Document:

EXHIBIT 10.1

 

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

 

DATED AS OF NOVEMBER 7, 2005

 

 

AMONG

 

 

LTC PROPERTIES, INC.

 

 

THE GUARANTORS FROM TIME TO TIME PARTIES
HERETO,

 

 

THE LENDERS FROM TIME TO TIME PARTIES
HERETO,

 

 

AND

 

 

BANK OF MONTREAL, CHICAGO BRANCH,

as Administrative Agent

 

 

 

 

HARRIS NESBITT CORP.,

as Co-Lead Arranger and Book Manager and

 

KEY BANK NATIONAL ASSOCIATION,

as Co-Lead
Arranger and Syndication Agent

 

 

 

 

TABLE
OF CONTENTS

 

	
  SECTION

  	
   

  	
  HEADING

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  THE CREDIT FACILITIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Commitments

  	
   

  	
   

  
	
  Section 1.2.

  	
   

  	
  Letters of Credit

  	
   

  	
   

  
	
  Section 1.3.

  	
   

  	
  Applicable Interest Rates

  	
   

  	
   

  
	
  Section 1.4.

  	
   

  	
  Minimum Borrowing Amounts;
  Maximum Eurodollar Loans

  	
   

  	
   

  
	
  Section 1.5.

  	
   

  	
  Manner of Borrowing Loans
  and Designating Applicable Interest Rates

  	
   

  	
   

  
	
  Section 1.6.

  	
   

  	
  Interest Periods

  	
   

  	
   

  
	
  Section 1.7.

  	
   

  	
  Maturity of Loans

  	
   

  	
   

  
	
  Section 1.8.

  	
   

  	
  Prepayments

  	
   

  	
   

  
	
  Section 1.9.

  	
   

  	
  Default Rate

  	
   

  	
   

  
	
  Section 1.10.

  	
   

  	
  The Notes

  	
   

  	
   

  
	
  Section 1.11.

  	
   

  	
  Funding Indemnity

  	
   

  	
   

  
	
  Section 1.12.

  	
   

  	
  Commitment Terminations

  	
   

  	
   

  
	
  Section 1.13.

  	
   

  	
  Substitution of Lenders

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  FEES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Fees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  PLACE
  AND APPLICATION OF PAYMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
   

  	
  Place and Application of
  Payments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  GUARANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Guaranties

  	
   

  	
   

  
	
  Section 4.2.

  	
   

  	
  Further Assurances

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  DEFINITIONS;
  INTERPRETATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Definitions

  	
   

  	
   

  
	
  Section 5.2.

  	
   

  	
  Interpretation

  	
   

  	
   

  
	
  Section 5.3.

  	
   

  	
  Change in
  Accounting Principles

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Organization
  and Qualification

  	
   

  	
   

  
	
  Section 6.2.

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  Section 6.3.

  	
   

  	
  Authority
  and Validity of Obligations

  	
   

  	
   

  
	
  Section 6.4.

  	
   

  	
  Use of
  Proceeds; Margin Stock

  	
   

  	
   

  
	
  Section 6.5.

  	
   

  	
  Financial
  Reports

  	
   

  	
   

  
	
  Section 6.6.

  	
   

  	
  No Material
  Adverse Change

  	
   

  	
   

  
	
  Section 6.7.

  	
   

  	
  Full
  Disclosure

  	
   

  	
   

  

 

i

 

	
  Section 6.8.

  	
   

  	
  Trademarks,
  Franchises, and Licenses

  	
   

  	
   

  
	
  Section 6.9.

  	
   

  	
  Governmental
  Authority and Licensing

  	
   

  	
   

  
	
  Section 6.10.

  	
   

  	
  Good Title

  	
   

  	
   

  
	
  Section 6.11.

  	
   

  	
  Litigation
  and Other Controversies

  	
   

  	
   

  
	
  Section 6.12.

  	
   

  	
  Taxes

  	
   

  	
   

  
	
  Section 6.13.

  	
   

  	
  Approvals

  	
   

  	
   

  
	
  Section 6.14.

  	
   

  	
  Affiliate
  Transactions

  	
   

  	
   

  
	
  Section 6.15.

  	
   

  	
  Investment
  Company; Public Utility Holding Company

  	
   

  	
   

  
	
  Section 6.16.

  	
   

  	
  ERISA

  	
   

  	
   

  
	
  Section 6.17.

  	
   

  	
  Compliance
  with Laws

  	
   

  	
   

  
	
  Section 6.18.

  	
   

  	
  Other
  Agreements

  	
   

  	
   

  
	
  Section 6.19.

  	
   

  	
  Solvency

  	
   

  	
   

  
	
  Section 6.20.

  	
   

  	
  No Broker
  Fees.

  	
   

  	
   

  
	
  Section 6.21.

  	
   

  	
  No Default

  	
   

  	
   

  
	
  Section 6.22.

  	
   

  	
  Stock of
  the Borrower

  	
   

  	
   

  
	
  Section 6.23.

  	
   

  	
  Condition
  of Property; Casualties; Condemnation

  	
   

  	
   

  
	
  Section 6.24.

  	
   

  	
  Legal
  Requirements, and Zoning

  	
   

  	
   

  
	
  Section 6.25.

  	
   

  	
  Qualified
  Ground Leases

  	
   

  	
   

  
	
  Section 6.26.

  	
   

  	
  No
  Defaults; Landlord is in Compliance with Leases

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  CONDITIONS
  PRECEDENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  All Credit
  Events

  	
   

  	
   

  
	
  Section 7.2.

  	
   

  	
  Initial
  Credit Event

  	
   

  	
   

  
	
  Section 7.3.

  	
   

  	
  Eligible
  Property Additions and Deletions to the Borrowing Base

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Maintenance
  of Business

  	
   

  	
   

  
	
  Section 8.2.

  	
   

  	
  Maintenance
  of Properties

  	
   

  	
   

  
	
  Section 8.3.

  	
   

  	
  Taxes and
  Assessments

  	
   

  	
   

  
	
  Section 8.4.

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  Section 8.5.

  	
   

  	
  Financial
  Reports

  	
   

  	
   

  
	
  Section 8.6.

  	
   

  	
  Inspection

  	
   

  	
   

  
	
  Section 8.7.

  	
   

  	
  Office of
  Foreign Asset Control

  	
   

  	
   

  
	
  Section 8.8.

  	
   

  	
  Liens

  	
   

  	
   

  
	
  Section 8.9.

  	
   

  	
  Investments,
  Acquisitions, Loans and Advances

  	
   

  	
   

  
	
  Section 8.10.

  	
   

  	
  Mergers,
  Consolidations and Sales

  	
   

  	
   

  
	
  Section 8.11.

  	
   

  	
  Maintenance
  of Subsidiaries

  	
   

  	
   

  
	
  Section 8.12.

  	
   

  	
  [Intentionally Omitted]

  	
   

  	
   

  
	
  Section 8.13.

  	
   

  	
  ERISA

  	
   

  	
   

  
	
  Section 8.14.

  	
   

  	
  Compliance with Laws

  	
   

  	
   

  
	
  Section 8.15.

  	
   

  	
  Burdensome Contracts With
  Affiliates

  	
   

  	
   

  
	
  Section 8.16.

  	
   

  	
  No Changes in Fiscal Year

  	
   

  	
   

  
	
  Section 8.17.

  	
   

  	
  Intentionally Omitted

  	
   

  	
   

  
	
  Section 8.18.

  	
   

  	
  Change in the Nature of Business

  	
   

  	
   

  

 

ii

 

	
  Section 8.19.

  	
   

  	
  Use of Loan Proceeds

  	
   

  	
   

  
	
  Section 8.20.

  	
   

  	
  No Restrictions

  	
   

  	
   

  
	
  Section 8.21.

  	
   

  	
  Financial Covenants

  	
   

  	
   

  
	
  Section 8.22.

  	
   

  	
  Borrowing Base Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  EVENTS OF
  DEFAULT AND REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Events of Default

  	
   

  	
   

  
	
  Section 9.2.

  	
   

  	
  Non-Bankruptcy Defaults

  	
   

  	
   

  
	
  Section 9.3.

  	
   

  	
  Bankruptcy Defaults

  	
   

  	
   

  
	
  Section 9.4.

  	
   

  	
  Collateral for Undrawn Letters of
  Credit

  	
   

  	
   

  
	
  Section 9.5.

  	
   

  	
  Notice of Default

  	
   

  	
   

  
	
  Section 9.6.

  	
   

  	
  Expenses

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  CHANGE IN
  CIRCUMSTANCES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Change of Law

  	
   

  	
   

  
	
  Section 10.2.

  	
   

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

  	
   

  	
   

  
	
  Section 10.3.

  	
   

  	
  Increased Cost and Reduced Return

  	
   

  	
   

  
	
  Section 10.4.

  	
   

  	
  Lending Offices

  	
   

  	
   

  
	
  Section 10.5.

  	
   

  	
  Discretion of Lender as to Manner
  of Funding

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  THE
  ADMINISTRATIVE AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
   

  	
  Appointment and Authorization of
  Administrative Agent

  	
   

  	
   

  
	
  Section 11.2.

  	
   

  	
  Administrative Agent and its
  Affiliates

  	
   

  	
   

  
	
  Section 11.3.

  	
   

  	
  Action by Administrative Agent

  	
   

  	
   

  
	
  Section 11.4.

  	
   

  	
  Consultation with Experts

  	
   

  	
   

  
	
  Section 11.5.

  	
   

  	
  Liability of Administrative
  Agent; Credit Decision

  	
   

  	
   

  
	
  Section 11.6.

  	
   

  	
  Indemnity

  	
   

  	
   

  
	
  Section 11.7.

  	
   

  	
  Resignation or Removal of
  Administrative Agent and Successor Administrative Agent

  	
   

  	
   

  
	
  Section 11.8.

  	
   

  	
  L/C Issuer.

  	
   

  	
   

  
	
  Section 11.9.

  	
   

  	
  Designation of Additional Agents

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  THE GUARANTEES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
   

  	
  The Guarantees

  	
   

  	
   

  
	
  Section 12.2.

  	
   

  	
  Guarantee Unconditional

  	
   

  	
   

  
	
  Section 12.3.

  	
   

  	
  Discharge Only upon Payment in
  Full; Reinstatement in Certain Circumstances

  	
   

  	
   

  
	
  Section 12.4.

  	
   

  	
  Subrogation

  	
   

  	
   

  
	
  Section 12.5.

  	
   

  	
  Waivers

  	
   

  	
   

  
	
  Section 12.6.

  	
   

  	
  Limit on Recovery

  	
   

  	
   

  
	
  Section 12.7.

  	
   

  	
  Stay of Acceleration

  	
   

  	
   

  
	
  Section 12.8.

  	
   

  	
  Benefit to Guarantors

  	
   

  	
   

  
	
  Section 12.9.

  	
   

  	
  Guarantor Covenants

  	
   

  	
   

  

 

iii

 

	
  SECTION 13.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
   

  	
  Withholding Taxes

  	
   

  	
   

  
	
  Section 13.2.

  	
   

  	
  No Waiver, Cumulative Remedies

  	
   

  	
   

  
	
  Section 13.3.

  	
   

  	
  Non-Business Days

  	
   

  	
   

  
	
  Section 13.4.

  	
   

  	
  Documentary Taxes

  	
   

  	
   

  
	
  Section 13.5.

  	
   

  	
  Survival of Representations

  	
   

  	
   

  
	
  Section 13.6.

  	
   

  	
  Survival of Indemnities

  	
   

  	
   

  
	
  Section 13.7.

  	
   

  	
  Sharing of Set-Off

  	
   

  	
   

  
	
  Section 13.8.

  	
   

  	
  Notices

  	
   

  	
   

  
	
  Section 13.9.

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
  Section 13.10.

  	
   

  	
  Successors and Assigns

  	
   

  	
   

  
	
  Section 13.11.

  	
   

  	
  Participants

  	
   

  	
   

  
	
  Section 13.12.

  	
   

  	
  Assignments

  	
   

  	
   

  
	
  Section 13.13.

  	
   

  	
  Amendments

  	
   

  	
   

  
	
  Section 13.14.

  	
   

  	
  Headings

  	
   

  	
   

  
	
  Section 13.15.

  	
   

  	
  Costs and Expenses;
  Indemnification

  	
   

  	
   

  
	
  Section 13.16.

  	
   

  	
  Set-off

  	
   

  	
   

  
	
  Section 13.17.

  	
   

  	
  Entire Agreement

  	
   

  	
   

  
	
  Section 13.18.

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
  Section 13.19.

  	
   

  	
  Severability of Provisions

  	
   

  	
   

  
	
  Section 13.20.

  	
   

  	
  Excess
  Interest

  	
   

  	
   

  
	
  Section 13.21.

  	
   

  	
  Construction

  	
   

  	
   

  
	
  Section 13.22.

  	
   

  	
  Lender’s Obligations Several

  	
   

  	
   

  
	
  Section 13.23.

  	
   

  	
  Submission to Jurisdiction;
  Waiver of Jury Trial

  	
   

  	
   

  
	
  Section 13.24.

  	
   

  	
  Amendment and Restatement

  	
   

  	
   

  
	
  Section 13.25.

  	
   

  	
  Equalization of Outstanding
  Obligations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature
  Page

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  —

  	
   

  	
  Notice
  of Payment Request

  	
   

  	
   

  
	
  EXHIBIT B

  	
  —

  	
   

  	
  Notice of Borrowing

  	
   

  	
   

  
	
  EXHIBIT C

  	
  —

  	
   

  	
  Notice of Continuation/Conversion

  	
   

  	
   

  
	
  EXHIBIT D

  	
  —

  	
   

  	
  Note

  	
   

  	
   

  
	
  EXHIBIT E

  	
  —

  	
   

  	
  Borrowing Base Certificate

  	
   

  	
   

  
	
  EXHIBIT F

  	
  —

  	
   

  	
  Compliance Certificate

  	
   

  	
   

  
	
  EXHIBIT G

  	
  —

  	
   

  	
  Additional Guarantor Supplement

  	
   

  	
   

  
	
  EXHIBIT H

  	
  —

  	
   

  	
  Assignment and Acceptance

  	
   

  	
   

  
	
  EXHIBIT I

  	
  —

  	
   

  	
  Opinion of Counsel

  	
   

  	
   

  
	
  SCHEDULE 1.0

  	
  —

  	
   

  	
  Commitments

  	
   

  	
   

  
	
  SCHEDULE 1.1

  	
  —

  	
   

  	
  Initial Properties, Initial
  Investment Amount and Initial Senior Housing Value

  	
   

  	
   

  
	
  SCHEDULE 6.2

  	
  —

  	
   

  	
  Material Subsidiaries

  	
   

  	
   

  
	
  SCHEDULE 6.26

  	
  —

  	
   

  	
  Significant Leases

  	
   

  	
   

  
							

 

iv

 

AMENDED
AND RESTATED CREDIT AGREEMENT

 

This Amended and Restated Credit Agreement is entered
into as of November 7, 2005 by and among LTC Properties, Inc.,
a Maryland corporation (the “Borrower”),
certain direct and indirect Subsidiaries of the Borrower from time to time
party to this Agreement, as Guarantors, the several financial institutions from
time to time party to this Agreement, as Lenders and Bank of Montreal, Chicago
Branch, as Administrative Agent as provided herein.  All capitalized terms used herein without
definition shall have the same meanings herein as such terms are defined in Section 5.1
hereof.

 

PRELIMINARY
STATEMENTS

 

WHEREAS, the Borrower, the Guarantors, the Lenders and
the Administrative Agent are currently party to that certain Credit Agreement
dated as of December 26, 2003; as amended by that certain First Amendment
to the Credit Agreement dated as of September 17, 2004; and by that
certain Second Amendment to Credit Agreement dated as of October 5, 2004
(together, the “Prior Credit Agreement”).  The Borrower has requested that the Prior
Credit Agreement be amended in certain respects as described below to, inter alia, (i) increase the Commitments, (ii) amend
the Applicable Margin, (iii) adjust certain financial covenants, and (iv) make
certain additional modifications to the Prior Credit Agreement, and for the
sake of clarity and convenience, the Borrower has requested that the Prior
Credit Agreement be restated as so amended.

 

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

 

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

 

SECTION 1.                THE CREDIT FACILITIES.

 

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

 

 

Loans may be repaid and the principal amount thereof reborrowed before
the Termination Date, subject to the terms and conditions hereof.

 

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

 

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

 

(c)           The Reimbursement Obligations.  Subject to Section 1.2(b) hereof,
the obligation of the Borrower to reimburse the L/C Issuer for all drawings
under a Letter of Credit (a “Reimbursement Obligation”)
shall be governed by the Application related to such Letter of Credit,

 

2

 

except that reimbursement shall be made by no later than 2:00 p.m.
(Chicago time) on the date when each drawing is to be paid if the Borrower has
been informed of such drawing by the L/C Issuer on or before 11:30 a.m.
(Chicago time) on the date when such drawing is to be paid or, if notice of
such drawing is given to the Borrower after 11:30 a.m. (Chicago time) on
the date when such drawing is to be paid, by the end of such day, in
immediately available funds at the Administrative Agent’s principal office in
Chicago, Illinois or such other office as the Administrative Agent may
designate in writing to the Borrower (who shall thereafter cause to be
distributed to the L/C Issuer such amount(s) in like funds).  If the Borrower does not make any such
reimbursement payment on the date due and the Participating Lenders fund their
participations therein in the manner set forth in Section 1.2(d) below,
then all payments thereafter received by the Administrative Agent in discharge
of any of the relevant Reimbursement Obligations shall be distributed in
accordance with Section 1.2(d) below.

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

	
  Adjusted
  LIBOR

  	
  =

  	
   

  	
  LIBOR

  	
   

  
	
   

  	
   

  	
   

  	
  1 - Eurodollar Reserve Percentage

  	
   

  

 

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

 

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

 

“LIBOR Index Rate” means, for any
Interest Period, the rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day
2 Business Days before the commencement of such Interest Period.

 

“Telerate Page 3750” means
the display designated as “Page 3750”
on the Telerate Service (or such other page as may replace Page 3750
on that service or such other service as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
British Bankers’ Association Interest Settlement Rates for U.S. Dollar
deposits).

 

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

 

5

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

governmental authority, (ii) the Borrower shall have received the
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, to such assignment, (iii) the Borrower shall have
paid to the Affected Lender all monies (together with amounts due such Affected
Lender under Section 1.11 hereof as if the Loans owing to it were prepaid
rather than assigned) other than such principal owing to it hereunder, and (iv) the
assignment is entered into in accordance with the other requirements of Section 13.12
hereof (provided any assignment fees and reimbursable expenses due thereunder
shall be paid by the Borrower).

 

SECTION 2.                FEES.

 

Section 2.1.           Fees.  (a) Commitment Fee.  The Borrower shall pay to the Administrative
Agent for the ratable account of the Lenders in accordance with their
Percentages a commitment fee at the rate per annum equal to the Applicable
Margin for commitment fees as shown in the definition of Applicable Margin in Section 5.1
hereof, (computed on the basis of a year of 360 days and the actual number
of days elapsed) on the daily Unused Commitments.  Such commitment fee shall be payable
quarterly in arrears on the last day of each Fiscal Quarter in each year
(commencing on December 31, 2005) and on the Termination Date, unless
the Commitments are terminated in whole on an earlier date, in which event the
commitment fee for the period to the date of such termination in whole shall be
paid on the date of such termination.

 

(b)           Letter of Credit Fees. 
On the date of issuance or extension, or increase in the amount, of any
Letter of Credit pursuant to Section 1.2 hereof, the Borrower shall pay to
the L/C Issuer for its own account a fronting fee equal to .125% of the face
amount of (or of the increase in the face amount of) such Letter of
Credit.  Quarterly in arrears, on the
last day of each Fiscal Quarter, commencing on December 31, 2005, the
Borrower shall pay to the Administrative Agent, for the ratable benefit of the
Lenders in accordance with their Percentages, a letter of credit fee at a rate
per annum equal to the Applicable Margin for Letter of Credit Fee as shown in the
definition of Applicable Margin in Section 5.1 hereof (computed on the
basis of a year of 360 days and the actual number of days elapsed) in
effect during each day of such quarter applied to the daily face amount of
Letters of Credit outstanding during such quarter.  In addition, the Borrower shall pay to the
L/C Issuer for its own account the L/C Issuer’s standard issuance, drawing,
negotiation, amendment, and other administrative fees for each Letter of Credit
as established by the L/C Issuer from time to time.

 

(c)           Administrative Agent Fees. 
The Borrower shall pay to the Administrative Agent, for its own use and
benefit, the fees agreed to between the Administrative Agent and the Borrower
in a fee letter dated September 1, 2005, or as otherwise agreed to in
writing between them (without duplication and pro rata for the administrative
fee previously paid to the Administrative Agent in connection with the Prior
Credit Agreement).

 

SECTION 3.                PLACE AND APPLICATION OF PAYMENTS.

 

Section 3.1.           Place
and Application of Payments.  All
payments of principal and interest on the Loans and the Reimbursement
Obligations, and of all other Obligations payable by the Borrower under this
Agreement and the other Loan Documents, shall be made by the Borrower

 

12

 

to the Administrative Agent by no later than 12:00 Noon (Chicago
time) on the due date thereof at the office of the Administrative Agent in
Chicago, Illinois (or such other location as the Administrative Agent may
designate to the Borrower) for the benefit of the Lender or Lenders entitled
thereto.  Any payments received after
such time shall be deemed to have been received by the Administrative Agent on
the next Business Day, provided however, that if the Borrower has provided to
the Administrative Agent written authorization to deduct such payments from its
operating bank account maintained at Harris N.A., Chicago, Illinois, by 12:00
Noon (Chicago Time), such amounts shall be deemed to have been received by the
Administrative Agent upon receipt of such notification.  All such payments shall be made in U.S.
Dollars, in immediately available funds at the place of payment, in each case
without set-off or counterclaim.  The
Administrative Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest on Loans and on
Reimbursement Obligations in which the Lenders have purchased Participating
Interests ratably to the Lenders and like funds relating to the payment of any
other amount payable to any Lender to such Lender, in each case to be applied
in accordance with the terms of this Agreement. 
If the Administrative Agent causes amounts to be distributed to the
Lenders in reliance upon the assumption that the Borrower will make a scheduled
payment and such scheduled payment is not so made, each Lender shall, on
demand, repay to the Administrative Agent the amount distributed to such Lender
together with interest thereon in respect of each day during the period
commencing on the date such amount was distributed to such Lender and ending on
(but excluding) the date such Lender repays such amount to the Administrative
Agent, at a rate per annum equal to:  (i) from
the date the distribution was made to the date 2 Business Days after payment by
such Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such Lender to
the date such payment is made by such Lender, the Adjusted Base Rate in effect
for each such day.

 

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

 

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

 

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

 

13

 

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

 

(d)           fourth,
to the payment of all other unpaid Obligations and all other indebtedness,
obligations, and liabilities of the Borrower and its Subsidiaries secured by
the Collateral Documents to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof; and

 

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

 

SECTION 4.                GUARANTIES .

 

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

 

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

 

SECTION 5.                DEFINITIONS; INTERPRETATION.

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

	
  LEVEL

  	
   

  	
  MAXIMUM
  TOTAL

  INDEBTEDNESS/TOTAL

  ASSET VALUE RATIO FOR

  SUCH PRICING DATE

  	
   

  	
  APPLICABLE
  MARGIN FOR

  ADJUSTED BASE RATE

  LOANS UNDER REVOLVING

  CREDIT AND

  REIMBURSEMENT

  OBLIGATIONS SHALL BE:

  	
   

  	
  APPLICABLE
  MARGIN FOR

  EURODOLLAR LOANS

  UNDER REVOLVING

  CREDIT AND LETTER OF

  CREDIT FEE SHALL BE:

  	
   

  	
  APPLICABLE

  MARGIN FOR

  COMMITMENT FEE

  SHALL BE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Greater than .45 to 1.0

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  0.40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Less than or equal to

  .45 to 1.0 but greater

  than .35 to 1.0

  	
   

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  	
  .0.35

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Less than or equal to

  .35 to 1.0 but greater

  than .25 to 1.0

  	
   

  	
  0.75

  	
  %

  	
  1.75

  	
  %

  	
  0.35

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Less than or equal to

  .25 to 1.0

  	
   

  	
  0.50

  	
  %

  	
  1.50

  	
  %

  	
  0.30

  	
  %

  

 

For purposes hereof, the term “Pricing
Date” means, for any Fiscal Quarter of the Borrower ending on or
after December 31, 2005, the date on which the Administrative Agent is in
receipt of the Borrower’s most recent financial statements and current
Compliance Certificate (and, in the case of the year-end financial statements,
audit report) for the Fiscal Quarter then ended, pursuant to Section 8.5 hereof.  The Applicable Margin shall be established
based on the Maximum Total Indebtedness/Total Asset Value Ratio for the most
recently completed Fiscal Quarter and the Applicable Margin established on a
Pricing Date shall remain in effect until the next Pricing Date.  If the Borrower has not delivered its
financial statements, including a Compliance Certificate, by the date such
financial statements (and, in the case of the year-end financial statements,
audit report) are required to be delivered under Section 8.5 hereof, until
such financial statements and audit report are delivered, the Applicable Margin
shall be the highest Applicable Margin (i.e.,
Level IV shall apply).  If the
Borrower subsequently delivers such financial statements before the next Pricing
Date, the Applicable Margin established by such late delivered financial
statements shall take effect from the date of delivery until the next Pricing
Date.  In all other circumstances, the
Applicable Margin established by such financial statements shall be in effect
from the Pricing Date that occurs immediately after the end of the Fiscal
Quarter covered by such financial statements until the next Pricing Date.  Each determination of the Applicable Margin
made by the Administrative Agent in accordance with the foregoing shall be
conclusive and binding on the Borrower and the Lenders if reasonably
determined.

 

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

 

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

 

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

 

16

 

named by any Authorized Representative of the Borrower in a written
notice to the Administrative Agent.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

“Capitalization Rate” means 9.5%
for assisted living facilities (“ALF’s”) and
12% for skilled nursing facilities (“SNF’s”).

 

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

 

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

 

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

 

18

 

“Collateral Account” is defined
in Section 9.4 hereof.

 

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

 

“Commitment” means, as to any
Lender, the obligation of such Lender to make Loans and to participate in
Letters of Credit issued for the account of the Borrower hereunder in an
aggregate principal or face amount at any one time outstanding not to exceed
the amount set forth opposite such Lender’s name on Schedule 1 attached
hereto and made a part hereof, as the same may be reduced or modified at any
time or from time to time pursuant to the terms hereof.  The Borrower and the Lenders acknowledge and
agree that the Commitments of the Lenders aggregate $90,000,000 on the date
hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“EBITDA” means, for any period,
determined on a consolidated basis of the Borrower and its Subsidiaries, in
accordance with GAAP, the sum of net income (or loss) plus: (i) depreciation
and amortization expense; (ii) Interest Expense; (iii) income tax
expense; (iv) extraordinary, unrealized or non-recurring losses, including
impairment charges and reserves,

 

19

 

minus:  (v) funds received
by the Borrower or a Subsidiary as rent but which are reserved for capital
expenses; (vi) unrealized gains on the sale of assets; and, (vii) income
tax benefits.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)           If
such Property is owned by a Material Subsidiary, (i) none of the Borrower’s
beneficial ownership interest in such Material Subsidiary is subject to any
Lien (other than certain Permitted Liens or Liens in favor of the Borrower or a
Material Subsidiary) or to any negative pledge, (ii) the Material
Subsidiary has the unilateral right to sell, transfer or otherwise dispose of
such Property and to create a Lien on such Property as security for
Indebtedness, and (iii) the Material Subsidiary has provided a Guaranty to
the Administrative Agent pursuant to Section 4.1 hereof;

 

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

 

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

 

(h)           For
each such Property, the Borrower shall have delivered to the Administrative
Agent a copy, certified as true and correct by the Borrower, of each of the
following: if the Property Owner is not the Borrower, the Property Owner’s
articles of

 

20

 

incorporation, by-laws,
partnership agreements, operating agreements, as applicable, and certificates
of existence, good standing and authority to do business from each appropriate
state authority, and partnership, corporate or limited liability company, as
applicable, authorizations authorizing the execution, delivery and performance
of the Additional Guarantor Supplement all certified to be true and complete by
a duly authorized officer of such Property Owner.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“GAAP” means generally accepted
accounting principles set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within

 

22

 

the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

“Interest Period” is defined in Section 1.6
hereof.

 

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

 

“Land” for any Property means the
real property upon which the Improvements are located, together with all
rights, title and interests appurtenant to such real property, including
without limitation all rights, title and interests to (a) all strips and
gores within or adjoining such property, (b) the streets, roads,
sidewalks, alleys, and ways adjacent thereto, (c) all of the tenements,
hereditaments, easements, reciprocal easement agreements, rights-of-way and
other rights, privileges and appurtenances thereunto belonging or in any way
pertaining thereto, (d) all reversions and remainders, (e) all air
space rights, and all water, sewer and wastewater rights, (e) all mineral,
oil, gas, hydrocarbon substances and other rights to produce or share in the
production of anything related to such property, and (f) all other
appurtenances appurtenant to such property, including without limitation, any
now or hereafter belonging or in anywise appertaining thereto.

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

“Lending Office” is defined in Section 10.4
hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

“Note” is defined in Section 1.10
hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

“Permitted Lien” means such of
the following as to which no enforcement, collection, execution, levy or
foreclosure proceeding has been commenced: 
(a) Liens for taxes, assessments and governmental charges or levies
to the extent not required to be paid under Section 8.3; (b) Liens
imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and
repairmen’s Liens and other similar Liens arising in the ordinary course of
business securing obligations that are not overdue or that are being contested
in good faith and by proper proceedings and as to which appropriate reserves
are being maintained; (c) pledges or deposits to secure obligations under
workers’ compensation laws or similar legislation or to secure public or
statutory obligations; (d) easements, rights of way and other encumbrances
on title to real property that do not materially and adversely affect the value
of such property or the use of such property for its present purposes; (e) deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of like nature incurred in the ordinary course of
business; (f) Liens in favor of the United States of America for amounts
paid to the Borrower or any Subsidiary as progress payments under government
contracts entered into by it; (g) attachment, judgment and other similar
Liens arising in connection with court, reference or arbitration proceedings,
provided that the same have been in existence less than 20 days, that the same
have been discharged or that execution or enforcement thereof has been stayed
pending appeal; and (h) Liens on Properties not included in the Borrowing
Base Value.

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

“Property Net Operating Income”
or “Property NOI” means, with respect to a
Property and for the four most recently ended Fiscal Quarters, the sum of the
following (without duplication):  (a) all
revenues received in the ordinary course of operating such Property (including
proceeds of rent loss insurance but excluding pre-paid rents and revenues and
security deposits except to the extent applied in satisfaction of tenants’
obligations for rent) minus (b) all
expenses (whether paid or accrued) directly related to the operation or
maintenance of such Property, including but not limited to payroll expenses,
taxes, assessments and other similar charges, insurance, utilities,
maintenance, repair and landscaping expenses but not including any management
fees (in accordance with the computation of EBITDA plus
rent and management fees).  All amounts
due to the Borrower or Guarantor, whether as rent or mortgage payments for the
property, will be excluded from the calculation of (b) above.

 

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

 

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

 

28

 

such lease is terminated,
such holder shall have the option to enter into a new lease having terms
substantially identical to those contained in the terminated lease and (g) which
is otherwise acceptable in form and substance to the Administrative Agent.

 

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

 

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

 

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

 

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

 

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

 

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

 

“REMIC” means
Real Estate Mortgage Investment Conduit.

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

“Senior Housing Assets” means any
Property on which the improvements consist only of one or more of the
following:  (a) senior apartments, (b) independent
living facilities, (c) congregate communities, (d) assisted living
facilities, (e) nursing homes, (f) hospitals and (g) other
Property primarily used for senior citizen residences or health care services,
together with other improvements incidental thereto.

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

“Termination Date” means November 7, 2008,
or such earlier date on which the Commitments are terminated in whole pursuant
to Section 1.12, 9.2 or 9.3 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

SECTION 6.                REPRESENTATIONS AND WARRANTIES.

 

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

 

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

 

Section 6.2.           Subsidiaries.  Each Subsidiary is duly organized, validly
existing, and in good standing under the laws of the jurisdiction in which it
is organized, has full and adequate power to own its Property and conduct its
business as now conducted, and is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the nature of the Property owned or leased by it requires such licensing
or qualifying.  Schedule 6.2 hereto
identifies each Subsidiary, the jurisdiction of its organization, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by the Borrower and the other Subsidiaries and,
if such percentage is not 100% (excluding directors’ qualifying shares as
required by law), a description of each class of its authorized capital stock
and other equity interests and the number of shares of each class issued and
outstanding.  All of the outstanding
shares of capital stock and other equity interests of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable and all such
shares and other equity interests indicated on Schedule 6.2 as owned by
the Borrower or another Subsidiary are owned, beneficially and of record, by
the Borrower or such Subsidiary free and clear of all Liens.  Neither the Borrower or any of its
Subsidiaries has committed or is obligated to issue Stock Equivalents in any of
the Borrower’s Subsidiaries to any Person not owned by the Borrower or its
Subsidiaries.

 

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

 

33

 

organizational documents
(e.g., charter, certificate or articles
of incorporation and by-laws, certificate or articles of association and
operating agreement, partnership agreement, or other similar organizational
documents) of the Borrower or any Material
Subsidiary, (b) contravene or constitute a default under any covenant,
indenture or agreement of or affecting the Borrower or any Material Subsidiary
or any of its Property or (c) result in the creation or imposition of any
Lien on any Property of the Borrower or any Material Subsidiary.

 

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

 

Section 6.5.           Financial
Reports.   The consolidated
balance sheet of the Borrower and its Subsidiaries as at December 31,
2004, and the related consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for the fiscal year then ended,
and accompanying notes thereto, which financial statements are accompanied by
the audit report of Ernst & Young, LLP, independent public
accountants, and the unaudited interim consolidated balance sheet of the
Borrower and its Subsidiaries as at September 30, 2005 and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the nine (9) months then ended,
heretofore furnished to the Administrative Agent and the Lenders, fairly
present the consolidated financial condition of the Borrower and its
Subsidiaries as at said dates and the consolidated results of their operations
and cash flows for the periods then ended in conformity with GAAP applied on a
consistent basis.  Neither the Borrower
nor any Subsidiary has contingent liabilities which are material to it other
than as indicated on such financial statements or, with respect to future
periods, on the financial statements furnished pursuant to Section 8.5
hereof.

 

Section 6.6.           No
Material Adverse Change.  Since September 30,
2005, there has been no event which could reasonably be expected to have a
Material Adverse Effect on the Borrower or its Subsidiaries, taken as a whole,
except those occurring in the ordinary course of business.

 

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

 

34

 

same were prepared on the
basis of information and estimates the Borrower believed to be reasonable.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.14.        Affiliate
Transactions.  Neither the Borrower
nor any Subsidiary is a party to any contracts or agreements with any of its
Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions
which are less favorable to the Borrower or such

 

35

 

Subsidiary than would be
usual and customary in similar contracts or agreements between Persons not
affiliated with each other.

 

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

 

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

 

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

 

(b)           Without
limiting the representations and warranties set forth in Section 6.17(a) above,
except for such matters, individually or in the aggregate, which could not
reasonably be expected to result in a Material Adverse Effect, the Borrower
represents and warrants that to the actual knowledge of each respectively that
the Borrower and its Subsidiaries, and each of the Properties owned by them: (i) comply
in all material respects with all applicable Environmental Laws; (ii) the
tenants of the Borrower and its Subsidiaries have obtained all governmental
approvals required for the operation of the Properties under any applicable
Environmental Law; (iii) the Borrower and its Subsidiaries have no actual
knowledge of any other Person who has, caused any Release, threatened Release
or disposal of any Hazardous Material at, on, about, or off any of the
Properties in any material quantity and, to the actual the knowledge of the

 

36

 

Borrower, none of the
Properties are adversely affected by any Release, threatened Release or
disposal of a Hazardous Material originating or emanating from any other
property; (iv) none of the Properties contain or have contained any:  (1) underground storage tanks in which
any Hazardous Material is being or has been treated, stored or disposed of on
any Property owned by the Borrower or any Subsidiary, in each case in any
manner not in compliance in all material respects with all applicable
Environmental Laws, (2) material amounts of asbestos containing building
material, (3) landfills or dumps, (4) hazardous waste management
facility as defined pursuant to RCRA or any comparable state law, or (5) site
on or nominated for the National Priority List promulgated pursuant to CERCLA
or any state remedial priority list promulgated or published pursuant to any
comparable state law; (v) the Borrower and its Subsidiaries have not used
a material quantity of any Hazardous Material and have conducted no Hazardous
Material Activity at any of the Properties; (vi) the Borrower and its
Subsidiaries have no material liability for response or corrective action,
natural resource damage or other harm pursuant to CERCLA, RCRA or any
comparable state law; (vii) the Borrower and its Subsidiaries are not
subject to, have no notice or actual knowledge of and are not required to give
any notice of any Environmental Claim involving the Borrower or any Subsidiary
or any of their Properties, and there are no conditions or occurrences at any
of their Properties which could reasonably be anticipated to form the basis for
an Environmental Claim against the Borrower or any Subsidiary or such Property;
(viii) none of the Properties are subject to any, and the Borrower has no
actual knowledge of any imminent restriction on the ownership, occupancy, use
or transferability of their Properties in connection with any (1) Environmental
Law or (2) Release, threatened Release or disposal of a Hazardous
Material; and (ix) there are no conditions or circumstances at any of
their Properties which pose an unreasonable risk to the environment or the
health or safety of Persons.

 

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

 

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

 

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

 

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

 

Section 6.22.        Stock
of the Borrower.  As of October 21,
2005, the entire outstanding capital stock of the Borrower consists of (i) Series C
Cumulative Convertible Preferred Stock,

 

37

 

2,000,000 shares; (ii) Series E
Cumulative Convertible Preferred Stock, 356,875 shares; (iii) Series F
Cumulative Preferred Stock, 6,640,000 shares; and (iv) Common Stock,
23,195,999 shares; all of which are duly and validly issued and outstanding,
fully paid and nonassessable as of the Effective Date.  The issuance and sale of such Stock of the
Borrower of the Borrower either (i) has been registered under applicable
federal and state securities laws or (ii) was issued pursuant to an
exemption therefrom.  The Borrower meets
the requirements for taxation as a REIT under the Code.

 

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

 

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

 

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

 

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

 

38

 

more than $4,000,000 in
annual contractual rents payable to the Borrower or its Subsidiaries are in
default for a period in excess of 60 days on the monthly minimum rent
payments due under such Leases.

 

SECTION 7.                CONDITIONS PRECEDENT.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           each
Lender shall have received a Borrowing Base Certificate containing calculations
of the Borrowing Base as of June 30, 2005, and Schedule 1.1
(form of which is attached hereto) and a Compliance Certificate;

 

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

 

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

 

Section 7.3.           Eligible
Property Additions and Deletions to the Borrowing Base.  As of September 30, 2005, the
Borrower represents to the Required Lenders and the Administrative Agent that
the Initial Properties qualify as Eligible Properties and that the information
provided on Schedule 1.1 is true and correct.

 

40

 

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

 

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

 

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

 

SECTION 8.                COVENANTS.

 

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

 

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

 

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

 

41

 

or the National
Association of Securities Dealers Automated Quotation and the Securities and
Exchange Commission.

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

(d)           as
soon as available, and in any event within 90 days after the close of each
fiscal year of the Borrower, a copy of the consolidated balance sheet of the
Borrower and its Subsidiaries as of the last day of the fiscal year then ended
and the consolidated statements of income, retained earnings, and cash flows of
the Borrower and its Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, each in reasonable detail showing in comparative
form the figures for the previous fiscal year, accompanied in the case of the
consolidated financial statements by an unqualified opinion of Ernst &
Young, LLP or another firm of independent public accountants of recognized
national standing, selected by the Borrower and reasonably satisfactory to the
Administrative Agent and the Required Lenders, to the effect that the
consolidated financial statements have been prepared in accordance with GAAP and
present fairly in accordance with GAAP the consolidated financial condition of
the Borrower and its Subsidiaries as of the close of such fiscal year and the
results of their operations and cash flows for the fiscal year then ended and
that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances (the delivery of the Borrower’s Form 10-K
shall satisfy this requirement);

 

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

 

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

 

(g)           as
soon as available, and in any event within 90 days after the end of each
fiscal year of the Borrower, a copy of the Borrower’s consolidated projections
of revenues, expenses and balance sheet on a quarter-by-quarter basis, with
such projections

 

43

 

in reasonable detail
prepared by the Borrower and in form satisfactory to the Administrative Agent (which shall include a summary of all significant
assumptions made in preparing such business plan);

 

(h)           notice
of any Change of Control;

 

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

 

(j)            within
45 days of the end of each of the first 3 Fiscal Quarters and within
90 days after the close of the last Fiscal Quarter of the year (i) a
list of all newly formed or acquired Subsidiaries during such quarter (such
list shall contain the information relative to such new Subsidiaries as set
forth in Schedule 6.2 hereto); (ii) a list of newly executed
Significant Leases or Qualified Ground Leases during such quarter (upon receipt
of which Schedule 1.1 and/or Schedule 6.26 shall be deemed amended to
include references to such Significant Lease and/or Qualified Ground Leases); (iii) a
copy of any notice of a material default or any other material notice
(including without limitation property condition reviews) received by the
Borrower or any Guarantor from any ground lessor under a Qualified Ground Lease
or a Lease during such quarter and (iv) a schedule showing for such
quarter (a) any Significant Lease that was or is continuing to be in
default with respect to monthly minimum rent payments in excess of
60 days, and (b) any other Leases that in the aggregate generate more
than $4,000,000 in annual contractual rents payable to the Borrower or its
Subsidiaries that were or are continuing to be in default for a period in
excess of 60 days on the monthly minimum rent payments due under such
Leases; and

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

45

 

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

 

(h)           investments
in Permitted Acquisitions;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

46

 

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

 

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

 

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

 

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

 

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

 

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

 

47

 

 

Section 8.12.        Intentionally
Omitted.

 

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

 

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

 

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

 

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

 

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

 

Section 8.17.        Intentionally
Omitted.

 

Section 8.18.        Change
in the Nature of Business.  The
Borrower shall not, nor shall it permit any Subsidiary to, engage in any
business or activity if as a result the general nature of the business of the
Borrower and its Subsidiaries would be changed in any material respect from the
general nature of the business engaged in by it as of the Closing Date.  As of the Closing Date,

 

48

 

the general nature of the business of the Borrower and its Subsidiaries
is primarily the business of the acquisition, financing and ownership of Senior
Housing Assets and other business activities incidental thereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)    Maintenance of Net Worth. 
The Borrower shall at all times maintain a Tangible Net Worth of not
less than the sum of (a) $350,000,000 plus (b) 85%
of the aggregate net proceeds received by the Borrower or any of its
Subsidiaries after the Closing Date in connection with any offering of Stock or
Stock Equivalents of the Borrower or the Subsidiaries that results in an
increase of Tangible Net Worth.

 

49

 

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

 

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

 

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

 

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

 

SECTION 9.                EVENTS OF DEFAULT AND REMEDIES.

 

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

 

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

 

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

 

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

 

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

 

(e)   any
representation or warranty made herein or in any other Loan Document or in any
certificate furnished to the Administrative Agent or the Lenders

 

50

 

pursuant hereto or
thereto or in connection with any transaction contemplated hereby or thereby
proves untrue in any material respect as of the date of the issuance or making
or deemed making thereof;

 

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

 

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

 

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

 

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

 

(j)    any
Change of Control shall occur;

 

(k)   the
Borrower or any Material Subsidiary shall (i) have entered involuntarily
against it an order for relief under the United States Bankruptcy Code, as
amended, (ii) not pay, or admit in writing its inability to pay, its debts
generally as they become due, (iii) make an assignment for the benefit of
creditors, (iv) apply for, seek, consent to or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner,

 

51

 

liquidator or similar
official for it or any substantial part of its Property, (v) institute any
proceeding seeking to have entered against it an order for relief under the
United States Bankruptcy Code, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (vi) take any corporate action in furtherance
of any matter described in parts (i) through (v) above, or (vii) fail
to contest in good faith any appointment or proceeding described in Section 9.1(l)
hereof;

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

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

 

53

 

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

 

SECTION 10.              CHANGE IN CIRCUMSTANCES.

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

(ii)   shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but excluding with respect to
any Eurodollar Loans any such requirement included in an applicable Eurodollar
Reserve Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Lender (or its Lending Office) or shall impose on any
Lender (or its Lending Office) or on the interbank market any other condition
affecting its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligation owed to it, or its
obligation to make Eurodollar Loans, or to issue a Letter of Credit, or to
participate therein;

 

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

 

(b)   If,
after the date hereof, any Lender or the Administrative Agent shall have
determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Lending Office) or any corporation

 

55

 

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

 

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

 

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

 

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

 

SECTION 11.              THE ADMINISTRATIVE AGENT.

 

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

 

56

 

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

 

Section 11.3.        Action
by Administrative Agent.  If the
Administrative Agent receives from the Borrower a written notice of an Event of
Default pursuant to Section 8.5 hereof, the Administrative Agent shall
promptly give each of the Lenders written notice thereof.  The obligations of the Administrative Agent
under the Loan Documents are only those expressly set forth therein.  Without limiting the generality of the
foregoing, the Administrative Agent shall not be required to take any action
hereunder with respect to any Default or Event of Default, except as expressly
provided in Sections 9.2 and 9.5. 
Unless and until the Required Lenders give such direction, the
Administrative Agent may (but shall not be obligated to) take or refrain from
taking such actions as it deems appropriate and in the best interest of all the
Lenders.  In no event, however, shall the
Administrative Agent be required to take any action in violation of applicable
law or of any provision of any Loan Document, and the Administrative Agent
shall in all cases be fully justified in failing or refusing to act hereunder
or under any other Loan Document unless it first receives any further
assurances of its indemnification from the Lenders that it may require,
including prepayment of any related expenses and any other protection it
requires against any and all costs, expense, and liability which may be
incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall be entitled to
assume that no Default or Event of Default exists unless notified in writing to
the contrary by a Lender or the Borrower. 
In all cases in which the Loan Documents do not require the
Administrative Agent to take specific action, the Administrative Agent shall be
fully justified in using its discretion in failing to take or in taking any
action thereunder.  Any instructions of
the Required Lenders, or of any other group of Lenders called for under the
specific provisions of the Loan Documents, shall be binding upon all the
Lenders and the holders of the Obligations.

 

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

 

Section 11.5.        Liability
of Administrative Agent; Credit Decision. 
Neither the Administrative Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or not taken by it in
connection with the Loan Documents:  (i) with
the consent or at the request of the Required Lenders or (ii) in the
absence of its own gross negligence or willful misconduct.  Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify: 
(i) any

 

57

 

statement, warranty or representation made in connection with this
Agreement, any other Loan Document or any Credit Event; (ii) the
performance or observance of any of the covenants or agreements of the Borrower
or any Subsidiary contained herein or in any other Loan Document; (iii) the
satisfaction of any condition specified in Section 7 hereof, except
receipt of items required to be delivered to the Administrative Agent; or (iv) the
validity, effectiveness, genuineness, enforceability, perfection, value, worth
or collectibility hereof or of any other Loan Document or of any other
documents or writing furnished in connection with any Loan Document; and the
Administrative Agent makes no representation of any kind or character with
respect to any such matter mentioned in this sentence.  The Administrative Agent may execute any of
its duties under any of the Loan Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, the Borrower, or
any other Person for the default or misconduct of any such agents or attorneys-in-fact
selected with reasonable care.  The
Administrative Agent shall not incur any liability by acting in reliance upon
any notice, consent, certificate, other document or statement (whether written
or oral) believed by it to be genuine or to be sent by the proper party or
parties.  In particular and without
limiting any of the foregoing, the Administrative Agent shall have no
responsibility for confirming the accuracy of any compliance certificate or
other document or instrument received by it under the Loan Documents.  The Administrative Agent may treat the payee
of any Note as the holder thereof until written notice of transfer shall have
been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent. 
Each Lender acknowledges that it has independently and without reliance
on the Administrative Agent or any other Lender, and based upon such
information, investigations and inquiries as it deems appropriate, made its own
credit analysis and decision to extend credit to the Borrower in the manner set
forth in the Loan Documents.  It shall be
the responsibility of each Lender to keep itself informed as to the
creditworthiness of the Borrower and its Subsidiaries, and the Administrative
Agent shall have no liability to any Lender with respect thereto.

 

Section 11.6.        Indemnity.  The Lenders shall ratably, in accordance with
their respective Percentages, indemnify and hold the Administrative Agent, and
its directors, officers, employees, agents, and representatives harmless from
and against any liabilities, losses, costs or expenses suffered or incurred by
it under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified.  The obligations of the Lenders under this Section shall
survive termination of this Agreement. 
The Administrative Agent shall be entitled to offset amounts received
for the account of a Lender under this Agreement against unpaid amounts due
from such Lender to the Administrative Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement and the other Loan Documents.

 

Section 11.7.        Resignation
or Removal of Administrative Agent and Successor Administrative Agent.  The Administrative Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower.  The Administrative Agent may be removed for
gross negligence or willful misconduct at any time by written notice from the
Required Lenders to the Administrative Agent and the Borrower.  Upon any such resignation or removal of the

 

58

 

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

 

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

 

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

 

SECTION 12.              THE GUARANTEES.

 

Section 12.1.        The
Guarantees.  To induce the Lenders to
provide the credits described herein and in consideration of benefits expected
to accrue to the Borrower by reason of the Commitments and for other good and
valuable consideration, receipt of which is hereby acknowledged, each Material
Subsidiary party hereto (including any Material Subsidiary formed or acquired
after the Closing Date executing an Additional Guarantor Supplement in the form
attached hereto as Exhibit G or such other form acceptable to the
Administrative Agent) hereby unconditionally and irrevocably guarantee jointly
and severally to the Administrative Agent, the

 

59

 

Lenders, and their Affiliates, the due and punctual payment of all
present and future Obligations, including, but not limited to, the due and
punctual payment of principal of and interest on the Notes, the Reimbursement Obligations,
and the due and punctual payment of all other Obligations now or hereafter owed
by the Borrower under the Loan Documents as and when the same shall become due
and payable, whether at stated maturity, by acceleration, or otherwise,
according to the terms hereof and thereof (including interest which, but for
the filing of a petition in bankruptcy, would otherwise accrue on any such
indebtedness, obligation, or liability). 
In case of failure by the Borrower or other obligor punctually to pay
any Obligations guaranteed hereby, each Guarantor hereby unconditionally agrees
to make such payment or to cause such payment to be made punctually as and when
the same shall become due and payable, whether at stated maturity, by
acceleration, or otherwise, and as if such payment were made by the Borrower or
such obligor.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)   any
invalidity or unenforceability relating to or against the Borrower or other
obligor or any other guarantor for any reason of this Agreement or of any other
Loan Document or any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower or other obligor or any other guarantor of
the principal of or

 

60

 

interest on any Note or
any Reimbursement Obligation or any other amount payable under the Loan
Documents; or

 

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

 

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

 

Section 12.4.        Subrogation.  Each Guarantor agrees it will not exercise
any rights which it may acquire by way of subrogation by any payment made
hereunder, or otherwise, until all the Obligations shall have been paid in full
subsequent to the termination of all the Commitments and expiration of all
Letters of Credit.  If any amount shall
be paid to a Guarantor on account of such subrogation rights at any time prior
to the later of (x) the payment in full of the Obligations and all other
amounts payable by the Borrower hereunder and the other Loan Documents and
(y) the termination of the Commitments and expiration of all Letters of
Credit, such amount shall be held in trust for the benefit of the
Administrative Agent and the Lenders (and their Affiliates) and shall forthwith
be paid to the Administrative Agent for the benefit of the Lenders (and their
Affiliates) or be credited and applied upon the Obligations, whether matured or
unmatured, in accordance with the terms of this Agreement.

 

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

 

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

 

Section 12.7.        Stay
of Acceleration.  If acceleration of
the time for payment of any amount payable by the Borrower or other obligor
under this Agreement or any other Loan Document, is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower or such obligor, all

 

61

 

such amounts otherwise subject to acceleration under the terms of this
Agreement or the other Loan Documents, shall nonetheless be payable by the
Guarantors hereunder forthwith on demand by the Administrative Agent made at
the request of the Required Lenders.

 

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

 

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

 

SECTION 13.                         MISCELLANEOUS.

 

Section 13.1.        Withholding
Taxes.  (a) Payments
Free of Withholding.  Except
as otherwise required by law and subject to Section 13.1(b) hereof,
each payment by the Borrower and the Guarantors under this Agreement or the
other Loan Documents shall be made without withholding for or on account of any
present or future taxes (other than overall net income taxes on the recipient)
imposed by or within the jurisdiction in which the Borrower or such Guarantor
is domiciled, any jurisdiction from which the Borrower or such Guarantor makes
any payment, or (in each case) any political subdivision or taxing authority
thereof or therein.  If any such
withholding is so required, the Borrower or such Guarantor shall make the
withholding, pay the amount withheld to the appropriate governmental authority
before penalties attach thereto or interest accrues thereon, and forthwith pay
such additional amount as may be necessary to ensure that the net amount
actually received by each Lender and the Administrative Agent free and clear of
such taxes (including such taxes on such additional amount) is equal to the
amount which that Lender or the Administrative Agent (as the case may be) would
have received had such withholding not been made.  If the Administrative Agent or any Lender
pays any amount in respect of any such taxes, penalties or interest, the
Borrower or such Guarantor shall reimburse the Administrative Agent or such
Lender for that payment on demand in the currency in which such payment was
made.  If the Borrower or such Guarantor
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Lender or
Administrative Agent on whose account such withholding was made (with a copy to
the Administrative Agent if not the recipient of the original) on or before the
thirtieth day after payment.

 

(b)           U.S. Withholding Tax Exemptions.  Each Lender that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Administrative Agent on or before the date the
initial Credit Event is made hereunder or, if later, the date such financial
institution becomes a Lender hereunder, two duly completed and signed copies of
(i) either Form W-8 BEN (relating to such Lender and entitling
it to a complete exemption from withholding under the Code on all amounts to be
received by such Lender, including fees, pursuant to the Loan Documents and the
Obligations) or Form W-8 ECI (relating to all amounts to be received
by such Lender, including fees, pursuant to the Loan Documents

 

62

 

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

 

(c)           Inability of Lender to Submit Forms.  If any Lender determines, as a result of any
change in applicable law, regulation or treaty, or in any official application
or interpretation thereof, that it is unable to submit to the Borrower or the
Administrative Agent any form or certificate that such Lender is obligated to
submit pursuant to subsection (b) of this Section 13.1 or that
such Lender is required to withdraw or cancel any such form or certificate
previously submitted or any such form or certificate otherwise becomes
ineffective or inaccurate, such Lender shall promptly notify the Borrower and
Administrative Agent of such fact and the Lender shall to that extent not be
obligated to provide any such form or certificate and will be entitled to
withdraw or cancel any affected form or certificate, as applicable.

 

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

 

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

 

63

 

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

 

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

 

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

 

Section 13.7.        Sharing
of Set-Off.  Each Lender agrees with
each other Lender a party hereto that if such Lender shall receive and retain
any payment, whether by set-off or application of deposit balances or
otherwise, on any of the Loans or Reimbursement Obligations in excess of its
ratable share of payments on all such Obligations then outstanding to the
Lenders, then such Lender shall purchase for cash at face value, but without
recourse, ratably from each of the other Lenders such amount of the Loans or
Reimbursement Obligations, or participations therein, held by each such other Lenders
(or interest therein) as shall be necessary to cause such Lender to share such
excess payment ratably with all the other Lenders; provided,
however, that if any such purchase is made by any Lender, and if
such excess payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest.  For purposes of this Section, amounts owed to
or recovered by the L/C Issuer in connection with Reimbursement Obligations in
which Lenders have been required to fund their participation shall be treated
as amounts owed to or recovered by the L/C Issuer as a Lender hereunder.

 

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

 

64

 

LTC Properties, Inc.

31365 Oak Crest Drive

Suite 200

Westlake Village,
California  91361

Attention:          Chief
Financial Officer

Telephone:        (805)
981-8655

Telecopy:          (805)
981-8663

 

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

 

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

 

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

 

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

 

65

 

Section 13.12.      Assignments.  (a) Each Lender shall have the right at
any time, with the prior consent of the Administrative Agent (and the
L/C Issuers, if other than the Administrative Agent) and, so long as no
Event of Default then exists, the Borrower (which consent of the Borrower shall
not be unreasonably withheld) to sell, assign, transfer or negotiate all or any
part of its rights and obligations under the Loan Documents (including, without
limitation, the indebtedness evidenced by the Notes then held by such assigning
Lender, together with an equivalent percentage of its obligation to make Loans
and participate in Letters of Credit) to one or more commercial banks or other
financial institutions or investors, provided that, unless otherwise agreed to
by the Administrative Agent, such assignment shall be of a fixed percentage
(and not by its terms of varying percentage) of the assigning Lender’s rights
and obligations under the Loan Documents; provided, however,
that in order to make any such assignment (i) unless the assigning Lender
is assigning all of its Commitments, outstanding Loans and interests in Letters
of Credit Obligations, the assigning Lender shall retain at least $5,000,000 in
unused Commitments, outstanding Loans and interests in Letters of Credit, (ii) the
assignee Lender shall have Commitments, outstanding Loans and interests in
Letters of Credit of at least $5,000,000, (iii) each such assignment shall
be evidenced by a written agreement (substantially in the form attached hereto
as Exhibit H or in such other form acceptable to the Administrative Agent)
executed by such assigning Lender, such assignee Lender or Lenders, the
Administrative Agent (and the L/C Issuers, if other than the
Administrative Agent) and, if required as provided above, the Borrower, which
agreement shall specify in each instance the portion of the Obligations which
are to be assigned to the assignee Lender and the portion of the Commitments of
the assigning Lender to be assumed by the assignee Lender, and (iv) the
assigning Lender shall pay to the Administrative Agent a processing fee of
$3,500 and any out-of-pocket attorneys’ fees and expenses incurred by the
Administrative Agent in connection with any such assignment agreement.  Any such assignee shall become a Lender for
all purposes hereunder to the extent of the rights and obligations under the
Loan Documents it assumes and the assigning Lender shall be released from its
obligations, and will have released its rights, under the Loan Documents to the
extent of such assignment.  The address
for notices to such assignee Lender shall be as specified in the assignment
agreement executed by it.  Promptly upon
the effectiveness of any such assignment agreement, the Borrower shall execute
and deliver replacement Notes to the assignee Lender and the assigning Lender
in the respective amounts of their Commitments (or assigned principal amounts,
as applicable) after giving effect to the reduction occasioned by such
assignment (all such Notes to constitute “Notes” for all
purposes of the Loan Documents), and the assignee Lender shall thereafter
surrender to the Borrower its old Notes. 
The Borrower authorizes each Lender to disclose to any purchaser or
prospective purchaser of an interest in the Loans and interest in Letters of
Credit owed to it or its Commitments under this Section any financial or
other information pertaining to the Borrower or any Subsidiary.  Notwithstanding any other provision hereof,
neither the Borrower nor any of its Subsidiaries or Affiliates may at any time
hold any interest whether by assignment or otherwise in the Loan Documents, as
a Lender.

 

(b)           Any
Lender may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including any such pledge or grant to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or grant of a security interest; provided that no such pledge or grant of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee

 

66

 

or secured party for such Lender as a party hereto; provided further, however, the right of any such pledgee or
grantee (other than any Federal Reserve Bank) to further transfer all or any
portion of the rights pledged or granted to it, whether by means of foreclosure
or otherwise, shall be at all times subject to the terms of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

67

 

Administrative Agent or such Lender for any legal or other expenses
incurred in connection with investigating or defending against any of the
foregoing (including any settlement costs relating to the foregoing) except if
the same is directly due to the gross negligence or willful misconduct of the
party to be indemnified.  The obligations
of the Borrower under this Section shall survive the termination of this
Agreement.

 

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

 

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

 

68

 

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

 

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

 

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

 

Section 13.20.      Excess
Interest.  Notwithstanding any
provision to the contrary contained herein or in any other Loan Document, no such
provision shall require the payment or permit the collection of any amount of
interest in excess of the maximum amount of interest permitted by applicable
law to be charged for the use or detention, or the forbearance in the
collection, of all or any portion of the Loans or other obligations outstanding
under this Agreement or any other Loan Document (“Excess
Interest”).  If any Excess
Interest is provided for, or is adjudicated to be provided for, herein or in
any other Loan Document, then in such event (a) the provisions of this Section shall
govern and control, (b) neither the Borrower nor any guarantor or endorser
shall be obligated to pay any Excess Interest, (c) any Excess Interest
that the Administrative Agent or any Lender may have received hereunder shall,
at the option of the Administrative Agent, be (i) applied as a credit
against the then outstanding principal amount of Obligations hereunder and
accrued and unpaid interest thereon (not to exceed the maximum amount permitted
by applicable law), (ii) refunded to the Borrower, or (iii) any
combination of the foregoing, (d) the interest rate payable hereunder or
under any other Loan Document shall be automatically subject to reduction to
the maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this Agreement and the other Loan
Documents shall be deemed to have been, and shall be, reformed and modified to
reflect such reduction in the relevant interest rate, and (e) neither the
Borrower nor any guarantor or endorser shall have any action against the
Administrative Agent or any Lender for any damages whatsoever arising out of
the payment or collection of any Excess Interest.  Notwithstanding the foregoing, if for any
period of time interest on any of Borrower’s Obligations is calculated at the
Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on the Borrower’s Obligations shall remain at the Maximum Rate
until the Lenders have received the amount of interest which such Lenders would
have received during such period on the Borrower’s Obligations had the rate of
interest not been limited to the Maximum Rate during such period.

 

69

 

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

 

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

 

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

 

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

 

Section 13.25.      Equalization
of Outstanding Obligations.  (a) Equalization of Outstanding Obligations.  Upon the satisfaction of the conditions
precedent set forth in Section 7.2 hereof, all Loans outstanding under,
and as defined in, the Prior Credit Agreement shall remain outstanding as part
of the initial Borrowing of Loans under this Agreement.  On the Closing Date, the Lenders each agree
to make such purchases and sales of interests in the outstanding Loans between
themselves so that each Lender is then holding its Percentage of outstanding
Loans.  Such purchases and sales shall be
arranged through the Administrative Agent and each Lender hereby agrees to
execute such further instruments and documents, if any, as the Agent may
reasonably request in connection therewith.

 

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

 

[SIGNATURE PAGES TO FOLLOW]

 

70

 

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

 

	
   

  	
  “BORROWER”

  
	
   

  	
   

  
	
   

  	
  LTC
  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
	
   

  	
   

  
	
   

  	
  “GUARANTORS”

  
	
   

  	
   

  
	
   

  	
  LTC-WEST,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
	
   

  	
   

  
	
   

  	
  FLORIDA-LTC,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
						

 

S-1

 

	
   

  	
  LTC GP I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
	
   

  	
   

  
	
   

  	
  LTC
  GP VI, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
	
   

  	
   

  
	
   

  	
  NORTH CAROLINA REAL ESTATE

  INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
							

 

S-2

 

	
   

  	
  EDUCATION
  PROPERTY INVESTORS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Andre Dimitriadis

  	
   

  
	
   

  	
  Title Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Wendy Simpson

  	
   

  
	
   

  	
  Title President and COO

  
					

 

S-3

 

	
   

  	
  “LENDERS”

  
	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL, Chicago Branch, in its

  individual capacity as a Lender, as

  L/C Issuer, and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Thomas A. Batterham

  	
   

  
	
   

  	
  Title Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  115
  South LaSalle Street

  
	
   

  	
  Chicago,
  Illinois  60603

  
	
   

  	
  Attention:

  	
  Thomas
  Batterham

  
	
   

  	
  Telecopy:

  	
  (312)
  293-5852

  
	
   

  	
  Telephone:

  	
  (312)
  293-8364

  
					

 

S-4

 

	
   

  	
  KEY BANK
  NATIONAL ASSOCIATION, as

  successor in interest to KEY CORPORATE

  CAPITAL INC., in its individual capacity as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Florentina Djulvezan

  	
   

  
	
   

  	
  Title Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  580
  Walnut Street

  
	
   

  	
  Mail
  Code OH-18-58-0229

  
	
   

  	
  Cincinnati,
  Ohio  45202

  
	
   

  	
  Attention:

  	
  Jack
  Boulder

  
	
   

  	
  Telecopy:

  	
  (513)
  762-8450

  
	
   

  	
  Telephone:

  	
  (513) 762-8284

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  127 Public Square

  
	
   

  	
  Mail Code OH-01-27-0839

  
	
   

  	
  Cleveland, Ohio 
  44114

  
	
   

  	
  Attention: 
  Denise Jones

  
	
   

  	
  Real Estate Capital Services

  
	
   

  	
  Telecopy:   
  (216) 689-3566

  
	
   

  	
  Telephone:  (216) 689-3607

  
					

 

S-5

 

	
   

  	
  BANK LEUMI USA, in its individual capacity

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Joung Hee Hong

  	
   

  
	
   

  	
  Title Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  562
  Fifth Avenue

  
	
   

  	
  9th
  Floor (46th Street)

  
	
   

  	
  New
  York, New York  10036

  
	
   

  	
  Attention:

  	
  Joung
  Hee Hong

  
	
   

  	
  Telecopy:

  	
  (212)
  407-4317

  
	
   

  	
  Telephone:

  	
  (212)
  407-4469

  
					

 

S-6

 

	
   

  	
  MERRILL LYNCH CAPITAL, a Division of

  Merrill Lynch Business Financial Services

  Inc., in its individual capacity as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
  /s/ Brett Robinson

  	
   

  
	
   

  	
  Title Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  222
  N. LaSalle Street

  
	
   

  	
  16th
  Floor

  
	
   

  	
  Attention:

  	
  Chicago,
  IL  60601

  
	
   

  	
   

  	
  Assistant
  Vice President, Operations

  
	
   

  	
  Telecopy:

  	
  (312)
  499-3361

  
	
   

  	
  Telephone:

  	
  (312)
  750-6240

  
					

 

S-7

 

EXHIBIT A

 

NOTICE OF PAYMENT REQUEST

 

[Date]

 

[Name of Lender]

[Address]

 

Attention:

 

Reference is made to the Amended and Restated Credit
Agreement, dated as of November 7, 2005, among LTC Properties,
Inc., the Guarantors from time to time party thereto, the Lenders party
thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent (the “Credit Agreement”). 
Capitalized terms used herein and not defined herein have the meanings
assigned to them in the Credit Agreement. 
[The Borrower has failed to pay its Reimbursement Obligation in the
amount of $                       .  Your Percentage of the unpaid Reimbursement
Obligation is $                          ]
or [                                     
has been required to return a payment by the Borrower of a Reimbursement
Obligation in the amount of $                        .  Your Percentage of the returned Reimbursement
Obligation is $                              .]

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK
  OF MONTREAL, Chicago Branch,

  
	
   

  	
  as
  L/C Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

 

EXHIBIT B

 

NOTICE OF BORROWING

 

Date:                  ,          

 

To:        BANK
OF MONTREAL, Chicago Branch, as Administrative Agent for the Lenders parties to
the Amended and Restated Credit Agreement dated as of
November 7, 2005 (as extended, renewed, amended or restated from time
to time, the “Credit Agreement”), among LTC
PROPERTIES, INC., certain Guarantors which are signatories thereto, certain
Lenders which are signatories thereto, and BANK OF MONTREAL, Chicago Branch, as
Administrative Agent

 

Ladies and Gentlemen:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  LTC
  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
					

 

 

EXHIBIT C

 

NOTICE OF
CONTINUATION/CONVERSION

 

Date:                    ,
      

 

To:      BANK
OF MONTREAL, Chicago Branch, as Administrative Agent for the Lenders parties to
the Amended and Restated Credit Agreement dated as of November 7, 2005 (as
extended, renewed, amended or restated from time to time, the “Credit Agreement”), among LTC PROPERTIES, INC., certain
Guarantors which are signatories thereto, certain Lenders which are signatories
thereto, and BANK OF MONTREAL, Chicago Branch, as Administrative Agent

 

Ladies and Gentlemen:

 

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

 

1.             The
conversion/continuation Date is                            ,
       .

 

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

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  LTC
  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

 

EXHIBIT D

 

NOTE

 

	
  U.S. $                               

  	
                      ,         

  

 

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

 

This Note is one of the Notes referred to in the Amended
and Restated Credit Agreement dated as of November 7, 2005, among the
Borrower, the Guarantors party thereto, the Lenders party thereto, and Bank of
Montreal, Chicago Branch, as Administrative Agent for the Lenders (the “Credit Agreement”), and this Note and the holder hereof are
entitled to all the benefits provided for thereby or referred to therein, to
which Credit Agreement reference is hereby made for a statement thereof.  All defined terms used in this Note, except
terms otherwise defined herein, shall have the same meaning as in the Credit
Agreement.  This Note shall be governed
by and construed in accordance with the internal laws of the State of New York.

 

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

 

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

 

	
   

  	
  LTC
  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

 

EXHIBIT E

 

BORROWING BASE
CERTIFICATE

 

To:          Bank
of Montreal, Chicago Branch, as

Administrative Agent under, and the

Lenders party to, the Credit Agreement

described below.

 

Pursuant to the terms of the Amended and Restated
Credit Agreement dated as of November 7, 2005, among us (the “Credit Agreement”), we submit this Borrowing Base
Certificate to you and certify that the information set forth below and on any
attachments to this Certificate is true, correct and complete as of the date of
this Certificate.

 

 

	
  1.

  	
  Borrowing Base Value

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Line 1 multiplied by 50%

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Unsecured Debt (other than Obligations)

  	
  ($             

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Borrowing Base (Line 2 minus by Line 3 above)

  	
  $

  	
   

  

 

The Borrower represents and warrants that the
aggregate principal amount of Loans and L/C Obligations on the date
hereof, including any Loans to be made or Letters of Credit to be issued on the
date hereof, do not exceed the Borrowing Base set forth above.

 

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

 

	
   

  	
  LTC
  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

 

SCHEDULE I

CALCULATIONS

 

 

EXHIBIT F

 

COMPLIANCE CERTIFICATE

 

To:          Bank
of Montreal, Chicago Branch, as

Administrative Agent under, and the

Lenders party to, the Credit Agreement

described below

 

This Compliance Certificate is furnished to the
Administrative Agent and the Lenders pursuant to that certain Amended and
Restated Credit Agreement dated as of November 7, 2005, among us (the
“Credit Agreement”).  Unless otherwise defined herein, the terms
used in this Compliance Certificate have the meanings ascribed thereto in the
Credit Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.             I
am the duly elected                                
of                                                    ;

 

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

 

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

 

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

 

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

 

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

 

 

 

 

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

 

 

	
   

  	
  By

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
				

 

 

SCHEDULE I

 

TO COMPLIANCE CERTIFICATE

 

COMPLIANCE CALCULATIONS

 

FOR AMENDED AND
RESTATED CREDIT AGREEMENT DATED AS OF NOVEMBER 7, 2005

 

CALCULATIONS
AS OF                        ,
           

 

	
  A.

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

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Total Indebtedness

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Total Asset Value

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Ratio of Line A1 to A2

  	
   

  	
       :1.0

  	
   

  
	
   

  	
  4.

  	
  Line A3 ratio must not exceed

  	
   

  	
  .50:1.0

  	
   

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

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

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Secured Debt

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Total Asset Value

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Ratio of Line B1 to B2

  	
   

  	
       :1.0

  	
   

  
	
   

  	
  4.

  	
  Line B3 ratio must not exceed

  	
   

  	
  .35:1.0

  	
   

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

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

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Net Income for the last 4 quarters

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Depreciation and Amortization Expense for last
  4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Interest Expense for last 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
  Income Tax Expense for last 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
  5.

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

  	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
  Sum of Lines C1 through C5

  	
   

  	
   

  	
   

  

 

 

	
   

  	
  7.

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

  	
   

  	
   

  	
   

  
	
   

  	
  8.

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

  	
   

  	
   

  	
   

  
	
   

  	
  9.

  	
  Income tax benefits of the last 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
  10.

  	
  Sum of Lines C6 through C8

  	
   

  	
   

  	
   

  
	
   

  	
  11.

  	
  Line 6 minus Line 10 (“EBITDA”)

  	
   

  	
   

  	
   

  
	
   

  	
  12.

  	
  Interest Expense

  	
   

  	
   

  	
   

  
	
   

  	
  13.

  	
  Ratio of Line C12 to C11

  	
   

  	
         :1.0

  	
   

  
	
   

  	
  14.

  	
  Line C13 ratio shall not be less than

  	
   

  	
  2.50:1.0

  	
   

  
	
   

  	
  15.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

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

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  EBITDA

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Fixed Charges

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Ratio of Line D1 to D2

  	
   

  	
         :1.0

  	
   

  
	
   

  	
  4.

  	
  Line D3 ratio shall not be less than

  	
   

  	
  1.50:1.0

  	
   

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

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

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Secured Recourse Debt

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Total Asset Value

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  3.

  	
  Ratio of Line E1 to Line E2

  	
   

  	
       :1.0

  	
   

  
	
   

  	
  4.

  	
  Line E3 shall not exceed

  	
   

  	
  .10:1.0

  	
   

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
  Tangible Net Worth (Section 8.21(f))

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Tangible Net Worth

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Line F1 shall not be less than

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  3.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  Yes/no

  	
   

  

 

2

 

	
  G.

  	
  Floating Rate Debt (Section 8.21(g))

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Total Asset Value

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Percentage of Total Asset Value consisting of
  outstanding unhedged floating rate debt

  	
   

  	
                %

  	
   

  
	
   

  	
  3.

  	
  Line G2 shall not exceed

  	
   

  	
  40%

  	
   

  
	
   

  	
  4.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
  Minimum Borrowing Base Value
  (Section 8.22(b))

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Borrowing Base Value

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  Line H1 shall not be less than

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
   

  	
  3.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

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

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Eligible Property NOI

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  2.

  	
  pari passu Unsecured Debt Service plus Credit
  Facility Debt Service

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  3.

  	
  Ratio of Line I1 to I2

  	
   

  	
          :1.0

  	
   

  
	
   

  	
  4.

  	
  Line I3 ratio shall not be less than

  	
   

  	
  2.25:1.0

  	
   

  
	
   

  	
  5.

  	
  The Borrower is in compliance (circle yes or no)

  	
   

  	
  yes/no

  	
   

  

 

3

 

EXHIBIT G

 

ADDITIONAL GUARANTOR
SUPPLEMENT

 

                           ,     

 

Bank of Montreal, Chicago Branch, as Administrative
Agent for the Lenders named in the Amended and Restated Credit Agreement dated
as of November 7, 2005, among LTC Properties, Inc., as Borrower, the
Guarantors referred to therein, the Lenders from time to time party thereto,
and the Administrative Agent (the “Credit Agreement”)

 

Ladies and Gentlemen:

 

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

 

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

 

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

 

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

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF SUBSIDIARY GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					

 

 

EXHIBIT H

 

ASSIGNMENT AND ACCEPTANCE

 

Dated              ,       

 

Reference is made to the Amended and Restated Credit
Agreement dated as of November 7, 2005 (the ”Credit
Agreement”) among LTC Properties, Inc., the Guarantors party
thereto, the Lenders party thereto, and Bank of Montreal, Chicago Branch, as
Administrative Agent for the Lenders (the “Administrative Agent”).  Terms defined in the Credit Agreement are
used herein with the same meaning.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

	
   

  	
  [Assignor
  Lender]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Assignee
  Lender]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lending
  office (and address for notices):

  
	
  Accepted
  and consented this

  	
   

  
	
           day
  of              

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and consented to by the Administrative

  	
   

  
	
  Agent and L/C Issuer this        day
  of          

  	
   

  
	
   

  	
   

  
	
  BANK OF MONTREAL, Chicago Branch, as

  	
   

  
	
  Administrative Agent and L/C Issuer

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  	
   

  
										

 

3

 

EXHIBIT I

 

OPINION OF COUNSEL

 

 

ANNEX I

 

TO ASSIGNMENT AND ACCEPTANCE

 

 

 

	
  PRINCIPAL AMOUNT

  	
   

  	
  TYPE OF LOAN

  	
   

  	
  INTEREST RATE

  	
   

  	
  MATURITY DATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE
1.0

 

COMMITMENTS

 

	
  NAME OF LENDER

  	
   

  	
  CREDIT COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  Montreal, Chicago Branch

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Key Bank
  National Association, as successor in interest to Key Corporate
  Capital Inc.

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Merrill Lynch
  Capital, a Division of Merrill Lynch Business Financial Services Inc.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank Leumi USA

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  90,000,000

  	
   

  

 

 

SCHEDULE 1.1

 

INITIAL PROPERTIES, INITIAL INVESTMENT AMOUNT

AND INITIAL BORROWING BASE VALUE

 

 

SCHEDULE 6.2

 

SUBSIDIARIES

 

 

SCHEDULE 6.26

 

SIGNIFICANT LEASESExhibit 10.1

 

SUPPLEMENTAL
INDENTURE NO. 15

 

by
and between

 

HRPT
PROPERTIES TRUST

 

and

 

U.S.
BANK NATIONAL ASSOCIATION

 

as of
October 31, 2005

 

SUPPLEMENTAL
TO THE INDENTURE DATED AS OF JULY 9, 1997

 

 

HRPT
PROPERTIES TRUST

 

5 3⁄4%
Senior Notes due November 1, 2015

 

 

 

This SUPPLEMENTAL
INDENTURE NO. 15 (this “Supplemental Indenture”) made and entered into as of October 31,
2005 between HRPT PROPERTIES TRUST, a Maryland real estate investment trust
(the “Company”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (as successor to State Street Bank
and Trust Company in its capacity as Trustee), as trustee (the “Trustee”),

 

WITNESSETH
THAT:

 

WHEREAS, the Company and
the Trustee are parties to an Indenture, dated as of July 9, 1997 (the “Indenture”),
relating to the Company’s issuance, from time to time, of various series of
debt securities;

 

WHEREAS, the Company has
determined to issue debt securities known as its 5 3⁄4%
Senior Notes due November 1, 2015; and

 

WHEREAS, the Indenture
provides that certain terms and conditions for each series of debt securities
issued by the Company thereunder may be set forth in an indenture supplemental
to the Indenture;

 

NOW, THEREFORE, THIS
SUPPLEMENTAL INDENTURE WITNESSETH:

 

ARTICLE 1

 

DEFINED TERMS

 

Section 1.1                                      The
following definitions supplement, and, to the extent inconsistent with, replace
the definitions in Section 101 of the Indenture:

 

“Acquired Debt” means
Debt of a Person or entity (i) existing at the time such Person or entity
becomes a Subsidiary or (ii) assumed in connection with the acquisition of
assets from such Person or entity, in each case, other than Debt incurred in
connection with, or in contemplation of, such Person or entity becoming a
Subsidiary or such acquisition.  Acquired
Debt shall be deemed to be incurred on the date of the related acquisition of
assets from any Person or entity or the date the acquired Person or entity
becomes a Subsidiary.

 

“Annual Debt Service” as
of any date means the maximum amount which is expensed in any 12-month period
for interest on Debt of the Company and its Subsidiaries.

 

“Business Day” means any
day other than a Saturday or Sunday or a day on which banking institutions in
the City of New York or in the city in which the Corporate Trust Office of the Trustee
is located, are required or authorized to close.

 

“Capital Stock” means,
with respect to any Person, any capital stock (including preferred stock),
shares, interests, participation or other ownership interests (however
designated) of such Person and any rights (other than debt securities
convertible into or exchangeable for capital stock), warrants or options to
purchase any thereof.

 

 

“Consolidated Income
Available for Debt Service” for any period means Earnings from Operations of
the Company and its Subsidiaries plus amounts which have been deducted, and
minus amounts which have been added, for the following (without duplication): (i) interest
on Debt of the Company and its Subsidiaries, (ii) provision for taxes of
the Company and its Subsidiaries based on income, (iii) amortization of
debt discount and deferred financing costs, (iv) provisions for gains and
losses on properties and property, depreciation and amortization, (v) the
effect of any noncash charge resulting from a change in accounting principles
in determining Earnings from Operations for such period and (vi) amortization
of deferred charges.

 

“Corporate Trust Office”
means the corporate trust office of the Trustee which it designates as the
office at which the agreement in question will be administered (which it may
change by notice from time to time), presently located at One Federal Street,
3rd Floor, Boston, Massachusetts 02110.

 

“Debt” of the Company or
any Subsidiary means, without duplication, any indebtedness of the Company or
any Subsidiary, whether or not contingent, in respect of (i) borrowed
money or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
for borrowed money secured by any Encumbrance existing on property owned by the
Company or any Subsidiary, to the extent of the lesser of (x) the amount of
indebtedness so secured and (y) the fair market value of the property subject
to such Encumbrance, (iii) the reimbursement obligations, contingent or
otherwise, in connection with any letters of credit actually issued (other than
letters of credit issued to provide credit enhancement or support with respect
to other indebtedness of the Company or any Subsidiary otherwise reflected as
Debt hereunder) or amounts representing the balance deferred and unpaid of the
purchase price of any property or services, except any such balance that
constitutes an accrued expense or trade payable, or all conditional sale
obligations or obligations under any title retention agreement, (iv) the
principal amount of all obligations of the Company or any Subsidiary with
respect to redemption, repayment or other repurchase of any Disqualified Stock,
or (v) any lease of property by the Company or any Subsidiary as lessee
which is reflected on the Company’s consolidated balance sheet as a capitalized
lease in accordance with GAAP, to the extent, in the case of items of
indebtedness under (i) through (iii) above, that any such items
(other than letters of credit) would appear as a liability on the Company’s
consolidated balance sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation by the Company or any Subsidiary
to be liable for, or to pay, as obligor, guarantor or otherwise (other than for
purposes of collection in the ordinary course of business), Debt of another
Person (other than the Company or any Subsidiary) (it being understood that
Debt shall be deemed to be incurred by the Company or any Subsidiary whenever
the Company or such Subsidiary shall create, assume, guarantee or otherwise
become liable in respect thereof).

 

“Disqualified Stock”
means, with respect to any Person, any Capital Stock of such Person which by
the terms of such Capital Stock (or by the terms of any security into which it
is convertible or for which it is exchangeable or exercisable), upon the
happening of any event or otherwise (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise (other than
Capital Stock which is redeemable solely in exchange for common stock or shares),
(ii) is convertible into or exchangeable or exercisable for Debt or
Disqualified Stock, or (iii) is redeemable at the option of the Holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
stated maturity of the Notes.

 

2

 

“Earnings from Operations”
for any period means net earnings excluding gains and losses on sales of
investments, extraordinary items, gains and losses on early extinguishment of
debt and property valuation losses, as reflected in the financial statements of
the Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.

 

“Encumbrance” means any
mortgage, lien, charge, pledge or security interest of any kind.

 

“Make-Whole Amount” means, in connection with any optional redemption
or accelerated payment of any Notes prior to May 1, 2015, the excess, if
any, of (i) the aggregate present value as of the date of such redemption
or accelerated payment of each dollar of principal being redeemed or paid and
the amount of interest (exclusive of interest accrued to the date of redemption
or accelerated payment) that would have been payable in respect of such dollar
if such redemption or accelerated payment had been made on May 1, 2015,
determined by discounting, on a semiannual basis, such principal and interest
at the Reinvestment Rate (determined on the third Business Day preceding the
date such notice of redemption is given or declaration of acceleration is made)
from the respective dates on which such principal and interest would have been
payable if such redemption or accelerated payment had been made on May 1,
2015, over (ii) the aggregate principal amount of the Notes being redeemed
or paid.  In the case of any redemption
or accelerated payment of notes on or after May 1, 2015, the Make-Whole
Amount means zero.  For purposes
of this Supplemental Indenture and the Notes, references in the Indenture to
the payment of the principal (and premium, if any) and interest on the Notes
shall be deemed to include the payment of the Make-Whole Amount, if any, due
upon redemption with respect to the Notes. 
The Make-Whole Amount shall be calculated by the Company and set forth
in an Officer’s Certificate delivered to the Trustee, and the Trustee shall be
entitled to rely on said Officer’s Certificate.

 

“Notes” means the Company’s
5 3/4%  Senior Notes due November 1, 2015, issued under this Supplemental
Indenture and the Indenture, as amended or supplemented from time to time.

 

“Reinvestment Rate” means
a rate per annum equal to the sum of 0.20% (twenty one-hundredths of one
percent) plus the yield on treasury securities at constant maturity under the
heading “Week Ending” published in the Statistical Release under the caption “Treasury
Constant Maturities” for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity (which, in the case of
maturities corresponding to the principal and interest due on the notes at
their maturity, shall be deemed to be May 1,
2015), as of the payment date of the principal being redeemed or
paid.  If no maturity exactly corresponds
to such maturity, yields for the two published maturities most closely
corresponding to such maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. 
For purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.

 

“Secured Debt” means Debt
secured by any mortgage, lien, charge, pledge or security interest of any kind.

 

“Statistical Release”
means the statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Federal Reserve System and which
establishes yields on actively traded United States government securities
adjusted to constant maturities or, if such

 

3

 

statistical
release is not published at the time of any determination under this
Supplemental Indenture, then any publicly available source of similar market
data which shall be designated by the Company.

 

“Subsidiary” means any
corporation or other entity of which a majority of (i) the voting power of
the voting equity securities or (ii) the outstanding equity interests are
owned, directly or indirectly, by the Company or one or more other Subsidiaries
of the Company.  For the purposes of this
definition, “voting equity securities” means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.

 

“Total Assets” as of any
date means the sum of (i) the Undepreciated Real Estate Assets and (ii) all
other assets of the Company and its Subsidiaries determined in accordance with
GAAP (but excluding accounts receivable and intangibles).

 

“Total Unencumbered
Assets” means the sum of (i) those Undepreciated Real Estate Assets not
subject to an Encumbrance for borrowed money and (ii) all other assets of
the Company and its Subsidiaries not subject to an Encumbrance for borrowed
money determined in accordance with GAAP (but excluding accounts receivable and
intangibles).

 

“Undepreciated Real
Estate Assets” as of any date means the cost (original cost plus capital improvements)
of real estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in accordance
with GAAP.

 

“Unsecured Debt” means
Debt which is not secured by any of the properties of the Company or any
Subsidiary.

 

ARTICLE 2

 

TERMS OF THE NOTES

 

Section 2.1                                      Pursuant
to Section 301 of the Indenture, the Notes shall have the following terms
and conditions:

 

(a)                                  Title;
Aggregate Principal Amount; Form of Notes.  The Notes shall be Registered Securities
under the Indenture and shall be known as the Company’s “5
3⁄4% Senior Notes due November 1, 2015.”  The Notes will be limited to an aggregate
principal amount of $250,000,000, subject to the right of the Company to reopen
such series for issuances of additional securities of such series and except as
provided in this Section or in Section 306 of the Indenture.  The Notes (together with the Trustee’s
certificate of authentication) shall be substantially in the form of Exhibit A
hereto, which is hereby incorporated in and made a part of this Supplemental
Indenture.

 

The Notes will be issued
in the form of one or more registered global securities without coupons (“Global
Notes”) that will be deposited with, or on behalf of, The Depository Trust Company
(“DTC”), and registered in the name of DTC’s nominee, Cede & Co.  Except under the circumstance described
below, the Notes will not be issuable in definitive form.  Unless and until it is exchanged in whole or
in part for the individual Notes represented thereby, a Global Note may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC
to

 

4

 

DTC or another
nominee of DTC or by DTC or any nominee of DTC to a successor depositary or any
nominee of such successor.

 

So long as DTC or its
nominee is the registered owner of a Global Note, DTC or such nominee, as the
case may be, will be considered the sole owner or holder of the Notes
represented by such Global Note for all purposes under this Supplemental
Indenture.  Except as described below,
owners of beneficial interest in Notes evidenced by a Global Note will not be
entitled to have any of the individual Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of any such Notes in definitive form and will not be considered the
owners or holders thereof under the Indenture or this Supplemental Indenture.

 

If DTC is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Notes in exchange for the Global Note or Global Notes
representing such Notes.  In addition,
the Company may at any time and in its sole discretion, subject to certain
limitations set forth in the Indenture, determine not to have any of such Notes
represented by one or more Global Notes and, in such event, will issue
individual Notes in exchange for the Global Note or Global Notes representing
the Notes.  Individual Notes so issued
will be issued in denominations of $1,000 and integral multiples thereof.

 

(b)                                 Interest
and Interest Rate.  The Notes will
bear interest at a rate of 5 3⁄4%  per annum, from October 31, 2005 (or, in the case of Notes issued upon
any reopening of this series of Notes, from the date designated by the Company
in connection with such reopening) or from the immediately preceding Interest
Payment Date to which interest has been paid or duly provided for, payable
semiannually in arrears on each May 1 and November 1, commencing May 1,
2006 (each of which shall be an “Interest
Payment Date”), to the Persons in whose names the Notes are registered in the
Security Register at the close of business on the day falling 14 calendar days
(whether or not a Business Day) next preceding such Interest Payment Date
(each, a “Regular Record Date”).

 

(c)                                  Principal
Repayment; Currency.  The stated
maturity of the Notes is November 1, 2015;
provided, however, the Notes may be earlier redeemed at the option of
the Company as provided in paragraph (d) below.  The principal of each Note payable on its
maturity date shall be paid against presentation and surrender thereof at the
Corporate Trust Office of the Trustee in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public or private debts.  The Company
will not pay Additional Amounts (as defined in the Indenture) on the Notes.

 

(d)                                 Redemption
at the Option of the Company; Acceleration. 
The Notes will be subject to redemption at any time at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days’
notice to each Holder of Notes to be redeemed at its address appearing in the
Security Register, at a price equal to the sum of (i) the outstanding
principal amount of the Notes being redeemed, plus accrued and unpaid interest
to but excluding the applicable Redemption Date, plus (ii) the Make-Whole
Amount, if any.  If the notes are
redeemed on or after May 1, 2015, the
redemption price will not include the Make-Whole Amount.  Upon the

 

5

 

acceleration of the Notes in accordance with Section 502
of the Indenture, the Company shall pay the amount specified in Section 4.2
of this Supplemental Indenture.

 

(e)                                  Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication.  Notices to the Company shall be directed to
it at 400 Centre Street, Newton, Massachusetts 02458, Attention: President;
notices to the Trustee shall be directed to it at One Federal Street, 3rd
Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department, Re:
HRPT Properties Trust 5 3⁄4% Senior Notes due November 1,
2015; or as to either party, at such
other address as shall be designated by such party in a written notice to the
other party.

 

(f)                                    Global
Note Legend.  Each Global Note shall
bear the following legend on the face thereof:

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

(g)                                 Applicability
of Discharge, Defeasance and Covenant Defeasance Provisions.  The Discharge, Defeasance and Covenant
Defeasance provisions in Article Fourteen of the Indenture will apply to
the Notes.

 

ARTICLE 3

 

ADDITIONAL COVENANTS

 

Section 3.1                                      In
addition to the covenants of the Company set forth in Article Ten of the
Indenture, for the benefit of the Holders of the Notes:

 

(a)                                  Limitations
on Incurrence of Debt.

 

(i)                                     The
Company will not, and will not permit any Subsidiary to, incur any Debt if,
immediately after giving effect to the incurrence of such additional Debt and
the application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 60% of the sum (“Adjusted
Total Assets”) of (without duplication) (A) the Total Assets of the
Company and its Subsidiaries as of the end of the calendar quarter covered in
the Company’s Annual Report on Form 10-K, or the Quarterly Report on

 

6

 

Form 10-Q, as the case may be, most recently
filed with the Securities and Exchange Commission (or, if such filing is not
permitted under the Securities Exchange Act of 1934, as amended, with the
Trustee) prior to the incurrence of such additional Debt and (B) the
purchase price of any real estate assets or mortgages receivable acquired, and
the amount of any securities offering proceeds received (to the extent that
such proceeds were not used to acquire real estate assets or mortgages
receivable or used to reduce Debt), by the Company or any Subsidiary since the
end of such calendar quarter, including those proceeds obtained in connection
with the incurrence of such additional Debt.

 

(ii)                                  In
addition to the foregoing limitations on the incurrence of Debt, the Company
will not, and will not permit any Subsidiary to, incur any Secured Debt if,
immediately after giving effect to the incurrence of such additional Secured
Debt and the application of the proceeds thereof, the aggregate principal
amount of all outstanding Secured Debt of the Company and its Subsidiaries on a
consolidated basis is greater than 40% of Adjusted Total Assets.

 

(iii)                               In addition to the
foregoing limitations on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Debt if the ratio of Consolidated
Income Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Debt is to be incurred shall have been less than 1.5 to 1.0, on a
pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (A) such Debt
and any other Debt incurred by the Company and its Subsidiaries since the first
day of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Debt, had occurred at the beginning of such
period; (B) the repayment or retirement of any other Debt by the Company
and its Subsidiaries since the first date of such four-quarter period had been
repaid or retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility shall be
computed based upon the average daily balance of such Debt during such period);
(C) in the case of Acquired Debt or Debt incurred in connection with any
acquisition since the first day of such four-quarter period, the related
acquisition had occurred as of the first day of such period with appropriate
adjustments with respect to such acquisition being included in such pro forma
calculation; and (D) in the case of any acquisition or disposition by the
Company or its Subsidiaries of any asset or group of assets since the first day
of such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or disposition being
included in such pro forma calculation. 
If the Debt giving rise to the need to make the foregoing calculation or
any other Debt incurred after the first day of the relevant four-quarter period
bears interest at a floating rate then, for purposes of calculating the Annual
Debt Service, the interest rate on such Debt shall be computed on a pro forma
basis as if the average interest rate which would have been in effect during
the entire such four-quarter period had been the applicable rate for the entire
such period.

 

(b)                                 Maintenance
of Total Unencumbered Assets.  The
Company and its Subsidiaries will maintain at all times Total Unencumbered
Assets of not less than 150% of the aggregate

 

7

 

outstanding principal amount of the Unsecured Debt of
the Company and its Subsidiaries on a consolidated basis.

 

ARTICLE 4

 

ADDITIONAL EVENTS OF DEFAULT

 

Section 4.1                                      For
purposes of this Supplemental Indenture and the Notes, in addition to the
Events of Default set forth in Section 501 of the Indenture, it shall also
constitute an “Event of Default” if a default under any bond, debenture, note
or other evidence of indebtedness of the Company (including a default with
respect to any other series of securities), or under any mortgage, indenture or
other instrument of the Company under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company (or by any Subsidiary, the repayment of which the Company has
guaranteed or for which the Company is directly responsible or liable as
obligor or guarantor) having an aggregate principal amount exceeding
$20,000,000, whether such indebtedness now exists or shall hereafter be
incurred or created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within a
period of ten days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the outstanding Notes, a
written notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a “Notice of Default” hereunder.

 

Section 4.2                                      Notwithstanding
any provisions to the contrary in the Indenture, upon any acceleration of the
Notes under Section 502 of the Indenture, the amount immediately due and
payable in respect of the Notes shall equal the Outstanding principal amount
thereof, plus accrued and unpaid interest thereon, plus, if such acceleration
occurs prior to May 1, 2015, the
Make-Whole Amount.

 

ARTICLE 5

 

EFFECTIVENESS

 

This Supplemental
Indenture shall be effective for all purposes as of the date and time this
Supplemental Indenture has been executed and delivered by the Company and the
Trustee in accordance with Article Nine of the Indenture.  As supplemented hereby, the Indenture is
hereby confirmed as being in full force and effect.

 

ARTICLE 6

 

MISCELLANEOUS

 

Section 6.1                                      In
the event any provision of this Supplemental Indenture shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof or any provision
of the Indenture.

 

8

 

Section 6.2                                      To
the extent that any terms of this Supplemental Indenture or the Notes are
inconsistent with the terms of the Indenture, the terms of this Supplemental
Indenture or the Notes shall govern and supersede such inconsistent terms.

 

Section 6.3                                      This
Supplemental Indenture shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.

 

Section 6.4                                      This
Supplemental Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

 

[Remainder of page intentionally
left blank.]

 

9

 

IN WITNESS WHEREOF, the Company and the Trustee have
caused this Supplemental Indenture to be executed as an instrument under seal
in their respective corporate names as of the date first above written.

 

	
   

  	
  HRPT PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Popeo

  	
   

  
	
   

  	
   

  	
  Name: John C. Popeo

  
	
   

  	
   

  	
  Title: Treasurer and
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marie A. Hattinger

  	
   

  
	
   

  	
   

  	
  Name: Marie A.
  Hattinger

  
	
   

  	
   

  	
  Title: Vice President

  
						

 

10

 

EXHIBIT A

 

FORM OF
NOTE

 

[Face of Note]

 

5 3⁄4%
Senior Note due November 1, 2015

 

	
  No. R-       

  	
   

  	
  $                    

  

 

HRPT
PROPERTIES TRUST

 

promises to pay to                                              
or registered assigns, the principal sum of                                              
($              )
on November 1, 2015, subject to
the terms set forth on the reverse of this Note and the terms of the Indenture
referred to therein.

 

Interest Payment
Dates:  each May 1 and November 1,
commencing May 1, 2006.

 

Record Dates:  the day falling 14 calendar days prior to any
Interest Payment Date.

 

CUSIP No.:                          

 

	
   

  	
  HRPT PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CERTIFICATE OF
  AUTHENTICATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
						

 

This is one of the Notes
referred to in the within-mentioned Indenture:

 

	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  

 

 

[THE
FOLLOWING CONSTITUTES THE REVERSE OF THE SECURITY]

 

HRPT
PROPERTIES TRUST

 

5 3/4% Senior Note due November 1, 2015

 

Capitalized terms used
herein have the meanings assigned to them in the Indenture (as defined below)
unless otherwise indicated.

 

1.                                       Interest.  HRPT Properties Trust, a Maryland real estate
investment trust (the “Company”), promises to pay interest on the principal
amount of this Note at the rate and in the manner specified below.

 

The Company shall pay in
cash interest on the principal amount of this Note at the rate per annum of 5 3/4%. The
Company will pay interest semiannually in arrears on each May 1 and November 1,
commencing May 1, 2006, or, if any such day is not a Business Day (as
defined in the Indenture), on the next succeeding Business Day (each an “Interest
Payment Date”), to Holders of record on the day falling 14 calendar days
immediately preceding such Interest Payment Date (whether or not a Business
Day).

 

Interest will be computed
on the basis of a 360-day year consisting of twelve 30-day months. Interest
shall accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from October 31, 2005.

 

2.                                       Method
of Payment.  The Company will pay
interest on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the record date next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date. The Company will pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. The Company,
however, may pay principal, premium, if any, and interest by check payable in
such money. It may mail an interest check to a Holder’s registered address.

 

3.                                       Indenture.  The Company issued the Notes under an
Indenture, dated as of July 9, 1997, and a Supplemental Indenture No. 15
thereto, dated as of October 31, 2005 (collectively, the “Indenture”),
between the Company and the Trustee.  The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 as in effect on
the date of the Indenture.  The Notes are
subject to all such terms, and Holders of the Notes are referred to the
Indenture and such Act for a statement of such terms.  The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes.  The Notes are unsecured general obligations
of the Company limited to $250,000,000 in aggregate principal amount, except as
otherwise provided in the Indenture.

 

4.                                       Optional
Redemption.  The Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days’ notice, at a redemption
price equal to the sum of (i) the principal amount of the Notes being
redeemed, plus accrued and unpaid interest to but excluding the applicable
Redemption Date and (ii) the Make-Whole Amount, if any.  If the Notes are redeemed on or after May 1,
2015, the redemption price will not include the Make-Whole Amount.

 

A-2

 

As used herein the term “Make-Whole Amount” means, in connection with
any optional redemption or accelerated payment of any Notes prior to May 1, 2015, the excess, if any, of (i) the aggregate present value as of the
date of such redemption or accelerated payment of each dollar of principal
being redeemed or paid and the amount of interest (exclusive of interest
accrued to the date of redemption or accelerated payment) that would have been
payable in respect of such dollar if such redemption or accelerated payment had
been made on May 1, 2015, determined by discounting, on a semiannual
basis, such principal and interest at the Reinvestment Rate (determined on the
third Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or
accelerated payment had been made on May 1, 2015, over (ii) the
aggregate principal amount of the Notes being redeemed or paid.  In the case of any redemption or accelerated
payment of notes on or after May 1, 2015, the Make-Whole Amount means
zero.  For purposes of the
Indenture and the Notes, references in the Indenture to the payment of the
principal (and premium, if any) and interest on the Notes shall be deemed to
include the payment of the Make-Whole Amount, if any, due upon redemption with
respect to the Notes.  The Make-Whole
Amount shall be calculated by the Company and set forth in an Officer’s
Certificate delivered to the Trustee, and the Trustee shall be entitled to rely
on said Officer’s Certificate.

 

As used herein the term “Reinvestment
Rate” means a rate per annum equal to the sum of 0.20% (twenty one-hundredths
of one percent) plus the yield on treasury securities at constant maturity
under the heading “Week Ending” published in the Statistical Release (as
defined herein) under the caption “Treasury Constant Maturities” for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity (which, in the case of maturities corresponding to the principal and
interest due on the Notes at their maturity, shall be deemed to be May 1, 2015), as of the payment date
of the principal being redeemed or paid. 
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

 

As used herein the term “Statistical
Release” means the statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Federal Reserve System and which
establishes yields on actively traded United States government securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination under the Supplemental Indenture,
then any publicly available source of similar market data which shall be
designated by the Company.

 

5.                                       Mandatory
Redemption.  The Company shall not be
required to make sinking fund or redemption payments with respect to the Notes.

 

6.                                       Notice
of Redemption.  Notice of redemption
shall be mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address.  Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed.  On and after the
redemption date, interest

 

A-3

 

ceases to accrue on Notes or portions of them called
for redemption.

 

7.                                       Denominations,
Transfer, Exchange.  The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. 
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Security
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. 
The Security Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption.  Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before the mailing of a notice of
redemption of Notes, or during the period between a record date and the
corresponding Interest Payment Date.

 

8.                                       Defaults
and Remedies.  In case an Event of
Default (as defined in the Indenture) with respect to the Notes shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the provisions provided in the Indenture.

 

9.                                       Actions
of Holders.  The Indenture contains
provisions permitting the Holders of not less than a majority of the aggregate
principal amount of the outstanding Notes, subject to certain exceptions as
provided in the Indenture, on behalf of the Holders of all such Notes at a
meeting duly called and held as provided in the Indenture, to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided in the Indenture to be made, given or taken by the Holders
of the Notes, including without limitation, waiving (a) compliance by the
Company with certain provisions of the Indenture, and (b) certain past
defaults under the Indenture and their consequences.  Any resolution passed or decision taken at
any meeting of the Holders of the Notes in accordance with the provisions of
the Indenture shall be conclusive and binding upon such Holders and upon all
future Holders of this Note and other Notes issued upon the registration of
transfer hereof or in exchange heretofore or in lieu hereof.

 

10.                                 Persons
Deemed Owners.  The Company, the
Trustee, and any agent of the Company or the Trustee may deem and treat the
Person in whose name this Note is registered on the Security Register as its
absolute owner for all purposes.

 

11.                                 Authentication.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

12.                                 Governing
Law.  THE INTERNAL LAW OF THE
COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE
AND THE NOTES.

 

13.                                 No
Personal Liability.  THE THIRD
AMENDMENT AND RESTATEMENT OF DECLARATION OF TRUST OF THE COMPANY, AS AMENDED
AND SUPPLEMENTED, DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS AND SUPPLEMENTS THERETO (THE “DECLARATION”), IS DULY FILED IN THE
OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME “HRPT PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT

 

A-4

 

INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE,
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.

 

The Company will furnish
to any Holder upon written request and without charge a copy of the Indenture.  Request may be made to:

 

HRPT Properties Trust

400 Centre Street

Newton, MA 02458

Telecopier No.: 
(617) 332-2261

Attention: President

 

or such other address as the Company may specify
pursuant to the Indenture.

 

A-5

 

ASSIGNMENT
FORM

 

To
assign this Note, fill in the form below:

 

[I] [We] assign and
transfer this Note to                                                                                                                                                   
                                                                                      
[Print or type assignee’s name, address and zip code]
                                                                                      
[Insert assignee’s soc. sec. or tax I.D. no.]
and irrevocably appoint                                                                                                            
to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
  [Sign exactly as your
  name appears on the face of this

  Note]

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [The signature must be
  guaranteed by

  an officer of a participant in a recognized

  signature guarantee program.  Notarized

  or witnessed signatures are not acceptable.]

  	
   

  

 

A-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]