**Exhibit 10.7**

** **

**LOAN AGREEMENT**

** **

**Between**

** **

**BROTMAN MEDICAL CENTER,INC.,a California corporation, debtor-in-possession**

** **

**as**

** **

**“Borrower”**

** **

**and**

** **

**JHA WEST 16, LLC,a Delaware limited liability company**

** **

**as**

** **

**“Lender”**

 

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**TABLE OF CONTENTS**

 
| ** ** | ** **                | **Page**                                         |
|------------|---------------------------|--------------------------------------------------|
|       |                      |                                             |   |   |   |
| I.         | LOAN;  OPTION TO PURCHASE | 8                                                |
|       |                      |                                             |   |
|       | 1.1                       | Principal                                        | 8 |
|       |                      |                                             |   |
|       | 1.2                       | Interest                                         | 8 |
|       |                      |                                             |   |   |   |
|       |                      | (a)                                              | Computation | 8 |
|       |                      |                                             |   |   |
|       |                      | (b)                                              | Usury | 9 |
|       |                      |                                             |   |   |   |
|       | 1.3                       | Maturity                                         | 9 |
|       |                      |                                             |   |   |   |
|       | 1.4                       | Release  of Deed of Trust                        | 9 |
|       |                      |                                             |   |   |   |
|       | 1.5                       | Option  to Purchase                              | 9 |
|       |                      |                                             |   |   |   |
|       | 1.6                       | Current  Bankruptcy                              | 10 |
|       |                      |                                             |   |   |   |
| II.        | CLOSING  CONDITIONS       | 10                                               |
|       |                      |                                             |   |   |   |
|       | 2.1                       | Conditions  of Lender’s Obligation to Close | 10 |
|       |                      |                                             |   |   |   |
|       |                      | (a)                                              | Loan  Documents | 10 |
|       |                      |                                             |   |   |   |
|       |                      | (b)                                              | Title  Insurance | 10 |
|       |                      |                                             |   |   |   |
|       |                      | (c)                                              | Broker’s  Affidavit | 10 |
|       |                      |                                             |   |   |   |
|       |                      | (e)                                              | Conditions  for Disbursement | 10 |
|       |                      |                                             |   |   |   |
|       |                      | (f)                                              | Tax  and Insurance Deposit Account | 10 |
|       |                      |                                             |   |   |   |
|       |                      | (g)                                              | Recordation  of Deed of Trust | 11 |
|       |                      |                                             |   |   |   |
|       |                      | (h)                                              | No  Defaults | 11 |
|       |                      |                                             |   |   |   |
|       |                      | (i)                                              | Liabilities | 11 |
|       |                      |                                             |   |   |   |
|       |                      | (j)                                              | Reserve  Account | 11 |
|       |                      |                                             |   |   |   |
|       |                      | (k)                                              | Additional  Conditions to Disbursement of Loan Amount | 11 |
|       |                      |                                             |   |   |   |
|       |                      | (l)                                              | Representations  and Warranties | 11 |
|       |                      |                                             |   |   |   |
|       |                      | (m)                                              | Bankruptcy  Court Order | 11 |

 

i

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|   |                                                   |                                               |                                        |   | **Page** |
|--------|--------------------------------------------------------|----------------------------------------------------|---------------------------------------------|--------|----------|
|   |                                                   |                                               |                                        |   |     |
|   | 2.2                                                    | Conditions  of Borrower’s Obligation to Close | 11                                          |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (a)                                                | Loan  Documents                             | 11     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (b)                                                | Representations  and Warranties             | 12     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (c)                                                | Bankruptcy  Court Order                     | 12     |
|   |                                                   |                                               |                                        |   |     |
| III.   | DISBURSEMENT  OF LOAN AMOUNT                           | 12                                                 |
|   |                                                   |                                               |                                        |   |     |
|   | 3.1                                                    | General                                            | 12                                          |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (a)                                                | Reduction  of Loan Amount                   | 12     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (b)                                                | Advances  to Lender                         | 12     |
|   |                                                   |                                               |                                        |   |     |
|   | 3.2                                                    | Inspections                                        | 12                                          |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (a)                                                | Access  to the Property                     | 12     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (b)                                                | Consultants                                 | 12     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (c)                                                | No  Reliance by Borrower or Third Party     | 13     |
|   |                                                   |                                               |                                        |   |     |
|   | 3.3                                                    | Lender  Responsibility                             | 13                                          |
|   |                                                   |                                               |                                        |   |     |
|   | 3.4                                                    | Direct  Application of Proceeds                    | 13                                          |
|   |                                                   |                                               |                                        |   |     |
|   | 3.5                                                    | Insufficient  Documentation                        | 13                                          |
|   |                                                   |                                               |                                        |   |     |
| IV.    | REPRESENTATIONS  AND WARRANTIES OF LENDER AND BORROWER | 13                                                 |
|   |                                                   |                                               |                                        |   |     |
|   | 4.1                                                    | Representations  and Warranties of Borrower        | 13                                          |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (a)                                                | Legal  Status of Borrower                   | 13     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (b)                                                | Title                                       | 13     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (c)                                                | No  Breach of Applicable Agreements or Laws | 13     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (d)                                                | No  Litigation or Defaults                  | 14     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (e)                                                | Financial  and Other Information            | 14     |
|   |                                                   |                                               |                                        |   |     |
|   |                                                   | (f)                                                | ERISA                                       | 14     |

 

ii

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|   |                   |                                                    |                                                                               |   | **Page** |
|--------|------------------------|---------------------------------------------------------|------------------------------------------------------------------------------------|--------|----------|
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (g)                                                     | Boundary  Lines; Conformance with Governmental Requirements and Restrictions       | 14     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (h)                                                     | Utilities,  Etc                                                                    | 14     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (i)                                                     | Collateral                                                                         | 14     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (j)                                                     | Condemnation                                                                       | 14     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (k)                                                     | Governmental  Regulations                                                          | 15     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (l)                                                     | Compliance  with Anti-Terrorism, Embargo, Sanctions and Anti Money Laundering Laws | 15     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (m)                                                     | Brokers                                                                            | 15     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (n)                                                     | Defects  and Hazards                                                               | 15     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (o)                                                     | Permits                                                                            | 15     |
|   |                   |                                                    |                                                                               |   |     |
|   | 4.2                    | Representations  and Warranties of Lender               | 15                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (a)                                                     | Legal  Status of Lender                                                            | 15     |
|   |                   |                                                    |                                                                               |   |     |
|   |                   | (b)                                                     | No  Breach of Applicable Agreements or Laws                                        | 15     |
|   |                   |                                                    |                                                                               |   |     |
| V.     | COVENANTS  OF BORROWER | 16                                                      |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.1                    | Paying  Costs of Loan                                   | 16                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | **5.2**                | **Using  Loan Proceeds**                                | 16                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.3                    | Keeping  of Records                                     | 16                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.4                    | Providing  Financial Information                        | 16                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.5                    | Providing  Operating Statements                         | 17                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.6                    | Complying  with the Loan Documents and Other Agreements | 17                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.7                    | Compliance  with Laws                                   | 17                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.8                    | Ownership  of Collateral                                | 17                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.9                    | Representations  and Warranties                         | 17                                                                                 |
|   |                   |                                                    |                                                                               |   |     |
|   | 5.10                   | Trade  Names                                            | 18                                                                                 |

 

iii

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|   |          |                                                                               |   |   | **Page** |
|--------|---------------|------------------------------------------------------------------------------------|--------|--------|----------|
|   |          |                                                                               |   |   |     |
|   | 5.11          | No  Distributions                                                                  | 18     |
|   |          |                                                                               |   |   |     |
|   | 5.12          | Future  Development                                                                | 18     |
|   |          |                                                                               |   |   |     |
|   | 5.13          | Further  Assurances                                                                | 18     |
|   |          |                                                                               |   |   |     |
|   | 5.14          | Notice  of Litigation, Etc                                                         | 18     |
|   |          |                                                                               |   |   |     |
|   | 5.15          | Signage                                                                            | 19     |
|   |          |                                                                               |   |   |     |
|   | 5.16          | Maintenance  of Existence                                                          | 19     |
|   |          |                                                                               |   |   |     |
|   | 5.17          | Impound  Account                                                                   | 19     |
|   |          |                                                                               |   |   |     |
|   | 5.18          | Reserve  Account                                                                   | 19     |
|   |          |                                                                               |   |   |     |
|   | 5.19          | Emergency  Room Account                                                            | 19     |
|   |          |                                                                               |   |   |     |
|   | 5.20          | New  Emergency Room                                                                | 20     |
|   |          |                                                                               |   |   |     |
|   | 5.21          | Release  of Emergency Room Account                                                 | 20     |
|   |          |                                                                               |   |   |     |
|   | 5.22          | Parking  Spaces                                                                    | 20     |
|   |          |                                                                               |   |   |     |
|   | 5.23          | Existence;  Change of Name; Location as a Registered Organization                  | 20     |
|   |          |                                                                               |   |   |     |
|   | 5.24          | Property  Management                                                               | 21     |
|   |          |                                                                               |   |   |     |
|   | 5.25          | Prohibited  Transactions                                                           | 21     |
|   |          |                                                                               |   |   |     |
|   | 5.26          | Compliance  with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws | 21     |
|   |          |                                                                               |   |   |     |
| VI.    | DEFAULTS      | 21                                                                                 |
|   |          |                                                                               |   |   |     |
|   | 6.1           | Events  of Default                                                                 | 21     |
|   |          |                                                                               |   |   |     |
|   | 6.2           | Rights  and Remedies                                                               | 23     |
|   |          |                                                                               |   |   |     |
| VII.   | RESERVED      | 24                                                                                 |
|   |          |                                                                               |   |   |     |
| VIII.  | MISCELLANEOUS | 24                                                                                 |
|   |          |                                                                               |   |   |     |
|   | 8.1           | Binding  Effect; Waivers; Cumulative Rights and Remedies                           | 24     |
|   |          |                                                                               |   |   |     |
|   | 8.2           | Survival                                                                           | 24     |
|   |          |                                                                               |   |   |     |
|   | 8.3           | Governing  Law; Waiver of Jury Trial                                               | 24     |

 

iv

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|   |   |                                                |   |   | **Page** |
|--------|--------|-----------------------------------------------------|--------|--------|----------|
|   |   |                                                |   |   |     |
|   | 8.4    | Counterparts                                        | 24     |
|   |   |                                                |   |   |     |
|   | 8.5    | Notices                                             | 24     |
|   |   |                                                |   |   |     |
|   | 8.6    | Costs  and Expenses; Indemnification; Reimbursement | 25     |
|   |   |                                                |   |   |     |
|   | 8.7    | No  Third Party Reliance                            | 25     |
|   |   |                                                |   |   |     |
|   | 8.8    | Sale  of Loan or Participations                     | 25     |
|   |   |                                                |   |   |     |
|   | 8.9    | Arrangement  by Brokers                             | 26     |
|   |   |                                                |   |   |     |
|   | 8.10   | Recourse                                            | 26     |
|   |   |                                                |   |   |     |
|   | 8.11   | Time  of the Essence                                | 27     |
|   |   |                                                |   |   |     |
|   | 8.12   | Entire  Agreement; No Oral Modifications            | 27     |
|   |   |                                                |   |   |     |
|   | 8.13   | Captions                                            | 27     |
|   |   |                                                |   |   |     |
|   | 8.14   | Joint  and Several Liability                        | 27     |
|   |   |                                                |   |   |     |
|   | 8.15   | Borrower-Lender  Relationship                       | 27     |
|   |   |                                                |   |   |     |
|   | 8.16   | Benefit  of Lender                                  | 27     |
|   |   |                                                |   |   |     |
|   | 8.17   | Single  Purpose Entity                              | 27     |
|   |   |                                                |   |   |     |
|   | 8.18   | Pledge  of Accounts                                 | 27     |
|   |   |                                                |   |   |     |
|   | 8.19   | Prohibition  Against Transfers                      | 27     |
|   |   |                                                |   |   |     |
|   | 8.20   | Lender  Approval                                    | 27     |

 

**LIST OF EXHIBITS AND SCHEDULES**

 
| EXHIBIT  A       | -      | Legal  Description of Land                  |   |
|------------------|--------|---------------------------------------------|--------|
|             |   |                                        |   |
| EXHIBIT  B       | -      | Additional  Required Items Prior to Funding |   |
|             |   |                                        |   |
| SCHEDULE  2.1(h) | -      | Liabilities/Litigation                      |   |

 

v

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**LOANAGREEMENT**

 

**THISLOAN AGREEMENT**(this “**Agreement**”) is made andentered into as of July 9, 2008, by and between**BROTMAN MEDICAL CENTER, INC.**, a California corporation,debtor-in-possession (“**Borrower**”)and **JHA WEST 16, LLC**, a Delawarelimited liability company (“**Lender**”).

 

**WITNESSETHTHAT**, inconsideration of the mutual covenants and agreements hereinafter set forth, theparties hereto agree as follows:

 

**DEFINITIONS**

** **

For the purposes of thisAgreement, the following terms shall have the following respective meanings,unless the context hereof clearly requires otherwise:

 

**Accounts**:  Means collectively the Emergency Room Account,the Reserve Account and the Tax and Insurance Deposit Account.

 

**AdjacentProperty Access Lease**:  Means that certain AdjacentProperty Access Lease and easement agreement to be entered into betweenBorrower and Lender as a condition to Lender’s exercise of the Option, andwhich shall contain the items described in Section 1.5(b) hereof.

 

**Affiliate**: Means (x) with respect to a corporation, (i) any officer ordirector thereof and any Person which is, directly or indirectly, thebeneficial owner of more than 10% of any class of shares or other equitysecurity or (ii) any Person which, directly or indirectly, controls or iscontrolled by or is under common control with such corporation and (y) withrespect to a partnership, venture or limited liability company, any (i) generalpartner or member, (ii) general partner of a general partner or member, (iii) partnershipwith a common general partner or member, or (iv) co-venturer thereof, andif any general partner, member or co-venturer is a corporation, any Personwhich is an Affiliate of such corporation. Controls (which includes the correlative meanings of “controlled by” and“under common control with”) means effective power, directly or indirectly, todirect or cause the direction of the management and policies of such Person.

 

**Agreement**: This Loan Agreement, including anyamendments hereof and supplements hereto executed by Borrower and Lender.

 

**Anti-TerrorismLaws**:  Shall mean, collectively, (a) theUniting and Strengthening America by Providing Appropriate Tools Required toIntercept and Obstruct Terrorism Act of 2001 (Public Law 107 56) (The USAPATRIOT Act), (b) Executive Order No. 13224 on Terrorist Financing,effective September 24, 2001, and relating to Blocking Property andProhibiting Transactions With Persons Who Commit, Threaten to Commit, orSupport Terrorism, (c) the International Emergency Economic Power Act, 50U.S.C. §1701 et seq. and (d) all other Legal Requirements relating tomoney laundering or terrorism.

 

**BankruptcyCode**:  Means the United States Bankruptcy Code.

 

----

 

**BankruptcyCourt Order**:  Means the findings and order described in Section 2.1(m).

 

**Borrower**: BROTMAN MEDICAL CENTER, INC., aCalifornia corporation, debtor-in-possession, and its permitted successors andassigns.

 

**Brokers**: Shall have the meaning given such term in Section 4.1(m).

 

**BusinessDay**: Any dayother than a Saturday, a Sunday, or a legal holiday on which Lender is not openfor business.

 

**ClosingDate**: Thedate upon which the Loan Amount is funded by Lender into the Escrow Account.

 

**Collateral**: All Equipment; all of Borrower’sdocuments, instruments, contract rights (including any rights under anydevelopment agreement) and general intangibles relating to any futureconstruction, use, operation or occupancy of the Property (or any portionthereof); all insurance proceeds from any policies of insurance covering any ofthe aforesaid; and such other collateral as may be described in the Deed ofTrust.  Notwithstanding anything to thecontrary contained in any Loan Document, Collateral shall not include, withoutlimitation, any accounts receivable, personal property or trade fixturesnotwithstanding the manner of annexation, including, without limitation, anyoxygen tanks, surgical lights, and generators.

 

**Consultants**: Third party experts retained by Lenderto assist it in connection with closing, disbursing or administering the Loan.

 

**Control**: means the possession, directly or indirectly, of the power to direct orcause the direction of the management and policies of a Person whether throughownership of voting securities, beneficial interests, by contract orotherwise.  The definition is to beconstrued to apply equally to variations of the word “Control” including “Controlled,”“Controlling” or “Controlled by.”

 

**CurrentBankruptcy**:  means the filing by Borrower on October 25,2007 of a Chapter 11 petition for bankruptcy under the Bankruptcy Code.

 

**Deedof Trust**:That certain Deed of Trust With Assignment of Leases and Rents, SecurityAgreement and Fixture Filing of even date herewith executed by Borrower astrustor in favor of Lender as beneficiary to be recorded in the OfficialRecords, creating a first lien on the Property, and all buildings, fixtures(excluding trade fixtures) and improvements now or hereafter owned or acquiredby Borrower and situated on the Land, and all rights and easements appurtenantthereto, and a first lien on and a security interest in the Collateralassociated with and appurtenant to the Land, which Deed of Trust shall securethe Note and the other obligations specified therein, including any amendmentsto such Deed of Trust and supplements thereto executed by Borrower and Lender.

 

**DefaultRate**: TheDefault Rate of interest payable under the Note, as that term is defined in theNote.

 

2

----

 

**EquityInterests**:  Means (a) partnership interests (whethergeneral or limited) in an entity which is a partnership; (b) membershipinterests in an entity which is a limited liability company; or (c) theshares or stock interests in an entity which is a corporation.

 

**EmergencyRoom Account**: Means the interest-bearing account to be established by Borrower at afinancial institution reasonably approved by Lender to reserve for all soft andhard costs of design and construction of the Emergency Room Facility to belocated outside of the boundaries of the Land.

 

**EmergencyRoom Contribution**:  Means the amount of One Hundred ThirtyThousand Dollars ($130,000), to be deposited by Borrower into the Emergency Room Accountin accordance with Section 5.19.

 

**EmergencyRoom Permits**. Means all thosepermits and approvals necessary to immediately commence construction of theEmergency Room Facility.

 

**EmergencyRoom Facility**: Means the newemergency room facility to be located outside the boundaries of the Land and to be constructed pursuant to the termsof the Option Agreement.

 

**EnvironmentalIndemnity**:That certain Unsecured Environmental Indemnity of even date herewith, executedby Borrower, in favor of Lender, setting forth certain indemnificationobligations relating to “Hazardous Substances” (as defined therein).

 

**Equipment**: All fixtures (excluding trade fixtures)and equipment, if any, owned by Borrower and located or to be located in or on,and used in connection with the management, maintenance or operation of, theLand and the Improvements, as opposed to the business conducted at the Land andthe Improvements.

 

**ERISA**: Means the Employee Retirement Income Security Act of 1974, and theregulations issued thereunder, all as amended or restated from time to time.

 

**EscrowAccount**:  The interest-bearing escrow account opened byBorrower with Escrow Holder.

 

**EscrowHolder**:  Fidelity National Title Company, NewportBeach, California.

 

**FinancingStatement**: AUCC-1 financing statement naming Borrower as debtor and Lender as securedparty, perfecting Lender’s security interest in the Collateral, in form andsubstance satisfactory to Lender, in Lender’s sole discretion, to be filed inthe Office of the Secretary of State of the State of the Borrower’s formation.

 

**FundingEnd Date****: **Means the earlier to occur of (i) thedate upon which Borrower has deposited the sum of $3,120,000 into the EmergencyRoom Account, (ii) completion of construction of the Emergency Room Facility,(iii) the expiration of the Option Period without exercise of the Optionby the Lender, or (iv) the Maturity Date.

 

3

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**GovernmentalRequirements**:All laws, statutes, codes, ordinances, and governmental rules, regulations andrequirements applicable to Borrower, Lender and the Property.

 

**Hospital**:  Means the Brotman Medical Center which islocated on approximately 1.1 acres of land in the cities of Los Angeles andCulver City, California, which land is adjacent to the Land.

 

**Improvements**: The improvements which currently existor which may in the future be placed or constructed upon the Land.

 

**InitialDeposit**:  The initial deposit in the amount determinedpursuant to Section 5.17(a), to be deposited by Borrower into the Taxesand Insurance Deposit Account prior to the Closing Date.

 

**Land**: The land consisting of approximately2.44 acres, legally described on Exhibit A attached hereto andincorporated herein by this reference, together with all additions thereto andsubstitutions therefor agreed to by Borrower and Lender.

 

**Lender**: JHA WEST 16, LLC, a Delaware limited liability company, and itssuccessors and assigns.

 

**Loan**: The loan of the Loan Amount evidencedby the Note and to be made as a single lump sum pursuant to the terms of thisAgreement and to be secured by the Deed of Trust and other Loan Documents, asapplicable.

 

**LoanAmount**:Sixteen Million and No/100 Dollars ($16,000,000.00).

 

**LoanDocuments**:The documents described in this Agreement, which evidence and secure the Loan,including but not limited to the Note, the Deed of Trust, this Agreement, theEnvironmental Indemnity, and the Financing Statement, and including anyamendments thereof and supplements thereto executed by Borrower and Lender.

 

**MaterialAdverse Effect**:  Means, other than as a result of the CurrentBankruptcy, with respect to any circumstance, act, condition or event ofwhatever nature (including any adverse determination in any litigation,arbitration, or governmental investigation or proceeding), whether singly or inconjunction with any other event, act, condition, circumstances, whether or notrelated, in Lender’s reasonable judgment, a material adverse change in, or amaterially adverse effect upon (a) the business, operations, or financialcondition of Borrower; (b) the ability of Borrower to perform itsobligations under any Loan Document to which it is a party; (c) the use,value or condition of the Property; (d) compliance of the Property withany Requirements of Law; or (e) the validity, priority or enforceabilityof any Loan Document or the liens, rights (including, without limitation,recourse against the Property) or remedies of Lender hereunder or thereunder.

 

**MaturityDate**: Thelater to occur of (i) twenty-four (24) months after the Closing Date, (ii) onehundred and eighty (180) days after Lender’s exercise of the Put Right, and (iii) ifLender, in its capacity as the “Buyer” under the Option Agreement, exercisesthe Option during

 

4

----

 

 

 

theOption Period (as such period may be extended pursuant to the terms thereof),the date of the closing of the transaction contemplated by the OptionAgreement.

 

**Note**: The Promissory Note, of even dateherewith, executed and delivered by Borrower to Lender in the Loan Amount, toevidence the Loan, as the same may be amended, modified or replaced from timeto time.

 

**OFAC List**: Means the list of specially designated nationals and blocked personssubject to financial sanctions that is maintained by the U.S. TreasuryDepartment, Office of Foreign Assets Control and any other similar listmaintained by the U.S. Treasury Department, Office of Foreign Assets Controlpursuant to any Requirements of Law, including, without limitation, tradeembargo, economic sanctions, or other prohibitions imposed by Executive Orderof the President of the United States. The OFAC List is accessible through the internet websitewww.treas.gov/ofac/t11sdn.pdf.

 

**OfficialRecords**: TheOfficial Records of Los Angeles County, California.

 

**OperatingStatement**: Acurrent, detailed statement of income and expenses from and for managing,maintaining and operating the Property, in form and substance acceptable toLender, certified as true, correct and complete by Borrower.

 

**Option**: Shall have the meaning given such termin Section 1.5.

 

**OptionAgreement**:  Means that certain Option Agreement to beentered into between Lender and Borrower, which shall describe and set forththe terms of Lender’s Option.

 

**OptionPeriod**:  Means the period commencing on (a) inthe event Borrower is able to obtain the Emergency Room Permits prior tothe Maturity Date, the date that Lender receives written notice from Borrowerthat Borrower has obtained the Emergency Room Permits (as defined in theLoan Agreement), or (b) in the event Borrower is unable to obtain theEmergency Room Permits prior to the Maturity Date, the Maturity Date, andending on (A) in the event Borrower is able to obtain the Emergency Room Permitsprior to the Maturity Date, the date which is the later to occur of (i) twelve(12) months  after Lender’s receipt ofsuch written notice from Borrower, and (ii) twenty-four (24) months afterthe “Closing Date” (as defined in the Loan Agreement), or (B) in the eventBorrower is unable to obtain the Emergency Room Permits prior to theMaturity Date, the date which is twelve (12) months after the MaturityDate.  If Lender desires to exercise theOption, then Lender must exercise the Option prior to the expiration of the OptionPeriod, provided, however, if an appeal (an “**Appeal**”)is pending challenging the Bankruptcy Court Order at the expiration of theOption Period, then the Option Period shall be extended to the date which isninety (90) days following dismissal of the Appeal; provided, further, ifBorrower wrongfully interferes with a foreclosure of the Deed of Trustfollowing an Event of Default (as defined in the Deed of Trust), then theOption Period shall be extended by the period of delay resulting from suchwrongful interference.

 

**Permits**: All governmental approvals,authorizations, permits and entitlements which have been or will be issued withrespect to the Property, including building permits, annexation agreements,plot plan approvals, subdivision approvals, environmental approvals (including an

 

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environmentalimpact report if required under applicable law), sewer and water permits, andzoning and land use entitlements.

 

**PermittedEncumbrances**:The liens, charges and encumbrances on title to the Land as shown on the TitlePolicy and as approved by Lender, or as otherwise approved in writing byLender, both in Lender’s sole discretion.

 

**PermittedTransfer**:  Means each of the following:

 

(a)           Transfers of Equity Interests which, inthe aggregate over the term of the Loan (i) do not exceed forty-ninepercent (49%) of the total interests in Borrower; (ii) do not result inany Person holding an Equity Interest in Borrower which exceeds forty-ninepercent (49%) of the total Equity Interests in Borrower; and (iii) do notresult in a change of Control.

 

(b)           Transfers with respect to any Personwhose stocks or certificates are traded on a nationally recognized stockexchange.

 

(c)           Transfers which have been approved byLender in accordance with Section 8.20 hereof.

 

(d)           Permitted Encumbrances.

 

(e)           All Transfers of worn out or obsoleteEquipment that are promptly replaced with property of equivalent value andfunctionality.

 

(f)            All leases which have been approved byLender in accordance with this Agreement.

 

(g)           Transfers contemplated by the OptionAgreement.

 

**Person**: Means and includes an individual, a partnership, a corporation, alimited liability company, a trust, an unincorporated association, a jointventure or any other entity or a government or any agency or politicalsubdivision thereof.

 

**Property**: The Land, the Improvements and the Equipment.

 

**PutRight**:  Means Lender’s right to declare the unpaidLoan Amount, including any remaining interest and any other amounts due andpayable under the Loan Documents, immediately due and payable at any timefollowing the first twelve (12) months of the Closing Date (provided, that suchtwelve-month period shall be extended to the extent that the period describedin Section 1.5(a) hereof is extended) and prior to the date which istwenty-four (24) months after the Closing Date, subject to Lender providingwritten notification to Borrower of its exercise of the Put Right at least onehundred and eighty (180) days in advance. Lender may not provide notification of its exercise of the Put Rightprior to the first (1st) anniversary of the Closing Date.

 

**Requirementsof Law**:  Means (a) the organizational documentsof an entity, and (b) any law, regulation, ordinance, code, decree,treaty, ruling or determination of an arbitrator, court or 

 

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otherGovernmental Authority, or any Executive Order issued by the President of theUnited States, in each case applicable to or binding upon such Person or towhich such Person, any of its property or the conduct of its business issubject including, without limitation, laws, ordinances and regulationspertaining to the zoning, occupancy and subdivision of real property.

 

**ReserveAccount**:  Means the interest-bearing account to be establishedby Borrower at a financial institution approved by Lender to pay for capitalimprovements, repairs and replacements to the Property.

 

**ReserveContribution**:  Means the amount of Ten Thousand and00/100ths Dollars ($10,000.00), to be deposited by Borrower into the ReserveAccount each month in accordance with Section 5.18.

 

**ReserveDeposit**:  The initial deposit in the amount ofTwenty-Five Thousand and 00/100ths Dollars ($25,000.00), to be deposited intothe Reserve Account on or before the Closing Date.

 

**Securitization**: Means the sale of the Loan, by itself or as part of a pool with otherloans, in a transaction whereby mortgage pass-through certificates or othersecurities evidencing a beneficial interest, backed by the Loan or such pool ofloans, will be sold as a rated or unrated public offering or private placement.

 

**Taxand Insurance Deposit Account**:  Means aninterest bearing demand deposit account to be opened by Borrower at a financialinstitution approved by Lender for the purpose of depositing payments of realestate taxes and assessments and insurance premiums for the Property, in theamounts and in the manner provided for in Section 5.17 hereof.

 

**TitleCompany**:  Fidelity National Title Company, NewportBeach, California.

 

**TitlePolicy**: Atitle insurance policy in the form of an American Land Title AssociationExtended Coverage Loan Policy - 1970, amended 10-17-70 (without furthermodification, revision or amendment), insuring that on the Closing Date,Borrower owns fee simple title to the Land and that the Deed of Trust is avalid first lien on the Property in the amount of the Note.  The Title Insurance Policy must provideaffirmative insurance against mechanics liens and contain endorsements as Lenderrequires, in Lender’s sole discretion. Except as approved by Lender in writing prior to the Closing Date, theTitle Insurance Policy must not contain any survey exceptions, exceptions forrights of parties in possession (other than pursuant to existing leases),easements not of record or unpaid installments of special assessments, or anyother exceptions to coverage not approved by Lender.  The Title Insurance Policy must contain suchreinsurance agreements and direct access agreements as Lender may require.

 

**Transfer**: Means any action by which either (a) the legal or beneficialownership of the Equity Interests in Borrower or (b) the legal orequitable title to the Property, or any part thereof, or (c) the Propertyor any portion thereof, is sold, assigned, transferred, hypothecated, pledgedor otherwise encumbered or dispose of, in each case (a), (b) or (c) whetherundertaken, directly or indirectly, or occurring by operation of law orotherwise, including, without limitation, each of the following actions:

 

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a.                                       the sale, conveyance, assignment, grantof an option with respect to, mortgage, deed in trust, pledge, grant of asecurity interest in, or any other transfer, as security or otherwise, of theProperty or with respect to leases or rents (or any thereof);

 

b.                                      the grant of an easement across theProperty or any other agreement granting rights in or restricting the use ordevelopment of the Property (including, without limitation, air rights);

 

c.                                       an installment sale wherein Borroweragrees to sell the Property for a price to be paid in installments; or

 

d.                                      an agreement by Borrower entered intoafter the Closing Date leasing all or a part of the Property.

 

**Transferees**: Shall have the meaning given such term in Section 8.8.

 

**TransferredInterest**:  Shall have the meaning given such term in Section 8.8.

 

**UCC**: Means the Uniform Commercial Code as enacted and in effect in the statewhere the Property is located (and as it may from time to time be amended);provided that, to the extent that the UCC is used to define any term in thisAgreement or in any other Loan Document and such term is defined differently indifferent Articles or Divisions of the UCC, the definition of such termcontained in Article or Division 9 shall govern; provided further,however, that if, by reason of mandatory provisions of law, any or all of theattachment, perfection or priority of , or remedies with respect to, Lender’sliens on any Collateral is governed by the Uniform Commercial Code as enactedan in effect in a jurisdiction other than the state where the Property islocated, the term “UCC” shall mean the Uniform Commercial Code as enacted andin effect in such other jurisdiction solely for the purposes of the provisionsthereof relating to such attachment, perfection, priority or remedies and forpurposes of definitions related to such provisions.

 

Capitalized terms usedbut not otherwise defined herein shall have the meanings used and defined inthe Note.

 

**I.LOAN; OPTION TO PURCHASE**

 

## **1.1****         ****Principal**. Lender agrees to lend to Borrower, and Borrower agrees to borrow fromLender, the Loan Amount, in accordance with the terms hereof until the MaturityDate but subject to Lender’s Put Right, the disbursement of which is evidencedby the Note.

##  

## **1.2****         ****Interest**.

##  

### (a)            **Computation**. Borrower shall pay to Lender interest on the Loan at the Interest Rateand in the manner specified in the Note.

 

8

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### (b)            **Usury**. In the event that the interest and/or charges in the nature of interest,if any, provided for by this Agreement or by any other Loan Document, shallcontravene a legal or statutory limitation applicable to the Loan, if any,Borrower shall pay only such amounts as would legally be permitted; provided,however, that if the defense of usury and all similar defenses are unavailableto Borrower, Borrower shall pay all amounts provided for herein.  If, for any reason, amounts in excess of theamounts permitted in the foregoing sentence shall have been paid, received,collected or applied hereunder, whether by reason of acceleration or otherwise,then, and in that event, any such excess amounts shall be applied to principal,unless principal has been fully paid, in which event such excess amount shallbe refunded to Borrower.

###  

## **1.3****         ****Maturity**. The principal balance owing on the Loan, and all accrued interest andother sums owing under the Loan Documents not otherwise paid when due, shall bedue and payable in full on the Maturity Date, subject to Lender’s Put Right.

##  

## **1.4****         ****Release of Deed of Trust**. Lender shall promptly cause the release of the Deed of Trust uponrepayment in full of the Loan.

##  

## **1.5****         ****Option to Purchase**.

##  

### (a)            Borrower covenants and agrees to usecommercially reasonable efforts to obtain the Emergency Room Permits within twelve (12) months following the Closing Date, unless such period oftime is extended by the mutual agreement of the parties, it being understoodand agreed that the parties intend to work collaboratively, in good faith, andwith all diligence during such period of time to obtain the Emergency Room Permits,at the Borrower’s sole expense, it being further understood and agreed that, tothe extent that the parties are working collaboratively, in good faith, andwith all diligence during such period of time to obtain the Emergency Room Permits,it is the intention of the parties to extend such twelve (12) month period asnecessary, provided that there is a reasonable expectation that such permitscan be obtained within an additional six (6) months.

###  

### (b)            At any time during the Option Period andpursuant to the Option Agreement, Lender shall have the option (the **“Option”**) to purchase the Property by providing Buyer withno less than one hundred eighty (180) days’ prior written notice.  Upon exercise of the Option, so long asBorrower has obtained the Emergency Room Permits, Borrower shallimmediately commence construction of the Emergency Room Facility inaccordance with the terms of the Option Agreement.  The terms of the transactions contemplated bythe exercise of the Option, including, without limitation, the purchase pricefor the Property, shall be as set forth in the Option Agreement.  Unless Lender exercises the Put Right, Lendershall have the right to exercise the Option during the Option Periodnotwithstanding any prepayment of the Loan.

###  

### (c)            Lender acknowledges that certain propertyadjacent to the Property is currently owned by Borrower and improved with,among other things, a hospital, emergency room building, and parking areas, andcertain portions of the emergency room building, a building adjacent to theemergency room building, and parking areas extend over and onto theProperty.  As such, if, and only if,Lender exercises the Option, and as a condition to Lender’s acquisition of theProperty pursuant to the exercise of the Option, Borrower and Lender shall

 

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### enter into an Adjacent Property Access Lease, providing for, amongother things, a lease-back to Borrower of an area of approximately 10,000square feet consisting of the emergency room, an area adjacent to the emergencyroom for use as a radiology room, and certain portions of the adjacentbuilding; a license to use the areas where the generators, oxygen tanks andservers are currently located; access to the tunnel, hospital, parking areas,generators, servers, and oxygen tanks; an easement to use one hundred (100)parking spaces at the Property (subject to the relocation right described in Section 5.22);and the use of certain other appurtenant rights upon terms and conditions asset forth in the Adjacent Property Access Lease.

###  

## **1.6****         ****Current Bankruptcy**. Notwithstanding the provisions of Section 1129(a)(9)(A) or anyother provision of the Bankruptcy Code, the Loan shall not be required to berepaid by Borrower upon confirmation of a plan of reorganization for theBorrower in the Current Bankruptcy.

##  

**II.CLOSING CONDITIONS**

 

## **2.1****         ****Conditions of Lender’sObligation to Close**.  The Closing Date shall notoccur, and Lender shall not be required to disburse the Loan Amount hereunderuntil the conditions and requirements set forth below have been completed andfulfilled to the reasonable satisfaction of Lender (or waived by Lender inwriting):

##  

### (a)            **Loan Documents**. Borrower shall execute and deliver (or cause to be executed anddelivered) to Lender and Escrow Holder the Loan Documents and such otherdocuments as Lender may require, in form and substance acceptable to Lender andto its counsel, in their sole discretion, to evidence and secure the Loan.  Lender may designate which of the LoanDocuments are to be placed of record, the order of recording thereof, and theoffices in which the same are to be recorded. Borrower shall pay all documentary, intangible, recording and/or registrationtaxes and/or fees due upon the Note, the Deed of Trust, the Financing Statementand/or the other Loan Documents.

###  

### (b)            **Title Insurance**. Lender shall have received an unconditional commitment from the TitleCompany to issue the Title Policy.

###  

### (c)            **Brokers’ Affidavit**. Brokers shall have executed and delivered to Lender an affidavit to theeffect that Brokers have arranged this transaction and been paid a fee inconnection therewith and that Brokers are currently licensed real estatebrokers under the laws of the State of California to which affidavit a copy ofsaid brokers’ licenses shall be attached.

###  

### (d)            **Conditions forDisbursement**.  Borrower shall have satisfied all conditionsfor disbursement set forth in Article III.

###  

### (e)            **Tax and InsuranceDeposit Account**.  Borrower shall have established in Borrower’sname, the Tax and Insurance Deposit Account with a financial institutionreasonably approved by Lender, and shall have funded the Initial Deposit, andpremiums for the 12-month period following the Closing Date shall have beenpaid for all insurance required to be maintained by Borrower.

 

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### (f)             **Recordation of Deed ofTrust**.  The Deed of Trust shall have been recorded inthe Official Records in full compliance with the letter of title and escrowinstructions from the Lender to the Escrow Holder.

###  

### (g)            **No Defaults**. As of the Closing Date, no default or event of default under thisAgreement or under any of the other Loan Documents shall have occurred and becontinuing, and no event shall have occurred which, upon the service of noticeand/or the lapse of time, would constitute an event of default thereunder.

###  

### (h)            **Liabilities**. Except for the Current Bankruptcy, and except as set forth on Schedule2.1(h) attached hereto, there is no litigation, administrativeproceeding, investigation or other legal proceeding pending or, to Borrower’sknowledge, threatened, which would have a Material Adverse Effect.

###  

### (i)             **Reserve Account**. Borrower shall have established in Borrower’s name, the Reserve Accountwith a financial institution approved by Lender, and shall have funded theReserve Deposit.

###  

### (j)             **Additional Conditions toDisbursement of Loan Amount**.  In additionto the satisfaction of each of the conditions set forth above in this Article II,and the applicable conditions specified in Article III below, Lender maycondition the disbursement of the Loan Amount upon Lender’s receipt andapproval of each of the additional items set forth in Exhibit B hereto.

###  

### (k)            **Representations andWarranties**.  The representations and warranties ofBorrower under Article IV shall be true and correct in all materialrespects through the Closing Date.

###  

### (l)             **Bankruptcy Court Order**. The Bankruptcy Court shall have entered findings and an order in formand substance reasonably approved by Lender approving this Agreement and theother Loan Documents and providing that the Loan and the transactioncontemplated hereby was extended by Lender in good faith, as provided in Section 364(e) ofthe Bankruptcy Code, and that Lender is entitled to all of the protectionsafforded to Lender provided in Section 364(e) of the BankruptcyCode.  The order approving this Agreementand the other Loan Documents shall provide, among other things, that the LoanDocuments shall not be altered, extended or otherwise modified in this, or anyfuture, bankruptcy case of Borrower.

###  

## **2.2****         ****Conditions of Borrower’sObligation to Close**.  The Closing Date shall notoccur, and Borrower shall not be required complete the transaction contemplatedhereby, until the conditions and requirements set forth below have beencompleted and fulfilled to the reasonable satisfaction of Borrower (or waivedby Borrower in writing):

##  

### (a)            **Loan Documents**. Lender shall execute and deliver (or cause to be executed and delivered)to Escrow Holder the Loan Documents and such other documents required to bedelivered by Lender to Escrow Holder pursuant to the Loan Documents

 

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### (b)            **Representations andWarranties**.  The representations and warranties of Lenderunder Article IV shall be true and correct in all material respectsthrough the Closing Date.

###  

### (c)            **Bankruptcy Court Order**. The Bankruptcy Court shall have entered an order (i) determiningthat the payoff amounts of Borrower’s current debtor-in-possession financingand pre-petition financing do not exceed Twenty Two Million and 00/100thsDollars ($22,000,00.00) in the aggregate, and (ii) expressly disallowingany claim for non-compliance fees in connection therewith.

** **

**III.DISBURSEMENT OF LOAN AMOUNT**

 

## **3.1****         ****General**.

##  

### (a)            **Reduction of Loan Amount**. The Loan Amount shall be disbursed by Lender for the benefit of Borroweron the Closing Date in accordance with the terms and conditions set forth inthis Article III.  Borroweracknowledges that the Loan Amount shall be disbursed minus any (i) delinquenttaxes and assessments on the Property not satisfied and removed prior to theClosing Date, and (ii) any mechanic’s liens encumbering the Property.  Any amounts withheld by Lender pursuant toclause (i) of the preceding sentence shall promptly be applied by Lenderto pay and delinquent taxes and assessments on the Property and any amountswithheld by Lender pursuant to clause (ii) of the preceding sentence shallbe held in an interest bearing account with Escrow Holder pending Borrower’sdirection as to the application of such proceeds.

###  

### (b)            **Advances to Lender**. Lender may, at Lender’s option, without any obligation to do so, advanceto itself all sums due to Lender under this Agreement or under any of the otherLoan Documents.  Lender shall also havethe right, but not the obligation, to advance and directly apply the proceedsof the Loan to the satisfaction of any of Borrower’s other obligationshereunder or under any of the other Loan Documents.

###  

## **3.2****         ****Inspections**.

##  

### (a)            **Access to the Property**. Upon reasonable advance notice, Lender, the Title Company, Consultantsand their representatives shall have access to the Property at all reasonabletimes and shall have the right to enter the Property and to conduct suchinspections thereof as they shall deem necessary or desirable for theprotection of Lender’s interests.

###  

### (b)            **Consultants**. Lender may retain any Consultants deemed necessary or desirable byLender, at Borrower’s expense, to make periodic inspections of theProperty.  Lender may also retain suchother Consultants as Lender deems necessary or convenient to perform suchservices as may, from time to time, be required by Lender in connection withthe Loan, this Agreement, the other Loan Documents or the Property.

 

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### (c)            **No Reliance by Borroweror Third Party**.  Neither Borrower nor any third party shallhave the right to use or rely upon any reports generated by Lender or itsConsultants for any purpose whatsoever.

##  

## **3.3****         ****Lender Responsibility**. It is expressly understood and agreed that Lender assumes no liabilityor responsibility for protection of the Property, or for any representationsmade by Borrower.

##  

## **3.4****         ****Direct Application ofProceeds**.  Lender shall have the right, but not theobligation, to disburse and directly apply the proceeds of any portion of theLoan Amount to the satisfaction of any of Borrower’s obligations hereunder orunder the other Loan Documents.  Anyadvance by Lender for such purpose shall be part of the Loan and shall beevidenced and secured by the Loan Documents. Lender may advance such funds and incur such expenses as Lender deemsnecessary to preserve the Property and any security for the Loan, and suchexpenses, even though in excess of the amount of the Loan, shall be secured byany and all documents securing the Loan and the Note and shall be payable toLender upon demand.

##  

## **3.5****         ****InsufficientDocumentation**.  In the event that Lender shall determine, inits reasonable judgment, that proper documentation to support disbursement ofthe Loan Amount, as required by this Agreement, has not been furnished, it maywithhold payment of the Loan Amount as shall not be so supported by properdocumentation, and shall promptly notify Borrower of the discrepancy in oromission of such documentation.  Untilsuch time as such discrepancy or omission is corrected to the satisfaction ofLender, it may withhold disbursement of the Loan Amount.

##  

**IV.REPRESENTATIONS AND WARRANTIES OF LENDER AND BORROWER**

 

## **4.1****         ****Representations andWarranties of Borrower**.  As aninducement to Lender to execute this Agreement and to disburse the proceeds ofthe Loan, Borrower represents and warrants to Lender that:

##  

### (a)            **Legal Status of Borrower**. Borrower is a corporation duly organized, validly existing and in goodstanding under the laws of the State of California.

###  

### (b)            **Title**. Borrower is the owner, in fee simple, of the Land and the Improvements,subject to no lien, charge, mortgage, deed of trust, restriction or encumbrance,except Permitted Encumbrances.

###  

### (c)            **No Breach of ApplicableAgreements or Laws**.  Subject to obtaining theapproval of the Bankruptcy Court, the consummation of the transactionscontemplated hereby and the execution, delivery and/or performance of thisAgreement and the other Loan Documents will not result in any breach of orconstitute a default under any mortgage, deed of trust, lease, bank loan,credit agreement, or other instrument or violate any Governmental Requirements,to which Borrower is a party, or by which Borrower may be bound or affected.

 

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### (d)            **No Litigation orDefaults**.  Except for the Current Bankruptcy, and exceptas set forth on Schedule 2.1(h), there are no actions, suits orproceedings pending or, to the knowledge of Borrower, threatened against oraffecting Borrower or the Property which would have a Material Adverse Effect,or involving the validity or enforceability of the Loan Documents or thepriority of the lien thereof, at law or in equity; and Borrower is not indefault under any order, writ, injunction, decree or demand of any court or anyadministrative body having jurisdiction over Borrower.

###  

### (e)            **Financial and OtherInformation**.  The financial statements of Borrowerpreviously or hereafter delivered to Lender fairly and accurately present, orwill fairly and accurately present, the financial condition of Borrower, as ofthe dates of such statements, and neither this Agreement nor any document,financial statement, financial or credit information, certificate or statementreferred to herein or furnished to Lender by Borrower contains, or willcontain, any untrue statement of a material fact or omits, or will omit, amaterial fact, or is or will be misleading in any material respect.

###  

### (f)             **ERISA**.  (a) Borroweris not and will not be an “employee benefit plan,” as defined in §3(3) ofERISA, subject to Title I of ERISA, (b) none of the assets of Borrowerconstitute or will constitute “plan assets” of one or more such plans withinthe meaning of 29 C.F.R. §2510.3-101, (c) Borrower is not and will not bea “governmental plan” within the meaning of §3(3) of ERISA, and (d) transactionsby or with Borrower are not and will not be subject to state statutesregulating investment of, and fiduciary obligations with respect to,governmental plans.

###  

### (g)            **Boundary Lines;Conformance with Governmental Requirements and Restrictions**. Except as disclosed in the survey provided to Lender, the exterior linesof the Improvements are, and at all times will be, within the boundary lines ofthe Land, and Borrower has examined and is familiar with all applicablecovenants, conditions, restrictions and reservations, and with all applicableGovernmental Requirements, including but not limited to building codes andzoning, environmental, hazardous substance, energy and pollution control laws,ordinances and regulations affecting the Property, and the Property conforms toand complies with said covenants, conditions, restrictions, reservations andGovernmental Requirements.

###  

### (h)            **Utilities, Etc**. Telephone services, gas, electric power, storm sewers, sanitary sewerand water facilities are available to the boundaries of the Land, adequate toserve the Property and not subject to any conditions (other than normal chargesto the utility supplier) which would limit the use of such utilities.  All streets and easements necessary for theoperation of the Property are available to the boundaries of the Property.

###  

### (i)             **Collateral**. Borrower is now and shall continue to be the sole owner of theCollateral free from any lien, security interest or adverse claim of any kindwhatsoever, except for liens or security interests in favor of Lender, anyliens disclosed in the Title Policy, or liens or security interests otherwiseapproved by Lender in Lender’s sole discretion.

###  

### (j)             **Condemnation**. No condemnation proceeding or moratorium is pending or, to the knowledgeof Borrower, threatened against the Land or the Improvements which would

 

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### impair any construction, use, sale or occupancy of the Property (or anyportion thereof) in any manner whatsoever.

###  

### (k)                                  **Governmental Regulations**. Except for the Current Bankruptcy, Borrower is not subject to regulationunder the Investment Company Act of 1940, the Federal Power Act, the PublicUtility Holding Company Act of 1935, the Interstate Commerce Act or any federalor state statute or regulation limiting its ability to incur indebtedness formoney borrowed.

###  

### (l)                                     **Compliance withAnti-Terrorism, Embargo, Sanctions and Anti Money Laundering Laws**. Borrower, and to Borrower’s current knowledge (a) each Personowning an interest in Borrower,  and (b) eachtenant at the Property:  (i) is notcurrently identified on the OFAC List, and (ii) is not a Person with whoma citizen of the United States is prohibited to engage in transactions by anytrade embargo, economic sanction, or other prohibition of United States law,regulation, or Executive Order of the President of the United States,including, without limitation, any Anti-Terrorism Laws.

###  

### (m)                               **Brokers**. Borrower is represented by HealthWest Realty Advisors **(“Broker”)** in connection with the making and arrangement ofthe Loan and the transaction contemplated hereby.  Other than any brokerage commissions or feeswhich may be due by Borrower to the Broker for such services, there are noother brokerage commissions or finders’ fees due or claimed by any party to bedue from Borrower in connection with or with respect to the transactioncontemplated hereby.  Borrower shall befully responsible for any commissions or fees due and owing to Broker (whichshall be paid at Closing from the Loan proceeds).

###  

### (n)                                 **Defects and Hazards**. Borrower does not know of any defects, facts or conditions affecting theLand that would make it unsuitable for the use contemplated hereunder or of anyabnormal hazards (including earth movement or slippage) affecting the Land.

###  

### (o)                                 **Permits**. Borrower has obtained all Permits which are necessary for the operationof the Property in accordance with all applicable building, environmental,subdivision, land use and zoning laws, including all permits for theImprovements, annexation agreements, plot plan approvals, subdivision approvals(including the approval and recordation of any required subdivision map),environmental approvals (including a negative declaration or an environmentalimpact report if required under applicable law), sewer and water permits andzoning and land use entitlements.

###  

## **4.2****                              ****Representations andWarranties of Lender**.  Lender represents and warrantsto Borrower that:

##  

### (a)                                  **Legal Status of Lender**. Lender is a limited liability company duly organized, validly existingand in good standing under the laws of Delaware.

###  

### (b)                                 **No Breach of ApplicableAgreements or Laws**.  The consummation of thetransactions contemplated hereby and the execution, delivery and/or performanceof this Agreement and the other Loan Documents will not result in any breach ofor constitute a default under any mortgage, deed of trust, lease, bank loan,credit agreement, or other instrument or 

 

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### violate any Governmental Requirements, to which Lender is a party, orby which Lender may be bound or affected.

 

**V.**

 

# **COVENANTS OF BORROWER**

 

As an inducement to Lenderto execute this Agreement and to make the Loan, and while this Agreement is ineffect, and until Lender has been paid in full the principal of and interest onthe Loan made by Lender hereunder and under the other Loan Documents, Borrowerhereby covenants as set forth in this Article V:

 

## **5.1****                              ****Paying Costs of Loan**. Borrower shall pay all reasonable expenses incurred by Lender inconnection with the (i) documentation of the Loan and the OptionAgreement, and (ii) closing, administration and enforcement, including,without limitation, all recording costs, title insurance premiums, escrowcharges, costs of surveys, appraisal fees, costs associated with updatingexisting environmental reports (and, if reasonably necessary, obtaining aPhase II report), and reasonable expenses and disbursements of Lender’slegal counsel, in connection with the Loan.

##  

## **5.2****                              ****Using Loan Proceeds****. **Borrowershall use the Loan solely to pay off, or to reimburse Borrower for paying off, (a) Borrower’scurrent debtor-in-possession financing and pre-petition financing and (b) thecosts and expenses incurred by Borrower in connection with obtaining the Loan,all as reasonably approved in writing by Lender.  Borrower shall not use the Loan proceeds, orany portion of them to pay any fees or other payments to any Affiliate ofBorrower without Lender’s prior written consent, in Lender’s sole discretion.

##  

## **5.3****                              ****Keeping of Records**. Borrower shall set up and maintain accurate and complete books, accountsand records pertaining to the Property in a manner reasonably acceptable toLender.  Borrower will permitrepresentatives of Lender to have free access to and to inspect and copy allbooks, records and contracts of Borrower. Any such inspection by Lender shall be for the sole benefit andprotection of Lender, and Lender shall have no obligation to disclose theresults thereof to Borrower or to any third party.

##  

## **5.4****                              ****Providing FinancialInformation**.  Borrower shall furnish such financialinformation concerning Borrower and the Property as Lender may reasonablyrequest, and shall furnish to Lender (a) quarterly financial statementsfor Borrower within forty-five (45) days following the end of each fiscalquarter thereof, (b) quarterly written reports, within forty-five (45)days following the end of each fiscal quarter, setting forth anynew direct indebtedness, obligations or liabilities incurred by Borrower(which shall include contingent liabilities and guaranties) since the datehereof (or the date of the last such written report after the first such writtenreport is so provided), and (c) if required by Lender, copies of allfederal income tax returns (with all supporting schedules) of Borrower dueduring the term of the Loan within fifteen (15) days after the deadline (assuch deadline may be extended) for filing the same.  All such financial statements shall be inreasonable detail, shall be prepared for partnerships, corporations and limitedliability companies in accordance with generally accepted accounting principles

 

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## consistently applied and for individuals in accordance with accountingprinciples consistently applied, shall be certified by the party to which theyapply as true, correct and complete.

##  

## **5.5****                              ****Providing OperatingStatements**.  Borrower shall, within ten (10) daysfollowing the close of each fiscal quarter, deliver to Lender an OperatingStatement and rent roll, in form and detail reasonably satisfactory to Lender,for the Property for the preceding fiscal quarter.  Borrower shall also deliver to Lender anannual Operating Statement for the Property within ninety (90) days followingthe end of each fiscal year thereof.  Allsuch Operating Statements, rent rolls and leasing status reports shall be certifiedas true, correct and complete by Borrower.

##  

## **5.6****                              ****Complying with the LoanDocuments and Other Agreements**.  Borrowershall comply with and perform all of its agreements and obligations under theLoan Documents and shall comply with all reasonable requests by Lender whichare consistent with the terms thereof. Borrower shall comply with and perform all of its agreements andobligations under any mortgage, deed of trust, lease, bank loan, creditagreement, and any other agreement and any Governmental Requirements to whichBorrower is a party, or by which Borrower may be bound or affected.

##  

## **5.7****                              ****Compliance with Laws**. Borrower will comply and, to the extent it is able, will cause others tocomply with all laws and requirements of governmental authorities havingjurisdiction over the processing, approving and recording of any subdivisionmap, and will furnish Lender with reports of any official searches forviolation of any requirements established by such governmentalauthorities.  Borrower will comply and,to the extent it is able, will cause others to comply with all restrictivecovenants and all obligations created by private contracts and leases whichaffect ownership, development, construction, equipping, fixturing, use,occupancy, sale or leasing of the Property (or any portion thereof).  The Property and the leasing thereof shall bein compliance with all permits and approvals issued by governmental agencieswith respect to the Property, applicable building, zoning and use laws,requirements, regulations and ordinances, and any development will not violateany restrictions of record against the Property.  Borrower will deliver to Lender, promptlyafter receipt thereof, copies of all permits and approvals received fromgovernmental authorities relating to the use, construction, development, orsale of the Property.

##  

## **5.8****                              ****Ownership of Collateral**. Borrower will be the sole owner of all Collateral acquired after thedate hereof, free from any adverse lien, security interest or adverse claim ofany kind whatsoever, except for security interests and liens in favor ofLender, liens disclosed in the Title Policy, and other liens approved byLender, in Lender’s sole discretion. Borrower will not convey or transfer any portion of the Collateralwithout the prior written consent of Lender; provided, however,Borrower may convey or transfer some or all of the Equipment so long asBorrower obtains a replacement of comparable or greater utility and value.

##  

## **5.9****                              ****Representations andWarranties**.  Until repayment of the Note and all otherobligations secured by the Deed of Trust, Borrower shall ensure that therepresentations and warranties of Article IV remain true and complete inall material respects.

 

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## **5.10****                       ****Trade Names**. Borrower shall immediately notify Lender in writing of any change in thejurisdiction of organization or place of business of, or the change in thelegal, trade or fictitious business names used by Borrower, and Lender ishereby authorized to file or record any additional financing statements,amendments and other certificates necessary to reflect any such changes.

##  

## **5.11****                       ****No Distributions**. During the occurrence and continuation of any Event of Default, Borrowerwill not, without the prior written consent of Lender in its sole discretion,make any distribution of assets to any shareholder of Borrower, whether or notsuch a distribution is permitted under the terms of Borrower’s bylaws,including repayment of any loans made by a shareholder of Borrower to Borrower,return of capital contributions, distributions upon termination, liquidation ordissolution of Borrower or any development, property management, accounting orother fees payable to a shareholder of Borrower (unless any such fee has beenapproved by Lender, in Lender’s sole discretion).

##  

## **5.12****                       ****Future Development**. Borrower shall not undertake any on-site construction, demolition orrehabilitation work on the Land at a cost in excess of $500,000 without theprior written consent of Lender. Borrower shall notify Lender of its intention to undertake any materialon-site construction, demolition or rehabilitation work on the Land regardlessof the cost thereof and shall demonstrate to Lender’s reasonable satisfactionthat Borrower has the funds available to pay for such costs.  Upon request, Borrower shall deliver toLender copies of any plans, specifications and contracts relating to such workas Lender shall reasonably request.

##  

## **5.13****                       ****Further Assurances**. Borrower shall execute and deliver from time to time, promptly after anyrequest therefor by Lender, any and all instruments, agreements and documentsand shall take such other action as may be reasonably necessary or desirable inthe opinion of Lender to maintain, perfect or insure Lender’s security providedfor herein and in the other Loan Documents, including the filing or recordingof UCC renewal statements or amendments, the execution of such amendments tothe Deed of Trust and the other Loan Documents and the delivery of suchendorsements to the Title Company, all as Lender reasonably requires, and shallpay all fees and expenses (including reasonable attorneys’ fees) relatedthereto or incurred by Lender in connection therewith.

##  

## **5.14****                       ****Notice of Litigation,Etc**.  Promptly upon receiving notice thereof,Borrower will give, or cause to be given, prompt written notice to Lender of (a) anyactions or proceeding instituted by or against it in any federal or state courtor before any commission or other regulatory body, federal, state or local,foreign or domestic which, if adversely determined, could reasonably beexpected to have a Material Adverse Effect or which would constitute an eventof default or a default under any other material contract, instrument oragreement to which it is a party or by or to which it or any of its propertiesor assets may be bound or subject; or (b) any such proceedings that arethreatened against it, which, if adversely determined, could reasonably beexpected to have a Material Adverse Effect; or (c) any actions,proceedings or notices adversely affecting the Property (or any portionthereof) or Lender’s interest therein or any zoning, building or othermunicipal officers, offices or departments having jurisdiction with respect tothe Property or the leasing of it.

 

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## **5.15****                       ****Signage**. Borrower shall not sell, lease or assign the right to any signage on orabout the Property without the prior written consent of Lender, other thanrights of tenants pursuant to existing leases.

##  

## **5.16****                       ****Maintenance of Property**. Borrower shall maintain and preserve all rights and franchises materialto its business at the Property.

##  

## **5.17****                       ****Impound Account**.

##  

### (a)                                  Borrower shall at all times maintain andmake deposits into the Taxes and Insurance Deposit Account as follows:commencing on the first day of the month in which Borrower is required to makeits first interest payment under the Note (the “First Payment Date”), (i) Borrowershall deposit into the Taxes and Insurance Deposit Account an amount equal tothe product of one-twelfth (1/12th) of the yearly real estate taxes andassessments which may be levied on the Property (less any such amounts as arepayable by tenants under leases of the Property), multiplied by the number ofmonths which have elapsed since the end of the prior fiscal tax year and theFirst Payment Date (Borrower shall receive a credit for the Initial Deposit),and (ii) thereafter, on the first day of the month thereafter until theMaturity Date, Borrower shall deposit or cause to be deposited into the Taxesand Insurance Deposit Account an amount equal to one-twelfth (1/12th) of theyearly real estate taxes and assessments which may be levied on the Propertyand the yearly premiums for all insurance required to be maintained byBorrower.  In connection with theforegoing, Borrower shall be responsible for ensuring Lender’s receipt, atleast thirty (30) days prior to the respective due date for payment, of allbills, invoices and statements for all real estate taxes and assessments andinsurance premiums to be paid.  In itssole discretion, Lender may retain a third party tax lien service to obtain taxcertificates and other evidence or estimates of tax due or to become due andBorrower shall promptly reimburse Lender for the cost of such service.  Any unpaid reimbursements for any tax lienservice will be added to the Note.

###  

### (b)                                 Lender shall withdraw, and Borrowerhereby authorizes Lender to withdraw, funds from the Taxes and InsuranceDeposit Account from time to time in order to cover the payments of real estatetaxes and assessments and insurance premiums as the same become due andpayable.

###  

## **5.18****                       ****Reserve Account**. Commencing on the first day of the month in which Borrower is requiredto make its first interest payment under the Note, and continuing on the firstday of each month thereafter  until theMaturity Date, Borrower shall deposit the Reserve Contribution into the ReserveAccount.  Borrower may draw upon theReserve Account for purposes of making capital improvements to the Property, upto four (4) times in any given year, provided Borrower gives Lender atleast thirty (30) days prior written notice of such draw request, and furtherprovided that Lender approves of the amount of the requested draw, the proposedcost, scope and need for the requested improvements, repairs and/orreplacements, and the proposed manner in which the work is to be performed.

##  

## **5.19****                       ****Emergency Room Account**. Commencing on the first day of the month in which Borrower is requiredto make its first interest payment under the Note, and continuing on the firstday of each month thereafter until the Funding End Date, Borrower shall depositthe Emergency

 

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## Room Contribution into the Emergency Room Account.  From and after commencement of constructionof the Emergency Room Facility, Borrower shall be entitled to a release ofproceeds in the Emergency Room Account which proceeds shall be used onlyto pay invoices covering the cost of construction of the Emergency Room Facilitywhich are then due and payable or which have previously been paid by Borrower,in an amount equal to the amount of the invoices to be paid or which havepreviously been paid by Borrower multiplied by a fraction, the numerator ofwhich is the balance then outstanding in the Emergency Room Account andthe denominator of which is the contract price under the construction contractcovering construction of the Emergency Room Facility, and in accordancewith disbursement procedures reasonably acceptable to Borrower, theconstruction loan lender and Lender. Notwithstanding anything to the contrary contained in this Agreement,upon the occurrence of any of the events described in clause (iii) ofthe definition of Funding End Date, and so long as no Event of Default hasoccurred and is continuing at the time of the occurrence of any such event,Lender shall promptly cause all of the funds in the Emergency Room Accountto be released to Borrower. Notwithstanding anything to the contrary contained in this Agreement,upon the occurrence of any of the events described in clause (iv) ofthe definition of Funding End Date, and provided that Borrower has repaid theLoan on the Maturity Date, Lender shall promptly cause all of the funds in theEmergency Room Account to be released to Borrower.

##  

## **5.20****                       ****Reserved**.

##  

## **5.21****                       ****Release of Emergency Room Account**. At such time as Borrower receives a certificate of occupancy for use ofthe new Emergency Room Facility and the old emergency room facility hasbeen closed, Borrower shall be entitled to the return of any monies remainingin the Emergency Room Account.  Atsuch time Lender shall pay to Borrower the additional sum of One MillionDollars ($1,000,000) to offset the soft and hard costs of design andconstruction of the new Emergency Room Facility to the extent the moniesin the Emergency Room Account were insufficient to pay all of said costs,including, without limitation, costs associated with financing the constructionof the Emergency Room Facility. Notwithstanding anything in the Loan Documents to the contrary, Lendershall subordinate all of its rights and interests to the Emergency Room Accountpursuant to the terms of a subordination agreement to be entered into byBorrower and any lender providing financing to Borrower for purposes of designand construction of the Emergency Room Facility.

##  

## **5.22****                       ****Parking Spaces**. Seventy-five (75) of the One Hundred (100) parking spaces which shall beleased to Borrower under the Adjacent Property Access Lease may be relocated byLender to a place outside of the boundaries of the Land so long as the locationthereof, and the distance thereof from the emergency room facility, complieswith all applicable laws and regulations and provided, further, that suchrelocated parking is within three hundred (300) yards of the entrance of theemergency room facility.

##  

## **5.23****                       ****Existence; Change of Name;Location as a Registered Organization**.  Borrowershall continuously maintain (a) its existence and shall not dissolve orpermit its dissolution, and (b) its rights and franchises to do business inthe state where the Property is located. Borrower shall not change Borrower’s name, legal entity, or its locationas a registered organization within the meaning of the UCC, without notifyingLender of such change in writing at least thirty (30) days prior to itseffective date.  The notificationrequirements set forth in this

 

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## Section are in addition to, and not in limitation of, therequirements of ARTICLE 7.  Borrowershall pay all costs and expenses incurred by Lender (including, withoutlimitation, reasonable legal fees) in connection with any change describedherein.

##  

## **5.24****                       ****Reserved**.

##  

## **5.25****                       ****Prohibited Transactions**. Borrower shall not engage in any transaction which would cause anyobligation or action taken or to be taken hereunder by Borrower (or theexercise by Lender of any of its rights under any of the Loan Documents) to bea non-exempt (under a statutory or administrative class exemption) prohibitedtransaction under ERISA.  Borrower agreesto deliver to Lender such certifications or other evidence throughout the termof the Loan as requested by Lender in its sole discretion to confirm compliancewith Borrower’s obligations under this Section 5.24 or to confirm thatBorrower’s representations and warranties regarding ERISA remain true.

##  

## **5.26****                       ****Compliance withAnti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws**. Borrower shall comply with all Requirements of Law relating to moneylaundering, anti-terrorism, trade embargos and economic sanctions, now orhereafter in effect, including, without limitation, Anti-Terrorism Laws.  Without limiting the foregoing, Borrowershall not take any action, or permit any action to be taken, that would causeBorrower’s representations and warranties in Section 4.1(l) of thisLoan Agreement to become untrue or inaccurate at any time during the term ofthe Loan.  Borrower shall notify Lenderpromptly of Borrower’s actual knowledge that the representations and warrantiesin Section 4.1(l) of this Loan Agreement may no longer be accurate orthat any other violation of the foregoing Requirements of Law has occurred oris being investigated by Governmental Authorities.  In connection with such an event, Borrowershall comply with all Requirements of Law and directives of GovernmentalAuthorities and, at Lender’s request, provide to Lender copies of all notices,reports and other communications exchanged with, or received from, GovernmentalAuthorities relating to such event. Borrower shall also reimburse Lender for any expense incurred by Lenderin evaluating the effect of such an event on the Loan and Lender’s interest inthe collateral for the Loan, in obtaining any necessary license fromGovernmental Authorities as may be necessary for Lender to enforce its rightsunder the Loan Documents, and in complying with all Requirements of Lawapplicable to Lender as the result of the existence of such an event and forany penalties or fines imposed upon Lender as a result thereof.

 

**VI.**

 

# **DEFAULTS**

 

## **6.1****                              ****Events of Default**. Any of the following events shall constitute an “Event of Default” underthis Agreement:

##  

### (a)                                  Borrower shall default in the payment ofprincipal due according to the terms hereof or of the Note.

###  

### (b)                                 Borrower shall default in the payment ofinterest on the disbursement of the Loan Amount made by Lender, or in thepayment of fees or other amounts payable to

 

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### Lender, hereunder, under the Note or under any of the other LoanDocuments, and such default is not cured within five (5) days afterreceipt of written notice from Lender.

 

### (c)                                  Borrower shall fail to perform or observeany obligation or covenant (other than those obligations and covenantsdescribed in subparagraphs (a) and (b), above, or otherwise set forth insubparagraphs (d) through (p), below, of this Section 6.1) under thisAgreement or any other Loan Document within thirty (30) days after receipt ofwritten notice that such obligation was not performed; provided that, if curecannot reasonably be effected within such 30-day period, such failure shall notbe an Event of Default hereunder so long as Borrower commences cure within such30-day period, and thereafter diligently prosecutes such cure to completion;and provided further, however, that notwithstanding the 30-day cure period orextended cure period described above in this subparagraph (c), if a differentnotice or cure period is specified under any Loan Document or under anyprovision of the Loan Documents as to any such failure or breach, the specificLoan Document or provision shall control, and Borrower shall have no more timeto cure the failure or breach than is allowed under the specific Loan Documentor provision as to such failure or breach.

###  

### (d)                                 Any representation or warranty made byBorrower in this Agreement, in any of the other Loan Documents, or in anycertificate or document furnished under the terms of this Agreement or inconnection with the Loan, shall be untrue or incomplete in any material respectwhen made.

###  

### (e)                                  An event of default, after the expirationof any applicable notice and/or cure period provided thereunder, shall existunder the terms of any other credit facility or other agreement now orhereafter existing between Borrower and Lender or JHA East 7 LLC, and/or betweenany other Affiliate of Borrower and Lender or JHA East 7 LLC.

###  

### (f)                                    A default shall exist under the terms ofBorrower’s formation documents.

###  

### (g)                                 The Environmental Indemnity, at any timeand for any reason ceases to be in full force and effect, or Borrower contestsor denies the validity or enforceability of the Environmental Indemnity, orgives notice to Lender to such effect, or otherwise attempts to revoke orrepudiate any of the foregoing as to any existing or future obligations.

###  

### (h)                                 Borrower shall fail to maintain insuranceas required by the Deed of Trust or shall fail to furnish to Lender proof ofpayment of all premiums for such insurance.

###  

### (i)                                     A transfer, encumbrance, lien, change ofownership or other action or occurrence prohibited by the Deed of Trust shalloccur.

###  

### (j)                                     Lender fails to have an enforceable lienon or security interest in any property or Collateral given as security for theLoan.

###  

### (k)                                  If Borrower shall (i) make anassignment for the benefit of creditors; (ii) generally not be paying itsdebts as they become due; or (iii) admit in writing its inability to payits debts as they become due;

 

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### (l)                                     Other than with respect to the CurrentBankruptcy, if (i) Borrower shall commence any case, proceeding or otheraction under any existing or future law of any jurisdiction, domestic orforeign, relating to bankruptcy, insolvency, reorganization, conservatorship orrelief of debtors (A) seeking to have an order for relief entered withrespect to it, or seeking to adjudicate it a bankrupt or insolvent, or seekingreorganization, arrangement, adjustment, winding-up, liquidation, dissolution,composition or other relief with respect to it or its debts, or (B) seekingappointment of a receiver, trustee, custodian, conservator or other similarofficial for it or for all or any substantial part of its assets; or (ii) thereshall be commenced against Borrower any case, proceeding or other action of anature referred to in clause (i) above by any party other than Lenderwhich (A) results in the entry of an order for relief or any suchadjudication or appointment, or (B) remains undismissed, undischarged orunbonded for a period of ninety (90) days; or (iii) there shall becommenced against Borrower any case, proceeding or other action seekingissuance of a warrant of attachment, execution, distraint or similar processagainst all or any substantial part of its assets which results in the entry ofany order for any such relief which shall not have been vacated, discharged, orstayed or bonded pending appeal within ninety (90) days from the entry thereof;or (iv) Borrower shall take any action in furtherance of, or indicatingits consent to, approval of, or acquiescence in, any of the acts set forth inclause (i), (ii), or (iii) above;

###  

### (m)                               Any judgment for monetary damages isentered against Borrower which, in Lender’s sole judgment, has a MaterialAdverse Effect or is not covered to Lender’s satisfaction by collectibleinsurance proceeds; or

###  

### (n)                                 If a Transfer, other than a PermittedTransfer, occurs without Lender’s prior written consent or in violation of theterms of Lender’s consent.

###  

## **6.2****                              ****Rights and Remedies**. Upon the occurrence and during the continuance of an event of default,unless such event of default is subsequently waived in writing by Lender,Lender shall be entitled, at the option of Lender, to exercise any or all ofthe following rights and remedies, consecutively or simultaneously, and in anyorder:

##  

### (a)                                  Lender may declare the entire unpaid principalbalance of the Loan Amount to be immediately due and payable, together withaccrued and unpaid interest on such advances, without notice to or demand onBorrower.

###  

### (b)                                 Lender may exercise any or all remediesspecified herein and in the other Loan Documents, including (without limitingthe generality of the foregoing) the right to foreclose the Deed of Trust,and/or any other remedies which it may have therefor at law, in equity or understatute.

###  

### (c)                                  Lender may cure the event of default onbehalf of Borrower, and, in doing so, may enter upon the Property, and mayexpend such sums as it may deem desirable, including attorneys’ fees, eventhough causing the Loan to exceed the face amount of the Note, shall bearinterest at the Default Rate and shall be payable by Borrower on demand.

 

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** **

**VII.**

** **

# **RESERVED**

** **

**VIII.**

** **

# **MISCELLANEOUS**

 

## **8.1****                              ****Binding Effect; Waivers;Cumulative Rights and Remedies**.  Theprovisions of this Agreement shall inure to the benefit of and be binding uponthe parties hereto and their respective heirs, executors, administrators,personal representatives, legal representatives, successors and assigns;provided, however, that neither this Agreement nor the proceeds of the Loan maybe assigned by Borrower voluntarily, by operation of law or otherwise, withoutthe prior written consent of Lender, in Lender’s sole discretion.  No delay on the part of Lender in exercisingany right, remedy, power or privilege hereunder shall operate as a waiverthereof, nor shall any single or partial exercise of any right, remedy, poweror privilege hereunder constitute such a waiver or exhaust the same, all ofwhich shall be continuing.  The rightsand remedies of Lender specified in this Agreement shall be in addition to, andnot exclusive of, any other rights and remedies which Lender would otherwisehave at law, in equity or by statute, and all such rights and remedies,together with Lender’s rights and remedies under the other Loan Documents, arecumulative and may be exercised individually, concurrently, successively and inany order.

##  

## **8.2****                              ****Survival**. All agreements, representations and warranties made in this Agreement orany other Loan Document shall survive the execution of this Agreement, themaking of the advances by Lender, and the execution of the other LoanDocuments, and shall continue until Lender receives payment in full of allindebtedness of Borrower incurred under this Agreement and under the other LoanDocuments.

##  

## **8.3****                              ****Governing Law; Waiver ofJury Trial**.  This Agreement, the rights of the partieshereunder and the interpretation hereof shall be governed by, and construed inaccordance with, the internal laws of the State of California, in all respects.  To the extent permitted by law, Borrowerhereby waives any right to a trial by jury in any action relating to the Loanand/or the Loan Documents.

##  

## **8.4****                              ****Counterparts**. This Agreement may be executed in any number of counterparts, all ofwhich shall constitute a single Agreement.

##  

## **8.5****                              ****Notices**. Any notice required or permitted to be given by either party hereto tothe other under the terms of this Agreement, or documents related hereto, shallbe deemed to have been given on the date the same is deposited in the UnitedStates Mail, registered or certified, return receipt requested, postageprepaid, addressed to the party to which the notice is to be given at theaddress set forth opposite its name below, or at any other address specified ina notice given by such party to the other not less than ten (10) days priorto the effective date of the address change.

 

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## **8.6****                              ****Costs and Expenses;Indemnification; Reimbursement**.

##  

### (a)                                  Upon the closing and funding of the Loan,Borrower shall pay (i) all taxes and assessments and all reasonableout-of-pocket expenses, charges, costs and fees provided for in this Agreement,(ii) all reasonable out of pocket expenses incurred by Lender (includingthe reasonable out-of-pocket fees, charges and disbursements of any counsel forLender), in connection with the enforcement or protection of its rights inconnection with this Agreement and the other Loan Documents, including itsrights under this Section, and (iii) a loan fee to Lender in the amount ofone percent (1%) of the original principal balance of the Loan (which shall bepaid out of Loan proceeds).

###  

### (b)                                 Borrower shall indemnify Lender(hereinafter, “**Indemnitee**”)against, and hold each Indemnitee harmless from, any and all losses, claims,damages, liabilities and related expenses (including the reasonable fees,charges and disbursements of any counsel for any Indemnitee), incurred by anyIndemnitee or asserted against any Indemnitee by any third party or by Borroweror Indemnitor arising out of, in connection with, or as a result of (i) theexecution or delivery of this Agreement, or any other Loan Document, theperformance by the parties hereto of their respective obligations hereunder orthereunder or the consummation of the Loan transactions, or (ii) anyactual or prospective claim, litigation, investigation or proceeding relatingto any of the foregoing, whether based on contract, tort or any other theory,whether brought by a third party or by Borrower, and regardless of whether anyIndemnitee is a party thereto, provided that such indemnity shall not, as toany Indemnitee, be available to the extent that such losses, claims, damages,liabilities or related expenses (x) are determined by a court of competentjurisdiction by final and nonappealable judgment to have resulted from thegross negligence or willful misconduct of such Indemnitee or (y) resultfrom a claim brought by Borrower against an Indemnitee for breach in bad faithof such Indemnitee’s obligations hereunder or under any other Loan Document, ifBorrower or Indemnitor has obtained a final and nonappealable judgment in itsfavor on such claim as determined by a court of competent jurisdiction.

 

The obligations on thepart of Borrower under this Section 7.6 shall survive the closing of theLoan and the repayment thereof.

 

## **8.7****                              ****No Third Party Reliance**. No third party shall be entitled to rely upon this Agreement or to haveany of the benefits of Lender’s interest hereunder, unless such third party isan express assignee of all or a portion of Lender’s interest hereunder.

##  

## **8.8****                              ****Sale of Loan orParticipations**.  Lender may at any time sell, transfer,syndicate, grant participations in or otherwise dispose of any portion of theLoan (each such interest so disposed of being herein called a “**Transferred Interest**”) to banks, insurancecompanies or other financial institutions (hereinafter called “**Transferees**”), pursuant to such transferagreements, co-lender agreements, participations agreements and/or agencyagreements into which Lender and its Transferees may enter and by whichBorrower shall agree in writing to recognize. In addition, Lender may, at any time and from time to time, in itsordinary course of business and in accordance with applicable law, (i) assignan undivided interest in the Loan to an Affiliate of Lender or to a successorentity by reason of any merger affecting Lender, or (ii) pledge or assignthe same to any Federal Reserve Bank in accordance with applicable law.  At 

 

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## the request of Lender, in the event of any such sale, assignment,transfer or syndication, Borrower shall execute separate new Notes to theAssignor and its assignee, in the amounts of their respective interests in theLoan after said assignment, and shall deliver the same to the assignor and theassignee, in exchange for the assignor’s existing Note.  All such separate new Notes shall be entitledto all the rights and benefits accorded to the Note under the terms of the LoanDocuments.  No such assignment shall bebinding upon Borrower until Lender gives written notice thereof to Borrower.  Lender may divulge all information relatingto Borrower or the Property which Lender has to any actual or potentialTransferee, and Borrower shall cooperate with Lender in connection with thetransfer.  Borrower agrees that eachTransferee shall be entitled to the benefits hereof with respect to its TransferredInterest and that each Transferee may exercise any and all rights of banker’slien, setoff and counterclaim as if such Transferee were a direct lender toBorrower.  If Lender makes any assignmentto a Transferee, then upon notice to Borrower such Transferee, to the extent ofsuch assignment (unless otherwise provided therein), shall become a lenderhereunder and shall have all the rights and obligations of Lender hereunder,and Lender shall be released from its duties and obligations under this agreementto the extent of such assignment.

##  

So long as (and only solong as) no event of default then exists at the time of a disposition of aTransferred Interest, confidential information regarding Borrower given to suchTransferees shall be kept confidential except to the extent such Transferee isrequired to disclose such information by reason of any applicable law orregulation.

 

## **8.9****                              ****Arrangement by Brokers**. Borrower acknowledges and agrees that this Loan and the transactioncontemplated hereby has been made or arranged by the Brokers as described in Section 1916.1of the California Civil Code, and as such, this transaction is exempt from Section 1of Article XV of the California Constitution.

##  

## **8.10****                       ****Recourse**. Upon an event of default, Lender will look solely to the Property forthe repayment of the Loan and will not enforce or seek a judgment againstBorrower; provided, however, Borrower shall be personally liable to Lender for:(i) fraud or intentional misrepresentation in connection with theexecution and the delivery of this Agreement, or the other Loan Documents; (ii) Borrower’smisapplication or misappropriation of rents received by Borrower after theoccurrence of a default or event of default in violation of the terms of theLoan Documents; (iii) Borrower’s misapplication or misappropriation ofsecurity deposits or rents collected more than thirty (30) days in advance inviolation of the terms of the Loan Documents; (iv) Borrower’smisapplication or the misappropriation of insurance proceeds or condemnationawards in violation of the terms of the Loan Documents; (v) Borrower’sfailure to pay prior to delinquency any Impositions (as defined in the Deed ofTrust) (except to the extent that sums sufficient to pay such amounts have beendeposited in escrow with Lender), charges for labor or materials or othercharges that can create liens on the Property; (vi) Borrower’s failure toreturn or to reimburse Lender for all Equipment taken from the Property by oron behalf of Borrower and not replaced with Equipment of the same utility andof the same or greater value; (vii) any act of intentional waste or arsonby Borrower or any affiliate thereof with respect to the Collateral, or (viii) Borrower’sfailure to comply with the provisions of Section 1.12 of the Deed ofTrust.

 

26

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## **8.11****                       ****Time of the Essence**. Time is of the essence hereof with respect to the dates, terms andconditions of this Agreement.

##  

## **8.12****                       ****Entire Agreement; NoOral Modifications**.  This Agreement, the other LoanDocuments and the other documents mentioned herein and executed as of the datehereof set forth the entire agreement of the parties with respect to the Loanand supersede all prior written or oral understandings and agreements withrespect thereto.  No modification orwaiver of any provision of this Agreement shall be effective unless set forthin writing and signed by the parties hereto.

##  

## **8.13****                       ****Captions**. The headings or captions of the Articles and Sections set forth hereinare for convenience only, are not a part of this Agreement and are not to beconsidered in interpreting this Agreement.

##  

## **8.14****                       ****Joint and SeveralLiability**.  If Borrower consists of more than one (1) individualand/or entity, each of said individuals and/or entities shall be jointly andseverally liable for each covenant, agreement, representation and warranty ofBorrower hereunder.

##  

## **8.15****                       ****Borrower-LenderRelationship**.  The relationship between Borrower and Lendercreated hereby and by the other Loan Documents shall be that of a borrower anda lender only, and in no event shall Lender be deemed to be a partner of, or ajoint venturer with, Borrower.

##  

## **8.16****                       ****Benefit of Lender**. The rights of the Lender under the Loan Documents are for the benefit ofLender solely in its capacity as a lender in connection with the Loan and arenot intended to benefit the Lender in its capacity as the “Buyer” under theOption Agreement.

##  

## **8.17****                       ****Reserved**.

##  

## **8.18****                       ****Pledge of Accounts**. Borrower shall grant to Lender a perfected security interest in theAccounts as additional security for the Loan. Upon the occurrence of an Event of Default hereunder, Lender shall beentitled to foreclose upon Borrower’s interest in the Accounts either before,after or together with the foreclosure of the Deed of Trust.  Upon any such foreclosure, all amountscontained in the Accounts shall be applied to reduce the balance of LoanAmount.  On or prior to the Closing Date,Lender, Borrower and the financial institutions maintaining the Accounts shallenter into “control agreements” for the purpose of perfecting the securityinterests in the Accounts as provided under the UCC.  Notwithstanding anything in the LoanDocuments to the contrary, Lender shall subordinate all of its rights andinterests to the Emergency Room Account pursuant to the terms of asubordination agreement to be entered into by Borrower and any lender providingfinancing to Borrower for purposes of design and construction of the Emergency Room Facility.

##  

## **8.19****                       ****Prohibition AgainstTransfers**.  Borrower shall not permit any Transfer to beundertaken or cause any Transfer to occur, other than a PermittedTransfer.  Any Transfer made in violationof this Loan Agreement shall be void.

##  

## **8.20****                       ****Lender Approval**. Lender’s decision to approve any Transfer proposed by Borrower shall bemade in Lender’s sole discretion and Lender shall not be obligated to approveany Transfer.

 

27

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**INWITNESS WHEREOF**,the parties have executed this Agreement as of the day and year first abovewritten.

 
| Address:                       |       | **“BORROWER”**                       |
|--------------------------------|------------|------------------------------------------------|
|                           |       | ** **                                     |
| Brotman Medical Center Inc.    |       | **BROTMAN MEDICAL CENTER, INC.,**              |
| 3828 Delmas Terrace            |       | a California corporation, debtor-in-possession |
| Culver City, California 90231  |       |                                           |
| Attn: Stanley Otake, CEO       | ** ** |                                           |
|                           |       |                                           |
|                           |       | By:                                            | /s/ Stanley Otake |
|                           |       |                                           | Name: | Stanley Otake |
|                           |       |                                           | Its: | Chief Executive Officer |
|                           |       |                                           |   |
| Address:                       |       | **“LENDER”**                         |
|                           |       |                                           |
| JHA West 16, LLC               |       | **JHA WEST 16, LLC,**                          |
| c/o Jewish Home for the Aging  |       | a Delaware limited liability company           |
| 7150 Tampa Avenue              |       |                                           |
| Reseda, California 91335       |       | By:                                            | JHA Geriatric Services, Inc., a California corporation |
|                           |       | Its:                                           | Sole Member |
| Attention: Loan Administration |       |                                           |   |
|                           | ** ** |                                           | By: | /s/ M. M. Forrest |
|                           | ** ** |                                           |   | Name: | M. M. Forrest |
|                           | ** ** |                                           |   | Title: | CEO and President |
|                                |            |                                                |  |  |  |  |

 

28

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** **

**EXHIBIT A**

** **

**Legal Description of Land**

** **

PARCELA:  APN (4207-003-014)

 

LOTS 8THROUGH 10, AND 14 THROUGH 17 INCLUSIVE , ALL IN BLOCK 12 OF TRACT NO. 2444, INTHE CITY OF CULVER CITY, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ASPER MAP RECORDED IN BOOK 24 PAGES 5, 6 AND 7 OF MAPS , IN THE OFFICE OF THECOUNTY RECORDER OF SAID COUNTY.

 

PARCELB: APN (4207-003-003, 004, 006, 007, 008, 015)

 

LOTS 4AND 5 IN THE CITY OF LOS ANGELES AND LOTS 7, 11, 12, 18 AND 19 IN THE CITY OFCULVER CITY, ALL IN BLOCK 12 OF TRACT NO. 2444, IN THE COUNTY OF LOS ANGELES,STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 24 PAGES 5, 6 AND 7 OF MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.  EXCEPT FROM LOT 18, ALL CRUDE OIL, PETROLEUM,GAS, BREA, ASPHALTUM AND ALL KINDRED

 

SUBSTANCESAND OTHER MINERALS UNDER AND IN SAID LAND, LYING BELOW A DEPTH OF 500 FEET FROMTHE SURFACE OF SAID LAND, BUT WITHOUT RIGHT OF SURFACE ENTRY FOR THE EXTRACTIONTHEREOF, AS RESERVED BY LORA MAC NAUGHTON FOSTER AND MARGARET MAC NAUGHTONMOORE, BOTH MARRIED

 

WOMEN,IN DEED RECORDED MAY 15, 1960 IN BOOK D-846 PAGE 929, OFFICIAL RECORDS.

 

ALSOEXCEPT FROM LOT 19, ALL RIGHT, TITLE AND INTEREST IN AND TO ALL OIL, NAPHTHA,GAS, PETROLEUM AND OTHER MINERAL SUBSTANCES DEPOSITED IN, LYING UNDER ORFLOWING THROUGH OR THAT MAY BE PRODUCED FROM SAID LAND WITH NO RIGHT TOENTER UPON THE SURFACE OF SAID PROPERTY OR SUBSURFACE THEREOF AT ANY POINTABOVE A DEPTH OF 500 FEET FROM THE SURFACE THEREOF, AS RESERVED IN DEEDEXECUTED BY MEAD ROLAND JOHNSTON AND CORA M. JOHNSTON, HIS WIFE, RECORDEDOCTOBER 14, 1960 IN BOOK D-1006 PAGE 57, OFFICIAL RECORDS.

 

PARCELC: APN (4207-003-005)

 

THATPORTION OF LOT 6, BLOCK 12 OF TRACT NO. 2444, IN THE CITY OF LOS ANGELES,COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 24PAGES 5 TO 7 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAIDCOUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER THEREOF;THENCE NORTHEASTERLY 53.85 FEET TO THE MOST EASTERLY CORNER THEREOF; THENCENORTHWESTERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT, 125 FEET TO PROPOSED 

 

A-1

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SOUTHEASTERLYLINE OF VENICE BOULEVARD, AS CONTEMPLATED IN ORDINANCE NO. 55691; THENCESOUTHWESTERLY ALONG SAID PROPOSED LINE, 40.31 FEET; THENCE SOUTHERLY ALONG SAIDPROPOSED LINE, 14.34 FEET TO A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT;THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY LINE, 115.05 FEET TO THE POINT OFBEGINNING.

 

A-2

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**EXHIBIT B**

** **

**AdditionalRequired Items Prior to Funding**

 

1.                                       Proof of Lender’s right to rely upon anyenvironmental report that Borrower (or a predecessor of Borrower) has obtainedwith respect to the Property.

 

2.                                       A Phase I Environmental Site Assessmentshall be required, at no cost to Lender. Lender reserves the right to require a more extensive environmentalaudit at Lender’s sole cost and expense.

 

3.                                       Copy of all organizational documents forthe Borrower.

 

4.                                       Preliminary title report and all associateddocuments prior to loan closing.  Titleinsurance policy containing all required endorsements at closing.

 

5.                                       Current financial statements for theBorrower.

 

6.                                       UCC Lien Search.

 

B-1

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** **

**SCHEDULE 2.1(h)**

** **

**[**Liabilities/Litigation]

 

None.

 

B-1

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