Document:

iots-ex101_124.htm

 

                       Exhibit10.1

Exhibit 1.1

BUSINESS FINANCING AGREEMENT

 

	
Borrower:
	
 
	
ADESTO TECHNOLOGIES CORPORATION
	
 
	
Lender:
	
 
	
WESTERN ALLIANCE BANK, an Arizona corporation

	
 
	
 
	
1250 Borregas Avenue
	
 
	
 
	
 
	
55 Almaden Boulevard, Suite 100

	
 
	
 
	
Sunnyvale, CA 94089
	
 
	
 
	
 
	
San Jose, CA 95113

This BUSINESS FINANCING AGREEMENT, dated as of July 7, 2016, is made and entered into between WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (“Lender”) and ADESTO TECHNOLOGIES CORPORATION, a Delaware corporation (“Borrower”) on the following terms and conditions:

	
1.
	
REVOLVING CREDIT LINE.

	
 
	
1.1
	
Advances. Subject to the terms and conditions of this Agreement, from the date on which this Agreement becomes effective until the Maturity Date, Lender will make Advances to Borrower not exceeding the Credit Limit or the Borrowing Base, whichever is less; provided that in no event shall Lender be obligated to make any Advance that results in an Overadvance or while any Overadvance is outstanding. Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement. It shall be a condition to each Advance that (a) an Advance Request acceptable to Lender has been received by Lender, (b) all of the representations and warranties set forth in Section 3 are true and correct on the date of such Advance as though made at and as of each such date except for representations and warranties that refer to a specific earlier date which must have been true and correct as of such earlier date, and (c) no Default has occurred and is continuing, or would result from such Advance.

	
 
	
1.2
	
Advance Requests. Borrower may request that Lender make an Advance by delivering to Lender an Advance Request therefor and Lender shall be entitled to rely on all the information provided by Borrower to Lender on or with the Advance Request. The Lender may honor Advance Requests, instructions or repayments given by the Borrower (if an individual) or by any Authorized Person.

	
 
	
1.3
	
Due Diligence. Lender may audit Borrower’s Receivables and any and all records pertaining to the Collateral, at Lender’s sole discretion and at Borrower’s expense. The first such audit shall be completed prior to the first Advance being made and no less often than annually thereafter. Lender may at any time and from time to time contact Account Debtors and other persons obligated or knowledgeable in respect of Receivables to confirm the Receivable Amount of such Receivables, to determine whether Receivables constitute Eligible Receivables, and for any other purpose in connection with this Agreement. If any of the Collateral or Borrower's books or records pertaining to the Collateral are in the possession of a third party, Borrower authorizes that third party to permit Lender or its agents to have access to perform inspections or audits thereof and to respond to Lender's requests for information concerning such Collateral and records.

	
 
	
1.4
	
Collections.

	
 
	
(a)
	
Lender shall have the exclusive right to receive all Collections on all Receivables. Borrower shall (i) immediately notify, transfer and deliver to Lender all Collections Borrower receives for deposit into an account under the sole control of Lender (the “Collection Account”), (ii) deliver to Lender a detailed cash receipts journal on Friday of each week until the Lockbox is operational, and (iii) immediately enter into a collection services agreement acceptable to Lender (the “Lockbox Agreement”) pursuant to which all Collections received in the Lockbox shall be deposited into the Collection Account. Borrower shall use the Lockbox address as the remit to and payment address for all of Borrower’s Collections from Account Debtors, and Borrower shall instruct all Account Debtors to make payments either directly to the Lockbox for deposit by Lender directly to the Collection Account, or instruct them to deliver such payments to Lender by wire transfer, ACH, or other means as Lender may direct for deposit to the Lockbox or Collection Account. It will be considered an immediate Event of Default if this does not occur or the Lockbox is not operational within 15 days of the date of this Agreement.

	
 
	
(b)
	
At Lender’s option, Lender may either (i) transfer all Collections deposited into the Collection Account to Borrower’s Account, or (ii) apply the Collections deposited into the Collection Account to the outstanding Account Balance, in either case, within three business days of the date received; provided that upon the occurrence and during the continuance of any Default, Lender may apply all Collections to the Obligations in such order and manner as Lender may determine. Lender has no duty to do any act other than to apply such amounts as required above. If an item of Collections is not honored or Lender does not receive good funds for any reason, any amount previously transferred to Borrower’s Account or applied to the Account Balance shall be reversed as of the date transferred or applied, as applicable, and, if applied to the Account Balance, the Finance Charge will accrue as if the 

 

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Collections had not been so applied. Lender shall have, with respect to any goods related to the Receivables, all the rights and remedies of an unpaid seller under the UCC and other applicable law, including the rights of replevin, claim and delivery, reclamation and stoppage in transit.

	
 
	
1.5
	
Receivables Activity Report. Within 30 days after the end of each Month End, Lender shall send to Borrower a report covering the transactions for the prior billing period , including the amount of all Advances, Collections, Adjustments, Finance Charges, and other fees and charges. The accounting shall be deemed correct and conclusive unless Borrower makes written objection to Lender within 30 days after the Lender sends the accounting to Borrower.

	
 
	
1.6
	
Adjustments. Any Adjustments or disputes asserted by any Account Debtor will be, on a monthly basis (after receipt by Lender of the reporting required by Section 4.9(g) hereof), reviewed with Lender, in a matter satisfactory to Lender, and Lender will have the right to adjust the Borrowing Base reserve based on such review. So long as any Obligations are outstanding, Lender shall have the right, at any time, to take possession of any rejected, returned, or recovered personal property. If such possession is not taken by Lender and upon Lender’s request, Borrower is to resell it for Lender’s account at Borrower’s expense with the proceeds made payable to Lender. While Borrower retains possession of any returned goods, Borrower shall segregate said goods and mark them as property of Lender.

	
 
	
1.7
	
Recourse; Maturity. Advances and the other Obligations shall be with full recourse against Borrower. On the Maturity Date, the Borrower will pay all then outstanding Advances and other Obligations to the Lender or such earlier date as shall be herein provided.

	
 
	
1.8
	
Cash Management Services. Borrower may use availability hereunder up to the Cash Management Sublimit for Lender's cash management services, which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in various cash management services agreements related to such services (the “Cash Management Services”). The entire Cash Management Sublimit will be treated as an Advance for purposes of determining availability under the Credit Limit and shall decrease, on a dollar-for-dollar basis, the amount available for other Advances. The Cash Management Services shall be subject to additional terms set forth in applicable cash management services agreements. If at any time this Agreement is terminated or otherwise ceases to exist, Borrower shall immediately secure in cash all obligations with respect to Cash Management Services on terms reasonably acceptable to Lender.

	
 
	
1.9
	
Overadvances. Upon any occurrence of an Overadvance, Borrower shall immediately pay down the Advances such that, after giving effect to such payments, no Overadvance exists.

	
 
	
1.10
	
Term Loan.

	
 
	
(a)
	
Term Loan. Subject to the terms and conditions of this Agreement, on the date hereof, or as soon thereafter as all conditions precedent to the making thereof have been met, Lender hereby agrees to make a loan to Borrower in the principal amount of $18,000,000 (the “Term Loan”) which shall be used to refinance all indebtedness owing from Borrower to Opus Bank and for general working capital.

	
 
	
(b)
	
Interest on the Term Loan. The outstanding principal amount of the Term Loan shall accrue interest at the Term Loan Rate and shall be payable in accordance with Section 1.10(c).

	
 
	
(c)
	
Repayment. Borrower shall make “interest only” payments on the outstanding principal amount of the Term Loan beginning on July 10, 2016 and on the tenth (10th) calendar day of each month thereafter. Borrower shall repay the Term Loan in (i) 33 equal monthly installments of principal, plus (ii) monthly payments of interest beginning on October 10, 2016, and on the 10th calendar day of each month thereafter, until the Term Loan Maturity Date. In any event, on the Term Loan Maturity Date, Borrower will repay the remaining principal balance plus any interest then due on the Term Loan.

	
 
	
(d)
	
Prepayment. Borrower may prepay all but not less than all of the Term Loan at any time along with the Termination Fee.

	
2.
	
FEES AND FINANCE CHARGES.

	
 
	
2.1
	
Finance Charges. Lender may, but is not required to, deduct the amount of accrued Finance Charge from Collections received by Lender. The accrued and unpaid Finance Charge shall be due and payable within 10 calendar days after each Month End during the term hereof.

	
 
	
2.2
	
Fees.

	
 
	
(a)
	
Maintenance Fee. On each Month End, Borrower shall pay to lender the accrued unpaid Maintenance Fee for the Monthly Period ending on such Month End.

 

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(b)
	
Termination Fee. In the event this Agreement is terminated prior to the first anniversary of the date of this Agreement, Borrower shall pay the Termination Fee to Lender.

	
 
	
(c)
	
Facility Fee. Borrower shall pay the Facility Fee to Lender promptly upon the execution of this Agreement and annually thereafter.

	
 
	
(d)
	
Cash Management Fees. Borrower shall pay to Lender fees in connection with the Cash Management Services as determined in accordance with Lender’s standard fees and charges then in effect for such activity.

	
 
	
(e)
	
Due Diligence Fee. Borrower shall pay the Due Diligence Fee to Lender promptly upon the execution of this Agreement (payment of which Lender hereby acknowledges has been received) and annually thereafter.

	
 
	
(f)
	
Term Loan Facility Fee. Borrower shall pay the Term Loan Facility Fee to Lender promptly upon the execution of this Agreement.

	
3.
	
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants:

	
 
	
3.1
	
No representation, warranty or other statement of Borrower in any certificate or written statement given to Lender contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement contained in the certificates or statement not misleading.

	
 
	
3.2
	
Borrower is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified unless such failure to be in good standing or qualified and licensed would not reasonably be expected to result in a material adverse effect.

	
 
	
3.3
	
The execution, delivery and performance of this Agreement has been duly authorized, and does not conflict with Borrower’s organizational documents, nor constitute an Event of Default under any material agreement by which Borrower is bound. Borrower is not in default under any material agreement to which or by which it is bound.

	
 
	
3.4
	
Borrower has good title to the Collateral and all inventory, subject to Permitted Liens, is in all material respects of good and marketable quality, free from material defects.

	
 
	
3.5
	
Borrower’s name, form of organization, chief executive office, and the place where the records concerning all Receivables and Collateral are kept is set forth at the beginning of this Agreement, Borrower is located at its address for notices set forth in this Agreement.

	
 
	
3.6
	
If Borrower owns, holds or has any interest in, any copyrights (whether registered, or unregistered), patents or trademarks, and licenses of any of the foregoing, such interest has been specifically disclosed and identified to Lender in writing.

	
4.
	
MISCELLANEOUS PROVISIONS. Borrower will:

	
 
	
4.1
	
Maintain its corporate existence and good standing in its jurisdiction of incorporation and maintain its qualification in each jurisdiction necessary to Borrower's business or operations and not merge or consolidate with or into any other business organization, or acquire all or substantially all of the capital stock or property of a third party, unless (i) any such acquired entity becomes a “borrower” under this Agreement and (ii) Lender has previously consented to the applicable transaction in writing.

	
 
	
4.2
	
Give Lender at least 30 days prior written notice of changes to its name, organization, chief executive office or location of records.

	
 
	
4.3
	
Pay all its taxes including gross payroll, withholding and sales taxes when due and will deliver satisfactory evidence of payment to Lender if requested.

	
 
	
4.4
	
Maintain:

	
 
	
(a)
	
insurance satisfactory to Lender in its reasonable business judgment as to amount, nature and carrier covering property damage (including loss of use and occupancy) to any of the Borrower's properties, business interruption insurance, public liability insurance including coverage for contractual liability, product liability and workers' compensation, and any other insurance which is usual for the Borrower's business. Each such policy shall provide for at least thirty (30) days prior notice to Lender of any cancellation thereof.

	
 
	
(b)
	
all risk property damage insurance policies (including without limitation windstorm coverage, and hurricane coverage as applicable) covering the tangible property comprising the collateral. Each insurance policy must be for the full replacement cost of the collateral and include a replacement cost endorsement. The insurance must be issued 

 

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by an insurance company acceptable to Lender and must include a lender's loss payable endorsement in favor of Lender in a form acceptable to Lender.

Upon the request of Lender, Borrower shall deliver to Lender a copy of each insurance policy, or, if permitted by Lender, a certificate of insurance listing all insurance in force.

	
 
	
4.5
	
Immediately transfer and deliver to Lender all Collections Borrower receives.

	
 
	
4.6
	
Not create, incur, assume, or be liable for any indebtedness, other than Permitted Indebtedness.

	
 
	
4.7
	
Not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments.

	
 
	
4.8
	
Not engage in any transactions with its Subsidiaries or Affiliates that are not arms length and in the ordinary course of business.

	
 
	
4.9
	
Immediately notify Lender if Borrower hereafter obtains any interest in any copyrights, patents, trademarks or licenses that are significant in value or are material to the conduct of its business.

	
 
	
4.10
	
Provide the following financial information and statements in form and content acceptable to Lender, and such additional information as requested by Lender from time to time. Lender has the right to require Borrower to deliver financial information and statements to Lender more frequently than otherwise provided below, and to use such additional information and statements to measure any applicable financial covenants in this Agreement.

	
 
	
(a)
	
Promptly upon filing with the Securities and Exchange Commission, all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission (including the annual financial statements of Borrower, certified and dated by an authorized financial officer. These financial statements must be audited (with an opinion satisfactory to the Lender) by Burr, Pilger and Mayer or another Certified Public Accountant acceptable to Lender. The statements shall be prepared on a consolidated basis.

	
 
	
(b)
	
No later than 30 days after the end of each month (including the last period in each fiscal year), monthly financial statements of Borrower, certified and dated by an authorized financial officer. The statements shall be prepared on a consolidated basis.

	
 
	
(c)
	
Promptly, upon sending or receipt, copies of any management letters and correspondence relating to management letters, sent or received by Borrower to or from Borrower's auditor. If no management letter is prepared, Borrower shall, upon Lender's request, obtain a letter from such auditor stating that no deficiencies were noted that would otherwise be addressed in a management letter.

	
 
	
(d)
	
Financial projections including an operating budget covering a time period acceptable to Lender and specifying the assumptions used in creating the projections. Draft annual projections shall in any case be provided to Lender no less than 30 days prior to the beginning of each fiscal year with final, board-approved annual projections due to Lender no later than 60 days after the beginning of each fiscal year.

	
 
	
(e)
	
Within 30 days of the end of each month, a compliance certificate of Borrower, signed by an authorized financial officer and setting forth (i) the information and computations (in sufficient detail) to establish compliance with all financial covenants at the end of the period covered by the financial statements then being furnished and (ii) whether there existed as of the date of such financial statements and whether there exists as of the date of the certificate, any Default under this Agreement and, if any such Default exists, specifying the nature thereof and the action Borrower is taking and proposes to take with respect thereto.

	
 
	
(f)
	
Within 10 days after the end of each calendar month, a borrowing base certificate, in form and substance satisfactory to Lender, setting forth Eligible Receivables and Receivable Amounts thereof as of the last day of the preceding calendar month

	
 
	
(g)
	
Within 10 days after the end of each calendar month, a detailed aging of Borrower’s receivables by invoice or a summary aging by Account Debtor, together with a backlog schedule, payable aging, inventory analysis, deferred revenue report, an inventory sell-through report (one-month in arrears), a credit memo/adjustments report and such other matters as Lender may request.

	
 
	
(h)
	
Promptly upon Lender's request, such other books, records, statements, lists of property and accounts, budgets, forecasts or reports as to Borrower and as to each guarantor of Borrower's obligations to Lender as Lender may request.

 

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4.11
	
No later than 60 days after the date of this Agreement and at all times thereafter, maintain all of its and its Subsidiaries’ depository and operating accounts with Lender”); provided, however, that Borrower’s foreign Subsidiaries may maintain accounts with foreign (i.e non domestic) banks with aggregate balances not to exceed $500,000.

	
 
	
4.12
	
Provide to Lender promptly upon the execution hereof the following documents which shall be in form and substance satisfactory to Lender: (i) a Control Agreement from each bank where Borrower maintains a depository or operating account, including, but not limited to, Opus Bank (which shall in any case be provided to Lender no later than 30 days after the date hereof, (ii) Resolutions to Borrow, (iii) an Insurance Authorization Letter, (iv) a completed Compliance Certificate, (v) an Intellectual Property Security Agreement executed by Borrower and Artemis Acquisition LLC in favor of Lender, (vi) a Guaranty duly executed by Artemis Acquisition LLC together with Limited Liability Company Resolutions to Guaranty, (vii) a Third Party Security Agreement duly executed by Artemis Acquisition LLC, (viii) a payoff letter from Opus Bank and (ix) evidence that (a) the liens securing the existing indebtedness of Borrower to Opus Bank will be terminated and (b) the documents and/or filings evidencing the perfection of such liens, including without limitation any financing statements and/or control agreements, have or will, concurrently with the execution of this Agreement and the funding of the Term Loan, be terminated.

	
 
	
4.13
	
Promptly provide to Lender such additional information and documents regarding the finances, properties, business or books and records of Borrower or any guarantor or any other obligor as Lender may reasonably request.

	
 
	
4.14
	
Maintain Borrower's financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

	
 
	
(a)
	
Liquidity Ratio not at any time less than 1.15 for 1.00.

	
5.
	
SECURITY INTEREST. To secure the prompt payment and performance to Lender of all of the Obligations, Borrower hereby grants to Lender a continuing security interest in the Collateral. Borrower is not authorized to sell, assign, transfer or otherwise convey any Collateral without Lender’s prior written consent, except for (i) the sale of finished inventory in the Borrower’s usual course of business; (ii) the use, payment or transfer of cash for the purchase of goods and services in a manner not otherwise prohibited by the terms of this Agreements or the related documents and other uses, payments and transfers of cash that are not prohibited by the terms of this Agreement or any related document; (iii) sales or transfers of unneeded, worn out or obsolete Equipment; and (v) in connection with the granting of Permitted Liens and the making of Permitted Investments. Borrower agrees to sign any instruments and documents requested by Lender to evidence, perfect, or protect the interests of Lender in the Collateral. Borrower agrees to deliver to Lender the originals of all instruments, chattel paper and documents evidencing or related to Receivables and Collateral. Borrower shall not grant or permit any lien or security in the Collateral or any interest therein other than Permitted Liens. Borrower hereby pledges to Lender and grants to Lender a security interest in Borrower’s deposit account #XXXXX3543 held at Lender into which the Term Loan shall be funded and which shall, at all times have a minimum aggregate balance equal to 115% of the total amounts owing with respect to the Term Loan, together with all proceeds and substitutions thereof, all interest paid thereon, and all other cash and noncash proceeds of the foregoing (all hereinafter called the “Pledged Collateral”), as security for the prompt performance of all of Borrower’s Obligations to Lender. Borrower authorizes Lender to file such financing statements, and take such other actions as Lender determines from time to time may be necessary or appropriate to perfect the security interest granted hereunder. Prior to the occurrence of an Event of Default, such account shall not be restricted and shall be under the control of Borrower. After the occurrence and during the continuance of an Event of Default, all amounts held in the Pledged Account shall be deemed restricted and under Lender’s sole control and shall be applied to the payment of any Obligations, whether then due or not, in such order or at such time of application as Lender may determine in its sole discretion.

	
6.
	
POWER OF ATTORNEY. Borrower irrevocably appoints Lender and its successors and as true and lawful attorney in fact, and authorizes Lender (a) to, whether or not there has been an Event of Default, (i) demand, collect, receive, sue, and give releases to any Account Debtor for the monies due or which may become due upon or with respect to the Receivables and to compromise, prosecute, or defend any action, claim, case or proceeding relating to the Receivables, including the filing of a claim or the voting of such claims in any bankruptcy case, all in Lender’s name or Borrower’s name, as Lender may choose; (ii) prepare, file and sign Borrower’s name on any notice, claim, assignment, demand, draft, or notice of or satisfaction of lien or mechanics’ lien or similar document; (iii) notify all Account Debtors with respect to the Receivables to pay Lender directly; (iv) receive and open all mail addressed to Borrower for the purpose of collecting the Receivables; (v) endorse Borrower’s name on any checks or other forms of payment on the Receivables; (vi) execute on behalf of Borrower any and all instruments, documents, financing statements and the like to perfect Lender’s interests in the Receivables and Collateral; (vii) debit any Borrower’s deposit accounts maintained with Lender for any and all Obligations due under this Agreement; and (viii) do all acts and things necessary or expedient, in furtherance of any such purposes, and (b) to, upon the occurrence and during the continuance of an Event of Default, sell, assign, transfer, pledge, compromise, or discharge the whole or any part of the Receivables. Upon the occurrence and continuation of an Event of Default, all of the power of attorney rights granted by Borrower to Lender hereunder shall be applicable with respect to all Receivables and all Collateral.

 

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7.
	
DEFAULT AND REMEDIES.

	
 
	
7.1
	
Events of Default. The occurrence of any one or more of the following shall constitute an Event of Default hereunder (each an “Event of Default”).

	
 
	
(a)
	
Failure to Pay. Borrower fails to make a payment when due under this Agreement.

	
 
	
(b)
	
Lien Priority. Lender fails to have an enforceable first lien (except for any prior liens to which Lender has consented in writing and Permitted Liens that are senior in priority) on or security interest in the Collateral.

	
 
	
(c)
	
False Information. Borrower (or any guarantor) has given Lender any materially false or misleading information or representations or has failed to disclose any material fact relating to the subject matter of this Agreement.

	
 
	
(d)
	
Bankruptcy. Borrower (or any guarantor) files a bankruptcy petition, a bankruptcy petition is filed against Borrower (or any guarantor) or Borrower (or any guarantor) makes a general assignment for the benefit of creditors.

	
 
	
(e)
	
Receivers. A receiver or similar official is appointed for a substantial portion of Borrower’s (or any guarantor’s) business, or the business is terminated.

	
 
	
(f)
	
Judgments. Any judgments or arbitration awards are entered against Borrower (or any guarantor), or Borrower (or any guarantor) enters into any settlement agreements with respect to any litigation or arbitration and the aggregate amount of all such judgments, awards, and agreements exceeds $50,000 and the same are not within ten (10) business days after the entry thereof, discharged or execution thereof bonded or stayed pending appeal.

	
 
	
(g)
	
Material Adverse Change. A material adverse change occurs (or circumstances that could reasonably be expected to result in a material adverse change occur), in either case, in Borrower’s (or any guarantor’s) business condition (financial or otherwise), operations, properties or prospects, or ability to repay the credit.

	
 
	
(h)
	
Cross-default. Any default occurs under any agreement in connection with any credit Borrower (or any guarantor) or any of Borrower’s Affiliates has obtained from anyone else or which Borrower (or any guarantor) or any of Borrower’s Affiliates has guaranteed (other than trade amounts payable incurred in the ordinary course of business and not more than 60 days past due) resulting in the right by such person to accelerate the maturity of any indebtedness in an amount in excess of $100,000.

	
 
	
(i)
	
Default under Related Documents. Any event of default occurs and continues under any subordination agreement, security agreement, deed of trust, mortgage, or other document required by or delivered in connection with this Agreement or any such document is no longer in effect.

	
 
	
(j)
	
Guaranty. If any guaranty of all or a portion of the Obligations (a “Guaranty”) ceases for any reason to be in full force and effect, or any guarantor fails to perform any material obligation under any Guaranty or a security agreement securing any Guaranty (collectively, the “Guaranty Documents”), or any event of default occurs under any Guaranty Document or any guarantor revokes or purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Lender in connection with any Guaranty Document, or if any of the circumstances described in subsections (c) or (g) above occur with respect to any guarantor.

	
 
	
(k)
	
Other Agreements. Borrower (or any guarantor) or any of Borrower’s Affiliates fails to meet the conditions of, or fails to perform any material obligation under any other material agreement Borrower (or any guarantor) or any of Borrower’s Affiliates has with Lender or any Affiliate of Lender.

	
 
	
(l)
	
Change of Control. The holders of the capital ownership of the Borrower as of the date hereof cease to own and control, directly and indirectly, at least 51% of the capital ownership of the Borrower.

	
 
	
(m)
	
Covenant Default. If Borrower fails or neglects to perform any obligations with respect to any of the affirmative or negative covenants contained herein within any applicable grace period set forth herein.

	
 
	
(n)
	
Other Breach Under Agreement. If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Lender and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within ten days after Borrower receives written notice thereof from Lender or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the ten day period or cannot after diligent attempts by Borrower be cured within such ten day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no further extensions of credit will be made.

 

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7.2
	
Remedies. Upon the occurrence and during the continuance of an Event of Default, (1) without implying any obligation to do so, Lender may cease making Advances or extending any other financial accommodations to Borrower; (2) all or a portion of the Obligations shall be, at the option of and upon demand by Lender, or with respect to an Event of Default described in Section 7.1(e), automatically and without notice or demand, due and payable in full; (3) Lender may set-off and apply to the Obligations any and all balances and deposits held by Lender; and (4) Lender shall have and may exercise all the rights and remedies under this Agreement and under applicable law, including the rights and remedies of a secured party under the California Uniform Commercial Code, all the power of attorney rights described in Section 6 with respect to all Collateral, and the right to collect, dispose of, sell, lease, use, and realize upon all Receivables and all Collateral in any commercial reasonable manner.

	
8.
	
ACCRUAL OF INTEREST, FEES. All interest and finance charges hereunder calculated at an annual rate shall be based on a year of 360 days, which results in a higher effective rate of interest than if a year of 365 or 366 days were used. Lender may charge interest, finance charges and fees based upon the projected amounts thereof as of the due dates therefor, and adjust subsequent charges to account for the actual accrued amounts. If any amount due under Section 2.2, amounts due under Section 9, and any other Obligations not otherwise bearing interest hereunder is not paid when due, such amount shall bear interest at a per annum rate equal to the Finance Charge Percentage until the earlier of (i) payment in good funds or (ii) entry of a trial judgment thereof, at which time the principal amount of any money judgment remaining unsatisfied shall accrue interest at the highest rate allowed by applicable law.

	
9.
	
FEES, COSTS AND EXPENSES; INDEMNIFICATION. The Borrower will pay to Lender upon demand all fees, costs and expenses (including fees of attorneys and professionals and their costs and expenses) that Lender incurs or may from time to time impose in connection with any of the following: (a) preparing, negotiating, administering, and enforcing this Agreement or any other agreement executed in connection herewith, including any amendments, waivers or consents in connection with any of the foregoing, (b) any litigation or dispute (whether instituted by Lender, Borrower or any other person) in any way relating to the Receivables, the Collateral, this Agreement or any other agreement executed in connection herewith or therewith, (c) enforcing any rights against Borrower or any guarantor, or any Account Debtor, (d) protecting or enforcing its interest in the Receivables or the Collateral, (e) collecting the Receivables and the Obligations, or (f) the representation of Lender in connection with any bankruptcy case or insolvency proceeding involving Borrower, any Receivable, the Collateral, any Account Debtor, or any guarantor. Borrower shall indemnify and hold Lender harmless from and against any and all claims, actions, damages, costs, expenses, and liabilities of any nature whatsoever arising in connection with any of the foregoing.

	
10.
	
INTEGRATION, SEVERABILITY WAIVER, CHOICE OF LAW, FORUM AND VENUE.

	
 
	
10.1
	
This Agreement and any related security or other agreements required by this Agreement, collectively: (a) represent the sum of the understandings and agreements between Lender and Borrower concerning this credit; (b) replace any prior oral or written agreements between Lender and Borrower concerning this credit; and (c) are intended by Lender and Borrower as the final, complete and exclusive statement of the terms agreed to by them. In the event of any conflict between this Agreement and any other agreements required by this Agreement, this Agreement will prevail. If any provision of this Agreement is deemed invalid by reason of law, this Agreement will be construed as not containing such provision and the remainder of the Agreement shall remain in full force and effect. Lender retains all of its rights, even if it makes an Advance after a default. If Lender waives a default, it may enforce a later default. Any consent or waiver under, or amendment of, this Agreement must be in writing, and no such consent, waiver, or amendment shall imply any obligation by Lender to make any subsequent consent, waiver, or amendment.

	
 
	
10.2
	
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA. THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATED DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SANTA CLARA, CALIFORNIA, OR, AT THE SOLE OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS JURISDICTION OVER THE SUBJECT MATTER AND PARTIES IN CONTROVERSY. EACH PARTY HERETO WAIVES ANY RIGHT TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION AND STIPULATES THAT THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SANTA CLARA, CALIFORNIA SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER EACH SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR ANY OTHER RELATED DOCUMENTS. SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST THE BORROWER MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS SPECIFIED FOR NOTICES PURSUANT TO SECTION 11.

 

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11.
	
NOTICES; TELEPHONIC AND TELEFAX AUTHORIZATIONS. All notices shall be given to Lender and Borrower at the addresses or faxes set forth on the signature page of this agreement and shall be deemed to have been delivered and received: (a) if mailed, three (3) calendar days after deposited in the United States mail, first class, postage pre-paid, (b) one (1) calendar day after deposit with an overnight mail or messenger service; or (c) on the same date of confirmed transmission if sent by hand delivery, telecopy, telefax or telex. Lender may honor telephone or telefax instructions for Advances or repayments given, or purported to be given, by any one of the Authorized Persons. Borrower will indemnify and hold Lender harmless from all liability, loss, and costs in connection with any act resulting from telephone or telefax instructions Lender reasonably believes are made by any Authorized Person. This paragraph will survive this Agreement's termination, and will benefit Lender and its officers, employees, and agents.

	
12.
	
DEFINITIONS AND CONSTRUCTION.

	
 
	
12.1
	
Definitions. In this Agreement:

“Account Balance” means at any time the aggregate of the Advances outstanding as reflected on the records maintained by Lender, together with any past due Finance Charges thereon.

“Account Debtor” has the meaning in the California Uniform Commercial Code and includes any person liable on any Receivable, including without limitation, any guarantor of any Receivable and any issuer of a letter of credit or banker’s acceptance assuring payment thereof.

“Adjustments” means all discounts, allowances, disputes, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by or on behalf of any Account Debtor with respect to any Receivable.

“Advance” means an advance with respect to an Eligible Receivable made by Lender to Borrower under this Agreement.

“Advance Rate” means 80% or such greater or lesser percentage as Lender may from time to time establish in its sole discretion upon notice to Borrower (including but not limited to the situation where Borrower’s 12 month dilution is greater than 5%).

“Advance Request” means a writing in form and substance satisfactory to Lender and signed by an Authorized Person requesting an Advance.

“Agreement” means this Business Financing Agreement.

“Affiliate” means, as to any person or entity, any other person or entity directly or indirectly controlling or controlled by, or under direct or indirect common control with, such person or entity.

“Authorized Person” means Borrower (if an individual) or any one of the individuals authorized to sign on behalf of the Borrower, and any other individual designated by any one of such authorized signers.

“Borrowing Base” means at any time the sum of (i) the Eligible Receivable Amount multiplied by the Advance Rate minus (ii) such reserves as Lender, in its sole discretion, may reasonably deem proper and necessary from time to time, which shall initially be set at 20% of the Eligible Receivable Amount.

“Cash Management Sublimit” means $25,000.

“Collateral” means all of Borrower’s rights and interest in any and all personal property, whether now existing or hereafter acquired or created and wherever located, and all products and proceeds thereof and accessions thereto, including but not limited to the following (collectively, the “Collateral”): (a) all accounts (including health care insurance receivables), chattel paper (including tangible and electronic chattel paper), inventory (including all goods held for sale or lease or to be furnished under a contract for service, and including returns and repossessions), equipment (including all accessions and additions thereto), instruments (including promissory notes), investment property (including securities and securities entitlements), documents (including negotiable documents), deposit accounts, letter of credit rights, money, any commercial tort claim of Borrower which is now or hereafter identified by Borrower or Lender, general intangibles (including payment intangibles and software), goods (including fixtures) and all of Borrower’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and (b) any and all cash proceeds and/or noncash proceeds thereof, including without limitation, insurance proceeds, and all supporting obligations and the security therefore or for any right to payment. Notwithstanding the foregoing, the Collateral does not include (a) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for the election of directors or any other matter; (b) rights held under a license or lease that are not assignable by their terms without the consent of the licensor or lessor thereof (but only to the extent such restriction on assignment is enforceable under applicable law); and (c) any interest of Borrower as a lessee under an equipment lease if Borrower is prohibited by the terms of such lease from 

 

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granting a security interest in such lease or under which such an assignment or lien would cause a default to occur under such lease; provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by Borrower or Lender.

“Collection Account” has the meaning assigned such term in Section 1.4 hereof.

“Collections” means all payments from or on behalf of an Account Debtor with respect to Receivables.

“Compliance Certificate” means a certificate in the form attached as Exhibit A to this Agreement by an Authorized Person that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such certificate is delivered.

“Credit Limit” means $2,000,000, which is intended to be the maximum amount of Advances at any time outstanding.

“Default” means any Event of Default or any event that has occurred and which if not cured or waived before the end of such cure period will constitute an Event of Default.

“Deferred Revenue” is all amounts received or invoiced, as appropriate, in advance of performance under contracts and not yet recognized as revenue.

“Due Diligence Fee” means payment of an annual fee equal to $900 due upon each anniversary of the date of this Agreement so long as any Advance is outstanding or available hereunder. 

“Eligible Receivable” means a Receivable that satisfies all of the following:

	
 
	
(a)
	
The Receivable has been created by Borrower in the ordinary course of Borrower’s business and without any obligation on the part of Borrower to render any further performance.

	
 
	
(b)
	
Borrower’s work related to the Receivable has been 100% completed.

	
 
	
(c)
	
There are no conditions which must be satisfied before Borrower is entitled to receive payment of the Receivable, and the Receivable does not arise from COD sales, consignments, conditional or guaranteed sales.

	
 
	
(d)
	
The Account Debtor upon the Receivable does not claim any defense to payment of the Receivable, whether well founded or otherwise.

	
 
	
(e)
	
The Receivable is not the obligation of an Account Debtor who has asserted or may be reasonably be expected to assert any counterclaims or offsets against Borrower (including offsets for any “contra accounts” owed by Borrower to the Account Debtor for goods purchased by Borrower or for services performed for Borrower).

	
 
	
(f)
	
The Receivable represents a genuine obligation of the Account Debtor and to the extent any credit balances exist in favor of the Account Debtor, such credit balances that have existed for greater than 90 days shall be deducted in calculating the Receivable Amount.

	
 
	
(g)
	
Borrower has sent an invoice to the Account Debtor in the amount of the Receivable

	
 
	
(h)
	
Borrower is not prohibited by the laws of the state where the Account Debtor is located from bringing an action in the courts of that state to enforce the Account Debtor’s obligation to pay the Receivable. Borrower has taken all appropriate actions to ensure access to the courts of the state where Account Debtor is located, including, where necessary; the filing of a Notice of Business Activities Report or other similar filing with the applicable state agency or the qualification by Borrower as a foreign corporation authorized to transact business in such state.

	
 
	
(i)
	
The Receivable is owned by Borrower free of any title defects or any liens or interests of others except the security interest in favor of Lender and Permitted Liens, and Lender has a perfected, first priority security interest in such Receivable.

	
 
	
(j)
	
The Account Debtor on the Receivable is not any of the following: (1) an employee, Affiliate, parent or subsidiary of Borrower, or an entity which has common officers or directors with Borrower; (2) the U.S. government or any agency or department of the U.S. government unless Borrower complies with the procedures in the Federal Assignment of Claims Act of 1940 (41 U.S.C. §15) with respect to the Receivable, and the underlying contract expressly provides that neither the U.S. government nor any agency or department thereof shall have the right of set-off against Borrower; or (3) an Account Debtor as to which 35% or more of the aggregate dollar amount of all outstanding Receivables owing from such Account Debtor have not been paid within 90 days from invoice date.

	
 
	
(k)
	
The Account Debtor on the Receivable is not any person or entity located in a foreign country, other than Canada, unless the Account Debtor is a foreign subsidiary of Arrow Electronics, Inc., Avnet, Inc. or another foreign entity approved by Lender in its sole discretion on a case-by-case basis and provided that the aggregate amount of Advances made with respect to such Receivables shall not exceed $700,000 at any time.

 

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(l)
	
The Receivable is not in default (a Receivable will be considered in default if any of the following occur: (i) the Receivable is not paid within 90 days from its invoice date; (ii) the Account Debtor obligated upon the Receivable suspends business, makes a general assignment for the benefit of creditors, or fails to pay its upon the Receivable under any bankruptcy law or any other law or laws for the relief of debtors).

	
 
	
(m)
	
The Receivable does not arise from the sale of goods which remain in Borrower’s possession or under Borrower’s control.

	
 
	
(n)
	
The Receivable is not evidenced by a promissory note or chattel paper, nor is the Account Debtor obligated to Borrower under any other obligation which is evidenced by a promissory note.

	
 
	
(o)
	
the Receivable is not that portion of Receivables due from an Account Debtor which is in excess of 35% of Borrower's aggregate dollar amount of all outstanding Receivables.

	
 
	
(p)
	
The Receivable has not been pre-billed and is not a progress billing, retention billing, bonded receivable or a bill and hold account.

	
 
	
(q)
	
The Receivable is otherwise acceptable to Lender.

“Eligible Receivable Amount” means at any time the sum of the Receivable Amounts of the Eligible Receivables net of pre-paid deposits, pre-billed invoices, offset able deferred revenue, offsets, and contras related to each specific Account Debtor.

“Event of Default” has the meaning set forth in Section 7.1.

“Facility Fee” means payment of a fee equal to $15,000 due upon the date of this Agreement and $10,000 due on the first anniversary thereof.

“Finance Charge” means an interest amount equal to the Finance Charge Percentage of the ending daily Account Balance for the relevant period.

“Finance Charge Percentage” means a rate per month equal to the Prime Rate plus 0.50 percentage points plus an additional 5.00 percentage points during any period that an Event of Default has occurred and is continuing.

“Foreign Subsidiary” means a subsidiary of Borrower that is a corporation organized under the laws of a jurisdiction other than the United States or any state or territory thereof or the District of Columbia.

“Investment” means, as to any person, any investment by such person, whether by means of the purchase or other acquisition of stock or other securities of any other person or by means of a loan, creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Lender” means Western Alliance Bank, an Arizona corporation, and its successors and assigns.

“Liquidity Ratio” the, for any applicable measuring period, the ratio of (i) the balance of unrestricted cash at Lender to (ii) the total amounts owing with respect to the Term Loan.

“Maintenance Fee” means an amount equal to 0.15 percentage points per month of the ending daily Account Balance for the relevant period.

“Maturity Date” means two years from the date hereof or such earlier date as Lender shall have declared the Obligations immediately due and payable pursuant to Section 7.2.

“Month End” means the last calendar day of each month.

“Monthly Period” means each calendar month.

“Obligations” means all liabilities and obligations of Borrower to Lender of any kind or nature, present or future, arising under or in connection with this Agreement or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other instrument, whether arising on account or by overdraft, whether become due, now owing or hereafter arising, and however acquired; including, without limitation, all Advances, Finance Charges, fees, interest, expenses, professional fees and attorneys’ fees.

“Overadvance” means at any time an amount equal to the greater of the amounts (if any) by which the total amount of the outstanding Advances (including the total amount of the Cash Management Sublimit) exceeds the lesser of the Credit Limit or the Borrowing Base.

 

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“Permitted Indebtedness” means:

	
 
	
(a)
	
Indebtedness under this Agreement or that is otherwise owed to the Lender.

	
 
	
(b)
	
Indebtedness existing on the date hereof and specifically disclosed on a schedule to this Agreement.

	
 
	
(c)
	
Purchase money indebtedness (including capital leases) incurred to acquire capital assets in ordinary course of business and not exceeding $5,000,000 in total principal amount at any time outstanding.

	
 
	
(d)
	
Other indebtedness in an aggregate amount not to exceed $150,000 at any time outstanding; provided that such indebtedness is junior in priority (if secured) to the Obligations and provided that the incurrence of such Indebtedness does not otherwise cause and Event of Default hereunder.

	
 
	
(e)
	
Indebtedness incurred in the refinancing of any indebtedness set forth in (a) through (d) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon the Borrower.

	
 
	
(f)
	
Subordinated Debt. 

“Permitted Investments” means:

	
 
	
(a)
	
Investments existing on the date first above written that have been disclosed by Borrower to Lender in writing.

	
 
	
(b)
	
Investments in other assets properly classified as “marketable securities” or “cash” or “cash equivalents”, and which conform to the investment policies adopted by the Board of Directors of Borrower from time to time.

	
 
	
(c)
	
advances to officers, directors and employees of Borrower and its subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes in an aggregate outstanding amount not to exceed $100,000 at any time.

	
 
	
(d)
	
Investments of Borrower in any of its Subsidiaries and Investments of any Subsidiary of Borrower in Borrower or another Subsidiary of Borrower in an aggregate amount not to exceed $100,000 per fiscal year.

	
 
	
(e)
	
Extensions of credit to customers or suppliers of Borrower and its Subsidiaries in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof in an aggregate outstanding amount not to exceed $100,000 at any time.

	
 
	
(f)
	
Investments consisting of loans to employees, the proceeds of which shall be used to purchase Equity Securities of Borrower or its Subsidiaries and other loans to employees in an aggregate amount not in excess of $100,000 at any time outstanding.

“Permitted Liens” means:

	
 
	
(a)
	
Liens existing on the date first written above which have been disclosed by Borrower to Lender in writing.

	
 
	
(b)
	
Liens securing any of the indebtedness described in clauses (a) through (d) of the definition of Permitted Indebtedness.

	
 
	
(c)
	
Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Lender’s security interests.

	
 
	
(d)
	
Liens incurred in connection with the extension, renewal or refinancing of the indebtedness described in clause (e) of the definition of Permitted Indebtedness, provided that any extension, renewal or replacement lien shall be limited to the property encumbered by the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase.

	
 
	
(e)
	
Liens securing Subordinated Debt.

	
 
	
(f)
	
Purchase money liens (i) on equipment acquired or held by Borrower incurred for financing the acquisition of the equipment securing no more than $5,000,000 in the aggregate amount outstanding at any time, or (ii) existing on equipment when acquired, if the lien is confined to the property and improvements and the proceeds of the equipment.

	
 
	
(g)
	
Liens of carriers, warehousemen, suppliers, or other persons that are possessory in nature arising in the ordinary course of business, securing liabilities in the aggregate amount not to exceed Fifty Thousand Dollars ($50,000) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto.

	
 
	
(h)
	
Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than liens imposed by ERISA).

 

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(i)
	
Liens in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at such institutions, provided that Lender has a first priority perfected security interest in the amounts held in such deposit and/or securities accounts.

	
 
	
(j)
	
Liens incurred in the extension, renewal or refinancing of the indebtedness secured by liens described in (a) through (c), but any extension, renewal or replacement lien must be limited to the property encumbered by the existing lien and the principal amount of the indebtedness may not increase.

“Person” means any individual, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture, or governmental authority.

“Prime Rate” means the greater of 3.50% per year or the Prime Rate published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced by Lender as its Prime Rate. Lender may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in Lender’s Prime Rate.

“Receivable Amount” means as to any Receivable, the Receivable Amount due from the Account Debtor after deducting all discounts, credits, offsets, payments or other deductions of any nature whatsoever, whether or not claimed by the Account Debtor.

“Receivables” means Borrower’s rights to payment arising in the ordinary course of Borrower’s business, including accounts, chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, and bankers acceptances.

“Subordinated Debt” means indebtedness of Borrower that is expressly subordinated to the indebtedness of Borrower owed to Lender pursuant to a subordination agreement satisfactory in form and substance to Lender.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned or controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Borrower.

“Term Loan” has the meaning set forth in Section 1.11.

“Term Loan Facility Fee” means a fee equal to $135,000 due upon the date of this Agreement.

“Term Loan Maturity Date” means June 10, 2019.

“Term Loan Rate” means a per annum rate equal to the Prime Rate plus 0.75 percentage points, provided that, an additional 5.00 percentage points during any period that an Event of Default has occurred and is continuing.

“Termination Fee” means (i) a payment equal to 1.00% of the Credit Limit plus (ii) a payment equal to 2.00% of the principal amount of the Term Loan.

	
 
	
12.2
	
Construction:

	
 
	
(a)
	
In this Agreement: (i) references to the plural include the singular and to the singular include the plural; (ii) references to any gender include any other gender; (iii) the terms “include” and “including” are not limiting; (iv) the term “or” has the inclusive meaning represented by the phrase “and/or,” (v) unless otherwise specified, section and subsection references are to this Agreement, and (vi) any reference to any statute, law, or regulation shall include all amendments thereto and revisions thereof.

	
 
	
(b)
	
Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved using any presumption against either Borrower or Lender, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each party hereto and their respective counsel. In case of any ambiguity or uncertainty, this Agreement shall be construed and interpreted according to the ordinary meaning of the words used to accomplish fairly the purposes and intentions of all parties hereto.

	
 
	
(c)
	
Titles and section headings used in this Agreement are for convenience only and shall not be used in interpreting this Agreement.

	
13.
	
JURY TRIAL WAIVER. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO 

 

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CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.

	
14.
	
JUDICIAL REFERENCE PROVISION.

	
 
	
14.1
	
In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect to proceed under this Judicial Reference Provision.

	
 
	
14.2
	
With the exception of the items specified in Section 14.3, below, any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any other document, instrument or agreement between the undersigned parties (collectively in this Section, the “Loan Documents”), will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).

	
 
	
14.3
	
The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

	
 
	
14.4
	
The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

	
 
	
14.5
	
The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within one hundred twenty (120) days after the date of the conference and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.

	
 
	
14.6
	
The referee will have power to expand or limit the amount and duration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

	
 
	
14.7
	
Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter. Subject to the referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

	
 
	
14.8
	
The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference. Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had 

 

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been tried by the Court and any such decision will be final, binding and conclusive. The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

	
 
	
14.9
	
If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

	
 
	
14.10
	
THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

	
15.
	
EXECUTION, EFFECTIVENESS, SURVIVAL. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other documents executed in connection herewith constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement shall become effective upon the execution and delivery hereof by Borrower and Lender and shall continue in full force and effect until the Maturity Date and thereafter so long as any Obligations remain outstanding hereunder. Lender reserves the right to issue press releases, advertisements, and other promotional materials describing any successful outcome of services provided on Borrower’s behalf. Borrower agrees that Lender shall have the right to identify Borrower by name in those materials.

	
16.
	
CONFIDENTIALITY. In handling any confidential information Lender and all employees and agents of Lender, including but not limited to accountants, shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) to the subsidiaries or affiliates of Lender in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Advances or the Term Loan, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Lender and (v) as Lender may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of Lender when disclosed to Lender, or becomes part of the public domain after disclosure to Lender through no fault of Lender; or (b) is disclosed to Lender by a third party, provided Lender does not have actual knowledge that such third party is prohibited from disclosing such information.

	
17.
	
TERMINATION. Upon (a) the indefeasible payment in full in cash of the monetary Obligations, (b) the satisfaction of all of Borrower’s other Obligations (other than inchoate indemnity obligations) then due, and (c) Lender having no further obligations to make any Advances or Term Loans, at the written instruction from Borrower to Lender to such effect, this Agreement shall terminate (along with the ability for Borrower to request additional credit extensions) except for any of Borrower’s obligations that specifically survive termination pursuant to the terms hereof, including, without limitation, Borrower’s indemnity obligations hereunder, and Lender shall, upon written request from Borrower, terminate its liens and security interests granted pursuant to this Agreement at Borrower’s sole cost and expense.

	
18.
	
OTHER AGREEMENTS. Any security agreements, liens and/or security interests securing payment of any obligations of Borrower owing to Lender or its Affiliates also secure the Obligations, and are valid and subsisting and are not adversely affected by execution of this Agreement. An Event of Default under this Agreement constitutes a default under other outstanding agreements between Borrower and Lender or its Affiliates.

	
19.
	
REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment of the Obligations by Borrower or any guarantor, or the transfer to Lender of any property should for any reason subsequently be asserted, or declared, to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the United States Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “Voidable Transfer”), and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Lender is required or elects to repay or restore, and as to all reasonable costs, expenses, and reasonable attorneys' 

 

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fees of Lender related thereto, the liability of Borrower and such guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

	
20.
	
PATRIOT ACT NOTIFICATION. Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (“Patriot Act”), Lender is required to obtain, verify and record information that identifies Borrower, which information includes the names and addresses of Borrower and other information that will allow Lender to identify Borrower in accordance with the Patriot Act.

	
21.
	
NOTICE OF FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

[Balance of Page Intentionally Left Blank]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement on the day and year above written.

 

											
	
BORROWER:
	
 
	
LENDER:

	
 
	
 
	
 

	
ADESTO TECHNOLOGIES CORPORATION
	
 
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

 

	
By
	
 
	
/s/ Ron Shelton
	
 
	
By
	
 
	
/s/ Christopher Hill

	
Name:
	
 
	
RON SHELTON
	
 
	
Name:
	
 
	
CHRISTOPHER HILL

	
Title:
	
 
	
CHIEF FINANCIAL OFFICER
	
 
	
Title:
	
 
	
SENIOR VICE PRESIDENT

	
 

 

Address for Notices:
	
 
	
 

 

Address for Notices:

	
1250 Borregas Avenue
	
 
	
55 Almaden Blvd.

	
Sunnyvale, CA 94089
	
 
	
San Jose, CA 95113

	
 
	
 
	
 
	
Fax: (405) 423-8510

	
 
	
 
	
 
	
 

	
Fax:
	
408.400.0721
	
 
	
 
	
 

 

 

 

 

 

 

 

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Exhibit 1.10

 

THIRD PARTY

SECURITY AGREEMENT

This Third Party Security Agreement (this “Agreement”) is made and entered into as of July 7, 2016 by and between ARTEMIS ACQUISITION LLC (“Grantor”), and WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (the “Bank”).

RECITALS

Bank proposes to enter into a transaction with ADESTO TECHNOLOGIES CORPORATION (“Borrower”), pursuant to a Business Financing Agreement dated as of July 7, 2016, as amended from time to time (the “Loan Agreement”).  Grantor expects to derive economic benefit from Bank’s doing so and dealing with Borrower in accordance with the Loan Agreement, and has entered into a Guaranty of even date herewith with respect to the present and future obligations of Borrower to Bank (as amended from time to time, the “Guaranty”). Grantor wishes to secure performance and payment of all obligations to Bank under the Guaranty and otherwise (the “Guarantor Obligations”) with substantially all of Grantor’s assets. All terms used without definition in this Agreement shall have the meaning assigned to them in the Loan Agreement.  All terms used without definition in this Agreement or in the Loan Agreement shall have the meaning assigned to them in the Uniform Commercial Code.

NOW, THEREFORE, Grantor and the Bank agree as follows:

1. Grant of Security Interest.  To secure all of the Guarantor Obligations, Grantor grants to the Bank a security interest in the property described in Exhibit A (the “Collateral”).

2. Grantor’s Representations and Warranties.  Grantor represents and warrants as follows:

(a) Authorization. Grantor has authority and has obtained all approvals and consents necessary to enter into this Agreement, and Grantor’s execution, delivery and performance of this Agreement will not violate or conflict with any law, agreement, or other instrument or writing to which Grantor is party or by which Grantor is bound.

(b) Title. The Collateral is owned by Grantor and is free of all liens, encumbrances and other security interests other than Permitted Liens.

(c) Solvency, Payment of Debts. Grantor is solvent and able to pay Grantor’s debts as they mature.

(d) Further Representations. Grantor further represents, warrants, and covenants that (i) Grantor is not in default under any agreement under which Grantor owes any money, or any agreement, the violation or termination of which could reasonably have a material adverse effect on Grantor; (ii) the information provided to Bank on or prior to the date of this Agreement is true and correct in all material respects; (iii) all financial statements and other information provided to Bank fairly present Grantor's financial condition, and there has not been a material adverse change in the financial condition of Grantor since the date of the most recent of the financial statements submitted to Bank; (iv) Grantor is in compliance with all laws and orders applicable to Grantor where the failure to be in compliance could reasonably be expected to have a material adverse effect on Grantor; (v) Grantor is neither a party to any litigation nor is the subject of any government investigation, and Grantor has no knowledge of any pending litigation or investigation or the existence of circumstances that reasonably could be expected to give rise to such litigation or investigation where there is a reasonable probability of an adverse determination regarding Grantor which could reasonably be expected to result in a material adverse effect on Grantor; (vi) Grantor’s principal residence is located at the address specified in Section 11; and (vii) no representation or other statement made by Grantor to Bank contains any untrue statement of a material fact or omits to state a material fact necessary to make any statements made to Bank not misleading.

3. Covenants.

(a) Encumbrances. Grantor shall not grant a security interest in any of the Collateral other than to Bank or Permitted Liens or execute any financing statements covering any of the Collateral in favor of any person other than Bank other than in connection with Permitted Liens

 

	
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(b) Use of Collateral. The Collateral will not be used for any unlawful purpose or in any way that will void any insurance required to be carried in connection therewith. Grantor will keep the Collateral free and clear of liens other than Permitted Liens and adverse claims and, as appropriate and applicable, will keep it in good condition and repair, and will clean, shelter, and otherwise care for the Collateral in all such ways as are considered good practice by owners of like property.

(c) Indemnification. Grantor shall indemnify Bank against all losses, claims, demands and liabilities of any kind caused by the Collateral.

(d) Perfection of Security Interest. Grantor shall execute and deliver such documents as Bank reasonably deems necessary to create, perfect and continue the security interest in the Collateral contemplated hereby.

(e) Insurance of Collateral.

(i) Grantor, at Grantor’s expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar circumstances in the locations where Grantor’s residence is located on the date hereof. Grantor shall also maintain insurance relating to Grantor’s ownership and use of the Collateral in amounts and of a type that are customary.

(ii) All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All such policies of property insurance shall contain a Bank’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee thereof and all liability insurance policies shall show Bank as an additional insured, and shall specify that the insurer agrees to give at least twenty (20) days notice to Bank before canceling its policy for any reason (ten (10) days’ notice for non-payment of premiums). Upon Bank’s request, Grantor shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All proceeds payable under any such policy shall, at the option of Bank, be payable to Bank to be applied on account of the Guarantor Obligations.

(f) Binding Agreement. Anything herein to the contrary notwithstanding, (a) Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of Grantor’s duties and obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by Bank of any of the rights granted hereunder shall not release Grantor from any of Grantor’s duties or obligations under the contracts and agreements included in the Collateral; and (c) Bank shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall Bank be obligated to perform any of the obligations or duties of Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

(g) Instruments. Grantor will deliver and pledge to Bank all Instruments that are part of the Collateral duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Bank.

(h) Records. Grantor shall prepare and keep, in accordance with generally accepted accounting principles consistently applied, complete and accurate records regarding the Collateral and, if and when requested by Bank, shall prepare and deliver a complete and accurate schedule of all the Collateral in such detail as Bank may reasonably require.

(i) Inspection of Grantor’s Books. Grantor shall permit Bank or its designee at reasonable times and from time to time to inspect Grantor’s books, records and properties and to audit and to make copies of extracts from such books and records.

(j) Fees and Costs. Grantor shall pay all expenses, including reasonable attorneys’ fees, incurred by Bank in the preservation, realization, enforcement or exercise of any Bank’s rights under this Agreement.

(k) Taxes. Grantor will pay all taxes on or before the date such taxes are due, and will comply with all laws and orders applicable to Grantor.

(l) Negative Covenants. Grantor will not (i) make any Investments other than Permitted Investments, or loans or advances to, any person other than as approved in writing by Bank or Permitted Indebtedness, (ii) acquire any assets other than as approved in writing by Bank other than Permitted Investments, (iii) create, incur, assume or be or remain liable with respect to any Indebtedness other than Indebtedness to Bank or other Indebtedness as approved in writing by Bank, (iv) move, dispose of or encumber any portion of Grantor’s assets, other than as approved in writing by Bank or Permitted Indebtedness, (v) create, incur, assume or suffer to exist any lien with respect to any of Grantor’s property other than Permitted Liens, or assign or otherwise convey any right to receive 

 

	
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income, including the sale of any of Grantor’s accounts, (vi) maintain or invest any of Grantor’s property with a Person other than Bank unless such Person has entered into an account control agreement with Bank in form and substance satisfactory to Bank, or (vii) permit the inclusion in any contract to which Grantor becomes a party of any provisions that could restrict or invalidate the creation of a security interest in any of Grantor’s property other than customary restrictions in in-bound licenses of intellectual property, real property and equipment leases.

(m) Further Assurances. At any time and from time to time, upon the written request of Bank, and at the sole expense of Grantor, Grantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further action as Bank may reasonably deem desirable to obtain the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (a) to secure all consents and approvals necessary or appropriate for the grant of a security interest to Bank in any Collateral held by Grantor or in which Grantor has any rights not heretofore assigned, (b) filing any financing or continuation statements under the UCC with respect to the security interests granted hereby, (c) transferring Collateral to Bank’s possession (if a security interest in such Collateral can be perfected by possession), (d) placing the interest of Bank as lienholder on the certificate of title (or other evidence of ownership) of any vehicle owned by Grantor or in or with respect to which Grantor holds a beneficial interest and (e) using its best efforts to obtain waivers of liens from landlords and mortgagees. Grantor also hereby authorizes Bank to file any such financing or continuation statement without the signature of Grantor.  If any amount payable under or in connection with any of the Collateral is or shall become evidenced by any Instrument, such Instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Bank and delivered to Bank promptly upon Grantor’s receipt thereof.

4. Events of Default. The occurrence of any Event of Default under the Loan Agreement, or the failure by Grantor to perform any obligations under the Guaranty within five (5) business days after receipt of Bank’s written notice with respect thereto, or the material breach of any representation under this Agreement, or the failure to perform any obligation under Section 3 of this Agreement, shall constitute an “Event of Default” under this Agreement.

5. Remedies on Default.  Upon the occurrence of an Event of Default, Bank shall have all rights, privileges, powers and remedies provided by law, including, but not limited to, exercise of any or all of the following remedies.

(a) Bank may declare all amounts outstanding under the Loan Agreement and the Guaranty to be immediately due and payable, and thereupon all such amounts shall be and become immediately due and payable to the Bank.

(b) Bank may dispose of the Collateral in accordance with applicable law.

(c) Bank may use, operate, consume and sell the Collateral in its possession as appropriate for the purpose of performing Grantor’s obligations with respect thereto to the extent necessary to satisfy the obligations of Grantor.

(d) All payments received and amounts realized by Bank shall be promptly applied and distributed by the Bank in the following order of priority:

(i) first, to the payment of all costs and expenses, including reasonable legal expenses and attorneys fees, incurred or made hereunder by Bank, including any such costs and expenses of foreclosure or suit, if any, and of any sale or the exercise of any other remedy under this Section 5, and of all taxes, assessments or liens superior to the lien granted under this Agreement; and

(ii) second, to the payment to Bank of the amount then owing under the Loan Agreement.

6. Power of Attorney. Grantor hereby appoints Bank, Grantor’s attorney-in-fact to prepare, sign and file or record, for Grantor in Grantor’s name, any financing statements, applications for registration and like papers and to take any other action deemed by Bank necessary or desirable in order to perfect the security interest of the Bank hereunder, to dispose of any Collateral, and to perform any obligations of Grantor hereunder, at Grantor’s expense, but without obligation to do so.

7. Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative.  Bank shall have all other rights and remedies not inconsistent herewith as provided under the California Uniform Commercial Code (the “UCC”), by law, or in equity.  No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s or Grantor’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given.

 

	
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8. Amendment of Loan Documents. Grantor authorizes Bank, without notice or demand and without affecting its liability hereunder, from time to time to (a) renew, extend, or otherwise change the terms of any Loan Document, or any part thereof; (b) take and hold security for the payment of any Loan Document, and exchange, enforce, waive and release any such security; and (c) apply such security and direct the order or manner of sale thereof as Bank in its sole discretion may determine.

9. Grantor Waivers. Grantor waives any right to require Bank to (a) proceed against Borrower, any other guarantor or any other person; (b) proceed against or exhaust any security held from Borrower; (c) marshal any assets of Borrower; or (d) pursue any other remedy in Bank’s power whatsoever.  Bank may, at its election, exercise or decline or fail to exercise any right or remedy it may have against Borrower or any security held by Bank, including without limitation the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of Grantor hereunder. Grantor waives any defense arising by reason of any disability or other defense of Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower. Grantor waives any setoff, defense or counterclaim that Borrower may have against Bank. Grantor waives any defense arising out of the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against Borrower. Until all obligations under the Guaranty have been satisfied, Grantor shall have no right of subrogation or reimbursement, contribution or other rights against Borrower, and Grantor waives any right to enforce any remedy that Bank now has or may hereafter have against Borrower. Grantor waives all rights to participate in any security now or hereafter held by Bank. Grantor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this Agreement and of the existence, creation, or incurring of new or additional indebtedness. Grantor assumes the responsibility for being and keeping himself informed of the financial condition of Borrower and of all other circumstances bearing upon the risk of nonpayment of any indebtedness or nonperformance of any obligation of Borrower, warrants to Bank that Grantor will keep so informed, and agrees that absent a request for particular information by Grantor, Bank shall have no duty to advise Grantor of information known to Bank regarding such condition or any such circumstances. Grantor waives the benefits of California Civil Code sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.

10. Borrower Insolvency. If Borrower becomes insolvent or is adjudicated bankrupt or files a petition for reorganization, arrangement, composition or similar relief under any present or future provision of the United States Bankruptcy Code, or if such a petition is filed against Borrower, and in any such proceeding some or all of any indebtedness or obligations under the Loan Documents are terminated or rejected or any obligation of Borrower is modified or abrogated, or if Borrower’s obligations are otherwise avoided for insolvency, bankruptcy or any similar reason, Grantor agrees that Grantor’s liability hereunder shall not thereby be affected or modified and such liability shall continue in full force and effect as if no such action or proceeding had occurred.  This Agreement shall continue to be effective or be reinstated, as the case may be, if any payment must be returned by Bank upon the insolvency, bankruptcy or reorganization of Borrower, Grantor, any other person, or otherwise, as though such payment had not been made.

11. Notices. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Grantor or to Bank, as the case may be, at its addresses set forth below:

 

	
If to Grantor:
	
 
	
ARTEMIS ACQUISITION LLC

	
 
	
 
	
c/o ADESTO TECHNOLOGIES CORPORATION

	
 
	
 
	
1250 Borregas Ave. Sunnyvale, CA 94089

	
 
	
 
	
Tel: (408) 400-0578.

	
 
	
 
	
 

	
If to Bank:
	
 
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

	
 
	
 
	
55 Almaden Boulevard, Suite 100

	
 
	
 
	
San Jose, California 95113

	
 
	
 
	
Attn:
	
 
	
 

	
 
	
 
	
Fax: (405) 423-8510

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

12. Jury Trial Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN CONNECTION WITH THE 

 

	
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OBLIGATIONS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY OBLIGATION, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.  EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

13. Reference Provision.

13.1 In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect to proceed under this Judicial Reference Provision.

13.2 With the exception of the items specified in Section 13.3, below, any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any other document, instrument or agreement between the undersigned parties (collectively in this Section, the “Loan Documents”), will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).

13.3 The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

13.4 The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted.  Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

13.5 The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within one hundred twenty (120) days after the date of the conference and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.

13.6 The referee will have power to expand or limit the amount and duration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever.  Unless otherwise ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

13.7 Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted 

 

	
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before the referee, and the referee will be provided a courtesy copy of the transcript.  The party making such a request shall have the obligation to arrange for and pay the court reporter.  Subject to the referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

13.8 The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California.  The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference.  Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court and any such decision will be final, binding and conclusive.  The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee.  The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

13.9 If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time.  The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

13.10 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.  AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

14. General Provisions.

14.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Grantor without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion.  Bank shall have the right without the consent of or notice to Grantor to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder.

14.2 Indemnification. Grantor shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Grantor whether under this Agreement, or otherwise (including without limitation reasonable attorneys’ fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct.

14.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.

14.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

14.5 Amendments in Writing, Integration. This Agreement cannot be amended or terminated orally. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement, if any, are merged into this Agreement and the Loan Documents.

14.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.

 

	
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14.7 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding, any Guarantor Obligations remain outstanding, or Bank has any obligation to make Credit Extensions to Borrower.  The obligations of Grantor to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 14.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.

[Balance of Page Intentionally Left Blank]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date set forth above.

 

	
GRANTOR:
	
 
	
 
	
 
	
 
	
BANK:
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
ARTEMIS ACQUISITION LLC
	
 
	
 
	
WESTERN ALLIANCE BANK, AN ARIZONA

CORPORATION

	
 
	
By:
	
Adesto Technologies Corporation,
	
 
	
 
	
 

	
 
	
as sole member and manager of
	
 
	
By:
	
/s/ Christopher Hill

	
 
	
Arternis Acquisition LLC
	
 
	
 
	
 

	
 
	
 
	
 
	
Name:
	
Christopher Hill

	
 
	
 
	
By:
	
/s/ Narbeh Derhacobian
	
 
	
 
	
 

	
 
	
 
	
Name:
	
Narbeh Derhacobian
	
 
	
Title:
	
Senior Vice President

	
 
	
 
	
Title:
	
President and Chief Executive Officer
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

 

			
	
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DEBTOR:
	
ARTEMIS ACQUISITION LLC

	
SECURED PARTY:
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

 

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT

TO THIRD PARTY SECURITY AGREEMENT

“Collateral” means all of Grantor’s rights and interest in any and all personal property, whether now existing or hereafter acquired or created and wherever located, and all products and proceeds thereof and accessions thereto, including but not limited to the following (collectively, the “Collateral”): (a) all accounts (including  health care insurance receivables), chattel paper (including  tangible  and  electronic  chattel  paper), inventory (including all goods held for sale or lease or to be furnished under a contract for service, and including returns and repossessions), equipment (including all accessions and additions thereto), instruments (including promissory notes), investment property (including securities and securities entitlements), documents (including negotiable documents), deposit accounts, letter of credit rights, money, any commercial tort claim of Grantor which is now or hereafter identified by Grantor or Bank, general intangibles (including payment intangibles and software), goods (including fixtures) and all of Grantor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and (b) any and all cash proceeds and/or noncash proceeds thereof, including without limitation, insurance proceeds, and all supporting obligations and the security therefore or for any right to payment. Notwithstanding the foregoing, the Collateral does not include (a) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Grantor of any Foreign Subsidiary which shares entitle the holder thereof to vote for the election of directors or any other matter; (b) rights held under a license or lease that are not assignable by their terms without the consent of the licensor or lessor thereof (but only to the extent such restriction on assignment is enforceable under applicable law); and (c) any interest of Grantor as a lessee under an equipment lease if Grantor is prohibited by the terms of such lease from granting a security interest in such lease or under which such an assignment or lien would cause a default to occur under such lease; provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by Grantor or Bank. 

 

			
	
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Exhibit 1.2

CORPORATE RESOLUTIONS TO BORROW

 

		
	
Borrower:
	
ADESTO TECHNOLOGIES CORPORATION

 

I, the undersigned Secretary or Assistant Secretary of ADESTO TECHNOLOGIES CORPORATION (the “Corporation”), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue of the laws of the State of Delaware.

I FURTHER CERTIFY that attached hereto as Attachments A and Bare true and complete copies of the Certificate of Incorporation, as amended, and the Bylaws of the Corporation, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at which a quorum was present and voting (or by other duly authorized corporate action in lieu of a meeting), the following resolutions (the “Resolutions”) were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Corporation, whose actual signatures are shown below:

 

	
NAMES
	
 
	
POSITION
	
 
	
ACTUAL SIGNATURES

	
 

 
	
 
	
 

 
	
 
	
 

 

	
NARBEH DERHACOBIAN
	
 
	
PRESIDENT AND CEO OF

ADESTO TECHNOLOGIES CORPORATION
	
 
	
/s/ Narbeh Derhacobian

	
RON SHELTON
	
 
	
CHIEF FINANCIAL OFFICER OF

ADESTO TECHNOLOGIES CORPORATION
	
 
	
/s/ Ron Shelton

	
 

 
	
 
	
 
	
 
	
 

acting for and on behalf of this Corporation and as its act and deed be, and they hereby are, authorized and empowered:

Borrow Money. To borrow from time to time from Western Alliance Bank, an Arizona corporation (“Bank”), on such terms as may be agreed upon between the officers, employees, or agents of the Corporation and Bank, such sum or sums of money as in their judgment should be borrowed, without limitation.

Execute Loan Documents. To execute and deliver to Bank that certain Business Financing Agreement dated as of July 7, 2016 (the “Financing Agreement”) and any other agreement entered into between Corporation and Bank in connection with the Financing Agreement, including any amendments, all as amended or extended from time to time (collectively, with the Financing Agreement, the “Loan Documents”), and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Loan Documents, or any portion thereof.

Grant Security. To grant a security interest to Bank in the Collateral described in the Loan Documents, which security interest shall secure all of the Corporation's Obligations, as described in the Loan Documents.

Negotiate Items. To draw, endorse, and discount with Bank all drafts, trade acceptances, promissory notes, or other evidences of indebtedness payable to or belonging to the Corporation or in which the Corporation may have an interest, and either to receive cash for the same or to cause such proceeds to be credited to the account of the Corporation with Bank, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable.

Further Acts. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered to and 

 

				
	
 
	
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received by Bank. Any such notice shall not affect any of the Corporation's agreements or commitments in effect at the time notice is given.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand on July 7, 2016 and attest that the signatures set opposite the names listed above are their genuine signatures.

 

	
CERTIFIED AND ATTESTED BY:

	
 

	
X
	
/s/ Ron Shelton

	
 
	
 

	
Secretary or Assistant Secretary of Corporation

 

 

 

				
	
 
	
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Exhibit 1.3

INTELLECTUAL PROPERTY SECURITY AGREEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of July 7, 2016, (the “Agreement”) between WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (“Lender”), ADESTO TECHNOLOGIES CORPORATION and ARTEMIS ACQUISITION LLC (each a “Grantor” and collectively, “Grantors”) is made with reference to (A) that certain Business Financing Agreement, dated as of July 7, 2016 (as amended from time to time, the “Loan Agreement”), between Lender and ADESTO TECHNOLOGIES CORPORATION and (B) that certain Guaranty, dated as of July 7, 2016 (as amended from time to time, the “Guaranty”), between Lender and ARTEMIS ACQUISITION LLC. Terms  defined  in  the  Loan  Agreement or Guaranty have the same  meanings  when  used  in  this Agreement.

For good and valuable consideration, receipt of which is hereby acknowledged, each Grantor hereby covenants and agrees as follows:

To secure the obligations under the Loan Agreement and the Guaranty, ADESTO TECHNOLOGIES CORPORATION and ARTEMIS ACQUISITION LLC respectively, grant to Lender a security interest in all right, title, and interest of Grantors in any of the following, whether now existing or hereafter acquired or created in any and all of the following property (collectively, the “Intellectual Property Collateral”):

(a) copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held (collectively, the “Copyrights”), including the Copyrights described in Exhibit A;

(b) trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like  protections, and the entire goodwill of the business of Grantor connected with and symbolized by such trademarks (collectively, the “Trademarks”), including the Trademarks described in Exhibit B;

(c) patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same (collectively, the “Patents”), including the Patents described in Exhibit C;

(d) mask work or similar rights available for the protection of semiconductor chips or other products (collectively, the “Mask Works”);

(e) trade secrets, and any and all intellectual property rights in computer software and computer software products;

(f) design rights;

(g) claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;

(h) licenses or other rights to use, where Grantor is the licensor or transferor of any of the Copyrights, Patents, Trademarks, or Mask Works, and all license fees and royalties arising from such use to the extent permitted by such license or rights;

(i) amendments, renewals and extensions of any of the Copyrights, Trademarks, Patents, or Mask Works; and

(j) proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.

Notwithstanding anything to the contrary contained in this Agreement, Intellectual Property Collateral does not include rights held under a license that are not assignable by their terms without the consent of the licensor thereof (but only to the extent such restriction on assignment is enforceable under applicable law).

The rights and remedies of Lender with respect to the security interests granted hereunder are in addition  to  those  set  forth  in  the  Loan  Agreement and  the  Guaranty, and  those  which  are  now or hereafter available to Lender as a matter of law or equity.   Each right, power and remedy of Lender provided for herein or in the Loan Agreement or the Guaranty, or now or hereafter existing at law or in equity shall be cumulative and concurrent and shall be in addition to every right, power or remedy provided for herein, and the exercise by Lender of any one or more of such rights, powers or remedies does not preclude the simultaneous or later exercise by Lender of any other rights, powers or remedies.

[Balance of Page Intentionally Left Blank]

 

 

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

 

	
GRANTOR:

	
 
	
 
	
 

	
ADESTO TECHNOLOGIES CORPORATION

	
 
	
 
	
 

	
By:
	
/s/ Ron Shelton

	
 
	
 
	
 

	
Name:
	
RON SHELTON

	
 
	
 
	
 

	
Title:
	
CHIEF FINANCIAL OFFICER

	
 
	
 
	
 

	
Address for Notices:
	
 

	
Attn:
	
Ron Shelton, CFO

	
1250 Borregas Avenue

	
Sunnyvale, CA 94089

	
Tel:
	
(408) 419-4841

	
Fax:
	
(408) 419-4841

 

	
GRANTOR:
	
 
	
 
	
 
	
 
	
LENDER:
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
ARTEMIS ACQUISITION LLC
	
 
	
 
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

	
 
	
By:
	
Adesto Technologies Corporation,
	
 
	
 
	
 

	
 
	
as sole member and manager of
	
 
	
By:
	
/s/ Christopher Hill

	
 
	
Artemis Acquisition LLC
	
 
	
 
	
 

	
 
	
 
	
 
	
Name:
	
Christopher Hill

	
 
	
 
	
By:
	
/s/ Narbeh Derhacobian
	
 
	
 
	
 

	
 
	
 
	
Name:
	
Narbeh Derhacobian
	
 
	
Title:
	
Senior Vice President

	
 
	
 
	
Title:
	
President and Chief Executive Officer
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

	
Address for Notices:
	
 
	
Address for Notices:

	
 
	
 
	
Attn:
	
Mike Field

	
c/o ADESTO TECHNOLOGIES CORPORATION
	
 
	
55 Almaden Boulevard, Suite l00

	
1250 Borregas Ave,
	
 
	
San Jose, California 95113

	
Sunnyvale, CA 94089
	
 
	
Tel:
	
(408) 556-6501

	
Tel:
	
(408) 400-0578
	
 
	
Fax:
	
(408) 282-1681

	
 
	
 
	
 

	
 
	
 
	
 

 

 

			
	
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EXHIBIT A

COPYRIGHTS

Please Check if No Copyrights Exist ☑

 

	
Type of

Work:
	
Title:
	
International 

Standard Serial 

Number (ISSN):
	
Registration

Number:
	
Filing

Date:
	
Pre - 

registered?

	
 
	
 
	
 
	
 
	
 
	
 

 

 

			
	
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EXHIBIT B

TRADEMARKS

Please Check if No Trademarks Exist ☐

 

	
Mark / Title:
	
U.S. Serial Number:
	
U.S. Registration

Number:
	
USPTO Reference

Number:
	
Filing

Date:

	
adesto

TECHNOLOGIES
	
85470629
	
4303684
	
 
	
11/11/11

	
CBRAM
	
85470550
	
4235215
	
 
	
11/11/11

	
Adesto
	
85470695
	
4193574
	
 
	
11/11/11

 

 

			
	
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EXHIBIT C

PATENTS

Please Check if No Patents Exist ☐

 

	
Title:
	
Patent Number:
	
Application/

Serial Number:
	
Issued or

Published?
	
Issued/Published

Date:

	
Programmable impedance element circuits and methods
	
8294488
	
 
	
Issued
	
10/23/12

	
Variable impedance memory device biasing circuits and methods
	
8498164
	
 
	
Issued
	
7/30/13

	
Resistive switching devices and methods of formation thereof
	
 
	
13767800
	
Published
	
2/14/13

	
Low power voltage regulator circuit for use in an integrated circuit device
	
6320454
	
 
	
Issued
	
11/20/01

	
Reference cell for high speed sensing in non-volatile memories
	
6411549
	
 
	
Issued
	
6/25/02

	
Method of establishing reference levels for sensing multilevel memory cell states
	
6618297
	
 
	
Issued
	
9/9/03

	
Row decoder circuit for use in programming a memory device
	
6621745
	
 
	
Issued
	
9/16/03

	
Method of programming a multi-level memory device
	
6714448
	
 
	
Issued
	
3/30/04

	
Method of recovering overerased bits in a memory device
	
6724662
	
 
	
Issued
	
4/20/04

	
Approach for zero dummy byte flash memory read operation
	
6879535
	
 
	
Issued
	
4/12/05

	
Current sense amplifier
	
6946882
	
 
	
Issued
	
9/20/05

	
Method for identification of spi compatible serial memory devices
	
7032039
	
 
	
Issued
	
4/18/06

	
Dual stage voltage regulation circuit
	
7064529
	
 
	
Issued
	
6/20/06

	
Functional register decoding system for multiple plane operation
	
7099226
	
 
	
Issued
	
8/29/06

	
Method and apparatus of a smart decoding scheme for fast synchronous read in a memory system
	
7143257
	
 
	
Issued
	
11/28/06

	
Column/sector redundancy cam fast programming scheme using regular memory core array in multi-plane flash memory device
	
7196952
	
 
	
Issued
	
3/27/07

	
Method for fabricating a semiconductor memory cell
	
7214587
	
 
	
Issued
	
5/8/07

	
Semiconductor memory component in cross-point architecture
	
7215564
	
 
	
Issued
	
5/8/07

	
Resistive memory arrangement
	
7215568
	
 
	
Issued
	
5/8/07

	
Pmc memory circuit and method for storing a datum in a pmc memory circuit
	
7257014
	
 
	
Issued
	
8/14/07

	
Integrated semiconductor memory with an arrangement of nonvolatile memory cells, and method
	
7277312
	
 
	
Issued
	
10/2/07

	
Redundant column read in a memory array
	
7296196
	
 
	
Issued
	
11/13/07

	
A memory device including electrical circuit configured to provide reversible bias across the pmc memory cell to perform erase and write functions
	
7327603
	
 
	
Issued
	
2/5/08

	
Memory system and process for controlling a memory component to achieve different kinds of memory characteristics on one and the same memory component
	
7337282
	
 
	
Issued
	
2/26/08

	
Read, write and erase circuit for programmable memory devices
	
7359236
	
 
	
Issued
	
4/15/08

	
Method for fabricating a resistive memory
	
7368314
	
 
	
Issued
	
5/6/08

 

			
	
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Title:
	
Patent Number:
	
Application/

Serial Number:
	
Issued or

Published?
	
Issued/Published

Date:

	
Memory having cbram memory cells and method
	
7372716
	
 
	
Issued
	
5/13/08

	
Channel discharging after erasing flash memory devices
	
7397699
	
 
	
Issued
	
7/8/08

	
Programmable memory device circuit
	
7426131
	
 
	
Issued
	
9/16/08

	
Resistively switching memory
	
7442605
	
 
	
Issued
	
10/28/08

	
Method for preventing over-erasing of unused column redundant memory cells in a flash memory having single- transistor memory cells
	
7457167
	
 
	
Issued
	
11/25/08

	
Method for improving the thermal characteristics of semiconductor memory cells
	
7483293
	
 
	
Issued
	
1/27/09

	
Read, write and erase circuit for programmable memory devices
	
7483294
	
 
	
Issued
	
1/27/09

	
Resistive memory element with shortened erase time
	
7511294
	
 
	
Issued
	
3/31/09

	
Voltage reference circuit using programmable metallization cells
	
7514706
	
 
	
Issued
	
4/7/09

	
Cbram cell and cbram array, and method of operating thereof
	
7515454
	
 
	
Issued
	
4/7/09

	
Method and system for reducing soft-writing in a multi-level flash memory
	
7522455
	
 
	
Issued
	
4/21/09

	
Integrated circuit including resistivity changing memory cells
	
7538411
	
 
	
Issued
	
5/26/09

	
Implementation of column redundancy for a flash memory with a high write parallelism
	
7551498
	
 
	
Issued
	
6/23/09

	
Resistive memory arrangement
	
7561460
	
 
	
Issued
	
7/14/09

	
Memory cell, memory device and method for the production thereof
	
7655939
	
 
	
Issued
	
2/2/10

	
Method for fabricating a solid electrolyte memory device and solid electrolyte memory device
	
7658773
	
 
	
Issued
	
2/9/10

	
Method for fabricating an integrated device comprising a structure with a solid electrolyte
	
7700398
	
 
	
Issued
	
4/20/10

	
A memory device including electrical circuit configured to provide reversible bias across the pmc memory cell to perform erase and write functions
	
7715226
	
 
	
Issued
	
5/11/10

	
Method for manufacturing a cbram semiconductor memory
	
7718537
	
 
	
Issued
	
5/18/10

	
Integrated circuit, method for manufacturing an integrated circuit memory cell array, memory module, and device
	
7732888
	
 
	
Issued
	
6/8/10

	
Memory component with memory cells having changeable resistance and fabrication method therefor
	
7737428
	
 
	
Issued
	
6/15/10

	
Nor and nad memory arrangement of resistive memory elements
	
7746683
	
 
	
Issued
	
6/29/10

	
Method for manufacturing an integrated circuit including an electrolyte material layer
	
7749805
	
 
	
Issued
	
7/6/10

	
Device and method for access time reduction by speculatively decoding non-memory read commands on a serial interface
	
7769909
	
 
	
Issued
	
8/3/10

	
Solid electrolyte memory element and method for fabricating such a memory element
	
7772614
	
 
	
Issued
	
8/10/10

	
Method for producing memory having a solid electrolyte material region
	
7829134
	
 
	
Issued
	
11/9/10

	
Method of manufacturing an integrated circuit, an integrated circuit and a memory module
	
7888228
	
 
	
Issued
	
2/15/11

	
Method and system to access memory
	
7929356
	
 
	
Issued
	
4/19/11

 

			
	
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Title:
	
Patent Number:
	
Application/

Serial Number:
	
Issued or

Published?
	
Issued/Published

Date:

	
Method for producing memory having a solid electrolyte material region
	
8062694
	
 
	
Issued
	
11/22/11

	
Integrated circuits having programmable metallization cells (pmcs) and operating methods therefor
	
8107273
	
 
	
Issued
	
1/31/12

	
Memory cells with an anode comprising intercalating material and metal species dispersed therein
	
8115282
	
 
	
Issued
	
2/14/12

	
Method and system to access memory
	
8208315
	
 
	
Issued
	
6/26/12

	
Methods of manufacturing a semiconductor device; method of manufacturing a memory cell, semiconductor device; semiconductor processing device, integrated circuit having a memory cell
	
8268664
	
 
	
Issued
	
9/18/12

	
Variable impedance memory device having simultaneous program and erase, and corresponding methods and circuits
	
8274842
	
 
	
Issued
	
9/25/12

	
Pmc-based non-volatile cam
	
8320148
	
 
	
Issued
	
11/27/12

	
Humanized antibodies against the beta-amyloid peptide
	
8323647
	
 
	
Issued
	
12/4/12

	
Reconfigurable memory arrays having programmable impedance elements and corresponding methods
	
8331128
	
 
	
Issued
	
12/11/12

	
Methods of programming and erasing programmable metallization cells (pmcs)
	
8369132
	
 
	
Issued
	
2/5/13

	
Memory cell device and method of manufacture
	
8420481
	
 
	
Issued
	
4/16/13

	
Conducting bridge random access memory (cbram) device structures
	
8426839
	
 
	
Issued
	
4/23/13

	
Methods and circuits for temperature varying write operations of programmable impedance elements*
	
8437171
	
 
	
Issued
	
5/7/13

	
Method for operating an integrated circuit having a resistivity changing memory cell
	
8531863
	
 
	
Issued
	
9/10/13

	
Conductive filament based memory elements and methods with improved data retention and/or endurance
	
8531867
	
 
	
Issued
	
9/10/13

	
Resistive switching element
	
 
	
11746393
	
Published
	
5/9/07

	
Contact structure and method for variable impedance memory element
	
 
	
13470286
	
Published
	
5/12/12

	
Resistive switching devices having alloyed electrodes and methods of formation thereof
	
 
	
13558296
	
Published
	
7/25/12

	
Variable impedance memory element structure, methods of manufacture, and memory devices containing the same
	
 
	
13445389
	
Published
	
4/12/12

	
Methods of programing and erasing programmable metallization cells (pmcs)
	
8625331
	
 
	
Issued
	
1/7/14

	
Read methods, circuits and systems for memory devices
	
8654561
	
 
	
Issued
	
2/18/14

	
PMC-based non-volatile cam
	
8659926
	
 
	
Issued
	
2/25/14

	
Erase and soft program within the erase operation for a high speed resistive switching memory operation with aa controlled erased states
	
8659931
	
 
	
Issued
	
2/25/14

	
Cbram/reram with improved program and erase algorithms
	
8659954
	
 
	
Issued
	
2/25/14

	
Integrated circuit devices and systems having programmable impedance elements with different response types
	
8675396
	
 
	
Issued
	
3/18/14

	
Circuits having programmable impedance elements
	
8687403
	
 
	
Issued
	
4/1/14

	
Circuits and methods for placing programmable impedance memory elements in high impedance states
	
8730752
	
 
	
Issued
	
5/20/14

 

			
	
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Title:
	
Patent Number:
	
Application/

Serial Number:
	
Issued or

Published?
	
Issued/Published

Date:

	
Variable impedance memory device structure and method of manufacture including programmable impedance memory cells and methods of forming the same
	
8829482
	
 
	
Issued
	
9/9/14

	
Programmable impedance memory elements, methods of manufacture, and memory devices containing the same
	
8847191
	
 
	
Issued
	
9/30/14

	
Memory devices, architectures and methods for memory elements having dynamic change in property
	
8854873
	
 
	
Issued
	
10/7/14

	
Resistive switching devices having a buffer layer and methods of formation thereof
	
8866122
	
 
	
Issued
	
10/21/14

	
Programmable memory elements, devices and methods having physically localized structure
	
8895953
	
 
	
Issued
	
11/25/14

	
Memory devices, circuits and, methods that apply different electrical conditions in access operations
	
8902631
	
 
	
Issued
	
12/2/14

	
Resistive switching memory
	
8912517
	
 
	
Issued
	
12/16/14

	
Read operations and circuits for memory devices having programmable elements, including programmable resistance elements
	
8913444
	
 
	
Issued
	
12/16/14

	
Current source circuits and methods for mass write and testing of programmable impedance elements
	
8947907
	
 
	
Issued
	
2/3/15

	
Circuits and methods having programmable impedance elements
	
8947913
	
 
	
Issued
	
2/3/15

	
Programmable impedance memory elements with laterally extending cell structure
	
8952351
	
 
	
Issued
	
2/10/15

	
Memory cell device and method of manufacture
	
8952493
	
 
	
Issued
	
2/10/15

	
Resistive devices and methods of operation thereof
	
8953362
	
 
	
Issued
	
2/10/15

	
Circuits and methods for programming variable impedance elements
	
8976568
	
 
	
Issued
	
3/10/15

	
Memory devices, circuits and, methods that apply different electrical conditions in access
	
8982602
	
 
	
Issued
	
3/17/15

	
Reverse program and erase cycling algorithms
	
8995167
	
 
	
Issued
	
3/31/15

	
Memory cells, devices and method with dynamic storage elements and programmable impedance shadow elements
	
8995173
	
 
	
Issued
	
3/31/15

	
Resistive devices and methods of operation thereof
	
9001553
	
 
	
Issued
	
4/7/15

	
Safeguarding data through an smt process
	
9007808
	
 
	
Issued
	
4/14/15

	
Application of relaxation voltage pulses to programmable impedance elements during read operations
	
9007814
	
 
	
Issued
	
4/14/15

	
Verify pulse delay to improve resistance window
	
9019745
	
 
	
Issued
	
4/28/15

	
Pre-conditioning circuits and methods for programmable impedance elements in memory devices
	
9025396
	
 
	
Issued
	
5/5/15

	
Resistive switching memories
	
9029829
	
 
	
Issued
	
5/12/15

	
Ultra-deep power-down mode for memory devices
	
9037890
	
 
	
Issued
	
5/19/15

	
Programmable window of operation for cbram
	
9047948
	
 
	
Issued
	
6/2/15

	
Coding techniques for reducing write cycles for memory
	
9047975
	
 
	
Issued
	
6/2/15

	
Triggered cell annihilation for resistive switching memory devices
	
9053789
	
 
	
Issued
	
6/9/15

	
Memory elements and methods with improved data retention and/or endurance
	
9070877
	
 
	
Issued
	
6/30/15

	
Memory devices and methods for read and write operation to memory elements having dynamic change in property
	
9099175
	
 
	
Issued
	
8/4/15

	
Resistive switching memory device with diode select
	
9099176
	
 
	
Issued
	
8/4/15

	
Solid electrolyte memory elements with electrode interface for improved performance
	
9099633
	
 
	
Issued
	
8/4/15

 

			
	
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Title:
	
Patent Number:
	
Application/

Serial Number:
	
Issued or

Published?
	
Issued/Published

Date:

	
System architecture with multiple memory types, including programmable impedance memory elements
	
9147464
	
 
	
Issued
	
9/29/15

	
Programmable impedance element circuits and methods
	
9159414
	
 
	
Issued
	
10/13/05

	
Resistive memory devices, circuits and methods having read current limiting
	
9165648
	
 
	
Issued
	
10/20/15

	
Memory devices, circuits and methods having data values based on dynamic change in material property
	
9177639
	
 
	
Issued
	
11/3/15

	
Multi-port memory devices and methods having programmable impedance elements
	
9208870
	
 
	
Issued
	
12/8/15

	
Verify pulse delay to improve resistance window
	
9208876
	
 
	
Issued
	
12/8/15

	
Resistive switching devices having a switching layer and an intermediate electrode layer and methods of formation thereof
	
9252359
	
 
	
Issued
	
2/2/16

	
Solid electrolyte based memory devices and methods having adaptable read threshold levels
	
9305643
	
 
	
Issued
	
4/5/16

	
Fabrication methods of conducting bridge random access memory (cbram) device structures
	
9306161
	
 
	
Issued
	
4/5/16

	
Latch circuit and methods with programmable impedance elements
	
9330755
	
 
	
Issued
	
5/3/16

	
Common plate switching reduction in resistive switching memory devices
	
9336868
	
 
	
Issued
	
5/10/16

	
Circuits having programmable impedance elements and vertical access devices
	
9343667
	
 
	
Issued
	
5/17/16

	
Sensing data in resistive switching memory devices
	
9361975
	
 
	
Issued
	
6/7/16

	
Circuits and methods for placing programmable impedance memory elements in high impedance states
	
9368198
	
 
	
Issued
	
6/14/16

	
Capacitor arrangements using a resistive switching memory cell structure
	
9368206
	
 
	
Issued
	
6/14/16

	
Prototyping integrated circuit devices with programmable impedance elements
	
9373398
	
 
	
Issued
	
6/21/16

	
Two terminal resistive access devices and methods of formation thereof
	
9373786
	
 
	
Issued
	
6/21/16

	
Memory devices and methods having write data permutation for cell wear reduction
	
 
	
13626721
	
Published
	
9/25/12

	
Network interface with logging
	
 
	
13716357
	
Published
	
12/17/12

	
Programmable impedance memory elements and corresponding methods
	
 
	
14195787
	
Published
	
3/3/14

	
Nonvolatile memory elements having conductive structures with semimetals and/or semiconductors
	
 
	
14217256
	
Published
	
3/17/14

	
Serial memory device alert of an external host to completion of an internally self-timed operation
	
 
	
14516261
	
Published
	
10/16/14

	
Resistive switching memory
	
 
	
14552250
	
Published
	
11/24/14

	
Resistive devices and methods of operation thereof
	
 
	
14599654
	
Published
	
1/19/15

	
Resistive switching element
	
 
	
11746393
	
Published
	
5/9/07

	
Current sense amplifier
	
6946882
	
 
	
Issued
	
9/20/05

	
Cbram cell and cbram array, and method of operating thereof
	
7515454
	
 
	
Issued
	
4/7/09

	
Method for fabricating a solid electrolyte memory device and solid electrolyte memory device
	
7658773
	
 
	
Issued
	
2/9/10

	
Method of operating a resistive memory device with a ramp-up/ramp-down program/erase pulse
	
9165644
	
 
	
Issued
	
10/20/15

 

			
	
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Title:
	
Patent Number:
	
Application/

Serial Number:
	
Issued or

Published?
	
Issued/Published

Date:

	
Concurrent read and write operations in a serial flash device
	
 
	
14719814
	
Published
	
5/22/15

	
Programmable resistive memory elements with electrode interface layer and memory devices including the same
	
 
	
14791412
	
Published
	
7/4/15

	
Ultra-deep power-down mode for memory devices
	
 
	
14698205
	
Published
	
4/28/15

 

 

 

			
	
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Exhibit 1.4

INSURANCE AUTHORIZATION LETTER

In accordance with the insurance coverage requirements of the Business Financing Agreement dated as of July 7, 2016 (the “Agreement”) between WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (“Lender”), and ADESTO TECHNOLOGIES CORPORATION (“Borrower”), coverage is to be provided as set forth below:

 

	
COVERAGE:
	
 
	
All risk including liability and property damage.

	
 
	
 
	
 

	
INSURED:
	
 
	
ADESTO TECHNOLOGIES CORPORATION

	
 
	
 
	
 

	
 

	
LOCATION(s) OF COLLATERAL:

	
 
	
 
	
 

	
1.
	
 
	
1250 Borregas Avenue, Sunnyvale, CA 94089

	
 
	
 
	
 

	
2.
	
 
	
1925 Zanker Avenue, San Jose CA 95112

	
 

	
Insuring Agent:
	
 
	
HUB International
	
 

	
 
	
 
	
 
	
 

	
Address:
	
 
	
180 Sutter Street
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
San Francisco CA 94104
	
 

	
 
	
 
	
 
	
 

	
Phone Number:
	
 
	
415-529-3475
	
 

	
 
	
 
	
 
	
 

	
Fax Number:
	
 
	
 
	
 

ADDITIONAL INSURED AND LOSS PAYEE:

Lender, as its respective interests may appear below. 

LENDER:

WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

55 Almaden Blvd.

San Jose, CA 95113

Attn: Note Dept

Fax # 408-689-8542

Phone # 408-423-8500

The above coverage is to be provided prior to funding the Agreement. Borrower hereby agrees to pay for the coverage above and by signing below acknowledges its obligation to do so.

 

	
Signature:
	
 
	
/s/ Ron Shelton

	
Title:
	
 
	
CFO

	
Date:
	
 
	
July 7, 2016

 

 

WEST\269906068.2

355157-000162

Exhibit 1.5

 

BORROWER: ADESTO TECHNOLOGIES CORPORATION

 

GUARANTOR: ARTEMIS ACQUISITION LLC

 

GUARANTY

	
To:
	
WESTERN ALLIANCE BANK, an Arizona corporation

1. The Guaranty. For valuable consideration, the undersigned (“Guarantor”) hereby unconditionally guarantees and promises to pay promptly to WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (“Lender”), or order, in lawful money of the United States, any and all Indebtedness of ADESTO TECHNOLOGIES CORPORATION (“Borrower”) to Lender when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter. The liability of Guarantor under this Guaranty is not limited as to the principal amount of the Indebtedness guaranteed and includes, without limitation, liability for all interest, fees, indemnities (including, without limitation, hazardous waste indemnities), and other costs and expenses relating to or arising out of the Indebtedness. The liability of Guarantor is continuing and relates to any Indebtedness, including that arising under successive transactions which shall either continue the Indebtedness or from time to time renew it after it has been satisfied. This Guaranty is cumulative and does not supersede any other outstanding guaranties, and the liability of Guarantor under this Guaranty is exclusive of Guarantor’s liability under any other guaranties signed by Guarantor. If more than one individual or entity sign this Guaranty, their obligations under this Guaranty shall be joint and several.

2. Definitions. As used herein:

(a) “Borrower” means the individual or the entity named in Paragraph 1 of this Guaranty and, if more than one, then any one or more of them.

(b) “Guarantor” means the individual or the entity signing this Guaranty and, if more than one, then any one or more of them, jointly and severally.

(c) “Indebtedness” means any and all debts, liabilities, and obligations of Borrower to Lender, now or hereafter existing, whether voluntary or involuntary and however arising, whether direct or indirect or acquired by Lender by assignment, succession, or otherwise, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, held or to be held by Lender for its own account or as agent for another or others, whether Borrower may be liable individually or jointly with others, whether recovery upon such debts, liabilities, and obligations may be or hereafter become barred by any statute of limitations, and whether such debts, liabilities, and obligations may be or hereafter become otherwise unenforceable. Indebtedness includes, without limitation, any and all obligations of Borrower to Lender for reasonable attorneys’ fees and all other costs and expenses incurred by Lender in the collection or enforcement of any debts, liabilities, and obligations of Borrower to Lender.

3. Obligations Independent. The obligations hereunder are independent of the obligations of Borrower or any other guarantor, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Borrower or any other guarantor or whether Borrower or any other guarantor be joined in any such action or actions. Anyone executing this Guaranty shall be bound by its terms without regard to execution by anyone else.

4. Rights of Lender. Guarantor authorizes Lender, without notice or demand and without affecting its liability hereunder, from time to time to: (a) renew, compromise, extend, accelerate, or otherwise change the time for payment, or otherwise change the terms, of the Indebtedness or any part thereof, including increase or decrease of the rate of interest thereon, or otherwise change the terms of the Indebtedness; (b) receive and hold security for the payment of this Guaranty or any Indebtedness and exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such security; (c) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; and (d) release or substitute any Guarantor or any one or more of any endorsers or other guarantors of any of the Indebtedness.

5. Guaranty to be Absolute. Guarantor agrees that until the Indebtedness has been paid in full and any terminated, Guarantor shall not be released by or because of the taking, or failure to take, any action that might in any manner or to any extent vary the risks of Guarantor under this Guaranty or that, but for this paragraph, might discharge or otherwise reduce, limit, or modify Guarantor’s obligations under this Guaranty. Guarantor waives and surrenders any defense to any liability under this Guaranty based upon any such action, including but not limited to any action of Lender described in the immediately preceding paragraph of this Guaranty. It is the express intent of Guarantor that Guarantor’s obligations under this Guaranty are and shall be absolute and unconditional.

1

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6. Guarantor’s Waivers of Certain Rights and Certain Defenses. Guarantor waives: (a) any right to require Lender to proceed against Borrower, proceed against or exhaust any security for the Indebtedness, or pursue any other remedy in Lender’s power whatsoever; (b) any defense arising by reason of any disability or other defense of Borrower, or the cessation from any cause whatsoever of the liability of Borrower other than the indefeasible satisfaction in full, in cash of all Obligations; (c) any defense based on any claim that Guarantor’s obligations exceed or are more burdensome than those of Borrower; and (d) the benefit of any statute of limitations affecting Guarantor’s liability hereunder. No provision or waiver in this Guaranty shall be construed as limiting the generality of any other waiver contained in this Guaranty.

7. Waiver of Subrogation. Until the Indebtedness has been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Indebtedness have been terminated, Guarantor agrees not to exercise or assert any right of subrogation, reimbursement, indemnification, and contribution (contractual, statutory, or otherwise) including, without limitation, any claim or right of subrogation under the Bankruptcy Code (Title 11, United States Code) or any successor statute, arising from the existence or performance of this Guaranty, and Guarantor waives any right to enforce any remedy which Lender now has or may hereafter have against Borrower, and waives any benefit of, and any right to participate in, any security now or hereafter held by Lender.

8. Waiver of Notices. Guarantor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of intent to accelerate, notices of acceleration, notices of any suit or any other action against Borrower or any other person, any other notices to any party liable on the Indebtedness (including Guarantor), notices of acceptance of this Guaranty, and notices of the existence, creation, or incurring of new or additional Indebtedness.

9. Waivers of Other Rights and Defenses.

(a) Guarantor waives any rights and defenses that are or may become available to Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code until the Obligations have been indefeasibly satisfied in full in cash and any commitments of Lender or facilities provided by Lender with respect to the Obligations have been terminated.

(b) Guarantor waives all rights and defenses that Guarantor may have because any of the Indebtedness is secured by real property. This means, among other things: (i) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower; and (ii) if Lender forecloses on any real property collateral pledged by Borrower: (1) the amount of the Indebtedness may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because any of the Indebtedness is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

(c) Guarantor waives any right or defense it may have at law or equity, including California Code of Civil Procedure Section 580a, to a fair market value hearing or action to determine a deficiency judgment after a foreclosure.

10. Security. To secure all of Guarantor's obligations hereunder, Guarantor has entered into a certain Third Party Security Agreement, of even date herewith, with Lender (the “Security Agreement”).

11. Subordination. Any obligations of Borrower to Guarantor, now or hereafter existing, including but not limited to any obligations to Guarantor as subrogee of Lender or resulting from Guarantor’s performance under this Guaranty, are hereby subordinated to the Indebtedness. In addition to Guarantor’s waiver of any right of subrogation as set forth in this Guaranty with respect to any obligations of Borrower to Guarantor as subrogee of Lender, Guarantor agrees that, if Lender so requests, Guarantor shall not demand, take, or receive from Borrower, by setoff or in any other manner, payment of any other obligations of Borrower to Guarantor until the Indebtedness has been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Indebtedness have been terminated. If any payments are received by Guarantor in violation of such waiver or agreement, such payments shall be received by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Indebtedness, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty. Any security interest, lien, or other encumbrance that Guarantor may now or hereafter have on any property of Borrower is hereby subordinated to any security interest, lien, or other encumbrance that Lender may have on any such property.

2

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12. Revocation of Guaranty.

(a) Guarantor absolutely, unconditionally, knowingly, and expressly waives any right to revoke this Guaranty as to future Indebtedness and, in light thereof, all protection afforded Guarantor under Section 2815 of the California Civil Code. Guarantor fully realizes and understands that, upon execution of this agreement, Guarantor will not have any right to revoke this Guaranty as to any future Indebtedness and, thus, may have no control over such Guarantor’s ultimate responsibility for the Indebtedness. If, contrary to the express intent of this agreement, any such revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that: (a) no such revocation shall be effective until written notice thereof has been received by Lender; (b) no such revocation shall apply to any Indebtedness in existence on such date (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof); (c) no such revocation shall apply to any Indebtedness made or created after such date to the extent made or created pursuant to a legally binding commitment of Lender which is, or is believed in good faith by Lender to be, in existence on the date of such revocation; (d) no payment by Borrower, or from any other source, prior to the date of such revocation shall reduce the obligations of such Guarantor hereunder; and (e) any payment by Borrower or from any source other than such Guarantor, subsequent to the date of such revocation, shall first be applied to that portion of the obligations, if any, as to which the revocation by such Guarantor is effective (and which are not, therefore, guarantied by such Guarantor hereunder), and, to the extent so applied, shall not reduce the obligations of such Guarantor hereunder.

(b) Guarantor acknowledges and agrees that this Guaranty may be revoked only in accordance with the foregoing provisions of this paragraph and shall not be revoked simply as a result of any change in name, location, or composition or structure of Borrower, the dissolution of Borrower, or the termination, increase, decrease, or other change of any personnel or owners of Borrower.

13. Reinstatement of Guaranty. If this Guaranty is revoked, returned, or cancelled, and subsequently any payment or transfer of any interest in property by Borrower to Lender is rescinded or must be returned by Lender to Borrower, this Guaranty shall be reinstated with respect to any such payment or transfer, regardless of any such prior revocation, return, or cancellation.

14. Stay of Acceleration. In the event that acceleration of the time for payment of any of the Indebtedness is stayed upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise, all such Indebtedness guaranteed by Guarantor shall nonetheless be payable by Guarantor immediately if requested by Lender.

15. No Deductions. All payments by Guarantor hereunder shall be paid in full, without setoff or counterclaim or any deduction or withholding whatsoever, including, without limitation, for any and all present and future taxes. In the event that Guarantor or Lender is required by law to make any such deduction or withholding, Guarantor agrees to pay on behalf of Lender such amount directly to the appropriate person or entity, or if the Guarantor cannot legally comply with the foregoing, Guarantor shall pay to Lender such additional amounts as will result in the receipt by Lender of the full amount payable hereunder. Guarantor shall promptly provide Lender with evidence of payment of any such amount made on Lender’s behalf.

16. Information Relating to Borrower. Guarantor acknowledges and agrees that it shall have the sole responsibility for, and has adequate means of, obtaining from Borrower such information concerning Borrower’s financial condition or business operations as Guarantor may require, and that Lender has no duty, and Guarantor is not relying on Lender, at any time to disclose to Guarantor any information relating to the business operations or financial condition of Borrower.

17. Borrower’s Authorization. Where Borrower is a corporation, partnership, trust, or limited liability company, it is not necessary for Lender to inquire into the powers of Borrower or of the officers, directors, partners, members, managers, or agents acting or purporting to act on its behalf, and any Indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder, subject to any limitations on Guarantor’s liability set forth herein.

18. Information Relating to Guarantor. Guarantor authorizes Lender to verify or check any information given by Guarantor to Lender, check Guarantor’s credit references, verify employment, and obtain credit reports. Guarantor acknowledges and agrees that the authorizations provided in this paragraph apply to any individual general partner of Guarantor and to Guarantor’s spouse and any such general partner’s spouse if Guarantor or such general partner is married and lives in a community property state.

3

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19. Guarantor’s Covenants. Until the Indebtedness has been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Indebtedness have been terminated and each and every term, covenant, and condition of this Guaranty is fully performed, Guarantor agrees:

(a) to provide the following financial information and statements in form and content acceptable to Lender, and such additional information as requested by Lender from time to time:

(i) Guarantor’s annual financial statements upon request of Lender. These financial statements must be audited, (with an opinion satisfactory to Lender) by a Certified Public Accountant (“CPA”) acceptable to Lender;

(ii) Guarantor’s quarterly financial statements upon request of Lender. These financial statements must be certified and dated by an authorized financial officer of Guarantor;

(iii) copies of Guarantor’s federal income tax return (with all forms K-1 attached) together with a statement of any contributions made by Guarantor to any subchapter S corporation or trust, and, if requested by Lender, copies of any extensions of the filing date.

20. Taxes. Guarantor represents and warrants that it is organized and resident in the United States of America. If Guarantor must make a payment under this Guaranty, Guarantor represents and warrants that it will make the payment from one of its U.S. resident offices to a U.S. office of Lender so that no withholding tax is imposed on the payment. If notwithstanding the foregoing, Guarantor makes a payment under this Guaranty to which withholding tax applies, then Guarantor shall pay any taxes (other than taxes on net income (a) imposed by the country or any subdivision of the country in which Lender’s principal office or actual lending office is located and (b) measured by the United States taxable income Lender would have received if all payments under or in respect of this Guaranty were exempt from taxes levied by Guarantor’s country) that are at any time imposed on any such payments under or in respect of this Guaranty including, but not limited to, payments made pursuant to this paragraph. Further, Guarantor shall also pay to Lender, on demand, all additional amounts that Lender specifies as necessary to preserve the after-tax yield Lender would have received if such taxes had not been imposed.

21. Change of Status. Guarantor shall not enter into any consolidation, merger, or other combination unless Guarantor is the surviving business entity. Further, Guarantor shall not change its legal structure unless (a) Guarantor obtains the prior written consent of Lender and (b) all Guarantor’s obligations under this Guaranty are assumed by the new business entity.

22. Notices. All notices required under this Guaranty shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of this Guaranty, or sent by facsimile to the fax numbers listed on the signature page, or to such other addresses as Lender and Guarantor may specify from time to time in writing. Notices sent by (a) first class mail shall be deemed delivered on the earlier of actual receipt or on the fourth business day after deposit in the U.S. mail, postage prepaid, (b) overnight courier shall be deemed delivered on the next business day, and (c) telecopy shall be deemed delivered when transmitted.

23. Successors and Assigns. This Guaranty (a) binds Guarantor and Guarantor’s executors, administrators, successors, and assigns, provided that Guarantor may not assign its rights or obligations under this Guaranty without the prior written consent of Lender, and (b) inures to the benefit of Lender and Lender’s indorsees, successors, and assigns. Lender may, without notice to Guarantor and without affecting Guarantor’s obligations hereunder, sell, assign, grant participations in, or otherwise transfer to any other person, firm, or corporation the Indebtedness and this Guaranty, in whole or in part. Guarantor agrees that Lender may disclose to any assignee or purchaser, or any prospective assignee or purchaser, of all or part of the Indebtedness any and all information in Lender’s possession concerning Guarantor, this Guaranty, and any security for this Guaranty.

24. Amendments, Waivers, and Severability. No provision of this Guaranty may be amended or waived except in writing. No failure by Lender to exercise, and no delay in exercising, any of its rights, remedies, or powers shall operate as a waiver thereof, and no single or partial exercise of any such right, remedy, or power shall preclude any other or further exercise thereof or the exercise of any other right, remedy, or power. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision of this Guaranty.

25. Costs and Expenses. Guarantor agrees to pay all reasonable attorneys’ fees, including allocated costs of Lender’s in-house counsel, and all other costs and expenses which may be incurred by Lender (a) in the enforcement of this Guaranty or (b) in the preservation, protection, or enforcement of any rights of Lender in any case commenced by or against Guarantor or Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute.

4

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26. Governing Law and Jurisdiction. This Guaranty shall be governed by and construed under the laws of the State of California. Guarantor irrevocably (a) submits to the non-exclusive jurisdiction of any federal or state court sitting in the State of California in any action or proceeding arising out of or relating to this Guaranty and (b) waives to the fullest extent permitted by law any defense asserting an inconvenient forum in connection therewith. Service of process by Lender in connection with such action or proceeding shall be binding on Guarantor if sent to Guarantor by registered or certified mail at its address specified below.

27. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

28. Reference Provision.

a. In the event the Jury Trial waiver is not enforceable, the parties elect to proceed under this Judicial Reference Provision.

b. With the exception of the items specified in Section 28(c) below, any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any other document, instrument or agreement between the undersigned parties (collectively in this Section, the “Loan Documents”), will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).

c. The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

d. The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

e. The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within one hundred twenty (120) days after the date of the conference and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.

f. The referee will have power to expand or limit the amount and duration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days 

5

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355157-000162

 

after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

g. Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter. Subject to the referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

h. The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference. Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court and any such decision will be final, binding and conclusive. The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

i. If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

j. THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

29. Remedies. All rights and remedies provided in this Guaranty and any instrument or agreement referred to herein are cumulative and are not exclusive of any rights or remedies otherwise provided by law. Any single or partial exercise of any right or remedy shall not preclude the further exercise thereof or the exercise of any other right or remedy.

30. Severability. The illegality or unenforceability of any provision of this Guaranty or any instrument or agreement referred to herein shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Guaranty or any instrument or agreement referred to herein.

[Balance of Page Intentionally Left Blank]

 

 

6

 r. 4.6.11

WEST\269975468.2

355157-000162

 

Executed as of July 7, 2016.

“Guarantor”

ARTEMIS ACQUISITION LLC

 

	
 
	
 
	
By: Adesto Technologies Corporation, as sole member and manager of Artemis Acquisition LLC

	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
/s/ Narbeh Derhacobian

	
 
	
 
	
Name
	
 
	
NARBEH DERHACOBIAN

	
 
	
 
	
Title:
	
 
	
President and Chief Executive Officer

	
 

	
Address for notices to Lender:
	
 
	
Address for notices to Guarantor:

	
 
	
 
	
 

	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION
	
 
	
ARTEMIS ACQUISITION LLC

c/o ADESTO TECHNOLOGIES CORPORATION

	
 
	
 
	
 

	
55 Almaden Boulevard
	
 
	
1250 Borregas Ave. 

	
San Jose, California 95113
	
 
	
Sunnyvale, CA 94089

	
Tel: (408) 556-6502
	
 
	
Tel: (408) 400-0578

	
Fax: (408) 423-8510
	
 
	
 

 

7

 r. 4.6.11

WEST\269975468.2

355157-000162

 

Exhibit 1.6

Company: ARTEMIS ACQUISITION LLC, a California limited liability company

THE  UNDERSIGNED hereby certifies that  ARTEMIS ACQUISITION LLC, a  California limited  liability company (“Company”), is duly organized, existing and in good standing as a

 

	
 
	
 
	
 member-managed

	
 
	
X
	
 manager-managed

 

limited liability company under and by virtue of the laws of the State of California, and that the undersigned is the sole member and manager of Company.

and that Company’s name shown above is the complete and correct name of Company.

THE UNDERSIGNED FURTHER CERTIFIES that at a meeting of Company (or by other duly authorized company action in lieu of a meeting), duly called and held, at which all of the undersigned were present and voting, the following resolutions were adopted:

BE IT RESOLVED, that any one (I) of the following named officers, employees, or agents of the sole member and manager of Company, whose actual signatures are shown below:

 

	
NAMES
	
 
	
POSITION
	
 
	
ACTUAL 

SIGNATURES

	
 
	
 
	
 

 
	
 
	
 

	
Narbeh Derhacobian
	
 
	
 

President and CEO OF Adesto

Technologies Corporation
	
 
	
/s/ Narbeh Derhacobian

	
Ron Shelton
	
 
	
 

Chief Financial Officer of Adesto

Technologies Corporation
	
 
	
/s/ Ron Shelton

	
 
	
 
	
 

 
	
 
	
 

acting for and on behalf of the Company and as its act and deed be, and they hereby are, authorized and empowered in the name of the Company:

Guaranty. The Company is authorized to guarantee loans and other extensions of credit made to ADESTO TECHNOLOGIES CORPORATION (“Borrower”) by WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (“Bank”), pursuant to a Guaranty executed in favor of Bank (together with each document or agreement executed or delivered in connection therewith including but not limited to that certain Third Party Security Agreement between the Company and Bank dated as of July 7, 2016 and that certain Intellectual Property Security Agreement between the Company and Bank dated as of July 7, 2016, as each such document or agreement is amended from time to time, collectively, the "Guaranty  Documents") and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Guaranty Documents, or any portion thereof.

Further Acts.  In the case of lines of credit, to designate additional or alternate individuals as being authorized to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Bank. Any such notice shall not affect any of Company's agreements or commitments in effect at the time notice is given.

 

WEST\270005998.2

355157-000162

 

THE UNDERSIGNED FURTHER CERTIFIES that the officers, employees, and agents of Borrowers named above are duly elected, appointed, or employed by or for Borrower, as the case may be, and occupy the positions set opposite their names; that the foregoing Resolutions now stand of  record on the  books of  Company, and that  the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever.

THE UNDERSIGNED FURTHER CERTIFIES that the Articles of Organization filed at the California Secretary of State on July 9, 2012, and the Operating Agreement of Company, dated as of July 10, 2012 in the form presented to Bank as of the date hereof are true and correct, in full force and effect as of the date hereof, and that no provision of either such document restricts the Company from entering into, or performing its obligations under, the Guaranty Documents.

The undersigned officer of the sole member and manager of Company has read all the provisions of this Limited Liability Company Resolution, and on behalf of Company certifies and agrees to its terms.  This certificate is dated July 7, 2016.

By: Adesto Technologies Corporation,

as sole member and manager of Artemis Acquisition LLC

 

			
	
By:
	
/s/ Narbeh Derhacobian

	
 
	
Name:
	
Narbeh Derhacobian

	
 
	
Its:
	
President and Chief Executive Officer

 

 

 

WEST\270005998.2

355157-000162

 

Exhibit 1.7

 

COMPLIANCE CERTIFICATE

 

		
	
TO:
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION (the “Lender”)

	
 
	
 

	
FROM:
	
ADESTO TECHNOLOGIES CORPORATION (the “Borrower”)

The undersigned authorized officer of Borrower hereby certifies that in accordance with the terms and conditions of the Business Financing Agreement between Borrower and Lender (the “Agreement”), (i) Borrower is in complete compliance for the period ending July 6, 2016 with all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

					
	
Reporting Covenant
	
Required
	
 
	
Complies
	
 

	
 
	
 
	
 
	
 
	
 

	
Consolidated monthly financial statements and Compliance Certificate
	
Within 30 days of the end of each calendar month

 
	
Yes
	
No
	
N/A

	
 
	
 
	
 
	
 
	
 

	
A/R & A/P Agings, Borrowing Base Certificate, Backlog Schedule, Deferred Revenue Schedule, Inventory Sell-Through Report (one month in arrears),Credit Memo/Adjustments Report
	
Monthly within 10 days thereafter
	
Yes
	
No
	
N/A

	
 
	
 
	
 
	
 
	
 

	
Consolidated annual financial statements (CPA audited) and lOK/IOQ
	
Upon filing with SEC
	
Yes
	
No
	
 

	
 
	
 
	
 
	
 
	
 

	
AIR & Collateral Audit
	
Prior to the initial Advance and annually thereafter
	
Yes
	
No
	
 

	
 
	
 
	
 
	
 
	
 

	
Board approved operating projections (including income statements, balance sheets and cash flow statement.)
	
60 days after each FYE.
	
Yes
	
No
	
 

 

						
	
Financial Covenant
	
Required
	
Actual
	
 
	
Complies
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Liquidity Ratio
	
1.15 to 1.00
	
~ 1.20 to 1.00 (1)
	
Yes
	
No
	
 

 

(1) Calculation  based on est payoff of op us debt of $ 10,508k + $150k commitment fee 

 

		
	
Deposits

	
Deposits held at Western Alliance Bank:

	
$
	
39k

	
Deposits held  outside of Western Alliance Bank:

	
$
	
14,524k

 

	
Comments Regarding Exceptions: See Attached.
	
 
	
BANK USE ONLY
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Sincerely,
	
 
	
Received by
	
/s/ Lisa Chang

	
 
	
/s/ Ron Shelton
	
 
	
 
	
AUTHORIZED SIGNER
	
 
	
 

	
SIGNATURE
	
 
	
 
	
 
	
 
	
 

	
 
	
CFO
	
 
	
Date
	
7/6/16
	
 
	
 

	
TITLE
	
 
	
 
	
 
	
 
	
 

	
 
	
7/6/16
	
 
	
Verified
	
 

	
DATE
	
 
	
 
	
AUTHORIZED SIGNER
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Date
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Compliance Status
	
YES
	
NO
	
 

 

 

WEST\269902313.2

355157-000162Exhibit 10.2

 

Spring Village at Wildewood

 

MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Non-Recourse)

 

(SENIORS HOUSING)

 

BY AND BETWEEN

 

WILDEWOOD OWNER, LLC 

 

AND

 

KEYBANK NATIONAL ASSOCIATION

 

DATED AS OF

 

AUGUST 19, 2016

 

 

     

     

    

  

TABLE OF CONTENTS

 

	Article 1 - DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS	1
	 	 	 
	Section 1.01	Defined Terms.	1
	Section 1.02	Schedules, Exhibits, and Attachments Incorporated.	1
	 	 	 
	Article 2 - GENERAL MORTGAGE LOAN TERMS	2
	 	 	 
	Section 2.01	Mortgage Loan Origination and Security.	2
	(a)	Making of Mortgage Loan.	2
	(b)	Security for Mortgage Loan.	2
	(c)	Protective Advances.	2
	Section 2.02	Payments on Mortgage Loan.	2
	(a)	Debt Service Payments.	2
	(b)	Capitalization of Accrued But Unpaid Interest.	3
	(c)	Late Charges.	3
	(d)	Default Rate.	4
	(e)	Address for Payments.	5
	(f)	Application of Payments.	5
	Section 2.03	Lockout/Prepayment.	6
	(a)	Prepayment; Prepayment Lockout; Prepayment Premium.	6
	(b)	Voluntary Prepayment in Full.	6
	(c)	Acceleration of Mortgage Loan.	7
	(d)	Application of Collateral.	7
	(e)	Casualty and Condemnation.	7
	(f)	No Effect on Payment Obligations.	8
	(g)	Loss Resulting from Prepayment.	8
	 	 	 
	Article 3 - PERSONAL LIABILITY	8
	 	 	 
	Section 3.01	Non-Recourse Mortgage Loan; Exceptions.	8
	Section 3.02	Personal Liability of Borrower (Exceptions to Non-Recourse Provision).	9
	(a)	Personal Liability Based on Lender’s Loss.	9
	(b)	Full Personal Liability for Mortgage Loan.	10
	Section 3.03	Personal Liability for Indemnity Obligations.	11
	Section 3.04	Lender’s Right to Forego Rights Against Mortgaged Property.	11
	 	 	 
	Article 4 - BORROWER AND PROPERTY OPERATOR STATUS	11
	 	 	 
	Section 4.01	Representations and Warranties.	11
	(a)	Due Organization and Qualification.	12
	(b)	Location.	12
	(c)	Power and Authority.	12
	(d)	Due Authorization.	13
	(e)	Valid and Binding Obligations.	13
	(f)	Effect of Mortgage Loan on Borrower’s Financial Condition.	14

 

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	(g)	Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.	14
	(h)	Borrower Single Asset Status.	15
	(i)	No Bankruptcies or Judgments.	16
	(j)	No Actions or Litigation.	16
	(k)	Payment of Taxes, Assessments, and Other Charges.	17
	(l)	Not a Foreign Person.	17
	(m)	ERISA.	17
	(n)	Default Under Other Obligations.	18
	(o)	Prohibited Person.	18
	(p)	No Contravention.	18
	(q)	Lockbox Arrangement.	19
	(r)	Licensing; Borrower/Property Operator Compliance with Laws.	19
	Section 4.02	Covenants.	20
	(a)	Maintenance of Existence; Organizational Documents.	20
	(b)	Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.	21
	(c)	Payment of Taxes, Assessments, and Other Charges.	21
	(d)	Borrower Single Asset Status.	22
	(e)	ERISA.	23
	(f)	Notice of Litigation or Insolvency.	23
	(g)	Payment of Costs, Fees, and Expenses.	24
	(h)	Restrictions on Distributions.	24
	(i)	Lockbox Arrangement.	24
	(j)	Borrower/Property Operator Compliance with Laws.	25
	 	 	 
	Article 5 - THE MORTGAGE LOAN	25
	 	 	 
	Section 5.01	Representations and Warranties.	25
	(a)	Receipt and Review of Loan Documents.	25
	(b)	No Default.	26
	(c)	No Defenses.	26
	(d)	Loan Document Taxes.	26
	Section 5.02	Covenants.	26
	(a)	Ratification of Covenants; Estoppels; Certifications.	26
	(b)	Further Assurances.	27
	(c)	Sale of Mortgage Loan.	27
	(d)	Limitations on Further Acts of Borrower.	28
	(e)	Financing Statements; Record Searches.	28
	(f)	Loan Document Taxes.	29
	 	 	 
	Article 6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE	29
	 	 	 
	Section 6.01	Representations and Warranties.	29
	(a)	Mortgaged Property Compliance with Laws; Permits and Licenses.	29
	(b)	Operating Documents; Contracts; Resident Records.	30
	(c)	Property Characteristics.	30

 

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	(d)	Property Ownership.	31
	(e)	Condition of the Mortgaged Property.	31
	(f)	Personal Property.	31
	(g)	Medicaid Provider Agreement Representations.	31
	Section 6.02	Covenants	32
	(a)	Use of Property.	32
	(b)	Property Maintenance.	33
	(c)	Property Preservation.	35
	(d)	Property Inspections.	36
	(e)	Mortgaged Property Compliance with Laws.	36
	(f)	Licensing.	37
	(g)	Medicaid Provider Agreement.	38
	(h)	Facility Operating Agreement.	39
	(i)	Change in Property Operator.	40
	(j)	Contracts.	41
	(k)	All Representations and Covenants Deemed Borrower Responsibility.	41
	Section 6.03	Mortgage Loan Administration Matters Regarding the Property.	42
	(a)	Property Management.	42
	(b)	Subordination of Fees by Property Operator.	42
	(c)	Property Condition Assessment.	42
	 	 	 
	Article 7 - LEASES AND RENTS	43
	 	 	 
	Section 7.01	Representations and Warranties.	43
	(a)	Prior Assignment of Rents.	43
	(b)	Prepaid Rents.	43
	(c)	Seniors Housing Facility Lease.	43
	Section 7.02	Covenants.	44
	(a)	Leases.	44
	(b)	Commercial Leases.	45
	(c)	Payment of Rents.	46
	(d)	Assignment of Rents.	47
	(e)	Further Assignments of Leases and Rents.	47
	(f)	Options to Purchase by Tenants.	47
	(g)	Special Covenants Regarding Seniors Housing Facility Lease.	47
	Section 7.03	Mortgage Loan Administration Regarding Leases and Rents.	50
	(a)	Material Commercial Lease Requirements.	50
	(b)	Residential Lease Form.	50
	(c)	Seniors Housing Facility Lease Structure Consideration.	50
	 	 	 
	Article 8 - BOOKS AND RECORDS; FINANCIAL REPORTING	51
	 	 	 
	Section 8.01	Representations and Warranties.	51
	(a)	Financial Information.	51
	(b)	No Change in Facts or Circumstances.	51
	Section 8.02	Covenants.	51

 

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	(a)	Obligation to Maintain Accurate Books and Records.	51
	(b)	Items to Furnish to Lender.	51
	(c)	Audited Financials.	56
	(d)	Delivery of Books and Records.	56
	Section 8.03	Mortgage Loan Administration Matters Regarding Books and Records and Financial Reporting.	56
	(a)	Lender’s Right to Obtain Audited Books and Records.	56
	(b)	Credit Reports; Credit Score.	57
	 	 	 
	Article 9 - INSURANCE	57
	 	 	 
	Section 9.01	Representations and Warranties.	57
	(a)	Compliance with Insurance Requirements.	57
	(b)	Property Condition.	57
	Section 9.02	Covenants.	57
	(a)	Insurance Requirements.	57
	(b)	Delivery of Policies, Renewals, Notices, and Proceeds.	58
	Section 9.03	Mortgage Loan Administration Matters Regarding Insurance	59
	(a)	Lender’s Ongoing Insurance Requirements.	59
	(b)	Application of Proceeds on Event of Loss.	60
	(c)	Payment Obligations Unaffected.	62
	(d)	Foreclosure Sale.	62
	(e)	Appointment of Lender as Attorney-In-Fact.	62
	 	 	 
	Article 10 - CONDEMNATION	62
	 	 	 
	Section 10.01	Representations and Warranties.	62
	(a)	Prior Condemnation Action.	63
	(b)	Pending Condemnation Actions.	63
	Section 10.02	Covenants.	63
	(a)	Notice of Condemnation.	63
	(b)	Condemnation Proceeds.	63
	Section 10.03	Mortgage Loan Administration Matters Regarding Condemnation.	63
	(a)	Application of Condemnation Awards.	63
	(b)	Payment Obligations Unaffected.	64
	(c)	Appointment of Lender as Attorney-In-Fact.	64
	(d)	Preservation of Mortgaged Property.	64
	 	 	 
	Article 11 - LIENS, TRANSFERS, AND ASSUMPTIONS	64
	 	 	 
	Section 11.01	Representations and Warranties.	64
	(a)	No Labor or Materialmen’s Claims.	64
	(b)	No Other Interests.	65
	Section 11.02	Covenants.	65
	(a)	Liens; Encumbrances.	65
	(b)	Transfers.	66
	(c)	Facility Operating Agreement.	68
	(d)	No Other Indebtedness.	69

 

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	(e)	No Mezzanine Financing or Preferred Equity.	69
	Section 11.03	Mortgage Loan Administration Matters Regarding Liens, Transfers and Assumptions	69
	(a)	Assumption of Mortgage Loan.	69
	(b)	Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.	71
	(c)	Estate Planning.	72
	(d)	Termination or Revocation of Trust.	72
	(e)	Death of Key Principal or Guarantor; Transfer Due to Death.	73
	(f)	Bankruptcy of Guarantor.	74
	(g)	Further Conditions to Transfers and Assumption.	75
	 	 	 
	Article 12 - IMPOSITIONS	77
	 	 	 
	Section 12.01	Representations and Warranties.	77
	(a)	Payment of Taxes, Assessments, and Other Charges.	77
	Section 12.02	Covenants.	77
	(a)	Imposition Deposits, Taxes, and Other Charges.	77
	Section 12.03	Mortgage Loan Administration Matters Regarding Impositions.	78
	(a)	Maintenance of Records by Lender.	78
	(b)	Imposition Accounts.	78
	(c)	Payment of Impositions; Sufficiency of Imposition Deposits.	78
	(d)	Imposition Deposits Upon Event of Default.	79
	(e)	Contesting Impositions.	79
	(f)	Release to Borrower.	80
	 	 	 
	Article 13 - REPLACEMENT RESERVE AND REPAIRS	80
	 	 	 
	Section 13.01	Covenants.	80
	(a)	Initial Deposits to Replacement Reserve Account and Repairs Escrow Account.	80
	(b)	Monthly Replacement Reserve Deposits.	80
	(c)	Payment for Replacements and Repairs.	80
	(d)	Assignment of Contracts for Replacements and Repairs.	81
	(e)	Indemnification.	81
	(f)	Amendments to Loan Documents.	81
	(g)	Administrative Fees and Expenses.	81
	Section 13.02	Mortgage Loan Administration Matters Regarding Reserves.	82
	(a)	Accounts, Deposits, and Disbursements.	82
	(b)	Approvals of Contracts; Assignment of Claims.	89
	(c)	Delays and Workmanship.	89
	(d)	Appointment of Lender as Attorney-In-Fact.	90
	(e)	No Lender Obligation.	90
	(f)	No Lender Warranty.	90
	 	 	 
	Article 14 - DEFAULTS/REMEDIES	90
	 	 	 
	Section 14.01	Events of Default.	90

 

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	(a)	Automatic Events of Default.	90
	(b)	Events of Default Subject to a Specified Cure Period.	93
	(c)	Events of Default Subject to Extended Cure Period.	93
	Section 14.02	Remedies.	94
	(a)	Acceleration; Foreclosure.	94
	(b)	Loss of Right to Disbursements from Collateral Accounts.	94
	(c)	Remedies Cumulative.	95
	(d)	Operations upon Event of Default; Lockbox Account.	95
	Section 14.03	Additional Lender Rights; Forbearance.	96
	(a)	No Effect Upon Obligations.	96
	(b)	No Waiver of Rights or Remedies.	97
	(c)	Appointment of Lender as Attorney-In-Fact.	97
	(d)	Borrower Waivers.	99
	Section 14.04	Waiver of Marshaling.	99
	 	 	 
	Article 15 - MISCELLANEOUS	100
	 	 	 
	Section 15.01	Governing Law; Consent to Jurisdiction and Venue.	100
	(a)	Governing Law.	100
	(b)	Venue.	100
	Section 15.02	Notice.	100
	(a)	Process of Serving Notice.	100
	(b)	Change of Address.	101
	(c)	Default Method of Notice.	101
	(d)	Receipt of Notices.	101
	(e)	Property Operator Notices.	101
	Section 15.03	Successors and Assigns Bound; Sale of Mortgage Loan.	101
	(a)	Binding Agreement.	101
	(b)	Sale of Mortgage Loan; Change of Servicer.	102
	Section 15.04	Counterparts.	102
	Section 15.05	Joint and Several (or Solidary) Liability.	102
	Section 15.06	Relationship of Parties; No Third Party Beneficiary.	102
	(a)	Solely Creditor and Debtor.	102
	(b)	No Third Party Beneficiaries.	102
	Section 15.07	Severability; Entire Agreement; Amendments.	103
	Section 15.08	Construction.	103
	Section 15.09	Mortgage Loan Servicing.	104
	Section 15.10	Disclosure of Information.	104
	Section 15.11	Waiver; Conflict.	104
	Section 15.12	No Reliance.	105
	Section 15.13	Subrogation.	105
	Section 15.14	Counting of Days.	105
	Section 15.15	Revival and Reinstatement of Indebtedness.	106
	Section 15.16	Time is of the Essence.	106
	Section 15.17	Final Agreement.	106
	Section 15.18	WAIVER OF TRIAL BY JURY.	106

 

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SCHEDULES & EXHIBITS

  

	Schedules	 	 	 	 
	Schedule 1	 	Definitions Schedule (required)	 	Form 6101.SARM.SRS
	Schedule 2	 	Summary of Loan Terms (required)	 	Form 6102.SARM.SRS
	Schedule 3	 	Interest Rate Type Provisions (required)	 	Form 6103.SARM
	Schedule 4	 	Prepayment Premium Schedule (required)	 	Form 6104.11
	Schedule 5	 	Required Replacement Schedule (required)	 	 
	Schedule 6	 	Required Repair Schedule (required)	 	 
	Schedule 7	 	Exceptions to Representations and Warranties Schedule (required)	 	 

 

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MULTIFAMILY LOAN AND SECURITY AGREEMENT

(NON-RECOURSE)

(SENIORS HOUSING)

 

This MULTIFAMILY LOAN
AND SECURITY AGREEMENT (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Loan
Agreement”) is made as of the Effective Date (as hereinafter defined) by and between WILDEWOOD OWNER, LLC, a Delaware
limited liability company (“Borrower”), and KEYBANK NATIONAL ASSOCIATION, a national banking association (“Lender”).

 

RECITALS:

 

WHEREAS, Borrower desires
to obtain the Mortgage Loan (as hereinafter defined) from Lender to be secured by the Mortgaged Property (as hereinafter defined);
and

 

WHEREAS, Lender is
willing to make the Mortgage Loan on the terms and conditions contained in this Loan Agreement and in the other Loan Documents
(as hereinafter defined);

 

NOW, THEREFORE, in
consideration of the making of the Mortgage Loan by Lender and other good and valuable consideration, the receipt and adequacy
of which are hereby conclusively acknowledged, the parties hereby covenant, agree, represent, and warrant as follows:

 

AGREEMENTS:

 

Article
1 - DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS

 

Section
1.01        Defined Terms.

 

Capitalized terms not
otherwise defined in the body of this Loan Agreement shall have the meanings set forth in the Definitions Schedule attached as
Schedule 1 to this Loan Agreement.

 

Section
1.02       Schedules, Exhibits, and Attachments Incorporated.

 

The schedules, exhibits,
and any other addenda or attachments are incorporated fully into this Loan Agreement by this reference and each constitutes a substantive
part of this Loan Agreement.

 

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Article
2 - GENERAL MORTGAGE LOAN TERMS

 

Section
2.01        Mortgage Loan Origination and Security.

 

(a)          Making
of Mortgage Loan.

 

Subject to the terms
and conditions of this Loan Agreement and the other Loan Documents, Lender hereby makes the Mortgage Loan to Borrower, and Borrower
hereby accepts the Mortgage Loan from Lender. Borrower covenants and agrees that it shall:

 

(1)         pay
the Indebtedness, including the Prepayment Premium, if any (whether in connection with any voluntary prepayment or in connection
with an acceleration by Lender of the Indebtedness), in accordance with the terms of this Loan Agreement and the other Loan Documents;
and

 

(2)         perform,
observe, and comply with this Loan Agreement and all other provisions of the other Loan Documents.

 

(b)          Security
for Mortgage Loan.

 

The Mortgage Loan is
made pursuant to this Loan Agreement, is evidenced by the Note, and is secured by the Security Instrument, this Loan Agreement,
and the other Loan Documents that are expressly stated to be security for the Mortgage Loan.

 

(c)         Protective
Advances.

 

As provided in the
Security Instrument, Lender may take such actions or disburse such funds as Lender reasonably deems necessary to perform the obligations
of Borrower under this Loan Agreement and the other Loan Documents and to protect Lender’s interest in the Mortgaged Property.

 

Section
2.02       Payments on Mortgage Loan.

 

(a)         Debt
Service Payments.

 

(1)         Short
Month Interest.

 

If the date
the Mortgage Loan proceeds are disbursed is any day other than the first day of the month, interest for the period beginning on
the disbursement date and ending on and including the last day of the month in which the disbursement occurs shall be payable by
Borrower on the date the Mortgage Loan proceeds are disbursed. In the event that the disbursement date is not the same as the Effective
Date, then:

 

(A)         the
disbursement date and the Effective Date must be in the same month, and

 

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(B)         the
Effective Date shall not be the first day of the month.

 

(2)         Interest
Accrual and Computation.

 

Except as
provided in Section 2.02(a)(1), interest shall be paid in arrears. Interest shall accrue as provided in the Schedule of Interest
Rate Type Provisions and shall be computed in accordance with the Interest Accrual Method. If the Interest Accrual Method is “Actual/360,”
Borrower acknowledges and agrees that the amount allocated to interest for each month will vary depending on the actual number
of calendar days during such month.

 

(3)         Monthly
Debt Service Payments.

 

Consecutive
monthly debt service installments (comprised of either interest only or principal and interest, depending on the Amortization Type),
each in the amount of the applicable Monthly Debt Service Payment, shall be due and payable on the First Payment Date, and on each
Payment Date thereafter until the Maturity Date, at which time all Indebtedness shall be due. Any regularly scheduled Monthly Debt
Service Payment that is received by Lender before the applicable Payment Date shall be deemed to have been received on such Payment
Date solely for the purpose of calculating interest due. All payments made by Borrower under this Loan Agreement shall be made
without set-off, counterclaim, or other defense.

 

(4)         Payment
at Maturity.

 

The unpaid
principal balance of the Mortgage Loan, any Accrued Interest thereon and all other Indebtedness shall be due and payable on the
Maturity Date.

 

(5)         Interest
Rate Type.

 

See the Schedule
of Interest Rate Type Provisions for additional provisions, if any, specific to the Interest Rate Type.

 

(b)         Capitalization
of Accrued But Unpaid Interest.

 

Any accrued and unpaid
interest on the Mortgage Loan remaining past due for thirty (30) days or more may, at Lender’s election, be added to and
become part of the unpaid principal balance of the Mortgage Loan.

 

(c)          Late
Charges.

 

(1)         If
any Monthly Debt Service Payment due hereunder is not received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged
Property located in Mississippi or North Carolina to comply with applicable law) after the applicable Payment Date, or any amount
payable under this Loan Agreement (other than the payment due on the Maturity Date for repayment of the Mortgage Loan in full)
or any other Loan Document is not received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged Property located
in Mississippi or North Carolina to comply with applicable law) after the date such amount is due, inclusive of the date on which
such amount is due, Borrower shall pay to Lender, immediately without demand by Lender, the Late Charge.

 

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The Late Charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 2.02(d).

 

(2)         Borrower
acknowledges and agrees that:

 

(A)         its
failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan;

 

(B)         it
is extremely difficult and impractical to determine those additional expenses;

 

(C)         Lender
is entitled to be compensated for such additional expenses; and

 

(D)         the
Late Charge represents a fair and reasonable estimate, taking into account all circumstances existing on the date hereof, of the
additional expenses Lender will incur by reason of any such late payment.

 

(d)         Default
Rate.

 

(1)         Default
interest shall be paid as follows:

 

(A)         If
any amount due in respect of the Mortgage Loan (other than amounts due on the Maturity Date) remains past due for thirty (30) days
or more, interest on such unpaid amount(s) shall accrue from the date payment is due at the Default Rate and shall be payable upon
demand by Lender.

 

(B)         If
any Indebtedness due is not paid in full on the Maturity Date, then interest shall accrue at the Default Rate on all such unpaid
amounts from the Maturity Date until fully paid and shall be payable upon demand by Lender.

 

Absent a demand by Lender, any
such amounts shall be payable by Borrower in the same manner as provided for the payment of Monthly Debt Service Payments. To the
extent permitted by applicable law, interest shall also accrue at the Default Rate on any judgment obtained by Lender against Borrower
in connection with the Mortgage Loan. To the extent Borrower or any other Person is vested with a right of redemption, interest
shall continue to accrue at the Default Rate during any redemption period until such time as the Mortgaged Property has been redeemed.

 

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(2)         Borrower
acknowledges and agrees that:

 

(A)         its
failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan; and

 

(B)         in
connection with any failure to timely pay all amounts due in respect of the Mortgage Loan on the Maturity Date, or during the time
that any amount due in respect of the Mortgage Loan is delinquent for more than thirty (30) days:

 

(i)          Lender’s
risk of nonpayment of the Mortgage Loan will be materially increased;

 

(ii)         Lender’s
ability to meet its other obligations and to take advantage of other investment opportunities will be adversely impacted;

 

(iii)        Lender
will incur additional costs and expenses arising from its loss of the use of the amounts due;

 

(iv)        it
is extremely difficult and impractical to determine such additional costs and expenses;

 

(v)         Lender
is entitled to be compensated for such additional risks, costs, and expenses; and

 

(vi)        the
increase from the Interest Rate to the Default Rate represents a fair and reasonable estimate of the additional risks, costs, and
expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled
to receive for the increased risks of nonpayment associated with a delinquency on the Mortgage Loan (taking into account all circumstances
existing on the Effective Date).

 

(e)         Address
for Payments.

 

All payments due pursuant
to the Loan Documents shall be payable at Lender’s Payment Address, or such other place and in such manner as may be designated
from time to time by written notice to Borrower by Lender.

 

(f)         Application
of Payments.

 

If at any time Lender
receives, from Borrower or otherwise, any payment in respect of the Indebtedness that is less than all amounts due and payable
at such time, then Lender may apply such payment to amounts then due and payable in any manner and in any order determined by Lender
or hold in suspense and not apply such payment at Lender’s election. Neither Lender’s acceptance of a payment that
is less than all amounts then due and payable, nor Lender’s application of, or suspension of the application of, such payment,
shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding
the application of any such payment to the Indebtedness, Borrower’s obligations under this Loan Agreement and the other Loan
Documents shall remain unchanged.

 

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Section
2.03        Lockout/Prepayment.

 

(a)         Prepayment;
Prepayment Lockout; Prepayment Premium.

 

(1)         Borrower
shall not make a voluntary full or partial prepayment on the Mortgage Loan during any Prepayment Lockout Period nor shall Borrower
make a voluntary partial prepayment at any time. Except as expressly provided in this Loan Agreement (including as provided in
the Prepayment Premium Schedule), a Prepayment Premium calculated in accordance with the Prepayment Premium Schedule shall be payable
in connection with any prepayment of the Mortgage Loan.

 

(2)         If
a Prepayment Lockout Period applies to the Mortgage Loan, and during such Prepayment Lockout Period Lender accelerates the unpaid
principal balance of the Mortgage Loan or otherwise applies collateral held by Lender to the repayment of any portion of the unpaid
principal balance of the Mortgage Loan, the Prepayment Premium shall be due and payable and equal to the amount obtained by multiplying
the percentage indicated (if at all) in the Prepayment Premium Schedule by the amount of principal being prepaid at the time of
such acceleration or application.

 

(b)         Voluntary
Prepayment in Full.

 

At any time after the
expiration of any Prepayment Lockout Period, Borrower may voluntarily prepay the Mortgage Loan in full on a Permitted Prepayment
Date so long as:

 

(1)         Borrower
delivers to Lender a Prepayment Notice specifying the Intended Prepayment Date not more than sixty (60) days, but not less than
thirty (30) days (if given via U.S. Postal Service) or twenty (20) days (if given via facsimile, e-mail, or overnight courier)
prior to such Intended Prepayment Date; and

 

(2)         Borrower
pays to Lender an amount equal to the sum of:

 

(A)         the
entire unpaid principal balance of the Mortgage Loan; plus

 

(B)         all
Accrued Interest (calculated through the last day of the month in which the prepayment occurs); plus

 

(C)         the
Prepayment Premium; plus

 

(D)         all
other Indebtedness.

 

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In connection with any such voluntary prepayment,
Borrower acknowledges and agrees that interest shall always be calculated and paid through the last day of the month in which the
prepayment occurs (even if the Permitted Prepayment Date for such month is not the last day of such month, or if Lender approves
prepayment on an Intended Prepayment Date that is not a Permitted Prepayment Date). Borrower further acknowledges that Lender is
not required to accept a voluntary prepayment of the Mortgage Loan on any day other than a Permitted Prepayment Date. However,
if Lender does approve an Intended Prepayment Date that is not a Permitted Prepayment Date and accepts a prepayment on such Intended
Prepayment Date, such prepayment shall be deemed to be received on the immediately following Permitted Prepayment Date. If Borrower
fails to prepay the Mortgage Loan on the Intended Prepayment Date for any reason (including on any Intended Prepayment Date that
is approved by Lender) and such failure either continues for five (5) Business Days, or into the following month, Lender shall
have the right to recalculate the payoff amount. If Borrower prepays the Mortgage Loan either in the following month or more than
five (5) Business Days after the Intended Prepayment Date that was approved by Lender, Lender shall also have the right to recalculate
the payoff amount based upon the amount of such payment and the date such payment was received by Lender. Borrower shall immediately
pay to Lender any additional amounts required by any such recalculation.

 

(c)         Acceleration
of Mortgage Loan.

 

Upon acceleration of
the Mortgage Loan, Borrower shall pay to Lender:

 

(1)         the
entire unpaid principal balance of the Mortgage Loan;

 

(2)         all
Accrued Interest (calculated through the last day of the month in which the acceleration occurs);

 

(3)         the
Prepayment Premium; and

 

(4)         all
other Indebtedness.

 

(d)         Application
of Collateral.

 

Any application by
Lender of any collateral or other security to the repayment of all or any portion of the unpaid principal balance of the Mortgage
Loan prior to the Maturity Date in accordance with the Loan Documents shall be deemed to be a prepayment by Borrower. Any such
prepayment shall require the payment to Lender by Borrower of the Prepayment Premium calculated on the amount being prepaid in
accordance with this Loan Agreement.

 

(e)         Casualty
and Condemnation.

 

Notwithstanding any
provision of this Loan Agreement to the contrary, no Prepayment Premium shall be payable with respect to any prepayment occurring
as a result of the application of any insurance proceeds or amounts received in connection with a Condemnation Action in accordance
with this Loan Agreement.

 

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(f)          No
Effect on Payment Obligations.

 

Unless otherwise expressly
provided in this Loan Agreement, any prepayment required by any Loan Document of less than the entire unpaid principal balance
of the Mortgage Loan shall not extend or postpone the due date of any subsequent Monthly Debt Service Payments, Monthly Replacement
Reserve Deposit, or other payment, or change the amount of any such payments or deposits.

 

(g)          Loss
Resulting from Prepayment.

 

In any circumstance
in which a Prepayment Premium is due under this Loan Agreement, Borrower acknowledges that:

 

(1)         any
prepayment of the unpaid principal balance of the Mortgage Loan, whether voluntary or involuntary, or following the occurrence
of an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional risk,
expense, and frustration or impairment of Lender’s ability to meet its commitments to third parties;

 

(2)         it
is extremely difficult and impractical to ascertain the extent of such losses, risks, and damages;

 

(3)         the
formula for calculating the Prepayment Premium represents a reasonable estimate of the losses, risks, and damages Lender will incur
as a result of a prepayment; and

 

(4)         the
provisions regarding the Prepayment Premium contained in this Loan Agreement are a material part of the consideration for the Mortgage
Loan, and that the terms of the Mortgage Loan are in other respects more favorable to Borrower as a result of Borrower’s
voluntary agreement to such prepayment provisions.

 

Article
3 - PERSONAL LIABILITY

 

Section
3.01       Non-Recourse Mortgage Loan; Exceptions.

 

Except as otherwise
provided in this Article 3 or in any other Loan Document, none of Borrower, or any director, officer, manager, member, partner,
shareholder, trustee, trust beneficiary, or employee of Borrower, shall have personal liability under this Loan Agreement or any
other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the
Loan Documents, and Lender’s only recourse for the satisfaction of such Indebtedness and the performance of such obligations
shall be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property and any other collateral held
by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not limit or impair Lender’s
enforcement of its rights against Guarantor under any Loan Document.

 

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Section
3.02       Personal Liability of Borrower (Exceptions to Non-Recourse Provision).

 

(a)         Personal
Liability Based on Lender’s Loss.

 

Borrower shall be personally
liable to Lender for the repayment of the portion of the Indebtedness equal to any loss or damage suffered by Lender as a result
of, subject to any notice and cure period, if any:

 

(1)         failure
to pay as directed by Lender upon demand after an Event of Default (to the extent actually received by Borrower or Affiliated Property
Operator):

 

(A)         all
Rents to which Lender is entitled under the Loan Documents; and

 

(B)         the
amount of all security deposits then held or thereafter collected from tenants and not properly applied pursuant to the applicable
Leases;

 

(2)         failure
to maintain all insurance policies required by the Loan Documents, except to the extent Lender has the obligation to pay the premiums
pursuant to Section 12.03(c);

 

(3)         failure
to apply all insurance proceeds received by Borrower or Affiliated Property Operator or any amounts received by Borrower or Affiliated
Property Operator in connection with a Condemnation Action, as required by the Loan Documents;

 

(4)         failure
to comply with any provision of this Loan Agreement or any other Loan Document relating to the delivery of books and records, statements,
schedules, and reports;

 

(5)         except
to the extent directed otherwise by Lender pursuant to Section 3.02(a)(1), failure to apply Rents to the ordinary and necessary
expenses of owning or operating, as applicable, the Mortgaged Property and Debt Service Amounts, as and when each is due and payable,
except that Borrower will not be personally liable with respect to Rents that are distributed by Borrower in any calendar year
if Borrower has paid all ordinary and necessary expenses of owning or operating, as applicable, the Mortgaged Property and Debt
Service Amounts for such calendar year;

 

(6)         waste
or abandonment of the Mortgaged Property;

 

(7)         grossly
negligent or reckless unintentional material misrepresentation or omission by Borrower, Affiliated Property Operator, Guarantor,
Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Affiliated Property Operator,
Guarantor, or Key Principal in connection with on-going financial or other reporting required by the Loan Documents, or any request
for action or consent by Lender;

 

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(8)         failure
to cause the renewal, continuation, extension, or maintenance of all Licenses or, if any Licenses are to be transferred to a transferee
approved by Lender, failure to cause such Licenses to be transferred or reissued within the period of time required under applicable
law and to provide to Lender written notice of such transfer including copies of the newly issued Licenses; or

 

(9)         revocation
or termination without Lender’s consent of the standing instructions from Borrower or Property Operator to the depositary
bank pursuant to any Depositary Agreement.

 

Notwithstanding the foregoing, Borrower
shall not have personal liability under clauses (1), (3), or (5) above to the extent that Borrower lacks the legal right to direct
the disbursement of the applicable funds due to an involuntary Bankruptcy Event that occurs without the consent, encouragement,
or active participation of (A) Borrower, Affiliated Property Operator, Guarantor, or Key Principal, (B) any Person Controlling
Borrower, Affiliated Property Operator, Guarantor, or Key Principal or (C) any Person Controlled by or under common Control with
Borrower, Affiliated Property Operator, Guarantor, or Key Principal.

 

(b)         Full
Personal Liability for Mortgage Loan.

 

Borrower shall be personally
liable to Lender for the repayment of all of the Indebtedness, and the Mortgage Loan shall be fully recourse to Borrower, upon
the occurrence of any of the following:

 

(1)         failure
by Borrower to comply with the single-asset entity requirements of Section 4.02(d) of this Loan Agreement;

 

(2)         a
Transfer (other than a conveyance of the Mortgaged Property at a Foreclosure Event pursuant to the Security Instrument and this
Loan Agreement) that is not permitted under this Loan Agreement or any other Loan Document;

 

(3)         the
occurrence of any Bankruptcy Event (other than an acknowledgement in writing as described in clause (b) of the definition of “Bankruptcy
Event”); provided, however, in the event of an involuntary Bankruptcy Event, Borrower shall only be personally liable if
such involuntary Bankruptcy Event occurs with the consent, encouragement, or active participation of (A) Borrower, Affiliated Property
Operator, Guarantor, or Key Principal, (B) any Person Controlling Borrower, Affiliated Property Operator, Guarantor, or Key Principal,
or (C) any Person Controlled by or under common Control with Borrower, Affiliated Property Operator, Guarantor, or Key Principal;

 

(4)         fraud,
written material misrepresentation, or material omission by Borrower, Affiliated Property Operator, Guarantor, Key Principal, or
any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Affiliated Property Operator, Guarantor,
or Key Principal in connection with any application for or creation of the Indebtedness; or

 

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(5)         fraud,
written intentional material misrepresentation, or intentional material omission by Borrower, Affiliated Property Operator, Guarantor,
Key Principal, or any officer, director, partner, manager, member, shareholder, or trustee of Borrower, Affiliated Property Operator,
Guarantor, or Key Principal in connection with on-going financial or other reporting required by the Loan Documents, or any request
for action or consent by Lender.

 

Section
3.03       Personal Liability for Indemnity Obligations.

 

Borrower shall be personally
and fully liable to Lender for Borrower’s indemnity obligations under Section 13.01(e) of this Loan Agreement, the Environmental
Indemnity Agreement, and any other express indemnity obligations provided by Borrower under any Loan Document. Borrower’s
liability for such indemnity obligations shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness,
or otherwise, provided that Borrower’s liability for such indemnities shall not include any loss caused by the gross negligence
or willful misconduct of Lender as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.

 

Section
3.04       Lender’s Right to Forego Rights Against Mortgaged Property.

 

To the extent that
Borrower has personal liability under this Loan Agreement or any other Loan Document, Lender may exercise its rights against Borrower
personally to the fullest extent permitted by applicable law without regard to whether Lender has exercised any rights against
the Mortgaged Property, the UCC Collateral, or any other security, or pursued any rights against Guarantor, or pursued any other
rights available to Lender under this Loan Agreement, any other Loan Document, or applicable law. For purposes of this Section
3.04 only, the term “Mortgaged Property” shall not include any funds that have been applied by Borrower or Property
Operator as required or permitted by this Loan Agreement prior to the occurrence of an Event of Default, or that Borrower was unable
to apply as required or permitted by this Loan Agreement because of a Bankruptcy Event. To the fullest extent permitted by applicable
law, in any action to enforce Borrower’s personal liability under this Article 3, Borrower waives any right to set off the
value of the Mortgaged Property against such personal liability.

 

Article
4 - BORROWER AND PROPERTY OPERATOR STATUS

 

Section
4.01       Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 4.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

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(a)         Due
Organization and Qualification.

 

Each of Borrower and
Affiliated Property Operator is validly existing and qualified to transact business and is in good standing in the state in which
it is formed or organized, the Property Jurisdiction, and in each other jurisdiction that qualification or good standing is required
according to applicable law to conduct its business with respect to the Mortgaged Property and where the failure to be so qualified
or in good standing would adversely affect (1) Borrower’s ownership or operation of the Mortgaged Property; (2) Affiliated
Property Operator’s management, leasing, or operation (as applicable) of the Mortgaged Property; (3) validity or enforceability
of, or the ability of Borrower to perform its obligations under, this Loan Agreement or any other Loan Document; or (4) validity
or enforceability of, or the ability of Affiliated Property Operator to perform its obligations under, the Facility Operating Agreement.

 

(b)          Location.

 

Borrower’s General
Business Address is Borrower’s principal place of business and principal office. Property Operator’s General Business
Address is Property Operator’s principal place of business and principal office.

 

(c)         Power
and Authority.

 

(1)         Borrower
has the requisite power and authority:

 

(A)         to
own the Mortgaged Property and to carry on its business as now conducted and as contemplated to be conducted in connection with
the performance of its obligations under this Loan Agreement and under the other Loan Documents to which it is a party;

 

(B)         to
execute and deliver this Loan Agreement and the other Loan Documents to which it is a party, and to carry out the transactions
contemplated by this Loan Agreement and the other Loan Documents to which it is a party; and

 

(C)         to
execute and deliver the Facility Operating Agreement and to carry out the transactions contemplated by the Facility Operating Agreement.

 

(2)         Affiliated
Property Operator has the requisite power and authority:

 

(A)         to
manage, lease, and operate (as applicable) the Mortgaged Property and to carry on its business as now conducted and as contemplated
to be conducted in connection with the performance or its obligations under the Facility Operating Agreement; and

 

(B)         to
execute and deliver the Facility Operating Agreement, to carry out the transactions contemplated by the Facility Operating Agreement,
and to facilitate Borrower’s compliance with the requirements of this Loan Agreement and the other Loan Documents.

 

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(d)          Due
Authorization.

 

(1)         The
execution, delivery, and performance by Borrower of this Loan Agreement, the Facility Operating Agreement, and the other Loan Documents
have been duly authorized by all necessary action and proceedings by or on behalf of Borrower, and no further approvals or filings
of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of Borrower as a
condition to the valid execution, delivery, and performance by Borrower of this Loan Agreement, the Facility Operating Agreement,
or any of the other Loan Documents, except filings required to perfect and maintain the liens to be granted under the Loan Documents
and routine filings to maintain the good standing and existence of Borrower.

 

(2)         The
execution, delivery, and performance by Affiliated Property Operator of the Facility Operating Agreement and the SASA have been
duly authorized by all necessary action and proceedings by or on behalf of Affiliated Property Operator, and no further approvals
or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of Affiliated
Property Operator as a condition to the valid execution, delivery, and performance by Affiliated Property Operator of the Facility
Operating Agreement and the SASA, except filings required to perfect and maintain the liens to be granted under the SASA and routine
filings to maintain the good standing and existence of Affiliated Property Operator.

 

(e)          Valid
and Binding Obligations.

 

(1)         This
Loan Agreement, the other Loan Documents, and the Facility Operating Agreement have been duly executed and delivered by Borrower
and constitute the legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their respective
terms, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court.

 

(2)         The
Facility Operating Agreement and the SASA have been duly executed and delivered by Affiliated Property Operator and constitute
the legal, valid, and binding obligations of Affiliated Property Operator, enforceable against Affiliated Property Operator in
accordance with their respective terms, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise
of discretion by any court.

 

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(f)          Effect
of Mortgage Loan on Borrower’s Financial Condition.

 

The Mortgage Loan will
not render Borrower Insolvent, and the Facility Operating Agreement obligations will not render Affiliated Property Operator insolvent.
Borrower has sufficient working capital, including proceeds from the Mortgage Loan, cash flow from the Mortgaged Property including
the Facility Operating Agreement, or other sources, not only to adequately maintain the Mortgaged Property in accordance with the
terms of the Loan Documents and the Facility Operating Agreement, but also to pay all of Borrower’s outstanding debts as
they come due, including all Debt Service Amounts, exclusive of Borrower’s ability to refinance or pay in full the Mortgage
Loan on the Maturity Date. In connection with the execution and delivery of this Loan Agreement and the other Loan Documents (and
the delivery to, or for the benefit of, Lender of any collateral contemplated thereunder), and the incurrence by Borrower of the
obligations under this Loan Agreement and the other Loan Documents, Borrower did not receive less than reasonably equivalent value
in exchange for the incurrence of the obligations of Borrower under this Loan Agreement and the other Loan Documents. Affiliated
Property Operator has sufficient working capital, including cash flow from the Mortgaged Property, or other resources, not only
to maintain the Mortgaged Property in accordance with the terms of the Facility Operating Agreement, but also to pay the rents
and other obligations under the Facility Operating Agreement, as well as other obligations under this Loan Agreement and the other
Loan Documents that Borrower elects to pass through to Affiliated Property Operator pursuant to the terms of the Facility Operating
Agreement.

 

(g)          Economic
Sanctions, Anti-Money Laundering, and Anti-Corruption.

 

(1)         None
of Borrower, any Affiliated Property Operator, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling
Borrower, any Affiliated Property Operator, Guarantor, or Key Principal, nor any Person Controlled by Borrower, any Affiliated
Property Operator, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, any Affiliated
Property Operator, Guarantor, or Key Principal, is in violation of any applicable civil or criminal laws or regulations (including
those requiring internal controls, intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or
corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled,
or has its principal place of business.

 

(2)         None
of Borrower, any Affiliated Property Operator, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling
Borrower, any Affiliated Property Operator, Guarantor, or Key Principal, nor any Person Controlled by Borrower, any Affiliated
Property Operator, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, any Affiliated
Property Operator, Guarantor, or Key Principal, is a Person:

 

(A)         against
whom proceedings are pending for any alleged violation of any laws described in Section 4.01(g)(1);

 

(B)         that
has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its
property seized or forfeited under, any laws described in Section 4.01(g)(1); or

 

(C)         with
whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories,
or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories,
is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Loan Agreement and
the other Loan Documents under any other applicable law.

 

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(3)         Borrower,
any Affiliated Property Operator, Guarantor, and Key Principal are in compliance with all applicable Economic Sanctions laws and
regulations.

 

(h)         Borrower
Single Asset Status.

 

Borrower:

 

(1)         does
not own or lease any real property, personal property, or assets other than the Mortgaged Property;

 

(2)         does
not own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the
Mortgaged Property;

 

(3)         has
no material financial obligation under or secured by any indenture, mortgage, deed of trust, deed to secure debt, loan agreement,
or other agreement or instrument to which Borrower is a party, or by which Borrower is otherwise bound, or to which the Mortgaged
Property is subject or by which it is otherwise encumbered, other than:

 

(A)         Permitted
Equipment Financing and unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive
of amounts for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property) that (i) are not evidenced by a
promissory note, (ii) are payable within sixty (60) days of the date incurred, and (iii) as of the Effective Date, do not exceed,
in the aggregate, four percent (4%) of the original principal balance of the Mortgage Loan;

 

(B)         if
the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating
such leasehold estate; and

 

(C)         obligations
under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;

 

(4)         has
maintained its financial statements, accounting records, and other partnership, real estate investment trust, limited liability
company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets have
been included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);

 

(5)         has
not commingled its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified
in the ordinary course of business from those of any other Person;

 

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(6)         has
been adequately capitalized in light of its contemplated business operations;

 

(7)         has
not assumed, guaranteed, or pledged its assets to secure the liabilities or obligations of any other Person (except in connection
with the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection
with any Consolidation, Extension and Modification Agreement or similar instrument), or held out its credit as being available
to satisfy the obligations of any other Person;

 

(8)         has
not made loans or advances to any other Person; and

 

(9)         has
not entered into, and is not a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business
and on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s length
transaction with an unrelated third party.

 

(i)          No
Bankruptcies or Judgments.

 

None of Borrower, Guarantor,
Key Principal, or Property Operator nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, Key Principal,
or Property Operator nor any Person Controlled by Borrower, Guarantor, Key Principal, or Property Operator that also has a direct
or indirect ownership interest in Borrower, Guarantor, Key Principal, or Property Operator, is currently:

 

(1)         the
subject of or a party to any completed or pending bankruptcy, reorganization, including any receivership or other insolvency proceeding;

 

(2)         preparing
or intending to be the subject of a Bankruptcy Event; or

 

(3)         the
subject of any judgment unsatisfied of record or docketed in any court; or

 

(4)         Insolvent.

 

(j)          No
Actions or Litigation.

 

(1)         There
are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending against or,
to Borrower’s knowledge, threatened against or affecting Borrower, any Affiliated Property Operator, or the Mortgaged Property
not otherwise covered by insurance (except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination,
or equal opportunity, which shall always be disclosed); and

 

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(2)         there
are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending or, to Borrower’s
knowledge, threatened against or affecting any Affiliated Property Operator, Guarantor, or Key Principal, which claims, actions,
suits, or proceedings, if adversely determined (individually or in the aggregate) reasonably would be expected to: (A) materially
adversely affect the financial condition or business of Borrower, any Affiliated Property Operator, Guarantor, or Key Principal
or the condition, operation, or ownership of the Mortgaged Property (except claims, actions, suits or proceedings regarding fair
housing, anti-discrimination, or equal opportunity, which shall always be deemed material), (B) result in the appointment of a
receiver, trustee or other official that would exercise control over the Mortgaged Property and its management and operations,
or (C) result in the revocation, transfer, surrender, suspension, or other impairment of the Licenses.

 

(k)         Payment
of Taxes, Assessments, and Other Charges.

 

Borrower confirms that:

 

(1)         each
of Borrower and Affiliated Property Operator has filed all federal, state, county, and municipal tax returns and reports required
to have been filed by it;

 

(2)         each
of Borrower and Affiliated Property Operator has paid, before any fine, penalty, interest, lien, or costs may be added thereto,
all taxes, governmental charges, and assessments due and payable with respect to such returns and reports;

 

(3)         there
is no controversy or objection pending, or to the knowledge of Borrower, threatened in respect of any tax returns of Borrower or
Affiliated Property Operator; and

 

(4)         each
of Borrower and Affiliated Property Operator has made adequate reserves on its books and records for all taxes that have accrued
but which are not yet due and payable.

 

(l)          Not
a Foreign Person.

 

Borrower is not a “foreign
person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code.

 

(m)        ERISA.

 

Borrower represents
and warrants that:

 

(1)         neither
Borrower nor Affiliated Property Operator is an Employee Benefit Plan;

 

(2)         no
asset of Borrower or Affiliated Property Operator constitutes “plan assets” (within the meaning of Section 3(42) of
ERISA and Department of Labor Regulation Section 2510.3 101) of an Employee Benefit Plan;

 

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(3)         no
asset of Borrower or Affiliated Property Operator is subject to any laws of any Governmental Authority governing the assets of
an Employee Benefit Plan; and

 

(4)         none
of Borrower, Affiliated Property Operator, or any ERISA Affiliate is subject to any obligation or liability with respect to any
ERISA Plan.

 

(n)         Default
Under Other Obligations.

 

(1)         The
execution, delivery, and performance of the obligations imposed on Borrower under this Loan Agreement and the Loan Documents to
which it is a party will not cause Borrower to be in default under the provisions of any agreement, judgment or order to which
Borrower is a party or by which Borrower is bound, and the execution, delivery and performance of the obligations imposed on Affiliated
Property Operator or Borrower under the Facility Operating Agreement will not cause Affiliated Property Operator or Borrower to
be in default under the provisions of any agreement, judgment, or order to which Affiliated Property Operator or Borrower is a
party or by which Affiliated Property Operator or Borrower is bound.

 

(2)         None
of Borrower, Affiliated Property Operator, Guarantor, or Key Principal is in default under any obligation to Lender. There is no
condition under the Facility Operating Agreement that would cause Borrower, Affiliated Property Operator, Guarantor, or Key Principal
to be in default under any obligation to Lender.

 

(o)         Prohibited
Person.

 

None of Borrower, Affiliated
Property Operator, Guarantor, or Key Principal is a Prohibited Person, nor to Borrower’s knowledge, is any Person:

 

(1)         Controlling
Borrower, Affiliated Property Operator, Guarantor, or Key Principal a Prohibited Person; or

 

(2)         Controlled
by and having a direct or indirect ownership interest in Borrower, Affiliated Property Operator, Guarantor, or Key Principal a
Prohibited Person.

 

(p)         No
Contravention.

 

Neither the execution
and delivery of the Facility Operating Agreement and this Loan Agreement and the other Loan Documents to which Borrower is a party,
nor the fulfillment of or compliance with the terms and conditions of the Facility Operating Agreement and this Loan Agreement
and the other Loan Documents to which Borrower or Affiliated Property Operator is a party, nor the performance of the obligations
of Borrower or Affiliated Property Operator under the Facility Operating Agreement, this Loan Agreement, and the other Loan Documents
does or will conflict with or result in any breach or violation of, or constitute a default under, any of the terms, conditions,
or provisions of Borrower’s or Affiliated Property Operator’s organizational documents, or any indenture, existing
agreement, or other instrument to which Borrower or Affiliated Property Operator is a party or to which Borrower, Affiliated Property
Operator, or the Mortgaged Property, or other assets of Borrower or Affiliated Property Operator, are subject.

 

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(q)          Lockbox
Arrangement.

 

Borrower is not party
to any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing, and no
(1) direct or indirect owner of Borrower, (2) Affiliated Property Operator, and (3) direct or indirect owner of Affiliated Property
Operator, is party to any type of lockbox agreement or similar cash management arrangement with respect to Rents or other income
from the Mortgaged Property that has not been approved by Lender in writing.

 

(r)          Licensing;
Borrower/Property Operator Compliance with Laws.

 

(1)         Borrower
(or the Property Operator, if applicable) is in all respects legally authorized to operate the Mortgaged Property as a Seniors
Housing Facility under the applicable laws of the Property Jurisdiction. If required by applicable law, Borrower has, or the Property
Operator, if applicable, has a current provider agreement (other than the Medicaid Provider Agreement covered by Section 6.01(g))
under any and all applicable federal, state, and local laws for reimbursement for providing housing or services to residents at
the Mortgaged Property. There is no decision not to renew any provider agreement (including the Medicaid Provider Agreement covered
by Section 6.01(g)) related to the Mortgaged Property, nor is there any action pending or threatened to impose alternative, interim,
or final sanctions with respect to the Mortgaged Property.

 

(2)         Other
than the Medicaid Provider Agreement covered by Section 6.01(g):

 

(A)         Borrower
is not a participant in any federal program whereby any Governmental Authority may have the right to recover funds by reason of
the advance of federal funds; and

 

(B)         Property
Operator is not a participant in any federal program whereby any Governmental Authority may have the right to recover funds by
reason of the advance of federal funds with respect to the Mortgaged Property.

 

(3)         Borrower
has not received notice, and is not aware of any violation by Borrower or Affiliated Property Operator of applicable antitrust
laws of any Governmental Authority.

 

(4)         Neither
the execution and delivery of this Loan Agreement, the Note, the Security Instrument, the SASA, or the other Loan Documents, or
the Facility Operating Agreement, Borrower’s performance under any of them, nor the recordation of the Security Instrument
or any other Loan Document will adversely affect the Licenses.

 

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(5)         In
the event any existing Facility Operating Agreement is terminated or Lender acquires the Mortgaged Property through a Foreclosure
Event, none of Borrower, Lender, any current or future Property Operator, or any subsequent purchaser must obtain a certificate
of need from any applicable state health care regulatory authority or agency (other than giving such notice required under the
applicable state law or regulation) prior to applying for any applicable License, provided that no service or unit complement is
changed.

 

(6)         If
Borrower or any Property Operator is a HIPAA Covered Entity or HIPAA Business Associate, such entity has developed and implemented
appropriate administrative, technical and physical safeguards to protect the privacy and security of Protected Health Information
(as that term is defined in HIPAA), and otherwise achieved substantial compliance with all applicable HIPAA requirements, including
those concerning privacy, breach notification, security and electronic transaction standards.

 

Section
4.02         Covenants.

 

(a)          Maintenance
of Existence; Organizational Documents.

 

Borrower and Affiliated
Property Operator shall each maintain its existence, its entity status, franchises, rights, and privileges under the laws of the
state of its formation or organization (as applicable). Borrower and Affiliated Property Operator shall each continue to be duly
qualified and in good standing to transact business in each jurisdiction in which qualification or standing is required according
to applicable law to conduct its business with respect to the Mortgaged Property and where the failure to do so would adversely
affect Borrower’s or Affiliated Property Operator’s applicable ownership or operation of the Mortgaged Property or
the validity, enforceability, or the ability of Borrower to perform its obligations under this Loan Agreement or any other Loan
Document, or Affiliated Property Operator to perform its obligations under the Facility Operating Agreement. Neither Borrower nor
any partner, member, manager, officer, or director of Borrower, nor Affiliated Property Operator nor any partner, member, manager,
officer, or director of Affiliated Property Operator, shall:

 

(1)         make
or allow any material change to the organizational documents or organizational structure of Borrower or Affiliated Property Operator,
including changes relating to the Control of Borrower or Affiliated Property Operator, or

 

(2)         file
any action, complaint, petition, or other claim to:

 

(A)         divide,
partition, or otherwise compel the sale of the Mortgaged Property; or

 

(B)         otherwise
change the Control of Borrower or Affiliated Property Operator.

 

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(b)          Economic
Sanctions, Anti-Money Laundering, and Anti-Corruption.

 

(1)         Borrower,
any Affiliated Property Operator, Guarantor, Key Principal, and any Person Controlling Borrower, any Affiliated Property Operator,
Guarantor, or Key Principal, or any Person Controlled by Borrower, any Affiliated Property Operator, Guarantor, or Key Principal
that also has a direct or indirect ownership interest in Borrower, any Affiliated Property Operator, Guarantor, or Key Principal
shall remain in compliance with any applicable civil or criminal laws or regulations (including those requiring internal controls)
intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and
the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place
of business.

 

(2)         At
no time shall Borrower, any Affiliated Property Operator, Guarantor, or Key Principal, or any Person Controlling Borrower, any
Affiliated Property Operator, Guarantor, or Key Principal, or any Person Controlled by Borrower, any Affiliated Property Operator,
Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, any Affiliated Property Operator,
Guarantor, or Key Principal, be a Person:

 

(A)         against
whom proceedings are pending for any alleged violation of any laws described in Section 4.02(b)(1);

 

(B)         that
has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its
property seized or forfeited under, any laws described in Section 4.02(b)(1); or

 

(C)         with
whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories,
or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories,
is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Loan Agreement and
the other Loan Documents under any other applicable law.

 

(3)         Borrower,
any Affiliated Property Operator, Guarantor, and Key Principal shall at all times remain in compliance with any applicable Economic
Sanctions laws and regulations.

 

(c)          Payment
of Taxes, Assessments, and Other Charges.

 

Borrower and Affiliated
Property Operator shall each file all federal, state, county, and municipal tax returns and reports required to be filed by Borrower
and Affiliated Property Operator, respectively, and shall pay, before any fine, penalty, interest, or cost may be added thereto,
all taxes payable with respect to such returns and reports.

 

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(d)         Borrower
Single Asset Status.

 

Until the Indebtedness
is fully paid, Borrower:

 

(1)         shall
not acquire or lease any real property, personal property, or assets other than the Mortgaged Property;

 

(2)         shall
not acquire, own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance
of the Mortgaged Property;

 

(3)         shall
not commingle its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified
in the ordinary course of business from those of any other Person;

 

(4)         shall
maintain its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company,
or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets are included
in a consolidated financial statement prepared in accordance with generally accepted accounting principles);

 

(5)         shall
have no material financial obligation under any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other
agreement or instrument to which Borrower is a party or by which Borrower is otherwise bound, or to which the Mortgaged Property
is subject or by which it is otherwise encumbered, other than:

 

(A)         Permitted
Equipment Financing or unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive
of amounts (i) to be paid out of the Replacement Reserve Account or Repairs Escrow Account, or (ii) for rehabilitation, restoration,
repairs, or replacements of the Mortgaged Property or otherwise approved by Lender) so long as such trade payables (1) are not
evidenced by a promissory note, (2) are payable within sixty (60) days of the date incurred, and (3) as of any date, do not exceed,
in the aggregate, two percent (2%) of the original principal balance of the Mortgage Loan; provided, however, that otherwise compliant
outstanding trade payables may exceed two percent (2%) up to an aggregate amount of four percent (4%) of the original principal
balance of the Mortgage Loan for a period (beginning on or after the Effective Date) not to exceed ninety (90) consecutive days;

 

(B)         if
the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating
such leasehold estate; and

 

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(C)         obligations
under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;

 

(6)         shall
not assume, guaranty, or pledge its assets to secure the liabilities or obligations of any other Person (except in connection with
the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection
with any Consolidation, Extension and Modification Agreement or similar instrument) or hold out its credit as being available to
satisfy the obligations of any other Person;

 

(7)         shall
not make loans or advances to any other Person; or

 

(8)         shall
not enter into, or become a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and
on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s-length transaction
with an unrelated third party.

 

(e)         ERISA.

 

Borrower covenants
that:

 

(1)         no
asset of Borrower shall constitute “plan assets” (within the meaning of Section 3(42) of ERISA and Department of Labor
Regulation Section 2510.3 101) of an Employee Benefit Plan;

 

(2)         no
asset of Borrower shall be subject to the laws of any Governmental Authority governing the assets of an Employee Benefit Plan;
and

 

(3)         neither
Borrower nor any ERISA Affiliate shall incur any obligation or liability with respect to any ERISA Plan.

 

(f)          Notice
of Litigation or Insolvency.

 

Borrower shall give
immediate written notice to Lender of any claims, actions, suits, or proceedings at law or in equity (including any insolvency,
bankruptcy, or receivership proceeding) by or before any Governmental Authority pending or, to Borrower’s knowledge, threatened
against or affecting Borrower, any Property Operator, Guarantor, Key Principal, or the Mortgaged Property, which claims, actions,
suits, or proceedings, if adversely determined reasonably would be expected to materially adversely affect the Licenses, the financial
condition or business of Borrower, any Property Operator, Guarantor, or Key Principal, or the condition, operation, or ownership
of the Mortgaged Property (including any claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or
equal opportunity, which shall always be deemed material).

 

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(g)         Payment
of Costs, Fees, and Expenses.

 

In addition to the
payments specified in this Loan Agreement, Borrower shall pay, on demand, all of Lender’s out-of-pocket fees, costs, charges,
or expenses (including the reasonable fees and expenses of attorneys, accountants, and other experts) incurred by Lender in connection
with:

 

(1)         any
amendment to, or consent, or waiver required under, this Loan Agreement, any of the Loan Documents, or the Facility Operating Agreement
(whether or not any such amendments, consents, or waivers are entered into);

 

(2)         defending
or participating in any litigation arising from actions by third parties and brought against or involving Lender with respect to:

 

(A)         the
Mortgaged Property, including the Facility Operating Agreement;

 

(B)         any
event, act, condition, or circumstance in connection with the Mortgaged Property; or

 

(C)         the
relationship between or among Lender, Borrower, Property Operator, Key Principal, and Guarantor in connection with this Loan Agreement
or any of the transactions contemplated by this Loan Agreement or the Facility Operating Agreement;

 

(3)         the
administration or enforcement of, or preservation of rights or remedies under, this Loan Agreement or any other Loan Documents
including or in connection with any litigation or appeals, any Foreclosure Event or other disposition of any collateral granted
pursuant to the Loan Documents or collateral to which Lender acquires rights by virtue of the Facility Operating Agreement; and

 

(4)         any
Bankruptcy Event or Guarantor Bankruptcy Event.

 

(h)         Restrictions
on Distributions.

 

No distributions or
dividends of any nature with respect to Rents or other income from the Mortgaged Property shall be made to any Person having a
direct ownership interest in Borrower or Affiliated Property Operator if an Event of Default has occurred and is continuing.

 

(i)          Lockbox
Arrangement.

 

Borrower shall not
enter into any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing,
and no (1) direct or indirect owner of Borrower, (2) Affiliated Property Operator, and (3) direct or indirect owner of Affiliated
Property Operator, shall enter into any type of lockbox agreement or similar cash management arrangement with respect to Rents
or other income from the Mortgaged Property that has not been approved by Lender in writing. Lender’s approval of any such
cash management arrangement may be conditioned upon requiring Borrower to enter into a lockbox agreement or similar cash management
arrangement with Lender in form and substance acceptable to Lender with regard to Rents and other income from the Mortgaged Property.

 

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(j)         Borrower/Property
Operator Compliance with Laws.

 

(1)         If
required by applicable law, Borrower shall at all times maintain a current provider agreement under any and all applicable federal,
state, and local laws for reimbursement for providing housing or other services to residents at the Mortgaged Property.

 

(2)         Other
than the Medicaid Provider Agreement covered by Section 6.02(g):

 

(A)         Borrower
shall not participate in any federal program whereby any Governmental Authority may have the right to recover funds by reason of
the advance of federal funds; and

 

(B)         Property
Operator shall not participate in any federal program whereby any Governmental Authority may have the right to recover funds by
reason of the advance of federal funds with respect to the Mortgaged Property.

 

(3)         Borrower
shall provide Lender notice of any violation by Borrower or Affiliated Property Operator of applicable antitrust laws of any Governmental
Authority.

 

(4)         If
Borrower or any Property Operator is a HIPAA Covered Entity or HIPAA Business Associate, such entity shall develop and implement
appropriate administrative, technical and physical safeguards to protect the privacy and security of Protected Health Information
(as that term is defined in HIPAA), and otherwise achieve substantial compliance with all applicable HIPAA requirements, including
those concerning privacy, breach notification, security, and electronic transaction standards.

 

Article
5 - THE MORTGAGE LOAN

 

Section
5.01        Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 5.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Receipt
and Review of Loan Documents.

 

Borrower has received
and reviewed this Loan Agreement and all of the other Loan Documents.

 

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(b)          No
Default.

 

No default exists under
any of the Loan Documents.

 

(c)          No
Defenses.

 

The Loan Documents
are not currently subject to any right of rescission, set-off, counterclaim, or defense by either Borrower or Guarantor, including
the defense of usury, and neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim, or defense
with respect thereto.

 

(d)          Loan
Document Taxes.

 

All mortgage, mortgage
and lease recording, stamp, intangible, or any other similar taxes required to be paid by any Person under applicable law currently
in effect in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of the Facility
Operating Agreement or any of the Loan Documents, including the Security Instrument, have been paid or will be paid in the ordinary
course of the closing of the Mortgage Loan.

 

Section
5.02       Covenants.

 

(a)          Ratification
of Covenants; Estoppels; Certifications.

 

Borrower shall:

 

(1)         promptly
notify Lender in writing upon any violation of any covenant set forth in any Loan Document of which Borrower has notice or knowledge;
provided, however, any such written notice by Borrower to Lender shall not relieve Borrower of, or result in a waiver
of, any obligation under this Loan Agreement or any other Loan Document; and

 

(2)         within
ten (10) days after a request from Lender, provide a written statement, signed and acknowledged by Borrower, together with such
corresponding certifications from Property Operator as Lender may request, certifying to Lender or any person designated by Lender,
as of the date of such statement:

 

(A)        that
the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are
in full force and effect as modified and setting forth such modifications);

 

(B)         the
unpaid principal balance of the Mortgage Loan;

 

(C)         the
date to which interest on the Mortgage Loan has been paid;

 

(D)         that
Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained
in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable
detail);

 

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(E)         whether
or not there are then-existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender
under the Loan Documents; and

 

(F)         any
additional facts reasonably requested in writing by Lender.

 

(b)         Further
Assurances.

 

(1)         Other
Documents As Lender May Require.

 

Within ten (10) days
after request by Lender, Borrower shall, subject to Section 5.02(d) below, execute, acknowledge, and deliver, at its cost and expense,
all further acts, deeds, conveyances, assignments, financing statements, transfers, documents, agreements, assurances, and such
other instruments as Lender may reasonably require from time to time in order to better assure, grant, and convey to Lender the
rights intended to be granted, now or in the future, to Lender under this Loan Agreement and the other Loan Documents.

 

(2)         Corrective
Actions.

 

Within ten (10) days
after request by Lender, Borrower shall provide, or cause to be provided, to Lender, at Borrower’s cost and expense, such
further documentation or information reasonably deemed necessary or appropriate by Lender in the exercise of its rights under the
related commitment letter between Borrower and Lender or to correct patent mistakes in the Loan Documents, the Title Policy, or
the funding of the Mortgage Loan.

 

(c)         Sale
of Mortgage Loan.

 

Borrower shall, subject
to Section 5.02(d) below:

 

(1)         comply
with the reasonable requirements of Lender or any Investor of the Mortgage Loan or provide, or cause to be provided, to Lender
or any Investor of the Mortgage Loan within ten (10) days of the request, at Borrower’s cost and expense, such further documentation
or information as Lender or Investor may reasonably require, in order to enable:

 

(A)         Lender
to sell the Mortgage Loan to such Investor;

 

(B)         Lender
to obtain a refund of any commitment fee from any such Investor; or

 

(C)         any
such Investor to further sell or securitize the Mortgage Loan;

 

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(2)         ratify
and affirm in writing the representations and warranties set forth in any Loan Document as of such date specified by Lender modified
as necessary to reflect changes that have occurred subsequent to the Effective Date;

 

(3)         confirm
that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained
in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable
detail); and

 

(4)         execute
and deliver to Lender and/or any Investor such other documentation, including any amendments, corrections, deletions, or additions
to this Loan Agreement or other Loan Document(s) as is reasonably required by Lender or such Investor.

 

(d)         Limitations
on Further Acts of Borrower.

 

Nothing in Section
5.02(b) and Section 5.02(c) shall require Borrower to do any further act that has the effect of:

 

(1)         changing
the economic terms of the Mortgage Loan set forth in the related commitment letter between Borrower and Lender;

 

(2)         imposing
on Borrower or Guarantor greater personal liability under the Loan Documents than that set forth in the related commitment letter
between Borrower and Lender; or

 

(3)         materially
changing the rights and obligations of Borrower or Guarantor under the commitment letter.

 

(e)         Financing
Statements; Record Searches.

 

(1)         Borrower
shall pay all costs and expenses associated with:

 

(A)         any
filing or recording of any financing statements, including all continuation statements, termination statements, and amendments
or any other filings related to security interests in or liens on collateral; and

 

(B)         any
record searches for financing statements that Lender may require.

 

(2)         Borrower
hereby authorizes Lender (and represents and warrants that the Facility Operating Agreement authorizes Borrower) to file any financing
statements, continuation statements, termination statements, and amendments (including an “all assets” or “all
personal property” collateral description or words of similar import) in form and substance as Lender may require in order
to protect and preserve Lender’s lien priority and security interest in the Mortgaged Property (and to the extent Lender
has filed any such financing statements, continuation statements, or amendments prior to the Effective Date, such filings by Lender
are hereby authorized and ratified by Borrower, and are permitted under the terms of the Facility Operating Agreement).

 

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(f)          Loan
Document Taxes.

 

Borrower shall pay,
on demand, any transfer taxes, documentary taxes, assessments, or charges made by any Governmental Authority in connection with
the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents, the Facility
Operating Agreement or the Mortgage Loan.

 

Article
6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE

 

Section
6.01       Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 6.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)         Mortgaged
Property Compliance with Laws; Permits and Licenses.

 

(1)         To
Borrower’s knowledge, all improvements to the Land and the use of the Mortgaged Property comply with all applicable laws,
ordinances, statutes, rules, and regulations, including:

 

(A)         all
applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing,
and rent control;

 

(B)         the
applicable provisions of all laws, rules, regulations, and published interpretations thereof including all criteria established
to classify the Mortgaged Property as housing for older persons under the Fair Housing Amendments Act of 1988 and the Housing for
Older Persons Act of 1995 to which Borrower, Property Operator or the Mortgaged Property is subject; and

 

(C)         privacy,
breach notification, security, and electronic transaction standards including those set forth in HIPAA; and

 

Borrower has no knowledge of
any action or proceeding (or threatened action or proceeding) regarding noncompliance or nonconformity with any of the foregoing.

 

(2)         To
Borrower’s knowledge, there is no evidence of any illegal activities on the Mortgaged Property.

 

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(3)         To
Borrower’s knowledge, no permits or approvals from any Governmental Authority, other than those previously obtained and furnished
to Lender, are necessary for the commencement and completion of the Repairs or Replacements, as applicable, other than those permits
or approvals which will be timely obtained in the ordinary course of business.

 

(4)         All
required permits, licenses, and certificates to comply with all zoning and land use statutes, laws, ordinances, rules, and regulations,
and all applicable health, fire, safety, and building codes, and for the lawful use and operation of the Mortgaged Property, including
certificates of occupancy, apartment licenses, or the equivalent, have been obtained and are in full force and effect.

 

(5)         No
portion of the Mortgaged Property has been purchased with the proceeds of any illegal activity.

 

(6)         To
the extent required under applicable law for the Seniors Housing Facility Licensing Designation, the Mortgaged Property is duly
licensed and such Licenses are in good standing and are in full force and effect.

 

(b)          Operating
Documents; Contracts; Resident Records.

 

(1)         Each
Facility Operating Agreement and each Contract is a valid and binding agreement enforceable against the parties in accordance with
its terms and is in full force and effect.

 

(2)         No
party is in default in performing any of its obligations under any Facility Operating Agreement or Contract.

 

(3)         Each
Facility Operating Agreement and Contract is assignable and no previous assignment of Borrower’s interest in the Facility
Operating Agreement or Contracts has been made. Borrower has entered into the Contracts previously identified to Lender for the
provision of goods or services, at or otherwise in connection with the operation, use, or management of the Mortgaged Property.

 

(4)         All
records pertaining to residents living at the Mortgaged Property are true and correct in all material respects.

 

(c)          Property
Characteristics.

 

(1)         The
Mortgaged Property contains at least:

 

(A)         the
Property Square Footage;

 

(B)         the
Total Parking Spaces; and

 

(C)         the
Total Residential Units.

 

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(2)         No
part of the Land is included or assessed under or as part of another tax lot or parcel, and no part of any other property is included
or assessed under or as part of the tax lot or parcels for the Land.

 

(d)          Property
Ownership.

 

The Mortgaged Property
is owned by or leased to Borrower or Property Operator.

 

(e)          Condition
of the Mortgaged Property.

 

(1)         Borrower
has not made any claims, and to Borrower’s knowledge, no claims have been made, against any contractor, engineer, architect,
or other party with respect to the construction or condition of the Mortgaged Property or the existence of any structural or other
material defect therein; and

 

(2)         neither
the Land nor the Improvements has sustained any damage other than damage which has been fully repaired, or is fully insured and
is being repaired in the ordinary course of business.

 

(f)          Personal
Property.

 

All Personal Property
that is material to and is used in connection with the management, ownership, and operation of the Mortgaged Property is:

 

(1)         owned
by Borrower (or, to the extent disclosed on the Exceptions to Representations and Warranties Schedule, leased by Borrower, other
than as lessor pursuant to the Seniors Housing Facility Lease); or

 

(2)         as
applicable, leased by Property Operator pursuant to the Seniors Housing Facility Lease.

 

(g)          Medicaid
Provider Agreement Representations.

 

(1)         If
neither Borrower nor any Property Operator is a Medicaid Participant as of the Effective Date, Borrower hereby confirms that neither
Borrower nor Property Operator has entered into a Medicaid Provider Agreement with respect to the Mortgaged Property.

 

(2)         The
following provisions apply if a Medicaid Provider Agreement is in place with respect to the Mortgaged Property:

 

(A)         Borrower
has delivered to Lender a true and complete copy of the Medicaid Provider Agreement in place as of the Effective Date, together
with any amendments and modifications thereto;

 

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(B)         the
Medicaid Provider Agreement is a valid and binding agreement enforceable against the parties in accordance with its terms and is
in full force and effect;

 

(C)         to
Borrower’s knowledge, neither Borrower, Property Operator nor a Governmental Authority or Managed Care Organization is in
default under the Medicaid Provider Agreement nor does any state of facts exist that with the passage of time or the giving of
notice, or both, could constitute a default under the Medicaid Provider Agreement;

 

(D)         neither
Property Operator nor Borrower has received any notice from a Governmental Authority or Managed Care Organization, as applicable,
to the effect that such Governmental Authority or Managed Care Organization, as applicable, intends to terminate its relationship
or unilaterally modify any terms of the Medicaid Provider Agreement in effect as of the Effective Date, including the reduction
of rates paid to Borrower or Property Operator for services provided under the Medicaid Provider Agreement;

 

(E)         as
of the Effective Date, Borrower or Property Operator, as applicable, meets the provider standards, including all conditions for
participation, as required by such Managed Care Organization or Governmental Authority;

 

(F)         if
Borrower or any Property Operator is a Medicaid Participant as of the Effective Date with respect to the Mortgaged Property, Borrower
hereby confirms that no more than twenty percent (20%) of the Mortgaged Property’s effective gross income is derived from
funds paid to such Borrower or Property Operator by a Governmental Authority or a Managed Care Organization, as applicable, under
a Medicaid Provider Agreement; and

 

(G)         neither
Borrower nor any Property Operator has been excluded from participation in any Governmental Health Care Program with respect to
the Mortgaged Property or any other property.

 

Section
6.02         Covenants

 

(a)          Use
of Property.

 

From and after the
Effective Date, Borrower shall not, unless required by applicable law or Governmental Authority:

 

(1)         change
the use of all or any part of the Mortgaged Property, including any change in the unit or bed Acuity composition (provided that
Borrower may effect an Allowed Change in Use so long as:

 

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(A)         Borrower
provides Lender written notice within thirty (30) days of such Allowed Change in Use; and

 

(B)         all
other terms, conditions, and covenants of the Loan Agreement are satisfied including covenants related to zoning, certificates
of occupancy, Licenses and alterations to the Mortgaged Property);

 

(2)         convert
any individual dwelling units or common areas to commercial use, or convert any common area or commercial use to individual dwelling
units;

 

(3)         initiate
or acquiesce in a change in the zoning classification of the Land;

 

(4)         establish
any condominium or cooperative regime with respect to the Mortgaged Property;

 

(5)         subdivide
the Land;

 

(6)         suffer,
permit, or initiate the joint assessment of any Mortgaged Property with any other real property constituting a tax lot separate
from such Mortgaged Property which could cause the part of the Land to be included or assessed under or as part of another tax
lot or parcel, or any part of any other property to be included or assessed under or as part of the tax lot or parcels for the
Land;

 

(7)         allow
use or occupancy of the Mortgaged Property by residential tenants that do not meet the standards for a Seniors Housing Facility;
or

 

(8)         accept
tenants that require skilled nursing care or permit tenants requiring skilled nursing care to remain at the Mortgaged Property
as a routine matter.

 

(b)          Property
Maintenance.

 

Borrower shall:

 

(1)         pay
the expenses of operating, managing, maintaining, and repairing the Mortgaged Property (including insurance premiums, utilities,
Repairs, and Replacements) before the last date upon which each such payment may be made without any penalty or interest charge
being added;

 

(2)         keep
the Mortgaged Property in good repair and marketable condition (ordinary wear and tear excepted) (including the replacement of
Personalty and Fixtures with items of equal or better function and quality) and subject to Section 9.03(b)(3) and Section 10.03(d)
restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its
original condition or condition immediately prior to the damage (if improved after the Effective Date), whether or not any insurance
proceeds or amounts received in connection with a Condemnation Action are available to cover any costs of such restoration or repair;

 

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(3)         commence
all Required Repairs, Additional Lender Repairs, and Additional Lender Replacements as follows:

 

(A)         with
respect to any Required Repairs, promptly following the Effective Date (subject to Force Majeure, if applicable), in accordance
with the timelines set forth on the Required Repair Schedule, or if no timelines are provided, as soon as practical following the
Effective Date;

 

(B)         with
respect to Additional Lender Repairs, in the event that Lender determines that Additional Lender Repairs are necessary from time
to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Repairs (subject
to Force Majeure, if applicable), commence any such Additional Lender Repairs in accordance with Lender’s timelines, or if
no timelines are provided, as soon as practical;

 

(C)         with
respect to Additional Lender Replacements, in the event that Lender determines that Additional Lender Replacements are necessary
from time to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Replacements
(subject to Force Majeure, if applicable), commence any such Additional Lender Replacements in accordance with Lender’s timelines,
or if no timelines are provided, as soon as practical;

 

(4)         make,
construct, install, diligently perform, and complete all Replacements and Repairs:

 

(A)         in
a good and workmanlike manner as soon as practicable following the commencement thereof, free and clear of any Liens, including
mechanics’ or materialmen’s liens and encumbrances (except Permitted Encumbrances and mechanics’ or materialmen’s
liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery
of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials);

 

(B)         in
accordance with all applicable laws, ordinances, rules, and regulations of any Governmental Authority, including applicable building
codes, special use permits, and environmental regulations;

 

(C)         in
accordance with all applicable insurance and bonding requirements; and

 

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(D)         within
all timeframes required by Lender, and Borrower acknowledges that it shall be an Event of Default if Borrower abandons or ceases
work on any Repair at any time prior to the completion of the Repairs for a period of longer than twenty (20) days (except when
Force Majeure exists and Borrower is diligently pursuing the reinstitution of such work, provided, however, any such abandonment
or cessation shall not in any event allow the Repair to be completed after the Completion Period, subject to Force Majeure); and

 

(5)         subject
to the terms of Section 6.03(a) provide for professional operation and management of the Mortgaged Property as a Seniors Housing
Facility either by Borrower or any Property Operator approved by Lender in writing;

 

(6)         give
written notice to Lender of, and, unless otherwise directed in writing by Lender, appear in and defend any action or proceeding
purporting to affect the Mortgaged Property, Lender’s security for the Mortgage Loan, or Lender’s rights under this
Loan Agreement; and

 

(7)         upon
Lender’s written request, submit to Lender any contracts or work orders described in Section 13.02(b).

 

(c)          Property
Preservation.

 

Borrower shall:

 

(1)         not
commit waste or abandon or (ordinary wear and tear excepted) permit impairment or deterioration of the Mortgaged Property;

 

(2)         subject
to any Allowed Change in Use pursuant to Section 6.02(a) and except as otherwise permitted herein in connection with Repairs and
Replacements, not remove, demolish, or alter the Mortgaged Property or any part of the Mortgaged Property (or permit any tenant
or any other person to do the same) except in connection with the replacement of tangible Personalty or Fixtures (provided such
Personalty and Fixtures are replaced with items of equal or better function and quality);

 

(3)         not
engage in or knowingly permit, and shall take appropriate measures to prevent and abate or cease and desist, any illegal activities
at the Mortgaged Property that could endanger tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture
of the Land or otherwise materially impair the lien created by the Security Instrument or Lender’s interest in the Mortgaged
Property;

 

(4)         not
permit any condition to exist on the Mortgaged Property that would invalidate any part of any insurance coverage required by this
Loan Agreement; or

 

(5)         not
subject the Mortgaged Property to any voluntary, elective, or non-compulsory tax lien or assessment (or opt in to any voluntary,
elective, or non-compulsory special tax district or similar regime).

 

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(d)          Property
Inspections.

 

Borrower shall:

 

(1)         permit
Lender, its agents, representatives, and designees to enter upon and inspect the Mortgaged Property (including in connection with
any Replacement or Repair, or to conduct any Environmental Inspection pursuant to the Environmental Indemnity Agreement), and shall
cooperate and provide access to all areas of the Mortgaged Property (subject to the rights of tenants under the Leases, other than
the Property Operator under the Seniors Housing Facility Lease):

 

(A)         during
normal business hours;

 

(B)         at
such other reasonable time upon reasonable notice of not less than one (1) Business Day;

 

(C)         at
any time when exigent circumstances exist; or

 

(D)         at
any time after an Event of Default has occurred and is continuing; and

 

(2)         pay
for reasonable costs or expenses incurred by Lender or its agents in connection with any such inspections.

 

(e)          Mortgaged
Property Compliance with Laws.

 

Borrower shall:

 

(1)         comply
with all laws, ordinances, statutes, rules, and regulations of any Governmental Authority and all recorded lawful covenants and
agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, statutes, rules and regulations, and
covenants pertaining to construction of improvements on the Land, fair housing, and requirements for equal opportunity, anti-discrimination,
and Leases;

 

(2)         procure
and maintain all required permits, licenses, charters, registrations, and certificates necessary to comply with all zoning and
land use statutes, laws, ordinances, rules and regulations, and all applicable health, fire, safety, and building codes and for
the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent;

 

(3)         comply
with all applicable laws that pertain to the maintenance and disposition of tenant security deposits;

 

(4)         at
all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.02(e); and

 

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(5)         promptly
after Borrower’s or Property Operator’s receipt or notification thereof, provide Lender copies of any building code
or zoning violation from any Governmental Authority with respect to the Mortgaged Property.

 

(f)          Licensing.

 

(1)         Borrower
(A) shall maintain and operate, or shall cause Property Operator, if applicable, to maintain and operate, the Mortgaged Property
as a Seniors Housing Facility, (B) shall maintain, or shall cause Property Operator, if applicable, to maintain, in good standing
all Licenses, (C) shall renew or extend, or shall cause Property Operator, if applicable, to renew and extend, all such required
Licenses, and (D) shall not fail, nor allow the failure by Property Operator, if applicable, to take any action necessary to keep
all such Licenses in good standing and full force and effect. Borrower will, or shall cause Property Operator, if applicable, to
provide Lender written notice within five (5) days of Borrower’s or Property Operator’s receipt of any notice or order
of a violation which may otherwise have an adverse impact on Borrower, Property Operator, or the Mortgaged Property, its operations,
or its compliance with licensing and regulatory requirements.

 

(2)         If
any License requirement is imposed upon the Mortgaged Property after the Effective Date, Borrower shall obtain, or shall cause
the Property Operator, if applicable, to obtain, all Licenses and shall maintain, or shall cause the Property Operator, if applicable,
to maintain, such Licenses in full force and effect. Borrower acknowledges and agrees that all such Licenses are subject to the
terms of this Loan Agreement and the Loan Documents.

 

(3)         Without
the prior written consent of Lender, Borrower shall not, and shall require Property Operator, if applicable, not to amend, modify,
transfer, or otherwise change the Licenses.

 

(4)         Borrower
shall promptly inform Lender in writing and shall cause Property Operator to promptly inform Lender in writing, if such party has
actual knowledge of, and shall deliver to Lender copies of, (A) any written communications, complaints, orders, judgments, and
other documents relating to the commencement of any litigation, rulemaking, or disciplinary proceeding or the promulgation of any
proposed or final rule which would have, or may reasonably be expected to have, a material adverse effect on the Mortgaged Property,
or the Licenses, and (B) notice from any Governmental Authority having jurisdiction over Borrower or any Property Operator that
(i) Borrower or Property Operator is being placed under regulatory supervision, (ii) any License related to the conduct of Borrower’s
or Property Operator’s, if applicable, business or the Mortgaged Property is to be suspended or revoked, or (iii) Borrower
or Property Operator is to cease and desist any practice, procedure, or policy employed by Borrower or Property Operator in the
conduct of its business, and such cessation would have, or may reasonably be expected to have, a material adverse effect on the
Mortgaged Property, or the Licenses.

 

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(g)          Medicaid
Provider Agreement.

 

(1)         (1)         If
neither Borrower nor any Property Operator is a Medicaid Participant as of the Effective Date, Borrower shall notify Lender in
writing thirty (30) days prior to Borrower’s or any Property Operator’s (with respect to the Mortgaged Property) submission
of its request to enter into a Medicaid Provider Agreement, and will provide Lender with copies of all correspondence and documentation
received from the Governmental Authority or the Managed Care Organization concerning its submission. In the event Borrower or any
Property Operator becomes a Medicaid Participant with respect to the Mortgaged Property, Borrower and such Property Operator shall
execute the form of Medicaid reserve agreement and Depositary Agreement as Lender may require.

 

(2)         The
following provisions apply if a Medicaid Provider Agreement is in place as of the Effective Date or entered into at any time during
the Term of the Mortgage Loan:

 

(A)         Borrower
and Property Operator shall comply with the terms and conditions of the Medicaid Provider Agreement and shall enforce the obligations
of each Managed Care Organization or Governmental Authority under the applicable Medicaid Provider Agreement;

 

(B)         Borrower
and Property Operator shall maintain their respective compliance with the provider standards, including all conditions for participation,
as required by the Managed Care Organization or the Governmental Authority, as applicable;

 

(C)         Borrower
or Property Operator, as applicable, shall not permit or allow more than twenty percent (20%) of the Mortgaged Property’s
effective gross income to be derived from funds paid to Borrower or Property Operator by a Governmental Authority or a Managed
Care Organization, as applicable, under a Medicaid Provider Agreement. Notwithstanding the foregoing, if Borrower or any Property
Operator is a Medicaid Participant with respect to the Mortgaged Property, and if by reason of applicable law or regulation more
than twenty percent (20%) of effective gross income is derived from funds paid to such Borrower or Property Operator by a Governmental
Authority or a Managed Care Organization, Borrower and Property Operator shall take in a diligent and expeditious manner all reasonable
steps necessary to comply with the preceding sentence to the extent permissible by applicable law or regulation;

 

(D)         without
the prior written consent of Lender, Borrower and Property Operator shall not:

 

(i)          amend
or otherwise modify the then-current Medicaid Provider Agreement;

 

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(ii)         terminate
the then-current Medicaid Provider Agreement;

 

(iii)        waive
a default under the then-current Medicaid Provider Agreement; or

 

(iv)        enter
into a new Medicaid Provider Agreement or renew or replace an existing Medicaid Provider Agreement; and

 

(E)         within
five (5) days after Borrower’s or any Property Operator’s receipt thereof, Borrower shall give Lender written notice
of any notice or information received by Borrower or any Property Operator that indicates that:

 

(i)          either
Borrower or any Property Operator is in default under the terms of the Medicaid Provider Agreement;

 

(ii)         the
applicable Governmental Authority or Managed Care Organization intends to amend, modify, or terminate the Medicaid Provider Agreement;

 

(iii)        Borrower
or Property Operator has ceased to meet the provider standards required by the applicable Governmental Authority or Managed Care
Organization;

 

(iv)        Borrower
or Property Operator has received notice from any Governmental Authority or Managed Care Organization that the rates for services
provided under the then-current Medicaid Provider Agreement will be adjusted; or

 

(v)         either
Borrower or any Property Operator has been excluded from participation in any Governmental Health Care Program with respect to
the Mortgaged Property or any other property.

 

(h)          Facility
Operating Agreement.

 

(1)         The
provisions of this Section 6.02(h)(1) apply to all Facility Operating Agreements other than a Seniors Housing Facility Lease and
to all Property Operators other than a Property Operator under a Seniors Housing Facility Lease. Borrower shall comply with and
shall enforce the obligations of each Property Operator under each Facility Operating Agreement. Without the prior written consent
of Lender, Borrower shall not:

 

(A)         modify,
amend, supplement, or restate any Facility Operating Agreement;

 

(B)         waive
a default under any Facility Operating Agreement;

 

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(C)         waive
any of Borrower’s rights or fail to diligently pursue Borrower’s remedies under the Facility Operating Agreement;

 

(D)         add
or release a property to or from any Facility Operating Agreement; or

 

(E)         violate
the provisions of Section 11.02(c).

 

(2)         Within
five (5) days of Borrower’s receipt or delivery (or any Property Operator’s receipt), Borrower shall provide Lender
written notice of any notice or information received by Borrower or any Property Operator that indicates either Borrower or any
Property Operator is (A) in default under the terms of any Facility Operating Agreement, (B) amending, modifying, or terminating
any Facility Operating Agreement, or (C) otherwise discontinuing its operation and management of the Mortgaged Property.

 

(3)         After
Borrower receives notice (or otherwise has actual knowledge) of an Event of Default under the Loan Documents, it will not make
any payment of fees under or pursuant to the Facility Operating Agreement without Lender’s prior written consent.

 

(4)         Borrower
shall cause each Property Operator, where applicable, to comply with the terms, conditions, provisions, requirements, and affirmative
and negative covenants of this Loan Agreement relating to the use and operation of the Mortgaged Property, including all terms,
conditions, provisions, requirements, and affirmative and negative covenants set forth in this Loan Agreement applicable to the
organization, existence, and good standing of Property Operator necessary for the use and operation of the Mortgaged Property.

 

(i)          Change
in Property Operator.

 

Each Property Operator
and each Facility Operating Agreement must be approved in writing in advance by Lender. Borrower shall not remove or permit or
suffer the removal of any Property Operator without the prior written consent of Lender and unless and until Lender has approved
in writing a replacement Property Operator. Each Facility Operating Agreement or other similar agreement between Borrower and a
new Property Operator must be approved in writing in advance by Lender, and Borrower and the new Property Operator must execute
and deliver to Lender a SASA in form required by Lender, subject to the provisions of Section 6.03(a). Borrower shall notify Lender
in writing of any name change of an Affiliated Property Operator or any change in an Affiliated Property Operator’s place
of incorporation or organization. Borrower agrees that Lender shall have the right to remove any Property Operator at any time
if an Event of Default has occurred and is continuing, subject to the provisions of the SASA.

 

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(j)          Contracts.

 

Borrower may in the
future enter into Contracts for the provision of additional goods or services at or otherwise in connection with the operation,
use, or management of the Mortgaged Property. Borrower absolutely and unconditionally pledges, grants a security interest in, and
assigns to Lender all of Borrower’s right, title, and interest in, to, and under the Contracts, including Borrower’s
right, power, and authority to modify the terms of, extend, or terminate any such Contract. Until Lender gives notice to Borrower
of Lender’s exercise of its rights under this Loan Agreement, Borrower shall have all right, power, and authority granted
to Borrower under any Contract (except as otherwise limited by this subsection or any other provision of this Loan Agreement),
including the right, power, and authority to modify the terms of any Contract or extend or terminate any Contract. If an Event
of Default has occurred and is continuing, and at the option of Lender, the permission given to Borrower pursuant to the preceding
sentence to exercise all right, power, and authority under Contracts shall terminate. Upon Lender’s delivery of notice to
Borrower of an Event of Default, Lender shall immediately have all right, power, and authority granted to Borrower under any Contract,
including the right, power, and authority to modify the terms of, extend, or terminate any such Contract. Borrower shall fully
perform all of its obligations under the Contracts, and Borrower agrees not to assign, sell, pledge, transfer, mortgage, or otherwise
encumber its interests in any of the Contracts without the prior written approval of Lender. Each Contract entered into by Borrower
subsequent to the date hereof, the average annual consideration of which, directly or indirectly, is at least $50,000, shall provide:
(A) that it shall be terminable for cause, and (B) that it shall be terminable, at Lender’s option, upon the occurrence of
an Event of Default.

 

(k)         All
Representations and Covenants Deemed Borrower Responsibility.

 

(1)         Any
act, action, term, condition, provision, requirement, or covenant required to be performed, or prohibited from being performed,
by Borrower under the Loan Documents including with respect to

 

(A)         the
use, management or operation of the Mortgaged Property, including any licensing, repair, reporting, or insurance requirements,
and

 

(B)         the
organization, existence, good standing or other entity-level requirements, shall be interpreted as requiring Borrower either to
perform such act or action directly or to cause Property Operator, a property manager or other appropriate agent to perform such
act or action. Any right or privilege assigned or delegated by Borrower or Property Operator to any other Person shall be construed
as being accompanied by each relevant obligation or restriction set forth in the Loan Documents or any Facility Operating Agreement,
as applicable.

 

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(C)         In
each instance that Borrower makes, or in the future renews or is deemed to renew, a representation, warranty, or covenant in this
Loan Agreement or the other Loan Documents regarding the condition, knowledge, acts, or omissions of Property Operator or any Property
Operator Business Information, or the condition of the Mortgaged Property, Borrower does and shall do so with full knowledge, after
due inquiry (including the due inquiry of and by Guarantor), of such information. Any reporting or compliance delay caused by Property
Operator or Guarantor shall not excuse Borrower’s timely performance of the terms of this Loan Agreement or the other Loan
Documents. Borrower acknowledges and agrees that Borrower’s reliance upon incorrect or incomplete information received from
Property Operator or Guarantor and the reporting of the same to Lender, whether or not Borrower had actual knowledge that such
information was incorrect or incomplete and whether or not Borrower is otherwise in violation of the terms of this Loan Agreement,
shall not be (and none of Borrower, Property Operator, Guarantor, nor Key Principal shall assert) a defense to Lender’s determination
that an Event of Default has occurred or that Borrower (or Guarantor) has incurred personal liability as set forth in Article 3
of this Loan Agreement.

 

Section
6.03        Mortgage Loan Administration Matters Regarding the Property.

 

(a)          Property
Management.

 

If, in connection with
the making of the Mortgage Loan, or at any later date, Lender waives in writing the requirement for a written contract for the
operation or management of the Mortgaged Property, and Borrower later elects to enter into a written contract or change the operation
or management of the Mortgaged Property, such new Property Operator and any Facility Operating Agreement must be approved by Lender.
As a condition to any approval by Lender, Borrower and such new Property Operator shall enter into a SASA.

 

(b)          Subordination
of Fees by Property Operator.

 

All fees due to an
Affiliated Property Operator in connection with the operation and management of the Mortgaged Property shall be subordinated in
right to the prior payment in full of the Indebtedness. All fees due to a non-Affiliated Property Operator in connection with the
operation and management of the Mortgaged Property shall be subordinated in right of payment to the prior payment in full of monthly
debt service and funding of escrows and reserves as required under the Mortgage Loan Documents, and the payment of all operating
expenses and capital expenditures incurred in connection with the operation and management of the Mortgaged Property.

 

(c)          Property
Condition Assessment.

 

If, in connection with
any inspection of the Mortgaged Property, Lender determines that the condition of the Mortgaged Property has deteriorated (ordinary
wear and tear excepted) since the Effective Date, Lender may obtain, at Borrower’s expense, a property condition assessment
of the Mortgaged Property. Lender’s right to obtain a property condition assessment pursuant to this Section 6.03(c) shall
be in addition to any other rights available to Lender under this Loan Agreement in connection with any such deterioration. Any
such inspection or property condition assessment may result in Lender requiring Additional Lender Repairs or Additional Lender
Replacements as further described in Section 13.02(a)(9)(B).

 

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Article
7 - LEASES AND RENTS

 

Section
7.01       Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 7.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Prior
Assignment of Rents.

 

Borrower has not executed
any:

 

(1)         prior
assignment of Rents (other than an assignment of Rents securing prior indebtedness that has been paid off and discharged or will
be paid off and discharged with the proceeds of the Mortgage Loan); or

 

(2)         instrument
which would prevent Lender from exercising its rights under this Loan Agreement, the Security Instrument, or the SASA.

 

(b)          Prepaid
Rents.

 

Borrower has not accepted,
and does not expect to receive prepayment of, any Rents for one (1) month for the Seniors Housing Facility Lease or more than two
(2) months under any other Lease prior to the due dates of such Rents.

 

(c)          Seniors
Housing Facility Lease.

 

(1)         The
Seniors Housing Facility Lease is in full force and effect and there is neither a default thereunder nor any condition that, with
the passage of time or the giving of notice, or both, would constitute a default thereunder. No right or claim of rescission, offset,
abatement, diminution, defense, or counterclaim has been asserted with respect to the Seniors Housing Facility Lease, and there
is no existing condition that, with the passage of time or giving of notice, or both, would result in a right or claim of rescission,
offset, abatement, diminution, defense, or counterclaim under the terms and provisions of the Seniors Housing Facility Lease. Borrower
has performed and discharged all of the obligations on the part of Borrower to be performed and discharged pursuant to the terms
set forth in the Seniors Housing Facility Lease.

 

(2)         The
Seniors Housing Facility Lease has not been modified, amended or supplemented by either party thereto. The Property Operator has
not been released, in whole or in part, from any of its obligations under the Seniors Housing Facility Lease. There has been no
prior sale, transfer, assignment, hypothecation, or pledge of the Seniors Housing Facility Lease (other than in connection with
the Loan Documents) that is outstanding.

 

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(3)         The
Seniors Housing Facility Lease has an original term ending on or after the date ninety (90) days after the Maturity Date. Absent
Lender’s direction, the Property Operator cannot terminate the Seniors Housing Facility Lease for any reason prior to the
payment in full of the Indebtedness.

 

(4)         There
is no free rent, partial rent or rebate of rent required to be given by Borrower to Property Operator under the Seniors Housing
Facility Lease. The Seniors Housing Facility Lease does not permit Property Operator to accept, and Property Operator has not accepted,
prepayment of Rents more than two (2) months in advance (and Borrower has not accepted prepayment of Rents more than one (1) month
in advance with respect to the Seniors Housing Facility Lease). Each payment due under the Seniors Housing Facility Lease is sufficient
to pay the Debt Service Amounts (including Monthly Debt Service Payments, Taxes, Impositions, and any Replacement Reserve Deposits)
in full on or prior to the due date thereof (without giving effect to any applicable grace periods) currently and throughout the
term of the Mortgage Loan. Payments due under the Seniors Housing Facility Lease are payable without notice or demand, and without
setoff, recoupment, abatement, or reduction.

 

(5)         Property
Operator has no right or option pursuant to the Seniors Housing Facility Lease or otherwise to purchase all or any part of the
Mortgaged Property, the leased premises or the building of which the leased premises are a part.

 

(6)         The
Seniors Housing Facility Lease contains customary and enforceable provisions that render the rights and remedies of Borrower adequate
for the enforcement and satisfaction of the Borrower’s rights thereunder.

 

(7)         Borrower
represents and warrants that it is the express intent of Borrower and Property Operator that the Seniors Housing Facility Lease
constitute a lease under applicable real property laws and laws governing bankruptcy, insolvency, and creditors’ rights generally,
and that the sole interest of Property Operator in the Mortgaged Property is as a tenant under the Seniors Housing Facility Lease.
The Seniors Housing Facility Lease is not intended to be deemed a guaranty.

 

Section
7.02        Covenants.

 

(a)          Leases.

 

Borrower shall:

 

(1)         comply
with and observe all landlord obligations under all Leases, including landlord’s obligations pertaining to the maintenance
and disposition of any tenant security deposits or any other refundable fees including entrance fees or community fees;

 

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(2)         surrender
possession of the Mortgaged Property, including all Leases and all security deposits and prepaid Rents, immediately upon appointment
of a receiver or Lender’s entry upon and taking of possession and control of the Mortgaged Property, as applicable;

 

(3)         require
that all Residential Leases have initial lease terms of not less than six (6) months and not more than twenty-four (24) months
(however, if customary in the applicable market for properties comparable to the Mortgaged Property, Residential Leases with terms
of less than six (6) months (but in no case less than one (1) month) may be permitted with Lender’s prior written consent;
provided further, where required by Applicable Law, Residential Leases with terms of less than six (6) months (but in no case less
than one (1) month) shall be permitted without Lender’s consent so long as Borrower promptly notifies Lender of such requirement);
and

 

(4)         promptly
provide Lender a copy of any non-Residential Lease at the time such Lease is executed (subject to Lender’s consent rights
for Material Commercial Leases in Section 7.02(b) and subject to Lender’s consent rights for the Seniors Housing Facility
Lease pursuant to Section 6.02(i) and the SASA), and, upon Lender’s written request, promptly provide Lender a copy of any
Residential Lease then in effect.

 

(b)          Commercial
Leases.

 

(1)         With
respect to Material Commercial Leases, Borrower shall not:

 

(A)         enter
into any Material Commercial Lease except with the prior written consent of Lender; or

 

(B)         modify
the terms of, extend, or terminate any Material Commercial Lease (including any Material Commercial Lease in existence on the Effective
Date) without the prior written consent of Lender.

 

(2)         With
respect to any non-Material Commercial Lease, Borrower shall not:

 

(A)         enter
into any non-Material Commercial Lease that materially alters the use and type of operation of the premises subject to the Lease
in effect as of the Effective Date or reduces the number or size of residential units at the Mortgaged Property; or

 

(B)         modify
the terms of any non-Material Commercial Lease (including any non-Material Commercial Lease in existence on the Effective Date)
in any way that materially alters the use and type of operation of the premises subject to such non-Material Commercial Lease in
effect as of the Effective Date, reduces the number or size of residential units at the Mortgaged Property, or results in such
non-Material Commercial Lease being deemed a Material Commercial Lease.

 

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(3)         With
respect to any Material Commercial Lease or non-Material Commercial Lease, Borrower shall cause the applicable tenant to provide
within ten (10) days after a request by Borrower, a certificate of estoppel, or if not provided by tenant within such ten (10)
day period, Borrower shall provide such certificate of estoppel, certifying:

 

(A)         that
such Material Commercial Lease or non-Material Commercial Lease is unmodified and in full force and effect (or if there have been
modifications, that such Material Commercial Lease or non-Material Commercial Lease is in full force and effect as modified and
stating the modifications);

 

(B)         the
term of the Lease including any extensions thereto;

 

(C)         the
dates to which the Rent and any other charges hereunder have been paid by tenant;

 

(D)         the
amount of any security deposit delivered to Borrower as landlord;

 

(E)         whether
or not Borrower is in default (or whether any event or condition exists which, with the passage of time, would constitute an event
of default) under such Lease;

 

(F)         the
address to which notices to tenant should be sent; and

 

(G)         any
other information as may be reasonably required by Lender.

 

(c)         Payment
of Rents.

 

Borrower shall:

 

(1)         pay
to Lender upon demand all Rents after an Event of Default has occurred and is continuing;

 

(2)         cooperate
with Lender’s efforts in connection with the assignment of Rents set forth in the Security Instrument and the SASA; and

 

(3)         not
accept prepayment of Rent for one (1) month for the Seniors Housing Facility Lease or more than two (2) months under any other
Lease (whether a Residential Lease or a non-Residential Lease).

 

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(d)          Assignment
of Rents.

 

Borrower shall not:

 

(1)         perform
any acts nor execute any instrument that would prevent Lender from exercising its rights under the assignment of Rents granted
in the Security Instrument, the SASA, or in any other Loan Document; nor

 

(2)         interfere
with Lender’s collection of such Rents.

 

(e)          Further
Assignments of Leases and Rents.

 

Borrower shall execute
and deliver any further assignments of Leases and Rents as Lender may reasonably require, and shall require Property Operator to
execute and deliver any corresponding assignments in support thereof.

 

(f)          Options
to Purchase by Tenants.

 

No Lease (whether a
Residential Lease or a non-Residential Lease) shall contain an option to purchase, right of first refusal to purchase or right
of first offer to purchase, except as set forth in the SASA or except as required by applicable law.

 

(g)         Special
Covenants Regarding Seniors Housing Facility Lease.

 

(1)         Seniors
Housing Facility Lease.

 

(A)         Borrower
shall:

 

(i)          at
all times fully perform, observe, and comply with all terms, covenants, and conditions of the Seniors Housing Facility Lease to
be performed, observed, or complied with by Borrower as lessor under the Seniors Housing Facility Lease and do all things necessary
to preserve and to keep unimpaired its rights thereunder;

 

(ii)         deliver
to Lender, within five (5) days after Borrower’s receipt, a true and correct copy of each written notice, demand, complaint,
or request from Property Operator under, or with respect to, the Seniors Housing Facility Lease;

 

(iii)        simultaneously
deliver to Lender a true and correct copy of each written notice, demand, complaint, or request that Borrower sends to Property
Operator under, or with respect to, the Seniors Housing Facility Lease;

 

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(iv)        to
the extent not otherwise covered in Article 8 of this Loan Agreement, upon written request from Lender, deliver to Lender a copy
of all business plans received by Borrower and any other information reasonably requested by Lender;

 

(v)         enforce
the terms, covenants and conditions contained in the Seniors Housing Facility Lease; and

 

(vi)        provide
Property Operator with written notice of any changes to Monthly Debt Service Payments, Imposition Deposits, Monthly Replacement
Reserve Deposits, or any other amounts due under the Loan Documents.

 

(B)         Borrower
shall not:

 

(i)          modify,
amend, supplement, or restate the Seniors Housing Facility Lease either orally or in writing;

 

(ii)         waive
a default under the Seniors Housing Facility Lease;

 

(iii)        waive
any of Borrower’s rights or fail to diligently pursue Borrower’s remedies under the Seniors Housing Facility Lease;

 

(iv)        add
or release a property to or from any Seniors Housing Facility Lease; or

 

(v)         violate
the provisions of Section 11.02(b)(3).

 

If, pursuant to the
Seniors Housing Facility Lease, Property Operator requests (1) the consent of Borrower (in its capacity as lessor under the Seniors
Housing Facility Lease) or Borrower’s designee to any matter as to which, pursuant to the Seniors Housing Facility Lease,
Borrower has discretion as to whether or not to grant its consent, (2) a waiver of any covenant or obligation of Property Operator
under the Seniors Housing Facility Lease, or (3) a modification of the terms of the Seniors Housing Facility Lease (any of the
foregoing, a “Seniors Housing Facility Lease Request”), Borrower shall give Lender prompt written notice of
such Seniors Housing Facility Lease Request (together with such supporting information as may reasonably be required to consider
such Seniors Housing Facility Lease Request, and such other information as Lender may reasonably request). Borrower shall not approve
or consent to any Seniors Housing Facility Lease Request unless Lender has approved and consented in writing to such Seniors Housing
Facility Lease Request.

 

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(C)         The
Seniors Housing Facility Lease shall:

 

(i)          pursuant
to the SASA, be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Security Instrument
and the other Loan Documents, and to all renewals, modifications, consolidations, replacements and extensions thereof, and to all
advances which may hereafter be made pursuant to the Note, this Loan Agreement, the Security Instrument and the other Loan Documents
(including all sums advanced for the purposes of (1) protecting or further securing the lien of the Security Instrument, curing
defaults by Borrower under the Loan Documents, or for any other purposes expressly permitted by this Loan Agreement, the Security
Instrument or the other Loan Documents, or (2) constructing, renovating, repairing, furnishing, fixturing, or equipping the Mortgaged
Property); and

 

(ii)         provide
that, in the event it shall be determined that the Seniors Housing Facility Lease is not a lease under applicable real property
laws or under laws governing bankruptcy, insolvency, and creditors’ rights generally, and that the interest of Property Operator
in the Mortgaged Property is other than that of tenant under the Seniors Housing Facility Lease, then the Property Operator’s
interest in the Mortgaged Property, however characterized, shall continue to be subject and subordinate to the lien, terms, and
conditions of the Security Instrument, and Borrower’s fee interest in the Mortgaged Property, on all the same terms and conditions
as contained in the Seniors Housing Facility Lease as of the Effective Date.

 

(D)         The
Seniors Housing Facility Lease shall provide that Borrower shall continue to have complete access throughout the Loan Term to the
organizational, financial, and operational information and documentation of Property Operator in every respect as it relates to
the Mortgage Loan, the Mortgaged Property, and the Seniors Housing Facility Lease (collectively, the “Property Operator Business
Information”). Borrower shall continue to be fully informed regarding the Property Operator Business Information to the same
extent as if Borrower were the day-to-day operator of the Mortgaged Property and the business activities thereon.

 

(2)         Seniors
Housing Facility Lease Estoppel.

 

With respect
to any Seniors Housing Facility Lease, Borrower shall cause Property Operator to provide as of the Effective Date (and, after the
Effective Date, within ten (10) days after a request by Borrower), an Operator Estoppel Certificate, or if not provided by Property
Operator within such ten (10) day period, Borrower shall provide a certificate of estoppel (and the Seniors Housing Facility Lease
shall so empower Borrower as Property Operator’s attorney-in-fact) substantially in the form of the Operator Estoppel Certificate.

 

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Section
7.03        Mortgage Loan Administration Regarding Leases and Rents.

 

(a)          Material
Commercial Lease Requirements.

 

Each Material Commercial
Lease, including any renewal or extension of any Material Commercial Lease in existence as of the Effective Date, shall provide,
directly or pursuant to a subordination, non-disturbance and attornment agreement approved by Lender, that:

 

(1)         the
tenant shall, upon written notice from Lender after the occurrence of an Event of Default, pay all Rents payable under such Lease
to Lender;

 

(2)         such
Lease and all rights of the tenant thereunder are expressly subordinate to the lien of the Security Instrument;

 

(3)         the
tenant shall attorn to Lender and any purchaser at a Foreclosure Event (such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a Foreclosure Event or by Lender in any manner);

 

(4)         the
tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a Foreclosure Event may from time to
time request; and

 

(5)         such
Lease shall not terminate as a result of a Foreclosure Event unless Lender or any other purchaser at such Foreclosure Event affirmatively
elects to terminate such Lease pursuant to the terms of the subordination, non-disturbance and attornment agreement.

 

(b)          Residential
Lease Form.

 

All Residential Leases
entered into from and after the Effective Date shall be on forms approved by Lender. Any Lease entered into by Property Operator
will be subject and subordinate to the Seniors Housing Facility Lease and will not relieve the Property Operator of its obligations
under the Seniors Housing Facility Lease.

 

(c)          Seniors
Housing Facility Lease Structure Consideration.

 

The agreements set
forth in this Loan Agreement constitute a material portion of the consideration for Lender agreeing to make the Mortgage Loan and
permit the Seniors Housing Facility Lease operating structure described in the Seniors Housing Facility Lease.

 

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Article
8 - BOOKS AND RECORDS; FINANCIAL REPORTING

 

Section
8.01       Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 8.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)         Financial
Information.

 

All financial statements
and data, including statements of cash flow and income and operating expenses, that have been delivered to Lender in respect of
the Mortgaged Property:

 

(1)         are
true, complete, and correct in all material respects; and

 

(2)         accurately
represent the financial condition of the Mortgaged Property as of such date.

 

(b)          No
Change in Facts or Circumstances.

 

All information in
the Loan Application and in all financial statements, rent rolls, reports, certificates, and other documents submitted in connection
with the Loan Application are complete and accurate in all material respects. There has been no material adverse change in any
fact or circumstance that would make any such information incomplete or inaccurate.

 

Section
8.02       Covenants.

 

(a)          Obligation
to Maintain Accurate Books and Records.

 

Borrower shall keep
and maintain at all times at the Mortgaged Property, the property management agent’s offices, Borrower’s General Business
Address, or Property Operator’s General Business Address, as applicable, and, upon Lender’s written request, shall
make available to Lender at the Land:

 

(1)         complete
and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the
operation of the Mortgaged Property; and

 

(2)         copies
of all written contracts, Leases, and other instruments that affect Borrower, Property Operator, or the Mortgaged Property.

 

(b)          Items
to Furnish to Lender.

 

Subject to Privacy
Laws, Borrower shall furnish to Lender the following, certified as true, complete, and accurate in all material respects, by an
individual having authority to bind Borrower (or Guarantor, as applicable), in such form and with such detail as Lender reasonably
requires:

 

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(1)         within
forty-five (45) days after the end of each calendar quarter, a statement of income and expenses for Borrower and each Property
Operator (in connection with the operation of the Mortgaged Property) for that calendar quarter;

 

(2)         within
one hundred twenty (120) days after the end of each calendar year:

 

(A)         for
any Borrower, any Property Operator (in connection with the operation of the Mortgaged Property), and any Guarantor that is an
entity, a statement of income and expenses and a statement of cash flows for such calendar year;

 

(B)         for
any Borrower, any Property Operator (in connection with the operation of the Mortgaged Property), and any Guarantor that is an
individual or a trust established for estate-planning purposes, a personal financial statement for such calendar year;

 

(C)         when
requested in writing by Lender, balance sheet(s) showing all assets and liabilities of Borrower, each Property Operator (in connection
with the operation of the Mortgaged Property), and Guarantor and a statement of all contingent liabilities as of the end of such
calendar year;

 

(D)         if
an energy consumption metric for the Mortgaged Property is required to be reported to any Governmental Authority, the Fannie Mae
Energy Performance Metrics report, as generated by ENERGY STAR® Portfolio Manager, for the Mortgaged Property for such calendar
year, which report must include the ENERGY STAR score, the Source Energy Use Intensity (EUI), the month and year ending period
for such ENERGY STAR score and such Source Energy Use Intensity, and the ENERGY STAR Portfolio Manager Property Identification
Number; provided that, if the Governmental Authority does not require the use of ENERGY STAR Portfolio Manager for the reporting
of the energy consumption metric and Borrower does not use ENERGY STAR Portfolio Manager, then Borrower shall furnish to Lender
the Source Energy Use Intensity for the Mortgaged Property for such calendar year;

 

(E)         a
written certification ratifying and affirming that:

 

(i)          Borrower
has taken no action in violation of Section 4.02(d) regarding its single asset status;

 

(ii)         neither
Borrower nor Property Operator has received any notice of any building code violation, or if Borrower, or Property Operator, has
received such notice, evidence of remediation;

 

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(iii)        neither
Borrower nor Property Operator has made any application for rezoning nor received any notice that the Mortgaged Property has been
or is being rezoned; and

 

(iv)        neither
Borrower nor Property Operator has taken any action nor has any knowledge of any action that would violate the provisions of Section
11.02(b)(1)(F) regarding liens encumbering the Mortgaged Property;

 

(F)         an
accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and
identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact
at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts;
and

 

(G)         written
confirmation of:

 

(i)          any
changes occurring since the Effective Date (or that no such changes have occurred since the Effective Date) in (1) the direct owners
of Borrower, (2) the indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held
Corporations or Publicly-Held Trusts), or (3) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the
ownership interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), and their respective interests;

 

(ii)         the
names of all officers and directors of (1) any Borrower which is a corporation, (2) any corporation which is a general partner
of any Borrower which is a partnership, or (3) any corporation which is the managing member or non-member manager of any Borrower
which is a limited liability company;

 

(iii)        the
names of all managers who are not members of (1) any Borrower which is a limited liability company, (2) any limited liability company
which is a general partner of any Borrower which is a partnership, or (3) any limited liability company which is the managing member
or non-member manager of any Borrower which is a limited liability company; and

 

(iv)        any
changes occurring since the Effective Date (or that no such changes have occurred since the Effective Date) in (1) the direct owners
of Affiliated Property Operator, (2) the indirect owners (and any non-member managers) of Affiliated Property Operator that Control
Affiliated Property Operator (excluding any Publicly-Held Corporations or Publicly-Held Trusts), or (3) the indirect owners of
Affiliated Property Operator that hold twenty-five percent (25%) or more of the ownership interests in Affiliated Property Operator
(excluding any Publicly-Held Corporations or Publicly-Held Trusts), and their respective interests;

 

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(v)        the
names of all officers and directors of (1) any Affiliated Property Operator that is a corporation, (2) any corporation which is
a general partner of any Affiliated Property Operator which is a partnership, or (3) any corporation which is the managing member
or non-member manager of any Property Operator which is a limited liability company;

 

(vi)        the
names of all managers who are not members of (1) any Property Operator which is a limited liability company, (2) any limited liability
company which is a general partner of any Affiliated Property Operator which is a partnership, or (3) any limited liability company
which is the managing member or non-member manager of any Affiliated Property Operator which is a limited liability company; and

 

(H)         if
not already provided pursuant to Section 8.02(b)(2)(A) above, a statement of income and expenses for Borrower’s and Property
Operator’s operation of the Mortgaged Property on a year-to-date basis as of the end of each calendar year;

 

(3)         within
forty-five (45) days after the end of each first, second, and third calendar quarter and within one hundred twenty (120) days after
the end of each calendar year, and at any other time upon Lender’s written request, a rent schedule for the Mortgaged Property
showing the name of each tenant and for each tenant, the space occupied, the lease expiration date, the lease term, the rent payable
for the current month, the date through which rent has been paid, and any related information requested by Lender;

 

(4)         within
ten (10) days after Borrower’s receipt, copies of all inspection reports, surveys, reviews, and certifications prepared by,
for, or on behalf of any licensing or regulatory authority relating to the Mortgaged Property and any legal actions, orders, notices,
or reports relating to the Mortgaged Property issued by the applicable regulatory or licensing authorities;

 

(5)         within
ten (10) days after submission, copies of all incident reports submitted by or on behalf of Borrower or any Property Operator to
any liability insurance carrier or any elderly affairs, regulatory or licensing authority; and

 

(6)         upon
Lender’s written request (but, absent an Event of Default, no more frequently than once in any six (6) month period):

 

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(A)         any
item described in Section 8.02(b)(1) or Section 8.02(b)(2) for Borrower or any Property Operator (in connection with the operation
of the Mortgaged Property), certified as true, complete and accurate by an individual having authority to bind Borrower or such
Property Operator;

 

(B)         a
property management or leasing report for the Mortgaged Property, showing the number of rental applications received from tenants
or prospective tenants and deposits received from tenants or prospective tenants, and any other information requested by Lender;

 

(C)         a
statement of income and expenses for Borrower’s or any Property Operator’s operation of the Mortgaged Property on a
year-to-date basis as of the end of each month for such period as requested by Lender, which statement shall be delivered within
thirty (30) days after the end of such month requested by Lender;

 

(D)         a
statement of real estate owned directly or indirectly by Borrower, Affiliated Property Operator and Guarantor for such period as
requested by Lender, which statement(s) shall be delivered within thirty (30) days after the end of such month requested by Lender;

 

(E)         a
statement that identifies:

 

(i)          the
direct owners of Borrower and Affiliated Property Operator and their respective interests;

 

(ii)         the
indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held Corporations or Publicly-Held
Trusts) and their respective interests; and

 

(iii)        the
indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower (excluding any Publicly-Held
Corporations or Publicly-Held Trusts) and their respective interests;

 

(iv)        the
indirect owners (and any non-member managers) of Affiliated Property Operator that Control Affiliated Master Lessee (excluding
any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests; and

 

(v)         the
indirect owners of Affiliated Property Operator that hold twenty-five percent (25%) or more of the ownership interests in Affiliated
Master Lessee (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests.

 

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(F)         copies
of all reports relating to the services and operations of the Mortgaged Property, including, if applicable, Medicaid cost reports
and records relating to account balances due to or from Third Party Payments; and

 

(G)         within
ten (10) days after submission to Borrower by any Property Operator, the financial statements, reports, documents, communications,
and information delivered to Borrower by any Property Operator pursuant to the Facility Operating Agreement, to the extent not
otherwise provided under this Loan Agreement.

 

(c)          Audited
Financials.

 

In the event Borrower,
any Property Operator, or Guarantor receives or obtains any audited financial statements and such financial statements are required
to be delivered to Lender under Section 8.02(b), Borrower shall deliver or cause to be delivered to Lender the audited versions
of such financial statements.

 

(d)          Delivery
of Books and Records.

 

If an Event of Default
has occurred and is continuing, Borrower shall deliver to Lender, upon written demand, all books and records relating to the Mortgaged
Property or its operation.

 

Section
8.03         Mortgage Loan Administration Matters Regarding Books and Records
and Financial Reporting.

 

(a)          Lender’s
Right to Obtain Audited Books and Records.

 

Lender may require
that Borrower’s, Property Operator’s (in connection with the operation of the Mortgaged Property), or Guarantor’s
books and records be audited, at Borrower’s expense, by an independent certified public accountant selected by Lender in
order to produce or audit any statements, schedules, and reports of Borrower, Guarantor, Property Operator (in connection with
the operation of the Mortgaged Property), or the Mortgaged Property required by Section 8.02, if:

 

(1)         Borrower
or Guarantor fails to provide in a timely manner the statements, schedules, and reports required by Section 8.02 and, thereafter,
Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c);

 

(2)         the
statements, schedules, and reports submitted to Lender pursuant to Section 8.02 are not full, complete, and accurate in all material
respects as determined by Lender and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports
within the cure period provided in Section 14.01(c); or

 

(3)         an
Event of Default has occurred and is continuing.

 

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Notwithstanding the
foregoing, the ability of Lender to require the delivery of audited financial statements shall be limited to not more than once
per Borrower’s fiscal year so long as no Event of Default has occurred during such fiscal year (or any event which, with
the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing).
Borrower shall cooperate with Lender in order to satisfy the provisions of this Section 8.03(a). All related costs and expenses
of Lender shall become immediately due and payable by Borrower within ten (10) Business Days after demand therefor.

 

(b)          Credit
Reports; Credit Score.

 

No more often than
once in any twelve (12) month period, Lender is authorized to obtain a credit report (if applicable) on each of Borrower, Affiliated
Property Operator, and Guarantor, the cost of which report shall be paid by Borrower. Lender is authorized to obtain a Credit Score
(if applicable) for Borrower, Affiliated Property Operator, or Guarantor at any time at Lender’s expense.

 

Article
9 - INSURANCE

 

Section
9.01       Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 9.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Compliance
with Insurance Requirements.

 

Borrower is in compliance
with Lender’s insurance requirements (or has obtained a written waiver from Lender for any non-compliant coverage) and has
timely paid all premiums on all required insurance policies.

 

(b)         Property
Condition.

 

(1)         The
Mortgaged Property has not been damaged by fire, water, wind, or other cause of loss; or

 

(2)         if
previously damaged, any previous damage to the Mortgaged Property has been repaired and the Mortgaged Property has been fully restored.

 

Section
9.02       Covenants.

 

(a)          Insurance
Requirements.

 

(1)         As
required by Lender and applicable law, and as may be modified from time to time, Borrower shall:

 

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(A)         keep
the Improvements insured at all times against any hazards, which insurance shall include coverage against loss by fire and all
other perils insured by the “special causes of loss” coverage form, general boiler and machinery coverage, business
income coverage, and flood (if any of the Improvements are located in an area identified by the Federal Emergency Management Agency
(or any successor) as an area having special flood hazards and to the extent flood insurance is available in that area), and may
include sinkhole insurance, mine subsidence insurance, earthquake insurance, terrorism insurance, windstorm insurance and, if the
Mortgaged Property does not conform to applicable building, zoning, or land use laws, ordinance and law coverage;

 

(B)         maintain
at all times commercial general liability insurance, umbrella liability insurance, workmen’s compensation insurance, auto
liability insurance, and such other liability, errors and omissions, and fidelity insurance coverage; and professional liability
insurance covering errors and omissions for medical malpractice, all types of abuse, and any service where healthcare is provided;
and

 

(C)         maintain
builder’s risk and public liability insurance, and other insurance in connection with completing the Repairs or Replacements,
as applicable.

 

(b)          Delivery
of Policies, Renewals, Notices, and Proceeds.

 

Borrower shall:

 

(1)         cause
all insurance policies (including any policies not otherwise required by Lender) which can be endorsed with standard non-contributing,
non-reporting mortgagee clauses making loss payable to Lender (or Lender’s assigns) to be so endorsed;

 

(2)         promptly
deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for
paid premiums;

 

(3)         deliver
evidence, in form and content acceptable to Lender, that each required insurance policy under this Article 9 has been renewed not
less than fifteen (15) days prior to the applicable expiration date, and (if such evidence is other than an original or duplicate
original of a renewal policy) deliver the original or duplicate original of each renewal policy (or such other evidence of insurance
as may be required by or acceptable to Lender) in form and content acceptable to Lender within ninety (90) days after the applicable
expiration date of the original insurance policy;

 

(4)         provide
immediate written notice to the insurance company and to Lender of any event of loss;

 

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(5)         execute
such further evidence of assignment of any insurance proceeds as Lender may require; and

 

(6)         provide
immediate written notice to Lender of Borrower’s or Property Operator’s receipt of any insurance proceeds under any
insurance policy required by Section 9.02(a)(1) above and, if requested by Lender, deliver to Lender all of such proceeds received
by Borrower or Property Operator to be applied by Lender in accordance with this Article 9.

 

Section
9.03       Mortgage Loan Administration Matters Regarding Insurance

 

(a)         Lender’s
Ongoing Insurance Requirements.

 

Borrower acknowledges
that Lender’s insurance requirements may change from time to time. All insurance policies and renewals of insurance policies
required by this Loan Agreement shall be:

 

(1)         in
the form and with the terms required by Lender;

 

(2)         in
such amounts, with such maximum deductibles and for such periods required by Lender; and

 

(3)         issued
by insurance companies satisfactory to Lender.

 

BORROWER ACKNOWLEDGES
THAT ANY FAILURE OF BORROWER TO COMPLY WITH THE REQUIREMENTS SET FORTH IN SECTION 9.02(a) OR SECTION 9.02(b)(3) ABOVE SHALL PERMIT
LENDER TO PURCHASE THE APPLICABLE INSURANCE AT BORROWER’S COST. SUCH INSURANCE MAY, BUT NEED NOT, PROTECT BORROWER’S
INTERESTS. THE COVERAGE THAT LENDER PURCHASES MAY NOT PAY ANY CLAIM THAT BORROWER MAKES OR ANY CLAIM THAT IS MADE AGAINST BORROWER
IN CONNECTION WITH THE MORTGAGED PROPERTY. IF LENDER PURCHASES INSURANCE FOR THE MORTGAGED PROPERTY AS PERMITTED HEREUNDER, BORROWER
WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AT THE DEFAULT RATE AND ANY OTHER CHARGES LENDER MAY IMPOSE
IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR THE EXPIRATION OF THE INSURANCE.
THE COSTS OF THE INSURANCE SHALL BE ADDED TO BORROWER’S TOTAL OUTSTANDING BALANCE OR OBLIGATION AND SHALL CONSTITUTE ADDITIONAL
INDEBTEDNESS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN. BORROWER
MAY LATER CANCEL ANY INSURANCE PURCHASED BY LENDER, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWER HAS OBTAINED INSURANCE AS REQUIRED
BY THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

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(b)         Application
of Proceeds on Event of Loss.

 

(1)         Upon
an event of loss, Lender may, at Lender’s option:

 

(A)         hold
such proceeds to be applied to reimburse Borrower for the cost of Restoration (in accordance with Lender’s then-current policies
relating to the restoration of casualty damage on similar multifamily residential properties); or

 

(B)         apply
such proceeds to the payment of the Indebtedness, whether or not then due; provided, however, Lender shall not apply
insurance proceeds to the payment of the Indebtedness and shall permit Restoration pursuant to Section 9.03(b)(1)(A) if all of
the following conditions are met:

 

(i)          no
Event of Default has occurred and is continuing (or any event which, with the giving of written notice or the passage of time,
or both, would constitute an Event of Default has occurred and is continuing);

 

(ii)         Lender
determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the
Restoration;

 

(iii)        Lender
determines that the net operating income generated by the Mortgaged Property after completion of the Restoration will be sufficient
to support a debt service coverage ratio not less than the debt service coverage ratio immediately prior to the event of loss,
but in no event less than 1.0x (the debt service coverage ratio shall be calculated on a thirty (30) year amortizing basis (if
applicable, on a proforma basis approved by Lender) in all events and shall include payments due from any Operator
under a Seniors Housing Facility Lease and all operating costs and other expenses, Imposition Deposits, deposits to Collateral
Accounts, and Mortgage Loan repayment obligations);

 

(iv)        Lender
determines that the Restoration will be completed before the earlier of (1) one year before the stated Maturity Date, or (2) one
year after the date of the loss or casualty; and

 

(v)         Borrower
provides Lender, upon written request, evidence of the availability during and after the Restoration of the insurance required
to be maintained pursuant to this Loan Agreement.

 

After the completion of Restoration
in accordance with the above requirements, as determined by Lender, the balance, if any, of such proceeds shall be returned to
Borrower.

 

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(2)         Notwithstanding
the foregoing, if any loss is estimated to be in an amount equal to or less than $50,000, Lender shall not exercise its rights
and remedies as power-of-attorney herein and shall allow Borrower to make proof of loss, to adjust and compromise any claims under
policies of property damage insurance, to appear in and prosecute any action arising from such policies of property damage insurance,
and to collect and receive the proceeds of property damage insurance; provided that each of the following conditions shall be satisfied:

 

(A)         Borrower
shall immediately notify Lender of the casualty giving rise to the claim;

 

(B)         no
Event of Default has occurred and is continuing (or any event which, with the giving of written notice or the passage of time,
or both, would constitute an Event of Default has occurred and is continuing);

 

(C)         the
Restoration will be completed before the earlier of (i) one year before the stated Maturity Date or (ii) one year after the date
of the loss or casualty;

 

(D)         Lender
determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the
Restoration;

 

(E)         all
proceeds of property damage insurance shall be issued in the form of joint checks to Borrower and Lender;

 

(F)         all
proceeds of property damage insurance shall be applied to the Restoration;

 

(G)         Borrower
shall deliver to Lender evidence satisfactory to Lender of completion of the Restoration and obtainment of all lien releases;

 

(H)         Borrower
shall have complied to Lender’s satisfaction with the foregoing requirements on any prior claims subject to this provision,
if any; and

 

(I)         Lender
shall have the right to inspect the Mortgaged Property (subject to the rights of tenants under the Leases, other than the Seniors
Housing Facility Lease).

 

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(3)         If
Lender elects to apply insurance proceeds to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall
not be obligated to restore or repair the Mortgaged Property. Rather, Borrower shall restrict access to the damaged portion of
the Mortgaged Property and, at its expense and regardless of whether such costs are covered by insurance, clean up any debris resulting
from the casualty event, and, if required or otherwise permitted by Lender, demolish or raze any remaining part of the damaged
Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition.
Nothing in this Section 9.03(b) shall affect any of Lender’s remedial rights against Borrower in connection with a breach
by Borrower of any of its obligations under this Loan Agreement or under any Loan Document, including any failure to timely pay
Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Loan Agreement.

 

(c)          Payment
Obligations Unaffected.

 

The application of
any insurance proceeds to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment
of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Loan Agreement
or in any other Loan Document. Notwithstanding the foregoing, if Lender applies insurance proceeds to the Indebtedness in connection
with a casualty of less than the entire Mortgaged Property, and after such application of proceeds the debt service coverage ratio
(as determined by Lender) is less than 1.25x based on the then-applicable Monthly Debt Service Payment and the anticipated on-going
net operating income of the Mortgaged Property after such casualty event, then Lender may, at its discretion, permit an adjustment
to the Monthly Debt Service Payments that become due and owing thereafter, based on Lender’s then-current underwriting requirements.
In no event shall the preceding sentence obligate Lender to make any adjustment to the Monthly Debt Service Payments.

 

(d)          Foreclosure
Sale.

 

If the Mortgaged Property
is transferred pursuant to a Foreclosure Event or Lender otherwise acquires title to the Mortgaged Property, Borrower acknowledges
that Lender shall automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums
applicable to the Mortgaged Property and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such
Foreclosure Event or such acquisition.

 

(e)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby authorizes
and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

 

Article
10 - CONDEMNATION

 

Section
10.01     Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 10.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

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(a)          Prior
Condemnation Action.

 

No part of the Mortgaged
Property has been taken in connection with a Condemnation Action.

 

(b)          Pending
Condemnation Actions.

 

No Condemnation Action
is pending nor, to Borrower’s knowledge, is threatened for the partial or total condemnation or taking of the Mortgaged Property.

 

Section
10.02     Covenants.

 

(a)          Notice
of Condemnation.

 

Borrower shall:

 

(1)         promptly
notify Lender of any Condemnation Action of which Borrower has knowledge;

 

(2)         appear
in and prosecute or defend, at its own cost and expense, any action or proceeding relating to any Condemnation Action, including
any defense of Lender’s interest in the Mortgaged Property tendered to Borrower by Lender, unless otherwise directed by Lender
in writing; and

 

(3)         execute
such further evidence of assignment of any condemnation award in connection with a Condemnation Action as Lender may require.

 

(b)          Condemnation
Proceeds.

 

Borrower shall pay
to Lender all awards or proceeds of a Condemnation Action promptly upon receipt.

 

Section
10.03    Mortgage Loan Administration Matters Regarding Condemnation.

 

(a)          Application
of Condemnation Awards.

 

Lender may apply any
awards or proceeds of a Condemnation Action, after the deduction of Lender’s expenses incurred in the collection of such
amounts, to:

 

(1)         the
restoration or repair of the Mortgaged Property, if applicable;

 

(2)         the
payment of the Indebtedness, with the balance, if any, paid to Borrower; or

 

(3)         Borrower.

 

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(b)          Payment
Obligations Unaffected.

 

The application of
any awards or proceeds of a Condemnation Action to the Indebtedness shall not extend or postpone the Maturity Date, or the due
date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred
to in this Loan Agreement or in any other Loan Document.

 

(c)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby authorizes
and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

 

(d)          Preservation
of Mortgaged Property.

 

If a Condemnation Action
results in or from damage to the Mortgaged Property and Lender elects to apply the proceeds or awards from such Condemnation Action
to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the
Mortgaged Property. Rather, Borrower shall restrict access to any portion of the Mortgaged Property which has been damaged or destroyed
in connection with such Condemnation Action and, at Borrower’s expense and regardless of whether such costs are covered by
insurance, clean up any debris resulting in or from the Condemnation Action, and, if required by any Governmental Authority or
otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to
keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 10.03(d) shall
affect any of Lender’s remedial rights against Borrower in connection with a breach by Borrower of any of its obligations
under this Loan Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain
the insurance coverage(s) required by this Loan Agreement.

 

Article
11 - LIENS, TRANSFERS, AND ASSUMPTIONS

 

Section
11.01    Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 11.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)         No
Labor or Materialmen’s Claims.

 

All parties furnishing
labor and materials on behalf of Borrower or on behalf of Property Operator with respect to the Mortgaged Property have been paid
in full. There are no mechanics’ or materialmen’s liens (whether filed or unfiled) outstanding for work, labor, or
materials (and no claims or work outstanding that under applicable law could give rise to any such mechanics’ or materialmen’s
liens) affecting the Mortgaged Property, whether prior to, equal with, or subordinate to the lien of the Security Instrument.

 

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(b)         No
Other Interests.

 

No Person:

 

(1)         other
than Borrower has any possessory ownership or interest in the Mortgaged Property or right to occupy the same except under and pursuant
to the provisions of the Facility Operating Agreement and the other existing Leases, the material terms of all such Leases having
been previously disclosed in writing to Lender; nor

 

(2)         has
an option, right of first refusal, or right of first offer (except as required by applicable law) to purchase the Mortgaged Property,
or any interest in the Mortgaged Property.

 

Section
11.02    Covenants.

 

(a)         Liens;
Encumbrances.

 

Borrower shall not
permit the grant, creation, or existence of any Lien, whether voluntary, involuntary, or by operation of law, on all or any portion
of the Mortgaged Property (including any voluntary, elective, or non-compulsory tax lien or assessment pursuant to a voluntary,
elective, or non-compulsory special tax district or similar regime) other than:

 

(1)         Permitted
Encumbrances;

 

(2)         the
creation of:

 

(A)         any
tax lien, municipal lien, utility lien, mechanics’ lien, materialmen’s lien, or judgment lien against the Mortgaged
Property if bonded off, released of record, or otherwise remedied to Lender’s satisfaction within sixty (60) days after the
earlier of the date Borrower or Property Operator has actual notice or constructive notice of the existence of such lien; or

 

(B)         any
mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the
commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower or Property Operator
is not delinquent in the payment for any such work or materials; and

 

(3)         the
lien created by, or (in connection with Permitted Equipment Financing) permitted under, the Loan Documents.

 

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(b)         Transfers.

 

(1)         Mortgaged
Property.

 

Borrower
shall not Transfer, or cause or permit a Transfer of, all or any part of the Mortgaged Property (including any interest in the
Mortgaged Property) other than:

 

(A)         a
Transfer to which Lender has consented in writing;

 

(B)         Leases
permitted pursuant to the Loan Documents, including the Seniors Housing Facility Lease between Borrower and Property Operator and
the subordination thereof to the terms, provisions, and lien of this Loan Agreement, the Security Instrument, and the other Loan
Documents;

 

(C)         [reserved];

 

(D)         a
Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function
and quality which are free of Liens (other than those created by the Loan Documents);

 

(E)         the
grant of an easement, servitude, or restrictive covenant to which Lender has consented, and Borrower has paid to Lender, upon demand,
all costs and expenses incurred by Lender in connection with reviewing Borrower’s request;

 

(F)         a
lien permitted pursuant to Section 11.02(a) of this Loan Agreement; or

 

(G)         the
conveyance of the Mortgaged Property following a Foreclosure Event.

 

(2)         Interests
in Borrower, Key Principal, Guarantor, or Affiliated Property Operator.

 

Other than
a Transfer to which Lender has consented in writing, Borrower shall not Transfer, or cause or permit to be Transferred:

 

(A)         any
direct or indirect ownership interest in Borrower, Key Principal, Guarantor, or Affiliated Property Operator if such Transfer would
cause a change in Control;

 

(B)         a
direct or indirect Restricted Ownership Interest in Borrower, Key Principal, Guarantor, or Affiliated Property Operator;

 

(C)         fifty
percent (50%) or more of Key Principal’s or Guarantor’s direct or indirect ownership interests in Borrower or Affiliated
Property Operator (if applicable) that existed on the Effective Date (individually or on an aggregate basis);

 

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(D)         the
economic benefits or rights to cash flows attributable to any ownership interests in Borrower, Key Principal, Guarantor or Affiliated
Property Operator (if applicable) separate from the Transfer of the underlying ownership interests if the Transfer of the underlying
ownership interest is prohibited by this Loan Agreement; or

 

(E)         a
Transfer to a new key principal or new guarantor (if such new key principal or guarantor is an entity), which entity has an organizational
existence termination date that ends before the Maturity Date.

 

Notwithstanding the foregoing, if a Publicly-Held
Corporation or a Publicly-Held Trust Controls Borrower, Key Principal, Guarantor, or Affiliated Property Operator, or owns a direct
or indirect Restricted Ownership Interest in Borrower, Key Principal, Guarantor, or Affiliated Property Operator, a Transfer of
any ownership interests in such Publicly-Held Corporation or Publicly-Held Trust shall not be prohibited under this Loan Agreement
as long as (i) such Transfer does not result in a conversion of such Publicly-Held Corporation or Publicly-Held Trust to a privately
held entity, and (ii) Borrower provides written notice to Lender not later than thirty (30) days thereafter of any such Transfer
that results in any Person owning ten percent (10%) or more of the ownership interests in such Publicly-Held Corporation or Publicly-Held
Trust.

 

(3)         Name
Change or Entity Conversion.

 

Lender shall
consent to Borrower changing its name, changing its jurisdiction of organization, or converting from one type of legal entity into
another type of legal entity for any lawful purpose, provided that:

 

(A)         Lender
receives written notice at least thirty (30) days prior to such change or conversion, which notice shall include organizational
charts that reflect the structure of Borrower both prior to and subsequent to such name change or entity conversion;

 

(B)         such
Transfer is not otherwise prohibited under the provisions of Section 11.02(b)(2);

 

(C)         Borrower
executes an amendment to this Loan Agreement and any other Loan Documents required by Lender documenting the name change or entity
conversion;

 

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(D)         Borrower
agrees and acknowledges, at Borrower’s expense, that (i) Borrower will execute and record in the land records any instrument
required by the Property Jurisdiction to be recorded to evidence such name change or entity conversion (or provide Lender with
written confirmation from the title company (via electronic mail or letter) that no such instrument is required), (ii) Borrower
will execute any additional documents required by Lender, including the amendment to this Loan Agreement, and, if applicable, an
amendment to the Facility Operating Agreement, and, if applicable, allow such documents to be recorded or filed in the land records
of the Property Jurisdiction, (iii) Lender will obtain a “date down” endorsement to the Lender’s Title Policy
(or obtain a new Title Policy if a “date down” endorsement is not available in the Property Jurisdiction), evidencing
title to the Mortgaged Property being in the name of the successor entity and the Lien of the Security Instrument against the Mortgaged
Property, and (iv) Lender will file any required UCC-3 financing statement and make any other filing deemed necessary to maintain
the priority of its Liens on the Mortgaged Property;

 

(E)         no
later than ten (10) days subsequent to such name change or entity conversion, Borrower shall provide Lender (i) the documentation
filed with the appropriate office in Borrower’s state of formation evidencing such name change or entity conversion, (ii)
copies of the organizational documents of Borrower, including any amendments, filed with the appropriate office in Borrower’s
state of formation reflecting the post-conversion Borrower name, form of organization and structure, and (iii) if available, new
certificates of good standing or valid formation for Borrower; and

 

(F)         Borrower
shall provide Lender with confirmation that any Licenses in Borrower’s name remain valid and in full force and effect following
the name change or entity conversion or have been properly transferred to Borrower following such name change or entity conversion.

 

(4)         No
Delaware Statutory Trust or Series LLC Conversion.

 

Notwithstanding
any provisions herein to the contrary, no Borrower, Guarantor, or Key Principal shall convert to a Delaware Statutory Trust or
a series limited liability company.

 

(c)          Facility
Operating Agreement.

 

Subject to the provisions
of this Article 11, Borrower shall not:

 

(1)         Transfer
its rights or interests in the Facility Operating Agreement, or Transfer the responsibility for the operation and management of
the Mortgaged Property, from Property Operator to any other Person;

 

(2)         permit
Affiliated Property Operator to Transfer its interest in the Facility Operating Agreement;

 

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(3)         remove,
permit, or suffer the removal of Affiliated Property Operator from the Facility Operating Agreement;

 

(4)         surrender
or accept a surrender of the Facility Operating Agreement;

 

(5)         cancel
or terminate the Facility Operating Agreement; or

 

(6)         permit
a merger of Borrower’s fee interest estate in the Mortgaged Property with Property Operator’s leasehold interest in
the Mortgaged Property, if any.

 

Borrower
agrees, and the Facility Operating Agreement shall provide, that Lender shall have the right to terminate the Facility Operating
Agreement at any time upon the occurrence and continuance of an Event of Default.

 

(d)          No
Other Indebtedness.

 

Other than the Mortgage
Loan, neither Borrower nor any Affiliated Property Operator shall incur or be obligated at any time with respect to any loan or
other indebtedness (except trade payables as otherwise permitted in this Loan Agreement), including any indebtedness secured by
a Lien on, or the cash flows from, the Mortgaged Property.

 

(e)          No
Mezzanine Financing or Preferred Equity.

 

Neither Borrower, any
Affiliated Property Operator nor any direct or indirect owner of Borrower or any Affiliated Property Operator shall: (1) incur
any Mezzanine Debt other than Permitted Mezzanine Debt, (2) issue any Preferred Equity other than Permitted Preferred Equity, or
(3) incur any similar indebtedness or issue any similar equity.

 

Section
11.03     Mortgage Loan Administration Matters Regarding Liens, Transfers
and Assumptions

 

(a)         Assumption
of Mortgage Loan.

 

Lender shall consent
to a Transfer of the Mortgaged Property to and an assumption of the Mortgage Loan by a new borrower if each of the following conditions
is satisfied prior to the Transfer:

 

(1)         Borrower
has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(a);

 

(2)         no
Event of Default has occurred and is continuing, and no event which, with the giving of written notice or the passage of time,
or both, would constitute an Event of Default has occurred and is continuing;

 

(3)         Lender
determines that:

 

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(A)         the
proposed new borrower, new key principal, and any other new guarantor fully satisfy all of Lender’s then-applicable borrower,
key principal, or guarantor eligibility, credit, management, and other loan underwriting standards, which shall include an analysis
of (i) the previous relationships between Lender and the proposed new borrower, new key principal, new guarantor, and any Person
in Control of them, and the organization of the new borrower, new key principal, and new guarantor (if applicable), and (ii) the
operating and financial performance of the Mortgaged Property, including physical condition and occupancy;

 

(B)         none
of the proposed new borrower, new key principal, and any new guarantor, or any owners of the proposed new borrower, new key principal,
and any new guarantor, are a Prohibited Person; and

 

(C)         none
of the proposed new borrower, new key principal, and any new guarantor (if any of such are entities) shall have an organizational
existence termination date that ends before the Maturity Date;

 

(4)         [reserved];

 

(5)         the
proposed new borrower has:

 

(A)         executed
an assumption agreement acceptable to Lender that, among other things, requires the proposed new borrower to assume and perform
all obligations of Borrower (or any other transferor), and that may require that the new borrower comply with any provisions of
any Loan Document that previously may have been waived by Lender for Borrower, subject to the terms of Section 11.03(g);

 

(B)         if
required by Lender, delivered to the Title Company for filing and/or recording in all applicable jurisdictions, all applicable
Loan Documents including the assumption agreement to correctly evidence the assumption and the confirmation, continuation, perfection,
and priority of the Liens created hereunder and under the other Loan Documents; and

 

(C)         delivered
to Lender a “date-down” endorsement to the Title Policy acceptable to Lender (or a new title insurance policy if a
“date-down” endorsement is not available);

 

(6)         one
or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

 

(A)         an
assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under
any Guaranty given in connection with the Mortgage Loan; or

 

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(B)         a
substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender;

 

(7)         Lender
has reviewed and approved the Transfer documents;

 

(8)         Lender
has received the fees described in Section 11.03(g); and

 

(9)         Borrower
and Property Operator have executed a new SASA required by Lender.

 

(b)         Transfers
to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.

 

(1)         Except
as otherwise covered in Section 11.03(b)(2) below, Transfers of direct or indirect ownership interests in Borrower or Affiliated
Property Operator to Key Principal or Guarantor, or to a transferee through which Key Principal or Guarantor (as applicable) Controls
Borrower or Affiliated Property Operator, with the same rights and abilities as Key Principal or Guarantor (as applicable) Controls
Borrower or Affiliated Property Operator immediately prior to the date of such Transfer, shall be consented to by Lender if:

 

(A)         such
Transfer satisfies the applicable requirements of Section 11.03(a), other than Section 11.03(a)(5); and

 

(B)         after
giving effect to any such Transfer, each Key Principal or Guarantor (as applicable) continues to own not less than fifty percent
(50%) of such Key Principal’s or Guarantor’s (as applicable) direct or indirect ownership interests in Borrower and
Affiliated Property Operator that existed on the Effective Date.

 

(2)         Transfers
of direct or indirect interests in Borrower or Affiliated Property Operator held by a Key Principal or Guarantor to other Key Principals
or Guarantors, as applicable, shall be consented to by Lender if such Transfer satisfies the following conditions:

 

(A)         the
Transfer does not cause a change in the Control of Borrower or Affiliated Property Operator; and

 

(B)         the
transferor Key Principal or Guarantor maintains the same right and ability to Control Borrower and Affiliated Property Operator
as existed prior to the Transfer.

 

If the conditions set forth in this Section
11.03(b) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

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(c)          Estate
Planning.

 

Notwithstanding the
provisions of Section 11.02(b)(2), so long as (1) the Transfer does not cause a change in the Control of Borrower or Affiliated
Property Operator, and (2) Key Principal and Guarantor, as applicable, maintain the same right and ability to Control Borrower
and Affiliated Property Operator as existed prior to the Transfer, Lender shall consent to Transfers of direct or indirect ownership
interests in Borrower or Affiliated Property Operator, and Transfers of direct or indirect ownership interests, in an entity Key
Principal or entity Guarantor to:

 

(A)         Immediate
Family Members of such transferor each of whom must have obtained the legal age of majority;

 

(B)         United
States domiciled trusts established for the benefit of the transferor, or Immediate Family Members of the transferor; or

 

(C)         partnerships
or limited liability companies of which the partners or members, respectively, are comprised entirely of (i) such transferor and
Immediate Family Members (each of whom must have obtained the legal age of majority) of such transferor, (ii) Immediate Family
Members (each of whom must have obtained the legal age of majority) of such transferor, or (iii) United States domiciled trusts
established for the benefit of the transferor, or Immediate Family Members of the transferor.

 

If the conditions set forth in this Section
11.03(c) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(d)          Termination
or Revocation of Trust.

 

If any of Borrower,
Affiliated Property Operator, Guarantor, or Key Principal is a trust, or if Control of Borrower, Affiliated Property Operator,
Guarantor, or Key Principal is Transferred or if a Restricted Ownership Interest in Borrower, Affiliated Property Operator, Guarantor,
or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation of such trust
is an unpermitted Transfer; provided that the termination or revocation of the trust due to the death of an individual trustor
shall not be considered an unpermitted Transfer so long as:

 

(1)         Lender
is notified within thirty (30) days of the death; and

 

(2)         such
Borrower, Affiliated Property Operator, Guarantor, Key Principal, or other Person, as applicable, is replaced with an individual
or entity acceptable to Lender, in accordance with the provisions of Section 11.03(a) within ninety (90) days of the date of the
death causing the termination or revocation.

 

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If the conditions set forth in this Section
11.03(d) are satisfied, the Transfer Fee shall be waived; provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(e)          Death
of Key Principal or Guarantor; Transfer Due to Death.

 

(1)         If
a Key Principal or Guarantor that is a natural person dies, or if Control of Borrower, Affiliated Property Operator, Guarantor,
or Key Principal is Transferred, or if a Restricted Ownership Interest in Borrower, Affiliated Property Operator, Guarantor, or
Key Principal would be Transferred as a result of the death of a Person (except in the case of trusts which is addressed in Section
11.03(d)), Borrower must notify Lender in writing within ninety (90) days in the event of such death. Unless waived in writing
by Lender, the deceased shall be replaced by an individual or entity within one hundred eighty (180) days, subject to Borrower’s
satisfaction of the following conditions:

 

(A)         Borrower
has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(e);

 

(B)         Lender
determines that, if applicable:

 

(i)          any
proposed new key principal and any other new guarantor (or Person Controlling such new key principal or new guarantor) fully satisfies
all of Lender’s then-applicable key principal or guarantor eligibility, credit, management, and other loan underwriting standards
(including any standards with respect to previous relationships between Lender and the proposed new key principal and new guarantor
(or Person Controlling such new key principal or new guarantor) and the organization of the new key principal and new guarantor);

 

(ii)         none
of any proposed new key principal or any new guarantor, or any owners of the proposed new key principal or any new guarantor, is
a Prohibited Person; and

 

(iii)        none
of any proposed new key principal or any new guarantor (if any of such are entities) shall have an organizational existence termination
date that ends before the Maturity Date; and

 

(C)         if
applicable, one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

 

(i)          an
assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under
any Guaranty given in connection with the Mortgage Loan; or

 

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(ii)         a
substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.

 

(2)         In
the event a replacement Key Principal, Guarantor, or other Person is required by Lender due to the death described in this Section
11.03(e), and such replacement has not occurred within such period, the period for replacement may be extended by Lender to a date
not more than one year from the date of such death; however, Lender may require as a condition to any such extension that:

 

(A)         any
then-current Property Operator be replaced with a property operator reasonably acceptable to Lender (or if a Property Operator
has not been previously engaged, a property operator reasonably acceptable to Lender be engaged); or

 

(B)         a
lockbox agreement or similar cash management arrangement (with Property Operator) reasonably acceptable to Lender during such extended
replacement period be instituted.

 

If the conditions set forth in this Section
11.03(e) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(f)          Bankruptcy
of Guarantor.

 

(1)         Upon
the occurrence of any Guarantor Bankruptcy Event, unless waived in writing by Lender, the applicable Guarantor shall be replaced
by an individual or entity within ninety (90) days of such Guarantor Bankruptcy Event, subject to Borrower’s satisfaction
of the following conditions:

 

(A)         Borrower
has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(f);

 

(B)         Lender
determines that:

 

(i)          the
proposed new guarantor fully satisfies all of Lender’s then-applicable guarantor eligibility, credit, management, and other
loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new
guarantor and the organization of the new guarantor (if applicable));

 

(ii)         no
new guarantor is a Prohibited Person; and

 

(iii)        no
new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity
Date; and

 

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(C)         one
or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

 

(i)          an
assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under
any Guaranty given in connection with the Mortgage Loan; or

 

(ii)         a
substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.

 

(2)         In
the event a replacement Guarantor is required by Lender due to the Guarantor Bankruptcy Event described in this Section 11.03(f),
and such replacement has not occurred within such period, the period for replacement may be extended by Lender in its discretion;
however, Lender may require as a condition to any such extension that:

 

(A)         any
then-current Property Operator be replaced with a Property Operator reasonably acceptable to Lender (or if a Property Operator
has not been previously engaged, a Property Operator reasonably acceptable to Lender be engaged); or

 

(B)         a
lockbox agreement or similar cash management arrangement (with the Property Operator) reasonably acceptable to Lender during such
extended replacement period be instituted.

 

If the conditions set forth in this Section
11.03(f) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(g)          Further
Conditions to Transfers and Assumption.

 

(1)         In
connection with any Transfer of the Mortgaged Property, or an ownership interest in Borrower, Affiliated Property Operator, Key
Principal, or Guarantor for which Lender’s approval is required under this Loan Agreement (including Section 11.03(a)), Lender
may, as a condition to any such approval, require:

 

(A)         additional
collateral, guaranties, or other credit support to mitigate any risks concerning the proposed transferee or the performance or
condition of the Mortgaged Property;

 

(B)         amendment
of the Loan Documents to delete or modify any specially negotiated terms or provisions previously granted for the exclusive benefit
of original Borrower, Affiliated Property Operator, Key Principal, or Guarantor and to restore the original provisions of the standard
Fannie Mae form multifamily loan documents, to the extent such provisions were previously modified; or

 

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(C)         a
modification to the amounts required to be deposited into the Reserve/Escrow Account pursuant to the terms of Section 13.02(a)(3)(B).

 

(2)         In
connection with any request by Borrower for consent to a Transfer, Borrower shall pay to Lender upon demand:

 

(A)         the
Transfer Fee (to the extent charged by Lender);

 

(B)         the
Review Fee (regardless of whether Lender approves or denies such request); and

 

(C)         all
of Lender’s out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request,
regardless of whether Lender approves or denies such request.

 

(h)         Transfer
of Interests in Sentio Healthcare Properties, Inc. and Sentio Healthcare Properties OP, L.P.

 

So long as no Event
of Default has occurred and is continuing, the following Transfers shall be permitted without the prior written consent of Lender:

 

(A)         Upon
prior written notice to Lender, Transfers of direct interest in Sentio Healthcare OP, L.P., a Delaware limited partnership (“Sentio
OP”) resulting from (i) the conversion by Sentinel RE Investment Holdings LP, a Delaware limited partnership (“Sentinel”)
of preferred units of Sentio OP (the “Preferred Units”) to common units of Sentio OP (the “Common Units”;
together with the Preferred Units, collectively, the “Units”) or (ii) the exchange of Units held by Sentinel
into common shares (“Common Shares”) of Sentio Healthcare Properties, Inc., a Delaware corporation (“Sentio”),
and the admission to Sentio OP of a new limited partner wholly owned by Sentio;

 

(B)         Upon
prior written notice to Lender, Transfers of direct interest in Sentio resulting from the conversion by Sentinel of any preferred
stock of Sentio (the “Preferred Shares”) held by Sentinel into Common Shares; and

 

(C)         Transfers
of direct or indirect ownership interests in Sentinel, provided that following any such Transfer, KKR & Co L.P., a Delaware
limited partnership (“KKR”) shall continue to possess, directly or indirectly, the power to direct or cause
the direction of the management and operations of Sentinel, whether through the ownership of voting securities or other ownership
interest, by contract or otherwise.

 

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Article
12 - IMPOSITIONS

 

Section
12.01     Representations and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 12.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Payment
of Taxes, Assessments, and Other Charges.

 

Borrower has:

 

(1)         paid
(or with the approval of Lender, established an escrow fund sufficient to pay when due and payable) all amounts and charges relating
to the Mortgaged Property that have become due and payable before any fine, penalty interest, lien, or costs may be added thereto,
including Impositions, leasehold payments, and ground rents;

 

(2)         paid
all Taxes for the Mortgaged Property that have become due before any fine, penalty interest, lien, or costs may be added thereto
pursuant to any notice of assessment received by Borrower and any and all taxes that have become due against Borrower before any
fine, penalty interest, lien, or costs may be added thereto;

 

(3)         no
knowledge of any basis for any additional assessments;

 

(4)         no
knowledge of any presently pending special assessments against all or any part of the Mortgaged Property, or any presently pending
special assessments against Borrower; and

 

(5)         not
received any written notice of any contemplated special assessment against the Mortgaged Property, or any contemplated special
assessment against Borrower.

 

Section
12.02     Covenants.

 

(a)          Imposition
Deposits, Taxes, and Other Charges.

 

Borrower shall:

 

(1)         deposit
the Imposition Deposits with Lender on each Payment Date (or on another day designated in writing by Lender) in amount sufficient,
in Lender’s discretion, to enable Lender to pay each Imposition before the last date upon which such payment may be made
without any penalty or interest charge being added, plus an amount equal to no more than one-sixth (1/6) (or the amount permitted
by applicable law) of the Impositions for the trailing twelve (12) months (calculated based on the aggregate annual Imposition
costs divided by twelve (12) and multiplied by two (2));

 

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(2)         deposit
with Lender, within ten (10) days after written notice from Lender (subject to applicable law), such additional amounts estimated
by Lender to be reasonably necessary to cure any deficiency in the amount of the Imposition Deposits held for payment of a specific
Imposition;

 

(3)         except
as set forth in Section 12.03(c) below, pay all Impositions, leasehold payments, ground rents, and Taxes when due and before any
fine, penalty, interest, lien, or costs may be added thereto;

 

(4)         promptly
deliver to Lender a copy of all notices of, and invoices for, Impositions, and, if Borrower pays any Imposition directly, Borrower
shall promptly furnish to Lender receipts evidencing such payments; and

 

(5)         promptly
deliver to Lender a copy of all notices of any special assessments and contemplated special assessments against the Mortgaged Property
or Borrower.

 

Section
12.03     Mortgage Loan Administration Matters Regarding Impositions.

 

(a)          Maintenance
of Records by Lender.

 

Lender shall maintain
records of the monthly and aggregate Imposition Deposits held by Lender for the purpose of paying Taxes, insurance premiums, and
each other obligation of Borrower for which Imposition Deposits are required.

 

(b)          Imposition
Accounts.

 

All Imposition Deposits
shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured
or guaranteed by a federal agency and which accounts meet the standards for custodial accounts as required by Lender from time
to time. Lender shall not be obligated to open additional accounts, or deposit Imposition Deposits in additional institutions,
when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. No interest,
earnings, or profits on the Imposition Deposits shall be paid to Borrower unless applicable law so requires. Imposition Deposits
shall not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that purpose in accordance
with this Loan Agreement. For the purposes of 9-104(a)(3) of the UCC, Lender is the owner of the Imposition Deposits and shall
be deemed a “customer” with sole control of the account holding the Imposition Deposits.

 

(c)          Payment
of Impositions; Sufficiency of Imposition Deposits.

 

Lender may pay an Imposition
according to any bill, statement, or estimate from the appropriate public office or insurance company without inquiring into the
accuracy of the bill, statement, or estimate or into the validity of the Imposition. Imposition Deposits shall be required to be
used by Lender to pay Taxes, insurance premiums and any other individual Imposition only if:

 

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(1)         no
Event of Default exists;

 

(2)         Borrower
has timely delivered to Lender all applicable bills or premium notices that it has received; and

 

(3)         sufficient
Imposition Deposits are held by Lender for each Imposition at the time such Imposition becomes due and payable.

 

Lender shall have no
liability to Borrower or any other Person for failing to pay any Imposition if any of the conditions are not satisfied. If at any
time the amount of the Imposition Deposits held for payment of a specific Imposition exceeds the amount reasonably deemed necessary
by Lender to be held in connection with such Imposition, the excess may be credited against future installments of Imposition Deposits
for such Imposition.

 

(d)          Imposition
Deposits Upon Event of Default.

 

If an Event of Default
has occurred and is continuing, Lender may apply any Imposition Deposits, in such amount and in such order as Lender determines,
to pay any Impositions or as a credit against the Indebtedness.

 

(e)          Contesting
Impositions.

 

Other than insurance
premiums, Borrower may contest, at its expense, by appropriate legal proceedings, the amount or validity of any Imposition if:

 

(1)         Borrower
notifies Lender of the commencement or expected commencement of such proceedings;

 

(2)         Lender
determines that the Mortgaged Property is not in danger of being sold or forfeited;

 

(3)         Borrower
deposits with Lender (or the applicable Governmental Authority if required by applicable law) reserves sufficient to pay the contested
Imposition, if required by Lender (or the applicable Governmental Authority);

 

(4)         Borrower
furnishes whatever additional security is required in the proceedings or is reasonably requested in writing by Lender; and

 

(5)         Borrower
commences, and at all times thereafter diligently prosecutes, such contest in good faith until a final determination is made by
the applicable Governmental Authority.

 

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(f)          Release
to Borrower.

 

Upon payment in full
of all sums secured by the Security Instrument and this Loan Agreement and release by Lender of the lien of the Security Instrument,
Lender shall disburse to Borrower the balance of any Imposition Deposits then on deposit with Lender.

 

Article
13 - REPLACEMENT RESERVE AND REPAIRS

 

Section
13.01     Covenants.

 

(a)         Initial
Deposits to Replacement Reserve Account and Repairs Escrow Account.

 

On the Effective Date,
Borrower shall pay to Lender:

 

(1)         the
Initial Replacement Reserve Deposit for deposit into the Replacement Reserve Account; and

 

(2)         the
Repairs Escrow Deposit for deposit into the Repairs Escrow Account.

 

(b)         Monthly
Replacement Reserve Deposits.

 

Borrower shall deposit
the applicable Monthly Replacement Reserve Deposit into the Replacement Reserve Account on each Payment Date.

 

(c)         Payment
for Replacements and Repairs.

 

Borrower shall:

 

(1)         pay
all invoices for the Replacements and Repairs, regardless of whether funds on deposit in the Replacement Reserve Account or the
Repairs Escrow Account, as applicable, are sufficient, prior to any request by Borrower for disbursement from the Replacement Reserve
Account or the Repairs Escrow Account, as applicable (unless Lender has agreed to issue joint checks in connection with a particular
Replacement or Repair);

 

(2)         pay
all applicable fees and charges of any Governmental Authority on account of the Replacements and Repairs, as applicable; and

 

(3)         provide
evidence satisfactory to Lender of completion of the Replacements and any Required Repairs (within the Completion Period or within
such other period or by such other date set forth in the Required Repair Schedule and any Borrower Requested Repairs and Additional
Lender Repairs (by the date specified by Lender for any such Borrower Requested Repairs or Additional Lender Repairs)).

 

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(d)          Assignment
of Contracts for Replacements and Repairs.

 

Borrower shall collaterally
assign to Lender as additional security any contract or subcontract for Replacements or Repairs, upon Lender’s written request,
on a form of assignment approved by Lender.

 

(e)          Indemnification.

 

If Lender elects to
exercise its rights under Section 14.03 due to Borrower’s failure to timely commence or complete any Replacements or Repairs,
Borrower shall indemnify and hold Lender harmless for, from and against any and all actions, suits, claims, demands, liabilities,
losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arising from
or in any way connected with the performance by Lender of the Replacements or Repairs or investment of the Reserve/Escrow Account
Funds; provided that Borrower shall have no indemnity obligation if such actions, suits, claims, demands, liabilities, losses,
damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arise as a result
of the willful misconduct or gross negligence of Lender, Lender’s agents, employees, or representatives as determined by
a court of competent jurisdiction pursuant to a final non-appealable court order.

 

(f)          Amendments
to Loan Documents.

 

Subject to Section
5.02, Borrower shall execute and deliver to Lender, upon written request, an amendment to this Loan Agreement, the Security Instrument,
and any other Loan Document deemed necessary or desirable to perfect Lender’s lien upon any portion of the Mortgaged Property
for which Reserve/Escrow Account Funds were expended.

 

(g)         Administrative
Fees and Expenses.

 

Borrower shall pay
to Lender:

 

(1)         by
the date specified in the applicable invoice, the Repairs Escrow Account Administrative Fee and the Replacement Reserve Account
Administration Fee for Lender’s services in administering the Repairs Escrow Account and Replacement Reserve Account and
investing the funds on deposit in the Repairs Escrow Account and the Replacement Reserve Account, respectively;

 

(2)         upon
demand, a reasonable inspection fee, not exceeding the Maximum Inspection Fee, for each inspection of the Mortgaged Property by
Lender in connection with a Repair or Replacement, plus all other reasonable costs and out-of-pocket expenses relating to such
inspections; and

 

(3)         upon
demand, all reasonable fees charged by any engineer, architect, inspector or other person inspecting the Mortgaged Property on
behalf of Lender for each inspection of the Mortgaged Property in connection with a Repair or Replacement, plus all other reasonable
costs and out-of-pocket expenses relating to such inspections.

 

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Section
13.02     Mortgage Loan Administration Matters Regarding Reserves.

 

(a)          Accounts,
Deposits, and Disbursements.

 

(1)         Custodial
Accounts.

 

(A)         The
Replacement Reserve Account shall be an interest-bearing account that meets the standards for custodial accounts as required by
Lender from time to time. Lender shall not be responsible for any losses resulting from the investment of the Replacement Reserve
Deposits or for obtaining any specific level or percentage of earnings on such investment. All interest, if any, earned on the
Replacement Reserve Deposits shall be added to and become part of the Replacement Reserve Account; provided, however,
if applicable law requires, and so long as no Event of Default has occurred and is continuing under any of the Loan Documents,
Lender shall pay to Borrower the interest earned on the Replacement Reserve Account not less frequently than the Replacement Reserve
Account Interest Disbursement Frequency. In no event shall Lender be obligated to disburse funds from the Reserve/Escrow Account
if an Event of Default has occurred and is continuing.

 

(B)         Lender
shall not be obligated to deposit the Repairs Escrow Deposits into an interest-bearing account.

 

(2)         Disbursements
by Lender Only.

 

Only Lender
or a designated representative of Lender may make disbursements from the Replacement Reserve Account and the Repairs Escrow Account.
Except as provided in Section 13.02(a)(8), disbursements shall only be made upon Borrower request and after satisfaction of all
conditions for disbursement.

 

(3)         Adjustment
to Deposits.

 

(A)         Mortgage
Loan Terms Exceeding Ten (10) Years.

 

If the Loan
Term exceeds ten (10) years (or five (5) years in the case of any Mortgaged Property that is an “affordable housing property”
as indicated on the Summary of Loan Terms), a property condition assessment shall be ordered by Lender for the Mortgaged Property
at the expense of Borrower (which expense may be paid out of the Replacement Reserve Account if excess funds are available). The
property condition assessment shall be performed no earlier than the sixth (6th) month and no later than the ninth (9th) month
of the tenth (10th) Loan Year and every tenth (10th) Loan Year thereafter if the Loan Term exceeds twenty (20) years (or the fifth
(5th) Loan Year in the case of any Mortgaged Property that is an “affordable housing property” as indicated on the
Summary of Loan Terms and every fifth (5th) Loan Year thereafter if the Loan Term exceeds ten (10) years). After review of the
property condition assessment, the amount of the Monthly Replacement Reserve Deposit may be adjusted by Lender for the remaining
Loan Term by written notice to Borrower so that the Monthly Replacement Reserve Deposits are sufficient to fund the Replacements
as and when required and/or the amount to be held in the Repairs Escrow Account may be adjusted by Lender so that the Repairs Escrow
Deposit is sufficient to fund the Repairs as and when required.

 

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(B)         Transfers.

 

In connection
with any Transfer of the Mortgaged Property, the Facility Operating Agreement, or any Transfer of an ownership interest in Borrower,
Affiliated Property Operator, Guarantor, or Key Principal that requires Lender’s consent, Lender may review the amounts on
deposit, if any, in the Replacement Reserve Account or the Repairs Escrow Account, the amount of the Monthly Replacement Reserve
Deposit and the likely repairs and replacements required by the Mortgaged Property, and the related contingencies which may arise
during the remaining Loan Term. Based upon that review, Lender may require an additional deposit to the Replacement Reserve Account
or the Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit as a condition to Lender’s
consent to such Transfer.

 

(4)         Insufficient
Funds.

 

Lender may,
upon thirty (30) days prior written notice to Borrower, require an additional deposit(s) to the Replacement Reserve Account or
Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit, if Lender determines that the
amounts on deposit in either the Replacement Reserve Account or the Repairs Escrow Account are not sufficient to cover the costs
for Required Repairs or Required Replacements or, pursuant to the terms of Section 13.02(a)(9), not sufficient to cover the costs
for Borrower Requested Repairs, Additional Lender Repairs, Borrower Requested Replacements, or Additional Lender Replacements.
Borrower’s agreement to complete the Replacements or Repairs as required by this Loan Agreement shall not be affected by
the insufficiency of any balance in the Replacement Reserve Account or the Repairs Escrow Account, as applicable.

 

(5)         Disbursements
for Replacements and Repairs.

 

(A)         Disbursement
requests may only be made after completion of the applicable Replacements and only to reimburse Borrower for the actual approved
costs of the Replacements. Lender shall not disburse from the Replacement Reserve Account the costs of routine maintenance to the
Mortgaged Property or for costs which are to be reimbursed from the Repairs Escrow Account or any similar account. Disbursement
from the Replacement Reserve Account shall not be made more frequently than the Maximum Replacement Reserve Disbursement Interval.
Other than in connection with a final request for disbursement, disbursements from the Replacement Reserve Account shall not be
less than the Minimum Replacement Reserve Disbursement Amount.

 

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(B)         Disbursement
requests may only be made after completion of the applicable Repairs and only to reimburse Borrower for the actual cost of the
Repairs, up to the Maximum Repair Cost. Lender shall not disburse any amounts which would cause the funds remaining in the Repairs
Escrow Account after any disbursement (other than with respect to the final disbursement) to be less than the Maximum Repair Cost
of the then-current estimated cost of completing all remaining Repairs. Lender shall not disburse from the Repairs Escrow Account
the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from the Replacement Reserve
Account or any similar account. Disbursement from the Repairs Escrow Account shall not be made more frequently than the Maximum
Repair Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Repairs Escrow
Account shall not be less than the Minimum Repairs Disbursement Amount.

 

(6)         Disbursement
Requests.

 

Each request
by Borrower for disbursement from the Replacement Reserve Account or the Repairs Escrow Account must be in writing, must specify
the Replacement or Repair for which reimbursement is requested (provided that for any Borrower Requested Replacements, Borrower
Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow
Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)), and must:

 

(A)         if
applicable, specify the quantity and price of the items or materials purchased, grouped by type or category;

 

(B)         if
applicable, specify the cost of all contracted labor or other services involved in the Replacement or Repair for which such request
for disbursement is made;

 

(C)         if
applicable, include copies of invoices for all items or materials purchased and all contracted labor or services provided;

 

(D)         include
evidence of payment of such Replacement or Repair satisfactory to Lender (unless Lender has agreed to issue joint checks in connection
with a particular Repair or Replacement as provided in this Loan Agreement); and

 

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(E)         contain
a certification by Borrower and, if applicable (and if reasonably requested by Lender), from Property Operator that the Repair
or Replacement has been completed lien free and in a good and workmanlike manner, in accordance with any plans and specifications
previously approved by Lender (if applicable) and in compliance with all applicable laws, ordinances, rules, and regulations of
any Governmental Authority having jurisdiction over the Mortgaged Property, and otherwise in accordance with the provisions of
this Loan Agreement.

 

(7)         Conditions
to Disbursement.

 

Lender may
require any or all of the following at the expense of Borrower as a condition to disbursement of funds from the Replacement Reserve
Account or the Repairs Escrow Account (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional
Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for
such replacements or repairs pursuant to the terms of Section 13.02(a)(9)):

 

(A)         an
inspection by Lender of the Mortgaged Property and the applicable Replacement or Repair;

 

(B)         an
inspection or certificate of completion by an appropriate independent qualified professional (such as an architect, engineer or
property inspector, depending on the nature of the Repair or Replacement) selected by Lender;

 

(C)         either:

 

(i)          a
search of title to the Mortgaged Property effective to the date of disbursement; or

 

(ii)         a
“date-down” endorsement to Lender’s Title Policy (or a new Lender’s Title Policy if a “date-down”
is not available) extending the effective date of such policy to the date of disbursement, and showing no Liens other than (1)
Permitted Encumbrances, (2) liens which Borrower is diligently contesting in good faith that have been bonded off to the satisfaction
of Lender, or (3) mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority
upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent
in the payment for any such work or materials; and

 

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(D)         an
acknowledgement of payment, waiver of claims, and release of lien for work performed and materials supplied from each contractor,
subcontractor or materialman in accordance with the requirements of applicable law and covering all work performed and materials
supplied (including equipment and fixtures) for the Mortgaged Property by that contractor, subcontractor, or materialman through
the date covered by the disbursement request (or, in the event that payment to such contractor, subcontractor, or materialman is
to be made by a joint check, the release of lien shall be effective through the date covered by the previous disbursement).

 

(8)         Joint
Checks for Periodic Disbursements.

 

Lender may,
upon Borrower’s written request, issue joint checks, payable to Borrower and the applicable supplier, materialman, mechanic,
contractor, subcontractor, or other similar party, if:

 

(A)         the
cost of the Replacement or Repair exceeds the Replacement Threshold or the Repair Threshold, as applicable, and the contractor
performing such Replacement or Repair requires periodic payments pursuant to the terms of the applicable written contract;

 

(B)         the
contract for such Repair or Replacement requires payment upon completion of the applicable portion of the work;

 

(C)         Borrower
makes the disbursement request after completion of the applicable portion of the work required to be completed under such contract;

 

(D)         the
materials for which the request for disbursement has been made are on site at the Mortgaged Property and are properly secured or
installed;

 

(E)         Lender
determines that the remaining funds in the Replacement Reserve Account designated for such Replacement, or in the Repairs Escrow
Account designated for such Repair, as applicable, are sufficient to pay such costs and the then-current estimated cost of completing
all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested
Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously
approved by Lender;

 

(F)         each
supplier, materialman, mechanic, contractor, subcontractor, or other similar party receiving payments shall have provided, if requested
in writing by Lender, a waiver of liens with respect to amounts which have been previously paid to them; and

 

(G)         all
other conditions for disbursement have been satisfied.

 

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(9)         Replacements
and Repairs Other than Required Replacements or Required Repairs.

 

(A)         Borrower
Requested Replacements and Borrower Requested Repairs.

 

Borrower may
submit a disbursement request from the Replacement Reserve Account or the Repairs Escrow Account to reimburse Borrower for any
Borrower Requested Replacement or Borrower Requested Repair. The disbursement request must be in writing and include an explanation
for such request. Lender shall make disbursements for Borrower Requested Replacements or Borrower Requested Repairs if:

 

(i)          they
are of the type intended to be covered by the Replacement Reserve Account or the Repairs Escrow Account, as applicable;

 

(ii)         the
costs are commercially reasonable;

 

(iii)        the
amount of funds in the Replacement Reserve Account or Repairs Escrow Account, as applicable, is sufficient to pay such costs and
the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost),
as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements or Additional
Lender Repairs that have been previously approved by Lender; and

 

(iv)        all
conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.

 

Nothing in this Loan Agreement
shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly
Replacement Reserve Deposit in connection with any such Borrower Requested Replacements, or an additional deposit to the Repairs
Escrow Account for any such Borrower Requested Repairs.

 

(B)         Additional
Lender Replacements and Additional Lender Repairs.

 

Lender may
require, as set forth in Section 6.02(b), Section 6.03(c), or otherwise from time to time, upon written notice to Borrower, that
Borrower make Additional Lender Replacements or Additional Lender Repairs. Lender shall make disbursements from the Replacement
Reserve Account for Additional Lender Replacements or from the Repairs Escrow Account for Additional Lender Repairs, as applicable,
if:

 

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(i)          the
costs are commercially reasonable;

 

(ii)         the
amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs
and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair
Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements,
or Additional Lender Repairs that have been previously approved by Lender; and

 

(iii)        all
conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.

 

Nothing in this Loan Agreement
shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly
Replacement Reserve Deposit for any such Additional Lender Replacements or an additional deposit to the Repairs Escrow Account
for any such Additional Lender Repair.

 

(10)       Excess
Costs.

 

In the event any Replacement
or Repair exceeds the approved cost set forth on the Required Replacement Schedule for Replacements, or the Maximum Repair Cost
for Repairs, Borrower may submit a disbursement request to reimburse Borrower for such excess cost. The disbursement request must
be in writing and include an explanation for such request. Lender shall make disbursements from the Replacement Reserve Account
or the Repairs Escrow Account, as applicable, if:

 

(A)         the
excess cost is commercially reasonable;

 

(B)         the
amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs
and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair
Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements,
or Additional Lender Repairs that have been previously approved by Lender; and

 

(C)         all
conditions for disbursement from the Replacement Reserve Account or the Repairs Escrow Account have been satisfied.

 

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(11)       Final
Disbursements.

 

Upon completion
of all Repairs in accordance with this Loan Agreement and so long as no Event of Default has occurred and is continuing, Lender
shall disburse to Borrower any amounts then remaining in the Repairs Escrow Account. Upon payment in full of the Indebtedness and
release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower any and all amounts then remaining
in the Replacement Reserve Account and the Repairs Escrow Account (if not previously released).

 

(b)          Approvals
of Contracts; Assignment of Claims.

 

Lender retains the
right to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors, or other parties
providing labor or materials in connection with the Replacements or Repairs. Notwithstanding Borrower’s assignment in the
Security Instrument (or Property Operator’s assignment pursuant to the SASA) of its rights and claims against all Persons
supplying labor or materials in connection with the Replacement or Repairs, Lender will not pursue any such right or claim unless
an Event of Default has occurred and is continuing or as otherwise provided in Section 14.03(c).

 

(c)          Delays
and Workmanship.

 

If any work for any
Replacement or Repair has not timely commenced, has not been timely performed in a workmanlike manner, or has not been timely completed
in a workmanlike manner, Lender may, without notice to Borrower:

 

(1)         withhold
disbursements from the Replacement Reserve Account or Repairs Escrow Account for such unsatisfactory Replacement or Repair, as
applicable;

 

(2)         proceed
under existing contracts or contract with third parties to make or complete such Replacement or Repair;

 

(3)         apply
the funds in the Replacement Reserve Account or Repairs Escrow Account toward the labor and materials necessary to make or complete
such Replacement or Repair, as applicable; or

 

(4)         exercise
any and all other remedies available to Lender under this Loan Agreement or any other Loan Document, including any remedies otherwise
available upon an Event of Default pursuant to the terms of Section 14.02.

 

To facilitate Lender’s completion
or making of such Replacements or Repairs, Lender shall have the right to enter onto the Mortgaged Property and perform any and
all work and labor necessary to make or complete the Replacements or Repairs and employ watchmen to protect the Mortgaged Property
from damage. All funds so expended by Lender shall be deemed to have been advanced to Borrower, shall be part of the Indebtedness
and shall be secured by the Security Instrument and this Loan Agreement.

 

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(d)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby authorizes
and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

 

(e)          No
Lender Obligation.

 

Nothing in this Loan
Agreement shall:

 

(1)         make
Lender responsible for making or completing the Replacements or Repairs;

 

(2)         require
Lender to expend funds, whether from the Replacement Reserve Account, the Repairs Escrow Account, or otherwise, to make or complete
any Replacement or Repair;

 

(3)         obligate
Lender to proceed with the Replacements or Repairs; or

 

(4)         obligate
Lender to demand from Borrower additional sums to make or complete any Replacement or Repair.

 

(f)          No
Lender Warranty.

 

Lender’s approval
of any plans for any Replacement or Repair, release of funds from the Replacement Reserve Account or Repairs Escrow Account, inspection
of the Mortgaged Property by Lender or its agents, representatives, or designees, or other acknowledgment of completion of any
Replacement or Repair in a manner satisfactory to Lender shall not be deemed an acknowledgment or warranty to any Person that the
Replacement or Repair has been completed in accordance with applicable building, zoning, or other codes, ordinances, statutes,
laws, regulations, or requirements of any Governmental Authority, such responsibility being at all times exclusively that of Borrower.

 

Article
14 - DEFAULTS/REMEDIES

 

Section
14.01     Events of Default.

 

The occurrence of any
one or more of the following in this Section 14.01 shall constitute an Event of Default under this Loan Agreement.

 

(a)          Automatic
Events of Default.

 

Any of the following
shall constitute an automatic Event of Default:

 

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(1)         any
failure to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document;

 

(2)         any
failure by Borrower to maintain the insurance coverage required by any Loan Document;

 

(3)         any
failure by Borrower to comply with the provisions of Section 4.02(d) relating to its single asset status;

 

(4)         if
any warranty, representation, certification, or statement of Borrower, Guarantor, or Key Principal in this Loan Agreement or any
of the other Loan Documents is false, inaccurate, or misleading in any material respect when made;

 

(5)         fraud,
gross negligence, willful misconduct, or material misrepresentation or material omission by or on behalf of Borrower, Affiliated
Property Operator, Guarantor, or Key Principal or any of their officers, directors, trustees, partners, members, or managers in
connection with:

 

(A)         the
application for, or creation of, the Indebtedness;

 

(B)         any
financial statement, rent roll, or other report or information provided to Lender during the term of the Mortgage Loan; or

 

(C)         any
request for Lender’s consent to any proposed action, including a request for disbursement of Reserve/Escrow Account Funds
or Collateral Account Funds;

 

(6)         the
occurrence of any Transfer not permitted by the Loan Documents;

 

(7)         the
occurrence of a Bankruptcy Event;

 

(8)         the
commencement of a forfeiture action or other similar proceeding, whether civil or criminal, which, in Lender’s reasonable
judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Loan Agreement
or the Security Instrument or Lender’s interest in the Mortgaged Property;

 

(9)         if
Borrower, Affiliated Property Operator, Guarantor, or Key Principal is a trust, or if Control of Borrower, Affiliated Property
Operator, Guarantor, or Key Principal is Transferred or if a Restricted Ownership Interest in Borrower, Affiliated Property Operator,
Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation
of such trust, except as set forth in Section 11.03(d);

 

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(10)        any
failure by Borrower to complete any Repair related to fire, life, or safety issues in accordance with the terms of this Loan Agreement
within the Completion Period (or such other date set forth on the Required Repair Schedule or otherwise required by Lender in writing
for such Repair);

 

(11)        any
exercise by the holder of any other debt instrument secured by a mortgage, deed of trust, or deed to secure debt on the Mortgaged
Property or any interest therein of a right to declare all amounts due under that debt instrument immediately due and payable;

 

(12)        amendment
or modification of Facility Operating Agreement not permitted by the Loan Documents;

 

(13)        any
failure by Borrower or any Property Operator to comply with the use and License requirements set forth in any Loan Document or
as required by any applicable law;

 

(14)        a
Transfer or change in the holder of the Licenses not permitted by the Loan Documents;

 

(15)        a
termination of any Facility Operating Agreement not permitted by the Loan Documents;

 

(16)        (A)
any loss by Borrower or any Property Operator of any License, or (B) any failure by Borrower or any Property Operator to comply
strictly with any consent order or decree or to correct, within the time deadlines set by any federal, state, or local licensing
agency, any deficiency where such failure results, or under applicable laws and regulations, is reasonably likely to result, in
an action by such agency with respect to the Mortgaged Property that may have a material adverse effect on Borrower, any Property
Operator, or the management and operations of the Mortgaged Property or Borrower’s or Property Operator’s interest
in the Mortgaged Property, including a termination, revocation, or suspension of any Licenses;

 

(17)        if
Borrower or any Property Operator:

 

(A)         ceases
to operate the Mortgaged Property as a Seniors Housing Facility or takes any action or permits to exist any condition that causes
the Mortgaged Property to no longer be classified as a Seniors Housing Facility;

 

(B)         ceases
to provide such kitchens, separate bathrooms, and areas for eating, sitting, and sleeping in each independent living or assisted
living unit or at a minimum, central bathing and dining facilities for Alzheimer’s/dementia care, as are provided as of the
Effective Date;

 

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(C)         ceases
to provide other facilities and services normally associated with independent living or assisted living units including (i) central
dining services providing up to three (3) meals per day, (ii) periodic housekeeping, (iii) laundry services, (iv) customary transportation
services, and (v) social activities;

 

(D)         provides
or contracts for skilled nursing care for any of the units; or

 

(E)         leases
or holds available for lease to commercial tenants non-residential space (i.e., space other than the units, dining areas, activity
rooms, lobby, parlors, kitchen, mailroom, marketing/management offices) exceeding ten percent (10%) of the net rental area;

 

(18)        a
default which continues beyond any applicable cure period under any Facility Operating Agreement; or

 

(19)        an
Event of Default under the SASA.

 

(b)          Events
of Default Subject to a Specified Cure Period.

 

Any of the following
shall constitute an Event of Default subject to the cure period set forth in the Loan Documents:

 

(1)         if
Key Principal or Guarantor is a natural person, the death of such individual, unless all requirements of Section 11.03(e) are met;

 

(2)         the
occurrence of a Guarantor Bankruptcy Event, unless requirements of Section 11.03(f) are met;

 

(3)         any
failure by Borrower, Affiliated Property Operator, Key Principal, or Guarantor to comply with the provisions of Section 5.02(b)
and Section 5.02(c); or

 

(4)         any
failure by Borrower to perform any obligation under this Loan Agreement or any Loan Document that is subject to a specified written
notice and cure period, which failure continues beyond such specified written notice and cure period as set forth herein or in
the applicable Loan Document.

 

(c)          Events
of Default Subject to Extended Cure Period.

 

The following shall
constitute an Event of Default if the existence of such condition or event, or such failure to perform or default in performance
continues for a period of thirty (30) days after written notice by Lender to Borrower of the existence of such condition or event,
or of such failure to perform or default in performance, provided, however, such period may be extended for up to an additional
thirty (30) days if Borrower, in the discretion of Lender, is diligently pursuing a cure of such; provided, further, however, no
such written notice, grace period, or extension shall apply if, in Lender’s discretion, immediate exercise by Lender of a
right or remedy under this Loan Agreement or any Loan Document is required to avoid harm to Lender or impairment of the Mortgage
Loan (including the Loan Documents), the Mortgaged Property or any other security given for the Mortgage Loan:

 

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(1)         any
failure by Borrower to perform any of its obligations under this Loan Agreement or any Loan Document (other than those specified
in Section 14.01(a) or Section 14.01(b) above) as and when required.

 

Section
14.02     Remedies.

 

(a)          Acceleration;
Foreclosure.

 

If an Event of Default
has occurred and is continuing, the entire unpaid principal balance of the Mortgage Loan, any Accrued Interest, interest accruing
at the Default Rate, the Prepayment Premium (if applicable), and all other Indebtedness, at the option of Lender, shall immediately
become due and payable, without any prior written notice to Borrower, unless applicable law requires otherwise (and in such case,
after any required written notice has been given). Lender may exercise this option to accelerate regardless of any prior forbearance.
In addition, Lender shall have all rights and remedies afforded to Lender hereunder and under the other Loan Documents, including,
foreclosure on and/or the power of sale of the Mortgaged Property, as provided in the Security Instrument, and any rights and remedies
available to Lender at law or in equity (subject to Borrower’s statutory rights of reinstatement, if any). Any proceeds of
a Foreclosure Event may be held and applied by Lender as additional collateral for the Indebtedness pursuant to this Loan Agreement.
Notwithstanding the foregoing, the occurrence of any Bankruptcy Event shall automatically accelerate the Mortgage Loan and all
obligations and Indebtedness shall be immediately due and payable without written notice or further action by Lender.

 

(b)          Loss
of Right to Disbursements from Collateral Accounts.

 

If an Event of Default
has occurred and is continuing, Borrower shall immediately lose all of its rights to receive disbursements from the Reserve/Escrow
Accounts and any Collateral Accounts. During the continuance of any such Event of Default, Lender may use the Reserve/Escrow Account
Funds and any Collateral Account Funds (or any portion thereof) for any purpose, including:

 

(1)         repayment
of the Indebtedness, including principal prepayments and the Prepayment Premium applicable to such full or partial prepayment,
as applicable (however, such application of funds shall not cure or be deemed to cure any Event of Default);

 

(2)         reimbursement
of Lender for all losses and expenses (including reasonable legal fees) suffered or incurred by Lender as a result of such Event
of Default;

 

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(3)         completion
of the Replacement or Repair or for any other replacement or repair to the Mortgaged Property; and

 

(4)         payment
of any amount expended in exercising (and the exercise of) all rights and remedies available to Lender at law or in equity or under
this Loan Agreement or under any of the other Loan Documents.

 

Nothing in this Loan Agreement shall obligate
Lender to apply all or any portion of the Reserve/Escrow Account Funds or Collateral Account Funds on account of any Event of Default
or to repayment of the Indebtedness or in any specific order of priority.

 

(c)         Remedies
Cumulative.

 

Each right and remedy
provided in this Loan Agreement is distinct from all other rights or remedies under this Loan Agreement or any other Loan Document
or afforded by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively,
in any order. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of additional
default by Borrower in order to exercise any of its remedies with respect to an Event of Default.

 

(d)         Operations
upon Event of Default; Lockbox Account.

 

(1)         If
an Event of Default has occurred and is continuing:

 

(A)         Borrower
shall or shall cause each Property Operator to, at the option of Lender, continue to provide all necessary services required under
each Facility Operating Agreement or applicable licensing or regulatory requirements to operate and manage the Mortgaged Property
as a Seniors Housing Facility and shall fully cooperate with Lender and any receiver as may be appointed by a court, in performing
these services and agrees to arrange for an orderly transition to a replacement property operator or provider of the necessary
services, and to execute promptly all applications, assignments, consents, and documents requested by Lender to facilitate such
transition; and

 

(B)         Lender
may cause the removal of Borrower or any Property Operator (as applicable) from any Mortgaged Property operations. Until such time
as Lender has located a replacement property operator, Borrower or the acting Property Operator shall continue to provide all required
services to maintain the Mortgaged Property in full compliance with all License and regulatory requirements. Borrower acknowledges
that its failure to perform or to cause the performance of this service shall constitute a form of waste of the Mortgaged Property,
causing irreparable harm to Lender and the Mortgaged Property, and shall constitute sufficient cause for the appointment of a receiver.

 

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(2)         In
addition to the remedies set forth herein and elsewhere in the Loan Documents, upon an Event of Default, Lender shall be entitled
to mandate the use of a lockbox bank account or other depositary account, to be maintained under the control and supervision of
Lender, for all income of the Mortgaged Property, including Rents, service charges, insurance payments, and Third Party Payments.

 

Section
14.03     Additional Lender Rights; Forbearance.

 

(a)          No
Effect Upon Obligations.

 

Lender may, but shall
not be obligated to, agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having
any effect upon the obligations of, any Property Operator, Guarantor, Key Principal, or other third party obligor, to take any
of the following actions:

 

(1)         the
time for payment of the principal of or interest on the Indebtedness may be extended, or the Indebtedness may be renewed in whole
or in part;

 

(2)         the
rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under
the Loan Documents may be modified;

 

(3)         the
time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently
existing or hereinafter entered into, may be extended or such performance or compliance may be waived;

 

(4)         any
or all payments due under this Loan Agreement or any other Loan Document may be reduced;

 

(5)         any
Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of
the Mortgage Loan;

 

(6)         any
amounts under this Loan Agreement or any other Loan Document may be released;

 

(7)         any
security for the Indebtedness may be modified, exchanged, released, surrendered, or otherwise dealt with, or additional security
may be pledged or mortgaged for the Indebtedness;

 

(8)         the
payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security,
or both, of any other present or future creditor of Borrower; or

 

(9)         any
other terms of the Loan Documents may be modified.

 

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(b)          No
Waiver of Rights or Remedies.

 

Any waiver of an Event
of Default or forbearance by Lender in exercising any right or remedy under this Loan Agreement or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of any other Event of Default or preclude the exercise or failure to exercise
of any other right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of
such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require
prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make
prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies
so as to preclude the exercise or failure to exercise of any other right available to Lender. Lender’s receipt of any insurance
proceeds or amounts in connection with a Condemnation Action shall not operate to cure or waive any Event of Default.

 

(c)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby irrevocably
makes, constitutes, and appoints Lender (and any officer of Lender or any Person designated by Lender for that purpose) as Borrower’s
true and lawful proxy and attorney-in-fact (and agent-in-fact) in Borrower’s name, place, and stead, with full power of substitution,
to:

 

(1)         use
any of the funds in the Replacement Reserve Account or Repairs Escrow Account for the purpose of making or completing the Replacements
or Repairs;

 

(2)         make
such additions, changes, and corrections to the Replacements or Repairs as shall be necessary or desirable to complete the Replacements
or Repairs;

 

(3)         employ
such contractors, subcontractors, agents, architects, and inspectors as shall be required for such purposes;

 

(4)         pay,
settle, or compromise all bills and claims for materials and work performed in connection with the Replacements or Repairs, or
as may be necessary or desirable for the completion of the Replacements or Repairs, or for clearance of title;

 

(5)         adjust
and compromise any claims under any and all policies of insurance required pursuant to this Loan Agreement and any other Loan Document,
subject only to Borrower’s rights under this Loan Agreement;

 

(6)         appear
in and prosecute any action arising from any insurance policies;

 

(7)         collect
and receive the proceeds of insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such
proceeds;

 

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(8)         commence,
appear in, and prosecute, in Lender’s or Borrower’s name, any Condemnation Action;

 

(9)         settle
or compromise any claim in connection with any Condemnation Action;

 

(10)        execute
all applications and certificates in the name of Borrower which may be required by any of the contract documents;

 

(11)        prosecute
and defend all actions or proceedings in connection with the Mortgaged Property or the rehabilitation and repair of the Mortgaged
Property;

 

(12)        take
such actions as are permitted in this Loan Agreement and any other Loan Documents;

 

(13)        execute
such financing statements and other documents and to do such other acts as Lender may require to perfect and preserve Lender’s
security interest in, and to enforce such interests in, the collateral; and

 

(14)        carry
out any remedy provided for in this Loan Agreement and any other Loan Documents, including endorsing Borrower’s name to checks,
drafts, instruments and other items of payment and proceeds of the collateral, executing change of address forms with the postmaster
of the United States Post Office serving the address of Borrower, changing the address of Borrower to that of Lender, opening all
envelopes addressed to Borrower, and applying any payments contained therein to the Indebtedness.

 

Borrower hereby acknowledges
that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable and shall
not be affected by the disability or incompetence of Borrower. Borrower specifically acknowledges and agrees that this power of
attorney granted to Lender may be assigned by Lender to Lender’s successors or assigns as holder of the Note (and the other
Loan Documents). The foregoing powers conferred on Lender under this Section 14.03(c) shall not impose any duty upon Lender to
exercise any such powers and shall not require Lender to incur any expense or take any action. Borrower hereby ratifies and confirms
all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Loan Agreement and any other Loan
Documents.

 

Notwithstanding the foregoing
provisions, Lender shall not exercise its rights as set forth in this Section 14.03(c) unless: (A) an Event of Default has occurred
and is continuing, or (B) Lender determines, in its discretion, that exigent circumstances exist or that such exercise is necessary
or prudent in order to protect and preserve the Mortgaged Property, or Lender’s lien priority and security interest in the
Mortgaged Property.

 

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(d)          Borrower
Waivers.

 

If more than one Person
signs this Loan Agreement as Borrower, each Borrower, with respect to any other Borrower, hereby agrees that Lender, in its discretion,
may:

 

(1)         bring
suit against Borrower, or any one or more of Borrower, jointly and severally, or against any one or more of them;

 

(2)         compromise
or settle with any one or more of the persons constituting Borrower, for such consideration as Lender may deem proper;

 

(3)         release
one or more of the persons constituting Borrower, from liability; or

 

(4)         otherwise
deal with Borrower, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect
from any Borrower the full amount of the Indebtedness.

 

Section
14.04    Waiver of Marshaling.

 

Notwithstanding the
existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the
right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this
Loan Agreement, any other Loan Document or applicable law. Lender shall have the right to determine the order in which all or any
part of the Indebtedness is satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who
now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Loan
Agreement waives any and all right to require the marshaling of assets or to require that any of the Mortgaged Property be sold
in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with
the exercise of any of the remedies permitted by applicable law or provided in this Loan Agreement or any other Loan Documents.

 

Lender shall account
for any moneys received by Lender in respect of any foreclosure on or disposition of collateral hereunder and under the other Loan
Documents provided that Lender shall not have any duty as to any collateral, and Lender shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers. NONE OF LENDER OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER (a) FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE,
EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED PURSUANT
TO A FINAL, NON-APPEALABLE COURT ORDER BY A COURT OF COMPETENT JURISDICTION, NOR (b) FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.

 

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Article
15 - MISCELLANEOUS

 

Section
15.01     Governing Law; Consent to Jurisdiction and Venue.

 

(a)         Governing
Law.

 

This Loan Agreement
and any other Loan Document which does not itself expressly identify the law that is to apply to it, shall be governed by the laws
of the Property Jurisdiction without regard to the application of choice of law principles.

 

(b)         Venue.

 

Any controversy arising
under or in relation to this Loan Agreement or any other Loan Document shall be litigated exclusively in the Property Jurisdiction
without regard to conflicts of laws principles. The state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Loan Agreement
or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation
and waives any other venue to which it might be entitled by virtue of domicile, habitual residence, or otherwise.

 

Section
15.02     Notice.

 

(a)         Process
of Serving Notice.

 

Except as otherwise
set forth herein or in any other Loan Document, all notices under this Loan Agreement and any other Loan Document shall be:

 

(1)         in
writing and shall be:

 

(A)         delivered,
in person;

 

(B)         mailed,
postage prepaid, either by registered or certified delivery, return receipt requested;

 

(C)         sent
by overnight courier; or

 

(D)         sent
by electronic mail with originals to follow by overnight courier;

 

(2)         addressed
to the intended recipient at Borrower’s Notice Address and Lender’s Notice Address, as applicable; and

 

(3)         deemed
given on the earlier to occur of:

 

(A)         the
date when the notice is received by the addressee; or

 

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(B)         if
the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established
by the records of the United States Postal Service or such express courier service.

 

(b)         Change
of Address.

 

Any party to this Loan
Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties
identified on the Summary of Loan Terms in accordance with this Section 15.02.

 

(c)          Default
Method of Notice.

 

Any required notice
under this Loan Agreement or any other Loan Document which does not specify how notices are to be given shall be given in accordance
with this Section 15.02.

 

(d)          Receipt
of Notices.

 

Neither Borrower nor
Lender shall refuse or reject delivery of any notice given in accordance with this Loan Agreement. Each party is required to acknowledge,
in writing, the receipt of any notice upon request by the other party.

 

(e)          Property
Operator Notices.

 

Borrower acknowledges
and agrees that Borrower solely shall be responsible for (1) causing Property Operator to comply with any notice received by Borrower
from Lender, and (2) promptly providing Lender with copies of notices received by Borrower from Property Operator. Borrower’s
compliance with or failure to act as an intermediary as described in this Section 15.02(e) shall not relieve Borrower from its
obligations under this Loan Agreement, nor shall it constitute a defense or excuse for nonperformance by Borrower, Property Operator,
or any Guarantor, as applicable. Lender shall have no obligation to provide any notice to Property Operator unless and until Lender
has taken ownership or control of the Mortgaged Property, or in connection with Lender’s exercise of the power of attorney
granted herein, and then only as required by the Loan Documents or the Facility Operating Agreement.

 

Section
15.03     Successors and Assigns Bound; Sale of Mortgage Loan.

 

(a)          Binding
Agreement.

 

This Loan Agreement
shall bind, and the rights granted by this Loan Agreement shall inure to, the successors and assigns of Lender and the permitted
successors and assigns of Borrower. However, a Transfer not permitted by this Loan Agreement shall be an Event of Default and shall
be void ab initio.

 

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(b)          Sale
of Mortgage Loan; Change of Servicer.

 

Nothing in this Loan
Agreement shall limit Lender’s (including its successors and assigns) right to sell or transfer the Mortgage Loan or any
interest in the Mortgage Loan. The Mortgage Loan or a partial interest in the Mortgage Loan (together with this Loan Agreement
and the other Loan Documents) may be sold one or more times without prior written notice to Borrower. A sale may result in a change
of the Loan Servicer.

 

Section
15.04     Counterparts.

 

This Loan Agreement
may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document and all
such counterparts shall be construed together and shall constitute one instrument.

 

Section
15.05     Joint and Several (or Solidary) Liability.

 

If more than one Person
signs this Loan Agreement as Borrower, the obligations of such Persons shall be joint and several (solidary instead for purposes
of Louisiana law).

 

Section
15.06     Relationship of Parties; No Third Party Beneficiary.

 

(a)          Solely
Creditor and Debtor.

 

The relationship between
Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement shall
create any other relationship between Lender and Borrower, nor between Lender and Property Operator. Nothing contained in this
Loan Agreement shall constitute Lender as a joint venturer, partner, or agent of Borrower or Property Operator, or render Lender
liable for any debts, obligations, acts, omissions, representations, or contracts of Borrower or Property Operator.

 

(b)          No
Third Party Beneficiaries.

 

No creditor of any
party to this Loan Agreement and no other Person shall be a third party beneficiary of this Loan Agreement or any other Loan Document
or any account created or contemplated under this Loan Agreement or any other Loan Document. Nothing contained in this Loan Agreement
shall be deemed or construed to create an obligation on the part of Lender to any third party nor shall any third party have a
right to enforce against Lender any right that Borrower may have under this Loan Agreement. Without limiting the foregoing:

 

(1)         any
Servicing Arrangement between Lender and any Loan Servicer shall constitute a contractual obligation of such Loan Servicer that
is independent of the obligation of Borrower for the payment of the Indebtedness;

 

(2)         Borrower
shall not be a third party beneficiary of any Servicing Arrangement; and

 

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(3)         no
payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

 

Section
15.07     Severability; Entire Agreement; Amendments.

 

The invalidity or unenforceability
of any provision of this Loan Agreement or any other Loan Document shall not affect the validity or enforceability of any other
provision of this Loan Agreement or of any other Loan Document, all of which shall remain in full force and effect, including the
Guaranty. This Loan Agreement contains the complete and entire agreement among the parties as to the matters covered, rights granted,
and the obligations assumed in this Loan Agreement. This Loan Agreement may not be amended or modified except by written agreement
signed by the parties hereto.

 

Section
15.08     Construction.

 

(a)          The
captions and headings of the sections of this Loan Agreement and the Loan Documents are for convenience only and shall be disregarded
in construing this Loan Agreement and the Loan Documents.

 

(b)          Any
reference in this Loan Agreement to an “Exhibit” or “Schedule” or a “Section” or an “Article”
shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit or Schedule attached to this
Loan Agreement or to a Section or Article of this Loan Agreement.

 

(c)          Any
reference in this Loan Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended
from time to time.

 

(d)          Use
of the singular in this Loan Agreement includes the plural and use of the plural includes the singular.

 

(e)          As
used in this Loan Agreement, the term “including” means “including, but not limited to” or “including,
without limitation,” and is for example only and not a limitation.

 

(f)          Whenever
Borrower’s knowledge is implicated in this Loan Agreement or the phrase “to Borrower’s knowledge” or a
similar phrase is used in this Loan Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the
best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.

 

(g)          Unless
otherwise provided in this Loan Agreement, if Lender’s approval, designation, determination, selection, estimate, action,
or decision is required, permitted, or contemplated hereunder, such approval, designation, determination, selection, estimate,
action or decision shall be made in Lender’s sole and absolute discretion.

 

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(h)          All
references in this Loan Agreement to a separate instrument or agreement shall include such instrument or agreement as the same
may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

 

(i)          “Lender
may” shall mean at Lender’s discretion, but shall not be an obligation.

 

(j)          If
the Mortgage Loan proceeds are disbursed on a date that is later than the Effective Date, as described in Section 2.02(a)(1), the
representations and warranties in the Loan Documents with respect to the ownership and operation of the Mortgaged Property shall
be deemed to be made as of the disbursement date.

 

(k)          Any
references in this Loan Agreement to a Senior Housing Facility shall refer to the Mortgaged Property identified on the Summary
of Loan Terms including the Seniors Housing Facility Licensing Designation.

 

(l)          Each
reference to “tenant” or “tenants” in the Loan Documents shall be interpreted to mean “subtenant”
or “subtenants” where the context so indicates.

 

Section
15.09    Mortgage Loan Servicing.

 

All actions regarding
the servicing of the Mortgage Loan, including the collection of payments, the giving and receipt of notice, inspections of the
Mortgaged Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer
unless Borrower receives notice to the contrary. If Borrower receives conflicting notices regarding the identity of the Loan Servicer
or any other subject, any such written notice from Lender shall govern. The Loan Servicer may change from time to time (whether
related or unrelated to a sale of the Mortgage Loan). If there is a change of the Loan Servicer, Borrower will be given written
notice of the change.

 

Section
15.10    Disclosure of Information.

 

Lender may furnish
information regarding Borrower, Property Operator, Key Principal, Guarantor, or the Mortgaged Property to third parties with an
existing or prospective interest in the servicing, enforcement, evaluation, performance, purchase, or securitization of the Mortgage
Loan, including trustees, master servicers, special servicers, rating agencies, and organizations maintaining databases on the
underwriting and performance of multifamily mortgage loans. Borrower irrevocably waives any and all rights it may have under applicable
law to prohibit such disclosure, including any right of privacy.

 

Section
15.11    Waiver; Conflict.

 

No specific waiver
of any of the terms of this Loan Agreement shall be considered as a general waiver. If any provision of this Loan Agreement is
in conflict with any provision of any other Loan Document, the provision contained in this Loan Agreement shall control.

 

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Section
15.12    No Reliance.

 

Borrower acknowledges,
represents, and warrants that:

 

(a)          it
understands the nature and structure of the transactions contemplated by this Loan Agreement and the other Loan Documents;

 

(b)          it
is familiar with the provisions of all of the documents and instruments relating to such transactions;

 

(c)          it
understands the risks inherent in such transactions, including the risk of loss of all or any part of the Mortgaged Property;

 

(d)          it
has had the opportunity to consult counsel; and

 

(e)          it
has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated
by this Loan Agreement or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting,
entering into, or otherwise in connection with this Loan Agreement, any other Loan Document, or any of the matters contemplated
hereby or thereby.

 

Section
15.13    Subrogation.

 

If, and to the extent
that, the proceeds of the Mortgage Loan are used to pay, satisfy, or discharge any obligation of Borrower or Property Operator
for the payment of money that is secured by a pre-existing mortgage, deed of trust, or other lien encumbering the Mortgaged Property,
such Mortgage Loan proceeds shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically,
and without further action on its part, be subrogated to the rights, including lien priority, of the owner or holder of the obligation
secured by such prior lien, whether or not such prior lien is released.

 

Section
15.14    Counting of Days.

 

Except where otherwise
specifically provided, any reference in this Loan Agreement to a period of “days” means calendar days, not Business
Days. If the date on which Borrower is required to perform an obligation under this Loan Agreement is not a Business Day, Borrower
shall be required to perform such obligation by the Business Day immediately preceding such date; provided, however, in respect
of any Payment Date, or if the Maturity Date is other than a Business Day, Borrower shall be obligated to make such payment by
the Business Day immediately following such date.

 

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Section
15.15     Revival and Reinstatement of Indebtedness.

 

If the payment of all
or any part of the Indebtedness by Borrower, Property Operator, any Guarantor, or any other Person, or the transfer to Lender of
any collateral or other property should for any reason subsequently be declared to be void or voidable under any state or federal
law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender
is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel,
then the amount of such Voidable Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or
restore, including all reasonable costs, expenses, and attorneys’ fees incurred by Lender in connection therewith, and the
Indebtedness shall be automatically revived, reinstated, and restored by such amount and shall exist as though such Voidable Transfer
had never been made.

 

Section
15.16     Time is of the Essence.

 

Borrower agrees that,
with respect to each and every obligation and covenant contained in this Loan Agreement and the other Loan Documents, time is of
the essence.

 

Section
15.17     Final Agreement.

 

THIS LOAN AGREEMENT
ALONG WITH ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations, and statements,
oral or written, are merged into this Loan Agreement and the other Loan Documents. This Loan Agreement, the other Loan Documents,
and any of their provisions may not be waived, modified, amended, discharged, or terminated except by an agreement in writing signed
by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then
only to the extent set forth in that agreement.

 

Section
15.18     WAIVER OF TRIAL BY JURY.

 

TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND
LENDER, THAT IS TRIABLE OF RIGHT BY A JURY AND (b) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT
ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY
AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

 

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IN WITNESS WHEREOF,
Borrower and Lender have signed and delivered this Loan Agreement under seal (where applicable) or have caused this Loan Agreement
to be signed and delivered under seal (where applicable) by their duly authorized representatives. Where applicable law so provides,
Borrower and Lender intend that this Loan Agreement shall be deemed to be signed and delivered as a sealed instrument.

 

	 	BORROWER:
	 	 
	 	WILDEWOOD OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ JOHN MARK RAMSEY	(SEAL)
	 	 	Name:  John Mark Ramsey
	 	 	Title:  Authorized Signatory

 

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	 	LENDER:
	 	 
	 	KeyBank National Association,
	 	a national banking association
	 	 
	 	By:	/s/ TONYA E. BARNES	(SEAL)
	 	 	Name: Tonya E. Barnes
	 	 	Title:   Vice President

 

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SCHEDULE 1 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Definitions Schedule

(Interest Rate Type - Structured ARM (1
and 3 Month LIBOR))

(Seniors Housing)

 

Capitalized terms used
in the Loan Agreement have the meanings given to such terms in this Definitions Schedule.

 

“Accounts” has the meaning
set forth in the Security Instrument.

 

“Accrued Interest” means
unpaid interest, if any, on the Mortgage Loan that has not been added to the unpaid principal balance of the Mortgage Loan pursuant
to Section 2.02(b) (Capitalization of Accrued But Unpaid Interest) of the Loan Agreement.

 

“Acuity” means the type
of housing and services categorized as Independent Living, Assisted Living or Alzheimer’s/Dementia Care provided to residents
at the Mortgaged Property.

 

“Additional Lender Repairs”
means repairs of the type listed on the Required Repair Schedule but not otherwise identified thereon that are determined advisable
by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition
or to prevent deterioration of the Mortgaged Property.

 

“Additional Lender Replacements”
means replacements of the type listed on the Required Replacement Schedule but not otherwise identified thereon that are determined
advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable
condition or to prevent deterioration of the Mortgaged Property.

 

“Adjustable Rate” has the
meaning set forth in the Summary of Loan Terms.

 

“Affiliated Property Operator”
means any Property Operator that is a Borrower Affiliate, as identified in the Summary of Loan Terms.

 

“Allowed Change in Use”
means a change during the Loan Term in the unit or bed Acuity composition at the Mortgaged Property not to exceed seventeen percent
(17%) of the total number of units or beds in place as of the Effective Date.

 

“Amortization Period” has
the meaning set forth in the Summary of Loan Terms.

 

“Amortization Type” has
the meaning set forth in the Summary of Loan Terms.

  

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“Bank Secrecy Act” means
the Bank Secrecy Act of 1970, as amended (e.g., 31 U.S.C. Sections 5311-5330).

 

“Bankruptcy Event” means
any one or more of the following:

 

(a)          the
commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Borrower;

 

(b)          the
acknowledgment in writing by Borrower (other than to Lender in connection with a workout) that it is unable to pay its debts generally
as they mature;

 

(c)          the
making of a general assignment for the benefit of creditors by Borrower;

 

(d)          the
commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Borrower; or

 

(e)          the
appointment of a receiver (other than a receiver appointed at the direction or request of Lender under the terms of the Loan Documents),
liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Borrower or any substantial part
of the assets of Borrower;

 

provided, however, that any proceeding or case
under (d) or (e) above shall not be a Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed) so
long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower, Affiliated
Property Operator, Guarantor, or Key Principal, (2) any Person Controlling Borrower, Affiliated Property Operator, Guarantor, or
Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Affiliated Property Operator, Guarantor,
or Key Principal (in which event such case or proceeding shall be a Bankruptcy Event immediately).

 

“Borrower” means, individually
(and jointly and severally (solidarily instead for purposes of Louisiana law) if more than one), the entity (or entities) identified
as “Borrower” in the first paragraph of the Loan Agreement.

 

“Borrower Affiliate” means,
as to Borrower, Guarantor, Key Principal or Affiliated Property Operator:

 

(a)          any
Person that owns any direct ownership interest in Borrower, Guarantor, Key Principal or Affiliated Property Operator;

 

(b)          any
Person that indirectly owns, with the power to vote, twenty percent (20%) or more of the ownership interests in Borrower, Guarantor,
Key Principal or Affiliated Property Operator;

 

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(c)          any
Person Controlled by, under common Control with, or which Controls, Borrower, Guarantor, Key Principal or Affiliated Property Operator;

 

(d)          any
entity in which Borrower, Guarantor, Key Principal or Affiliated Property Operator directly or indirectly owns, with the power
to vote, twenty percent (20%) or more of the ownership interests in such entity; or

 

(e)          any
other individual that is related (to the third degree of consanguinity) by blood or marriage to Borrower, Guarantor, Key Principal
or Affiliated Property Operator.

 

“Borrower Requested Repairs”
means repairs not listed on the Required Repair Schedule requested by Borrower to be reimbursed from the Repairs Escrow Account
and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or
to prevent deterioration of the Mortgaged Property.

 

“Borrower Requested Replacements”
means replacements not listed on the Required Replacement Schedule requested by Borrower to be reimbursed from the Replacement
Reserve Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable
condition or to prevent deterioration of the Mortgaged Property.

 

“Borrower’s General Business
Address” has the meaning set forth in the Summary of Loan Terms.

 

“Borrower’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Business Day” means any
day other than (a) a Saturday, (b) a Sunday, (c) a day on which Lender is not open for business, or (d) a day on which the Federal
Reserve Bank of New York is not open for business.

 

“Collateral Account Funds”
means, collectively, the funds on deposit in any or all of the Collateral Accounts, including the Reserve/Escrow Account Funds.

 

“Collateral Accounts” means
any account designated as such by Lender pursuant to a Collateral Agreement or as established pursuant to this Loan Agreement,
including the Reserve/Escrow Account.

 

“Collateral Agreement” means
any separate agreement between Borrower and Lender for the establishment of any other fund, reserve or account.

 

“Completion Period” has
the meaning set forth in the Summary of Loan Terms.

 

“Condemnation Action” has
the meaning set forth in the Security Instrument.

 

“Contract” means any contract
or other agreement for the provision of goods or services at or otherwise in connection with the operation, use or maintenance
of the Mortgaged Property, excluding the Facility Operating Agreement and including cash deposited to secure performance by parties
of their obligations.

 

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“Control” (including with
correlative meanings, such as “Controlling,” “Controlled by” and “under common Control with”)
means, as applied to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management
and operations of such entity, whether through the ownership of voting securities or other ownership interests, by contract or
otherwise.

 

“Conversion” means the conversion
of the Mortgage Loan from an adjustable rate to a fixed rate and, if applicable, the extension of the Maturity Date of the Mortgage
Loan to the New Maturity Date.

 

“Conversion Amendment” means
Lender’s then-current form of Amendment to Multifamily Loan and Security Agreement to be executed by Borrower and Lender
to amend or restate all or any part of this Loan Agreement (including any Schedules, Exhibits or other attachments) in connection
with, and reflecting the terms of, a Conversion of the Mortgage Loan.

 

“Conversion Closing Date”
means, after Borrower exercises the Conversion Option, the date designated by Lender for the closing of the Conversion which date
(a) is a Business Day, (b) is within the Conversion Period, and (c) is not more than ten (10) days after the Conversion Exercise
Date.

 

“Conversion Effective Date”
means, if the Conversion Exercise Date occurs on a Payment Date, the first (1st) day of the calendar month following the Conversion
Exercise Date, or, if the Conversion Exercise Date occurs on any other day other than a Payment Date, the first (1st) day of the
second (2nd) calendar month following the Conversion Exercise Date, but in no event shall the Conversion Effective Date be after
the last day of the Conversion Period.

 

“Conversion Exercise Date”
means the date that Borrower accepts the rate quote provided by Lender in connection with Borrower’s Rate Lock Request.

 

“Conversion Option” means
Borrower’s one-time option to effect the Conversion pursuant to the terms of the Loan Agreement.

 

“Conversion Period” means
the period commencing on the first (1st) day of the second (2nd) Loan Year and ending on the first (1st) day of the third (3rd)
month prior to the Maturity Date of the Mortgage Loan.

 

“Conversion Review Fee”
has the meaning set forth in the Summary of Loan Terms.

 

“Credit Score” means a numerical
value or a categorization derived from a statistical tool or modeling system used to measure credit risk and predict the likelihood
of certain credit behaviors, including default.

 

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“Current Index” has the
meaning set forth in the Summary of Loan Terms.

 

“Debt Service Amounts” means
the Monthly Debt Service Payments and all other amounts payable under the Loan Agreement, the Note, the Security Instrument or
any other Loan Document.

 

“Debt Service Coverage Ratio”
means the ratio of (a) the Net Operating Income of the Mortgaged Property, to (b) the underwritten debt service for the Mortgage
Loan at the proposed Fixed Rate for the trailing twelve (12) month period from the date of the most recently received quarterly
financial statements prepared by Borrower for the Mortgaged Property, provided that (1) the interest rate used in determining such
ratio shall be the greater of (A) the Fixed Rate, or (B) the Underwriting Interest Rate (if any), and (2) an Amortization Period
of three hundred sixty (360) months shall be used in determining such ratio.

 

“Default Rate” means an
interest rate equal to the lesser of:

 

(a)          the
sum of the Interest Rate plus four (4) percentage points; or

 

(b)          the
maximum interest rate which may be collected from Borrower under applicable law.

 

“Definitions Schedule” means
this Schedule 1 (Definitions Schedule) to the Loan Agreement.

 

“Depositary Agreement” means,
individually and together the Government Receivables Depositary Agreement and the Government Receivables Collection Account Agreement.

 

“Economic Sanctions” means
any economic or financial sanction administered or enforced by the United States Government (including, without limitation, those
administered by OFAC at http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx),
the U.S. Department of Commerce, or the U.S. Department of State.

 

“Effective Date” has the
meaning set forth in the Summary of Loan Terms.

 

“Employee Benefit Plan”
means a plan described in Section 3(3) of ERISA, regardless of whether the plan is subject to ERISA.

 

“Enforcement Costs” has
the meaning set forth in the Security Instrument.

 

“Environmental Indemnity Agreement”
means that certain Environmental Indemnity Agreement dated as of the Effective Date made by Borrower to and for the benefit of
Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.

 

“Environmental Inspections”
has the meaning set forth in the Environmental Indemnity Agreement.

 

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“Environmental Laws” has
the meaning set forth in the Environmental Indemnity Agreement.

 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” shall
mean, with respect to Borrower, any entity that, together with Borrower, would be treated as a single employer under Section 414(b)
or (c) of the Internal Revenue Code, or Section 4001(a)(14) of ERISA, or the regulations thereunder.

 

“ERISA Plan” means any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (or related trust) that is subject to the requirements of Title
IV of ERISA, Sections 430 or 431 of the Internal Revenue Code, or Sections 302, 303, or 304 of ERISA, which is maintained or contributed
to by Borrower or its ERISA Affiliates.

 

“Event of Default” means
the occurrence of any event listed in Section 14.01 (Events of Default) of the Loan Agreement.

 

“Exceptions to Representations and
Warranties Schedule” means that certain Schedule 7 (Exceptions to Representations and Warranties Schedule) to the Loan
Agreement.

 

“Facility Operating Agreement”
means, individually and collectively, any of an Operating Lease, Sublease, Management Agreement or any other agreement setting
forth the responsibilities for the operation, management, maintenance or administration of the Mortgaged Property as a Seniors
Housing Facility.

 

“First Payment Date” has
the meaning set forth in the Summary of Loan Terms.

 

“First Principal and Interest Payment
Date” has the meaning set forth in the Summary of Loan Terms, if applicable.

 

“Fixed Monthly Principal Component”
has the meaning set forth in the Summary of Loan Terms.

 

“Fixed Rate” means an interest
rate per annum equal to the sum of the Investor Yield, the Servicing Fee and the Guaranty Fee.

 

“Fixed Rate Amortization Factor”
has the meaning set forth in the Summary of Loan Terms.

 

“Fixed Rate Option” means,
in connection with a Conversion, Borrower’s selection of one (1) of the following fixed rate options for the Mortgage Loan,
which shall be effective from and after the Conversion Effective Date:

 

(a)          seven
(7) year term with a five (5) year yield maintenance period;

 

(b)          seven
(7) year term with a six and one-half (6.5) year yield maintenance period;

 

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(c)          ten
(10) year term with a seven (7) year yield maintenance period; or

 

(d)          ten
(10) year term with a nine and one-half (9.5) year yield maintenance period.

 

“Fixtures” has the meaning
set forth in the Security Instrument.

 

“Force Majeure” shall mean
acts of God, acts of war, civil disturbance, governmental action (including the revocation or refusal to grant licenses or permits,
where such revocation or refusal is not due to the fault of Borrower), strikes, lockouts, fire, unavoidable casualties or any other
causes beyond the reasonable control of Borrower (other than lack of financing), and of which Borrower shall have notified Lender
in writing within ten (10) days after its occurrence.

 

“Foreclosure Event” means:

 

(a)          foreclosure
under the Security Instrument;

 

(b)          any
other exercise by Lender of rights and remedies (whether under the Security Instrument or under applicable law, including Insolvency
Laws) as holder of the Mortgage Loan and/or the Security Instrument, as a result of which Lender (or its designee or nominee) or
a third party purchaser becomes owner of the Mortgaged Property;

 

(c)          delivery
by Borrower to Lender (or its designee or nominee) of a deed or other conveyance of Borrower’s interest in the Mortgaged
Property in lieu of any of the foregoing; or

 

(d)          in
Louisiana, any dation en paiement.

 

“Good Faith Deposit” means
a fee in an amount equal to two percent (2%) of the unpaid principal balance of the Mortgage Loan immediately prior to the Initial
Fixed Rate Payment Date.

 

“Goods” has the meaning
set forth in the Security Instrument.

 

“Government Receivables Collection
Account Agreement” means, if any, that certain Government Receivables Collection Account Agreement among Borrower, Lender,
any applicable Property Operator and a depositary bank executed in connection with the Mortgage Loan.

 

“Government Receivables Depositary
Agreement” means, if any, that certain Government Receivables Depositary Agreement among Borrower, Lender, any applicable
Property Operator and a depositary bank executed in connection with the Mortgage Loan.

 

“Governmental Authority”
means any court, board, commission, department or body of any municipal, county, state or federal governmental unit, or any subdivision
of any of them, that has or acquires jurisdiction over Borrower or the Mortgaged Property or the use, operation or improvement
of the Mortgaged Property.

 

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“Governmental Health Care Program”
means any plan or program that provides health benefits, whether directly, through insurance, or otherwise, and that is funded
directly, in whole or in part, by the U.S. Government or a state health care program.

 

“Guarantor” means, individually
and collectively, any guarantor of the Indebtedness or any other obligation of Borrower under any Loan Document.

 

“Guarantor Bankruptcy Event”
means any one or more of the following:

 

(a)          the
commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Guarantor;

 

(b)          the
acknowledgment in writing by Guarantor (other than to Lender in connection with a workout) that it is unable to pay its debts generally
as they mature;

 

(c)          the
making of a general assignment for the benefit of creditors by Guarantor;

 

(d)          the
commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Guarantor;
or

 

(e)          the
appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Guarantor
or any substantial part of the assets of Guarantor, as applicable;

 

provided, however, that any proceeding or case
under (d) or (e) above shall not be a Guarantor Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed)
so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower, Affiliated
Property Operator, Guarantor or Key Principal, (2) any Person Controlling Borrower, Affiliated Property Operator, Guarantor or
Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Affiliated Property Operator, Guarantor or
Key Principal (in which event such case or proceeding shall be a Guarantor Bankruptcy Event immediately).

 

“Guarantor’s General Business
Address” has the meaning set forth in the Summary of Loan Terms.

 

“Guarantor’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Guaranty” means, individually
and collectively, any Payment Guaranty, Non-Recourse Guaranty or other guaranty executed by Guarantor in connection with the Mortgage
Loan.

 

“Guaranty Fee” has the meaning
set forth in the Summary of Loan Terms.

 

“HIPAA” means the Health
Insurance Portability and Accountability Act of 1996, Subtitle D of the Health Information Technology for Economic and Clinical
Health Act of 2009, and all regulations and other guidance promulgated under both laws by the U.S. Department of Health and Human
Services, as may be amended from time to time.

 

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“HIPAA Business Associate”
means any entity that is a “business associate” as that term is defined in HIPAA, as identified on the Summary of Loan
Terms.

 

“HIPAA Covered Entity” means
any entity that is a “covered entity” as that term is defined in HIPAA, as identified on the Summary of Loan Terms.

 

“Immediate Family Members”
means a child, stepchild, grandchild, spouse, sibling, or parent, each of whom is not a Prohibited Person.

 

“Imposition Deposits” has
the meaning set forth in the Security Instrument.

 

“Impositions” has the meaning
set forth in the Security Instrument.

 

“Improvements” has the meaning
set forth in the Security Instrument.

 

“Indebtedness” has the meaning
set forth in the Security Instrument.

 

“Index” has the meaning
set forth in the Summary of Loan Terms.

 

“Initial Adjustable Rate”
has the meaning set forth in the Summary of Loan Terms.

 

“Initial Fixed Rate Payment Date”
means the first (1st) day of the calendar month following the Conversion Effective Date.

 

“Initial Monthly Debt Service Payment”
has the meaning set forth in the Summary of Loan Terms.

 

“Initial Replacement Reserve Deposit”
has the meaning set forth in the Summary of Loan Terms.

 

“Insolvency Laws” means
the United States Bankruptcy Code, 11 U.S.C. Section 101, et seq., together with any other federal or state law affecting debtor
and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, moratorium, readjustment of debt, dissolution,
liquidation or similar laws, proceedings, or equitable principles affecting the enforcement of creditors’ rights, as amended
from time to time.

 

“Insolvent” means:

 

(a)          that
the sum total of all of a specified Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated
or unliquidated) is in excess of the value of such Person’s non-exempt assets, i.e., all of the assets of such Person that
are available to satisfy claims of creditors; or

 

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(b)          such
Person’s inability to pay its debts as they become due.

 

“Intended Prepayment Date”
means the date upon which Borrower intends to make a prepayment on the Mortgage Loan, as set forth in the Prepayment Notice.

 

“Interest Accrual Method”
has the meaning set forth in the Summary of Loan Terms.

 

“Interest Only Term” has
the meaning set forth in the Summary of Loan Terms.

 

“Interest Rate” means the
Initial Adjustable Rate or the Adjustable Rate, as applicable.

 

“Interest Rate Type” has
the meaning set forth in the Summary of Loan Terms.

 

“Internal Revenue Code”
means the Internal Revenue Code of 1986, as amended.

 

“Investor” means any Person
to whom Lender intends to (a) sell, transfer, deliver or assign the Mortgage Loan in the secondary mortgage market, or (b) sell
an MBS backed by the Mortgage Loan.

 

“Investor Yield” means,
in connection with a Conversion, the percentage equal to (a) the required net yield offered for purchase by Fannie Mae or (b) the
MBS pass-through rate offered for purchase by regular buyers of mortgage backed securities, as applicable, for a new Fannie Mae
mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account
the Fixed Rate Option selected by Borrower).

 

“Key Principal” means, collectively:

 

(a)          the
natural person(s) or entity that Controls Borrower that Lender determines is critical to the successful operation and management
of Borrower and the Mortgaged Property, as identified as such in the Summary of Loan Terms; or

 

(b)          any
natural person or entity who becomes a Key Principal after the date of the Loan Agreement and is identified as such in an assumption
agreement, or another amendment or supplement to the Loan Agreement.

 

“Key Principal’s General Business
Address” has the meaning set forth in the Summary of Loan Terms.

 

“Key Principal’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Land” means the land described
in Exhibit A to the Security Instrument.

 

“Last Interest Only Payment Date”
has the meaning set forth in the Summary of Loan Terms, if applicable.

 

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“Late Charge” means an amount
equal to the delinquent amount then due under the Loan Documents multiplied by five percent (5%).

 

“Leases” has the meaning
set forth in the Security Instrument.

 

“Lender” means the entity
identified as “Lender” in the first paragraph of the Loan Agreement and its transferees, successors and assigns, or
any subsequent holder of the Note.

 

“Lender’s General Business Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Lender’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Lender’s Payment Address”
has the meaning set forth in the Summary of Loan Terms.

 

“License” means any operating
licenses, certificates of occupancy, health department licenses, food service licenses, certificates of need, business licenses,
permits, registrations, certificates, authorizations, approvals, legal authority, and similar documents required by applicable
laws and regulations for the lawful operation of the Mortgaged Property as a Seniors Housing Facility in the Property Jurisdiction
as of the Effective Date or during the Loan Term, including renewals, replacements and additions to any of the foregoing.

 

“Lien” has the meaning set
forth in the Security Instrument.

 

“Loan Agreement” means the
Multifamily Loan and Security Agreement dated as of the Effective Date executed by and between Borrower and Lender to which this
Definitions Schedule is attached, as the same may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

 

“Loan Amount” has the meaning
set forth in the Summary of Loan Terms.

 

“Loan Application” means
the application for the Mortgage Loan submitted by Borrower to Lender.

 

“Loan Documents” means the
Note, the Loan Agreement, the Security Instrument, the Environmental Indemnity Agreement, the Guaranty, the SASA, all guaranties,
all indemnity agreements, all Collateral Agreements, all O&M Plans, and any other documents now or in the future executed by
Borrower, Guarantor, Key Principal, any other guarantor or any other Person in connection with the Mortgage Loan, as such documents
may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Loan Servicer” means the
entity that from time to time is designated by Lender to collect payments and deposits and receive notices under the Note, the
Loan Agreement, the Security Instrument and any other Loan Document, and otherwise to service the Mortgage Loan for the benefit
of Lender. Unless Borrower receives notice to the contrary, the Loan Servicer shall be the Lender originally named on the Summary
of Loan Terms.

 

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“Loan Term” has the meaning
set forth in the Summary of Loan Terms.

 

“Loan Year” has the meaning
set forth in the Summary of Loan Terms.

 

“Managed Care Organization”
means a Person that has been certified by, and has entered into a contractual relationship with, a Governmental Authority in the
Property Jurisdiction to make available to its members (including residents of the Mortgaged Property) certain long-term care and
health care services through Medicaid Participant(s), which, as of the Effective Date, is the party identified on the Summary of
Loan Terms.

 

“Management Agreement” means,
if applicable, any agreement for management services as amended, restated, replaced, supplemented, or otherwise modified from time
to time, preapproved in writing by Lender, under which daily management or operation with respect to the Mortgaged Property as
a Seniors Housing Facility has been granted to any individual or entity other than Borrower.

 

“Manager” means the Person
responsible for the operation or management of the Mortgaged Property pursuant to a Management Agreement, if any.

 

“Margin” has the meaning
set forth in the Summary of Loan Terms.

 

“Material Commercial Lease”
means any Lease that is not a Residential Lease, and which is:

 

(a)          a
Lease comprising five percent (5%) or more of total gross income of the Mortgaged Property on an annualized basis;

 

(b)          a
master Lease (which term “master Lease” shall include any master Lease to a single corporate tenant);

 

(c)          a
cell tower Lease;

 

(d)          a
solar (power) Lease;

 

(e)          a
solar power purchase agreement; or

 

(f)           a
Lease of oil, gas, or mineral rights.

 

“Maturity Date” has the
meaning set forth in the Summary of Loan Terms.

 

“Maximum Fixed Rate” means
the maximum Fixed Rate to which the Mortgage Loan may be converted, as determined by Lender, so that the Debt Service Coverage
Ratio of the Mortgage Loan is not less than the Minimum Conversion Debt Service Coverage Ratio.

 

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“Maximum Inspection Fee”
has the meaning set forth in the Summary of Loan Terms.

 

“Maximum Permitted Equipment Financing”
has the meaning set forth in the Summary of Loan Terms.

 

“Maximum Repair Cost” shall
be the amount(s) set forth in the Required Repair Schedule, if any.

 

“Maximum Repair Disbursement Interval”
has the meaning set forth in the Summary of Loan Terms.

 

“Maximum Replacement Reserve Disbursement
Interval” has the meaning set forth in the Summary of Loan Terms.

 

“MBS” means an investment
security that represents an undivided beneficial interest in a pool of mortgage loans or participation interests in mortgage loans
held in trust pursuant to the terms of a governing trust document.

 

“Medicaid” means the medical
assistance program established by Title XIX of the Social Security Act (42 U.S.C. Secs. 1396 et seq.) and any statutes succeeding
thereto.

 

“Medicaid Participant” means
a Person that has entered into a Medicaid Provider Agreement as identified on the Summary of Loan Terms.

 

“Medicaid Program” means
the Medicaid assisted living waiver program administered by a Governmental Authority under which certain benefits are available
through a Governmental Authority or a Managed Care Organization.

 

“Medicaid Provider Agreement”
means, individually and collectively, an agreement between Borrower or Property Operator and a Governmental Authority (or administered
by a Governmental Authority, as applicable) or a Managed Care Organization to be a participating provider under the Medicaid Program,
as further described in the Summary of Loan Terms, as the same may be amended, restated, replaced, supplemented, or otherwise modified
from time to time.

 

“Mezzanine Debt” means a
loan to a direct or indirect owner of Borrower or Affiliated Property Operator secured by a pledge of such owner’s interest
in an entity owning a direct or indirect interest in Borrower or Affiliated Property Operator.

 

“Minimum Conversion Debt Service Coverage
Ratio” has the meaning set forth in the Summary of Loan Terms.

 

“Minimum Repairs Disbursement Amount”
has the meaning set forth in the Summary of Loan Terms.

 

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“Minimum Replacement Reserve Disbursement
Amount” has the meaning set forth in the Summary of Loan Terms.

 

“Monthly Debt Service Payment”
has the meaning set forth in the Summary of Loan Terms.

 

“Monthly Replacement Reserve Deposit”
has the meaning set forth in the Summary of Loan Terms.

 

“Mortgage Loan” means the
mortgage loan made by Lender to Borrower in the principal amount of the Note made pursuant to the Loan Agreement, evidenced by
the Note and secured by the Loan Documents that are expressly stated to be security for the Mortgage Loan.

 

“Mortgaged Property” has
the meaning set forth in the Security Instrument.

 

“Multifamily Project” has
the meaning set forth in the Summary of Loan Terms.

 

“Multifamily Project Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Net Operating Income” means
the amount determined by Lender to be the net operating income of the Mortgaged Property.

 

“New Maturity Date” means
the Maturity Date of the Mortgage Loan following the Conversion, as set forth on the Summary of Loan Terms attached as Schedule
2 to the Conversion Amendment, which date may be the same as, or later than, the Maturity Date prior to the exercise of the Conversion.

 

“NOI Determination Notice”
means the notice given by Lender to Borrower pursuant to the Conversion Option in which Lender establishes the Net Operating Income
and the Maximum Fixed Rate to which the Mortgage Loan may be converted.

 

“NOI Determination Request”
means the notice given by Borrower to Lender to exercise the Conversion Option in which Borrower requests that Lender determines
the Net Operating Income and the Maximum Fixed Rate to which the Mortgage Loan may be converted.

 

“Non-Recourse Guaranty”
means, if applicable, that certain Guaranty of Non-Recourse Obligations of even date herewith executed by Guarantor to and for
the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Note” means that certain
Multifamily Note of even date herewith in the original principal amount of the stated Loan Amount made by Borrower in favor of
Lender, and all schedules, riders, allonges and addenda attached thereto, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

 

“O&M Plan” has the meaning
set forth in the Environmental Indemnity Agreement.

 

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“OFAC” means the United
States Treasury Department, Office of Foreign Assets Control, and any successor thereto.

 

“Operating Lease” means,
if applicable, any operating lease, master lease, or similar document as amended, restated, replaced, supplemented, or otherwise
modified from time to time, preapproved in writing by Lender, under which control of the occupancy, use, operation, management,
maintenance or administration of the Mortgaged Property as a Seniors Housing Facility has been granted by Borrower as lessor to
any Person (other than Borrower) as lessee.

 

“Operator” means the Person
responsible for the occupancy, use, operation, management, maintenance and administration of the Mortgaged Property pursuant to
an Operating Lease, if any.

 

“Operator Estoppel Certificate”
means a certificate of estoppel from Property Operator to Lender in a form required by Lender pursuant to the terms of Section
7.02(g)(2) (Seniors Housing Facility Lease Estoppel) of the Loan Agreement.

 

“Payment Change Date” has
the meaning set forth in the Summary of Loan Terms.

 

“Payment Date” means the
First Payment Date and the first (1st) day of each month thereafter until the Mortgage Loan is fully paid.

 

“Payment Guaranty” means,
if applicable, that certain Guaranty (Payment) of even date herewith executed by Guarantor to and for the benefit of Lender, as
the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Permitted Encumbrance”
has the meaning set forth in the Security Instrument.

 

“Permitted Equipment Financing”
means equipment lease or other purchase money financing incurred in the ordinary course for acquisition of additional or replacement
equipment or other personal property, or to refinance Permitted Equipment Financing, in an amount not to exceed, at any time, the
Maximum Permitted Equipment Financing.

 

“Permitted Mezzanine Debt”
means Mezzanine Debt incurred by a direct or indirect owner or owners of Borrower or Affiliated Property Operator where the exercise
of any of the rights and remedies by the holder or holders of the Mezzanine Debt would not in any circumstance cause (a) a change
in Control in Borrower, Affiliated Property Operator, Key Principal, or Guarantor, or (b) a Transfer of a direct or indirect Restricted
Ownership Interest in Borrower, Affiliated Property Operator, Key Principal, or Guarantor.

 

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“Permitted Preferred Equity”
means Preferred Equity that does not (a) require mandatory dividends, distributions, payments or returns (including at maturity
or in connection with a redemption), or (b) provide the Preferred Equity owner with rights or remedies on account of a failure
to receive any preferred dividends, distributions, payments or returns (or, if such rights are provided, the exercise of such rights
do not violate the Loan Documents or are otherwise exercised with the prior written consent of Lender in accordance with Article
11 (Liens, Transfers and Assumptions) of the Loan Agreement and the payment of all applicable fees and expenses as set forth in
Section 11.03(g) (Further Conditions to Transfers and Assumption)).

 

“Permitted Prepayment Date”
means the last Business Day of a calendar month.

 

“Person” means an individual,
an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental
or private).

 

“Personal Property” means
the Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles,
instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes,
records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts
and other property or assets of any kind or nature related to the Land or the Improvements, including operating agreements, surveys,
plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements,
and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land.

 

“Personalty” has the meaning
set forth in the Security Instrument.

 

“Preferred Equity” means
a direct or indirect equity ownership interest in, economic interests in, or rights with respect to, Borrower that provide an equity
owner preferred dividend, distribution, payment, or return treatment relative to other equity owners.

 

“Prepayment Lockout Period”
has the meaning set forth in the Summary of Loan Terms.

 

“Prepayment Notice” means
the written notice that Borrower is required to provide to Lender in accordance with Section 2.03 (Lockout/Prepayment) of the Loan
Agreement in order to make a prepayment on the Mortgage Loan, which shall include, at a minimum, the Intended Prepayment Date.

 

“Prepayment Premium” means
the amount payable by Borrower in connection with a prepayment of the Mortgage Loan, as provided in Section 2.03 (Lockout/Prepayment)
of the Loan Agreement and calculated in accordance with the Prepayment Premium Schedule.

 

“Prepayment Premium Schedule”
means that certain Schedule 4 (Prepayment Premium Schedule) to the Loan Agreement.

 

“Prepayment Premium Term”
has the meaning set forth in the Summary of Loan Terms.

 

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“Privacy Laws” mean any
federal, state and local laws and regulations applicable to resident and tenant privacy, including but not limited to HIPAA.

 

“Prohibited Person” means:

 

(a)          any
Person with whom Lender or Fannie Mae is prohibited from doing business pursuant to any law, rule, regulation, judicial proceeding
or administrative directive; or

 

(b)          any
Person identified on the United States Department of Housing and Urban Development’s “Limited Denial of Participation,
HUD Funding Disqualifications and Voluntary Abstentions List,” or on the General Services Administration’s “System
for Award Management (SAM)” exclusion list, each of which may be amended from time to time, and any successor or replacement
thereof; or

 

(c)          any
Person that is determined by Fannie Mae to pose an unacceptable credit risk due to the aggregate amount of debt of such Person
owned or held by Fannie Mae; or

 

(d)          any
Person that has caused any unsatisfactory experience of a material nature with Fannie Mae or Lender, such as a default, fraud,
intentional misrepresentation, litigation, arbitration or other similar act.

 

“Property Jurisdiction”
has the meaning set forth in the Security Instrument.

 

“Property Operator” means
individually and collectively, (a) any Operator, (b) any Sublessee, and (c) any Manager, as identified in the Summary of Loan Terms.

 

“Property Operator Business Information”
has the meaning set forth in Section 7.02(g)(1)(B) (Seniors Housing Facility Lease) of the Loan Agreement.

 

“Property Operator’s General
Business Address” means, as applicable, the Manager’s General Business Address, the Operator’s General Business
Address, and/or the Sublessee’s General Business Address.

 

“Property Square Footage”
has the meaning set forth in the Summary of Loan Terms.

 

“Publicly-Held Corporation”
means a corporation, the outstanding voting stock of which is registered under Sections 12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended.

 

“Publicly-Held Trust” means
a real estate investment trust, the outstanding voting shares or beneficial interests of which are registered under Sections 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended.

 

“Rate Change Date” has the
meaning set forth in the Summary of Loan Terms.

 

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“Rate Lock Request” means
a request from Borrower to Lender for a rate quote for the Fixed Rate (based on the Fixed Rate Option selected by Borrower) which
shall apply after the Conversion Effective Date.

 

“Rents” has the meaning
set forth in the Security Instrument.

 

“Repair Threshold” has the
meaning set forth in the Summary of Loan Terms.

 

“Repairs” means, individually
and collectively, the Required Repairs, Borrower Requested Repairs, and Additional Lender Repairs.

 

“Repairs Escrow Account”
means the account established by Lender into which the Repairs Escrow Deposit is deposited to fund the Repairs.

 

“Repairs Escrow Account Administrative
Fee” has the meaning set forth in the Summary of Loan Terms.

 

“Repairs Escrow Deposit”
has the meaning set forth in the Summary of Loan Terms.

 

“Replacement Reserve Account”
means the account established by Lender into which the Replacement Reserve Deposits are deposited to fund the Replacements.

 

“Replacement Reserve Account Administration
Fee” has the meaning set forth in the Summary of Loan Terms.

 

“Replacement Reserve Account Interest
Disbursement Frequency” has the meaning set forth in the Summary of Loan Terms.

 

“Replacement Reserve Deposits”
means the Initial Replacement Reserve Deposit, Monthly Replacement Reserve Deposits and any other deposits to the Replacement Reserve
Account required by the Loan Agreement.

 

“Replacement Threshold”
has the meaning set forth in the Summary of Loan Terms.

 

“Replacements” means, individually
and collectively, the Required Replacements, Borrower Requested Replacements and Additional Lender Replacements.

 

“Required Repair Schedule”
means that certain Schedule 6 (Required Repair Schedule) to the Loan Agreement.

 

“Required Repairs” means
those items listed on the Required Repair Schedule.

 

“Required Replacement Schedule”
means that certain Schedule 5 (Required Replacement Schedule) to the Loan Agreement.

 

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“Required Replacements”
means those items listed on the Required Replacement Schedule.

 

“Reserve/Escrow Account Funds”
means, collectively, the funds on deposit in the Reserve/Escrow Accounts.

 

“Reserve/Escrow Accounts”
means, together, the Replacement Reserve Account and the Repairs Escrow Account.

 

“Residential Lease” means
a Lease of an individual dwelling unit and shall not include any master Lease (which term “master Lease” includes any
master Lease to a single corporate tenant).

 

“Restoration” means restoring
and repairing the Mortgaged Property to the equivalent of its physical condition immediately prior to the casualty or to a condition
approved by Lender following a casualty.

 

“Restricted Ownership Interest”
means, with respect to any entity, the following:

 

(a)          if
such entity is a general partnership or a joint venture, fifty percent (50%) or more of all general partnership or joint venture
interests in such entity;

 

(b)          if
such entity is a limited partnership:

 

(1)         the
interest of any general partner; or

 

(2)         fifty
percent (50%) or more of all limited partnership interests in such entity;

 

(c)          if
such entity is a limited liability company or a limited liability partnership:

 

(1)         the
interest of any managing member or the contractual rights of any non-member manager; or

 

(2)         fifty
percent (50%) or more of all membership or other ownership interests in such entity;

 

(d)          if
such entity is a corporation (other than a Publicly-Held Corporation) with only one class of voting stock, fifty percent (50%)
or more of voting stock in such corporation;

 

(e)          if
such entity is a corporation (other than a Publicly-Held Corporation) with more than one class of voting stock, the amount of shares
of voting stock sufficient to have the power to elect the majority of directors of such corporation; or

 

(f)          if
such entity is a trust (other than a land trust or a Publicly-Held Trust), the power to Control such trust vested in the trustee
of such trust or the ability to remove, appoint or substitute the trustee of such trust (unless the trustee of such trust after
such removal, appointment or substitution is a trustee identified in the trust agreement approved by Lender).

 

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“Review Fee” means the non-refundable
fee of $3,000 payable to Lender.

 

“Sanctioned Country” means
a country subject to a comprehensive country-wide sanctions program administered and enforced by OFAC, which list is updated from
time to time.

 

“Sanctioned Person” means
(a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC, available
at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time;
(b) (1) an agency of the government of a Sanctioned Country, (2) an organization controlled by a Sanctioned Country, or (3) a Person
resident in a Sanctioned Country, to the extent any Person described in clauses (1), (2) or (3) is the subject of a sanctions program
administered by OFAC; and, (c) a Person whose property and interests in property are blocked pursuant to an Executive Order or
regulations administered by OFAC consistent with the guidance issued by OFAC.

 

“SASA” means a Subordination,
Assignment and Security Agreement in a form approved by Lender affecting the Mortgaged Property executed and delivered to Lender
by Borrower and any Property Operator as the same may be amended, restated, replaced, supplemented, or otherwise modified from
time to time.

 

“Schedule of Interest Rate Type Provisions”
means that certain Schedule 3 (Schedule of Interest Rate Type Provisions) to the Loan Agreement.

 

“Security Instrument” means
that certain multifamily mortgage, deed to secure debt or deed of trust executed and delivered by Borrower as security for the
Mortgage Loan and encumbering the Mortgaged Property, including all riders or schedules attached thereto, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Seniors Housing Facility”
means a residential housing facility which qualifies as “housing for older persons” under the Fair Housing Amendments
Act of 1988 and the Housing for Older Persons Act of 1995, and as of the date of this Loan Agreement, is comprised of and licensed
for use as identified on the Summary of Loan Terms.

 

“Seniors Housing Facility Lease”
if applicable, means, individually and together, any Operating Lease or Sublease.

 

“Seniors Housing Facility Lease Request”
has the meaning set forth in Section 7.02(g)(1)(B) (Seniors Housing Facility Lease) of the Loan Agreement.

 

“Seniors Housing Facility Licensing
Designation” means the licensing designation under the laws of the Property Jurisdiction, if applicable, for the Seniors
Housing Facility as set forth on the Summary of Loan Terms.

 

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“Servicing Arrangement”
means any arrangement between Lender and the Loan Servicer for loss sharing or interim advancement of funds.

 

“Servicing Fee” has the
meaning set forth in the Summary of Loan Terms.

 

“Sublease” means, if applicable,
any sublease or similar document as amended, restated, replaced, supplemented or otherwise modified from time to time, preapproved
in writing by Lender, pursuant to which control of the occupancy, use, operation, maintenance and administration of the Mortgaged
Property as a Seniors Housing Facility has been granted by an Operator as sub-lessor to any Person (other than Borrower or Operator)
as Sublessee.

 

“Sublessee” means the Person
responsible for the operation and management of the Mortgaged Property pursuant to any Sublease.

 

“Summary of Loan Terms”
means that certain Schedule 2 (Summary of Loan Terms) to the Loan Agreement.

 

“Survey” means the plat
of survey of the Mortgaged Property approved by Lender.

 

“Taxes” has the meaning
set forth in the Security Instrument.

 

“Third Party Payments” means
all payments and the rights to receive such payments from Medicaid or other federal, state or local programs, boards, bureaus or
agencies, and from residents, private insurers or others relating to the Mortgaged Property.

 

“Title Policy” means the
mortgagee’s loan policy of title insurance issued in connection with the Mortgage Loan and insuring the lien of the Security
Instrument as set forth therein, as approved by Lender.

 

“Total Parking Spaces” has
the meaning set forth in the Summary of Loan Terms.

 

“Total Residential Units”
has the meaning set forth in the Summary of Loan Terms.

 

“Transfer” means:

 

(a)          a
sale, assignment, transfer or other disposition (whether voluntary, involuntary, or by operation of law), other than Residential
Leases, Material Commercial Leases or non-Material Commercial Leases permitted by this Loan Agreement;

 

(b)          a
granting, pledging, creating or attachment of a lien, encumbrance or security interest (whether voluntary, involuntary, or by operation
of law);

 

(c)          an
issuance or other creation of a direct or indirect ownership interest;

 

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(d)          a
withdrawal, retirement, removal or involuntary resignation of any owner or manager of a legal entity; or

 

(e)          a
merger, consolidation, dissolution or liquidation of a legal entity.

 

“Transfer Fee” means a fee
equal to one percent (1%) of the unpaid principal balance of the Mortgage Loan payable to Lender.

 

“UCC” has the meaning set
forth in the Security Instrument.

 

“UCC Collateral” has the
meaning set forth in the Security Instrument.

 

“Underwriting Interest Rate”
means, in connection with the Conversion, the then-current minimum underwriting interest rate (if applicable) used by Lender for
underwriting new loans with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking
into account the Fixed Rate Option selected by Borrower).

 

“Voidable Transfer” means
any fraudulent conveyance, preference or other voidable or recoverable payment of money or transfer of property.

 

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INITIAL PAGE TO

 

SCHEDULE 1

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Definitions Schedule

(Interest Rate Type - Structured ARM (1
and 3 Month LIBOR))

(Seniors Housing)

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM) (Seniors Housing)	Form 6101.SARM.SRS	Initial Page
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SCHEDULE 2 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Summary of Loan Terms

(Interest Rate Type - Structured ARM (1
and 3 Month LIBOR))

(Seniors Housing)

 

	I.           GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION
	Borrower	Wildewood Owner, LLC, a Delaware limited liability company
	Lender	KeyBank National Association, a national banking association
	Key Principal	Sentio Healthcare Properties, Inc., a Maryland corporation Sentio Healthcare Properties OP, L.P., a Delaware limited partnership
	Guarantor	Sentio Healthcare Properties, Inc., a Maryland corporation Sentio Healthcare Properties OP, L.P., a Delaware limited partnership
	Multifamily Project	Spring Village at Wildewood
	Type of Property	Assisted Living, Alzheimer’s/Dementia Care
	Seniors Housing Facility Licensing Designation	Assisted Living Facility 
	HIPAA Covered Entity	Borrower 

Operator

Manager	 ̈  Yes

 ̈  Yes

 ̈  Yes	x  No

x  No

x  No

 

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	Medicaid Participant	Borrower 

Operator

Manager	 ̈  Yes

 ̈  Yes

 ̈  Yes	x  No

x  No

x  No
	Property Operator(s)	
        Operator         WILDEWOOD
        TRS, LLC, a Delaware limited liability company

        Sublessee       Not
        Applicable

        Manager         Woodbine
        Senior Living, LLC, a Maryland limited liability company

	Affiliated Property Operator(s)	
        x
        Yes

        Operator         WILDEWOOD
        TRS, LLC, a Delaware limited liability company

        Sublessee       Not
        Applicable

        Manager         Unaffiliated
        Property Operator

         ̈
        No

	ADDRESSES
	Borrower’s General Business Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801
	Borrower’s Notice Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801

Email: JMRamsey@sentioinvestments.com
	Multifamily Project Address	23185 Milestone Way

California, Maryland 20619
	Multifamily Project County	St. Mary’s County 
	Key Principal’s General Business Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801
	Key Principal’s Notice Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801

Email: JMRamsey@sentioinvestments.com

 

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	Guarantor’s General Business Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801
	Guarantor’s Notice Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801

Email: JMRamsey@sentioinvestments.com
	Lender’s General Business Address	c/o KeyBank Real Estate Capital – Servicing Dept.

11501 Outlook Street, Suite #300

Overland Park, Kansas 66211

Mailcode: KS-01-11-0501

Attn: Servicing Manager
	Lender’s Notice Address	Same as above

Gina_Sullivan@keybank.com
	Lender’s Payment Address	KeyBank Real Estate Capital

P.O. Box 145404

Cincinnati, OH 45250
	Manager’s General Business Address	c/o Gloria Brock  

11120 Dovedale Court, Unit 27

Marriottsville, Maryland 21104
	Manager’s Notice Address	c/o Gloria Brock  

11120 Dovedale Court, Unit 27

Marriottsville, Maryland 21104
	Operator’s General Business Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801
	Operator’s Notice Address	189 S. Orange Avenue, Suite 1700

Orlando, Florida 32801

Email: JMRamsey@sentioinvestments.com
	Sublessee’s General Business Address	Not Applicable
	Sublessee’s Notice Address	Not Applicable

 

	II.          MULTIFAMILY PROJECT INFORMATION
	Property Square Footage	80,963 sq. feet

 

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	Total Parking Spaces	18
	Total Residential Units	Independent Living

Assisted Living

Alzheimer’s

Dementia Care	0 units

32 units

16 units

0 units
	Affordable Housing Property	
         ̈        Yes

        x        No

 

	III.         MORTGAGE LOAN INFORMATION
	Adjustable Rate	Until the first Rate Change Date, the Initial Adjustable Rate, and from and after each Rate Change Date following the first Rate Change Date until the next Rate Change Date, a per annum interest rate that is the sum of (i) the Current Index, and (ii) the Margin, which sum is then rounded to the nearest three (3) decimal places; provided, however, that the Adjustable Rate shall never be less than the Margin.
	Amortization Period	Three hundred sixty (360) months.
	Amortization Type	

 ̈        Amortizing

 ̈        Full Term Interest Only

x        Partial Interest Only
	Current Index	The published Index that is effective on the Business Day immediately preceding the applicable Rate Change Date.
	Effective Date	August 19, 2016
	First Payment Date	The first day of October, 2016.
	First Principal and Interest Payment Date	The first day of October, 2021.

 

    	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM) (Seniors Housing)	Form 6102.SARM.SRS	Page 4
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	Fixed Monthly Principal Component	$16,881.86
	Fixed Rate Amortization Factor	4.17% per annum.
	Index	The ICE Benchmark Administration Limited (or any successor administrator) fixing of the London Inter-Bank Offered Rate for one-month U.S. Dollar-denominated deposits as reported by Reuters through electronic transmission.  If the Index is no longer available, or is no longer posted through electronic transmission, Lender will choose a new index that is based upon comparable information.
	Initial Adjustable Rate	3.17% per annum.
	Initial Monthly Debt Service Payment	$29,776.87
	Interest Accrual Method	Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Mortgage Loan by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month).
	Interest Only Term	Sixty (60) months.
	Interest Rate Type	Structured ARM
	Last Interest Only Payment Date	The first day of September, 2021.

 

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	Loan Amount	$11,272,000.00
	Loan Term	One hundred twenty (120) months.
	Loan Year	The period beginning on the Effective Date and ending on the last day of August, 2017, and each successive twelve (12) month period thereafter.
	Margin	2.66%
	Maturity Date	The first day of September, 2026, or any later date to which the Maturity Date may be extended (if at all) in connection with an election by Borrower to convert the Interest Rate on the Mortgage Loan to a fixed rate pursuant to the terms of the Loan Agreement, or any earlier date on which the unpaid principal balance of the Mortgage Loan becomes due and payable by acceleration or otherwise.
	Maximum Permitted Equipment Financing	$225,440.00

 

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	Monthly Debt Service Payment	
        (i)           for
        the First Payment Date, the Initial Monthly Debt Service Payment;

        (ii)          for
        each Payment Date thereafter through and including the Last Interest Only Payment Date, the amount obtained by multiplying the
        unpaid principal balance of the Mortgage Loan by the Adjustable Rate, dividing the product by three hundred sixty (360), and multiplying
        the quotient by the actual number of days elapsed in the applicable month;

        (iii)         for
        the First Principal and Interest Payment Date and each Payment Date thereafter until the Mortgage Loan is fully paid, an amount
        equal to the sum of:

        (1)          the
        Fixed Monthly Principal Component; plus

        (2)          an
        interest payment equal to the amount obtained by multiplying the unpaid principal balance of the Mortgage Loan by the Adjustable
        Rate, dividing the product by three hundred sixty (360), and multiplying the quotient by the actual number of days elapsed in the
        applicable month.

	Payment Change Date	The first (1st) day of the month following each Rate Change Date until the Mortgage Loan is fully paid.
	Prepayment Lockout Period	The first (1st) Loan Year of the term of the Mortgage Loan.
	Rate Change Date	The First Payment Date and the first (1st) day of each month thereafter until the Mortgage Loan is fully paid.

 

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	IV.          YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION
	Prepayment Premium Term	The period beginning on the Effective Date and ending on the last calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs.

 

	V.RESERVE INFORMATION
	Completion Period	Within N/A months after the Effective Date or as otherwise shown on the Required Repair Schedule.
	Initial Replacement Reserve Deposit	$0.00
	Maximum Inspection Fee	$250.00
	Maximum Repair Disbursement Interval	One time per calendar quarter
	Maximum Replacement Reserve Disbursement Interval	One time per calendar quarter
	Minimum Repairs Disbursement Amount	$10,000.00
	Minimum Replacement Reserve Disbursement Amount	$5,000.00
	Monthly Replacement Reserve Deposit	$919.00
	Repair Threshold	$10,000.00
	Repairs Escrow Account Administrative Fee	$0
	Repairs Escrow Deposit	$0.00
	Replacement Reserve Account Administration Fee	$0

 

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	Replacement Reserve Account Interest Disbursement Frequency	Annually
	Replacement Threshold	$10,000.00

 

	VI.          CONVERSION OPTION – SARM LOAN
	Conversion Review Fee	A non-refundable fee in the amount of $5,000.
	Guaranty Fee	The guaranty fee offered by Fannie Mae for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower) at the time of the Conversion Effective Date.
	Minimum Conversion Debt Service Coverage Ratio	1.40
	Servicing Fee	The servicing fee offered by Fannie Mae for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower) at the time of the Conversion Effective Date.

 

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INITIAL PAGE TO

 

SCHEDULE 2

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Summary of Loan Terms

(Interest Rate Type - Structured ARM (1
and 3 Month LIBOR))

(Seniors Housing)

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM) (Seniors Housing)	Form 6102.SARM.SRS	Initial
Page
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SCHEDULE 3 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Schedule of Interest Rate Type Provisions

(Structured ARM (1 and 3 Month LIBOR))
and Fixed Rate Conversion Option

 

		1.	Defined Terms.

 

Capitalized terms not otherwise
defined in this Schedule have the meanings given to such terms in the Definitions Schedule to the Loan Agreement.

 

		2.	Interest Accrual.

 

Except as otherwise provided
in the Loan Agreement, interest shall accrue at the Adjustable Rate until the Mortgage Loan is fully paid.

 

		3.	Adjustable Rate; Adjustments.

 

The Initial Adjustable
Rate shall be effective until the first Rate Change Date. Thereafter, the Adjustable Rate shall change on each Rate Change Date
based on fluctuations in the Current Index.

 

		4.	Fixed Monthly Principal Component.

 

Each amortizing Monthly
Debt Service Payment shall include a principal payment equal to the Fixed Monthly Principal Component, which shall be determined
using the Fixed Rate Amortization Factor.

 

		5.	Notification of Interest Rate Change and Monthly Debt Service
Payment.

 

Before each Payment Change
Date, Lender shall notify Borrower of any change in the Adjustable Rate and the amount of the next Monthly Debt Service Payment.

 

		6.	Correction to Monthly Debt Service Payments.

 

If Lender determines at
any time that it has miscalculated the amount of a Monthly Debt Service Payment (whether because of a miscalculation of the Adjustable
Rate or otherwise), then Lender shall give notice to Borrower of the corrected amount of the Monthly Debt Service Payment (and
the corrected Adjustable Rate, if applicable) and (a) if the corrected amount of the Monthly Debt Service Payment represents an
increase, then Borrower shall, within thirty (30) calendar days thereafter, pay to Lender any sums that Borrower would have otherwise
been obligated to pay to Lender had the amount of the Monthly Debt Service Payment not been miscalculated, or (b) if the corrected
amount of the Monthly Debt Service Payment represents a decrease and Borrower is not otherwise in default under any of the Loan
Documents, then Borrower shall thereafter be paid the sums that Borrower would not have otherwise been obligated to pay to Lender
had the amount of the Monthly Debt Service Payment not been miscalculated.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 1
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		7.	Conversion to Fixed Rate.

 

		(a)	Conversion Option.

 

(1)         Subject
to the following terms and conditions, Borrower may exercise the Conversion Option pursuant to which the interest rate payable
on the Mortgage Loan may be converted, one (1) time only, on any Payment Date during the Conversion Period from the Adjustable
Rate to the Fixed Rate, after which the interest rate on the Mortgage Loan shall remain at the Fixed Rate until the New Maturity
Date.

 

(2)         For
Mortgage Loans that are full-term interest-only, the Amortization Period from and after the Conversion Effective Date shall be
three hundred sixty (360) months. For all other Mortgage Loans, including Mortgage Loans that are partial interest-only or amortizing,
the Amortization Period from and after the Conversion Effective Date shall be:

 

(A)         three
hundred sixty (360) months, if (i) Borrower selects a Fixed Rate Option having a term greater than or equal to the original term
of the Mortgage Loan from the Effective Date through the Maturity Date, and (ii) the most recent inspection of the Mortgaged Property
by Lender resulted in a rating of either “1” or “2”; or

 

(B)         in
all other cases, the number of months equal to (A) three hundred sixty (360) months, minus (B) the number of Monthly Debt Service
Payments that have elapsed since the Effective Date.

 

(3)         The
Monthly Debt Service Payment following a Conversion shall be in an amount required to pay the unpaid principal balance of the Mortgage
Loan immediately prior to the Initial Fixed Rate Payment Date in equal monthly installments, including accrued interest at the
Fixed Rate, over the Amortization Period utilizing the 30/360 Interest Accrual Method even if Actual/360 is the Interest Accrual
Method.

 

(4)         The
Conversion Option shall lapse (A) at 5:00 p.m. (Eastern Time) on the ninetieth (90th) day prior to the expiration of the Conversion
Period if Borrower has not previously delivered to Lender an NOI Determination Request in accordance with the terms of this Schedule
or (B) on the Conversion Effective Date, if the Conversion Option is timely exercised but the Fixed Rate does not become effective
on such Conversion Effective Date.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 2
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(5)         It
is anticipated that the Conversion will be effected by the issuance by Lender of a fixed-rate MBS or by the cash purchase of the
Mortgage Loan by Lender into its portfolio (subject to the provisions of Section 7(b)(2) of this Schedule). Borrower acknowledges,
however, that the Conversion is contingent on the capital markets generally, and that from time to time, disruptions in the capital
markets may make Conversion infeasible. In the event Lender is not able to obtain any quotes for the Mortgage Loan at the Fixed
Rate (and does not make a cash bid for the Mortgage Loan), or if the quotes exceed the Maximum Fixed Rate, the interest rate on
the Mortgage Loan shall remain at the Adjustable Rate.

 

		(b)	Procedures for Conversion.

 

		(1)	NOI Determination Request.

 

(A)         Subject
to the terms of the Loan Agreement, if Borrower desires to exercise the Conversion Option, Borrower shall submit an NOI Determination
Request to Lender, which shall include Borrower’s selection of a Fixed Rate Option.

 

(B)         The
NOI Determination Request shall be accompanied by the Conversion Review Fee in the form of a check payable to Lender or by wire
transfer to an account designated by Lender.

 

(C)         In
no event shall the NOI Determination Request be made prior to the commencement of the Conversion Period or less than ninety (90)
days prior to the expiration of the Conversion Period. Borrower may not submit an NOI Determination Request if an Event of Default
has occurred and is continuing at the time of the request or if an Event of Default has occurred at any time within the twelve
(12) month period immediately preceding the date of Borrower’s request. In addition, Borrower may not submit an NOI Determination
Request more than twice in any Loan Year. Borrower shall submit to Lender, within five (5) days after receipt of a request therefor,
all information relating to the operation of the Mortgaged Property required by Lender to determine the Net Operating Income and
Borrower’s compliance with Section 7 of this Schedule. If Borrower fails to provide such information within such period,
Borrower’s NOI Determination Request shall be deemed canceled (however, such canceled NOI Determination Request shall count
as a request for the Loan Year in which the request was made).

 

		(2)	Conversion Eligibility Determination.

 

(A)         Within
fifteen (15) days after receipt of an NOI Determination Request (or, if Lender requests additional information from Borrower pursuant
to Section 7(b)(2)(B) of this Schedule, within fifteen (15) days after Lender’s receipt of such additional information),
Lender shall determine the Net Operating Income of the Mortgaged Property and the Maximum Fixed Rate to which the Mortgage Loan
may be converted and shall provide Borrower with the NOI Determination Notice.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 3
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 3	 	 

     

    

 

(B)         Lender
shall determine the Net Operating Income for the trailing twelve (12) month period on the basis of the most recently received quarterly
financial statements (as such statements may be adjusted by Lender as necessary to accurately reflect items of income, operating
expenses, ground lease payments, if applicable, and replacement reserves to reflect suitable underwriting) prepared by Borrower
for the Mortgaged Property. In connection with any request by Lender for additional information, Borrower shall have five (5) days
after Borrower’s receipt of such request to provide Lender with such additional information.

 

(C)         Borrower
may not exercise the Conversion Option unless Lender determines that, based upon the Net Operating Income set forth in the NOI
Determination Notice and the Fixed Rate quoted in connection with a Rate Lock Request, the Debt Service Coverage Ratio for the
Mortgaged Property is equal to or greater than the Minimum Conversion Debt Service Coverage Ratio.

 

		(3)	Exercise of Conversion Option; Rate Lock Request.

 

(A)         If,
after receipt of the NOI Determination Notice, Borrower desires to exercise the Conversion Option, Borrower shall, within fifteen
(15) days of Borrower’s receipt of the NOI Determination Notice:

 

(i)          provide
Lender with a title report for the Mortgaged Property prepared by, or by an agent for, the issuer of the Title Policy, showing
marketable fee simple or leasehold title to the Mortgaged Property (as applicable) to be vested in Borrower, free and clear of
all Liens and other matters affecting title other than the Permitted Encumbrances;

 

(ii)         pay
to Lender the Good Faith Deposit; and

 

(iii)        make
a Rate Lock Request.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 4
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 3	 	 

     

    

 

(B)         If
the Conversion closes, Lender shall refund the Good Faith Deposit to Borrower within thirty (30) days after the Conversion Closing
Date. If Borrower pays the Good Faith Deposit but does not timely exercise the Conversion Option and the Fixed Rate is not rate
locked, Lender shall refund the Good Faith Deposit to Borrower within forty-five (45) days after receipt of a written request from
Borrower (and the interest rate shall remain at the Adjustable Rate). If Borrower timely exercises the Conversion Option, but the
Conversion is not consummated for any reason other than a default by Lender in performing its obligations under the Loan Agreement,
Borrower shall forfeit the Good Faith Deposit and (i) if the MBS Investor is not Fannie Mae, shall be fully liable for, and agrees
to pay on demand, any and all loss, costs and/or damages incurred by Lender in connection with Borrower’s failure to consummate
the Conversion as provided herein, including any loss, costs and/or damages incurred by Lender in excess of the Good Faith Deposit,
and (ii) if the MBS Investor is Fannie Mae or if the converted Mortgage Loan is held by Fannie Mae and does not back an MBS, the
Good Faith Deposit shall serve as liquidated damages resulting from failure to consummate the Conversion. Borrower expressly acknowledges
that by electing to convert the interest rate on the Mortgage Loan to the Fixed Rate, and agreeing to the Fixed Rate as provided
herein, Borrower is causing Lender to take a position in the financial markets in reliance thereon, and the failure of Borrower
to convert the interest rate on the Mortgage Loan to the Fixed Rate as provided herein may cause Lender to incur economic damages.

 

(C)         If
Borrower desires to exercise the Conversion Option and has complied with all other requirements of Section 7(d) of this Schedule,
within fifteen (15) days of Borrower’s receipt of the NOI Determination Notice, Borrower shall contact Lender to initiate
a Rate Lock Request. If the Fixed Rate quoted to Borrower is greater than the Maximum Fixed Rate, Borrower shall not be permitted
to accept the quoted Fixed Rate (or exercise its Conversion Option). On or before 5:00 p.m. (Eastern Time) of the day Borrower
accepts the quoted Fixed Rate, Borrower and Lender shall confirm to each other (by letter addressed from Lender to Borrower, acknowledged
and accepted in writing by Borrower and transmitted, in each case, by facsimile or other electronic transmission acceptable to
Lender), (i) the Fixed Rate, (ii) the New Maturity Date (if applicable), (iii) the Conversion Effective Date, (iv) the new Monthly
Debt Service Payment and (v) the Initial Fixed Rate Payment Date.

 

		(c)	Amendment to Multifamily Loan and Security Agreement.

 

The Conversion
shall be evidenced by the Conversion Amendment.

 

		(d)	Conditions Precedent to Closing of Conversion.

 

Borrower’s
right to consummate the Conversion and Lender’s obligation to execute and deliver the Conversion Amendment, shall be subject
to satisfaction of the conditions precedent below.

 

(1)         All
representations and warranties of Borrower set forth in the Loan Documents shall be true and correct in all material respects on
and as of the Conversion Closing Date as though made on and as of the Conversion Closing Date.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 5
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 3	 	 

     

    

 

(2)         Borrower
shall have performed or complied with all of its obligations under the Loan Agreement to be performed or complied with on or before
the Conversion Closing Date.

 

(3)         On
the Conversion Closing Date, no Event of Default shall have occurred and be continuing (or any event which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing).

 

(4)         On
the Conversion Closing Date, Lender shall have received all of the following, each of which, where applicable, shall be executed
by individuals authorized to do so, shall be dated as of the Closing Date, and shall be in form and substance acceptable to Lender:

 

(A)         the
Conversion Amendment;

 

(B)         an
endorsement to the Title Policy or a new Title Policy as of the Conversion Closing Date showing that the Security Instrument constitutes
a valid mortgage lien on the Mortgaged Property, with the same lien priority insured by the Title Policy, subject only to the Permitted
Encumbrances;

 

(C)         either
(i) the Survey, redated to a date within fifteen (15) days prior to the Conversion Closing Date showing that there are no Liens
or other matters that have arisen since the date of the Survey other than matters approved in writing by Lender, or (ii) affirmative
coverage in the title insurance endorsement referred to in Section 7(d)(4)(B) that there are no exceptions based upon the results
of a visual inspection of the Mortgaged Property, or the absence of any exception based upon any facts or conditions which have
arisen since the date of the Survey and which would be disclosed by a current survey of the Mortgaged Property;

 

(D)         if
necessary, as determined by Lender, an amendment to the Security Instrument to be recorded in the land records and insured as a
supplement to the Security Instrument to reflect the New Maturity Date;

 

(E)         an
opinion of counsel satisfactory to Lender as to such matters as Lender may reasonably request; and

 

(F)         such
other documents as Lender may reasonably request related to the Loan Agreement, the Conversion Amendment or the transactions contemplated
hereby or thereby.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 6
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 3	 	 

     

    

 

(5)         The
Mortgaged Property shall not have been damaged, destroyed or subject to any condemnation or other taking, in whole or any material
part, and Lender shall have received a certificate of Borrower, dated as of the Conversion Closing Date, to such effect.

 

		8.	Property Condition Assessment.

 

Notwithstanding the provisions
of Section 13.02(a)(3)(A), if the Conversion Option is exercised for any Mortgaged Property other than an “affordable housing
property” (as indicated on the Summary of Loan Terms), and extends the Loan Term, then a new property condition assessment
shall be required in the earlier of (a) the Loan Year that would have been the final Loan Year of the Mortgage Loan had the Conversion
Option not been exercised, or (b) the tenth (10th) Loan Year.

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 7
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 3	 	 

     

    

 

INITIAL PAGE TO

 

SCHEDULE 3

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Schedule of Interest Rate Type Provisions

(Structured ARM (1 and 3 Month LIBOR))
and Fixed Rate Conversion Option

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Initial
Page
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 3	 	 

     

    

 

SCHEDULE 4 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Prepayment Premium Schedule

(1% Prepayment Premium – ARM, SARM)

 

		1.	Defined Terms.

 

All capitalized terms used
but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in the Loan Agreement.

 

		2.	Prepayment Premium.

 

(a)          Any
Prepayment Premium payable under Section 2.03 (Lockout/Prepayment) of the Loan Agreement shall be equal to the following percentage
of the amount of principal being prepaid at the time of such prepayment, acceleration or application:

 

	Prepayment Lockout Period	 	 	5.00	%
	Second Loan Year, and each Loan Year thereafter	 	 	1.00	%

 

(b)          Notwithstanding
the provisions of Section 2.03 (Lockout/Prepayment) of the Loan Agreement or anything to the contrary in this Prepayment Premium
Schedule, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth
(4th) month prior to the month in which the Maturity Date occurs.

 

    	Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – 1% Prepayment Premium – ARM, SARM)	Form 6104.11	Page 1
	Fannie Mae	01-11	© 2011 Fannie Mae
	 	 	 
	Schedule 4	 	 

     

    

 

INITIAL PAGE TO

 

SCHEDULE 4

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Prepayment Premium Schedule

(1% Prepayment Premium – ARM, SARM)

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – 1% Prepayment Premium – ARM, SARM)	Form 6104.11	Initial Page
	Fannie Mae	01-11	© 2011 Fannie Mae
	 	 	 
	Schedule 4	 	 

     

    

 

SCHEDULE 5 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Replacement Schedule

 

List of Replacements for Replacement Reserve

PNA Completed by Partner Engineering and Science,
Inc.

 

	Item
	Asphalt seal coat
	Parking, stall striping
	Painting, Exterior
	Packaged terminal air condition (PTAC)
	Carpet
	Vinyl Flooring
	Kitchen: Refrigerator
	Common area floors, carpet
	Common area seating, FF&E, tables, etc
	Unit Interior FF&E
	 

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 5	 	 

     

    

 

INITIAL PAGE TO

 

SCHEDULE 5

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Replacement Schedule

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Initial Page
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 5	 	 

     

    

 

SCHEDULE 6 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Repair Schedule

 

NONE

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 6	 	 

     

    

 

INITIAL PAGE TO

 

SCHEDULE 6

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Repair Schedule

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Initial Page
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 6	 	 

     

    

 

SCHEDULE 7 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Exceptions to Representations and Warranties
Schedule

 

i.    Section
6.01(b)(3): The following Contracts are not assignable:

 

	Vendor Name	Contract

Term	Annual

Contract

Value	Contract

Parties	Multi-

property

Contract?

(yes or no)	Assignable?

(yes or no)
	Pitney Bowes	36 months	 $     180.00 	Pitney Bowes and Spring Village at Wildewood	No	Not specified.
	Ecolab	1 year, subject to automatic renewal	$      1,619.40	Ecolab Inc. and Spring Village at Wildewood	No	Not specified.
	Sandra Triplett (Hair Salon Booth Rental)	Not specified	Stylist pays 10% of earnings to Wildewood	Sandra Triplett and Spring Village at Wildewood	No	Not specified
	Spartan	Not specified	$4200 	Spring Village and Spartan Sewer Raider, Inc.	No	Not specified
	Total Quality Concepts	Not specified	Based on hours worked 	Spring Village at Wildewood Assisted Living and Total Quality Concepts, Inc.	No	Not specified
	Guardian Termite and Pest Control	One year	$1080 	Spring Village at Wildewood and Guardian Termite and Pest Control, Inc.	No	Not specified

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 7	 	 

     

    

 

ii.    Section
6.01(f):

 

All Personal Property that is material to and is used in
connection with the management, ownership and operation of the Mortgaged Property is owned by Wildewood TRS, LLC.

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Page 2
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 7	 	 

     

    

 

INITIAL PAGE TO

 

SCHEDULE 7

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Exceptions to Representations and Warranties
Schedule

 

	 	/s/ JMR	 
	 	Borrower Initials	 

 

    	Multifamily Loan and Security Agreement (Non-Recourse) (Seniors Housing)	Form 6001.NR.SRS	Initial Page
	Fannie Mae	01-16	© 2016 Fannie Mae
	 	 	 
	Schedule 7

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