Exhibit 10.9


 


LOAN AGREEMENT


 


Between


 


BROTMAN MEDICAL CENTER INC.,


a California corporation,
debtor-in-possession


 


as


 


“Borrower”


 


and


 


JHA EAST 7 LLC,


a Delaware limited liability
company


 


as


 


“Lender”


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Principal

  	
  7

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Interest

  	
  7

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Maturity

  	
  7

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Current Bankruptcy

  	
  7

  
	
   

  	
   

  	
   

  
	
  II.

  	
  CLOSING CONDITIONS

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Conditions of Lender’s
  Obligation to Close

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Conditions of Borrower’s Obligation to Close

  	
  9

  
	
   

  	
   

  	
   

  
	
  III.

  	
  DISBURSEMENT OF LOAN AMOUNT

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  General

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Inspections

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Lender Responsibility

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Direct Application of
  Proceeds

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Insufficient Documentation

  	
  11

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  REPRESENTATIONS AND WARRANTIES OF LENDER AND
  BORROWER

  	
  11

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Representations and
  Warranties of Borrower

  	
  11

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Representations and
  Warranties of Lender

  	
  13

  
	
   

  	
   

  	
   

  
	
  V.

  	
  COVENANTS OF BORROWER

  	
  14

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Paying Costs of Loan

  	
  14

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Using Loan Proceeds

  	
  14

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Keeping of Records

  	
  14

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Providing Financial
  Information

  	
  14

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Providing Operating
  Budgets and Operating Statements

  	
  15

  
				



 


i

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Complying with the Loan
  Documents and Other Agreements

  	
  15

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Compliance with Laws

  	
  15

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Ownership of Personal
  Property

  	
  15

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Representations and
  Warranties

  	
  15

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Trade Names

  	
  15

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  No Distributions

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  Future Development

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.13

  	
  Further Assurances

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.14

  	
  Notice of Litigation, Etc

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.15

  	
  Signage

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.16

  	
  Maintenance of Existence

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.17

  	
  Impound Account

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.18

  	
  Reserve Account

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.19

  	
  Existence; Change of Name;
  Location as a Registered Organization

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.20

  	
  Property Management

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.21

  	
  Prohibited Transactions

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.22

  	
  Compliance with
  Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.22

  	
  Compliance with
  Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws

  	
  18

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  DEFAULTS

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Events of Default

  	
  19

  
	
   

  	
   

  	
   

  
	
  0.6.2

  	
  Rights and Remedies

  	
  20

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  SINGLE PURPOSE ENTITY REQUIREMENTS

  	
  21

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  MISCELLANEOUS

  	
  21

  
				



 


ii

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Binding Effect; Waivers;
  Cumulative Rights and Remedies

  	
  21

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Survival

  	
  21

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Governing Law; Waiver of
  Jury Trial

  	
  21

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Counterparts

  	
  21

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Notices

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Costs and Expenses;
  Indemnification; Reimbursement

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  No Third Party Reliance

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  Sale of Loan or
  Participations

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.9

  	
  Arrangement by Brokers

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  Recourse

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.11

  	
  Time of the Essence

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.12

  	
  Entire Agreement; No Oral
  Modifications

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.13

  	
  Captions

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.14

  	
  Joint and Several
  Liability

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.15

  	
  Borrower-Lender
  Relationship

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.16

  	
  Benefit of Lender

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.17

  	
  Single Purpose Entity

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.18

  	
  Pledge of Accounts

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.19

  	
  Prohibition Against
  Transfers

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.20

  	
  Lender Approval

  	
  25

  
	
   

  	
   

  	
   

  
	
  8.21

  	
  Personal Property Financings

  	
  25

  



 


LIST OF EXHIBITS AND
EXHIBITS


 


	
  EXHIBIT A

  	
  —

  	
   

  	
  Legal Description of Land

  
	
  EXHIBIT B

  	
  —

  	
   

  	
  Additional Required Items
  Prior to Funding

  
	
  SCHEDULE 2.1(h)

  	
  —

  	
   

  	
  Liabilities/Litigation

  



 


iii

















 


LOAN AGREEMENT


 


THIS LOAN
AGREEMENT (this “Agreement”) is made and entered into as of July 9,
2008, by and between BROTMAN MEDICAL CENTER
INC., a California corporation, debtor-in-possession (“Borrower”) and JHA EAST 7 LLC,
a Delaware limited liability company (“Lender”).


 


WITNESSETH THAT, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:


 


DEFINITIONS


 


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


 


Accounts:  Means collectively the Reserve Account and
the Tax and Insurance Deposit Account.


 


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


 


Agreement:  This Loan
Agreement, including any amendments hereof and supplements hereto executed by
Borrower and Lender.


 


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


 


Bankruptcy Code:  Means the
United States Bankruptcy Code.


 


Bankruptcy Court Order: 
Means the findings and order described in Section 2.1(m).


 


Borrower:  BROTMAN
MEDICAL CENTER INC., a California corporation, debtor-in-possession, and its
permitted successors and assigns.


 

















 


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


 


Business Day:  Any day other
than a Saturday, a Sunday, or a legal holiday on which Lender is not open for
business.


 


Closing Date:  The date upon
which the Loan Amount is funded by Lender into the Escrow Account.


 


Collateral:  All
Equipment, furniture, furnishings, machinery, inventory, construction materials
(if any), and any other item of personal property in which Borrower now or
hereafter owns or acquires any interest or right, including any of the
foregoing that are leased, which are used or useful in the construction,
operation, use or occupancy of the Property (or any portion thereof); all of
Borrower’s documents, instruments, contract rights (including any rights under
any development agreement) and general intangibles relating to any future
construction, use, operation or occupancy of the Property (or any portion
thereof); all insurance proceeds from any policies of insurance covering any of
the aforesaid; and such other collateral as may be described in the Deed of
Trust.  Notwithstanding anything to the
contrary contained in any Loan Document, Collateral shall not include, without
limitation, any accounts receivable.


 


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


 


Control:  Means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person whether through ownership
of voting securities, beneficial interests, by contract or otherwise.  The definition is to be construed to apply equally
to variations of the word “Control” including “Controlled,” “Controlling” or “Controlled
by.”


 


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


 


Deed of Trust:  That certain
Deed of Trust With Assignment of Leases and Rents, Security Agreement and
Fixture Filing of even date herewith executed by Borrower as trustor in favor
of Lender as beneficiary to be recorded in the Official Records, creating a
first lien on the Property, and all buildings, fixtures and improvements now or
hereafter owned or acquired by Borrower and situated on the Land, and all
rights and easements appurtenant thereto, and a first lien on and a security
interest in the Collateral associated with and appurtenant to the Land, which
Deed of Trust shall secure the Note and the other obligations specified
therein, including any amendments to such Deed of Trust and supplements thereto
executed by Borrower and Lender.


 


Default Rate:  The Default
Rate of interest payable under the Note, as that term is defined in the Note.


 


Environmental Indemnity:  That certain Unsecured Environmental
Indemnity of even date herewith, executed by Borrower, in favor of Lender,
setting forth certain indemnification obligations relating to “Hazardous
Substances” (as defined therein).


 


2

















 


Equipment: All fixtures
and equipment, if any, owned by Borrower and located or to be located in or on,
and used in connection with the management, maintenance or operation of, the
Land and the Improvements, and the business conducted at the Land and the
Improvements.


 


Equity Interests:  Means (a) partnership interests (whether
general or limited) in an entity which is a partnership; (b) membership
interests in an entity which is a limited liability company; or (c) the
shares or stock interests in an entity which is a corporation.


 


Escrow Account:  The
interest-bearing escrow account opened by Borrower with Escrow Holder.


 


Escrow Holder:  Fidelity
National Title Company, Newport Beach, California.


 


Financing Statement: 
A UCC-1 financing statement naming Borrower as debtor and Lender as
secured party, perfecting Lender’s security interest in the Collateral, in form
and substance satisfactory to Lender, in Lender’s sole discretion, to be filed
in the Office of the Secretary of State of the State of the Borrower’s
formation.


 


Governmental Requirements: 
All laws, statutes, codes, ordinances, and governmental rules,
regulations and requirements applicable to Borrower, Lender and the Property.


 


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


 


Initial Deposit:  The initial
deposit in the amount determined pursuant to Section 5.17(a), to be
deposited by Borrower into the Taxes and Insurance Deposit Account prior to the
Closing Date.


 


Land:  The land
consisting of approximately 1.1 acres, legally described on Exhibit A
attached hereto and incorporated herein by this reference, together with all
additions thereto and substitutions therefor agreed to by Borrower and Lender.


 


Lender:  JHA EAST 7,
LLC, a Delaware limited liability company, and its successors and assigns.


 


Loan:  The loan of
the Loan Amount evidenced by the Note and to be made as a single lump sum
pursuant to the terms of this Agreement and to be secured by the Deed of Trust
and other Loan Documents, as applicable.


 


Loan Amount:  Seven Million
and No/100 Dollars ($7,000,000.00), provided that if the Bankruptcy Court determines
that the aggregate payoff amounts of Borrower’s current debtor-in-possession
financing and pre-petition financing (collectively, the “Total BK
Payoff Amount”) do not exceed Twenty Two Million and 00/100ths
Dollars ($22,000,000.00), in the aggregate, the Loan Amount shall be reduced by
the amount by which Twenty Two Million and 00/100ths Dollars ($22,000,000.00)
exceeds the Total BK Payoff Amount.


 


3

















 


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


 


Material Adverse Effect: 
Means, other than as a result of the Current Bankruptcy, with respect to
any circumstance, act, condition or event of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with any other
event, act, condition, circumstances, whether or not related, in Lender’s
reasonable judgment, a material adverse change in, or a materially adverse
effect upon (a) the business, operations, or financial condition of
Borrower; (b) the ability of Borrower to perform its obligations under any
Loan Document to which it is a party; (c) the use, value or condition of
the Property; (d) compliance of the Property with any Requirements of Law;
or (e) the validity, priority or enforceability of any Loan Document or
the liens, rights (including, without limitation, recourse against the
Property) or remedies of Lender hereunder or thereunder.


 


Maturity Date:  Thirty-six
(36) months from the Closing Date.


 


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


 


OFAC List:  Means the
list of specially designated nationals and blocked persons subject to financial
sanctions that is maintained by the U.S. Treasury Department, Office of Foreign
Assets Control and any other similar list maintained by the U.S. Treasury
Department, Office of Foreign Assets Control pursuant to any Requirements of
Law, including, without limitation, trade embargo, economic sanctions, or other
prohibitions imposed by Executive Order of the President of the United
States.  The OFAC List is accessible
through the internet website www.treas.gov/ofac/t11sdn.pdf.


 


Official Records: 
The Official Records of Los Angeles County, California.


 


Operating Statement: 
A current, detailed statement of income and expenses from and for
managing, maintaining and operating the Property, in form and substance acceptable
to Lender, certified as true, correct and complete by Borrower.


 


Permits:  All
governmental approvals, authorizations, permits and entitlements which have
been or will be issued with respect to the Property, including building
permits, annexation agreements, plot plan approvals, subdivision approvals,
environmental approvals (including an environmental impact report if required
under applicable law), sewer and water permits, and zoning and land use
entitlements.


 


Permitted Encumbrances: 
The liens, charges and encumbrances on title to the Land as shown on the
Title Policy and as approved by Lender, or as otherwise approved in writing by
Lender, both in Lender’s sole discretion.


 


Permitted Transfer: 
Means each of the following:


 


4

















 


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


 


b.             Transfers with respect to any
Person whose stocks or certificates are traded on a nationally recognized stock
exchange.


 


c.             Transfers which have been approved
by Lender in accordance with Section 8.20 hereof.


 


d.             Permitted Encumbrances.


 


e.             All Transfers of worn out or
obsolete Equipment that are promptly replaced with property of equivalent value
and functionality.


 


f.              All leases which have been
approved by Lender in accordance with this Agreement.


 


Person:  Means and
includes an individual, a partnership, a corporation, a limited liability
company, a trust, an unincorporated association, a joint venture or any other entity
or a government or any agency or political subdivision thereof.


 


Property:  The Land, the
Improvements and the Collateral.


 


Requirements of Law: 
Means (a) the organizational documents of an entity, and (b) any
law, regulation, ordinance, code, decree, treaty, ruling or determination of an
arbitrator, court or other Governmental Authority, or any Executive Order
issued by the President of the United States, in each case applicable to or
binding upon such Person or to which such Person, any of its property or the
conduct of its business is subject including, without limitation, laws,
ordinances and regulations pertaining to the zoning, occupancy and subdivision
of real property.


 


Reserve Account:  Means the
interest-bearing account to be established by Borrower at a financial
institution approved by Lender to pay for capital improvements, repairs and
replacements to the Property.


 


Reserve Contribution: 
Means the amount of Ten Thousand and 00/100ths Dollars ($10,000.00), to
be deposited by Borrower into the Reserve Account each month in accordance with
Section 5.18.


 


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


 


Tax and Insurance Deposit Account: 
Means an interest bearing demand deposit account to be opened by
Borrower at a financial institution approved by Lender for the purpose of
depositing payments of real estate taxes and assessments and insurance premiums
for the Property, in the amounts and in the manner provided for in Section 5.17
hereof.


 


5

















 


Title Company:  Fidelity
National Title Company, Newport Beach, California.


 


Title Policy:  A title
insurance policy in the form of an American Land Title Association Extended
Coverage Loan Policy — 1970, amended 10-17-70 (without further modification,
revision or amendment), insuring that on the Closing Date, Borrower owns fee
simple title to the Land and that the Deed of Trust is a valid first lien on
the Property in the amount of the Note. 
The Title Insurance Policy must provide affirmative insurance against
mechanics liens and contain endorsements as Lender requires, in Lender’s sole
discretion.  Except as approved by Lender
in writing prior to the Closing Date, the Title Insurance Policy must not
contain any survey exceptions, exceptions for rights of parties in possession
(other than pursuant to existing leases), easements not of record or unpaid
installments of special assessments, or any other exceptions to coverage not
approved by Lender.  The Title Insurance
Policy must contain such reinsurance agreements and direct access agreements as
Lender may require.


 


Transfer:  Means any
action by which either (a) the legal or beneficial ownership of the Equity
Interests in Borrower or (b) the legal or equitable title to the Property,
or any part thereof, or (c) the Property or any portion thereof, is sold,
assigned, transferred, hypothecated, pledged or otherwise encumbered or dispose
of, in each case (a), (b) or (c) whether undertaken, directly or
indirectly, or occurring by operation of law or otherwise, including, without
limitation, each of the following actions:


 


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


 


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


 


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


 


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


 


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


 


Transferred Interest: 
Shall have the meaning given such term in Section 8.8.


 


UCC:  Means the Uniform
Commercial Code as enacted and in effect in the state where the Property is
located (and as it may from time to time be amended); provided that, to the
extent that the UCC is used to define any term in this Agreement or in any
other Loan Document and such term is defined differently in different Articles
or Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern; provided further, however, that if, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of , or remedies with respect to, Lender’s liens on any Collateral is
governed by the Uniform Commercial Code as enacted an in effect in a
jurisdiction other than the state where the Property


 


6
















 


is
located, the term “UCC” shall mean the Uniform Commercial Code as enacted and
in effect in such other jurisdiction solely for the purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.


 


Capitalized terms used
but not otherwise defined herein shall have the meanings used and defined in
the Note.


 


I.


 


LOAN; OPTION TO PURCHASE


 


1.1          Principal. 
Lender agrees to lend to Borrower, and Borrower agrees to borrow from
Lender, the Loan Amount, in accordance with the terms hereof until the Maturity
Date, the disbursement of which is evidenced by the Note.


 


1.2          Interest.


 


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


 


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


 


1.3          Maturity. 
The principal balance owing on the Loan, and all accrued interest and
other sums owing under the Loan Documents not otherwise paid when due, shall be
due and payable in full on the Maturity Date.


 


1.4          Release
of Deed of Trust.  Lender shall promptly release the Deed of
Trust on the Property upon repayment in full of the Loan.


 


1.5          Current Bankruptcy. 
Notwithstanding the provisions of Section 1129(a)(9)(A) or any
other provision of the Bankruptcy Code, the Loan shall not be required to be
repaid by Borrower upon confirmation of a plan of reorganization for the
Borrower in the Current Bankruptcy.


 


7

















 


II.


 


CLOSING CONDITIONS


 


2.1          Conditions
of Lender’s Obligation to Close.  The Closing
Date shall not occur, and Lender shall not be required to disburse the Loan
Amount hereunder until the conditions and requirements set forth below have been
completed and fulfilled to the reasonable satisfaction of Lender (or waived by
Lender in writing).


 


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


 


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


 


(c)              Brokers’
Affidavit.  Brokers shall have executed and delivered to
Lender an affidavit to the effect that Brokers have arranged this transaction
and been paid a fee in connection therewith and that Brokers are currently
licensed real estate brokers under the laws of the State of California to which
affidavit a copy of said brokers’ licenses shall be attached.


 


(d)              Conditions
for Disbursement.  Borrower shall have satisfied all conditions
for disbursement set forth in Article III.


 


(e)              Tax and Insurance
Deposit Account.  Borrower shall have established in Borrower’s
name, the Tax and Insurance Deposit Account with a financial institution
reasonably approved by Lender, and shall have funded the Initial Deposit, and
premiums for the 12-month period following the Closing Date shall have been
paid for all insurance required to be maintained by Borrower.


 


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


 


(g)              No
Defaults.  As of the Closing Date, no default or event
of default under this Agreement or under any of the other Loan Documents shall
have occurred and be continuing, and no event shall have occurred which, upon
the service of notice and/or the lapse of time, would constitute an event of
default thereunder.


 


(h)              Liabilities. 
Except for the Current Bankruptcy, and except as set forth on Schedule 2.1(h) attached
hereto, there is no litigation, administrative proceeding, 


 


8

















 


investigation or other legal proceeding pending or, to Borrower’s
knowledge, threatened, which would have a Material Adverse Effect.


 


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


 


(j)               Additional
Conditions to Disbursement of Loan Amount.  In addition
to the satisfaction of each of the conditions set forth above in this Article II,
and the applicable conditions specified in Article III below, Lender may
condition the disbursement of the Loan Amount upon Lender’s receipt and
approval of each of the additional items set forth in Exhibit B
hereto.


 


(k)             Representations
and Warranties.  The representations and warranties of
Borrower under Article IV shall be true and correct in all material
respects through the Closing Date.


 


(l)               Bankruptcy
Court Order.  The Bankruptcy Court shall have entered
findings and an order in form and substance reasonably approved by Lender
approving this Agreement and the other Loan Documents and providing that the
Loan and the transaction contemplated hereby was extended by Lender in good
faith, as provided in Section 364(e) of the Bankruptcy Code, and that
Lender is entitled to all of the protections afforded to Lender provided in Section 364(e) of
the Bankruptcy Code.  The order approving
this Agreement and the other Loan Documents shall provide, among other things,
that the Loan Documents shall not be altered, extended or otherwise modified in
this, or any future, bankruptcy case of Borrower.


 


2.2          Conditions
of Borrower’s Obligation to Close.  The Closing
Date shall not occur, and Borrower shall not be required complete the
transaction contemplated hereby until the conditions and requirements set forth
below have been completed and fulfilled to the reasonable satisfaction of
Borrower (or waived by Borrower in writing):


 


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


 


(b)              Representations
and Warranties.  The representations and warranties of Lender
under Article IV shall be true and correct in all material respects
through the Closing Date.


 


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


 


9

















 


III.


 


DISBURSEMENT OF LOAN AMOUNT


 


3.1          General.


 


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


 


(b)              Advances
to Lender.  Lender may, at Lender’s option, without any
obligation to do so, advance to itself all sums due to Lender under this
Agreement or under any of the other Loan Documents.  Lender shall also have the right, but not the
obligation, to advance and directly apply the proceeds of the Loan to the
satisfaction of any of Borrower’s other obligations hereunder or under any of
the other Loan Documents.


 


3.2          Inspections.


 


(a)              Access
to the Property.  Upon reasonable advance notice, Lender, the
Title Company, Consultants and their representatives shall have access to the
Property at all reasonable times and shall have the right to enter the Property
and to conduct such inspections thereof as they shall deem necessary or
desirable for the protection of Lender’s interests.


 


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


 


(c)              No
Reliance by Borrower or Third Party.  Neither
Borrower nor any third party shall have the right to use or rely upon any
reports generated by Lender or its Consultants for any purpose whatsoever.


 


3.3          Lender
Responsibility.  It is expressly understood and agreed that
Lender assumes no liability or responsibility for protection of the Property,
or for any representations made by Borrower.


 


3.4          Direct
Application of Proceeds.  Lender shall
have the right, but not the obligation, to disburse and directly apply the
proceeds of any portion of the Loan Amount to the satisfaction of any of
Borrower’s obligations hereunder or under the other Loan Documents. 


 


10

















 


Any advance by Lender for such purpose shall be part of the Loan and
shall be evidenced and secured by the Loan Documents.  Lender may advance such funds and incur such
expenses as Lender deems necessary to preserve the Property and any security
for the Loan, and such expenses, even though in excess of the amount of the
Loan, shall be secured by any and all documents securing the Loan and the Note
and shall be payable to Lender upon demand.


 


3.5          Insufficient
Documentation.  In the event that Lender shall determine, in
its reasonable judgment, that proper documentation to support disbursement of
the Loan Amount, as required by this Agreement, has not been furnished, it may
withhold payment of the Loan Amount as shall not be so supported by proper
documentation, and shall promptly notify Borrower of the discrepancy in or
omission of such documentation.  Until
such time as such discrepancy or omission is corrected to the satisfaction of
Lender, it may withhold disbursement of the Loan Amount.


 


IV.


 


REPRESENTATIONS AND WARRANTIES OF LENDER AND BORROWER


 


4.1          Representations
and Warranties of Borrower.  As an
inducement to Lender to execute this Agreement and to disburse the proceeds of
the Loan, Borrower represents and warrants to Lender that:


 


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


 


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


 


(c)              No
Breach of Applicable Agreements or Laws.  Subject to
obtaining the approval of the Bankruptcy Court, the consummation of the
transactions contemplated hereby and the execution, delivery and/or performance
of this Agreement and the other Loan Documents will not result in any breach of
or constitute a default under any mortgage, deed of trust, lease, bank loan,
credit agreement, or other instrument or violate any Governmental Requirements,
to which Borrower is a party, or by which Borrower may be bound or affected.


 


(d)              No
Litigation or Defaults.  Except for
the Current Bankruptcy, and except as set forth on Schedule 2.1(h),
there are no actions, suits or proceedings pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or the Property which would
have a Material Adverse Effect, or involving the validity or enforceability of
the Loan Documents or the priority of the lien thereof, at law or in equity;
and Borrower is not in default under any order, writ, injunction, decree or
demand of any court or any administrative body having jurisdiction over
Borrower.


 


(e)              Financial
and Other Information.  The financial statements of
Borrower previously or hereafter delivered to Lender fairly and accurately
present, or will fairly and accurately present, the financial condition of
Borrower, as of the dates of such statements, 


 


11

















 


and neither this Agreement nor any document, financial statement,
financial or credit information, certificate or statement referred to herein or
furnished to Lender by Borrower contains, or will contain, any untrue statement
of a material fact or omits, or will omit, a material fact, or is or will be
misleading in any material respect.


 


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


 


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


 


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


 


(i)               Collateral.  Borrower is now and shall continue to be the sole
owner of the Collateral free from any lien, security interest or adverse claim
of any kind whatsoever, except for liens or security interests in favor of
Lender, the interest of a lessor pursuant to a lease of personal property, any
liens disclosed in the Title Policy, or liens or security interests otherwise
approved by Lender in Lender’s sole discretion.


 


(j)               Condemnation. 
No condemnation proceeding or moratorium is pending or, to the knowledge
of Borrower, threatened against the Land or the Improvements which would impair
any construction, use, sale or occupancy of the Property (or any portion
thereof) in any manner whatsoever.


 


(k)             Governmental
Regulations.  Except for the Current Bankruptcy, Borrower
is not subject to regulation under the Investment Company Act of 1940, the
Federal Power Act, the Public Utility Holding Company Act of 1935, the
Interstate Commerce Act or any federal or state statute or regulation limiting
its ability to incur indebtedness for money borrowed.


 


12

















 


(l)               Compliance
with Anti-Terrorism, Embargo, Sanctions and Anti Money Laundering Laws. 
Borrower and, to Borrower’s current knowledge, (a) each Person
owning an interest in Borrower and (b) each tenant at the Property:  (i) is not currently identified on the
OFAC List, and (ii) is not a Person with whom a citizen of the United
States is prohibited to engage in transactions by any trade embargo, economic
sanction, or other prohibition of United States law, regulation, or Executive
Order of the President of the United States, including, without limitation, any
Anti-Terrorism Laws.  Borrower agrees to
confirm this representation and warranty in writing on an annual basis if
requested by Lender to do so.


 


(m)             Brokers. 
Borrower is represented by HealthWest Realty Advisors (“Broker”)  in connection with the making and arrangement of the Loan
and the transaction contemplated hereby. 
Other than any brokerage commissions or fees which may be due by
Borrower to the Broker for such services, there are no other brokerage commissions
or finders’ fees due or claimed by any party to be due from Borrower in
connection with or with respect to the transaction contemplated hereby.  Borrower shall be fully responsible for any
commissions or fees due and owing, if any, to Broker.


 


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


 


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


 


4.2          Representations
and Warranties of Lender.  Lender
represents and warrants to Borrower that:


 


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


 


(b)              No Breach of Applicable
Agreements or Laws.  The consummation of the
transactions contemplated hereby and the execution, delivery and/or performance
of this Agreement and the other Loan Documents will not result in any breach of
or constitute a default under any mortgage, deed of trust, lease, bank loan,
credit agreement, or other instrument or violate any Governmental Requirements,
to which Lender is a party, or by which Lender may be bound or affected.


 


13

















 


V.


 


COVENANTS OF BORROWER


 


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


 


5.1          Paying Costs of Loan. 
Borrower shall pay all reasonable expenses incurred by Lender in
connection with the Loan and its documentation, closing, administration and
enforcement, including, without limitation, all recording costs, title
insurance premiums, escrow charges, costs of surveys, appraisal fees, costs
associated with updating existing environmental reports (and, if reasonably
necessary, obtaining a Phase II report), and reasonable expenses and
disbursements of Lender’s legal counsel.


 


5.2          Using
Loan Proceeds.  Borrower shall use the Loan solely to pay
off, or to reimburse Borrower for paying off, (a) Borrower’s current
debtor-in-possession financing and pre-petition financing and (b) the
costs and expenses incurred by Borrower in connection with obtaining the
Loan.  Borrower shall not use the Loan
proceeds, or any portion of them, to pay any fees or other payments to any
Affiliate of Borrower without Lender’s prior written consent, in Lender’s sole
discretion.


 


5.3          Keeping
of Records.  Borrower shall set up and maintain accurate
and complete books, accounts and records pertaining to the Property in a manner
reasonably acceptable to Lender. 
Borrower will permit representatives of Lender to have free access to
and to inspect and copy all books, records and contracts of Borrower.  Any such inspection by Lender shall be for
the sole benefit and protection of Lender, and Lender shall have no obligation
to disclose the results thereof to Borrower or to any third party.


 


5.4          Providing
Financial Information.  Borrower shall furnish such
financial information concerning Borrower and the Property as Lender may
reasonably request, and shall furnish to Lender (a) quarterly financial
statements for Borrower within forty-five (45) days following the end of each
fiscal quarter thereof, (b) quarterly written reports, within forty-five
(45) days following the end of each fiscal quarter, setting forth any
new direct indebtedness, obligations or liabilities incurred by Borrower
(which shall include contingent liabilities and guaranties) since the date
hereof (or the date of the last such written report after the first such
written report is so provided), and (c) if required by Lender, copies of
all federal income tax returns (with all supporting schedules) of Borrower due
during the term of the Loan within fifteen (15) days after the deadline (as
such deadline may be extended) for filing the same.  All such financial statements shall be in
reasonable detail, shall be prepared for partnerships, corporations and limited
liability companies in accordance with generally accepted accounting principles
consistently applied and for individuals in accordance with accounting principles
consistently applied, shall be certified by the party to which they apply as
true, correct and complete.


 


14

















 


5.5          Providing
Operating Statements.  Borrower shall, within ten (10) days
following the close of each fiscal quarter, deliver to Lender an Operating
Statement and rent roll, in form and detail reasonably satisfactory to Lender,
for the Property for the preceding fiscal quarter.  Borrower shall also deliver to Lender an
annual Operating Statement for the Property within ninety (90) days following
the end of each fiscal year thereof.  All
such Operating Statements, rent rolls and leasing status reports shall be
certified as true, correct and complete by Borrower.


 


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


 


5.7          Compliance
with Laws.  Borrower will comply and, to the extent it is
able, will cause others to comply with all laws and requirements of
governmental authorities having jurisdiction over the processing, approving and
recording of any subdivision map, and will furnish Lender with reports of any
official searches for violation of any requirements established by such
governmental authorities.  Borrower will
comply and, to the extent it is able, will cause others to comply with all
restrictive covenants and all obligations created by private contracts and
leases which affect ownership, development, construction, equipping, fixturing,
use, occupancy, sale or leasing of the Property (or any portion thereof).  The Property and the leasing thereof shall be
in compliance with all permits and approvals issued by governmental agencies
with respect to the Property, applicable building, zoning and use laws,
requirements, regulations and ordinances, and any development will not violate
any restrictions of record against the Property.  Borrower will deliver to Lender, promptly
after receipt thereof, copies of all permits and approvals received from
governmental authorities relating to the use, construction, development, or
sale of the Property.


 


5.8          Ownership
of Personal Property.  Borrower will be the sole
owner of all Collateral acquired after the date hereof, free from any adverse
lien, security interest or adverse claim of any kind whatsoever, except for
security interests and liens in favor of Lender, Liens disclosed in the Title
Policy, and other liens approved by Lender, in Lender’s sole discretion.  Borrower will not convey or transfer any
portion of the Collateral without the prior written consent of Lender, other
than in the ordinary course of business; provided, however, Borrower may convey
or transfer some or all of the Collateral so long as Borrower obtains a
replacement of comparable or greater utility and value.


 


5.9          Representations
and Warranties.  Until repayment of the Note and all other
obligations secured by the Deed of Trust, Borrower shall ensure that the
representations and warranties of Article IV remain true and complete in
all material respects.


 


5.10        Trade
Names.  Borrower shall immediately notify Lender in
writing of any change in the jurisdiction of organization or place of business
of, or the change in the legal, trade or fictitious business names used by
Borrower, and Lender is hereby authorized to file or record 


 


15

















 


any additional financing statements, amendments and other certificates
necessary to reflect any such changes.


 


5.11        No
Distributions.  During the occurrence and continuation of any
Event of Default, Borrower will not, without the prior written consent of
Lender in its sole discretion, make any distribution of assets to any
shareholder of Borrower, whether or not such a distribution is permitted under
the terms of Borrower’s bylaws, including repayment of any loans made by a
shareholder of Borrower to Borrower, return of capital contributions,
distributions upon termination, liquidation or dissolution of Borrower or any
development, property management, accounting or other fees payable to a
shareholder of Borrower.


 


5.12        Future
Development.  Borrower shall not undertake any on-site
construction, demolition or rehabilitation work on the Land at a cost in excess
of $500,000 without the prior written consent of Lender.  Borrower shall notify Lender of its intention
to undertake any material on-site construction, demolition or rehabilitation work
on the Land regardless of the cost thereof and shall demonstrate to Lender’s
reasonable satisfaction that Borrower has the funds available to pay for such
costs.  Upon request, Borrower shall
deliver to Lender copies of any plans, specifications and contracts relating to
such work as Lender shall reasonably request.


 


5.13        Further
Assurances.  Borrower shall execute and deliver from time
to time, promptly after any request therefor by Lender, any and all
instruments, agreements and documents and shall take such other action as may
be reasonably necessary or desirable in the opinion of Lender to maintain,
perfect or insure Lender’s security provided for herein and in the other Loan
Documents, including the filing or recording of UCC renewal statements or amendments,
the execution of such amendments to the Deed of Trust and the other Loan
Documents and the delivery of such endorsements to the Title Company, all as
Lender reasonably requires, and shall pay all fees and expenses (including
reasonable attorneys’ fees) related thereto or incurred by Lender in connection
therewith.


 


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


 


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


 


16
















 


5.16        Maintenance
of Property.  Borrower shall maintain and preserve all
rights and franchises material to its business at the Property.


 


5.17        Impound
Account.


 


(a)              Borrower shall at all times maintain and
make deposits into the Taxes and Insurance Deposit Account as follows:
commencing on the first day of the month in which Borrower is required to make
its first interest payment under the Note (the “First
Payment Date”), (i) Borrower shall deposit into the Taxes and
Insurance Deposit Account an amount equal to the product of one-twelfth (1/12th) of the yearly real estate taxes and assessments
which may be levied on the Property multiplied by the number of months which
have elapsed since the end of the prior fiscal tax year and the First Payment
Date (Borrower shall receive a credit for the Initial Deposit), and (ii) thereafter,
on the first day of the month thereafter until the Maturity Date, Borrower
shall deposit or cause to be deposited into the Taxes and Insurance Deposit
Account an amount equal to one-twelfth (1/12th)
of the yearly real estate taxes and assessments which may be levied on the
Property and the yearly premiums for all insurance required to be maintained by
Borrower.  In connection with the
foregoing, Borrower shall be responsible for ensuring Lender’s receipt, at
least thirty (30) days prior to the respective due date for payment, of all
bills, invoices and statements for all real estate taxes and assessments and
insurance premiums to be paid.  In its
sole discretion, Lender may retain a third party tax lien service to obtain tax
certificates and other evidence or estimates of tax due or to become due and
Borrower shall promptly reimburse Lender for the cost of such service.  Any unpaid reimbursements for any tax lien
service will be added to the Note.


 


(b)              Lender shall withdraw, and Borrower
hereby authorizes Lender to withdraw, funds from the Taxes and Insurance
Deposit Account from time to time in order to cover the payments of real estate
taxes and assessments and insurance premiums as the same become due and
payable.


 


5.18        Reserve
Account.  Commencing on the first day of the month in
which Borrower is required to make its first interest payment under the Note,
and continuing on the first day of each month thereafter  until the Maturity Date, Borrower shall
deposit the Reserve Contribution into the Reserve Account.  Borrower may draw upon the Reserve Account
for purposes of making capital improvements to the Property, up to four (4) times
in any given year, provided Borrower gives Lender at least thirty (30) days
prior written notice of such draw request, and further provided that Lender
approves of the amount of the requested draw, the proposed cost, scope and need
for the requested improvements, repairs and/or replacements, and the proposed
manner in which the work is to be performed.


 


5.19        Existence;
Change of Name; Location as a Registered Organization. 
Borrower shall continuously maintain (a) its existence and shall
not dissolve or permit its dissolution, and (b) its rights and franchises
to do business in the state where the Property is located.  Borrower shall not change Borrower’s name,
legal entity, or its location as a registered organization within the meaning
of the UCC, without notifying Lender of such change in writing at least thirty
(30) days prior to its effective date. 
The notification requirements set forth in this Section are in
addition to, and not in limitation of, the requirements of ARTICLE 7.  Borrower 


 


17

















 


shall pay all costs and expenses incurred by Lender (including, without
limitation, reasonable legal fees) in connection with any change described
herein.


 


5.20        Reserved.


 


5.21        Prohibited
Transactions.  Borrower shall not engage in any transaction
which would cause any obligation or action taken or to be taken hereunder by
Borrower (or the exercise by Lender of any of its rights under any of the Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA. 
Borrower agrees to deliver to Lender such certifications or other
evidence throughout the term of the Loan as requested by Lender in its sole
discretion to confirm compliance with Borrower’s obligations under this Section 5.20
or to confirm that Borrower’s representations and warranties regarding ERISA
remain true.


 


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


 


5.23        Single
Purpose Entity.  In connection with the effectiveness of
Borrower’s plan of reorganization in the Current Bankruptcy, and subject to
Borrower’s receipt of all necessary regulatory and other approvals, Borrower
covenants and agrees to use its commercially reasonable efforts to cause the
Property to be transferred to a “single purpose entity” (“SPE”) and to cause
such SPE to comply with customary “single purpose entity” covenants, including,
without limitation, corporate governance provisions, rating agency requirements,
and the assignment of any applicable property management agreement.


 


18

















 


VI.


 


DEFAULTS


 


6.1          Events
of Default.  Any of the following events shall constitute
an “Event of Default” under this Agreement:


 


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


 


(b)              Borrower shall default in the payment of
interest on the disbursement of the Loan Amount made by Lender, or in the
payment of fees or other amounts payable to Lender, hereunder, under the Note
or under any of the other Loan Documents, and such default is not cured within
five (5) days after receipt of written notice from Lender.


 


(c)              Borrower shall fail to perform or observe
any obligation or covenant (other than those obligations and covenants
described in subparagraphs (a) and (b), above, or otherwise set forth in
subparagraphs (d) through (p), below, of this Section 6.1) under this
Agreement or any other Loan Document within thirty (30) days after receipt of
written notice that such obligation was not performed; provided that, if cure
cannot reasonably be effected within such 30-day period, such failure shall not
be an Event of Default hereunder so long as Borrower commences cure within such
30-day period, and thereafter diligently prosecutes such cure to completion;
and provided further, however, that notwithstanding the 30-day cure period or
extended cure period described above in this subparagraph (c), if a different
notice or cure period is specified under any Loan Document or under any
provision of the Loan Documents as to any such failure or breach, the specific
Loan Document or provision shall control, and Borrower shall have no more time
to cure the failure or breach than is allowed under the specific Loan Document
or provision as to such failure or breach.


 


(d)              Any representation or warranty made by
Borrower in this Agreement, in any of the other Loan Documents, or in any
certificate or document furnished under the terms of this Agreement or in
connection with the Loan, shall be untrue or incomplete in any material respect
when made.


 


(e)              An event of default, after the expiration
of any applicable notice and/or cure period provided thereunder, shall exist
under the terms of any other credit facility or other agreement now or
hereafter existing between Borrower and Lender or JHA West 16, LLC, and/or
between any other Affiliate of Borrower and Lender or JHA West 16, LLC.


 


(f)               A default shall exist under the terms of
Borrower’s formation documents.


 


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


 


19

















 


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


 


(i)               A transfer, encumbrance, lien, change of
ownership or other action or occurrence prohibited by the Deed of Trust shall
occur.


 


(j)               Lender fails to have an enforceable lien
on or security interest in any property or Collateral given as security for the
Loan.


 


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


 


(l)               Other than with respect to the Current
Bankruptcy, if (i) Borrower shall commence any case, proceeding or other
action under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors (A) seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets; or (ii) there
shall be commenced against Borrower any case, proceeding or other action of a
nature referred to in clause (i) above by any party other than Lender
which (A) results in the entry of an order for relief or any such
adjudication or appointment, or (B) remains undismissed, undischarged or
unbonded for a period of ninety (90) days; or (iii) there shall be
commenced against Borrower any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
any order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within ninety (90) days from the entry thereof;
or (iv) Borrower shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above;


 


(m)             Any judgment for monetary damages is
entered against Borrower which, in Lender’s sole judgment, has a Material
Adverse Effect or is not covered to Lender’s satisfaction by collectible
insurance proceeds;


 


(n)              If a Transfer, other than a Permitted
Transfer, occurs without Lender’s prior written consent or in violation of the
terms of Lender’s consent; or


 


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


 


(a)              Lender may declare the entire unpaid
principal balance of the Loan Amount to be immediately due and payable,
together with accrued and unpaid interest on such advances, without notice to
or demand on Borrower.


 


20

















 


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


 


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


 


VII.


 


RESERVED


 


VIII.


 


MISCELLANEOUS


 


8.1          Binding
Effect; Waivers; Cumulative Rights and Remedies. 
The provisions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, personal representatives, legal representatives, successors and
assigns; provided, however, that neither this Agreement nor the proceeds of the
Loan may be assigned by Borrower voluntarily, by operation of law or otherwise,
without the prior written consent of Lender, in Lender’s sole discretion.  No delay on the part of Lender in exercising
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder constitute such a waiver or exhaust the same, all of
which shall be continuing.  The rights
and remedies of Lender specified in this Agreement shall be in addition to, and
not exclusive of, any other rights and remedies which Lender would otherwise
have at law, in equity or by statute, and all such rights and remedies,
together with Lender’s rights and remedies under the other Loan Documents, are
cumulative and may be exercised individually, concurrently, successively and in
any order.


 


8.2          Survival. 
All agreements, representations and warranties made in this Agreement or
any other Loan Document shall survive the execution of this Agreement, the
making of the advances by Lender, and the execution of the other Loan
Documents, and shall continue until Lender receives payment in full of all
indebtedness of Borrower incurred under this Agreement and under the other Loan
Documents.


 


8.3          Governing
Law; Waiver of Jury Trial.  This
Agreement, the rights of the parties hereunder and the interpretation hereof
shall be governed by, and construed in accordance with, the internal laws of
the State of California, in all respects. 
Borrower hereby waives any right to a trial by jury in any action
relating to the Loan and/or the Loan Documents.


 


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


 


21

















 


8.5          Notices. 
Any notice required or permitted to be given by either party hereto to
the other under the terms of this Agreement, or documents related hereto, shall
be deemed to have been given on the date the same is deposited in the United
States Mail, registered or certified, return receipt requested, postage
prepaid, addressed to the party to which the notice is to be given at the
address set forth opposite its name below, or at any other address specified in
a notice given by such party to the other not less than ten (10) days
prior to the effective date of the address change.


 


8.6          Costs
and Expenses; Indemnification; Reimbursement.


 


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


 


(b)              Borrower shall indemnify Lender
(hereinafter, “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses (including the reasonable fees, charges and disbursements
of any counsel for any Indemnitee), incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by Borrower or Indemnitor arising
out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder or the
consummation of the Loan transactions, or (ii) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought
by a third party or by Borrower, and regardless of whether any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee or (y) result from a claim
brought by Borrower against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if
Borrower or Indemnitor has obtained a final and nonappealable judgment in its
favor on such claim as determined by a court of competent jurisdiction.


 


(c)              The obligations on the part of Borrower
under this Section 7.6 shall survive the closing of the Loan and the
repayment thereof.


 


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


 


8.8          Sale
of Loan or Participations.  Lender may at
any time sell, transfer, syndicate, grant participations in or otherwise
dispose of any portion of the Loan (each such interest so 


 


22

















 


disposed of being herein called a “Transferred Interest”)
to banks, insurance companies or other financial institutions (hereinafter
called “Transferees”), pursuant to such
transfer agreements, co-lender agreements, participations agreements and/or
agency agreements into which Lender and its Transferees may enter and by which
Borrower shall agree in writing to recognize. 
In addition, Lender may, at any time and from time to time, in its
ordinary course of business and in accordance with applicable law, (i) assign
an undivided interest in the Loan to an Affiliate of Lender or to a successor
entity by reason of any merger affecting Lender, or (ii) pledge or assign
the same to any Federal Reserve Bank in accordance with applicable law.  At the request of Lender, in the event of any
such sale, assignment, transfer or syndication, Borrower shall execute separate
new Notes to the Assignor and its assignee, in the amounts of their respective
interests in the Loan after said assignment, and shall deliver the same to the
assignor and the assignee, in exchange for the assignor’s existing Note.  All such separate new Notes shall be entitled
to all the rights and benefits accorded to the Note under the terms of the Loan
Documents.  No such assignment shall be
binding upon Borrower until Lender gives written notice thereof to Borrower.  Lender may divulge all information relating
to Borrower or the Property which Lender has to any actual or potential
Transferee, and Borrower shall cooperate with Lender in connection with the
transfer.  Borrower agrees that each
Transferee shall be entitled to the benefits hereof with respect to its
Transferred Interest and that each Transferee may exercise any and all rights
of banker’s lien, setoff and counterclaim as if such Transferee were a direct
lender to Borrower.  If Lender makes any
assignment to a Transferee, then upon notice to Borrower such Transferee, to
the extent of such assignment (unless otherwise provided therein), shall become
a lender hereunder and shall have all the rights and obligations of Lender
hereunder, and Lender shall be released from its duties and obligations under
this agreement to the extent of such assignment.


 


So long as (and only so
long as) no event of default then exists at the time of a disposition of a
Transferred Interest, confidential information regarding Borrower given to such
Transferees shall be kept confidential except to the extent such Transferee is
required to disclose such information by reason of any applicable law or
regulation.


 


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


 


8.10        Recourse. 
Upon an event of default, Lender will look solely to the Property for
the repayment of the Loan and will not enforce or seek a judgment against
Borrower; provided, however, Borrower shall be personally liable to Lender for:
(i) fraud or intentional misrepresentation in connection with the
execution and the delivery of this Agreement, or the other Loan Documents; (ii) Borrower’s
misapplication or misappropriation of rents received by Borrower after the
occurrence of a default or event of default; (iii) Borrower’s
misapplication or misappropriation of security deposits or rents collected more
than thirty (30) days in advance; (iv) Borrower’s misapplication or the
misappropriation of insurance proceeds or condemnation awards; (v) Borrower’s
failure to pay prior to delinquency any Impositions (as defined in the Deed of
Trust) (except to the extent that sums sufficient to pay such amounts have been
deposited in escrow with Lender), charges for labor or materials or other
charges that can create liens on the Property; (vi) Borrower’s failure to
return or to reimburse Lender for all Collateral 


 


23

















 


taken from the Property by or on behalf of Borrower and not replaced
with Collateral of the same utility and of the same or greater value in
violation of the terms of the Loan Documents; (vii) any act of intentional
waste or arson by Borrower or any affiliate thereof with respect to the
Property; or (viii) Borrower’s failure to comply with the provisions of Section 1.12
of the Deed of Trust.


 


8.11        Time
of the Essence.  Time is of the essence hereof with respect to
the dates, terms and conditions of this Agreement.


 


8.12        Entire
Agreement; No Oral Modifications.  This
Agreement, the other Loan Documents and the other documents mentioned herein
and executed as of the date hereof set forth the entire agreement of the
parties with respect to the Loan and supersede all prior written or oral
understandings and agreements with respect thereto.  No modification or waiver of any provision of
this Agreement shall be effective unless set forth in writing and signed by the
parties hereto.


 


8.13        Captions. 
The headings or captions of the Articles and Sections set forth herein
are for convenience only, are not a part of this Agreement and are not to be
considered in interpreting this Agreement.


 


8.14        Joint
and Several Liability.  If Borrower consists of more
than one (1) individual and/or entity, each of said individuals and/or
entities shall be jointly and severally liable for each covenant, agreement,
representation and warranty of Borrower hereunder.


 


8.15        Borrower-Lender
Relationship.  The relationship between Borrower and Lender
created hereby and by the other Loan Documents shall be that of a borrower and
a lender only, and in no event shall Lender be deemed to be a partner of, or a
joint venturer with, Borrower.


 


8.16        Benefit of Lender. 
The rights of the Lender under the Loan Documents are for the benefit of
Lender solely in its capacity as a lender in connection with the Loan and are
not intended to benefit the Lender in its capacity as the “Buyer” under the
Option Agreement.


 


8.17        Reserved.


 


8.18        Pledge
of Accounts.  Borrower shall grant to Lender a perfected
security interest in the Accounts as additional security for the Loan.  Upon the occurrence of an Event of Default
hereunder, Lender shall be entitled to foreclose upon Borrower’s interest in
the Accounts either before, after or together with the foreclosure of the Deed
of Trust.  Upon any such foreclosure, all
amounts contained in the Accounts shall be applied to reduce the balance of
Loan Amount.  On or prior to the Closing
Date, Lender, Borrower and the financial institutions maintaining the Accounts
shall enter into “control agreements” for the purpose of perfecting the
security interests in the Accounts as provided under the UCC.


 


8.19        Prohibition
Against Transfers.  Borrower shall not permit any
Transfer to be undertaken or cause any Transfer to occur, other than a
Permitted Transfer.  Any Transfer made in
violation of this Loan Agreement shall be void.


 


24

















 


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


 


8.21        Personal
Property Financings.  Lender hereby agrees that
Borrower shall be permitted to secure financings and grant liens on the
Collateral but not on the Land and Improvements to other lenders.  Lender agrees to subordinate its lien on the
Collateral to such other liens in order to facilitate such financings;
provided, however, the terms of such financings shall be commercially
reasonable.


 


[Signatures on following
page]


 


25
















 


IN
WITNESS WHEREOF,
the parties have executed this Agreement as of the day and year first above
written.


 


 


	
  Address:

  	
  “BORROWER”

  
	
   

  	
   

  
	
  Brotman
  Medical Center Inc.

  	
  BROTMAN
  MEDICAL CENTER INC.,

  
	
  3828
  Delmas Terrace

  	
  a
  California corporation, debtor-in-possession

  
	
  Culver
  City, California 90231

  	
   

  
	
  Attn:
  Stanley Otake, CEO

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stanley Otake

  
	
   

  	
  Name:

  	
  Stanley
  Otake

  
	
   

  	
  Its:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
  “LENDER”

  
	
   

  	
   

  
	
  JHA
  East 7, LLC

  	
  JHA
  EAST 7, LLC,

  
	
  c/o
  Jewish Home for the Aging

  	
  a
  Delaware limited liability company

  
	
  7150
  Tampa Avenue

  	
   

  
	
  Reseda,
  California 91335

  	
   

  
	
  Attention:
  Loan Administration

  	
  By:

  	
  /s/
  Richard S. Liman

  
	
   

  	
  Name:

  	
  Richard
  S. Liman

  
	
   

  	
  Its:

  	
  Manager

  



 


26

















 


EXHIBIT A


 


Legal Description of Land


 


PARCEL
1: (APN: 4207-2-27)


 


LOTS 9
TO 14 INCLUSIVE IN BLOCK 13 OF TRACT 2444, IN THE CITY OF CULVER CITY, IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 24
PAGES 5 TO 7, INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.  EXCEPT FROM LOT 14, ALL OIL,
GAS, MINERALS, HYDROCARBONS AND /OR ASSOCIATED SUBSTANCES IN OR UNDER SAID LOT
BELOW A DEPTH OF 500 FEET FROM THE SURFACE THEREOF, BUT WITHOUT THE RIGHT TO
ENTER UPON THE SURFACE OF THE TOP 500 FEET OF THE SUBSURFACE OF SAID LOT, AS
RESERVED BY ELLA B. OLESON, A WIDOW, IN THE DEED RECORDED February 1, 1963
IN BOOK D-1906 PAGE 919 OFFICIAL RECORDS.


 


PARCEL
(APN: 2407-2-27)


 


THE
SOUTHWESTERLY 5 FEET OF THAT PORTION OF THAT CERTAIN ALLEY NOW VACATED IN BLOCK
13 OF TRACT N0.2444, IN THE CITY OF CULVER CITY, IN THE COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 24 PAGE 7 OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; BOUNDED ON THE SOUTHEAST BY THE
SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LIME OF LOT 28 IN BLOCK 13 OF
SAID TRACT NO. 2444 AND BOUNDED ON THE NORTHWESTERLY PROLONGATION OF THE
NORTHWESTERLY LINE OF LOT 24 IN BLOCK 13 OF SAID TRACT NO. 2444.


 


APN:
4207-002-027


 

















 


EXHIBIT B


 


Additional Required Items
Prior to Funding


 


a.             Proof of Lender’s
right to rely upon any environmental report that Borrower (or a predecessor of
Borrower) has obtained with respect to the Property.


 


b.             A Phase I
Environmental Site Assessment shall be required, at no cost to Lender.  Lender reserves the right to require a more
extensive environmental audit at Lender’s sole cost and expense.


 


c.             Copy of all
organizational documents for the Borrower.


 


d.             Preliminary title
report and all associated documents prior to loan closing.  Title insurance policy containing all
required endorsements at closing.


 


e.             Current financial
statements for the Borrower.


 


f.              UCC Lien Search.


 

















 


SCHEDULE 2.1(h)


 


[Liabilities/Litigation]


 


None.