Document:

EX-10.70 PROMISSORY NOTE DATED 4-25-06

 

Exhibit 10.70

Conn’s — San Antonio

Loan No. 50-2853213

PROMISSORY NOTE

	 	 	 
	$3,580,000.00

	 	April 25, 2006

     FOR VALUE RECEIVED, the undersigned, COLE CO SAN ANTONIO TX, LP, a Delaware limited
partnership (“Maker”), having an address at 2555 East Camelback Road, Suite 400, Phoenix, Arizona
85016, promises to pay to the order of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association (“Payee”), at the office of Payee at Commercial Real Estate Services, 8739 Research
Drive URP — 4, NC 1075, Charlotte, North Carolina 28262, or at such other place as Payee may
designate to Maker in writing from time to time, the principal sum of THREE MILLION FIVE HUNDRED
EIGHTY THOUSAND AND NO/100 DOLLARS ($3,580,000.00), together with interest on so much thereof as is
from time to time outstanding and unpaid, from the date of the advance of the principal evidenced
hereby and as allocated to Fixed Rate Tranche A and Floating Rate Tranche B (as each term is
hereinafter defined) for each such tranche, at the Note Rate (as hereinafter defined), together
with all other amounts due hereunder or under the other Loan Documents (as defined herein), in
lawful money of the United States of America, which shall at the time of payment be legal tender in
payment of all debts and dues, public and private.

ARTICLE I — TERMS AND CONDITIONS

     1.1 Definitions. The following terms, as used in this Note, shall have the following
meanings, which meanings shall be applicable equally to the singular and the plural of the terms
defined:

          (a) “Business Day” shall mean a day of the year on which banks are not required or authorized
to close in Charlotte, North Carolina.

          (b) “Determination Date” shall mean a date on which the LIBOR-Based Rate shall be selected as
the applicable interest rate in respect of Floating Rate Tranche B, which date shall be the day
that is two (2) London Business Days prior to the commencement of an Interest Period or, with
respect to the first Interest Period, the date the Loan shall be advanced by Payee.

          (c) “Extended Maturity Date” shall mean May 11, 2031.

          (d) “Fixed Rate Tranche A” shall mean Two Million Four Hundred Sixty-One Thousand and No/100
Dollars ($2,461,000.00) of the aggregate amount of the Loan which shall bear interest as set forth
in Section 1.3 hereof.

          (e) “Floating Rate Tranche B” shall mean One Million One Hundred Nineteen Thousand and No/100
Dollars ($1,119,000.00) of the aggregate amount of the Loan which shall bear interest at the
LIBOR-Based Rate (as hereinafter defined).

          (f) “Interest Period” shall mean initially, the period commencing on the date hereof and
ending on and including the day of the tenth (10th) day of the calendar month following
the date of this Note, unless principal is advanced on the tenth (10th) of a month, in
which case the first Interest Period shall consist only such tenth (10th) day. Each
Interest Period thereafter shall commence on the eleventh (11th) day of each calendar
month during the term of this Note and shall end on and include the tenth (10th) day of
the next occurring calendar month. Interest shall accrue from the date on which funds are advanced
hereunder (regardless of the time of day) through and including the day on which funds are credited
pursuant to Section 1.4 hereof.

          (g) “LIBOR-Based Rate” shall mean (i) for the first Interest Period, an interest rate per
annum equal to six and ninety-five one-hundredths percent (6.95%) and (ii) for each succeeding
Interest Period until Floating Rate Tranche B is satisfied, an interest rate per annum equal at all
times to two hundred (200) basis points above the one-month LIBOR, in each case as determined by
Payee prior to the commencement of each Interest Period.

 

 

          (h) “LIBOR” shall mean with respect to each day during each Interest Period, the rate for U.S.
dollar deposits of that many months maturity as reported on Telerate page 3750 as of 11:00 a.m.,
London time, on the second London Business Day before the relevant Interest Period begins (or if
not so reported, then as determined by Payee from another recognized source or interbank
quotation), rounded up to the nearest one-eighth of one percent (1/8%).

          (i) “Loan” shall mean that certain loan made by Payee to Maker in respect of the Property
which is evidenced by this Note and secured by, among other things, the Security Instrument and all
other Loan Documents.

          (j) “Loan Documents” shall mean the Security Instrument, this Note and all other documents now
or hereafter evidencing, securing, guarantying, modifying or otherwise relating to the indebtedness
evidenced hereby.

          (k) “London Business Day” shall mean a day of the year on which dealings in United States
dollars are carried on in the London interbank market and banks are not required or authorized to
close in London or in New York, New York.

          (l) “Maturity Date” shall mean May 11, 2011.

          (m) “Monthly Payment Amount” shall mean the sum of (A) from and including the First Payment
Date through the Maturity Date, an amount equal to the interest payable under this Note on the
portion allocated as Fixed Rate Tranche A at the Fixed Interest Rate in the amounts for each such
Payment Date set forth on Annex 1 attached hereto and incorporated herein by this reference or as
provided by Payee to Maker in connection with the initial Fixed Interest Rate Interest Period, plus
(B) through and until Floating Rate Tranche B is satisfied, an amount equal to the interest payable
under this Note on the portion allocated as Floating Rate Tranche B at the LIBOR-Based Rate
pursuant to the provisions of Section 1.2 hereof. Annex 1 is for reference purposes only and any
payment incorrectly referenced thereon or omitted therefrom shall not limit or reduce Maker’s
obligations for actual amounts due under this Note in accordance with its payment terms, and Maker
agrees that Payee may substitute a replacement Annex 1 in the event the attached does not
accurately reflect Maker’s scheduled payment obligations.

          (n) “Optional Prepayment Date” shall mean May 11, 2011.

          (o) “Optional Prepayment Determination Date” shall mean May 11, 2011.

          (p) “Security Instrument” shall mean that certain mortgage, deed of trust or deed to secure
debt and security agreement from Maker for the benefit of Payee, dated of even date herewith,
covering property located in Bexar County, Texas.

     Each of the capitalized terms not otherwise defined in this Note shall have the respective
meaning ascribed to it in the Security Instrument of even date herewith from Maker to Payee.

     1.2 LIBOR-Based Rate; Pay-Down Date. (a) From the date of the advance of the principal
evidenced hereby through the Pay-Down Date (as hereinafter defined) for Floating Rate Tranche B,
Floating Rate Tranche B shall bear interest at the LIBOR-Based Rate. The LIBOR-Based Rate shall
remain in effect, subject to the provisions hereof, from and including the first day of the
Interest Period to and excluding the last day of the Interest Period for which it is determined.

          (b) If requested by Payee, Maker shall immediately confirm the LIBOR-Based Rate and the
duration of the applicable Interest Period by acknowledging receipt of a written confirmation of
the LIBOR-Based Rate and Interest Period delivered by Payee to Maker. Only one Interest Period may
be in effect at any given time.

          (c) Without limiting the effect of any other provision of this Note, Maker shall pay to Payee
on the last day of each and every Interest Period, so long as and to the extent that Payee (or its
source of funds) may directly or indirectly be required to maintain reserves against “Eurocurrency
liabilities” under Federal Reserve

 

 

Regulation D (as at any time amended), additional interest (as determined by Payee and disclosed to
Maker) for each such Interest Period at an interest rate per annum equal, at all times during such
Interest Period for the principal balance of Floating Rate Tranche B, to the excess of (i) the rate
obtained by dividing LIBOR for such Interest Period by a percentage equal to 100% minus the reserve
percentage applicable during such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or if more than one such percentage is so
applicable, minus the daily average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve requirement) for Payee (or its
source of funds) in respect of liabilities or assets consisting of or including “Eurocurrency
liabilities” under Federal Reserve Regulation D (as at any time amended) having a term equal to
such Interest Period over (ii) LIBOR for such Interest Period. Terms used in Regulation D shall
have the same meanings when used herein. Each such determination made by Payee and each such
notification by Payee to Maker under this subparagraph of the amount of additional interest payable
hereunder shall be conclusive as to the matters set forth therein.

          (d) In addition to the payment of interest and fees as aforesaid, Maker shall, from time to
time, upon demand by Payee pay to Payee amounts as shall be sufficient to compensate Payee for (i)
any loss, cost, fee, breakage or other expense incurred or sustained directly or indirectly by
reason of the liquidation or reemployment of deposits or other funds acquired by Payee to fund or
maintain Floating Rate Tranche B during any Interest Period as a result of any prepayment of
Floating Rate Tranche B or any portion thereof or any attempt by Maker to rescind the selection of
the LIBOR-Based Rate as the applicable interest rate for Floating Rate Tranche B and (ii) any
increased costs incurred by Payee, by reason of:

     (x) taxes (or the withholding of amounts for taxes) of any nature whatsoever,
including, without limitation, income, excise and interest equalization taxes (other than
United States or state income taxes) as well as all levies, imports, duties, or fees whether
now in existence or as the result of a change in, or promulgation of, any treaty, statute or
regulation or interpretation thereof, or any directive, guideline or otherwise, by a central
bank or fiscal authority or any other entity (whether or not having the force of law) or a
change in the basis of, or time of payment of, such taxes and other amounts resulting
therefrom;

     (y) any reserve or special deposit requirements against or with respect to assets or
liabilities or deposits outstanding under LIBOR (including, without limitation, those
imposed under the Monetary Control Act of 1978) currently required by, or resulting from a
change in, or the promulgation of, such requirements by treaty, statute, regulation,
interpretation thereof, or any directive, guidelines, or otherwise by a central bank or
fiscal authority (whether or not having the force of law); and

     (z) any other costs resulting from compliance with treaties, statutes, regulations,
interpretations or any directives or guidelines or otherwise, promulgated by or of a central
bank or fiscal authority or other entity with similar authority (whether or not having the
force of law).

A certificate as to the amount of any such costs prepared by Payee, signed by an authorized officer
of Payee and submitted to Maker shall be conclusive as to the matters therein set forth.

     (e) The selection at any time of an interest rate based upon LIBOR shall be expressly
conditioned upon the existence of an adequate and fair means of determining LIBOR and the absence
of any legal prohibition against the charging of interest based on LIBOR.

     (f) On or prior to July 25, 2006 (the “Pay-Down Date”), Maker shall fully prepay the principal
balance of this Note allocated as Floating Rate Tranche B. Floating Rate Tranche B shall not be
deemed to have been paid and/or satisfied in full until all such additional costs, in addition to
the principal balance thereof and all interest thereon and all other sums due and payable under the
Loan Documents in regards to Floating Rate Tranche B, shall have been paid.

     1.3 Note Rate; Computation of Interest. The term “Note Rate” as used in this Note shall
mean (a) for Fixed Rate Tranche A, from the date of this Note through but not including the
Optional Prepayment Date, a rate per annum equal to five and eighty-six one hundredths percent
(5.86%) (the “Fixed Interest Rate”), (b) for Floating Rate Tranche B, from the date of this Note
through the Pay-Down Date and satisfaction of Floating Rate Tranche B, a

 

 

rate per annum equal to the LIBOR-Based Rate, and (c) from the Optional Prepayment Date
through and including the date this Note is paid in full, a rate per annum equal to the greater of
(i) the Fixed Interest Rate plus two (2%) percent or (ii) the Treasury Constant Maturity Yield
Index (as hereinafter defined) plus two (2%) percent ((i) or (ii), as applicable, the “Revised
Interest Rate”). Interest shall be computed hereunder based on a 360-day year and based on the
actual number of days elapsed for any period in which interest is being calculated. For purposes
of this Section 1.3, the term “Treasury Constant Maturity Yield Index” shall mean the average yield
for “This Week” as reported by the Federal Reserve Board in Federal Statistical Release H.15 (519)
published during the second full week preceding the Optional Prepayment Date for instruments having
a maturity coterminous with the remaining term of this Note. If there is no Treasury Constant
Maturity Yield Index for instruments having a maturity coterminous with the remaining term of this
Note, then the index shall be equal to the weighted average yield to maturity of the Treasury
Constant Maturity Yield Indices with maturities next longer and shorter than such remaining average
life to maturity, calculated by averaging (and rounding upward to the nearest whole multiple of
1/100 of 1% per annum, if the average is not such a multiple) the yields of the relevant Treasury
Constant Maturity Yield Indices (rounded, if necessary, to the nearest 1/100 of 1% with any figure
of 1/200 of 1% or above rounded upward). If such Release is not available or no longer published,
Payee may refer to another recognized source of financial market information.

     1.4 Payment of Principal and Interest. Payments in federal funds immediately available at the
place designated for payment received by Payee prior to 2:00 p.m. local time on a day on which
Payee is open for business at said place of payment shall be credited prior to close of business,
while other payments, at the option of Payee, may not be credited until immediately available to
Payee in federal funds at the place designated for payment prior to 2:00 p.m. local time on a day
on which Payee is open for business. Interest only shall be payable in consecutive monthly
installments of the Monthly Payment Amount, beginning on June 11, 2006 (the “First Payment Date”),
and continuing on the eleventh (11th) day of each and every calendar month thereafter
(each, a “Payment Date”). On the Maturity Date or the Optional Prepayment Date, the entire
outstanding principal balance hereof, together with all accrued but unpaid interest thereon, shall
be due and payable in full provided, however, that in the event that such amounts are not paid on
such date, the Maturity Date shall be extended to the Extended Maturity Date. In computing the
number of days during which interest accrues, the day on which funds are initially advanced shall
be included regardless of the time of day such advance is made, and the day on which funds are
repaid shall be included unless repayment is credited prior to close of business. Payments in
federal funds immediately available in the place designated for payment received by Payee prior to
2:00 p.m. local time on a Business Day at said place of payment shall be credited prior to close of
business, while other payments, at the option of Payee, may not be credited until immediately
available to Payee in federal funds in the place designated for payment prior to 2:00 p.m. local
time at said place of payment on a Business Day.

     1.5 Application of Payments. So long as no Event of Default (as hereinafter defined) exists
hereunder or under any other Loan Document, each such monthly installment shall be applied, prior
to the Optional Prepayment Date, first, to any amounts hereafter advanced by Payee hereunder or
under any other Loan Document, second, to any late fees and other amounts payable to Payee, third,
to the payment of accrued interest and last to reduction of principal, and from and after the
Optional Prepayment Date, as provided in Section 2.2 of this Note.

     1.6 Payment of “Short Interest”. If the advance of the principal amount evidenced by this
Note is made on a date on or after the first (1st) day of a calendar month and prior to
the eleventh (11th) day of a calendar month, Maker shall pay to Payee contemporaneously
with the execution hereof interest at the Note Rate for a period from the date hereof through and
including the tenth (10th) day of this calendar month. If the advance of the principal
amount evidenced by this Note is made on a date after the eleventh (11th) day of a
calendar month and prior to or on the last day of a calendar month, Maker shall pay to Payee
contemporaneously with the execution hereof interest at the Note Rate for a period from the date
hereof through and including the tenth (10th) day of the immediately succeeding calendar
month.

     1.7 Prepayment.

          (a) This Note may be prepaid in whole but not in part (except as otherwise specifically
provided herein) at any time after the first (1st) anniversary of the date of this Note (the
“Lock-out Expiration Date”) provided (i) written notice of such prepayment is received by Payee not
more than ninety (90) days and not less than thirty (30) days prior to the date of such prepayment,
(ii) such prepayment is accompanied by (X) all interest accrued

 

 

hereunder through and including the date of such prepayment, if such prepayment occurs on a
Payment Date, or all interest accrued hereunder through and including the date of such prepayment
plus all interest which would have accrued hereunder through and including the immediately
succeeding Payment Date, if such prepayment occurs on a date other than a Payment Date and (Y) all
other sums due hereunder or under the other Loan Documents, and (iii) if such prepayment occurs
after the Lock-out Expiration Date but before the date that is four (4) years and nine (9) months
after the date of this Note, Payee is paid a prepayment fee in an amount equal to the greater of
(A) one percent (1.0%) of the principal amount being prepaid, and (B) the present value of a series
of payments each equal to the Payment Differential (as hereinafter defined) and payable on each
Payment Date over the remaining original term of this Note and on the Maturity Date, discounted at
the Reinvestment Yield (as hereinafter defined) for the number of months remaining as of the date
of such prepayment to each such Payment Date and the Maturity Date; provided, however, that the
Payment Differential shall be calculated as of the immediately succeeding Payment Date if such
prepayment occurs on a date other than a Payment Date. The term “Payment Differential” shall mean
an amount equal to (i) the Note Rate less the Reinvestment Yield, divided by (ii) twelve (12) and
multiplied by (iii) the principal sum outstanding under this Note after application of the constant
monthly payment due under this Note on the date of such prepayment, provided that the Payment
Differential shall in no event be less than zero. The term “Reinvestment Yield” shall mean an
amount equal to the lesser of (i) the yield on the U.S. Treasury issue (primary issue) with a
maturity date closest to the Maturity Date, or (ii) the yield on the U.S. Treasury issue (primary
issue) with a term equal to the remaining average life of the indebtedness evidenced by this Note,
with each such yield being based on the bid price for such issue as published in the Wall Street
Journal on the date that is fourteen (14) days prior to the date of such prepayment set forth in
the notice of prepayment (or, if such bid price is not published on that date, the next preceding
date on which such bid price is so published) and converted to a monthly compounded nominal yield.
In the event that any prepayment fee is due hereunder, Payee shall deliver to Maker a statement
setting forth the amount and determination of the prepayment fee, and, provided that Payee shall
have in good faith applied the formula described above, Maker shall not have the right to challenge
the calculation or the method of calculation set forth in any such statement in the absence of
manifest error, which calculation may be made by Payee on any day during the fifteen (15) day
period preceding the date of such prepayment. Payee shall not be obligated or required to have
actually reinvested the prepaid principal balance at the Reinvestment Yield or otherwise as a
condition to receiving the prepayment fee. No prepayment fee or premium shall be due or payable in
connection with any prepayment of the indebtedness evidenced by this Note made on or after the date
that is four (4) years and nine (9) months after the date of this Note.

          (b) Partial prepayments of this Note shall not be permitted, except for (i) partial
prepayments resulting from Payee’s election to apply insurance or condemnation proceeds to reduce
the outstanding principal balance of this Note as provided in the Security Instrument, in which
event no prepayment fee or premium shall be due unless, at the time of either Payee’s receipt of
such proceeds or the application of such proceeds to the outstanding principal balance of this
Note, an Event of Default shall have occurred, which Event of Default is unrelated to the
applicable casualty or condemnation, in which event the applicable prepayment fee or premium shall
be due and payable based upon the amount of the prepayment or (ii) any partial prepayment required
on or prior to the Pay-Down Date pursuant to Section 1.2(f) above, in which event no prepayment fee
or premium shall be due. No notice of prepayment shall be required under the circumstances
specified in subclause (i) of the preceding sentence. No principal amount repaid may be
reborrowed. Any such partial prepayments of principal under subclause (i) above shall be applied
to the unpaid principal balance evidenced hereby but such application shall not reduce the amount
of the fixed monthly installments required to be paid pursuant to Section 1.4 above.

          (c) Except as otherwise expressly provided herein, the prepayment fees provided above shall be
due, to the extent permitted by applicable law, under any and all circumstances where all or any
portion of this Note is paid prior to the Maturity Date, whether such prepayment is voluntary or
involuntary, including, without limitation, if such prepayment results from Payee’s exercise of its
rights upon Maker’s default and acceleration of the Maturity Date of this Note (irrespective of
whether foreclosure proceedings have been commenced), and shall be in addition to any other sums
due hereunder or under any of the other Loan Documents. No tender of a prepayment of this Note
with respect to which a prepayment fee is due shall be effective unless such prepayment is
accompanied by the applicable prepayment fee. If, prior to the Lock-out Expiration Date, the
indebtedness evidenced by this Note shall have been declared due and payable by Payee pursuant to
Article II hereof or the provisions of any other Loan Document due to a default by Maker, there
shall also then be immediately due and payable a sum equal to the interest which would have accrued
on the principal balance of this Note at the Note Rate from the date of such acceleration to the
Lock-out Expiration Date, together with a prepayment fee in an amount equal to the prepayment

 

 

fee that would have been due and payable on the Lock-out Expiration Date as though Maker were
prepaying the entire indebtedness evidenced hereby on the first (1st) day on which a prepayment
would have been permitted pursuant to the provisions set forth in this Note. If such acceleration
is on or after the Lock-out Expiration Date but before the date that is four (4) years and nine (9)
months after the date of this Note, such prepayment fee shall also then be immediately due and
payable as though Maker were prepaying the entire indebtedness on the date of such acceleration.
In addition to the amounts described in the two preceding sentences, in the event of any tender of
payment of such indebtedness made on or prior to the first (1st) anniversary of the date of this
Note, there shall also then be immediately due and payable an additional prepayment fee of three
percent (3%) of the principal amount being prepaid.

     1.8 Security. The indebtedness evidenced by this Note and the obligations created hereby are
secured by, among other things, the Security Instrument. All of the terms and provisions of the
Loan Documents are incorporated herein by reference. Some of the Loan Documents are to be filed
for record on or about the date hereof in the appropriate public records.

ARTICLE II — OPTIONAL PREPAYMENT DATE PROVISIONS

     2.1 Optional Prepayment Determination Date. The following subsections shall apply from and
after the Optional Prepayment Determination Date:

     (a) [Reserved].

     (b) For the calendar year in which the Optional Prepayment Determination Date occurs and for
each calendar year thereafter, Maker shall submit to Payee for Payee’s written approval an annual
budget (an “Annual Budget”) not later than (i) the Optional Prepayment Determination Date for the
calendar year in which the Optional Prepayment Determination occurs and (ii) sixty (60) days prior
to the commencement of each calendar year thereafter, in form satisfactory to Payee setting forth
in reasonable detail budgeted monthly operating income and monthly operating capital and other
expenses for the Mortgaged Property. Each Annual Budget shall contain, among other things,
limitations on management fees, third party service fees and other expenses as Maker may reasonably
determine. Payee shall have the right to approve such Annual Budget and in the event that Payee
objects to the proposed Annual Budget submitted by Maker, Payee shall advise Maker of such
objections within fifteen (15) days after receipt thereof (and deliver to Maker a reasonably
detailed description of such objections) and Maker shall, within three (3) days after receipt of
notice of any such objections, revise such Annual Budget and resubmit the same to Payee. Payee
shall advise Maker of any objections to such revised Annual Budget within ten (10) days after
receipt thereof (and deliver to Maker a reasonably detailed description of such objections) and
Maker shall revise the same in accordance with the process described in this subsection until Payee
approves an Annual Budget, provided, however, that if Payee shall not advise Maker of its
objections to any proposed Annual Budget within the applicable time period set forth in this
subsection, then such proposed Annual Budget shall be deemed approved by Payee. Each such Annual
Budget approved by Payee in accordance with terms hereof shall hereinafter be referred to as an
“Approved Annual Budget.” Until such time that Payee approves a proposed Annual Budget, the most
recently Approved Annual Budget shall apply; provided, that such Approved Annual Budget shall be
adjusted to reflect actual increases in real estate taxes, insurance premiums and utilities
expenses.

     (c) In the event that Maker must incur an extraordinary operating expense or capital expense
not set forth in the Annual Budget (an “Extraordinary Expense”), then Maker shall promptly deliver
to Payee a reasonably detailed explanation of such proposed Extraordinary Expense for Payee’s
approval.

     (d) For the purposes of this Note, “Cash Expenses” shall mean, for any period, the operating
expenses for the operation and maintenance of the Mortgaged Property as set forth in an Approved
Annual Budget to the extent that such expenses are actually incurred by Maker excluding payments
into the Impound Account and expenses for which Maker shall be reimbursed from, or which shall be
paid for out of, any such account or reserve.

     (e) Notwithstanding the other provisions of this Section 2.1, in the event that, prior to the
Optional Prepayment Determination Date, Maker delivers to Payee either (i) a written commitment
(the “Commitment”) for the refinancing of the loan evidenced by this Note from a Qualified
Institutional Lender (as hereinafter defined), which reasonably provides for the consummation of
such refinance prior to the Optional Prepayment Date or (ii) other evidence

 

 

in form and substance satisfactory to Payee in its sole determination of Maker’s ability to
refinance the loan evidenced by this Note prior to the Optional Prepayment Date, then, solely in
either such event, the terms of Section 2.1(a), (b), (c) and (d) of this Note shall be inoperative,
provided, however, that upon (x) the failure of such refinance to be consummated in accordance with
the terms of the Commitment or such other evidence, as applicable, (y) the termination of the
Commitment for any reason or (z) any adverse change in circumstances with respect to Maker or any
principals of Maker, the Mortgaged Property, the proposed lender or otherwise, as determined by
Payee in its sole determination, which, in Payee’s reasonable judgment, significantly decreases the
likelihood of such refinance being consummated prior to the Optional Prepayment Date, the terms of
Section 2.1(a), (b), (c) and (d) of this Note shall immediately become operative and Maker shall
immediately comply with any of the terms thereof which, except for the operation of this subsection
(e), Maker would theretofore have been obligated to comply. “Qualified Institutional Lender” shall
mean a financial institution or other lender with a long term credit rating which is not less than
investment grade. The determination of whether the conditions set forth in clause (i) or (ii)
above, shall be made and notice of such determination shall be delivered to Maker, within ten (10)
business days following Payee’s receipt of the items set forth in such clauses.

     2.2 Failure to Prepay On or Before Optional Prepayment Date. In the event that Maker does not
prepay the entire principal balance of this Note and any other amounts outstanding under this Note
or any of the other Loan Documents on or prior to the Optional Prepayment Date, the provisions of
Section 2.1(b), (c) and (d) as set forth above shall remain in full force and effect, and the
following subsections also shall apply:

     (a) From and after the Optional Prepayment Date, interest shall accrue on the unpaid principal
balance from time to time outstanding under this Note at the Revised Interest Rate. Interest
accrued at the Revised Interest Rate and not paid pursuant to this Section 2.2 shall be deferred
and added to the principal balance of this Note and shall earn interest at the Revised Interest
Rate to the extent permitted by applicable law (such accrued interest is hereinafter referred to as
“Accrued Interest”). All of the unpaid principal balance of this Note, including, without
limitation, any Accrued Interest, shall be due and payable on the Extended Maturity Date.

     (b) Maker shall be obligated to pay, and Payee shall collect from the Rent Account (as defined
in the Security Instrument) to the extent of funds on deposit in such account, on the Optional
Prepayment Date and on the eleventh (11th) day of each calendar month thereafter to and including
the Extended Maturity Date the following payments from Rents (as defined in the Security
Instrument) received on or before such day in the listed order of priority:

     (i) First, the payment of the Monthly Payment Amount with interest computed at the
Fixed Interest Rate;

     (ii) Second, payments to the Impound Account (as defined in the Security Instrument) in
accordance with the terms and conditions of the Security Instrument;

     (iii) [Reserved];

     (iv) Fourth, payments for monthly Cash Expenses, less management fees payable to
affiliates of Maker, pursuant to the terms and conditions of the related Approved Annual
Budget;

     (v) Fifth, payment for Extraordinary Expenses approved by Payee, if any;

     (vi) Sixth, payments to Payee of the balance of the funds then on deposit in the Rent
Account to be applied to (x) any other amounts due under the Loan Documents, (y) Accrued
Interest and (z) the reduction of the outstanding principal balance of this Note until such
principal balance is paid in full in whatever proportion and priority as Payee may
determine.

     (c) Nothing in this Article II shall limit, reduce or otherwise affect Maker’s obligations to
make payments of the Monthly Payment Amount (including interest on the Note as provided in Section
1.3 hereof) payments to the Impound Account and payments of other amounts due hereunder and under
the other Loan Documents, whether or not Rents (as defined in the Security Instrument) are
available to make such payments.

 

 

ARTICLE III — DEFAULT

     3.1 Events of Default. It is hereby expressly agreed that should any default occur in the
payment of principal or interest as stipulated above and such payment is not made on the date such
payment is due, or should any other default not cured within any applicable grace or notice period
occur under any other Loan Document, then an event of default (an “Event of Default”) shall exist
hereunder, and in such event the indebtedness evidenced hereby, including all sums advanced or
accrued hereunder or under any other Loan Document, and all unpaid interest accrued thereon, shall,
at the option of Payee and without notice to Maker, at once become due and payable and may be
collected forthwith, whether or not there has been a prior demand for payment and regardless of the
stipulated date of maturity.

     3.2 Late Charges. In the event that any payment is not received by Payee on the date when
due, then, in addition to any default interest payments due hereunder, Maker shall also pay to
Payee a late charge in an amount equal to five percent (5%) of the amount of such overdue payment.

     3.3 Default Interest Rate. So long as any Event of Default exists hereunder, regardless of
whether or not there has been an acceleration of the indebtedness evidenced hereby, and at all
times after maturity of the indebtedness evidenced hereby (whether by acceleration or otherwise),
interest shall accrue on the outstanding principal balance of this Note, from the date due until
the date credited, at a rate per annum equal to four percent (4%) in excess of the Note Rate, or,
if such increased rate of interest may not be collected under applicable law, then at the maximum
rate of interest, if any, which may be collected from Maker under applicable law (the “Default
Interest Rate”), and such default interest shall be immediately due and payable.

     3.4 Maker’s Agreements. Maker acknowledges that it would be extremely difficult or
impracticable to determine Payee’s actual damages resulting from any late payment or default, and
such late charges and default interest are reasonable estimates of those damages and do not
constitute a penalty. The remedies of Payee in this Note or in the Loan Documents, or at law or in
equity, shall be cumulative and concurrent, and may be pursued singly, successively or together, in
Payee’s discretion.

     3.5 Maker to Pay Costs. In the event that this Note, or any part hereof, is collected by or
through an attorney-at-law, Maker agrees to pay all costs of collection, including, but not limited
to, reasonable attorneys’ fees.

     3.6 Exculpation. Notwithstanding anything in this Note or the Loan Documents to the contrary,
but subject to the qualifications hereinbelow set forth, Payee agrees that:

     (a) Maker shall be liable upon the indebtedness evidenced hereby and for the other obligations
arising under the Loan Documents to the full extent (but only to the extent) of the security
therefor, the same being all properties (whether real or personal), rights, estates and interests
now or at any time hereafter securing the payment of this Note and/or the other obligations of
Maker under the Loan Documents (collectively, the “Security Property”);

     (b) if a default occurs in the timely and proper payment of all or any part of such
indebtedness evidenced hereby or in the timely and proper performance of the other obligations of
Maker under the Loan Documents, any judicial proceedings brought by Payee against Maker shall be
limited to the preservation, enforcement and foreclosure, or any thereof, of the liens, security
titles, estates, assignments, rights and security interests now or at any time hereafter securing
the payment of this Note and/or the other obligations of Maker under the Loan Documents, and no
attachment, execution or other writ of process shall be sought, issued or levied upon any assets,
properties or funds of Maker other than the Security Property, except with respect to the liability
described below in this section; and

     (c) in the event of a foreclosure of such liens, security titles, estates, assignments, rights
or security interests securing the payment of this Note and/or the other obligations of Maker under
the Loan Documents, no judgment for any deficiency upon the indebtedness evidenced hereby shall be
sought or obtained by Payee against Maker, except with respect to the liability described below in
this section; provided, however, that, notwithstanding the foregoing provisions of this section,
Maker shall be fully and personally liable and subject to legal action (i) for proceeds paid under
any insurance policies (or paid as a result of any other claim or cause of action against any
person or entity) by reason of damage, loss or destruction to all or any portion of the Security
Property, to the full extent of such proceeds not previously delivered to Payee, but which, under
the terms of the Loan Documents, should have been delivered to Payee, (ii) for proceeds or awards
resulting from the condemnation or other taking in lieu of condemnation of all or any

 

 

portion of the Security Property, to the full extent of such proceeds or awards not previously
delivered to Payee, but which, under the terms of the Loan Documents, should have been delivered to
Payee, (iii) for all tenant security deposits or other refundable deposits paid to or held by Maker
or any other person or entity in connection with leases of all or any portion of the Security
Property which are not applied in accordance with the terms of the applicable lease or other
agreement, (iv) for rent and other payments received from tenants under leases of all or any
portion of the Security Property paid more than one (1) month in advance, (v) for rents, issues,
profits and revenues of all or any portion of the Security Property received or applicable to a
period after the occurrence of any Event of Default hereunder or under the Loan Documents, which
are not either applied to the ordinary and necessary expenses of owning and operating the Security
Property or paid to Payee, (vi) for waste committed on the Security Property, damage to the
Security Property as a result of the intentional misconduct or gross negligence of Maker or any of
its principals, officers, general partners or members, any guarantor, any indemnitor, or any agent
or employee of any such person, or any removal of all or any portion of the Security Property in
violation of the terms of the Loan Documents, to the full extent of the losses or damages incurred
by Payee on account of such occurrence, (vii) for failure to pay any valid taxes, assessments,
mechanic’s liens, materialmen’s liens or other liens which could create liens on any portion of the
Security Property which would be superior to the lien or security title of the Security Instrument
or the other Loan Documents, to the full extent of the amount claimed by any such lien claimant
except, with respect to any such taxes or assessments, to the extent that funds have been deposited
with Payee pursuant to the terms of the Security Instrument specifically for the applicable taxes
or assessments and not applied by Payee to pay such taxes and assessments, (viii) for all
obligations and indemnities of Maker under the Loan Documents relating to hazardous or toxic
substances or radon or compliance with environmental laws and regulations to the full extent of any
losses or damages (including, but not limited to, those resulting from diminution in value of any
Security Property) incurred by Payee as a result of the existence of such hazardous or toxic
substances or radon or failure to comply with environmental laws or regulations, (ix) for fraud,
material misrepresentation or failure to disclose a material fact by Maker or any of its
principals, officers, general partners or members, any guarantor, any indemnitor or any agent,
employee or other person authorized or apparently authorized to make statements, representations or
disclosures on behalf of Maker, any principal, officer, general partner or member of Maker, any
guarantor or any indemnitor, to the full extent of any losses, damages and expenses of Payee on
account thereof and (x) for failure to pay to Payee all amounts due pursuant to Section 1.7 of this
Note in the event the Security Property is purchased pursuant to Section 6.1 of that certain
Restrictive Covenant, Development and Operating Agreement recorded in Volume 9034, Page 2168, Deed
and Plat Records of Bexar County, Texas, and this Note is prepaid.

     References herein to particular sections of the Loan Documents shall be deemed references to
such sections as affected by other provisions of the Loan Documents relating thereto. Nothing
contained in this section shall (1) be deemed to be a release or impairment of the indebtedness
evidenced by this Note or the other obligations of Maker under the Loan Documents or the lien of
the Loan Documents upon the Security Property, or (2) preclude Payee from foreclosing the Loan
Documents in case of any default or from enforcing any of the other rights of Payee except as
stated in this section, or (3) limit or impair in any way whatsoever (A) any Indemnity and Guaranty
Agreements (the “Indemnity Agreements”) or (B) the Environmental Indemnity Agreement (the
“Environmental Indemnity Agreement”), executed and delivered in connection with the indebtedness
evidenced by this Note or release, relieve, reduce, waive or impair in any way whatsoever, any
obligation of any party to the Indemnity Agreements or the Environmental Indemnity Agreement.

     Notwithstanding the foregoing, the agreement of Payee not to pursue recourse liability as set
forth in subsection (c) above SHALL BECOME NULL AND VOID and shall be of no further force and
effect (i) in the event of a default by Maker or Indemnitor (as defined in the Security Instrument)
of any of the covenants set forth in Section 1.13 or Section 1.33 of the Security Instrument, or
(ii) if the Security Property or any part thereof shall become an asset in (A) a voluntary
bankruptcy or insolvency proceeding of Maker, or (B) an involuntary bankruptcy or insolvency
proceeding of Maker which is not dismissed within sixty (60) days of filing.

     Notwithstanding anything to the contrary in this Note, the Security Instrument or any of the
other Loan Documents, Payee shall not be deemed to have waived any right which Payee may have under
Section 506(a), 506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a
claim for the full amount of the indebtedness evidenced hereby or secured by the Security
Instrument or any of the other Loan Documents or to require that all collateral shall continue to
secure all of the indebtedness owing to Payee in accordance with this Note, the Security Instrument
and the other Loan Documents.

 

 

ARTICLE IV — GENERAL CONDITIONS

     4.1 No Waiver; Amendment. No failure to accelerate the indebtedness evidenced hereby by
reason of default hereunder, acceptance of a partial or past due payment, or indulgences granted
from time to time shall be construed (i) as a novation of this Note or as a reinstatement of the
indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of Payee
thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the
exercise of such right of acceleration or any other right granted hereunder or by any applicable
laws; and Maker hereby expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result contrary to or in
conflict with the foregoing. No extension of the time for the payment of this Note or any
installment due hereunder made by agreement with any person now or hereafter liable for the payment
of this Note shall operate to release, discharge, modify, change or affect the original liability
of Maker under this Note, either in whole or in part, unless Payee agrees otherwise in writing.
This Note may not be changed orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is sought.

     4.2 Waivers. Presentment for payment, demand, protest and notice of demand, protest and
nonpayment and all other notices are hereby waived by Maker. Maker hereby further waives and
renounces, to the fullest extent permitted by law, all rights to the benefits of any moratorium,
reinstatement, marshaling, forbearance, valuation, stay, extension, redemption, appraisement,
exemption and homestead now or hereafter provided by the Constitution and laws of the United States
of America and of each state thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the obligations evidenced by this Note or the
other Loan Documents.

     4.3 Limit of Validity. The provisions of this Note and of all agreements between Maker and
Payee, whether now existing or hereafter arising and whether written or oral, including, but not
limited to, the Loan Documents, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of demand or acceleration of the maturity of this Note or otherwise,
shall the amount contracted for, charged, taken, reserved, paid or agreed to be paid (“Interest”)
to Payee for the use, forbearance or detention of the money loaned under this Note exceed the
maximum amount permissible under applicable law. If, from any circumstance whatsoever, performance
or fulfillment of any provision hereof or of any agreement between Maker and Payee shall, at the
time performance or fulfillment of such provision shall be due, exceed the limit for Interest
prescribed by law or otherwise transcend the limit of validity prescribed by applicable law, then,
ipso facto, the obligation to be performed or fulfilled shall be reduced to such limit, and if,
from any circumstance whatsoever, Payee shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any excessive Interest
shall be applied to the reduction of the principal balance owing under this Note in the inverse
order of its maturity (whether or not then due), in which event no prepayment fee or premium shall
be due, or, at the option of Payee, be paid over to Maker, and not to the payment of Interest. All
Interest (including any amounts or payments judicially or otherwise under the law deemed to be
Interest) contracted for, charged, taken, reserved, paid or agreed to be paid to Payee shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the
full term of this Note, including any extensions and renewals hereof until payment in full of the
principal balance of this Note so that the Interest thereon for such full term will not exceed at
any time the maximum amount permitted by applicable law. To the extent United States federal law
permits a greater amount of interest than is permitted under the law of the State in which the
Security Property is located, Payee will rely on United States federal law for the purpose of
determining the maximum amount permitted by applicable law. Additionally, to the extent permitted
by applicable law now or hereafter in effect, Payee may, at its option and from time to time,
implement any other method of computing the maximum lawful rate under the law of the State in which
the Security Property is located or under other applicable law by giving notice, if required, to
Maker as provided by applicable law now or hereafter in effect. This Section 4.3 will control all
agreements between Maker and Payee.

     4.4 Use of Funds. Maker hereby warrants, represents and covenants that no funds disbursed
hereunder shall be used for personal, family or household purposes.

     4.5 Unconditional Payment. Maker is and shall be obligated to pay principal, interest and any
and all other amounts which become payable hereunder or under the other Loan Documents absolutely
and unconditionally and without any abatement, postponement, diminution or deduction and without
any reduction for counterclaim or setoff. In the event that at any time any payment received by
Payee hereunder shall be deemed by a court of competent jurisdiction to have been a voidable
preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief

 

 

law, then the obligation to make such payment shall survive any cancellation or satisfaction of
this Note or return thereof to Maker and shall not be discharged or satisfied with any prior
payment thereof or cancellation of this Note, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof, and such payment shall be
immediately due and payable upon demand.

     4.6 GOVERNING LAW. THIS NOTE SHALL BE INTERPRETED, CONSTRUED AND ENFORCED ACCORDING TO THE
LAWS OF THE STATE IN WHICH THE SECURITY PROPERTY IS LOCATED.

     4.7 WAIVER OF JURY TRIAL. MAKER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES
AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO THE DEBT EVIDENCED BY THIS NOTE OR ANY CONDUCT, ACT OR OMISSION
OF PAYEE OR MAKER, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES,
AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH PAYEE OR MAKER, IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

     4.8 Secondary Market. Payee may sell, transfer and deliver the Loan Documents to one or more
investors in the secondary mortgage market. In connection with such sale, Payee may retain or
assign responsibility for servicing the loan evidenced by this Note or may delegate some or all of
such responsibility and/or obligations to a servicer, including, but not limited to, any
subservicer or master servicer, on behalf of the investors. All references to Payee herein shall
refer to and include, without limitation, any such servicer, to the extent applicable.

     4.9 Dissemination of Information. If Payee determines at any time to sell, transfer or assign
this Note, the Security Instrument and the other Loan Documents, and any or all servicing rights
with respect thereto, or to grant participations therein (the “Participations”) or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the “Securities”), Payee may forward to each
purchaser, transferee, assignee, servicer, participant, investor, or their respective successors in
such Participations and/or Securities (collectively, the “Investor”) or any Rating Agency rating
such Securities, each prospective Investor and each of the foregoing’s respective counsel, all
documents and information which Payee now has or may hereafter acquire relating to the debt
evidenced by this Note and to Maker, any guarantor, any indemnitor and the Security Property, which
shall have been furnished by Maker, any guarantor or any indemnitor as Payee determines necessary
or desirable.

ARTICLE V — MISCELLANEOUS PROVISIONS

     5.1 Miscellaneous. The terms and provisions hereof shall be binding upon and inure to the
benefit of Maker and Payee and their respective heirs, executors, legal representatives,
successors, successors-in-title and assigns, whether by voluntary action of the parties or by
operation of law. As used herein, the terms “Maker” and “Payee” shall be deemed to include their
respective heirs, executors, legal representatives, successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law. If Maker consists of more than
one person or entity, each shall be jointly and severally liable to perform the obligations of
Maker under this Note. All personal pronouns used herein, whether used in the masculine, feminine
or neuter gender, shall include all other genders; the singular shall include the plural and vice
versa. Titles of articles and sections are for convenience only and in no way define, limit,
amplify or describe the scope or intent of any provisions hereof. Time is of the essence with
respect to all provisions of this Note. This Note and the other Loan Documents contain the entire
agreements between the parties hereto relating to the subject matter hereof and thereof and all
prior agreements relative hereto and thereto which are not contained herein or therein are
terminated.

     5.2 Maker’s Tax Identification Number is 20-3960077.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, Maker has executed this Note as of the date first written above.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	MAKER:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	COLE SAN ANTONIO TX, LP,	 	 
	 	 	a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:  Cole GO San Antonio TX CO, LLC,	 	 
	 	 	        a Delaware limited liability company,

        its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:   Series D, LLC,
	 	 
	 	 	        an Arizona limited liability company,

        its manager

	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:    /s/ John M. Pons

 

	 	 
	 

	 	John M. Pons, Authorized Officer
	 	 

 

 

Schedule A

LOAN TERMS

	 	 	 	 	 	 
	Original Principal Amount
	 	$	2,461,000.00	 	
	Note Rate % (Per Annum)
	 	 	5.860	%	
	Original Amortization Term (Months)
	 	 	 	 	
	Monthly Payment Amount (Excluding IO Period)
	 	$	12,017.88	 	
	Note Date
	 	 	4/25/2006	 	
	First Pay Date
	 	 	6/11/2006	 	
	Original Loan Term (Months)
	 	 	60	 	
	Scheduled Maturity Date
	 	 	5/11/2011	 	
	Interest Accrual Basis During Amortization Periods
	 	ACTUAL/360	 	
	Interest Only (IO) Periods (Months)
	 	 	60	 	
	Interest Accrual Basis During IO Period
	 	ACTUAL/360	 	
	 
	CONN’S SAN ANTONIO, TX
	 	 	 	 	502853213	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Interest          	 	Principal       	 	 
	 	 	 	 	 	 	 	 	 	 	Accrual	 	 	 	 	 	Component    	 	Component of	 	 
	Pay	 	 	 	 	 	Days in	 	Scheduled           	 	of Scheduled  	 	Scheduled      	 	Ending Unpaid   
	Period	 	 	 	Pay Date         	 	Period 	 	Payment             	 	Payment         	 	Payment        	 	Principal Balance
	 
	 	 	0	 	 	 	5/11/2006	 	 	 	16	 	 	$	0.00	 	 	$	6,409.60	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	1	 	 	 	6/11/2006	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	2	 	 	 	7/11/2006	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	3	 	 	 	8/11/2006	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	4	 	 	 	9/11/2006	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	5	 	 	 	10/11/2006	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	6	 	 	 	11/11/2006	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	7	 	 	 	12/11/2006	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	8	 	 	 	1/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	9	 	 	 	2/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	10	 	 	 	3/11/2007	 	 	 	28	 	 	$	11,216.69	 	 	$	11,216.69	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	11	 	 	 	4/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	12	 	 	 	5/11/2007	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	13	 	 	 	6/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	14	 	 	 	7/11/2007	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	15	 	 	 	8/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	16	 	 	 	9/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	17	 	 	 	10/11/2007	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	18	 	 	 	11/11/2007	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	19	 	 	 	12/11/2007	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	20	 	 	 	1/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	21	 	 	 	2/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	22	 	 	 	3/11/2008	 	 	 	29	 	 	$	11,617.29	 	 	$	11,617.29	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	23	 	 	 	4/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	 
	 	 	24	 	 	 	5/11/2008	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Interest      	 	Principal       	 	 
	 	 	 	 	 	 	 	 	Accrual	 	 	 	 	 	Component  	 	Component of	 	 
	Pay	 	 	 	 	 	 	Days in	 	Scheduled	 	of Scheduled	 	Scheduled      	 	Ending Unpaid
	Period	 	 	Pay Date         	 	 	Period 	 	Payment  	 	Payment       	 	Payment       	 	Principal Balance
	25	 	 	 	6/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	26	 	 	 	7/11/2008	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	27	 	 	 	8/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	28	 	 	 	9/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	29	 	 	 	10/11/2008	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	30	 	 	 	11/11/2008	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	31	 	 	 	12/11/2008	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	32	 	 	 	1/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	33	 	 	 	2/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	34	 	 	 	3/11/2009	 	 	 	28	 	 	$	11,216.69	 	 	$	11,216.69	 	 	$	0.00	 	 	$	2,461,000.00	 
	35	 	 	 	4/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	36	 	 	 	5/11/2009	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	37	 	 	 	6/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	38	 	 	 	7/11/2009	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	39	 	 	 	8/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	40	 	 	 	9/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	41	 	 	 	10/11/2009	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	42	 	 	 	11/11/2009	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	43	 	 	 	12/11/2009	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	44	 	 	 	1/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	45	 	 	 	2/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	46	 	 	 	3/11/2010	 	 	 	28	 	 	$	11,216.69	 	 	$	11,216.69	 	 	$	0.00	 	 	$	2,461,000.00	 
	47	 	 	 	4/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	48	 	 	 	5/11/2010	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	49	 	 	 	6/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	50	 	 	 	7/11/2010	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	51	 	 	 	8/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	52	 	 	 	9/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	53	 	 	 	10/11/2010	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	54	 	 	 	11/11/2010	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	55	 	 	 	12/11/2010	 	 	 	30	 	 	$	12,017.88	 	 	$	12,017.88	 	 	$	0.00	 	 	$	2,461,000.00	 
	56	 	 	 	1/11/2011	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	57	 	 	 	2/11/2011	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	58	 	 	 	3/11/2011	 	 	 	28	 	 	$	11,216.69	 	 	$	11,216.69	 	 	$	0.00	 	 	$	2,461,000.00	 
	59	 	 	 	4/11/2011	 	 	 	31	 	 	$	12,418.48	 	 	$	12,418.48	 	 	$	0.00	 	 	$	2,461,000.00	 
	60	 	 	 	5/11/2011	 	 	 	30	 	 	$	2,473,017.88	 	 	$	12,017.88	 	 	$	2,461,000.00	 	 	$	0.00	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	60	 	 	 	 	 	 	 	1,826	 	 	$	3,192,488.45	 	 	$	731,488.45	 	 	$	2,461,000.00	 	 	 	 	 

 

 

AUTO DRAFT INFORMATION

If you would like to sign up for our automatic payment drafting service, fill out
and return the enclosed authorization form along with a voided check and mail to the
address listed below. Please continue to send your monthly payments until you
receive written confirmation that the auto-draft service has begun. You will
receive written notification confirming your auto-draft setup and first auto-draft
date within 7 business days of the 15th of the month submitted.

Note: Requests must be received by the 15th to be set up for the
following month.

Wachovia Securities

Attention: Customer Service Department

8739 Research Drive — URP4

Charlotte, NC 28288-1075

 

 

I hereby request and authorize Wachovia Bank, National Association, doing business as Wachovia
Securities (“Wachovia Securities”), to draft my account specified below made payable to the order
of Wachovia Securities located in Charlotte, NC, provided there are sufficient funds in said
account to pay the same upon presentation. I agree that your rights in respect to each such draft
shall be the same as if it were a check drawn on Wachovia Securities and signed personally by me.
This authorization is to remain in effect until revoked by me in writing and until Wachovia
Securities actually receives such notice. I agree that Wachovia Securities shall be fully
protected in honoring any such drafts.

	 	 	 
	LOAN NUMBER

	 	                NAME OF BORROWING ENTITY
	Wachovia Loan # (9 digits)

	 	                Borrower Name
	BANK’S ROUTING NUMBER FROM CHECK

	 	ACCOUNT # TO BE DRAFTED
	Bank Routing Number (9 digits)

	 	Bank Account # (from check)
	NAME OF BANK TO BE DRAFTED

	 	LOCATION OF THE BANK
	Name of Bank

	 	                City and State

     PLEASE INCLUDE A VOIDED CHECK WITH THIS FORM

	 	 	 
	BORROWER’S SIGNATURE

	 	BORROWER’S NAME
	Authorized Signature (as it appears on bank documents)

	 	               Print Name
	 

	 	               TODAY’S DATE
	 

	 	               Date
	DAY OF MONTH PAYMENT WILL DRAFT

	 	BORROWER’S FAX NUMBER
	Draft Date (Payment due date)

	 	Fax #

TERMS AND CONDITIONS

Effective Date of Draft: The draft will occur on the payment due date, unless otherwise agreed upon
by borrower and servicer.

The borrower will receive a confirmation letter to insure auto-draft
set-up and to confirm draft date.

Revocation of this Authority: The authority of Wachovia Securities to transfer funds from the
borrowers account will not cease until Wachovia Securities receives written notification revoking
this authorization agreement. Wachovia Securities must receive this notice at least 15 days prior
to the date on which you wish the arrangement to end.

Dishonor: Wachovia Securities shall be under no liability whatsoever if a transfer of funds cannot
be made, whether or not such failure is caused by the act of omission of the borrower.

Insufficient Funds: If the automatic withdrawal is returned due to insufficient funds both Wachovia
Securities and the borrower’s financial institution may assess a fee.

Errors: The borrower has the right to have the amount of any incorrect deduction immediately
corrected by the borrower’s financial institution provided the borrower sends the appropriate
notice to the financial institution.

Amount of Draft: Wachovia Securities will withdraw the amount of the current monthly receivable.
This amount may vary due to escrow analyses, interest rate changes or reserve requirements as
applicable.

ACH Routing Number: Please contact the financial institution from which the money will be drafted
for this information.

Wachovia Securities is the trade name under which Wachovia Corporation conducts its investment
banking, capital markets and institutional securities business through First Union Securities, Inc.
(“FUSI”), Member NYSE, NASD, SIPC, and through other bank and non-bank and broker-dealer
subsidiaries of Wachovia Corporation.EX-4.1

 

Exhibit 4.1

EXECUTION COPY

          SECOND AMENDMENT, dated as of June 22, 2006 (this “Second Amendment”), to the Credit
Agreement, dated as of May 27, 2005 (as amended by the First Amendment, dated as of August 3, 2005
and as further amended, supplemented or otherwise modified from time to time prior to the date
hereof, the “Credit Agreement”), among Manor Care, Inc. (the “Borrower”), the
lenders from time to time party thereto (the “Lenders”), Bank of America, N.A., as
syndication agent, SunTrust Bank, UBS Securities LLC and Merrill Lynch Bank USA, as documentation
agents, and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative
Agent”).

W I T N E S S E T H :

—  —  —  —  —  —  —

          WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to the Credit
Agreement;

          WHEREAS, the Borrower has requested that the Lenders amend certain terms in the Credit
Agreement in the manner provided for herein; and

          WHEREAS, the Administrative Agent and the Lenders are willing to agree to the requested
amendments subject to the provisions of this Second Amendment;

          NOW, THEREFORE, in consideration of the premises contained herein, the parties hereto agree as
follows:

     1. Defined Terms. Unless otherwise defined herein, terms which are defined
in the Credit Agreement and used herein as defined terms are so used as so defined.

     2. Amendments to Section 1.01 (Defined Terms). Section 1.01 of the Credit
Agreement is hereby amended by:

          (a) deleting the table appearing in the definition of “Applicable Margin” in its entirety and
inserting in lieu thereof the following table:

	 	 	 	 	 	 	 	 	 	 	 	Applicable Margin	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	for Offshore Rate	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	Loans and Letters	 	 	 	 
	Pricing Level	 	 	Leverage Ratio	 	 	Facility Fee	 	 	of Credit	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	I

	 	 	Less than 1.0:1.0
	 	 	 	0.075	%	 	 	 	0.275	%	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	II

	 	 	Greater than or equal to
1.0:1.0 but less than 1.5:1.0
	 	 	 	0.080	%	 	 	 	0.320	%	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	III

	 	 	Greater than or equal to
1.5:1.0 but less than 2.0:1.0
	 	 	 	0.090	%	 	 	 	0.360	%	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	IV

	 	 	Greater than or equal to
2.0:1.0 but less than 2.5:1.0
	 	 	 	0.100	%	 	 	 	0.400	%	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	V

	 	 	Greater than or equal to 2.5:1.0
	 	 	 	0.125	%	 	 	 	0.500	%	 	 	 	 

          (b) inserting the following sentence after the table appearing in the definition of
“Applicable Margin”:

 

 

2

     “Until the first Business Day immediately following the date a Compliance Certificate
is delivered by the Borrower to the Administrative Agent for the first quarter following the
Second Amendment Effective Date, Level IV shall apply.”

          (c) deleting the date in the definition of “Audited Financial Statements” and substituting in
lieu thereof the following; “December 31, 2005”.

          (d) deleting the definition of “Cash Equivalent Investment” in its entirety and inserting in
lieu thereof the following:

     “(a) any direct obligation of (or obligation unconditionally guaranteed by) the United
States or a State thereof (or any agency or political subdivision thereof, to the extent
such obligations are supported by the full faith and credit of the United States or a State
thereof) maturing not more than three years after such time;

     (b) commercial paper maturing not more than three years from the date of issue, which
is issued by (i) a corporation (other than an Affiliate of any Obligor) organized under the
laws of any State of the United States or of the District of Columbia and rated A-1 or
higher by S&P or P-1 or higher by Moody’s, or (ii) any Lender (or its holding company);

     (c) any certificate of deposit, time deposit (including Eurodollar time deposits) or
bankers acceptance, maturing not more than three years after its date of issuance, which is
issued by either (i) any bank organized under the laws of the United States (or any State
thereof) and which has (A) a credit rating of A2 or higher from Moody’s or A or higher from
S&P and (B) a combined capital and surplus greater than $100,000,000, or (ii) any Lender;

     (d) any repurchase agreement having a term of three years or less entered into with any
Lender or any commercial banking institution satisfying the criteria set forth in clause
(c)(i) which (i) is secured by a fully perfected security interest in any obligation of
the type described in clause (a), and (ii) has a market value at the time such
repurchase agreement is entered into of not less than 102% of the repurchase obligation of
such commercial banking institution thereunder;

     (e) any bond, note, VRDN/VRDO, or commercial paper maturing not more than three years
after its date of issuance, issued by any State of the United States (or any agency or
political subdivision thereof), which has (i) a long-term credit rating of A2 or higher from
Moody’s or A or higher from S&P or (ii) a short-term credit rating of MIG1, SP-1, or the
equivalent;

     (f) any corporate fixed rate or floating rate medium-term notes maturing not more than
three years after its date of issuance, which has received a credit rating of A2 or higher
from Moody’s or A or higher from S&P;

     (g) asset backed paper maturing not more than three years after its date of issuance,
which has a credit rating of A-1/P-1 or higher from S&P or Moody’s respectively or AAA/Aaa
from S&P or Moody’s respectively;

     (h) asset-backed securities, which have a credit rating of AAA/Aaa from S&P or Moody’s
respectively with average lives of 3 years or less;

     (i) asset-backed commercial paper, which has a credit rating of A-1/ P-1 or higher from
S&P or Moody’s respectively;

 

 

3

     (j) any security issued by an agency of the United States (to the extent such
securities are supported by the full faith and credit of the United States or a State
thereof), including issuances of Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, Federal Home Loan Bank, Federal Farm Credit Bank, Student Loan
Marketing Association, Government National Mortgage Association and other agencies or
instrumentalities of the United States maturing not more than three years after the date of
its issuance (it being understood that such securities include securities that may be
“called” by the issuer prior to the final maturity date);

     (k) any investment in auction rate securities, which has (i) a credit rating of A or
higher from S&P or A2 or higher from Moody’s and (ii) a maximum maturity of one year after
its date of issuance, for which the reset date will be used to determine the maturity date,
all to the extent such investments are made in a manner consistent with past practice; and

     (l) investments in money market funds that are 2a-7 eligible or enhanced cash/cash plus
funds that are designated as 3(c)7 funds that invest almost exclusively in items described
in clauses (a) through (k).

     Notwithstanding the foregoing, the maximum maturity of individual securities shall be
three years and one month or less at the time of purchase by the Borrower (except with
respect to asset backed securities described in clauses (h), (i) and
(j) above, which may have an average maturity of three years or less. The maturity
of variable rate demand notes and auction rate debt/ preferred securities shall be measured
by the time to reset date. Auction rate debt and preferred stock and perpetual preferred
securities with a floating rate dividend that is paid and reset every seven to 49 days
through a bidding process shall have a credit rating of AAA/Aaa from S&P or Moody’s.”

          (e) deleting the definition of “Consolidated Interest Expense” in its entirety and inserting
in lieu thereof the following:

     “Consolidated Interest Expense” means, for any period, for the Borrower and
Subsidiaries (determined on a consolidated basis without duplication in accordance with
GAAP), all interest in respect of Indebtedness for Borrowed Money accrued or capitalized
during such period (whether or not actually paid during such period), excluding amortization
of fees related to the closing of this Agreement, each of the Notes Documents and any New
Indebtedness.”

          (f) deleting clause (i) in the definition of “Interest Period” in its entirety and inserting
in lieu thereof the following:

     “as to each Offshore Rate Loan, the period commencing on the date such Offshore Rate
Loan is disbursed or converted to or continued as an Offshore Rate Loan and ending on the
date one or two weeks or other periods if available to all Lenders, or one, two, three or
six months thereafter, as selected by the Borrower in its Revolving Loan Notice or the
applicable Competitive Bid Request”

          (g) deleting the definition of “Maturity Date” in its entirety and inserting in lieu thereof
the following:

     “Maturity Date” means June 22, 2011.”

 

 

4

          (h) substituting the existing dollar limitation referred to in subclause (i)(x) of subsection
(b) of the definition of “Non-Obligor” as follows: $75,000,000 in lieu of $50,000,000;

          (i) substituting the existing dollar limitation referred to in subclause (ii)(y) of subsection
(b) of the definition of “Non-Obligor” as follows: $25,000,000 in lieu of $20,000,000;

          (j) substituting the existing dollar limitation referred to in subclause (ii)(z) of subsection
(b) of the definition of “Non-Obligor” as follows: $75,000,000 in lieu of $50,000,000;

          (k) substituting the existing dollar limitation referred to in subsection (a) of the
definition of “Swing Line Sublimit” as follows: $25,000,000 in lieu of $20,000,000; and

          (l) adding the following definitions in the appropriate alphabetical order:

     “Second Amendment” means the Second Amendment, dated as of June 22, 2006, to
this Agreement.”

     “Second Amendment Effective Date” means the date on which the conditions
precedent set forth in Section 11 of the Second Amendment shall have been satisfied, which
date is June 22, 2006.”

     3. Amendment to Section 2.06 (Termination or Reduction of Commitments; Increase
of Commitments). Section 2.06(e) of the Credit Agreement is hereby amended by deleting the
number “$400,000,000” and replacing it with the number “$500,000,000”.

     4. Amendment to Section 6.01 (Financial Statements). Section 6.01 of the
Credit Agreement is hereby amended by (a) deleting the penultimate sentence thereof in its entirety
and (b) deleting from the ultimate sentence “Except for such Compliance Certificates, the” and
replacing it with “The”.

     5. Amendment to Section 6.11 (Additional Guarantors). Section 6.11(b) of
the Credit Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof
the following:

	 	 	 	          “If any Non-Obligor or Non-Obligors, as applicable, of the type referred to in (i)
clause (a)(i) of the definition of “Non-Obligor” ceases to be dormant and/or becomes
a wholly owned Subsidiary, as applicable, at any time, (ii) clause (b)(i)(w) of the
definition of “Non-Obligor” has a total asset value of greater than $1,000,000 at any Fiscal
Quarter end, (iii) clause (b)(ii)(y) of the definition of “Non-Obligor” has a total
asset value greater than $25,000,000 at any Fiscal Quarter end, (iv) clause
(b)(i)(x) of the definition of “Non-Obligor” has a combined total asset value greater
than $75,000,000 in the aggregate at any Fiscal Quarter end or (v) clause (b)(ii)(z)
of the definition of “Non-Obligor” has a combined total asset value greater than
$75,000,000 in the aggregate at any Fiscal Quarter end, then, in any case, the Borrower
shall notify the Administrative Agent thereof within 30 days thereof and thereafter cause
such Subsidiary or Subsidiaries, as the case may be, to become a Guarantor by executing an
Assumption Agreement in the form of Exhibit 1 to the Guaranty to the extent
permissible under Applicable Law, it being understood in the case of clause (iv) that only
such Subsidiary or Subsidiaries as selected by the Borrower as may be necessary to cause
combined total asset value to not exceed $75,000,000 shall be required to become
Guarantors.”

     6. Amendment to Section 7.05 (Restricted Payments). Section 7.05 is hereby
amended by inserting the following at the end of the first proviso thereof:

 

 

5

     “(and it being further understood that the period beginning January 1, 2006 through the
Second Amendment Effective Date and the period beginning the Second Amendment Effective Date
through December 31, 2006 shall be deemed to be separate Fiscal Years for the purposes of
this Section 7.05 only)”

     7. Amendment to Schedule 2.01. (a) Schedule 2.01 to the Credit
Agreement is hereby amended by deleting such schedule and substituting therefor Schedule
2.01 to this Second Amendment.

     (b) If, on the Second Amendment Effective Date, there is an unpaid principal amount of Loans,
the principal outstanding amount of all such Loans shall (i) in the case of such Loans which are
Base Rate Loans, be immediately prepaid by the Borrower (but all such Loans may, on the terms and
conditions hereof, be reborrowed on such date on a ratable basis, based on the revised Commitments
as then in effect) and (B) in the case of such Loans which are Offshore Rate Loans, continue to
remain outstanding (notwithstanding any other requirement in the Credit Agreement that such Loans
be held ratably based on the revised Commitments as then in effect) until the end of the then
current Interest Period therefor, at which time such Offshore Rate Loans shall be paid by the
Borrower (but all such Loans may, on the terms and conditions hereof, be reborrowed on such date on
a ratable basis, based on the Commitments as then in effect).

     8. Amendment to Schedule 10.02. Schedule 10.02 to the Credit
Agreement is hereby amended by deleting such schedule and substituting therefor Schedule
10.02 to this Second Amendment.

     9. Amendment to Exhibit A. Exhibit A to the Credit Agreement is
hereby amended by deleting such exhibit and substituting therefor Exhibit A to this Second
Amendment.

     10. Representations and Warranties. On and as of the date hereof, the
Borrower hereby confirms that the representations and warranties set forth in Article V of the
Credit Agreement are true and correct in all material respects, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date.

     11. Effectiveness of Amendment. This Second Amendment shall become
effective as of the date of satisfaction of the following conditions precedent (the “Second
Amendment Effective Date”):

     (a) the Administrative Agent shall have received this Second Amendment executed and delivered
by the Administrative Agent, the Borrower, each Lender party to the Credit Agreement (or, in the
case of any Lender, a lender addendum in a form specified by the Administrative Agent).

     (b) a favorable opinion of Latham & Watkins LLP, special counsel to the Obligors, addressed to
the Administrative Agent and each Lender, as to certain of the matters set forth in Annex A
to this Second Amendment and such other matters concerning the Obligors and the Loan Documents as
the Required Lenders may reasonably request;

     (c) a favorable opinion of Richard Parr, the General Counsel of the Borrower, addressed to the
Administrative Agent and each Lender, as to those matters set forth in Annex B to this
Second Amendment not otherwise covered in the opinion referenced in clause (b) above and such other
matters concerning the Obligors and the Loan Documents as the Required Lenders may reasonably
request;

     (d) a certificate of a Responsible Officer of the Borrower certifying (i) that the conditions
specified in Section 11 hereof have been satisfied, and (ii) that there has been no event or
circumstance since the date of the Audited Financial Statements that has had or could be reasonably
expected to have, either individually or in the aggregate, a Material Adverse Effect;

 

 

6

     (e) such certificates of resolutions or other action, incumbency certificates and other
certificates of Responsible Officers of each Obligor as the Administrative Agent may require
evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to
act as a Responsible Officer in connection with this Amendment;

     (f) evidence that there exists no action, suit, investigation, litigation or proceeding
affecting any Obligor or any of its Subsidiaries pending or threatened before any Governmental
Authority that (A) could reasonably be expected to have a Material Adverse Effect or (B) purports
to affect the legality, validity or enforceability of this Second Amendment or the consummation of
any of the transactions contemplated by this Second Amendment;

     (g) any fees and expenses required to be paid on or before the Second Amendment Effective Date
shall have been paid; and

     (h) the Administrative Agent shall have received an Acknowledgement, in the form annexed to
this Second Amendment as Annex C, from each Guarantor.

     12. Continuing Effect; No Other Amendments or Consents. Except as expressly
provided herein, all of the terms and provisions of the Credit Agreement are and shall remain in
full force and effect. The amendments and consent provided for herein are limited to the specific
subsections of the Credit Agreement specified herein and shall not constitute a consent, waiver or
amendment of, or an indication of the Administrative Agent’s or the Lenders’ willingness to consent
to any action requiring consent under any other provisions of the Credit Agreement or the same
subsection for any other date or time period.

     13. Expenses. The Borrower agrees to pay and reimburse the Administrative
Agent for all its reasonable costs and out-of-pocket expenses incurred in connection with the
preparation and delivery of this Second Amendment, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent.

     14. Counterparts. This Second Amendment may be executed in any number of
counterparts by the parties hereto (including by facsimile transmission), each of which
counterparts when so executed shall be an original, but all the counterparts shall together
constitute one and the same instrument.

     15. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

 

7

     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed
by their respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	 

	 	MANOR CARE, INC.
	 
	 

	 	By:
	 	 

Name:

Title:
	 
	 

	 	JPMORGAN CHASE BANK, N.A., as a Lender

and as Administrative Agent
	 
	 

	 	By:
	 	 

Name:

Title:

SIGNATURE PAGE TO SECOND AMENDMENT

 

 

8

Signature Page to Second Amendment to

Manor Care, Inc. Credit Agreement

	 	 	 	 	 
	 

	 	[INSERT LENDER NAME], as a Lender
	 
	 

	 	By:
	 	 

Name:
	 

	 	 	 	Title:

SIGNATURE PAGE TO SECOND AMENDMENT

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