or any court, administrative tribunal, or public body, including but
not limited to all such authorities relating to the quality and adequacy of
residential care facility services, medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting.
 
“Hazardous Materials” has the definition given to such term in the Environmental
Indemnity Agreement.
 
“HIPAA” has the meaning assigned to such term in Section 8.1(a).
 
“HIPAA Compliance Plan” has the meaning assigned to such term in Section 8.1(a).
 
“HIPAA Compliance Date” has the meaning assigned to such term in Section 8.1(a).
 
LOAN AGREEMENT – Schedule I – Page 4
 
 
 

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“Healthcare Laws” has the meaning assigned to such term in Section 8.1(a).
 
“Improvements” has the meaning assigned to such term in Recital B.
 
“Indebtedness” means all payment obligations of Borrower or any Principal to
Agent and Lender under the Loan or any of the Loan Documents.
 
“Initial Loan” has the meaning assigned to such term in Section 2.1(a).
 
“Insurance Impound” has the meaning assigned to such term in Section 3.4.
 
“Interest Holder Agreement” has the meaning assigned to such term in Section
7.20(b).
 
“Interest Rate” means the Contract Rate or the Swap Rate, as applicable.
 
“Laws” means, collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations and guidances and judicial opinions or
presidential authority in the applicable jurisdiction, including but not limited
to quality and safety standards, accreditation standards and requirements of the
State Regulator, each as it may be amended from time to time.
 
“Leases” means, collectively, all leases of, subleases of and occupancy
agreements affecting the Projects or any part thereof now existing or hereafter
executed (including all patient and resident care agreements and service
agreements which include an occupancy agreement) and all amendments,
modifications or supplements thereto.
 
“Lender” has the meaning assigned to such term in the introductory paragraph of
this Agreement.
 
“Libor Breakage Amount” means an amount, as reasonably calculated by Lender,
equal to the amount of any losses, expenses, liabilities (including, without
limitation, any loss (including interest paid) and lost opportunity cost in
connection with the re-employment of such funds) that Lender may sustain as a
result of any payment of the Loan on any day that is not the last day of the
Libor Interest Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise).
 
“Libor Business Day” means a Business Day on which banks in the City of London
are generally open for interbank or foreign exchange transactions.
 
“Libor Interest Period” means each period commencing on the first day of a
calendar month and ending on the last day of the month that is three (3) months
thereafter; provided, any Libor Interest Period that would otherwise extend
beyond the Maturity Date of the Loan shall end on the Maturity Date.
 
“Libor Rate” means the greater of (a) one percent (1%) per annum or (b) for each
Libor Interest Period, a rate of interest determined by Lender equal to:
 
LOAN AGREEMENT – Schedule I – Page 5
 
 
 

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(i)
with respect to any Libor Interest Period, the rate determined by the Lender to
be the offered rate for deposits in Dollars for the applicable Libor Interest
Period appearing on the Reuters Screen LIBOR01 page as of 11:00 a.m. (London
time) on the second full Libor Business Day next preceding the first day of each
Libor Interest Period.  In the event that such rate does not appear on the
Reuters Screen LIBOR01 page at such time, the “Libor Rate” shall be determined
by reference to such other comparable publicly available service for displaying
the offered rate for deposit in Dollars in the London interbank market as may be
selected by the Lender and, in the absence of availability, such other method to
determine such offered rate as may be selected by the Lender in its sole
discretion; divided by

 
 
(ii)
a number equal to 1.0 minus the aggregate (but without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on the day
that is two (2) Libor Business Days prior to the beginning of such Libor
Interest Period (including basic, supplemental, marginal and emergency reserves
under any regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from time to time
in effect) for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Federal Reserve Board that are required to
be maintained by a member bank of the Federal Reserve System.

 
“Licensed Beds” has the meaning assigned to such term in Section 3.6(a).
 
“Licenses” has the meaning assigned to such term in Section 8.1(a).
 
“Lien” means any interest, or claim thereof, in the Projects securing an
obligation owed to, or a claim by, any Person other than the owner of the
Projects, whether such interest is based on common law, statute or contract,
including the lien or security interest arising from a deed of trust, mortgage,
assignment, encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.  The term
“Lien” shall include reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting the Projects.
 
“Lists” has the meaning assigned to such term in Section 5.26(a).
 
“Loan” means collectively, the Initial Loan, the Restatement Date Loan Amount
and all other amounts payable under the Loan Documents, including any Exit Fee
or Swap Termination Fee.
 
“Loan Documents” means: (a) this Agreement, (b) the Note, (c) the Guaranty, (d)
any letter of credit provided to Agent in connection with the Loan, (e) the
Security Documents, (f) the Environmental Indemnity Agreement, (g) Uniform
Commercial Code financing statements, (h) such assignments of management
agreements, contracts and other rights as may be required under the Commitment
or otherwise requested by Agent, (i) all other documents evidencing, securing,
governing or otherwise pertaining to the Loan, and (j) all amendments,
modifications, renewals, substitutions and replacements of any of the foregoing.
 
LOAN AGREEMENT – Schedule I – Page 6
 
 
 

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“Loan Party” means each Principal and Managing Member.
 
“Management Agreements” means those certain Amended and Restated Management
Agreements between Property Managers and Master Tenants for the management of
the Projects, each dated as of April 30, 2010.
 
“Managing Member” means Royal Cornerstone South Carolina Portfolio, LLC, a
Delaware limited liability company, the sole member of Borrower.
 
“Master Leases” mean those certain leases between Borrowers as landlord and each
Master Tenant, as tenant.
 
“Master Tenants” means with respect to Oakleaf Village at Greenville, RSC
Greenville, LLC, a Florida limited liability company, and with respect to
Oakleaf Village at Lexington, RSC Lexington, LLC, a Florida limited liability
company.
 
“Material Adverse Change” or “material adverse change” means, in Agent’s
reasonable discretion, the business prospects, operations or financial condition
of a Person or property has changed in a manner which could impair the value of
Agent’s and Lender’s security for the Loan, prevent timely repayment of the Loan
or otherwise prevent the applicable Person, any Principal or any Borrower from
timely performing any of its material obligations under the Loan Documents.
 
“Maturity Date” means the earlier of (a) April 30, 2015, or (b) any earlier date
on which the entire Loan is required to be paid in full, whether at maturity, by
acceleration or otherwise, under this Agreement or any of the other Loan
Documents, or any later date to which the same may be extended in accordance
with the terms of the Loan Agreement.
 
“Minor Claim” has the meaning assigned to such term in Section 3.1(e).
 
“Money Market Rate” has the meaning assigned to such term in Section 3.4.
 
“Monthly Effective Rent” has the meaning assigned to such term in Schedule II.
 
“Monthly Reports” has the meaning assigned to such term in Section 6.1(a).
 
“Net Operating Income” has the meaning assigned to such term in Schedule II.
 
“Note” means the Amended and Restated Promissory Note dated the Restatement
Date.
 
“Obligations” has the meaning assigned to such term in Section 11.28.
 
“OFAC” means the Office of Foreign Assets Control, Department of the Treasury.
 
“Patriot Act” means the USA Patriot Act of 2001, Pub. L. No. 107-56.
 
“Payment Date” has the meaning assigned to such term in Section 2.3(a).
 
“Permitted Encumbrances” has the meaning assigned to such term in Section 5.13.
 
LOAN AGREEMENT – Schedule I – Page 7
 
 
 

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“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, limited partnership, limited liability, partnership, limited
partnership, unincorporated organization, real estate investment trust,
government or any agency or political subdivision thereof, or any other form of
entity.
 
“Potential Default” means the occurrence of any event or condition which, with
the giving of notice, the passage of time, or both, would constitute an Event of
Default.
 
“Principals” means collectively, the Cornerstone Principal and the RSC
Principals.
 
“Project” and “Projects” have the meanings assigned to such terms in Recital C.
 
“Project Yield” means the ratio, expressed as a percentage, of (a) annualized
Net Operating Income from the Projects, as determined by Agent for a particular
period, to (b) the outstanding principal balance of the Loan.
 
“Property” and “Properties” have the meanings assigned to such terms in Recital
B.
 
“Property Condition Report” has the meaning assigned in Schedule 2.1.
 
“Property Manager” means with respect to Oakleaf Village of Greenville, RSC-GSC
Management, LLC, a Florida limited liability company, and with respect to
Oakleaf Village at Lexington, RSC-LSC Management, LLC, a Florida limited
liability company, the manager of the Projects approved by Agent, and any
successor manager approved by Agent.
 
“Rating Agencies” means at least two of Fitch, Inc., Moody’s Investors Service,
Inc. and Standard & Poor’s Ratings Services or any other nationally recognized
statistical rating organizations that are successors or substitutes for any such
Person (or, if a Secondary Market Transaction has occurred in which Securities
have been issued, each of the foregoing that rated such Securities).
 
“Rating Confirmation” means the written confirmation of the Rating Agencies that
a proposed action shall not, in and of itself, result in the downgrading,
withdrawal or qualification of the then-current ratings assigned to any of the
Securities issued in connection with a Secondary Market Transaction.
 
“Release Date” has the meaning assigned to such term in Section 2.6.
 
“REMIC” has the meaning assigned to such term in Section 2.6.
 
“Repayment Date” means the date upon which the entire principal balance of the
Loan and all interest thereon and other sums due pursuant to the Loan Documents
have been paid in full.
 
“Replacement Deposit” has the meaning assigned to such term in Section 3.6.
 
“Replacement Reserve” has the meaning assigned to such term in Section 3.6.
 
LOAN AGREEMENT – Schedule I – Page 8

 
 

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“Replacement Treasury Yield” has the meaning assigned to such term in Schedule
2.5.
 
“Restatement Date” shall be the date on which the conditions on Schedule 2.1 are
satisfied and the Restatement Date Loan is funded.
 
“Restatement Date Loan” has the meaning assigned to such term in Section 2.1(b).
 
“Restricted Account Agreements” has the meaning assigned to such term in Section
11.30.
 
“Restricted Accounts” has the meaning assigned to such term in Section 11.30.
 
“Revenue” has the meaning assigned to such term in Schedule II.
 
“RSC Principals” means, collectively, Gazit Senior Care, Inc., a Florida
corporation, and ROICO Holdings, L.P., a Delaware limited partnership.
 
“Secondary Market Transactions” has the meaning assigned to such term in Section
7.24.
 
“Security Agreement” has the meaning assigned to such term in Section 2.6(c).
 
“Security Deposits” means any security deposit from any tenant or occupant of
any Project collected or held by any Borrower, Property Manager or Master
Tenant.
 
“Security Documents” means those certain first priority Deeds to Secure Debt,
Security Agreements and Fixture Filing, (or documents of similar title) executed
by Borrowers for the benefit of Agent, encumbering the Projects.
 
“Single Purpose Entity” means a Person (other than an individual, a government,
or any agency or political subdivision thereof), which exists solely for the
purpose of owning and operating a Project, conducts business only in its own
name, does not engage in any business or have any assets unrelated to such
Project, does not have any Debt other than as permitted by this Agreement, has
its own separate books, records, and accounts (with no commingling of assets),
holds itself out as being a Person separate and apart from any other Person, and
observes corporate, partnership or limited liability company, as the case may
be, formalities independent of any other Person, and which otherwise constitutes
a single purpose, bankruptcy remote entity as determined by Agent.  Without
limiting the foregoing, a Single Purpose Entity (i) does not hold, directly or
indirectly, any ownership interest (legal or equitable) in any real or personal
property other than the interest which it owns in its respective Project and
(ii) is not a shareholder or partner or member of any other entity.
 
“Specifically Designed National and Blocked Persons” means those Persons that
have been designated by executive order or by the sanction regulations of OFAC
as Persons with whom U.S. Persons may not transact business or must limit their
interactions to types approved by OFAC.
 
“State Regulator” has the meaning assigned to such term in Section 7.18(a).
 
LOAN AGREEMENT – Schedule I – Page 9

 
 

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“Swap Termination Date” means January 10, 2011.
 
“Swap Termination Fee” shall mean the amount that Lender reasonably determines
in good faith to be its total losses and costs in connection with a termination
of the hedging arrangements entered into by Lender in connection with the
funding of the Loans and cost of funds rate lock in respect of any such hedging
arrangements, including any loss of bargain, cost of funding and loss or cost
incurred as a result of its terminating, liquidating, obtaining or
re-establishing any hedge or related trading position.
 
“Taxes” has the meaning assigned to such term in Section 3.5.
 
“Tax Impound” has the meaning assigned to such term in Section 3.5.
 
“Tenant” means any tenant or occupant of a Project under a Lease.
 
“Term Sheet” means that certain letter agreement dated March 17, 2010 from Agent
and accepted by or on behalf of Managing Member on March 17, 2010.
 
“Terrorism Insurance” has the meaning assigned to such term in Section 3.1(b).
 
“Third Party Payor Programs” has the meaning assigned to such term in Section
8.2(f).
 
“Title Policies” has the meaning assigned to such term in Schedule 2.1 Part A.
 
“U.S. Obligations” has the meaning assigned to such term in Section 2.6(c).
 
“Violation” has the meaning assigned to such term in Section 5.24.
 
LOAN AGREEMENT – Schedule I – Page 10

 
 

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SCHEDULE II
 
Calculation of Net Operating Income
 
“Net Operating Income” means annualized Revenue less Expenses, all as determined
by Agent’s audit (or otherwise estimated by Agent) in its sole discretion and at
Borrower’s expense.
 
“Revenue” for a period means the lesser of (i) annualized Adjusted Actual Rent
for such period or (ii) annualized Monthly Effective Rent, excluding in each
case, rent payable under a Master Lease.  In determining Revenue, the occupancy
factor utilized shall be the lesser of (a) actual occupancy (ignoring for this
purpose any Master Lease), or (b) an assumed ninety-five percent (95%) occupancy
rate.
 
“Adjusted Actual Rent” means (a) all amounts collected from tenants of the
Projects (excluding amounts due from any Master Tenant) for the period in
question (and if none specified, then for the most current three (3) months),
excluding nonrecurring income and non-property related income (as determined by
Agent in its sole discretion) and income from tenants (i) that are thirty (30)
or more days delinquent, (ii) that are in bankruptcy (even if current), (iii)
non-residential tenants whose leases terminate within six (6) months (as
adjusted for space re-leased upon terms acceptable to Agent in its sole
discretion) and (iv) that have been delinquent two (2) or more times during the
past twelve (12) months, and (b) other revenue for such period not to exceed ten
percent (10%) of the amounts included in clause (a) above for laundry, vending,
parking and other occupancy payments (but excluding late fees and interest
income) based upon collections for such period.
 
“Monthly Effective Rent” means an amount equal to (x) total rent due over the
term of the leases (excluding rent due under any Master Lease) less any payments
or concessions which Agent, in its sole discretion, deems to be a rent
concession, divided by (y) the total number of months in the leases.
 
“Expenses” means actual and customary operating expenses related to the Project
on a stabilized accrual basis for the previous twelve (12) month period (as
reasonably adjusted by Agent), including:  (i) recurring expenses (e.g., tenant
improvements, leasing commissions, carpeting replacement, appliance and drapery
replacement and such others as determined by Agent), (ii) real estate taxes,
(iii) management fees (whether paid or not) in an amount not less than five
percent (5%) of effective gross income (or the actual management fee paid, if
higher), and (iv) a replacement reserve (whether reserved or not) of not less
than Three Hundred Sixty and No/100 Dollars ($360.00) per Licensed Bed.
 
LOAN AGREEMENT – Schedule II – Page 1
 

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SCHEDULE III

Part A—Required Repairs

 
The below listed repairs shall be completed within 90 days of the Restatement
Date with respect to the property owned by RSC Oakleaf Lexington, LLC:

       
$ Amount
   
(A)
Evaluate roof leaks in ALF and portico;
  $ 4,000.00    
(B)
Remedy active roof leaks;
    5,000.00    
(C)
Remove wet attic insulation;
    1,500.00    
(D)
Access attics for microbial growth;
    2,000.00    
(E)
Evaluate attics for fire retardant plywood;
    500.00    
(F)
Evaluate PTAC condensate blockages;
    1,500.00    
(G)
Evaluate source of stained ceiling finishes;
    2,000.00    
(H)
Assess ceiling spaces for microbial growth;
    2,000.00    
(I)
Repair/replace moisture affected ceiling materials;
    5,000.00                    
Total
  $ 23,500.00  

 
The below listed repairs shall be completed within 90 days of the Restatement
Date with respect to the property owned by RSC Oakleaf Greenville, LLC

       
$ Amount
   
(J)
Replace missing exterior light;
  $ 200.00    
(K)
Replace missing shutter and window accent trim;
    500.00    
(L)
Repair damaged downspout;
    500.00    
(M)
Repair damaged fascia trim;
    500.00    
(N)
Perform roof condition survey;
    3,000.00    
(O)
Repair EPDM roofs to prevent standing water; and
    6,000.00    
(P)
Replace roofing shingles.
    500.00                    
Total
  $ 11,200.00  

LOAN AGREEMENT – Schedule III – Page 1

 
 

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SCHEDULE III
(continued)
Part B—Post Closing Obligations
 
1)           Within 30 days of the Restatement Date, the Borrowers shall, with
respect to the property owned by RSC Oakleaf Greenville, LLC, correct the
deficiencies in violation of the Fire Prevention Code set forth in that certain
letter dated April 4, 2010 from the Boiling Springs Fire District, which shall
be deemed satisfied upon receipt by Agent of a copy of a satisfactory inspection
report from the Boiling Springs fire district.

2)           Within 90 days of the Restatement Date, the Borrowers shall, with
respect to the property owned by RSC Oakleaf Greenville, LLC, provide the Agent
radon testing results for such property which results shall be satisfactory to
the Agent.

3)           Within 30 days of the Restatement Date, the Borrowers shall provide
the Agent with reliance letters on the environmental reports delivered pursuant
to item 9 on Part A of Schedule 2.1.

LOAN AGREEMENT – Schedule III – Page 2

 
 

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