EXHIBIT
10.1


 




 





SECOND
AMENDED AND RESTATED CREDIT AGREEMENT


 


DATED
AS OF JULY 17, 2008


 


AMONG


 


LTC
PROPERTIES, INC.


 


THE
GUARANTORS FROM TIME TO TIME PARTIES HERETO,


 


THE
LENDERS FROM TIME TO TIME PARTIES HERETO,


 


AND


 


BANK
OF MONTREAL, CHICAGO BRANCH,


as
Administrative Agent


 




 





BMO
CAPITAL MARKETS,


as
Co-Lead Arranger and Book Manager and


 


KEY
BANK NATIONAL ASSOCIATION,


as Co-Lead Arranger and Syndication Agent


 




 




















 


TABLE OF CONTENTS


 


	
  SECTION

  	
   

  	
  HEADING

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  THE
  CREDIT FACILITIES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Commitments

  	
   

  	
  1

  
	
  Section 1.2.

  	
   

  	
  Letters of Credit

  	
   

  	
  2

  
	
  Section 1.3.

  	
   

  	
  Applicable Interest Rates

  	
   

  	
  4

  
	
  Section 1.4.

  	
   

  	
  Minimum Borrowing Amounts; Maximum
  Eurodollar Loans

  	
   

  	
  6

  
	
  Section 1.5.

  	
   

  	
  Manner of Borrowing Loans and
  Designating Applicable Interest Rates

  	
   

  	
  6

  
	
  Section 1.6.

  	
   

  	
  Interest Periods

  	
   

  	
  8

  
	
  Section 1.7.

  	
   

  	
  Maturity of Loans

  	
   

  	
  8

  
	
  Section 1.8.

  	
   

  	
  Prepayments

  	
   

  	
  9

  
	
  Section 1.9.

  	
   

  	
  Default Rate

  	
   

  	
  9

  
	
  Section 1.10.

  	
   

  	
  The Notes

  	
   

  	
  10

  
	
  Section 1.11.

  	
   

  	
  Funding Indemnity

  	
   

  	
  10

  
	
  Section 1.12.

  	
   

  	
  Commitment Terminations

  	
   

  	
  11

  
	
  Section 1.13.

  	
   

  	
  Substitution of Lenders

  	
   

  	
  11

  
	
  Section 1.15.

  	
   

  	
  Increase in Revolving Credit
  Commitments

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  FEES

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Fees

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  PLACE
  AND APPLICATION OF PAYMENTS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
   

  	
  Place and Application of Payments

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  GUARANTIES

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Guaranties

  	
   

  	
  15

  
	
  Section 4.2.

  	
   

  	
  Further Assurances

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  DEFINITIONS;
  INTERPRETATION

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Definitions

  	
   

  	
  15

  
	
  Section 5.2.

  	
   

  	
  Interpretation

  	
   

  	
  33

  
	
  Section 5.3.

  	
   

  	
  Change in Accounting Principles

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Organization and Qualification

  	
   

  	
  34

  
	
  Section 6.2.

  	
   

  	
  Subsidiaries

  	
   

  	
  34

  
	
  Section 6.3.

  	
   

  	
  Authority and Validity of
  Obligations

  	
   

  	
  35

  
	
  Section 6.4.

  	
   

  	
  Use of Proceeds; Margin Stock

  	
   

  	
  35

  
	
  Section 6.5.

  	
   

  	
  Financial Reports

  	
   

  	
  36

  
	
  Section 6.6.

  	
   

  	
  No Material Adverse Change

  	
   

  	
  36

  



 

















 


	
  Section 6.7.

  	
   

  	
  Full Disclosure

  	
   

  	
  36

  
	
  Section 6.8.

  	
   

  	
  Trademarks, Franchises, and
  Licenses

  	
   

  	
  36

  
	
  Section 6.9.

  	
   

  	
  Governmental Authority and
  Licensing

  	
   

  	
  36

  
	
  Section 6.10.

  	
   

  	
  Good Title

  	
   

  	
  36

  
	
  Section 6.11.

  	
   

  	
  Litigation and Other Controversies

  	
   

  	
  37

  
	
  Section 6.12.

  	
   

  	
  Taxes

  	
   

  	
  37

  
	
  Section 6.13.

  	
   

  	
  Approvals

  	
   

  	
  37

  
	
  Section 6.14.

  	
   

  	
  Affiliate Transactions

  	
   

  	
  37

  
	
  Section 6.15.

  	
   

  	
  Investment Company; Public Utility
  Holding Company

  	
   

  	
  37

  
	
  Section 6.16.

  	
   

  	
  ERISA

  	
   

  	
  37

  
	
  Section 6.17.

  	
   

  	
  Compliance with Laws

  	
   

  	
  38

  
	
  Section 6.18.

  	
   

  	
  Other Agreements

  	
   

  	
  39

  
	
  Section 6.19.

  	
   

  	
  Solvency

  	
   

  	
  39

  
	
  Section 6.20.

  	
   

  	
  No Broker Fees.

  	
   

  	
  39

  
	
  Section 6.21.

  	
   

  	
  No Default

  	
   

  	
  39

  
	
  Section 6.22.

  	
   

  	
  Stock of the Borrower

  	
   

  	
  39

  
	
  Section 6.23.

  	
   

  	
  Condition of Property; Casualties;
  Condemnation

  	
   

  	
  39

  
	
  Section 6.24.

  	
   

  	
  Legal Requirements, and Zoning

  	
   

  	
  40

  
	
  Section 6.25.

  	
   

  	
  Qualified Ground Leases

  	
   

  	
  40

  
	
  Section 6.26.

  	
   

  	
  No Defaults; Landlord is in
  Compliance with Leases

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  CONDITIONS
  PRECEDENT

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  All Credit Events

  	
   

  	
  40

  
	
  Section 7.2.

  	
   

  	
  Initial Credit Event

  	
   

  	
  41

  
	
  Section 7.3.

  	
   

  	
  Eligible Property Additions and
  Deletions to the Borrowing Base

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  COVENANTS

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Maintenance of Business

  	
   

  	
  43

  
	
  Section 8.2.

  	
   

  	
  Maintenance of Properties

  	
   

  	
  43

  
	
  Section 8.3.

  	
   

  	
  Taxes and Assessments

  	
   

  	
  43

  
	
  Section 8.4.

  	
   

  	
  Insurance

  	
   

  	
  43

  
	
  Section 8.5.

  	
   

  	
  Financial Reports

  	
   

  	
  44

  
	
  Section 8.6.

  	
   

  	
  Inspection

  	
   

  	
  46

  
	
  Section 8.7.

  	
   

  	
  Office of Foreign Asset Control

  	
   

  	
  46

  
	
  Section 8.8.

  	
   

  	
  Liens

  	
   

  	
  46

  
	
  Section 8.9.

  	
   

  	
  Investments, Acquisitions, Loans
  and Advances

  	
   

  	
  46

  
	
  Section 8.10.

  	
   

  	
  Mergers, Consolidations and Sales

  	
   

  	
  48

  
	
  Section 8.11.

  	
   

  	
  Maintenance of Subsidiaries

  	
   

  	
  49

  
	
  Section 8.12.

  	
   

  	
  Intentionally Omitted

  	
   

  	
  49

  
	
  Section 8.13.

  	
   

  	
  ERISA

  	
   

  	
  49

  
	
  Section 8.14.

  	
   

  	
  Compliance with Laws

  	
   

  	
  49

  
	
  Section 8.15.

  	
   

  	
  Burdensome Contracts With
  Affiliates

  	
   

  	
  50

  
	
  Section 8.16.

  	
   

  	
  No Changes in Fiscal Year

  	
   

  	
  50

  
	
  Section 8.17.

  	
   

  	
  Intentionally Omitted

  	
   

  	
  50

  



 


ii

















 


	
  Section 8.18.

  	
   

  	
  Change in the Nature of Business

  	
   

  	
  50

  
	
  Section 8.19.

  	
   

  	
  Use of Loan Proceeds

  	
   

  	
  50

  
	
  Section 8.20.

  	
   

  	
  No Restrictions

  	
   

  	
  50

  
	
  Section 8.21.

  	
   

  	
  Financial Covenants

  	
   

  	
  51

  
	
  Section 8.22.

  	
   

  	
  Borrowing Base Covenants

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  EVENTS
  OF DEFAULT AND REMEDIES

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Events of Default

  	
   

  	
  52

  
	
  Section 9.2.

  	
   

  	
  Non-Bankruptcy Defaults

  	
   

  	
  54

  
	
  Section 9.3.

  	
   

  	
  Bankruptcy Defaults

  	
   

  	
  54

  
	
  Section 9.4.

  	
   

  	
  Collateral for Undrawn Letters of
  Credit

  	
   

  	
  54

  
	
  Section 9.5.

  	
   

  	
  Notice of Default

  	
   

  	
  55

  
	
  Section 9.6.

  	
   

  	
  Expenses

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  CHANGE
  IN CIRCUMSTANCES

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Change of Law

  	
   

  	
  55

  
	
  Section 10.2.

  	
   

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

  	
   

  	
  56

  
	
  Section 10.3.

  	
   

  	
  Increased Cost and Reduced Return

  	
   

  	
  56

  
	
  Section 10.4.

  	
   

  	
  Lending Offices

  	
   

  	
  57

  
	
  Section 10.5.

  	
   

  	
  Discretion of Lender as to Manner
  of Funding

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  THE
  ADMINISTRATIVE AGENT

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
   

  	
  Appointment and Authorization of
  Administrative Agent

  	
   

  	
  58

  
	
  Section 11.2.

  	
   

  	
  Administrative Agent and its
  Affiliates

  	
   

  	
  58

  
	
  Section 11.3.

  	
   

  	
  Action by Administrative Agent

  	
   

  	
  58

  
	
  Section 11.4.

  	
   

  	
  Consultation with Experts

  	
   

  	
  59

  
	
  Section 11.5.

  	
   

  	
  Liability of Administrative Agent;
  Credit Decision

  	
   

  	
  59

  
	
  Section 11.6.

  	
   

  	
  Indemnity

  	
   

  	
  60

  
	
  Section 11.7.

  	
   

  	
  Resignation or Removal of
  Administrative Agent and Successor Administrative Agent

  	
   

  	
  60

  
	
  Section 11.8.

  	
   

  	
  L/C Issuer.

  	
   

  	
  61

  
	
  Section 11.9.

  	
   

  	
  Designation of Additional Agents

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  THE
  GUARANTEES

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
   

  	
  The Guarantees

  	
   

  	
  61

  
	
  Section 12.2.

  	
   

  	
  Guarantee Unconditional

  	
   

  	
  61

  
	
  Section 12.3.

  	
   

  	
  Discharge Only upon Payment in
  Full; Reinstatement in Certain Circumstances

  	
   

  	
  62

  
	
  Section 12.4.

  	
   

  	
  Subrogation

  	
   

  	
  62

  
	
  Section 12.5.

  	
   

  	
  Waivers

  	
   

  	
  63

  
	
  Section 12.6.

  	
   

  	
  Limit on Recovery

  	
   

  	
  63

  
	
  Section 12.7.

  	
   

  	
  Stay of Acceleration

  	
   

  	
  63

  
	
  Section 12.8.

  	
   

  	
  Benefit to Guarantors

  	
   

  	
  63

  



 


iii

















 


	
  Section 12.9.

  	
   

  	
  Guarantor Covenants

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
   

  	
  Withholding Taxes

  	
   

  	
  63

  
	
  Section 13.2.

  	
   

  	
  No Waiver, Cumulative Remedies

  	
   

  	
  65

  
	
  Section 13.3.

  	
   

  	
  Non-Business Days

  	
   

  	
  65

  
	
  Section 13.4.

  	
   

  	
  Documentary Taxes

  	
   

  	
  65

  
	
  Section 13.5.

  	
   

  	
  Survival of Representations

  	
   

  	
  65

  
	
  Section 13.6.

  	
   

  	
  Survival of Indemnities

  	
   

  	
  65

  
	
  Section 13.7.

  	
   

  	
  Sharing of Set-Off

  	
   

  	
  65

  
	
  Section 13.8.

  	
   

  	
  Notices

  	
   

  	
  66

  
	
  Section 13.9.

  	
   

  	
  Counterparts

  	
   

  	
  66

  
	
  Section 13.10.

  	
   

  	
  Successors and Assigns

  	
   

  	
  66

  
	
  Section 13.11.

  	
   

  	
  Participants

  	
   

  	
  67

  
	
  Section 13.12.

  	
   

  	
  Assignments

  	
   

  	
  67

  
	
  Section 13.13.

  	
   

  	
  Amendments

  	
   

  	
  69

  
	
  Section 13.14.

  	
   

  	
  Headings

  	
   

  	
  70

  
	
  Section 13.15.

  	
   

  	
  Costs and Expenses; Indemnification

  	
   

  	
  70

  
	
  Section 13.16.

  	
   

  	
  Set-off

  	
   

  	
  71

  
	
  Section 13.17.

  	
   

  	
  Entire Agreement

  	
   

  	
  71

  
	
  Section 13.18.

  	
   

  	
  Governing Law

  	
   

  	
  71

  
	
  Section 13.19.

  	
   

  	
  Severability of Provisions

  	
   

  	
  71

  
	
  Section 13.20.

  	
   

  	
  Excess Interest

  	
   

  	
  71

  
	
  Section 13.21.

  	
   

  	
  Construction

  	
   

  	
  72

  
	
  Section 13.22.

  	
   

  	
  Lender’s Obligations Several

  	
   

  	
  72

  
	
  Section 13.23.

  	
   

  	
  Submission to Jurisdiction; Waiver
  of Jury Trial

  	
   

  	
  72

  
	
  Section 13.24.

  	
   

  	
  Amendment and Restatement

  	
   

  	
  73

  
	
  Section 13.25.

  	
   

  	
  USA Patriot Act

  	
   

  	
  73

  
	
  Section 13.26.

  	
   

  	
  Equalization of Outstanding
  Obligations

  	
   

  	
  73

  
	
  Section 13.27.

  	
   

  	
  Departing Lenders

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature Page

  	
   

  	
   

  	
   

  	
  S-1

  



 




	
  EXHIBIT A

  	
   

  	
  —

  	
   

  	
  Notice of Payment Request

  
	
  EXHIBIT B

  	
   

  	
  —

  	
   

  	
  Notice of Borrowing

  
	
  EXHIBIT C

  	
   

  	
  —

  	
   

  	
  Notice of
  Continuation/Conversion

  
	
  EXHIBIT D

  	
   

  	
  —

  	
   

  	
  Note

  
	
  EXHIBIT E

  	
   

  	
  —

  	
   

  	
  Borrowing Base
  Certificate

  
	
  EXHIBIT F

  	
   

  	
  —

  	
   

  	
  Compliance Certificate

  
	
  EXHIBIT G

  	
   

  	
  —

  	
   

  	
  Additional Guarantor
  Supplement

  
	
  EXHIBIT H

  	
   

  	
  —

  	
   

  	
  Assignment and
  Acceptance

  
	
  EXHIBIT I

  	
   

  	
  —

  	
   

  	
  Opinion of Counsel

  
	
  EXHIBIT J

  	
   

  	
  —

  	
   

  	
  Commitment Amount
  Increase Request

  
	
  SCHEDULE 1.0

  	
   

  	
  —

  	
   

  	
  Commitments

  
	
  SCHEDULE 1.1

  	
   

  	
  —

  	
   

  	
  Initial Properties,
  Initial Investment Amount and Initial Senior Housing Value

  
	
  SCHEDULE 6.2

  	
   

  	
  —

  	
   

  	
  Material Subsidiaries

  
	
  SCHEDULE 6.26

  	
   

  	
  —

  	
   

  	
  Significant Leases

  






 


iv

















 


SECOND AMENDED AND
RESTATED CREDIT AGREEMENT


 


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


 


PRELIMINARY STATEMENTS


 


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


 


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


 


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


 


SECTION 1.                                                 THE CREDIT FACILITIES.


 


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


 

















 


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


 


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


 


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


 


2

















 


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


 


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


 


3

















 


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


 


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


 


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


 


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


 


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


 


4
















 


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


 




	
  Adjusted LIBOR

  	
   

  	
  =

  	
   

  	
  LIBOR

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1 - Eurodollar Reserve
  Percentage

  	
   

  






 


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


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


11

















 


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


 


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


 


SECTION 2.                                     FEES.


 


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


 


12

















 


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


 


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


 


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


 


SECTION 3.                                     PLACE AND APPLICATION OF PAYMENTS.


 


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


 


13

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


14

















 


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


 


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


 


SECTION 4.                                     GUARANTIES.


 


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


 


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


 


SECTION 5.                                     DEFINITIONS; INTERPRETATION.


 


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


 


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


 


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


 


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


 


15
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


16

















 


	
  LEVEL

  	
   

  	
  MAXIMUM TOTAL

  INDEBTEDNESS/TOTAL

  ASSET VALUE RATIO FOR

  SUCH PRICING DATE

  	
   

  	
  APPLICABLE MARGIN FOR

  ADJUSTED BASE RATE 

  LOANS UNDER REVOLVING

  CREDIT AND

  REIMBURSEMENT

  OBLIGATIONS SHALL BE:

  	
   

  	
  APPLICABLE MARGIN FOR

  EURODOLLAR LOANS

  UNDER REVOLVING

  CREDIT AND LETTER OF

  CREDIT FEE SHALL BE:

  	
   

  	
  APPLICABLE

  MARGIN FOR

  COMMITMENT FEE

  SHALL BE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Greater than .45 to 1.0

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  0.40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

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

  	
   

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  	
  .0.35

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

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

  	
   

  	
  0.75

  	
  %

  	
  1.75

  	
  %

  	
  0.35

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Less than or
  equal to .25 to 1.0

  	
   

  	
  0.50

  	
  %

  	
  1.50

  	
  %

  	
  0.30

  	
  %

  



 


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


 


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


 


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


 


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


 


17

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


18

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


19

















 


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


 


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


 


“Collateral Account” is defined
in Section 9.4 hereof.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


20

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


21

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


22

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


23

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


24
















 


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


 


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


 


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


 


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


 


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


 


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


 


“Interest Period” is defined in Section 1.6
hereof.


 


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


 


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


 


25

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Lending Office” is defined in Section 10.4
hereof.


 


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


 


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


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Note” is defined in Section 1.10
hereof.


 


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


 


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


 


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


 


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


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


28

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


29

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


30

















 


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


 


“REMIC” means Real Estate Mortgage
Investment Conduit.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


31

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


32

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


33

















 


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


 


SECTION 6.                                     REPRESENTATIONS
AND WARRANTIES.


 


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


 


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


 


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


 


34

















 


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


 


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


 


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


 


35
















 


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


 


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


 


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


 


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


 


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


 


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


 


36

















 


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


 


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


 


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


 


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


 


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


 


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


 


37

















 


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


 


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


 


38

















 


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


 


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


 


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


 


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


 


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


 


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


 


39

















 


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


 


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


 


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


 


SECTION 7.                                                 CONDITIONS PRECEDENT.


 


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


 


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


 


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


 


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


 


40

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


41

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


42

















 


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


 


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


 


SECTION 8.                                                 COVENANTS.


 


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


 


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


 


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


 


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


 


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


 


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


 


43

















 


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


 


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


 


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


 


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


 


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


 


44

















 


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


 


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


 


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


 


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


 


(h)                                 notice
of any Change of Control;


 


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


 


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


 


45

















 


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


 


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


 


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


 


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


 


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


 


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


 


46
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(h)                                 investments
in Permitted Acquisitions;


 


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


 


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


 


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


 


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


 


47

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


48

















 


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


 


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


 


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


 


Section 8.12.                                   Intentionally
Omitted.


 


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


 


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


 


49

















 


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


 


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


 


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


 


Section 8.17.                                   Intentionally
Omitted.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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SECTION 9.                                                 EVENTS OF DEFAULT AND REMEDIES.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)                                     any
Change of Control shall occur;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


54

















 


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


 


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


 


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


 


SECTION 10.                                           CHANGE IN CIRCUMSTANCES.


 


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


 


55
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


56

















 


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


 


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


 


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


 


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


 


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


 


57

















 


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


 


SECTION 11.                                           THE ADMINISTRATIVE AGENT.


 


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


 


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


 


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


 


58

















 


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


 


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


 


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


 


59

















 


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


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


 


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


 


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


 


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


 


SECTION 12.                                           THE GUARANTEES.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


SECTION 13.                                           MISCELLANEOUS.


 


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


 


63

















 


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


 


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


 


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


 


64

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


65

















 


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


 


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


 


	
  LTC
  Properties, Inc.

  	
   

  	
   

  
	
  31365 Oak Crest
  Drive

  	
   

  	
   

  
	
  Suite 200

  	
   

  	
   

  
	
  Westlake
  Village, California 91361

  
	
  Attention:

  	
   

  	
  Chief Financial
  Officer

  
	
  Telephone:

  	
   

  	
  (805) 981-8655

  
	
  Telecopy:

  	
   

  	
  (805) 981-8663

  
					



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


67

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


68

















 


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


 


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


 


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


 


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


 


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


 


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


 


69

















 


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


 


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


 


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


 


70

















 


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


 


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


 


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


 


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


 


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


 


71

















 


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


 


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


 


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


 


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


 


72

















 


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


 


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


 


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


 


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


 


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


 


[SIGNATURE PAGES TO FOLLOW]


 


73

















 


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


 


	
   

  	
  “BORROWER”

  
	
   

  	
   

  
	
   

  	
  LTC PROPERTIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “GUARANTORS”

  
	
   

  	
   

  
	
   

  	
  LTC WEST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  FLORIDA-LTC,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  
						



 

















 


	
   

  	
  LTC GP I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  LTC GP VI, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTH CAROLINA
  REAL ESTATE 

  
	
   

  	
   

  	
  INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  
								



 

















 


	
   

  	
  EDUCATION
  PROPERTY INVESTORS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy
  Simpson

  
	
   

  	
   

  	
  Name:

  	
  Wendy Simpson

  
	
   

  	
   

  	
  Title:

  	
  CEO &
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Shelley-Kessler

  
	
   

  	
   

  	
  Title:

  	
  SVP &
  Chief Financial Officer

  



 
















 


	
   

  	
  “LENDERS”

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL, Chicago Branch, as 

  
	
   

  	
   

  	
  L/C Issuer and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David L. Mistic

  
	
   

  	
   

  	
  Name:

  	
  David L. Mistic

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  115 South LaSalle Street

  
	
   

  	
  Chicago, Illinois 
  60603

  
	
   

  	
  Attention:

  	
  David L. Mistic

  
	
   

  	
  Telecopy:

  	
  (312) 293-5068

  
	
   

  	
  Telephone:

  	
  (312) 461-1402

  
						



 

















 


	
   

  	
  BMO CAPITAL MARKETS FINANCING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David L. Mistic

  
	
   

  	
   

  	
  Name:

  	
  David L. Mistic

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  115 South LaSalle Street

  
	
   

  	
  Chicago, Illinois 
  60603

  
	
   

  	
  Attention:

  	
  David L. Mistic

  
	
   

  	
  Telecopy:

  	
  (312) 293-5068

  
	
   

  	
  Telephone:

  	
  (312) 461-1402

  
						



 

















 


	
   

  	
  KEY BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Laura Conway

  
	
   

  	
   

  	
  Name:

  	
  Laura Conway

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Laura Conway

  
	
   

  	
  127 Public Square

  
	
   

  	
  Mail Code OH-01-27-0848

  
	
   

  	
  Cleveland, OH 
  44114

  
	
   

  	
  Telecopy:

  	
  (216) 689-3630

  
	
   

  	
  Telephone:

  	
  (216) 689-5970

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Denise J. Jones

  
	
   

  	
  800 Superior Avenue

  
	
   

  	
  Mail Code OH-01-02-0628

  
	
   

  	
  Cleveland, OH 
  44114

  
	
   

  	
  Telecopy:

  	
  (216) 828-7498

  
	
   

  	
  Telephone:

  	
  (216) 828-7521

  
						



 

















 


	
   

  	
  RAYMOND JAMES BANK, FSB

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Steven F. Paley

  
	
   

  	
   

  	
  Name:

  	
  Steven F. Paley

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  710 Carillon Parkway

  
	
   

  	
  St. Petersburg, FL 
  33716

  
	
   

  	
  Attention:

  	
  Steven F. Paley

  
	
   

  	
  Telecopy:

  	
  (727) 567-8830

  
	
   

  	
  Telephone:

  	
  (727) 567-1720

  
						



 

















 


	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dan LePage

  
	
   

  	
   

  	
  Name:

  	
  Dan LePage

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  One Liberty Plaza, 3rd Floor

  
	
   

  	
  165 Broadway

  
	
   

  	
  New York, New York 
  10006-1404

  
	
   

  	
  Attention:

  	
  Dan LePage

  
	
   

  	
  Telecopy:

  	
  (212) 428-6459

  
	
   

  	
  Telephone:

  	
  (212) 428-6605

  
						



 





















 


EXHIBIT A


 


NOTICE OF PAYMENT
REQUEST


 


[Date]


 


[Name of Lender]


[Address]


 


Attention:


 


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


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL, Chicago Branch,

  
	
   

  	
  as L/C Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
       Name

  	
   

  
	
   

  	
       Title

  	
   

  
				



 

















 


EXHIBIT B


 


NOTICE OF BORROWING


 


Date:                         ,            


 


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


 


Ladies and Gentlemen:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
       Name

  	
   

  
	
   

  	
       Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
       Name

  	
   

  
	
   

  	
       Title

  	
   

  
					



 


2

















 


EXHIBIT C


 


NOTICE OF
CONTINUATION/CONVERSION


 


Date: 
                        ,       


 


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


 


Ladies and Gentlemen:


 


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


 


1.     The
conversion/continuation Date is
                    ,
        .


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
       Name

  	
   

  
	
   

  	
       Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
       Name

  	
   

  
	
   

  	
       Title

  	
   

  
				



 


2
















 


EXHIBIT D


 


NOTE


 


	
  U.S. $

  	
   

  	
   

  	
  ,

  



 


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


 


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


 


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


 


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


 


	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
						



 

















 


EXHIBIT E


 


BORROWING BASE
CERTIFICATE


 


	
  To:

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

  
	
   

  	
   

  
	
   

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

  



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


 


	
  1.

  	
  Borrowing Base Value

  	
   

  	
  $                      

  
	
  2.

  	
  Line 1 multiplied by
  50%

  	
   

  	
  $                      

  
	
  3.

  	
  Unsecured Debt (other
  than Obligations)

  	
   

  	
  ($                      )

  
	
  4.

  	
  Borrowing Base (Line 2
  minus by Line 3 above)

  	
   

  	
  $                      

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

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

  
	
   

  	
   

  
	
   

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

  
	
              
  day of
                                      
  20      .

  
					



 


	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
					



 

















 


SCHEDULE I


CALCULATIONS


 





















 


EXHIBIT F


 


COMPLIANCE CERTIFICATE


 


	
  To:

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

  



 


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


 


THE UNDERSIGNED HEREBY CERTIFIES THAT:


 


1.               I
am the duly elected
                        
of
                                                                      ;


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
				



 


2

















 


SCHEDULE I


TO COMPLIANCE
CERTIFICATE


 


COMPLIANCE CALCULATIONS


FOR SECOND AMENDED AND
RESTATED CREDIT AGREEMENT DATED AS OF 

                              , 2008


 


CALCULATIONS AS OF
                          ,      


 


	
  A.

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

  	
   

  	
   

  
	
   

  	
  1.

  	
  Total Indebtedness

  	
   

  	
  $               

  
	
   

  	
  2.

  	
  Total Asset Value

  	
   

  	
                 

  
	
   

  	
  3.

  	
  Ratio of Line A1 to A2

  	
   

  	
      :1.0

  
	
   

  	
  4.

  	
  Line A3 ratio must not exceed

  	
   

  	
  .50:1.0

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

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

  	
   

  	
   

  
	
   

  	
  1.

  	
  Secured Debt

  	
   

  	
  $               

  
	
   

  	
  2.

  	
  Total Asset Value

  	
   

  	
                 

  
	
   

  	
  3.

  	
  Ratio of Line B1 to B2

  	
   

  	
      :1.0

  
	
   

  	
  4.

  	
  Line B3 ratio must not exceed

  	
   

  	
  .35:1.0

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

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

  	
   

  	
   

  
	
   

  	
  1.

  	
  Net Income for the last 4 quarters

  	
   

  	
  $               

  
	
   

  	
  2. 

  	
  Depreciation and Amortization Expense for last
  4 quarters

  	
   

  	
                 

  
	
   

  	
  3.

  	
  Interest Expense for last 4 quarters

  	
   

  	
                 

  
	
   

  	
  4.

  	
  Income Tax Expense for last 4 quarters

  	
   

  	
                 

  
	
   

  	
  5.

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

  	
   

  	
                 

  
	
   

  	
  6.

  	
  Sum of Lines C1 through C5

  	
   

  	
                 

  



 

















 


	
   

  	
  7.

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

  	
   

  	
                 

  
	
   

  	
  8.

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

  	
   

  	
                 

  
	
   

  	
  9.

  	
  Income tax benefits of the last 4 quarters

  	
   

  	
                 

  
	
   

  	
  10.

  	
  Sum of Lines C7 through C9

  	
   

  	
                 

  
	
   

  	
  11.

  	
  Line 6 minus Line 10 (“EBITDA”)

  	
   

  	
                 

  
	
   

  	
  12.

  	
  Interest Expense

  	
   

  	
   

  
	
   

  	
  13.

  	
  Ratio of Line C11 to C12

  	
   

  	
      :1.0

  
	
   

  	
  14.

  	
  Line C13 ratio shall not be less than

  	
   

  	
  2.50:1.0

  
	
   

  	
  15.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

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

  	
   

  	
   

  
	
   

  	
  1.

  	
   

  	
  EBITDA

  	
   

  	
  $               

  
	
   

  	
  2.

  	
   

  	
  Fixed Charges

  	
   

  	
   

  
	
   

  	
  3.

  	
   

  	
  Ratio of Line D1 to D2

  	
   

  	
      :1.0

  
	
   

  	
  4.

  	
   

  	
  Line D3 ratio shall not be less than

  	
   

  	
  1.50:1.0

  
	
   

  	
  5.

  	
   

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Secured Recourse Debt

  	
   

  	
  $               

  
	
   

  	
   

  	
  2.

  	
   

  	
  Total Asset Value

  	
   

  	
  $               

  
	
   

  	
   

  	
  3.

  	
   

  	
  Ratio of Line E1 to Line E2

  	
   

  	
      :1.0

  
	
   

  	
   

  	
  4.

  	
   

  	
  Line E3 shall not exceed

  	
   

  	
  .10:1.0

  
	
   

  	
   

  	
  5.

  	
   

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Tangible Net Worth (Section 8.21(f))

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Tangible Net Worth

  	
   

  	
  $               

  
	
   

  	
   

  	
  2.

  	
   

  	
  Line F1 shall not be less than

  	
   

  	
  $               

  
	
   

  	
   

  	
  3.

  	
   

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
								



 


2

















 


	
  G.

  	
   

  	
  Floating Rate Debt (Section 8.21(g))

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Total Asset Value

  	
   

  	
  $                  

  
	
   

  	
   

  	
  2.

  	
   

  	
  Total unhedged Floating Rate Debt outstanding

  	
   

  	
  $                  

  
	
   

  	
   

  	
  3.

  	
   

  	
  Percentage of unhedged Floating Rate Debt
  outstanding to Total Asset Value

  	
   

  	
  %

  
	
   

  	
   

  	
  4.

  	
   

  	
  Line G3 shall not exceed

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
  5.

  	
   

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Minimum Borrowing Base Value
  (Section 8.22(b))

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Borrowing Base Value

  	
   

  	
  $                  

  
	
   

  	
   

  	
  2.

  	
   

  	
  Line H1 shall not be less than

  	
   

  	
  $50,000,000

  
	
   

  	
   

  	
  3.

  	
   

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Eligible Property NOI

  	
   

  	
  $                  

  
	
   

  	
   

  	
  2.

  	
   

  	
  pari passu Unsecured Debt Service plus Credit
  Facility Debt Service

  	
   

  	
  $                  

  
	
   

  	
   

  	
  3.

  	
   

  	
  Ratio of Line I1 to I2

  	
   

  	
             :1.0

  
	
   

  	
   

  	
  4.

  	
   

  	
  Line I3 ratio shall not be less than

  	
   

  	
        2.25:1.0

  
	
   

  	
   

  	
  5.

  	
   

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
         yes/no

  



 


3

















 


EXHIBIT G


 


ADDITIONAL GUARANTOR
SUPPLEMENT


 


                            ,      


 


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


 


Ladies
and Gentlemen:


 


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


 


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


 


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


 


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


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF SUBSIDIARY GUARANTOR]

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
				



 

















 


EXHIBIT H


 


ASSIGNMENT AND
ACCEPTANCE


 


Dated
                      ,   


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 






	
  *

  	
   

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

  



 


2
















 


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


 


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


 


	
   

  	
  [Assignor Lender]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Assignee Lender]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   Name

  	
   

  
	
   

  	
   Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Lending office (and address for notices):

  
				



 


Accepted and consented this 

         day of


 


	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					



 


Accepted and consented to by the Administrative


  Agent and L/C
Issuer this        day of


 


BANK OF MONTREAL, Chicago Branch, as


  Administrative
Agent and L/C Issuer


 


 


	
  By

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					



 


3

















 


ANNEX I


TO ASSIGNMENT AND
ACCEPTANCE


 


	
  PRINCIPAL AMOUNT

  	
   

  	
  TYPE OF LOAN

  	
   

  	
  INTEREST RATE

  	
   

  	
  MATURITY DATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT I


 


OPINION OF COUNSEL


 

















 


EXHIBIT J


 


COMMITMENT AMOUNT
INCREASE REQUEST


 


                         ,     


 


	
  To:

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

  



 


Ladies
and Gentlemen:


 


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


 


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


 


[Include paragraphs 1-4 for a New Lender]


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 






	
  *

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

  



 


2

















 


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


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NEW OR EXISTING LENDER
  INCREASING 

  COMMITMENTS]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
							



 


The undersigned hereby
consents on 

this      day of
                          ,
           

to the above-requested Commitment 

Amount Increase.


 


BANK OF MONTREAL, 

as Administrative Agent


 


 


	
  By

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					



 


3

















 


SCHEDULE 1.0


 


COMMITMENTS


 


	
  NAME OF LENDER

  	
   

  	
  CREDIT COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BMO Capital
  Markets Financing, Inc.

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Key Bank
  National Association

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Raymond James
  Bank, FSB

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Royal Bank of
  Canada

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  80,000,000

  	
   

  



 

















 


SCHEDULE 1.1


 


INITIAL PROPERTIES,
INITIAL INVESTMENT AMOUNT

AND INITIAL BORROWING BASE VALUE


 

















 


SCHEDULE 6.2


 


SUBSIDIARIES


 

















 


SCHEDULE 6.26


 


SIGNIFICANT LEASES