Document:

ifsl1012gaex10-7.htm

Exhibit 10.7

 

Promissory Note

 

1.       Names

 

Borrower:             Robert Dahl

 

Lender:                 Ideal Financial Soultions, Inc.

 

Address:              5940 S. Rainbow Blvd. Las Vegas, NV 89118

 

2.       Promise to Pay.  For value received, Borrower promises to pay Lender $15,000 and interest at the yearly rate of 10% APR on the unpaid balance as specified below.

 

3.      Payment Dates.  Borrower will pay payments of three hundred ($300) dollars monthly starting on January 15, 2010 and continuing monthly for twelve months with the entire amount of principal and interest due on or before December 15, 2010.

 

4.       Default. Borrower will have a ten (10) grace period to make all interest.  Payments not made within the ten (10) day grace will accrue a ten (10%) percent late fee.  Interest payments not made within thirty (30) days of the due date will be considered in default.

 

5.       Collection Costs.  If Borrow defaults and Lender prevails in a lawsuit to collect on this note, Borrower will pay Lender's costs and lawyer's fees in an amount the court finds to be reasonable.

 

6.       Entire Agreement.  This is the entire agreement between the parties. It replaces and supersedes any and all written and/or oral agreements between the parties.

 

7.       Successors and Assignees.  This agreement binds and benefits the heirs, successors, and assignees of the parties.

 

8.       Notices.  All notices must be in writing. A notice may be delivered to a party at the address that follows a party's signature or to a new address that a party designates in writing. A notice may be delivered: (1) in person, (2) by certified mail, or (3) by overnight courier.

 

9.       Governing Law.  This agreement will be governed by and construed in accordance with the laws of the state of Utah.

  

Page 1

  

10.      Modification.  This agreement may be modified only by a writing signed by the party against whom such modification is sought to be enforced.

 

11.      Waiver.  If one party waives any term or provision of this agreement at any time, that waiver will be effective only for the specific instance and specific purpose for which the waiver was given. If either party fails to exercise or delays exercising any of its rights or remedies under this agreement, that party retains the right to enforce that term or provision at a later time.

 

12.      Severability.  If any court determines that any provision of this agreement is invalid or unenforceable, any invalidity or unenforceability will affect only that provision and will not make any other provision of this agreement invalid or unenforceable, and such provision shall be modified, amended, or limited only to the extent necessary to render it valid and enforceable.

 

 

Dated:      October 2009                

Ideal Financial Solutions, Inc.

 

 

 

By: /s/ Benjamin M. Larsen                  

Benjamin M. Larsen

Title: CFO

 

 

 

 

By: /s/ Robert Dahl                                 

Robert Dahl

 

 

 

 

Page 2ifsl1012gaex10-8.htm

 

Exhibit 10.8

Summary of Oral Agreement with Paul Currie

The Registrant and Paul Currie have agreed that Mr. Currie shall provide investor relation service to the Company in exchange for compensation of $42,000 per year, paid monthly.  The agreement is terminable by either party at any time with or without cause.EXHIBIT
10.1

 

 

 

 

 

LTC PROPERTIES, INC.

 

 

 

NOTE
PURCHASE AND PRIVATE SHELF AGREEMENT

 

 

 

5.26% Series A-1 Senior Notes Due
July 14, 2015

($25,000,000 Aggregate Original
Principal Amount)

 

 

5.74% Series A-2 Senior Notes Due
January 14, 2019

($25,000,000 Aggregate Original
Principal Amount)

 

 

$50,000,000 Private Shelf
Facility

 

 

July 14, 2010

 

 

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
  Authorization of Notes

  	
  1

  	
   

  
	
   

  	
  1A

  	
  Authorization of Series A-1 Notes

  	
  1

  	
   

  
	
   

  	
  1B

  	
  Authorization of Series A-2 Notes

  	
  1

  	
   

  
	
   

  	
  1C

  	
  Authorization of Issue of Shelf Notes

  	
  2

  	
   

  
	
  2

  	
  Sale And Purchase of Notes

  	
  2

  	
   

  
	
   

  	
  2A

  	
  Sale and Purchase of Series A-1 Notes and Series A-2
  Notes

  	
  2

  	
   

  
	
   

  	
  2B

  	
  Sale and Purchase of Shelf Notes

  	
  2

  	
   

  
	
   

  	
   

  	
  2B(1)

  	
  Facility

  	
  2

  	
   

  
	
   

  	
   

  	
  2B(2)

  	
  Issuance Period

  	
  3

  	
   

  
	
   

  	
   

  	
  2B(3)

  	
  Request For Purchase

  	
  3

  	
   

  
	
   

  	
   

  	
  2B(4)

  	
  Rate Quotes

  	
  3

  	
   

  
	
   

  	
   

  	
  2B(5)

  	
  Acceptance

  	
  4

  	
   

  
	
   

  	
   

  	
  2B(6)

  	
  Market Disruption

  	
  4

  	
   

  
	
   

  	
   

  	
  2B(7)

  	
  Facility Closings

  	
  4

  	
   

  
	
   

  	
   

  	
  2B(8)

  	
  Fees

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
  2B(8)(i)

  	
  [Intentionally Omitted.]

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
  2B(8)(ii)

  	
  [Intentionally Omitted.]

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
  2B(8)(iii)

  	
  Delayed Delivery Fee

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
  2B(8)(iv)

  	
  Cancellation Fee

  	
  6

  	
   

  
	
  3

  	
  Series A Closing

  	
  6

  	
   

  
	
  4

  	
  Conditions to Closing

  	
  7

  	
   

  
	
   

  	
  4A

  	
  Conditions to Series A Closing

  	
  7

  	
   

  
	
   

  	
   

  	
  4A(1)

  	
  Completion of Due Diligence

  	
  7

  	
   

  
	
   

  	
   

  	
  4A(2)

  	
  Delivery of Credit Agreement and Modifications
  Thereto

  	
  7

  	
   

  
	
   

  	
   

  	
  4A(3)

  	
  Consents

  	
  7

  	
   

  
	
   

  	
   

  	
  4A(4)

  	
  Borrowing Base Certificate

  	
  7

  	
   

  
	
   

  	
   

  	
  4A(5)

  	
  Payment of Special Counsel Fees

  	
  7

  	
   

  
	
   

  	
  4B

  	
  Conditions to Each Closing

  	
  7

  	
   

  
	
   

  	
   

  	
  4B(1)

  	
  Certain Documents

  	
  7

  	
   

  
	
   

  	
   

  	
  4B(2)

  	
  Payment of Fees

  	
  8

  	
   

  
	
   

  	
   

  	
  4B(3)

  	
  Representations and Warranties

  	
  9

  	
   

  
	
   

  	
   

  	
  4B(4)

  	
  Performance; No Default

  	
  9

  	
   

  

 

i

 

Table of Contents

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4B(5)

  	
  Changes in Structure

  	
  9

  	
   

  
	
   

  	
   

  	
  4B(6)

  	
  Purchase Permitted By Applicable Law, etc.

  	
  9

  	
   

  
	
   

  	
   

  	
  4B(7)

  	
  Private Placement Number

  	
  9

  	
   

  
	
   

  	
   

  	
  4B(8)

  	
  Proceedings and Documents

  	
  9

  	
   

  
	
  5

  	
  Representation and Warranties of the Company

  	
  9

  	
   

  
	
  6

  	
  Representations of the Purchasers

  	
  19

  	
   

  
	
  7

  	
  Information as to the Company

  	
  21

  	
   

  
	
  8

  	
  Prepayment of the Notes

  	
  25

  	
   

  
	
  9

  	
  Affirmative Covenants

  	
  28

  	
   

  
	
  10

  	
  Negative Covenants

  	
  30

  	
   

  
	
  11

  	
  Events Of Default

  	
  37

  	
   

  
	
  12

  	
  Remedies On Default, Etc.

  	
  39

  	
   

  
	
  13

  	
  Registration; Exchange; Substitution Of Notes

  	
  41

  	
   

  
	
  14

  	
  Payments On Notes

  	
  42

  	
   

  
	
  15

  	
  Expenses, Etc.

  	
  43

  	
   

  
	
  16

  	
  Survival Of Representations And Warranties; Entire
  Agreement

  	
  43

  	
   

  
	
  17

  	
  Amendment And Waiver

  	
  44

  	
   

  
	
  18

  	
  Notices

  	
  45

  	
   

  
	
  19

  	
  Reproduction Of Documents

  	
  46

  	
   

  
	
  20

  	
  Multiparty Guaranty

  	
  46

  	
   

  
	
  21

  	
  Confidentiality

  	
  52

  	
   

  
	
  22

  	
  Miscellaneous

  	
  52

  	
   

  

 

ii

 

Information Schedule

 

	
  Schedule A

  	
  —

  	
  Purchaser Schedule Related to Series A Notes

  
	
  Schedule B

  	
  —

  	
  Defined Terms

  
	
  Schedule 5.4

  	
  —

  	
  Subsidiaries; Affiliates; Directors and Officers;
  Restrictions on Subsidiaries

  
	
  Schedule 5.10(b)

  	
  —

  	
  Borrowing Base Properties

  
	
  Schedule 5.10(c)

  	
  —

  	
  Significant Leases

  
	
  Schedule 5.15

  	
  —

  	
  Existing Indebtedness for Borrowed Money

  
	
  Schedule 10.2

  	
  —

  	
  Existing Investments

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1

  	
  —

  	
  Form of 5.26% Series A-1 Senior Notes due July 14,
  2015

  
	
  Exhibit A-2

  	
  —

  	
  Form of 5.74% Series A-2 Senior Notes due January
  14, 2019

  
	
  Exhibit A-3

  	
  —

  	
  Form of Shelf Note

  
	
  Exhibit B

  	
  —

  	
  Form of Request for Purchase

  
	
  Exhibit C

  	
  —

  	
  Form of Confirmation of Acceptance

  
	
  Exhibit D-1

  	
  —

  	
  Form of Series A Note Opinion of Special Counsel for
  the Credit Parties

  
	
  Exhibit D-2

  	
  —

  	
  Form of Shelf Note Opinion of Special Counsel for
  the Credit Parties

  
	
  Exhibit D-3

  	
  —

  	
  Form of Series A Note Opinion of Special Maryland
  Counsel for the Credit Parties

  
	
  Exhibit D-4

  	
  —

  	
  Form of Shelf Note Opinion of Special Maryland
  Counsel for the Credit Parties

  
	
  Exhibit D-5

  	
  —

  	
  Form of Series A Note Opinion of Special Texas
  Counsel for the Credit Parties

  
	
  Exhibit D-6

  	
  —

  	
  Form of Shelf Note Opinion of Special Texas Counsel
  for the Credit Parties

  
	
  Exhibit D-7

  	
  —

  	
  Form of Series A Note Opinion of Special Nevada
  Counsel for the Credit Parties

  
	
  Exhibit D-8

  	
  —

  	
  Form of Shelf Note Opinion of Special Nevada Counsel
  for the Credit Parties

  
	
  Exhibit E

  	
  —

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit F

  	
  —

  	
  Form of Joinder to Multiparty Guaranty

  

 

i

 

LTC
PROPERTIES, INC.

31365
Oak Crest Drive, Suite 200

Westlake
Village, California 91361

 

July 14, 2010

 

Prudential Investment
Management, Inc.

Each Prudential Affiliate
(as hereinafter defined) which is

  a signatory of this Agreement or becomes
bound by certain

  provisions of this Agreement as hereinafter
provided)

 

c/o Prudential Capital
Group

2029 Century Park East,
Suite 710

Los Angeles, California
90067

 

Ladies and Gentlemen:

 

Each
of the undersigned, LTC Properties, Inc., a Maryland corporation (the “Company”), and certain direct and indirect
Subsidiaries of the Company from time to time party to this Agreement as
Guarantors agrees with each of the Purchasers as follows:

 

1                                        AUTHORIZATION
OF NOTES

 

1A       AUTHORIZATION
OF SERIES A-1 NOTES.

 

The
Company has authorized the issue and sale of $25,000,000 aggregate principal
amount of its 5.26% Series A-1 Senior Notes due July 14, 2015 (as amended,
restated, supplemented or otherwise modified from time to time, the “Series A-1 Notes”, such term to include any
such notes issued in substitution therefor pursuant to Section 13).  The Series A-1 Notes shall be substantially
in the form set out in Exhibit A-1. 
Certain capitalized and other terms used in this Agreement are defined
in Schedule B; and references to a “Schedule” or an “Exhibit” are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.

 

1B       AUTHORIZATION
OF SERIES A-2 NOTES.

 

The
Company has authorized the issue and sale of $25,000,000 aggregate principal
amount of its 5.74% Series A-2 Senior Notes due January 14, 2019 (as amended,
restated, supplemented or otherwise modified from time to time, the “Series A-2 Notes”, such term to include any
such notes issued in substitution therefor pursuant to Section 13).  The Series A-2 Notes shall be substantially
in the form set out in Exhibit A-2. 
The terms “Series A Note”
and “Series A Notes” as used
herein shall include each Series A-1 Note and each Series A-2 Note delivered
pursuant to any provision of this Agreement and each Note delivered in
substitution or exchange for any such Note pursuant to any such provision.

 

 

1C       AUTHORIZATION
OF ISSUE OF SHELF NOTES.

 

The
Company will authorize the issue and sale of its additional senior notes (as
amended, restated, supplemented or otherwise modified from time to time, the “Shelf Notes”) in the aggregate principal
amount of up to $50,000,000, to be dated the date of issue thereof, to mature,
in the case of each Shelf Note so issued, no more than 10 years after the date
of original issuance thereof, to have an average life, in the case of each
Shelf Note so issued, of no more than 7 years after the date of original
issuance thereof, to bear interest on the unpaid balance thereof from the date
thereof at the rate per annum, and to have such other particular terms, as
shall be set forth, in the case of each Shelf Note so issued, in the
Confirmation of Acceptance with respect to such Shelf Note delivered pursuant
to Section 2B(5), and to be substantially in the form of Exhibit A-3.  The terms “Shelf
Note” and “Shelf Notes”
as used herein shall include each Shelf Note delivered pursuant to any
provision of this Agreement and each Shelf Note delivered in substitution or
exchange for any such Shelf Note pursuant to any such provision.  The terms “Note”
and “Notes” as used herein shall
include each Series A Note and each Shelf Note delivered pursuant to any
provision of this Agreement and each Note delivered in substitution or exchange
for any such Note pursuant to any such provision.  Notes that have (i) the same final maturity,
(ii) the same principal prepayment dates, (iii) the same principal prepayment
amounts (as a percentage of the original principal amount of each Note), (iv)
the same interest rate, (v) the same interest payment periods, and (vi) the
same date of issuance (which, in the case of a Note issued in exchange for
another Note, shall be deemed for these purposes the date on which such Note’s
ultimate predecessor Note was issued), are herein called a “Series” of Notes.

 

2                                        SALE
AND PURCHASE OF NOTES

 

2A       SALE
AND PURCHASE OF SERIES A-1 NOTES AND SERIES A-2 NOTES.

 

Subject
to the terms and conditions of this Agreement, the Company agrees to issue and
sell to each Series A Purchaser and each Series A Purchaser agrees to purchase
from the Company, on the Series A Closing Day provided for in Section 3, Series
A-1 Notes and/or Series A-2 Notes, as applicable, in the principal amount with
respect to Series A-1 Notes and/or Series A-2 Notes, as applicable, specified
opposite such Series A Purchaser’s name in the Purchaser Schedule Relating to
Series A Notes set forth as Schedule A at the purchase price of 100% of
the principal amount thereof.

 

2B       SALE
AND PURCHASE OF SHELF NOTES.

 

2B(1)   Facility.  PIM is
willing to consider, in its sole discretion and within limits that may be
authorized for purchase by PIM and Prudential Affiliates from time to time, the
purchase of Shelf Notes pursuant to this Agreement.  The willingness of PIM to consider such
purchase of Shelf Notes is herein called the “Facility.”  At any time, (i) the aggregate principal
amount of Shelf Notes stated in Section 1C, minus (ii) the aggregate principal amount of Shelf Notes
purchased and sold pursuant to this Agreement prior to such time, minus (iii) the aggregate
principal amount of Accepted Notes (as hereinafter defined) which have not yet
been purchased and sold hereunder prior to such time, is herein called the “Available Facility Amount” at such
time.  NOTWITHSTANDING
THE WILLINGNESS OF PIM TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PIM NOR ANY PRUDENTIAL
AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES,
OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF
SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PIM
OR ANY PRUDENTIAL AFFILIATE.  Notwithstanding anything to the
contrary appearing herein, in no event shall any Note be purchased under the
Facility by a Prudential Affiliate described in clause (i) of the definition
thereof if, upon giving effect to such purchase and the use of proceeds
thereof, the aggregate principal amount all Notes and any other notes of the
Company then outstanding and held by all Prudential Affiliates described in
such clause, would exceed $75,000,000.

 

2

 

2B(2)   Issuance Period.  Shelf Notes may be issued and sold pursuant
to this Agreement until the earlier of (i) the third anniversary of the date of
this Agreement (or if such anniversary is not a New York Business Day, the New
York Business Day next preceding such anniversary), and (ii) the thirtieth day
after PIM shall have given to the Company, or the Company shall have given to
PIM, written notice stating that it elects to terminate the issuance and sale
of Shelf Notes pursuant to this Agreement (or if such thirtieth day is not a
New York Business Day, the New York Business Day next preceding such thirtieth
day).  The period during which Shelf
Notes may be issued and sold pursuant to this Agreement is herein called the “Issuance Period.”

 

2B(3)   Request For Purchase.  The Company may from time to time during the
Issuance Period make requests for purchases of Shelf Notes (each such request
being herein called a “Request for Purchase”).  Each Request for Purchase shall be made to PIM
by email or overnight delivery service, and shall (i) specify the aggregate
principal amount of Shelf Notes covered thereby, which shall not be less than
$10,000,000 and not be greater than the Available Facility Amount at the time
such Request for Purchase is made, (ii) specify the principal amounts, final
maturities (which shall be no more than 10 years from the date of original
issuance), and principal prepayment dates and amounts (which shall result in an
average life of no more than 7 years from the date of original issuance) of the
Shelf Notes covered thereby, (iii) specify the interest payment periods (which
shall be quarterly or semi-annually), (iv) specify the use of proceeds of such
Shelf Notes), (v) specify the proposed day for the closing of the purchase and
sale of such Shelf Notes, which shall be a Business Day during the Issuance
Period not less than 10 Business Days and not more than 42 days after the
making of such Request for Purchase, (vi) specify the number of the account and
the name and address of the depository institution to which the purchase prices
of such Shelf Notes are to be transferred on the Closing Day for such purchase
and sale, (vii) certify that the representations and warranties contained in
Section 5 are true on and as of the date of such Request for Purchase and that
there exists on the date of such Request for Purchase no Event of Default or
Default, and (viii) be substantially in the form of Exhibit B attached
hereto.  Each Request for Purchase shall
be in writing and shall be deemed made when received by PIM.

 

2B(4)   Rate Quotes.  Not later than 5 Business Days after the
Company shall have given PIM a Request for Purchase pursuant to Section 2B(3),
PIM may, but shall be under no obligation to, provide to the Company by telephone
interest rate quotes for the several principal amounts, maturities and
principal prepayment schedules, and interest payment periods of Shelf Notes
specified in such Request for Purchase. 
Each quote shall represent the interest rate per annum payable on the
outstanding principal balance of such Shelf Notes at which PIM or a Prudential
Affiliate would be willing to purchase such Shelf Notes at 100% of the
principal amount thereof.

 

3

 

2B(5)   Acceptance.  Within 2 minutes after PIM shall have
provided any interest rate quotes pursuant to Section 2B(4) or such shorter
period as PIM may specify to the Company (such period herein called the “Acceptance Window”), the Company may,
subject to Section 2B(6), elect to accept such interest rate quotes as to not
less than $10,000,000 aggregate principal amount of the Shelf Notes specified
in the related Request for Purchase. 
Such election shall be made by an Authorized Officer of the Company
notifying PIM by telephone or email within the Acceptance Window (but not
earlier than 9:30 a.m. or later than 1:30 p.m. (or such later time as PIM may
agree), New York City local time) that the Company elects to accept such
interest rate quotes, specifying the Shelf Notes (each such Shelf Note being
herein called an “Accepted Note”)
as to which such acceptance (herein called an “Acceptance”) relates. 
The day the Company notifies PIM of an Acceptance with respect to any
Accepted Notes is herein called the “Acceptance
Day” for such Accepted Notes. 
Any interest rate quotes as to which PIM does not receive an Acceptance
within the Acceptance Window shall expire, and no purchase or sale of Shelf
Notes hereunder shall be made based on such expired interest rate quotes.  Subject to Section 2B(6) and the other terms
and conditions hereof, the Company agrees to sell to PIM or a Prudential
Affiliate, and PIM agrees to purchase, or to cause the purchase by a Prudential
Affiliate of, the Accepted Notes at 100% of the principal amount of such
Accepted Notes.  As soon as practicable
following the Acceptance Day, the Company, PIM and each Prudential Affiliate
which is to purchase any such Accepted Notes will execute a confirmation of
such Acceptance substantially in the form of Exhibit C (herein called a
“Confirmation of Acceptance”).  If the Company should fail to execute and
return to PIM within 2 Business Days following receipt thereof a Confirmation
of Acceptance with respect to any Accepted Notes, PIM may at its election at
any time prior to its receipt thereof cancel the closing with respect to such
Accepted Notes by so notifying the Company in writing.

 

2B(6)   Market Disruption.  Notwithstanding the provisions of Section
2B(5), if PIM shall have provided interest rate quotes pursuant to Section
2B(4) and thereafter, prior to the time an Acceptance with respect to such
quotes shall have been notified to PIM in accordance with Section 2B(5), the
domestic market for U.S. Treasury securities or derivatives shall have closed
or there shall have occurred a general suspension, material limitation, or
significant disruption of trading in securities generally on the New York Stock
Exchange or in the domestic market for U.S. Treasury securities or derivatives,
then such interest rate quotes shall expire, and no purchase or sale of Shelf
Notes hereunder shall be made based on such expired interest rate quotes.  If the Company thereafter notifies PIM of the
Acceptance of any such interest rate quotes, such Acceptance shall be
ineffective for all purposes of this Agreement, and PIM shall promptly notify
the Company that the provisions of this Section 2B(6) are applicable with
respect to such Acceptance.

 

2B(7)   Facility Closings. 
Not later than 1:30 p.m. (New York City local time) on the Closing Day
for any Accepted Notes, the Company will deliver to each Purchaser listed in
the Confirmation of Acceptance relating thereto at the offices of the Bingham
McCutchen LLP, Three Embarcadero Center, San Francisco, California 94111 (or
such other address as PIM may specify in writing), the Accepted Notes to be
purchased by such Purchaser in the form of one or more Notes in authorized
denominations as such Purchaser may request for each Series of Accepted Notes
to be purchased on such Closing Day, dated the applicable Closing Day and
registered in such Purchaser’s name (or in the name of its nominee), against
payment of the purchase price thereof by transfer of immediately available
funds for credit to the account 

 

4

 

specified in the Request for Purchase of such Notes.  If the Company fails to tender to any
Purchaser the Accepted Notes to be purchased by such Purchaser on the scheduled
Closing Day for such Accepted Notes as provided above in this paragraph 2B(7),
or any of the conditions specified in Section 4 shall not have been fulfilled
by the time required on such scheduled Closing Day, the Company shall, prior to
2:00 p.m., New York City local time, on such scheduled Closing Day notify PIM
(which notification shall be deemed received by each Purchaser) in writing
whether (i) such closing is to be rescheduled (such rescheduled date to be a
Business Day during the Issuance Period not less than one Business Day and not
more than 10 Business Days after such scheduled Closing Day (the “Rescheduled Closing Day”)) and certify to
PIM (which certification shall be for the benefit of each Purchaser) that the
Company reasonably believes that it will be able to comply with the conditions
set forth in Section 4 on such Rescheduled Closing Day and that the Company
will pay the Delayed Delivery Fee in accordance with Section 2B(8)(iii), or
(ii) such closing is to be canceled and the Company will pay the Cancellation
Fee as provided in Section 2B(8)(iv).  In
the event that the Company shall fail to give such notice referred to in the
immediately preceding sentence, PIM (on behalf of each Purchaser) may at its
election, at any time after 2:00 p.m., New York City local time, on such
scheduled Closing Day, notify the Company in writing that such closing is to be
canceled and the Company is obligated to pay the Cancellation Fee as provided
in Section 2B(8)(iv).  Notwithstanding
anything to the contrary appearing in this Agreement, the Company may elect to
reschedule a closing with respect to any given Accepted Notes on not more than
one occasion, unless PIM shall have otherwise consented in writing.

 

2B(8)   Fees.

 

2B(8)(i)           [Intentionally Omitted.]

 

2B(8)(ii)          [Intentionally Omitted.]

 

2B(8)(iii)         Delayed Delivery Fee.  If the closing of the purchase and sale of
any Accepted Note is delayed for any reason beyond the original Closing Day for
such Accepted Note, the Company shall pay to or as directed by PIM, on the
Cancellation Date or actual Closing Day of such purchase and sale, an amount
(the “Delayed Delivery Fee”) equal
to:

 

(BEY - MMY) X DTS/360 X PA

 

where
“BEY” means Bond Equivalent Yield, i.e., the bond equivalent yield per annum of such Accepted
Note; “MMY” means Money Market Yield, i.e., the yield per annum on an alternative Dollar investment
of the highest quality selected by PIM having a maturity date or dates the same
as, or closest to, the Rescheduled Closing Day from time to time fixed for the
delayed delivery of such Accepted Note; “DTS” means Days
to Settlement, i.e., the number of actual days
elapsed from and including the original Closing Day for such Accepted Note to
but excluding the date of such payment; and “PA”
means Principal Amount, i.e., the
principal amount of the Accepted Note for which such calculation is being made.

 

In no
case shall the Delayed Delivery Fee be less than zero.  Nothing contained herein shall obligate any
Purchaser to purchase any Accepted Note on any day other than the Closing Day
for such Accepted Note, as the same may be rescheduled from time to time in
compliance with Section 2B(7).

 

5

 

 

2B(8)(iv)         Cancellation Fee.  If the Company at any time notifies PIM in
writing that the Company is canceling the closing of the purchase and sale of
any Accepted Note, or if PIM notifies the Company in writing under the
circumstances set forth in the last sentence of paragraph 2B(5) or the
penultimate sentence of Section 2B(7) that the closing of the purchase and sale
of such Accepted Note is to be canceled, or if the closing of the purchase and
sale of such Accepted Note is not consummated on or prior to the last day of
the Issuance Period (the date of any such notification, or the last day of the
Issuance Period, as the case may be, being herein called the “Cancellation Date”), the Company shall pay
to or as directed by PIM in immediately available funds on the Cancellation
Date an amount (the “Cancellation Fee”)
equal to:

 

PI X PA

 

where “PI” means Price Increase, i.e., the quotient (expressed in decimals) obtained by dividing
(a) the excess of the ask price (as determined by PIM) of the Hedge Treasury
Note(s) on the Cancellation Date over the bid price (as determined by PIM) of
the Hedge Treasury Note(s) on the Acceptance Day for such Accepted Note by (b)
such bid price; and “PA” has the
meaning ascribed to it in paragraph 2B(8)(iii). 
The foregoing bid and ask prices shall be as reported by such publicly
available source of such market data as is then customarily used by PIM, and
rounded to the second decimal place.

 

In
no case shall the Cancellation Fee be less than zero.

 

3                                        SERIES
A CLOSING.

 

The
sale and purchase of the Series A-1 Notes or Series A-2 Notes, as applicable,
to be purchased by the Series A Purchasers shall occur at the offices of
Bingham McCutchen LLP, Three Embarcadero Center, San Francisco, California
94111, at 9:00 a.m., Pacific time, at a single closing on July 14, 2010 (the “Series A Closing Day”).  On the Series A Closing Day, the Company will
deliver to each Series A Purchaser the Series A Notes to be purchased by such
Series A Purchaser in the form of a single Series A-1 Note (or such greater
number of Series A-1 Notes in denominations of at least $1,000,000 as it may
request) and/or a single Series A-2 Note (or such greater number of Series A-2
Notes in denominations of at least $1,000,000 as it may request), as
applicable, each dated the date of the Series A Closing Day, and registered in
such Series A Purchaser’s name (or in the name of its nominee), against
delivery by such Series A Purchaser to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer
of immediately available funds for the account of the Company to account number
317-4554 at Harris Trust and Savings, Chicago, IL 60694, ABA number
071000288.  If on the Series A Closing
Day the Company shall fail to tender such Notes as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to the satisfaction of any Series A Purchaser, such Series A
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights it may have by reason of
such failure or such nonfulfillment.

 

6

 

4                                        CONDITIONS
TO CLOSING.

 

The
obligation of any Purchaser to purchase and pay for any Notes is subject to the
fulfillment to its satisfaction, on or before the applicable Closing Day, of
the following conditions:

 

4A       CONDITIONS
TO SERIES A CLOSING

 

4A(1)   Completion of Due Diligence.  PIM and the Series A Purchasers shall have
completed to their satisfaction financial and other business, environmental and
legal due diligence related to the Company and its Subsidiaries.

 

4A(2)   Delivery of Credit Agreement and
Modifications Thereto. 
PIM and the Series A Purchasers shall have received copies of the Credit
Agreement and the definitive agreements with respect to any other Principal
Credit Facilities, and all amendments or other modifications to each of the
foregoing, accompanied by an Officer’s Certificate certifying such copies as
being true, correct and complete copies thereof.

 

4A(3)   Consents.  PIM and the Series A Purchasers shall have
received evidence satisfactory to them that all government, contractual (including,
without limitation, under the Credit Agreement) and other third-party approvals
and consents, if any, necessary to the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents as of the
Series A Closing Day have been obtained.

 

4A(4)   Borrowing
Base Certificate. 
PIM and the Series A Purchasers shall have received a Borrowing Base
Certificate containing a calculation of the Borrowing Base as of March 31, 2010
based on the information set forth on Schedule 5.10(b) as of the Series
A Closing Day.

 

4A(5)   Payment of Special Counsel Fees.  Without limiting the provisions of Section
15.1, the Company shall have paid on or before the Series A Closing Day the
fees, charges and disbursements of the special counsel of PIM and the Series A
Purchasers referred to in Section 4B(1)(g), to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Series A Closing Day.

 

4B                             CONDITIONS
TO EACH CLOSING.

 

4B(1)           Certain Documents.  PIM
and each Purchaser that is purchasing Notes on such Closing Day shall have
received the following, each dated the applicable Closing Day (except as
provided in clause (h)):

 

(a)        The Note(s) to be purchased by such
Purchaser;

 

(b)        an Officer’s Certificate from the
Company, certifying that the conditions specified in Sections 4B(3), 4B(4) and
4B(5) have been fulfilled;

 

(c)        certified copies of the resolutions of
each Credit Party (or, if such Person is a partnership, its general partner),
authorizing the execution and delivery of the Transaction Documents to which
such Credit Party is a party (and, in the case of such resolutions of the
Company, authorizing the issuance of the applicable Series of Notes by the
Company), and of all documents evidencing other necessary corporate or similar
action and governmental approvals, if any, with respect to the Transaction
Documents and the applicable Series of Notes;

 

7

 

(d)        a certificate of the Secretary or an
Assistant Secretary and one other officer of each of the Credit Parties (or, if
such Person is a partnership, its general partner), certifying the names and
true signatures of the officers of such Person authorized to sign the
Transaction Documents to which such Credit Party is a party;

 

(e)        certified copies of the articles or
certificate of incorporation (or similar charter document) and by-laws,
operating agreement or partnership agreement, as applicable, of each Credit
Party;

 

(f)         favorable opinions of:  (i) Reed Smith LLP, special counsel for the
Credit Parties satisfactory to such Purchaser and substantially in the form of Exhibit
D-1 (in the case of the Series A Notes) or Exhibit D-2 (in the case
of any Shelf Notes) attached hereto, and as to such other matters as such
Purchaser may reasonably request; (ii) Ballard Spahr LLP, special Maryland
counsel for the Credit Parties satisfactory to such Purchaser and substantially
in the form of Exhibit D-3 (in the case of the Series A Notes) or Exhibit
D-4 (in the case of any Shelf Notes) attached hereto, and as to such other
matters as such Purchaser may reasonably request; (iii) Fulbright &
Jaworski L.L.P., special Texas counsel for the Credit Parties satisfactory to
such Purchaser and substantially in the form of Exhibit D-5 (in the case
of the Series A Notes) or Exhibit D-6 (in the case of any Shelf Notes)
attached hereto, and as to such other matters as such Purchaser may reasonably
request; and (iv) Brownstein Hyatt Farber Schreck, LLP, special Nevada counsel
for the Credit Parties satisfactory to such Purchaser and substantially in the
form of Exhibit D-7 (in the case of the Series A Notes) or Exhibit
D-8 (in the case of any Shelf Notes) attached hereto.  The Company hereby directs each such counsel
to deliver such opinions, agrees that the issuance and sale of any Notes will
constitute a reconfirmation of such direction, and understands and agrees that
each Purchaser receiving such an opinion will and is hereby authorized to rely
on such opinion;

 

(g)        a favorable opinion of Bingham McCutchen
LLP, special counsel for PIM and the Purchasers, as to such matters incident to
the matters herein contemplated related to the Series A Notes as such Purchaser
reasonably requests;

 

(h)        a good standing or similar certificate
for each Credit Party (or its general partner, in the case of a partnership)
from the appropriate Governmental Authority of its jurisdiction of
organization, dated as of a recent date, and such other evidence of the status
of such Persons as such Purchaser may reasonably request; and

 

(i)         additional documents or certificates
with respect to legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by such
Purchaser.

 

4B(2)   Payment of Fees.  The Company shall have paid to or as directed
by PIM any fees due pursuant to or in connection with this Agreement, including
any Delayed Delivery Fee due pursuant to Section 2B(8)(iii).

 

8

 

4B(3)   Representations and Warranties.  The representations and warranties of the
Credit Parties in Section 5 hereof shall, in each case, be correct when made
and on and as of such Closing Day.

 

4B(4)   Performance; No Default.  Each of the Credit Parties shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at such
Closing Day, and after giving effect to the issue and sale of the applicable
Series of Notes (and the application of the proceeds thereof pursuant to the
requirements of Section 5.14) no Default or Event of Default shall have
occurred and be continuing.

 

4B(5)   Changes
in Structure. 
The Company shall not have changed its jurisdiction of organization or
been a party to any merger or consolidation or succeeded to all or any
substantial part of the liabilities of any other Person, at any time following
the date of the most recent financial statements referred to in Section 5.5.

 

4B(6)   Purchase Permitted By Applicable Law, etc.  Each Purchaser’s purchase of Notes on such
Closing Day shall (i) be permitted by the laws and regulations of each
jurisdiction to which such Purchaser is subject, without recourse to provisions
(such as Section 1405(a)(8) of the New York Insurance Law) permitting limited
investments by insurance companies without restriction as to the character of
the particular investment, (ii) not violate any applicable law or regulation
(including Regulation T, U or X of the Board of Governors of the Federal
Reserve System), and (iii) not subject such Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof.  If requested by any Purchaser of Notes on such
Closing Day, such Purchaser shall have received an Officer’s Certificate
certifying as to such matters of fact as it may reasonably specify to enable it
to determine whether such purchase is so permitted.

 

4B(7)   Private Placement Number.  A Private Placement number issued by Standard
& Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Insurance Commissioners) shall have been
obtained for each Series of Notes to be issued on the applicable Closing Day.

 

4B(8)   Proceedings and Documents.  All corporate, organizational and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to each Purchaser purchasing Notes on the applicable Closing Day
and its special counsel, and each such Purchaser and its U.S. and Canadian
special counsel shall have received all such counterpart originals or certified
or other copies of such documents as such Purchaser or such counsel may
reasonably request.

 

5                                        REPRESENTATION
AND WARRANTIES OF THE COMPANY.

 

The
Company represents and warrants to each Purchaser that:

 

9

 

5.1       Organization; Power and Authority.

 

Each
Credit Party is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to
be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Each Credit Party has the requisite power and
authority to own or hold under lease the Properties it purports to own or hold
under lease, to transact the business it transacts and proposes to transact, to
execute and deliver the Transaction Documents to which it is a party and to
perform the provisions of such Transaction Documents.  The Company is organized in conformity with
the requirements for qualification as a REIT under the Code, and its method of
operation enables it to meet the requirements for qualification and taxation as
a REIT under the Code.

 

5.2       Authorization, etc.

 

This
Agreement, the Notes and the other Transaction Documents to which any Credit
Party is a party have been duly authorized by all necessary action on the part
of such Credit Party, and each of this Agreement and such other Transaction
Documents (other than the Notes) constitutes, and upon execution and delivery
thereof each Note will constitute, a legal, valid and binding obligation of
each Credit Party that is party to such Transaction Document enforceable
against such Credit Party in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors’
rights generally, and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

 

5.3       Disclosure.

 

Neither
this Agreement nor any other document, certificate or statement furnished to
PIM by or on behalf of the Company or the other Credit Parties in connection
herewith, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading in light of the circumstances under which they were
made, PIM acknowledging that as to any projections furnished to PIM, the
Company only represents that the same were prepared on the basis of information
and estimates the Company believed to be reasonable at the time of the
preparation and delivery thereof.  There
is no fact known to the Company or any other Credit Party that could reasonably
be expected to have a Material Adverse Effect that has not been set forth
herein or in the other documents, certificates and other writings (including
the Company’s most recent reports on Form 10-Q and Form 10-K and the Company’s
reports on Form 8-K filed during the period from January 1, 2010 through the
date hereof) delivered to PIM by or on behalf of the Company or the other
Credit Parties.  Since the date of the
most recent audited balance sheet delivered pursuant to Section 7.1(b), or if
no such balance sheet has been delivered, the most recent audited balance sheet
referred to in Section 5.5, there has been no change in the financial
condition, operations, business, Properties or prospects of the Company or any
Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the other documents, certificates and other writings
delivered to PIM by or on behalf of the Company or the other Credit Parties.

 

10

 

5.4       Organization
and Ownership of Equity in Subsidiaries; Affiliates.

 

(a)        Schedule 5.4
contains complete and correct lists as of the Series A Closing Day (and as of
the date such Schedule is updated from time to time as provided in Section
7.1(d)) (i) of each of the Subsidiaries of the Company, showing, as to each
such Person, the correct name thereof, the jurisdiction of its organization,
the percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company 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 or units of each class issued and
outstanding, (ii) of each of the Company’s Affiliates, other than such Person’s
Subsidiaries and other than the other Credit Parties, and (iii) of the
Company’s directors and senior officers.

 

(b)        All of the outstanding shares of capital
stock or similar equity interests of each Subsidiary shown in Schedule 5.4
as being owned by the Company and its Subsidiaries have been validly issued,
are fully paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien except as disclosed on Schedule 5.4.

 

(c)        Each Subsidiary (other than the Credit
Parties) is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal entity
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  Each such Subsidiary has the corporate or
other power and authority to own or hold under lease the Properties it purports
to own or hold under lease and to transact business it transacts and proposes
to transact.

 

(d)        No Subsidiary is a party to, or
otherwise subject to any legal, regulatory, contractual or other restriction
(other than this Agreement, the agreements listed on Schedule 5.4 and
customary limitations imposed by corporate law or similar statutes) restricting
the ability of such Subsidiary to pay dividends out of profits or make any
other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.

 

5.5       Financial Statements.

 

The
Company has furnished each Purchaser of the Series A Notes and any Accepted
Notes with the following financial statements: 
(i) consolidated balance sheets of the Company and its Subsidiaries as
of December 31, 2007, 2008 and 2009 and as of the last day in each of the
fiscal years completed thereafter and prior to the date as of which this
representation is made or repeated to such Purchaser (other than fiscal years
completed within 90 days prior to such date for which audited financial
statements have not been released), and consolidated statements of income,
retained earnings and cash flows of the Company and its Subsidiaries for each
such year, all certified by independent certified public accountants of
recognized international standing; and (ii) unaudited consolidated balance
sheets of the Company and its Subsidiaries as at the end of the quarterly
period (if any) most recently completed prior to such date and after the 

 

11

 

end
of the most recent fiscal year (other than quarterly periods completed within
45 days prior to such date for which financial statements have not been
released) and the most recently completed fiscal year end and unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for the periods from the beginning of the fiscal years in which
such quarterly periods are included to the end of such quarterly periods and
the comparable quarterly period in the immediately preceding fiscal year.  Such financial statements (including any
related schedules and/or notes) have been prepared in accordance with GAAP
(subject, as to interim statements, to changes resulting from year-end
adjustments) consistently applied throughout the periods involved and show all
liabilities, direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles.  The balance sheets fairly present in all
material respects the consolidated financial condition of the Company and its
Subsidiaries as at the dates thereof, and the statements of income, retained
earnings and cash flows fairly present the consolidated financial results of
their operations for the periods indicated. 
The Company and its Subsidiaries do not have any Material liabilities
that are not disclosed on such financial statements or otherwise disclosed in
writing to the Purchasers.  No event has
occurred since the end of the most recent fiscal year for which such audited
financial statements have been furnished which has had or could reasonably be
expected to have a material adverse effect on the condition (business,
financial or otherwise), results of operations, assets, liabilities or
prospects of the Company or any of its Subsidiaries.

 

5.6       Compliance with Laws; Other Instruments,
etc.

 

The
execution, delivery and performance by each Credit Party of the Transaction
Documents to which it is a party will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any Lien in
respect of any Property of any Credit Party or any of its Subsidiaries under,
any indenture, mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate charter (or similar constitutive documents) or bylaws (or
similar documents), or any other agreement or instrument to which any Credit
Party or any of its Subsidiaries is bound or by which any Credit Party or any
of its Subsidiaries or any of their respective Properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to any Credit Party or
any of its Subsidiaries, or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to any Credit Party
or any of its Subsidiaries.

 

Neither
the Company 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.

 

5.7       Governmental Authorizations, etc.

 

No
consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the execution,
delivery or performance by any Credit Party of this Agreement, the Notes or the
other Transaction Documents to which such Person is a party.

 

12

 

5.8       Litigation;
Observance of Agreements, Statutes and Orders.

 

(a)        There are no actions,
suits, investigations or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any Property of the Company or any of its Subsidiaries in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

(b)        Neither the Company nor any Subsidiary
is in default under any term of any agreement or instrument to which it is a
party or by which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws or the USA Patriot Act) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

5.9       Taxes.

 

Each
of the Company 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 by such Person (giving effect to permitted extensions) and has paid all
taxes shown thereon to be due (giving effect to permitted extensions),
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.

 

5.10     Title to Property; Leases.

 

(a)        The Company and its Subsidiaries have
good and sufficient title to their respective Properties (other than Properties
which are leased) that individually or in the aggregate are Material, including
all such Properties reflected in the most recent audited balance sheet
delivered pursuant to Section 7.1(b), or if no such balance sheet has been
delivered, the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Subsidiary after said
date (except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by this Agreement.

 

(b)        Schedule 5.10(b) identifies, as
of the Series A Closing Day (and as of the date such Schedule is updated from
time to time as provided in Section 7.1(d)), the Properties which are included
in the computation of the Borrowing Base (separately identifying each Qualified
Ground Lease, the Borrowing Base Value for each such Property, whether each
such Property was then owned more or less than four quarters, and such other
information as would permit a determination to be made as to whether or not
each such Property is an Eligible Property and whether or not such Properties,
taken as a whole, satisfy the Borrowing Base Requirements).  Each of such Properties qualifies as an
Eligible Property and such Properties, taken as a whole, satisfy the Borrowing
Base Requirements to the extent required by Section 10.11(a).

 

13

 

(c)        Schedule 5.10(c) identifies, as
of the Series A Closing Day (and as of the date such Schedule is updated from
time to time as provided in Section 7.1(d)), each Significant Lease, the
Property which is demised pursuant to each Significant Lease and the name of
each landlord and lessee under each Significant Lease.  Except as set forth on Schedule 5.10(c),
as of the Series A Closing Day (and as of the date such Schedule is updated
from time to time as provided in Section 7.1(d)):  (x) none of the tenants under Significant
Leases on Properties owned by the Company, Material Subsidiaries or any other
Subsidiary of the Company was (as of such date or at any other time during the
Fiscal Quarter beginning immediately prior to such date) in default for a
period in excess of 60 days on the monthly minimum rent payments due under such
Significant Leases, and (y) no other tenants on other Leases that in the
aggregate generate more than $4,000,000 in annual contractual rents payable to
the Company or its Subsidiaries were (as of such date or at any other time
during the Fiscal Quarter beginning immediately prior to such date) in default
for a period in excess of 60 days on the monthly minimum rent payments due
under such Leases.

 

5.11     Licenses, Permits, etc.

 

(a)        The Company and its Subsidiaries own or
possess all licenses, permits, franchises, authorizations, patents, copyrights,
proprietary software, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
conflict with the rights of others.

 

(b)        To the best knowledge of the Company, no
product of the Company or any of its Subsidiaries infringes in any material
respect any license, permit, franchise, authorization, patent, copyright,
proprietary software, service mark, trademark, trade name or other right owned
by any other Person.

 

(c)        To the best knowledge of the Company,
there is no Material violation by any Person of any right of the Company or any
of its Subsidiaries with respect to any patent, copyright, proprietary
software, service mark, trademark, trade name or other right owned or used by
the Company or any of its Subsidiaries.

 

5.12     Compliance with ERISA.

 

(a)        The Company, each Subsidiary and each
ERISA Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse
Effect.  None of the Company, any
Subsidiary or any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and
no event, transaction or condition has occurred or exists that could reasonably
be expected to result in the incurrence of any such liability by the Company,
any Subsidiary or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company, any Subsidiary or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or pursuant to section 4068 of ERISA or
the Pension Funding Rules, other than such liabilities or Liens as would not be
individually or in the aggregate Material.

 

14

 

(b)        The present value of the aggregate
benefit liabilities under each of the Plans (other than Multiemployer Plans),
determined as of the end of such Plan’s most recently ended plan year on the
basis of the actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities.  The term “benefit liabilities” has the meaning specified in
section 4001 of ERISA and the terms “current value” and
“present value” have the meaning
specified in section 3 of ERISA. 
Following the effective date of the Pension Act, for any Plan which is
subject to the Pension Funding Rules, the funding target attainment percentage,
within the meaning of Section 303 of ERISA or Section 430 of the Code, for such
Plan is not less than 100%.

 

(c)        The Company, the Subsidiaries and its
ERISA Affiliates have not incurred withdrawal liabilities (and are not subject
to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA
in respect of Multiemployer Plans that individually or in the aggregate are
Material.

 

(d)        The expected postretirement benefit
obligation (determined as of the last day of the Company’s most recently ended
fiscal year in accordance with Financial Accounting Standards Board Statement
No. 106, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries is
not Material.

 

(e)        The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or
in connection with which a tax could be imposed pursuant to
section 4975(c)(1)(A)-(D) of the Code. 
The representation by the Company to each Purchaser in the first
sentence of this Section 5.12(e) is made in reliance upon and subject to the
accuracy of such Purchaser’s representation in Section 6.2 as to the sources of
the funds used to pay the purchase price of the Notes to be purchased by such
Purchaser.

 

5.13     Private Offering.

 

Neither
the Company nor anyone acting on its behalf has offered the Notes or any
similar securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, any Person
other than the Purchasers, each of which has been offered the Notes at a
private sale for investment.  Neither the
Company nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act or the registration
requirements of any securities or blue sky laws of any applicable jurisdiction.

 

5.14     Use of Proceeds; Margin Regulations.

 

The
Company will apply the proceeds of the sale of (i) the Series A Notes to
refinance existing indebtedness, for acquisitions, for capital expenditures,
for working capital and for other general corporate purposes, and (ii) each
Series of Shelf Notes in the manner described in the applicable Request for
Purchase with respect to such Series of Shelf Notes.  None of the proceeds of the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any 

 

15

 

securities
under such circumstances as to involve the Company in a violation of Regulation
X of said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220). 
Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does
not have any present intention that margin stock will constitute more than 5%
of the value of such assets.  As used in
this Section, the terms “margin stock”
and “purpose of buying or carrying” shall
have the meanings assigned to them in said Regulation U.

 

5.15     Existing Debt; Liens.

 

(a)        Except as described therein, Schedule
5.15 sets forth a complete and correct list as of the Series A Closing Day
of all outstanding Indebtedness for Borrowed Money of the Company and its
Subsidiaries as of June 30, 2010 (including a description of the obligors and
obligees, principal amount outstanding and collateral therefor, if any, and
Guaranties thereof, if any), since which date there has been no Material change
in the amounts, interest rates, sinking funds, installment payments or
maturities of the Indebtedness for Borrowed Money of the Company or any of its
Subsidiaries.  Neither the Company nor
any Subsidiary is in default and no waiver of default is currently in effect,
in the payment of any principal or interest on any Indebtedness for Borrowed Money
of the Company or such Subsidiary and no event or condition exists with respect
to any Indebtedness for Borrowed Money of the Company or any Subsidiary that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness for Borrowed Money to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.

 

(b)        Neither the Company nor any Subsidiary
has agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.1.

 

(c)        As of the Series A Closing Day, neither
the Company nor any Subsidiary is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Indebtedness for Borrowed
Money of the Company or such Subsidiary, any agreement relating thereto or any
other agreement (including, but not limited to, its charter or other organizational
document) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Indebtedness for Borrowed Money of the Company or any Subsidiary,
except as specifically indicated in Schedule 5.15.

 

5.16     Foreign Assets Control Regulations, etc.

 

(a)        Neither
the sale of the Notes by the Company hereunder nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.

 

(b)        Neither
the Company nor any Subsidiary (i) is a Person described or designated in the
Specially Designated National and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti-Terrorism Order, or (ii) engages in
any dealings or transactions with any such Person.  The Company and its Subsidiaries are in
compliance, in all material respects, with the USA Patriot Act.

 

16

 

(c)        No
part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as amended,
assuming in all cases that such act applies to the Company.

 

5.17     Status under Certain Statutes.

 

Neither
the Company nor any of its Subsidiaries is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility Holding Company
Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the
Federal Power Act, as amended.

 

5.18     Environmental Matters.

 

(a)        Neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage
to the environment or violation of any Environmental Laws, except, in each
case, such as could not reasonably be expected to result in a Material Adverse
Effect.

 

(b)        Neither the Company nor any Subsidiary
has knowledge of any claim or has knowledge that any of its tenants has
received any notice of any claim, and neither the Company nor any Subsidiary
has knowledge that any proceeding has been instituted raising any claim against
any tenant of the Company or its Subsidiaries with respect to their use of any
real properties or other assets now or formerly owned, leased or operated by
any of the Company or its Subsidiaries, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.

 

(c)        Neither the Company nor any Subsidiary
has knowledge of any facts which would give rise to any claim, public or
private, of violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or their
use, except, in each case, such as could not reasonably be expected to result
in a Material Adverse Effect.

 

(d)        Neither the Company nor any Subsidiary
has, and to the knowledge of the Company and its Subsidiaries none of its
tenants has, stored any material quantities of Hazardous Materials on real
properties now or formerly owned, leased or operated by any of the Company or
its Subsidiaries; and neither the Company nor any Subsidiary has, and to the
knowledge of the Company and its Subsidiaries none of its tenants or any other
Person has, disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect;

 

17

 

(e)        To the knowledge of the Company and its
Subsidiaries, the tenants of the Company and its Subsidiaries have obtained all
governmental approvals required for the operation of the Properties under
applicable Environmental Laws, except such as could not reasonably be expected
to result in a Material Adverse Effect; and

 

(f)         To the knowledge of the Company, all
buildings on all real properties now owned, leased or operated by the Company
or any Subsidiary are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to result in a
Material Adverse Effect.

 

5.19     Stock of the Company.

 

As
of the Series A Closing Day, the entire outstanding capital stock of the
Company consists of:  (i) Series C
Cumulative Convertible Preferred Stock, 2,000,000 shares outstanding; (ii)
Series E Cumulative Convertible Preferred Stock, 37,816 shares outstanding;
(iii) Series F Cumulative Preferred Stock, 5,894,216 shares outstanding; and
(iv) Common Stock, 23,799,484 shares outstanding.

 

5.20     Condition of Property; Casualties;
Condemnation.

 

As
of the Series A Closing Day, to the knowledge of the Company 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 knowledge of the
Company or of any of its 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
Effect, are pending and served nor, to the knowledge of the Company, threatened
against any Property owned by it or any of its Subsidiaries in any manner
whatsoever.  No casualty has occurred to
any such Property that could reasonably be expected to have a Material Adverse
Effect.

 

5.21     Legal Requirements and Zoning.

 

To
the knowledge of the Company and its Subsidiaries, the use and operation of
each Property owned by the Company or 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).

 

5.22     Qualified Ground Leases.

 

The
only material leases of Eligible Properties for which either the Company 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.

 

18

 

5.23     Solvency.

 

The
Company and each of 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.

 

5.24     Hostile Tender Offers.  None
of the proceeds of the sale of any Notes will be used to finance a Hostile
Acquisition.

 

6                                        REPRESENTATIONS
OF THE PURCHASERS.

 

6.1       Purchase for Investment.  Each
Purchaser severally represents that it is purchasing the Notes for its own
account or for one or more separate accounts maintained by such Purchaser or
for the account of one or more pension or trust funds and not with a view to
the distribution thereof, provided that the disposition of such
Purchaser’s or their property shall at all times be within such Purchaser’s or
their control.  Each Purchaser
understands that the Notes have not been registered under the Securities Act
and may be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.

 

6.2       Source of Funds.

 

Each Purchaser
severally represents that at least one of the following statements is an
accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to
pay the purchase price of the Notes to be purchased by such Purchaser
hereunder:

 

(a)        the Source is an “insurance company
general account” (as the term is defined in the United States Department of
Labor’s Prohibited Transaction Exemption (“PTE”)
95-60) in respect of which the reserves and liabilities (as defined by the
annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the “NAIC
Annual Statement”)) for the general account contract(s) held by or
on behalf of any employee benefit plan together with the amount of the reserves
and liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or

 

(b)        the Source is a separate account that is
maintained solely in connection with such Purchaser’s fixed contractual
obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment performance of the
separate account; or

 

19

 

(c)        the Source is either (i) an insurance
company pooled separate account, within the meaning of PTE 90-1, or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 and, except as
disclosed by such Purchaser to the Company in writing pursuant to this clause
(c), no employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment fund; or

 

(d)        the Source constitutes assets of an
“investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan’s assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by
the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and (g)
of the QPAM Exemption are satisfied, as of the last day of its most recent
calendar quarter, neither the QPAM nor a person controlling or controlled by
the QPAM (applying the definition of “control” in Section V(e) of the QPAM
Exemption) owns a 10% or more interest in the Company and (i) the identity of
such QPAM, and (ii) the names of all employee benefit plans whose assets
managed by the QPAM in the investment fund, when combined with the assets of
other plans established or maintained by the same employer (or affiliate
thereof described in Section V(c)(1) of the QPAM Exemption) or by the same
employee organization, represent 10% or more of the assets of the investment
fund have been disclosed to the Company in writing pursuant to this clause (d);
or

 

(e)        the Source constitutes assets of a
“plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house
asset manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5%
or more interest in the Company and (i) the identity of such INHAM, and (ii)
the name(s) of the employee benefit plan(s) whose assets constitute the Source
have been disclosed to the Company in writing pursuant to this clause (e); or

 

(f)         the Source is a governmental plan; or

 

(g)        the Source is one or more employee
benefit plans, or a separate account or trust fund comprised of one or more
employee benefit plans, or one or more plans, within the meaning of Section
4975 of the Code, each of which has been identified to the Company in writing
pursuant to this clause (g); or

 

(h)        the Source does not include the “plan
assets,” within the meaning of Department of Labor Regulations Section
2510.3-101, as modified by Section 3(42) of ERISA, of any employee benefit plan
subject to the fiduciary responsibility provisions of Title I of ERISA or of
any plan to which Section 4975 of the Code applies.

 

As
used in this Section 6.2, the terms “employee benefit plan”, “governmental
plan”, and “separate account” shall have the respective meanings assigned to
such terms in Section 3 of ERISA.

 

20

 

7                                        INFORMATION
AS TO THE COMPANY.

 

The
Company covenants that during the Issuance Period and so long thereafter as any
Notes remain outstanding or any amounts owing under the Transaction Documents
remain unpaid:

 

7.1       Financial and Business Information.  The Company shall deliver to each holder of
Notes that is an Institutional Investor:

 

(a)        Quarterly Statements
— 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 Company a
copy of the consolidated balance sheet of the Company and its Subsidiaries as
of the last day of such Fiscal Quarter and the consolidated statements of
income and cash flows of the Company and its Subsidiaries for such 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 Company in accordance with GAAP
and certified to by its chief financial officer or another officer of the
Company acceptable to the Required Holders (the filing within the time period
specified above of the Company’s Form 10-Q for such Fiscal Quarter on the EDGAR
system shall satisfy this requirement);

 

(b)        Annual Statements
— as soon as available, and in any event within 90 days after the end of each
Fiscal Year of the Company, duplicate copies of

 

(i)                                   a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such year, and

 

(ii)                                consolidated
statements of income, changes in stockholders’ equity and cash flows of the
Company and its Subsidiaries for such year,

 

setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that the examination
of such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances,

 

provided that the filing within the time
period specified above of the Company’s Form 10-K for such Fiscal Year
(together with the Company’s annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act, provided that such
annual report need not be filed until required to be filed pursuant to SEC
requirements) prepared in accordance with the requirements therefor and filed
with the SEC shall be deemed to satisfy the requirements of this
Section 7.1(b);

 

21

 

(c)        Quarterly Borrowing Base
Certificates — during such times as Section 10.11 shall be operative
in accordance with the terms hereof, as soon as available, and in any event
within 50 days after the last day of each Fiscal Quarter (except for the fourth
Fiscal Quarter, in which event it shall be on the 60th day following the last
day such 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 Company and certified by a Senior
Financial Officer;

 

(d)        Quarterly Operating
Reports — within 45 days after the last day of each of the first
three Fiscal Quarters and within 90 days after the last day of the fourth
Fiscal Quarter of the year:  (i) a list
(a) 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 5.4 hereto and upon receipt of which Schedule 5.4 shall be
deemed amended to include references to such Subsidiaries), and (b) identifying
any Subsidiary whose capital stock or other equity interests were transferred
during such quarter as permitted by Section 10.4(c), together with the name of
the transferor and transferee thereof; (ii) a list of newly executed Qualified
Ground Leases or Significant Leases during such quarter (upon receipt of which,
Schedule 5.10(b) and/or Schedule 5.10(c) 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 Company 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 Company 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;

 

(e)        Annual Projections
— as soon as available, and in any event within 90 days after the last day of
each Fiscal Year of the Company, a copy of the Company’s consolidated
projections of revenues, expenses and balance sheet on a quarter-by-quarter
basis, with such projections in reasonable detail prepared by the Company and
in form satisfactory to the Required Holders (which shall include a summary of
all significant assumptions made in preparing such business plan);

 

(f)         SEC and Other Reports
— promptly upon their becoming available, (i) one copy of each financial
statement, report or notice sent by the Company or any Subsidiary to its
principal lending banks as a whole (including, without limitation, each
Borrowing Base Certificate, but excluding any other information sent to such
banks in the ordinary course of administration of a bank facility, such as
information relating to pricing and borrowing availability), and (ii) each
report on Form 8-K (or any similar successor form) and all amendments thereto
(which documents may be delivered by email) filed by the Company or any
Subsidiary with the SEC;

 

22

 

(g)        Notice of Default or Event
of Default — promptly, and in any event within five days after a
Responsible Officer becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any action with
respect to a claimed default hereunder or that any Person has given any notice
or taken any action with respect to a claimed default of the type referred to
in Section 11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take
with respect thereto;

 

(h)        Notices from Governmental
Authority — promptly, and in any event within 30 days of receipt
thereof, copies of any notice to the Company or any Subsidiary from any federal
or state Governmental Authority relating to any order, ruling, statute or other
law or regulation that could reasonably be expected to have a Material Adverse Effect;

 

(i)         Other Notices —
promptly after knowledge thereof shall have come to the attention of any
Responsible Officer of the Company, written notice of (i) any threatened or
pending litigation or governmental or arbitration proceeding or labor
controversy against the Company or any Subsidiary which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect, or
(ii) during such times as Section 10.11 shall be operative in accordance with
the terms hereof, if a Lease of any Property included in the Borrowing Base
Value is more than thirty (30) days past due;

 

(j)         ERISA Matters —
promptly, and in any event within five days after a Responsible Officer
becoming aware of any of the following, a written notice setting forth the
nature thereof and the action, if any, that the Company or an ERISA Affiliate
proposes to take with respect thereto:

 

               (i)      with respect to any Plan, any reportable
event, as defined in section 4043(c) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or

 

              (ii)      the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multi-employer Plan that such action has been
taken by the PBGC with respect to such Multi-employer Plan; or

 

            (iii)       any event, transaction or condition that
could result in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to have a
Material Adverse Effect; and

 

23

 

(k)        Requested Information
— with reasonable promptness, such other data and information relating to the
business, operations, affairs, financial condition, assets or properties of the
Company or any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to time may
be reasonably requested by any such holder of Notes.

 

7.2       Officer’s Certificate. 
Each set of financial statements delivered to a holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate
of a Senior Financial Officer setting forth:

 

(a)        Covenant Compliance
— the information (including detailed calculations) required in order to
establish whether the Company was in compliance with the requirements of
Section 10.2, Section 10.3, Section 10.10 and Section 10.11 during the
quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, (i) the
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Sections, and the calculation of
the amount, ratio or percentage then in existence, and (ii) a reconciliation
from GAAP, as reflected in the statements then being furnished, to the
calculation of the financial covenants in Section 10.2, Section 10.3, Section
10.10 and Section 10.11, after giving effect to the exclusion from GAAP of the
effects of Accounting Standards Codification 825-10-25 (previously referred to
as SFAS 159) or any successor or similar provision to the extent it relates to
“fair value” accounting for liabilities); and

 

(b)        Event of Default
— a statement that such Senior Financial Officer has reviewed the relevant
terms hereof and has made, or caused to be made, under his or her supervision,
a review of the transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition or
event existed or exists (including, without limitation, any such event or
condition resulting from the failure of the Company or any Subsidiary to comply
with any Environmental Law), specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to take with
respect thereto.

 

7.3       Visitation.  The Company shall permit the representatives
of each holder of Notes that is an Institutional Investor:

 

(a)        No Default — if
no Default or Event of Default then exists, at the expense of such holder and
upon reasonable prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the Company’s officers, and (with the consent
of the Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company, which
consent will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable times and
as often as may be reasonably requested in writing; and

 

24

 

(b)        Default — if a
Default or Event of Default then exists, at the expense of the Company to visit
and inspect any of the offices or properties of the Company or any Subsidiary,
to examine all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company and
its Subsidiaries), all at such times and as often as may be requested.

 

8                                        PREPAYMENT
OF THE NOTES.

 

The
Series A Notes and any Shelf Notes shall be subject to required prepayment as
and to the extent provided in Section 8.1. 
The Series A Notes and any Shelf Notes shall also be subject to
prepayment under the circumstances set forth in Section 8.2.

 

8.1       Required Prepayments.

 

(a)        Series A-1 Notes.  As provided therein, the entire unpaid
principal balance of the Series A-1 Notes shall be due and payable on the
stated maturity date thereof.

 

(b)        Series A-2 Notes.  On January 14, 2014 and on each January 14
thereafter to and including January 14, 2018 the Company will prepay
$4,166,666.67 principal amount (or such lesser principal amount as shall then
be outstanding) of the Series A-2 Notes at par and without payment of the
Make-Whole Amount or any premium, provided that upon any partial
prepayment of the Series A-2 Notes pursuant to Section 8.2, the principal
amount of each required prepayment of the Series A-2 Notes becoming due under
this Section 8.1 on and after the date of such prepayment shall be reduced
in the same proportion as the aggregate unpaid principal amount of the Series
A-2 Notes is reduced as a result of such prepayment.

 

(c)        Shelf Notes.  Each Series of Shelf Notes shall be subject
to required prepayments, if any, set forth in the Notes of such Series; provided that upon any partial
prepayment of any Series of Shelf Notes pursuant to Section 8.2, the principal
amount of each required prepayment thereof becoming due on and after the date
of such partial prepayment shall be reduced in the same proportion as the
aggregate principal amount of such Series of Shelf Notes is reduced as a result
of such prepayment.

 

8.2       Optional
Prepayments with Make-Whole Amount.

 

The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes of any Series (to the
exclusion of all other Series), in an amount not less than $1,000,000 (and
increments of $100,000 in excess thereof) of the aggregate principal amount of
the Notes of such Series then outstanding in the case of a partial prepayment,
or such lesser principal amount of the Notes of such Series as shall then be outstanding,
at 100% of the principal amount so prepaid, plus interest thereon to the
prepayment date and the Make-Whole Amount determined for the prepayment date
with respect to such principal amount. 
The Company will give each holder of Notes of such Series written notice
of each optional prepayment under this Section 8.2 not less than 5 Business
Days and not more than 60 days prior to the date (which shall be a Business
Day) fixed for such prepayment.  Each
such notice shall specify such date, the Series of Notes to be prepaid, the
aggregate principal amount of such Notes to be prepaid on such date, the
principal amount of each Note of such Series held by the registered holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being
prepaid.

 

25

 

8.3       Allocation of Partial Prepayments.

 

In
the case of each partial prepayment of the Notes of each Series under Section
8.1(b) or Section 8.2, the principal amount prepaid shall be allocated among
the Notes of such Series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
prepaid.

 

8.4       Maturity; Surrender, etc.

 

In
the case of each prepayment of Notes pursuant to this Section 8, the principal
amount of each Note to be prepaid shall mature and become due and payable on
the date fixed for such prepayment (which shall be a Business Day), together
with interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any.  From and
after such date, unless the Company shall fail to pay such principal amount
when so due and payable, together with the interest and Make-Whole Amount, if
any, as aforesaid, interest on such principal amount shall cease to
accrue.  Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid principal amount of any
Note.

 

8.5       Purchase of Notes.

 

The
Company will not, and will not permit any Affiliate to, purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes of any Series except (i) upon the payment or prepayment of the Notes of
such Series in accordance with the terms of this Agreement and the Notes of
such Series, or (ii) pursuant to a written offer to purchase any outstanding
Notes of such Series made by the Company or an Affiliate pro rata to the holders
of all Notes of such Series at the time outstanding upon the same terms and
conditions.  The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement,
and no Notes may be issued in substitution or exchange for any such Notes.

 

8.6       Make-Whole Amount.

 

The
term “Make-Whole Amount” means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal; provided that the Make-Whole
Amount may in no event be less than zero. 
For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:

 

“Called Principal”
means, with respect to any Note, the principal of such Note that is to be
prepaid pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.

 

26

 

“Discounted Value”
means, with respect to the Called Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted financial
practice and at a discount factor (applied on the same periodic basis as that
on which interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.

 

“Reinvestment Yield”
means, with respect to the Called Principal of any Note, 0.50% over the yield
to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City
local time) on the Business Day next preceding the Settlement Date with respect
to such Called Principal, for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date on the display designated as “Page PX1” on Bloomberg
Financial Markets (“Bloomberg”)
(or, if Bloomberg shall cease to report such yields on Page PX1 or shall cease
to be PIM’s customary source of information for calculating make-whole amounts
on privately placed notes, then such source as is then PIM’s customary source
of such information), or if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the second Business Day next
preceding the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date.  Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice, and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the maturity closest to and greater than the Remaining
Average Life of such Called Principal, and (2) the actively traded U.S.
Treasury security with the maturity closest to and less than the Remaining
Average Life of such Called Principal. 
The Reinvestment Yield shall be rounded to the number of decimal places
as appears in the interest rate of the applicable Note.

 

“Remaining Average
Life”  means, with respect to
any Called Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b) the
number of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled
Payments” means, with respect to the Called Principal of any Note,
all payments of such Called Principal and interest thereon that would be due
after the Settlement Date with respect to such Called Principal if no payment
of such Called Principal were made prior to its scheduled due date; provided that if such Settlement
Date is not a date on which interest payments are due to be made under the
terms of the Notes, then the amount of the next succeeding scheduled interest
payment will be reduced by the amount of interest accrued to such Settlement
Date and required to be paid on such Settlement Date pursuant to Section 8.2 or
Section 12.1.

 

27

 

“Settlement Date”
means, with respect to the Called Principal of any Note, the date on which such
Called Principal is to be prepaid pursuant to Section 8.2, or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.

 

9                                        AFFIRMATIVE
COVENANTS

 

The
Company covenants that during the Issuance Period and for so long thereafter as
any of the Notes are outstanding or any amounts owing under the Transaction
Documents remain unpaid:

 

9.1       Compliance with Law.  (a)  Without limiting Section 10.13,
the Company will, and will cause each of its Subsidiaries to, comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, ERISA, the USA Patriot Act and
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective Properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(b)  Without
limiting the agreements set forth in Section 9.1(a) above, for each of its
owned Properties, respectively, the Company will, and will cause each of its
Subsidiaries 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.

 

9.2       Insurance.  The Company will, and will cause each of its
Subsidiaries to, maintain and cause their respective tenants to maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.

 

9.3       Maintenance of Properties.  The Company will, and will cause each of its
Subsidiaries to, maintain and keep, or cause to be maintained and kept
(including, without limitation, by their respective tenants), their respective
Properties in good repair, working order and condition (other than ordinary
wear and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its Properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

28

 

9.4       Payment of Taxes and Claims.  The Company and Credit Parties will cause
each of their respective tenants to duly pay and discharge, all taxes, rates,
assessments, fees, and governmental charges upon or against it or its Property
relating to such 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.

 

The Company will, and will cause each of its Subsidiaries to, file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
Properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on Properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is
contested by the Company or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary, or (ii) the nonpayment of all such taxes, assessments
and claims in the aggregate could not reasonably be expected to have a Material
Adverse Effect.

 

9.5       Maintenance of Existence, Etc.  Subject to Section 10.3, the Company will at
all times preserve and keep in full force and effect its corporate or similar
existence and the corporate or similar existence of each of its Subsidiaries
(unless merged into the Company or a Wholly-Owned Subsidiary) and all rights
and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.

 

9.6       Books and Records.  The Company will, and will cause each of its
Subsidiaries to, maintain proper books of record and account in conformity with
GAAP and all applicable requirements of any Governmental Authority having legal
or regulatory jurisdiction over the Company or such Subsidiary, as the case may
be.

 

9.7       Maintenance of REIT Status.  The Company will, at all times, conduct its
affairs and the affairs of its Subsidiaries in a manner so as to continue to
qualify as a REIT and elect to be treated as a REIT under all applicable laws,
rules and regulations.

 

9.8       Listing of Common Stock; Filing of
Reports.  The
Company will (i) at all times cause its common stock to be duly listed on the
New York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers Automated Quotation or other national stock
exchange, and (ii) timely file all reports required to be filed by it with the
New York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers Automated Quotation and the Securities and
Exchange Commission.

 

29

 

9.9       Additional Guarantors.  Concurrent with any Person becoming a
guarantor or other obligor under the Credit Agreement or any other Principal
Credit Facility, the Company shall cause such Person to execute and deliver a
Joinder to Multiparty Guaranty, together with such other instruments,
documents, certificates, and opinions reasonably required by the Required
Holders in connection therewith.

 

9.10     Borrowing Base-Related Provisions.  Upon not less than 10 Business Days’ prior
written notice from the Company to the holders of Notes, the Company may
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, the Company’s certification
in such detail as reasonably required by the Required Holders 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 Company 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
Holders.

 

Notwithstanding
anything contained in this Agreement to the contrary, the Required Holders in
their reasonable discretion may (a) at the Company’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 Company, 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 Company can satisfy those
requirements deemed unsatisfied by the Required Holders, 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 the Multiparty Guaranty
if it is concurrently released from its obligations under the corresponding
guaranty in respect of the Credit Agreement and any and all other Principal
Credit Facilities.

 

9.11     Information Required by Rule 144A.  Upon the request of the holder of any Note,
the Company will promptly provide to such holder, and to any Qualified
Institutional Buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act.

 

10                                NEGATIVE
COVENANTS.

 

The
Company covenants that, during the Issuance Period and for so long thereafter
as any of the Notes are outstanding or any amounts owing under the Transaction
Documents remain unpaid:

 

30

 

10.1     Liens, Etc.  The Company will 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.  Without limitation of the immediately
preceding sentence, the Company will not permit any Principal Credit Facility
(including the Credit Agreement) to be secured by any consensual Lien unless
the Notes are simultaneously secured pursuant to terms and provisions,
including an intercreditor agreement, satisfactory to the Required Holders.

 

10.2     Investments, Acquisitions, Loans and
Advances.  The
Company will not, nor will it permit any Subsidiary to, directly or indirectly,
make, retain or have outstanding any investments (consisting of loans,
advances, capital contributions or investments in debt or equity securities) 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 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 (as defined in the Credit Agreement) 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 Company’s investments from time to
time in its Subsidiaries, and investments made from time to time by a
Subsidiary in one or more of its Subsidiaries;

 

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

 

(h)        investments in Permitted Acquisitions;

 

(i)         investments held by the Company and its
Subsidiaries as of the date of this Agreement and disclosed in Schedule 10.2;

 

31

 

(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
10.2 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 as of or prior to the date of
this Agreement and disclosed on Schedule 10.2;

 

(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 as of or prior to the date of this Agreement
and disclosed on Schedule 10.2;

 

(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 as of or prior to the
date of this Agreement and disclosed on Schedule 10.2;

 

(o)        investments in REMICs pertaining to
issues for which the Company 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 REMICs of the Company existing as of or prior to the
date of this Agreement and disclosed on Schedule 10.2;

 

(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 Company as of or prior to the date of
this Agreement and disclosed on Schedule 10.2; and

 

(q)        investments received in connection with
a workout of any obligation owed to the Company 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.

 

10.3     Mergers, Consolidations and Sales.  The Company 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 Company may merge or consolidate with another Person, including a
Subsidiary, if (A) the Company is the surviving corporation, (B) the Company
will be in pro forma compliance with all provisions of this Agreement upon and
after such merger or consolidation, and (C) the Company will not engage in any
material line of business substantially different from that engaged in on the
Series A Closing Day and; provided  further, that so long as no
Default or Event of Default exists this Section shall not apply to nor operate
to prevent:

 

32

 

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

 

(b)        the merger of any Subsidiary with and
into the Company or any other Subsidiary, provided that, in the case of
any merger involving the Company, the Company 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 Company 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 Company or any Subsidiary (including any
disposition of Property as part of a sale and leaseback transaction)
aggregating for the Company and its Subsidiaries not more than $100,000,000
during any fiscal year of the Company; provided, 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
Company in the aggregate exceed $50,000,000, then for such disposition(s) the
Company shall provide to the holders of Notes covenant calculations for the
covenants contained in Section 10.10, 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 Company 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 10.10 covenants
applicable to the Fiscal Quarter.

 

10.4     Maintenance of Subsidiaries.  The Company shall not assign, sell or
transfer, nor shall it permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock or other equity interests of a
Subsidiary; provided, however, that the foregoing shall not
operate to prevent (a) Liens on the capital stock or other equity interests of
Subsidiaries granted to a collateral agent for the benefit of the holders from
time to time of the Notes and the Lenders under the Credit Agreement (subject
to compliance with Section 10.1), (b) the issuance, sale, and transfer to any
person of any shares of capital stock of a Subsidiary solely for the purpose of
qualifying, and to the extent legally necessary to qualify, such person as a
director of such Subsidiary, and (c) any assignment, sale or transfer of the
shares of capital stock or other equity interests of a Subsidiary if the
conveyance, transfer, lease or other disposition of all of the assets of such
Subsidiary would be permitted by Sections 10.3(a), (b) or (d) above.

 

10.5     No Burdensome Contracts With Affiliates.  The Company 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 Company or such Subsidiary than
would be usual and customary in similar contracts, agreements or business
arrangements between Persons not affiliated with each other.

 

33

 

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

 

10.7     Change in the Nature of Business.  The Company will 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 Company and its Subsidiaries would be changed in
any material respect from the general nature of the business engaged in by it
as of the Series A Closing Day.  As of
the Series A Closing Day, the general nature of the business of the Company and
its Subsidiaries is primarily the business of the acquisition, financing and ownership
of Senior Housing Assets and other business activities incidental thereto.

 

10.8     Use of Proceeds of Notes.  The Company will not use the credit extended
under this Agreement for any purpose other than solely the purposes set forth
in, or otherwise contemplated by, Section 5.14 hereof.

 

10.9     No Restrictions.  Except as provided herein, the Company will
not, nor will 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 Company 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 Company or any other Subsidiary, (b) pay any indebtedness owed to the
Company or any other Subsidiary, (c) make loans or advances to the Company or
any other Subsidiary, (d) transfer any of its Property to the Company 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 evidenced by the Notes or under this
Agreement and/or grant Liens on its assets to a collateral Agent for the
benefit of the holders from time to time of the Notes and the Lenders under the
Credit Agreement as required by the Transaction Documents.

 

10.10   Financial Covenants.

 

(a)        Maximum Total Indebtedness
to Total Asset Value Ratio. 
As of the last day of each Fiscal Quarter of the Company, the Company
shall not permit the ratio of Total Indebtedness to Total Asset Value to be
greater than 0.50 to 1.00.

 

(b)        Maximum Secured Debt to
Total Asset Value Ratio.  As
of the last day of each Fiscal Quarter of the Company, the Company shall not
permit the ratio of Secured Debt to Total Asset Value to be greater than 0.35
to 1.00.

 

(c)        Minimum EBITDA to Interest
Expense Ratio.  As of the last
day of each Rolling Period of the Company, the Company shall not permit the
ratio of EBITDA to Interest Expense to be less than 2.50 to 1.00.

 

34

 

(d)        Minimum EBITDA to Fixed
Charges Ratio.  As of the last
day of each Rolling Period of the Company, the Company 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 Fiscal Quarter of the Company, the Company
shall not permit the ratio of Secured Recourse Debt to Total Asset Value to be
greater than 0.10 to 1.00.

 

(f)         Maintenance of Tangible
Net Worth.  The Company shall
not permit at any time Tangible Net Worth to be less than the sum of (a)
$368,000,000 plus (b) 80% of the aggregate net proceeds received by the
Company or any of its Subsidiaries after the Series A Closing Day in connection
with any offering of capital stock or other equity interests of the Company or
the Subsidiaries, but only to the extent that such net proceeds are not used to
redeem existing capital stock or other equity interests of the Company or the
Subsidiaries.

 

If at any time any of the Credit Agreement, or any agreement related to
the Credit Agreement or any Principal Credit Facility of the Company or any
Subsidiary, includes a tangible net worth or other net worth covenant or other
provision (regardless of how defined) which is more restrictive in any respect
than the covenant provided in the initial sentence of this Section 10.10(f),
then (a) such more restrictive provision shall immediately and automatically be
incorporated by reference in this Agreement as if set forth fully herein, mutatis mutandis, and no such provision may thereafter be
waived, amended or otherwise modified under this Agreement except pursuant to
the provisions of Section 17, and (b) the Company shall promptly, and in any
event within 5 days after entering into any such more restrictive provision, so
advise each holder of a Note in writing. 
Thereafter, upon the request of the Required Holders, the Company and
the Required Holders shall enter into an amendment to this Agreement evidencing
the incorporation of such more restrictive provision, it being agreed that any
failure to make such request or to enter into any such amendment shall in no
way qualify or limit the incorporation by reference described in clause (a) of
the immediately preceding sentence.

 

(g)        Floating Rate Debt.  On any date, the Company and its Subsidiaries
shall not, on a consolidated basis, have outstanding Indebtedness for Borrowed
Money that is neither at a fixed rate nor hedged pursuant to a derivative
contract greater than 40% of Total Asset Value.

 

(h)        Minimum TMVUA to Unsecured
Debt.  The Company shall not
permit the ratio of TMVUA, determined for the Rolling Period then or most
recently ended, to Unsecured Debt at any time to be less than 1.65:1.00.

 

(i)         Minimum Aggregate TMVUA
Real Property NOI to Unsecured Debt Service.  As of the last day of each Rolling Period of
the Company, the Company shall not permit the ratio of Aggregate TMVUA Real
Property NOI to Unsecured Debt Service to be less than 2.25 to 1.00.

 

10.11   Borrowing Base Covenants.

 

(a)        Compliance With Borrowing
Base Requirements.  The
Company 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 Company shall have cured such failure, or (ii) for
Borrowing Base purposes the Company 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.

 

35

 

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

 

(c)        Minimum Eligible Property
NOI to Debt Service Ratio.  As
of the last day of each Fiscal Quarter of the Company, the Company 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 (or any Principal Credit Facility that
replaces the Credit Agreement), including, without limitation, the Notes, plus
(ii) Credit Facility Debt Service, to be less than 2.25 to 1.0.

 

Notwithstanding
anything to the contrary in this Agreement, if the Credit Agreement no longer
requires the Company to maintain a Borrowing Base, then the Company will have
no obligation to maintain the Borrowing Base or Borrowing Base Requirements
under this Agreement and the provisions of Sections 5.10(b), 9.10(a) and 10.11
hereof, any related obligations to give notices, and any Events of Default
resulting from the breach of any such provisions or obligations to give notices
will have no further force or effect (the “Borrowing Base Release”);
provided, however, that if at any time after any occurrence of
the Borrowing Base Release any of the Credit Agreement, or any agreement
related to the Credit Agreement or any Principal Credit Facility of the Company
or any Subsidiary, includes a borrowing base covenant or other similar
provision (regardless of how defined), then (a) such provision shall
immediately and automatically be incorporated by reference in this Agreement as
if set forth fully herein, mutatis mutandis,
and no such provision may thereafter be waived, amended or otherwise modified
under this Agreement except pursuant to the provisions of Section 17, and (b)
the Company shall promptly, and in any event within 5 days after entering into
any such provision, so advise each holder of a Note in writing.  Thereafter, upon the request of the Required
Holders, the Company and the Required Holders shall enter into an amendment to
this Agreement evidencing the incorporation of such provision, it being agreed
that any failure to make such request or to enter into any such amendment shall
in no way qualify or limit the incorporation by reference described in clause
(a) of the immediately preceding sentence.

 

10.12   Redemption of Stock, Etc.  The Company will not, and will not permit any
Subsidiary to, redeem, purchase or otherwise acquire, refinance or repay any
preferred stock of the Company or any Subsidiary except (a) with the proceeds
from, or in exchange for, the issuance of capital stock (other than preferred
stock which is mandatorily redeemable, preferred stock which is redeemable at
the election of the holder thereof or preferred stock with respect to which any
holder thereof has a put or similar right to require the Company or any
Subsidiary to purchase, re-purchase or otherwise acquire such preferred stock),
or (b) with funds borrowed or expended (including funds on hand) for such
redemption, purchase, acquisition, refinancing or repayment provided
that (i) such funds are repaid by the issuance of capital stock (other than
preferred stock which is mandatorily redeemable, preferred stock which is
redeemable at the election of the holder thereof or preferred stock with
respect to which any holder thereof has a put or similar right to require the
Company or any Subsidiary to purchase, re-purchase or otherwise acquire such
preferred stock) within three months of each such transaction, and (ii) the
aggregate amount of such funds, prior to their repayment in accordance with the
immediately preceding clause (i), for all such transactions do not exceed
$25,000,000 at any time.

 

36

 

10.13   Terrorism Sanctions Regulations.  The Company will not and will not permit any
Subsidiary to (a) become a Person described or designated in the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order, or (b) engage in
any dealings or transactions with any such Person.

 

11                                EVENTS
OF DEFAULT.

 

An
“Event of Default” shall exist if
any of the following conditions or events shall occur and be continuing:

 

(a)        The Company defaults in the payment of
any principal or Make-Whole Amount, if any, on any Note when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or

 

(b)        the Company defaults in the payment of
any interest on any Note for more than three Business Days after the same
becomes due and payable; or

 

(c)        the Company defaults in the performance
of or compliance with any term contained in Sections 9.5, 9.9 or 10; or

 

(d)        any Credit Party defaults in the
performance of or compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section 11) or in any other
Transaction Document and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such
default, and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a “notice of
default” and to refer specifically to this paragraph (d) of Section 11); or

 

(e)        any representation or warranty made in
writing by or on behalf of any Credit Party or by any officer of any Credit
Party in this Agreement or in any other Transaction Document or in any writing
furnished in connection with the transactions contemplated hereby or thereby
proves to have been false or incorrect in any material respect on the date as
of which made; or

 

(f)         (i) the Company or any Subsidiary is in
default (as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Indebtedness for
Borrowed Money that is outstanding beyond any period of grace provided with
respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Indebtedness
for Borrowed Money or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default or
condition such Indebtedness for Borrowed Money has become, or has been declared
(or one or more Persons are entitled to declare such Indebtedness for Borrowed
Money to be), due and payable before its 

 

37

 

stated maturity or before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the
right of the holder of Indebtedness for Borrowed Money to convert such
Indebtedness for Borrowed Money into equity interests), (x) the Company or any
Subsidiary has become obligated to purchase or repay Indebtedness for Borrowed
Money before its regular maturity or before its regularly scheduled dates of
payment, or (y) one or more Persons have the right to require the Company or
any Subsidiary so to purchase or repay such Indebtedness for Borrowed Money; provided that the aggregate
amount of all Indebtedness for Borrowed Money to which such a payment default
shall occur and be continuing or such a failure or other event causing or
permitting acceleration (or resale to the Company or any Subsidiary) shall
occur and be continuing exceeds $10,000,000; or

 

(g)        the Company or any Subsidiary (i) is
generally not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing; or

 

(h)        a court or Governmental Authority of
competent jurisdiction enters an order appointing, without consent by the Company
or any of the Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, or constituting an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Company or any of the Subsidiaries, or any such petition shall be filed against
the Company or any of the Subsidiaries and such petition shall not be dismissed
within 60 days; or

 

(i)         (a) a final judgment or judgments for
the payment of money aggregating in excess of $10,000,000 are rendered against
one or more of the Company and its Subsidiaries and which judgments are not,
within 30 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 30 days after the expiration of such stay;

 

(j)         if (i) any Plan shall fail to
satisfy the minimum funding standards of the Pension Funding Rules for any plan
year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under the Pension Funding Rules, (ii)
a notice of intent to terminate any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified any Credit Party or any
ERISA Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate “amount of unfunded benefit liabilities” (within the
meaning of section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $10,000,000, (iv) any
Credit Party or any ERISA Affiliate shall have incurred or is reasonably 

 

38

 

expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans, (v) any Credit Party or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) any Credit Party or any Subsidiary establishes
or amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of any Credit
Party or any Subsidiary thereunder; and any such event or events described in
clauses (i) through (vi) above, either individually or together with any other
such event or events, could reasonably be expected to have a Material Adverse
Effect; or

 

(k)        a Change of Control shall occur; or

 

(l)         a default or event of default shall
occur under any Qualified Ground Lease; or

 

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

 

(n)        the Company at any time hereafter fails
to cause its common stock to be duly listed on the New York Stock Exchange, the
American Stock Exchange or the National Association of Securities Dealers
Automated Quotation; or

 

(o)        any provision of any Transaction
Document shall for any reason (other than pursuant to the terms thereof) cease
to be valid and binding on or enforceable in any material respect against any
Credit Party party to it, or any such Credit Party shall so state in writing.

 

As used in Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to
such terms in Section 3 of ERISA.

 

12                                REMEDIES
ON DEFAULT, ETC.

 

12.1     Acceleration.

 

(a)        If an Event of Default with respect to
any Credit Party described in Section 11(g) or (h) (other than an Event of
Default described in clause (i) of Section 11(g) or described in clause (vi) of
Section 11(g) by virtue of the fact that such clause encompasses clause (i) of
Section 11(g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

 

(b)        If any Event of Default described in
Section 11(a) or (b) has occurred and is continuing, in addition to any action
that may be taken pursuant to Section 12.1(c), any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company, declare all the Notes
held by it or them to be immediately due and payable.

 

(c)        If any other Event of Default has
occurred and is continuing, any holder or holders of a majority in principal
amount of the Notes of any Series at the time outstanding may at any time at
its or their option, by notice or notices to the Company, declare all the Notes
of such Series then outstanding to be immediately due and payable.

 

39

 

Upon
any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the
entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon (including, but not limited to, interest accrued
thereon at the Default Rate) and (y) the Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived.  The Company acknowledges, and
the parties hereto agree, that each holder of a Note has the right to maintain
its investment in the Notes free from prepayment by the Company (except as
herein specifically provided for) and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide compensation
for the deprivation of such right under such circumstances.

 

12.2     Other Remedies.

 

If
any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or
otherwise.

 

12.3     Rescission.

 

At
any time after any Notes of any Series have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than a
majority in principal amount of the Notes of such Series then outstanding, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes
of such Series, all principal of and Make-Whole Amount, if any, on any Notes of
such Series that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes of such Series, at the Default Rate, (b) neither the
Company nor any other Person shall have paid any amounts which have become due
solely by reason of such declaration, (c) all Events of Default and Defaults,
other than non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and
(d) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes.  No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.

 

40

 

12.4     No Waivers or Election of Remedies,
Expenses, etc.

 

No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies.  No right, power or remedy conferred by this
Agreement, any Note or any other Transaction Document upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.  Without limiting the obligations of the
Company under Section 15, the Company will pay to the holder of such Note on
demand such further amount as shall be sufficient to cover all costs and
expenses of such holder incurred in any enforcement or collection under this
Section 12, including, without limitation, reasonable attorneys’ fees, expenses
and disbursements.

 

13                                REGISTRATION;
EXCHANGE; SUBSTITUTION OF NOTES.

 

13.1     Registration of Notes.

 

The
Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes.  The name and address of each holder of one or
more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register.  Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes hereof, and the
Company shall not be affected by any notice or knowledge to the contrary.  The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.

 

13.2     Transfer and Exchange of Notes.

 

Upon
surrender of any Note to the Company at the address and to the attention of the
designated officer (all as specified in Section 18(iii)), for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder’s attorney duly authorized in
writing and accompanied by the relevant name, address and other information for
notices of each transferee of such Note or part thereof), within ten Business
Days thereafter, the Company shall execute and deliver, at the Company’s
expense (except as provided below), one or more replacement Notes (as requested
by the holder thereof) in exchange therefor, in an aggregate principal amount
equal to the unpaid principal amount of the surrendered Note.  Each such replacement Note shall be payable
to such Person as such holder may request and shall be substantially in the
form of the Note so surrendered.  Each
such replacement Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes.  Notes shall
not be transferred in denominations of less than $1,000,000; provided that if necessary to
enable the registration of transfer by a holder of its entire holding of Notes
of a Series, one Note may be in a denomination of less than $1,000,000.  Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.2.

 

41

 

13.3     Replacement
of Notes.

 

Upon receipt by the Company at the address and to the
attention of the designated officer (all as specified in Section 18(iii)) of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and

 

(a)        in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it (provided that if the holder of
such Note is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $5,000,000 or a Qualified
Institutional Buyer, such Person’s own unsecured agreement of indemnity shall
be deemed to be satisfactory), or

 

(b)        in the case of mutilation, upon
surrender and cancellation thereof,

 

within ten Business Days thereafter, the
Company at its own expense shall execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon; provided, that in no event shall the Company be
required to pay any interest or principal with respect to a replacement Note if
such amounts have previously been paid with respect to the original Note.

 

14                                PAYMENTS
ON NOTES.

 

14.1     Place of Payment.

 

Subject
to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made in New York, New York at
the principal office of JPMorgan Chase Bank in such jurisdiction.  The holder of a Note may at any time, by
notice to the Company, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

 

14.2     Home Office Payment.

 

So
long as a Purchaser or its nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose, in the case of the Series A Notes, on the Purchaser
Schedule Relating to Series A Notes attached hereto as Schedule A and,
in the case of any Shelf Note, on the Purchaser Schedule attached to the
Confirmation of Acceptance with respect to such Note, or by such other method
or at such other address as such Purchaser shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, such Purchaser shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at 

 

42

 

the place of payment most recently designated by the Company pursuant
to Section 14.1.  Prior to any sale or
other disposition of any Note held by any Purchaser or its nominee such
Purchaser will, at its election, either endorse thereon the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a replacement Note or Notes
pursuant to Section 13.2.  The Company
will afford the benefits of this Section 14.2 to any Institutional Investor
that is the direct or indirect transferee of any Note purchased by any
Purchaser under this Agreement and that has made the same agreement relating to
such Note as each Purchaser has made in this Section 14.2.

 

15                                EXPENSES,
ETC.

 

15.1     Transaction
Expenses.

 

Whether or not the transactions contemplated hereby
are consummated, the Company will pay all costs and expenses (including
reasonable attorneys’ fees of a special counsel and, if reasonably required by the
Required Holders, local or other counsel) incurred by PIM, the Purchasers or
any holder of a Note in connection with such transactions and in connection
with any amendments, waivers or consents under or in respect of this Agreement,
the Notes or any of the other Transaction Documents (whether or not such
amendment, waiver or consent becomes effective), including, without
limitation:  (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement, the Notes or any of the other
Transaction Documents or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement, the
Notes or any of the other Transaction Documents, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors’
fees, incurred in connection with the insolvency or bankruptcy of the Company,
any Guarantor or any Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby, by the Notes and the
other Transaction Documents.  The Company
will pay, and will save PIM, each Purchaser and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses, if any, of
brokers and finders.

 

15.2     Survival.

 

The
obligations of the Company under this Section 15 will survive the payment or
transfer of any Note, the enforcement, amendment or waiver of any provision of
this Agreement or the Notes, and the termination of this Agreement.

 

16                                SURVIVAL
OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

All
representations and warranties contained herein or in any of the other
Transaction Documents shall survive the execution and delivery of this
Agreement, the Notes and the other Transaction Documents, the purchase or
transfer by any Purchaser of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of any
Purchaser or any other holder of a Note. 
All statements contained in any certificate or other instrument
delivered by or on behalf of any Credit Party or any Subsidiary pursuant to
this Agreement or any of the other Transaction Documents shall be deemed
representations and 

 

43

 

warranties
of such Credit Party or Subsidiary under this Agreement or such other
Transaction Document.  Subject to the
preceding sentence, this Agreement (including the Multiparty Guaranty), the
Notes and the other Transaction Documents embody the entire agreement and
understanding among PIM, the Purchasers and the Credit Parties and supersede
all prior agreements and understandings relating to the subject matter hereof.

 

17                                AMENDMENT
AND WAIVER.

 

17.1     Requirements.

 

This
Agreement, the Notes and the other Transaction Documents may be amended, and
any Credit Party may take any action herein or therein prohibited, or omit to
perform any act herein required to be performed by it, if the Credit Parties
shall obtain the written consent to such amendment, action or omission to act,
of the Required Holder(s) of the Notes of each Series except that, (i) with the written consent
of the holders of all Notes of a particular Series, and if an Event of Default
shall have occurred and be continuing, of the holders of all Notes of all
Series, at the time outstanding (and not without such written consents), the
Notes of such Series may be amended or the provisions thereof waived to change
the maturity thereof, to change or affect the principal thereof, or to change
or affect the rate or time of payment of interest on or any Make-Whole Amount
payable with respect to the Notes of such Series, (ii) without the written
consent of the holder or holders of all Notes at the time outstanding, no
amendment to or waiver of the provisions of this Agreement shall change or
affect the provisions of Section 12 or this Section 17 insofar as such
provisions relate to proportions of the principal amount of the Notes of any
Series, or the rights of any individual holder of Notes, required with respect
to any declaration of Notes to be due and payable or with respect to any
consent, amendment, waiver or declaration, (iii) with the written consent of
PIM (and not without the written consent of PIM) the provisions of Section 2B
may be amended or waived (except insofar as any such amendment or waiver would
affect any rights or obligations with respect to the purchase and sale of Notes
which shall have become Accepted Notes prior to such amendment or waiver), and
(iv) with the written consent of all of the Purchasers which shall have become
obligated to purchase Accepted Notes of any Series (and not without the written
consent of all such Purchasers), any of the provisions of Sections 2B and 4 may
be amended or waived insofar as such amendment or waiver would affect only
rights or obligations with respect to the purchase and sale of the Accepted
Notes of such Series or the terms and provisions of such Accepted Notes.  Each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this Section
17, whether or not such Note shall have been marked to indicate such consent,
but any Notes issued thereafter may bear a notation referring to any such
consent.

 

17.2     Solicitation of Holders of Notes.

 

(a)        Solicitation.  The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes.  The Company will
deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to each holder
of outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.

 

44

 

(b)        Payment.  The Company will not directly or indirectly
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security or provide other
credit support, to any holder of Notes as consideration for or as an inducement
to the entering into by any holder of Notes of any waiver or amendment of any
of the terms and provisions hereof unless such remuneration is concurrently
paid, or security is concurrently granted or other credit support concurrently
provided, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.

 

17.3     Binding Effect. etc.

 

Any amendment or
waiver consented to as provided in this Section 17 applies equally to all
holders of Notes and is binding upon them and upon each future holder of any
Note and upon the Company without regard to whether such Note has been marked
to indicate such amendment or waiver.  No
such amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or
impair any right consequent thereon.  No
course of dealing between any Credit Party and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note.  As used herein, the term “this Agreement” and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

 

17.4     Notes Held by Company, etc.

 

Solely
for the purpose of determining whether the holders of the requisite percentage
of the aggregate principal amount of Notes or any Series thereof then
outstanding have approved or consented to any amendment, waiver or consent to
be given under this Agreement or the Notes or any Series thereof, or have
directed the taking of any action provided herein or in the Notes or any Series
thereof to be taken upon the direction of the holders of a specified percentage
of the aggregate principal amount of Notes or any Series thereof then
outstanding, Notes directly or indirectly owned by any Credit Party or any of
its Affiliates shall be deemed not to be outstanding.

 

18                                NOTICES.

 

All
notices and communications provided for hereunder (other than communications
provided for in Section 2) shall be in writing and sent (a) by facsimile if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified
mail with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid).  Any such notice must be sent:

 

(i)         if to any Series A Purchaser or its
nominee, to such Person at the address specified for such communications in the
Purchaser Schedule Relating to Series A Notes attached hereto as Schedule A
and, in the case of a Purchaser of any Shelf Note or its nominee, to such
Person at the address specified for such communications in the Purchaser
Schedule attached to the Confirmation of Acceptance with respect to such Shelf
Note, or at such other address as such Person or it shall have specified to the
Company in writing;

 

45

 

(ii)        if to any other holder of any Note, to
such holder at such address as such other holder shall have specified to the
Company in writing; or

 

(iii)       if to any Credit Party, to such Credit
Party care of the Company, at its address set forth at the beginning hereof to
the attention of the Chief Financial Officer, or at such other address as the
Company, shall have specified to the holder of each Note in writing.

 

Notices under this Section 18 will be deemed
to have been given and received when delivered at the address so
specified.  Any communication pursuant to
Section 2 shall be made by the method specified for such communication in
Section 2, and shall be effective to create any rights or obligations under
this Agreement only if, in the case of a telephone communication, an Authorized
Officer of the party conveying the information and of the party receiving the
information are parties to the telephone call, and in the case of a facsimile
communication, the communication is signed by an Authorized Officer of the
party conveying the information, addressed to the attention of an Authorized
Officer of the party receiving the information, and in fact received at the
facsimile number that is listed for the party receiving the communication on
the Information Schedule or at such other facsimile number as the party
receiving the information shall have specified in writing to the party sending
such information.

 

19                                REPRODUCTION
OF DOCUMENTS.

 

This
Agreement, and all documents relating hereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by any Purchaser on any Closing Day (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to any Purchaser, may be reproduced by such
Purchaser by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and such Purchaser may destroy any
original document so reproduced.  To the
extent permitted by applicable law, any such reproduction shall be admissible
in evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.  This
Section 19 shall not prohibit any party hereto from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

 

20                                MULTIPARTY
GUARANTY.

 

The multiparty
guaranty under this Section 20 (as amended or otherwise modified from time to
time, the “Multiparty Guaranty”) is made
jointly and severally by each of the Guarantors in favor of the Purchasers and
their respective successors, assigns and transferees (each of such Persons
being referred to herein as a “Beneficiary”
and collectively, as the “Beneficiaries”).

 

46

 

20.1     Unconditional
Guaranty.

 

(a)        Unconditional
Guaranty.

 

Each Guarantor hereby unconditionally,
absolutely and irrevocably guarantees to each of the Beneficiaries the prompt
and complete payment when due (whether at stated maturity, by acceleration or
otherwise) and performance of all Guaranteed Obligations.  The term “Guaranteed
Obligations” shall mean all loans, advances, debts, liabilities and
obligations for monetary amounts and otherwise from time to time owing by the
Company, in the Company’s capacity as the issuer of Notes, to the Purchasers in
connection with this Agreement, the Notes and the other Transaction Documents,
whether due or to become due, matured or unmatured, liquidated or unliquidated,
contingent or non-contingent, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or instrument, arising under or in respect of this
Agreement, the Notes or the other Transaction Documents (it being understood
that this term includes all principal, interest (including interest that
accrues after the commencement by or against the Company of any action under
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law, whether now or hereafter in
effect), the Make-Whole Amount, if any, premium or other prepayment
consideration, fees, expenses, costs or other sums (including, without
limitation, all fees and disbursements of any law firm or other external
counsel) chargeable to the Company, in the Company’s capacity as the issuer of
Notes, under this Agreement, the Notes or the other Transaction Documents).

 

(b)        Reimbursement of Expenses.

 

Each Guarantor also agrees to pay upon demand all costs and expenses
(including, without limitation, all fees and disbursements of any law firm or
other external counsel) incurred by any Beneficiary in enforcing any rights
under this Multiparty Guaranty.

 

(c)        Guaranteed Obligations
Unaffected.

 

No payment or payments made by any other Guarantor or other Credit
Party, or by any other guarantor or other Person, or received or collected by
any of the Beneficiaries from any other Guarantor or other Credit Party or from
any other guarantor or other Person by virtue of any action or proceeding or
any setoff or appropriation or application at any time or from time to time in
reduction of or in payment of the Guaranteed Obligations shall be deemed to
modify, release or otherwise affect the liability of each of the Guarantors
hereunder which shall, notwithstanding any such payments, remain liable for the
Guaranteed Obligations, subject to Section 20.5 below, until the Guaranteed
Obligations are paid in full.

 

(d)        Joint and Several
Liability.

 

All Guarantors and their respective successors and assigns shall be
jointly and severally liable for the payment of the Guaranteed Obligations and
the expenses required to be reimbursed to the holders of the Notes pursuant to
Section 20.1(b), above, notwithstanding any relationship or contract of
co-obligation by or among the Guarantors or their successors and assigns.

 

47

 

(e)        Enforcement of Guaranteed
Obligations.

 

Upon the occurrence and during the continuance of an Event of Default,
then and in any such event all of the Guaranteed Obligations shall
automatically become due and payable (in the case of an Event of Default
described in Section 11(g) or (h)) and all or any part of the Guaranteed
Obligations may, at the option of (i) any holder of any Note (in the case of an
Event of Default described in Section 11(a) or (b)), and (ii) the Required
Holders (in the case of any Event of Default described in Section 11 other than
those described in Section 11(g) or (h)) and without demand, notice or legal
process of any kind, be declared, and immediately shall become, due and
payable.

 

(f)         Tolling of Statute of
Limitations.

 

Each Guarantor agrees that any payment, performance or other act that
tolls any statute of limitations applicable to the obligations, liabilities and
indebtedness of the Company owing to the Beneficiaries under this Agreement, the
Notes or any of the other Transaction Documents shall also toll the statute of
limitations applicable to such Guarantor’s liability under this Multiparty
Guaranty to the extent permitted by law.

 

(g)        Rights of Contribution.

 

The Company and each Guarantor hereby agree that, to the extent that a
Guarantor shall have paid an amount hereunder to any Beneficiary that is
greater than the net value of the benefits received, directly or indirectly, by
such paying Guarantor as a result of the issuance and sale of the Notes, such
paying Guarantor shall be entitled to contribution from the Company or any
Guarantor that has not paid its proportionate share, based on benefits received
as a result of the issuance and sale of the Notes, of the Guaranteed
Obligations.  Any amount payable as a
contribution under this Section 20.1(g) shall be determined as of the date on
which the related payment or distribution is made by the Guarantor seeking
contribution, and each of the Company and the Guarantors acknowledges that the
right to contribution hereunder shall constitute an asset of such Guarantor to
which such contribution is owed. 
Notwithstanding the foregoing, the provisions of this Section 20.1(g)
shall in no respect limit the obligations and liabilities of any Guarantor to
the Beneficiaries hereunder or under any other Transaction Document, and each
Guarantor shall remain liable for the full payment and performance guaranteed
hereunder.  Any indebtedness or other
obligations of the Company or a Guarantor now or hereafter held by or owing to
any Guarantor is hereby subordinated in time and right of payment to all
indebtedness or other obligations of the Company and the Guarantors to any or
all of the Beneficiaries under the Notes, this Agreement or any other
Transaction Document.

 

48

 

20.2     Subrogation.

 

Notwithstanding any payment or payments made by any Guarantor
hereunder, each Guarantor hereby irrevocably waives, solely with respect to
such payment or payments, any and all rights of subrogation to the rights of
the Beneficiaries against the Company and, except to the extent otherwise
provided in Section 20.1(g), any and all rights of contribution, reimbursement,
assignment, indemnification or implied contract or any similar rights against
the Company, any endorser or other guarantor of all or any part of the
Guaranteed Obligations, in each case until such time as the Guaranteed
Obligations have been paid in full (subject to Section 20.5 below).  If, notwithstanding the foregoing, any amount
shall be paid to any Guarantor on account of such subrogation or other rights
at any time when all of the Guaranteed Obligations shall not have been paid in
full, such amount shall be held by such Guarantor in trust for the Beneficiaries,
segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to each Beneficiary (ratably based on
the principal amount outstanding of Notes held by such Beneficiary at such time
as a percentage of the aggregate principal amount outstanding of Notes held by
all the Beneficiaries at such time) in the exact form received by such
Guarantor (duly endorsed by such Guarantor to such Beneficiary if required), to
be applied against the Guaranteed Obligations, whether matured or unmatured, in
such order as such Beneficiary may determine.

 

20.3     Amendments, Etc. with Respect to Guaranteed
Obligations.

 

Each Guarantor shall remain obligated hereunder notwithstanding
that:  (a) any demand for payment of any
of the Guaranteed Obligations made by any Beneficiary may be rescinded by such
Beneficiary, and any of the Guaranteed Obligations continued; (b) this
Multiparty Guaranty, the Guaranteed Obligations, or the liability of any other
party upon or for any part of the Guaranteed Obligations, or any collateral
security or guaranty therefor or right of setoff with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by any
Beneficiary or such other party; (c) this Agreement, the Notes, the other
Transaction Documents and any other document executed in connection with any of
them may be renewed, extended, amended, modified, supplemented or terminated,
in whole or in part; or (d) any guaranty, collateral or right of setoff at any
time held by any Person for the payment of any of the Guaranteed Obligations
may be sold, exchanged, waived, surrendered or released.  When making any demand hereunder against any
Guarantor, each Beneficiary may, but shall be under no obligation to, make a
similar demand on any other Credit Party or any other Person, and any failure
by such Beneficiary to make any such demand or to collect any payments from any
other Credit Party or any other Person or any release of any such other Credit
Party or Person shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of such Beneficiary against the
Guarantors.  For the purposes hereof
“demand” shall include the commencement and continuance of any legal
proceedings.

 

20.4     Guaranty Absolute and Unconditional;
Termination.

 

(a)        Each Guarantor waives any and all notice
of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by any Beneficiary upon this
Multiparty Guaranty or acceptance of this Multiparty Guaranty.  This Agreement, the Notes, the other
Transaction Documents and the Guaranteed Obligations in respect of any of them,
shall conclusively be deemed to have been created, contracted for or 

 

49

 

incurred in reliance upon this Multiparty Guaranty; and all dealings
between any of the Company or the Guarantors, on the one hand, and any of the
Beneficiaries, on the other, shall likewise conclusively be presumed to have
been had or consummated in reliance upon this Multiparty Guaranty.  Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon any
Credit Party or any other guarantor with respect to the Guaranteed
Obligations.  Except as provided in
Section 20.4(b), this Multiparty Guaranty shall be construed as a continuing,
irrevocable, absolute and unconditional guaranty of payment, performance and compliance
when due (and not of collection) and is a primary obligation of each Guarantor
without regard to (a) the validity or enforceability of the provisions of this
Agreement (other than the Multiparty Guaranty), the Notes, the other
Transaction Documents, any of the Guaranteed Obligations or any other guaranty
or right of setoff with respect thereto at any time or from time to time held
by any Beneficiary, (b) any defense, setoff or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by any of the Credit Parties against any Beneficiary, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of any Credit
Party or guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any Credit Party or any other guarantor of the
Guaranteed Obligations, in bankruptcy or in any other instance (other than
payment or performance in full of the Guaranteed Obligations).  Each of the Guarantors hereby agrees that it
has complete and absolute responsibility for keeping itself informed of the
business, operations, properties, assets, condition (financial or otherwise) of
the Company, the other Guarantors, any and all endorsers and any and all guarantors
of the Guaranteed Obligations and of all other circumstances bearing upon the
risk of nonpayment of the obligations evidenced by the Notes or the Guaranteed
Obligations, and each of the Guarantors further agrees that the Beneficiaries
shall have no duty, obligation or responsibility to advise it of any such facts
or other information, whether now known or hereafter ascertained, and each
Guarantor hereby waives any such duty, obligation or responsibility on the part
of the Beneficiaries to disclose such facts or other information to such
Guarantor.

 

When pursuing its rights and remedies hereunder against any of the
Guarantors, any Beneficiary may, but shall be under no obligation to, pursue
such rights and remedies as it may have against any other Credit Party or any
other Person under a guaranty of the Guaranteed Obligations or any right of
setoff with respect thereto, and any failure by such Beneficiary to pursue such
other rights or remedies or to collect any payments from any such other Credit
Party or Person or to realize upon any such guaranty or to exercise any such
right of setoff, or any release of any such other Credit Party or Person or any
such guaranty or right of setoff, shall not relieve the Guarantors of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of each of the
Beneficiaries against the Guarantors. 
This Multiparty Guaranty shall remain in full force and effect until all
Guaranteed Obligations shall have been satisfied by payment or performance in
full, upon the occurrence of which this Multiparty Guaranty shall, subject to
Section 20.5 below, terminate.

 

(b)        Each Guarantor shall be released and
discharged automatically from its obligations under this Multiparty Guaranty provided
that (i) such Guarantor concurrently is released and discharged from its
obligations as a guarantor under the Credit Agreement and each other Principal
Credit Facility, (ii) no Default or Event of Default exists or would exist
after giving effect to such release and discharge, (iii) no remuneration
(whether by way of supplemental or additional interest, fee or otherwise) or
alternative credit support (whether by 

 

50

 

way of another guaranty, collateral security, a letter of credit or
otherwise) is provided to any lender under the Credit Agreement or any other
Principal Credit Facility as compensation for such release of such Guarantor
under the Credit Agreement or such other Principal Credit Facility (provided
that the foregoing shall not apply to facility fees, structuring fees,
arrangement fees or similar up-front fees in connection with the extension or
replacement of the Credit Agreement or any other Principal Credit Facility so
long as the primary purpose of such fees is not compensation for the release of
any Guarantor), and (iv) the Company has delivered an Officer’s Certificate
certifying as to the conditions in each of the immediately preceding clauses
(i), (ii) and (iii) and setting forth the date of effectiveness for such
release and discharge.

 

20.5     Reinstatement.

 

This Multiparty Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time the payment, or any part
thereof, of any of the Guaranteed Obligations is rescinded or otherwise must be
restored or returned by any Beneficiary in connection with the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Credit Party upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, any Credit Party or any substantial part of
their respective property or assets, or otherwise, all as though such payments
had not been made.

 

20.6     Payments.

 

Each Guarantor hereby agrees that the
Guaranteed Obligations will be paid to each of the Beneficiaries pursuant to
this Agreement without setoff or counterclaim in immediately available funds at
the location and in the currency or currencies specified by such Beneficiary
pursuant to this Agreement.

 

20.7     Bound
by Other Provisions.

 

Each Guarantor agrees that it is bound by
each covenant set forth in this Agreement and that it shall make each
representation and warranty set forth in this Agreement, in each case to the
extent the applicable provision pertains to a Subsidiary.

 

20.8     Additional Guarantors.

 

The initial Guarantors shall be such Persons as are identified as
“Guarantors” on the signature pages hereof. 
From time to time subsequent to the date hereof, additional Persons that
are Subsidiaries or other Affiliates of any Credit Party may become parties
hereto, as additional Guarantors (each an “Additional Guarantor”),
by executing a Joinder to Multiparty Guaranty. 
Upon delivery of any such Joinder to Multiparty Guaranty to each of the
Beneficiaries, notice of which is hereby waived by the Guarantors, each such
Additional Guarantor shall be a Guarantor and shall be as fully a party hereto
in such capacity as if such Additional Guarantor were an original signatory
hereof.  Each Guarantor expressly agrees
that its obligations arising hereunder shall not be affected or diminished by
the addition or release of any other Guarantor hereunder, nor by any election
of the Beneficiaries not to cause any Subsidiary of any Credit Party to become
an Additional Guarantor hereunder.  This
Multiparty Guaranty shall be fully effective as to any Guarantor that is or
becomes a party hereto regardless of whether any other Person becomes or fails
to become or ceases to be a Guarantor hereunder.

 

51

 

21                                CONFIDENTIALITY.

 

For
the purposes of this Section 21, “Confidential Information”
means information delivered to any Purchaser by or on behalf of the Company or
any Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary, provided
that such term does not include information that (a) was publicly known or
otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such
Purchaser or any person acting on such Purchaser’s behalf, (c) otherwise
becomes known to such Purchaser other than through disclosure by the Company or
any Subsidiary, or (d) constitutes financial statements delivered to such
Purchaser under Section 7.1 that are otherwise publicly available.  Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser
may deliver or disclose Confidential Information to (i) its directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 21, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 21), (v) any Person
from which it offers to purchase any security of the Company (if such Person
has agreed in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 21), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or
the SVO or, in each case, any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser’s investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party, or (z) if an Event of Default
has occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes and this Agreement. 
Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this Section
21 as though it were a party to this Agreement. 
On reasonable request by the Company in connection with the delivery to
any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 21.

 

22                                MISCELLANEOUS.

 

22.1     Successors and Assigns.

 

All
covenants and other agreements contained in this Agreement by or on behalf of
any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including any subsequent holder of a Note) whether so
expressed or not.

 

52

 

22.2     Payments Due on Non-Business Days.

 

Anything
in this Agreement or the Notes to the contrary notwithstanding (but without
limiting the requirement in Section 8.4 that the notice of any optional
prepayment specify a Business Day as the date fixed for such prepayment), any
payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a New York Business Day shall be made on the next
succeeding New York Business Day without including the additional days elapsed
in the computation of the interest payable on such next succeeding New York
Business Day; provided that if the maturity date of any Note is a date
other than a Business Day, the payment otherwise due on such maturity date
shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next
succeeding Business Day.

 

22.3     Accounting Terms.

 

All
accounting terms used herein which are not expressly defined in this Agreement
have the meanings respectively given to them in accordance with GAAP.  Except as otherwise specifically provided
herein, (i) all computations made pursuant to this Agreement shall be made
in accordance with GAAP, and (ii) all financial statements shall be
prepared in accordance with GAAP.

 

22.4     Severability.

 

Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

22.5     Construction.

 

Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant.  Where any provision
herein refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.

 

For the avoidance of doubt, all Schedules and Exhibits
attached to this Agreement shall be deemed to be a part hereof.

 

22.6     Counterparts.

 

This
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.

 

53

 

22.7     Governing Law.

 

This
Agreement shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such state that would permit the
application of the laws of a jurisdiction other than such state.

 

22.8     Jurisdiction and Process.  (a) Each Credit Party irrevocably submits to
the non-exclusive jurisdiction of any New York State or federal court sitting
in the Borough of Manhattan, The City of New York, over any suit, action or
proceeding arising out of or relating to this Agreement (including the
Multiparty Guaranty) or the Notes.  To
the fullest extent permitted by applicable law, each Credit Party irrevocably
waives and agrees not to assert, by way of motion, as a defense or otherwise,
any claim that it is not subject to the jurisdiction of any such court, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.

 

            (b)        Each
Credit Party consents to process being served by or on behalf of any holder of
Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other
address of which such holder shall then have been notified pursuant to said
Section.  Each Credit Party agrees that
such service upon receipt (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding, and
(ii) shall, to the fullest extent permitted by applicable law, be taken
and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery service.

 

            (c)        Nothing
in this Section 22.8 shall affect the right of any holder of a Note to
serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against any Credit
Party in the courts of any appropriate jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

22.9     Waiver of Jury Trial. 
THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON
OR WITH RESPECT TO THIS AGREEMENT (INCLUDING THE MULTIPARTY GUARANTY), THE
NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

 

22.10   Transaction References.  The
Company agrees that Prudential Capital Group may (a) refer to its role in the
origination of the purchase of the Notes from the Company, as well as the
identity of the Company and the aggregate principal amount and issue date of
the Notes, on its internet site or in marketing materials, press releases,
published “tombstone” announcements or any other print or electronic medium,
and (b) display the Company’s corporate logo in conjunction with any such
reference.

 

*    *   
*    *    *

 

54

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
  THE COMPANY:

  	
   

  
	
   

  	
   

  
	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: /s/ Pamela Shelley-Kessler

  
	
   

  	
  Name:

  	
  Pamela Shelley-Kessler

  
	
   

  	
  Title:

  	
  Senior Vice President
  and Chief Financial Officer

  

 

THE GUARANTORS:

 

 

ALBUQUERQUE REAL ESTATE INVESTMENTS, INC.,
a Delaware corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Chief Financial Officer and Treasurer

  

 

 

 

EDUCATION PROPERTY INVESTORS, INC.,
a Nevada corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

FLORIDA-LTC, INC., a Nevada
corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

LTC GP I, INC., a Delaware
corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

LTC-GARDNER, INC., a Delaware
corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

LTC-GRIFFIN, INC., a Nevada
corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

LTC-JONESBORO, INC., a Nevada
corporation

 

 

	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

NORTH CAROLINA REAL ESTATE INVESTMENTS, LLC,
a North Carolina limited liability company

 

 

	
  By:
  LTC-Dearfield, Inc., its manager

  
	
   

  	
   

  
	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
  By:
  LTC-Richmond, Inc., its manager

  
	
   

  	
   

  
	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  LTC
  PARTNERS IX, L.P., a Delaware limited partnership

  
	
   

  	
   

  
	
  By: LTC GP VI,
  Inc., its general partner

  
	
   

  	
   

  
	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  TEXAS-LTC
  LIMITED PARTNERSHIP, a Texas limited partnership

  
	
   

  	
   

  
	
  By: L-Tex GP,
  Inc., its general partner

  
	
   

  
	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

	
  TEXAS-LTC WOODRIDGE LIMITED PARTNERSHIP,
  a Delaware limited partnership

  
	
   

  	
   

  
	
  By: L-Tex GP,
  Inc., its general partner

  
	
   

  	
   

  
	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  BEAUMONT
  REAL ESTATE INVESTMENTS, LP, a Texas limited partnership

  
	
   

  	
   

  
	
  By: L-Tex GP,
  Inc., its general partner

  
	
   

  	
   

  
	
  By: /s/ Pamela
  Shelley-Kessler

  
	
  Name:

  	
  Pamela Shelley-Kessler

  
	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  

 

 

The foregoing is hereby
agreed to as of

the date thereof.

 

PRUDENTIAL
INVESTMENT MANAGEMENT, INC.

 

By: /s/ Cornelia Cheng

            Vice President

 

 

 

THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA

 

 

By: /s/ Cornelia Cheng

Title:  Vice President

 

 

 

PRUCO LIFE INSURANCE COMPANY

 

 

By: /s/
Cornelia Cheng

Title:  Vice President

 

 

 

UNITED OF
OMAHA LIFE INSURANCE 

COMPANY

 

By:  Prudential Private Placement Investors, L.P.,
asset manager

 

By:  Prudential Private Placement Investors, Inc.,
general partner

 

 

 

By: /s/ Cornelia Cheng

Title:  Vice President

 

 

INFORMATION SCHEDULE

 

Authorized
Officers for PIM

 

	
  Mitchell W. Reed

  Senior Vice President

  PRUDENTIAL CAPITAL GROUP

  Four Embarcadero Center, Suite 2700

  San Francisco, California 94111

  Telephone:                                (415)
  291-5059

  Facsimile:                                      (415)
  421-6233

  	
  Stephen J. DeMartini

  Managing Director

  PRUDENTIAL CAPITAL GROUP

  Four Embarcadero Center, Suite 2700

  San Francisco, California 94111

  Telephone:                                (415)
  291-5058

  Facsimile:                                      (415)
  421-6233

  
	
   

  	
   

  
	
  Iris Krause

  Senior Vice President

  PRUDENTIAL CAPITAL GROUP

  Four Embarcadero Center, Suite 2700

  San Francisco, California 94111

  Telephone:                                (415)
  291-5060

  Facsimile:                                      (415) 421-6233

  	
  Charles
  Senner

  PRUDENTIAL CAPITAL GROUP

  100 Mulberry Street

  7 Gateway Center Four

  Newark, New Jersey 07102

  Telephone:                                (973) 802-6660

  Facsimile:                                      (973) 624-6432

  
	
   

  	
   

  
	
  James
  McCrane

  PRUDENTIAL CAPITAL GROUP

  100 Mulberry Street

  7 Gateway Center Four

  Newark, New Jersey 07102

  Telephone:                                (973) 802-4222

  Facsimile:                                      (973) 624-6432

  	
  Mathew
  R. Douglass

  Senior Vice President

  PRUDENTIAL CAPITAL GROUP

  2029 Century Park East, Suite 710

  Los Angeles, California 90067

  Telephone:                                (310)
  295-5012

  Facsimile:                                      (310)
  295-5019

  
	
   

  	
   

  
	
  David
  Nguyen

  Vice President

  PRUDENTIAL CAPITAL GROUP

  Four Embarcadero Center, Suite 2700

  San Francisco, California 94111

  Telephone:                                (415)
  291-5071

  Facsimile:                                      (415)
  421-6233

  	
  Cornelia
  Cheng

  Vice President

  PRUDENTIAL CAPITAL GROUP

  2029 Century Park East, Suite 710

  Los Angeles, California 90067

  Telephone:                                (310)
  295-5013

  Facsimile:                                      (310)
  295-5019

  

 

 

Authorized
Officers for the Company

 

	
  Wendy
  Simpson

  CEO
  and President

  LTC
  Properties, Inc.

  31365
  Oak Crest Drive, Suite 200

  Westlake
  Village, California 91361

  Telephone:        (805) 981-8655

  Facsimile:          (805) 981-8663

  	
  Pamela
  Shelley-Kessler

  SVP
  & Chief Financial Officer

  LTC
  Properties, Inc.

  31365
  Oak Crest Drive, Suite 200

  Westlake
  Village, California 91361

  Telephone:        (805) 981-8648

  Facsimile:          (805) 981-8663

  

 

 

SCHEDULE
A

 

INFORMATION
RELATING TO SERIES A NOTE PURCHASERS

 

PURCHASER
SCHEDULE

 

	
   

  	
   

  
	
   

  	
   

  
	
  Purchaser
  Name

  	
  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name
  in Which Notes are to be Registered

  	
  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

  
	
   

  	
   

  
	
  Note Registration Numbers;

  Original
  Principal Amounts

  	
   

  A-1-1     $25,000,000

   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Payment on Account of Notes

   

   

  	
  Method: 
  Federal Funds Wire Transfer

   

  Account Information:            JPMorgan Chase Bank

                                                New
  York, NY

                                                ABA
  No.:  021-000-021

   

  Account No.: 
  P86188 (please do not include spaces

  Account Name: 
  Prudential Managed Portfolio

   

  Re:  (See “Accompanying
  information” below)

   

  
	
   

  	
   

  
	
  Accompanying
  Information

  	
  Name of Company:               LTC Properties, Inc.

  Description of
  Security:        5.26% Series A-1 Senior
  Notes due 7/14/15

  PPN:      502175 A*3

   

   

  Each such wire transfer
  shall also set forth the due date and application (as among principal,
  interest, and Make-Whole Amount, if any) of the payment being made.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address
  for Notices Related to Payments

  	
  The Prudential Insurance Company of America

  c/o Investment Operations Group

  Gateway Center Two, 10th Floor

  100 Mulberry Street

  Newark, NJ 07102-4077

  Attn:      Manager,
  Billings and Collections

   

  with telephonic prepayment notices to:

   

  Manager, Trade Management Group

   

  Tel:        (973)
  367-3141

   

  Fax:        (800) 224-2278

   

  
	
   

  	
   

  
	
  Address
  for All Other Notices

  	
  The Prudential Insurance Company of America 

  c/o Prudential Capital Group

  Four Embarcadero Center, Suite 2700 

  San Francisco, California 94111-4180 

  Attn:      Managing
  Director 

   

  Fax:        415-421-6233

   

  
	
  Other
  Instructions

  	
  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

   

  By:
  ________________________________

  Name:    

  Title:      Vice President

   

  
	
   

  	
   

  
	
  Instructions
  re Delivery of Notes

  	
  Prudential Capital Group

  Four Embarcadero Center, Suite 2700 

  San Francisco, CA 94111-4180 

  Attn:
       James Evert, Esq.

   

  
	
   

  	
   

  
	
  Tax
  Identification Number

  	
  22-1211670

  
	
   

  	
   

  

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  Purchaser Name

  	
  PRUCO LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name
  in Which Notes are to be Registered

  	
  PRUCO LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  Note Registration Numbers;

  Principal
  Amounts

  	
   

  A-2-1     $12,500,000

   

  
	
   

  	
   

  
	
  Payment on Account of Note

   

   

   

   

  	
  Method:  Federal Funds Wire Transfer

   

  Account Information:            JPMorgan Chase Bank

                                                New York, NY

                                                ABA No.:  021-000-021

  Account No.:  P86192 (please do not include spaces)

  Account
  Name:  Pruco Life Private Placement

   

   

  Re:         (see “Accompanying Information”
  below)

   

  
	
   

  	
   

  
	
  Accompanying Information

  	
  Name of Company:               LTC Properties, Inc.

  Description of Security:        5.74% Series A-2 Senior Notes due
  1/14/19

  PPN:      502175
  A@1

   

  Each such wire transfer shall also set forth
  the due date and application (as among principal, interest, and Make-Whole
  Amount, if any) of the payment being made.

   

  
	
   

  	
   

  
	
  Address for Notices Related to Payments

  	
  Pruco
  Life Insurance Company

  c/o
  The Prudential Insurance Company of America

  c/o
  Investment Operations Group

  Gateway
  Center Two, 10th Floor

  100
  Mulberry Street

  Newark,
  NJ 07102-4077

  Attn:      Manager, Billings and Collections

   

  with telephonic prepayment notices to:

   

  Manager,
  Trade Management Group

   

  Tel:    (973)
  367-3141

  Fax:   (800) 224-2278

   

  
	
   

  	
   

  
	
  Address for All Other Notices

  	
  The
  Prudential Insurance Company of America 

  c/o
  Prudential Capital Group

  Four
  Embarcadero Center, Suite 2700 

  San
  Francisco, California 94111-4180 

  Attn:      Managing Director 

   

  Fax:        415-421-6233

   

  
	
   

  	
   

  
	
  Other Instructions

  	
  PRUCO LIFE INSURANCE COMPANY

   

  By:
  ________________________________

  Name:

  Title:

   

  
	
   

  	
   

  
	
  Instructions re Delivery of Notes

  	
  Prudential
  Capital Group

  Four
  Embarcadero Center, Suite 2700 

  San
  Francisco, CA 94111-4180 

  Attn:      James Evert, Esq.

   

  
	
  z

  	
   

  
	
  Tax Identification Number

  	
  22-1944557

   

  

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  Purchaser Name

  	
  UNITED OF OMAHA LIFE INSURANCE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name
  in Which Notes are to be Registered

  	
  UNITED OF OMAHA LIFE INSURANCE COMPANY

   

  
	
   

  	
   

  
	
  Note Registration Numbers;

  Principal
  Amounts

  	
   

  A-2-2     $12,500,000

   

   

  
	
   

  	
   

  
	
  Payment on Account of Note

   

                Method

   

                Account
  Information

  	
   

   

  Federal
  Funds Wire Transfer

   

  JPMorgan
  Chase Bank

  ABA
  No.:  021-000-021

  Private
  Income Processing

  For
  Credit to account:  900-9000200

  For
  further credit to Account Name:  United
  of Omaha Life Insurance Company

  For
  further credit to Account Number: 
  G09588

   

  Re:  (See “Accompanying information” below)

   

  
	
   

  	
   

  
	
  Accompanying Information

  	
   

  Name of Company:               LTC Properties, Inc.

  Description of Security:        5.74% Series A-2 Senior Notes due
  1/14/19

  PPN:      502175
  A@1

   

  Each such wire transfer shall also set forth
  the due date and application (as among principal, interest, and Make-Whole
  Amount, if any) of the payment being made.

   

  
	
   

  	
   

  
	
  Address for Notices Related to Payments

  	
  JPMorgan
  Chase Bank

   

  14201
  Dallas Parkway - 13th Floor

   

  Dallas,
  TX 75254-2917

   

   

  Attn:  Income Processing - G. Ruiz 

   

  a/c:  G09588

   

  
	
   

  	
   

  
	
  Address for All Other Notices

  	
  Prudential
  Private Placement Investors, L.P.

   

  c/o
  Prudential Capital Group

  Four
  Embarcadero Center, Suite 2700

  San
  Francisco, California 94111-4180

  Attn:      Managing Director 

   

  Fax:        415-421-6233

   

  
	
   

  	
   

  
	
  Other Instructions

  	
  UNITED OF OMAHA LIFE INSURANCE COMPANY

   

   

  By:  Prudential Private Placement Investors,
  L.P., asset manager

   

  By:  Prudential Private Placement Investors,
  Inc., general partner

   

  By:
  ________________________________

  Name:

  Title:

   

  

 

Schedule A-1

 

	
   

  	
   

  
	
   

  	
   

  
	
  Purchaser Name

  	
  UNITED OF OMAHA LIFE INSURANCE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  Instructions re Delivery of Notes

  	
  (a)  Send physical security by nationwide
  overnight delivery service to:

   

  JPMorgan
  Chase Bank

  4
  New York Plaza

  Ground
  Floor Receive Window

  New
  York, NY 10004

   

  Please
  include in the cover letter accompanying the Note a reference to the
  Purchaser’s account number (United of Omaha Life Insurance Company: Account
  Number:  G09588

   

  (b)
   Send copy by nationwide overnight
  delivery service to:

   

  Prudential
  Capital Group

  Gateway
  Center 4

  100
  Mulberry, 7th Floor

  Newark,
  NJ 07102

   

  Attention:  Trade Management, Manager

  Telephone:  (973) 367-3141

   

  
	
   

  Tax Identification Number

   

  	
   

  47-0322111

   

  

 

Schedule A-2

 

SCHEDULE
B

 

DEFINED
TERMS

 

 

As
used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

 

“Acceptance”
is defined in Section 2B(5).

 

“Acceptance Day”
is defined in Section 2B(5).

 

“Acceptance Window”
is defined in Section 2B(5).

 

“Accepted Note”
is defined in Section 2B(5).

 

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

 

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

 

“Additional Guarantor”
is defined in Section 20.8.

 

“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 other 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.

 

“Aggregate TMVUA Real
Property NOI” means the aggregate amount of TMVUA Real Property NOI
for all TMVUA Real Properties.

 

“Agreement”
means this Note Purchase and Private Shelf Agreement, dated as of July 14,
2010, between the Company and the other Credit Parties, on the one hand and
PIM, the Series A Purchasers, and each Prudential Affiliate that hereafter may
become bound by certain provisions hereof, on the other hand, as it may from
time to time be amended, supplemented or otherwise modified.

 

Schedule B-1

 

“ALFs” means
assisted living facilities.

 

“Anti-Terrorism
Order” means Executive Order No. 13,224 of September 24, 2001,
Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as
amended.

 

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

 

“Authorized Officer”
means (i) in the case of the Company, its President, Chief Financial Officer,
Controller, Treasurer and any Vice President thereof designated as an
“Authorized Officer” of the Company in the Information Schedule or designated
as an “Authorized Officer” of the Company for purposes of this Agreement in an
Officer’s Certificate executed by the Company’s President, Chief Financial
Officer or Treasurer, and (ii) in the case of PIM, any officer of PIM
designated as its “Authorized Officer” in the Information Schedule or any
officer of PIM designated as its “Authorized Officer” for the purpose of this
Agreement in a certificate executed by one of its Authorized Officers.  Any action taken under this Agreement on
behalf of the Company by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of the Company and whom PIM in
good faith believes to be an Authorized Officer of the Company at the time of
such action shall be binding on the Company even though such individual shall
have ceased to be an Authorized Officer of the Company, and any action taken
under this Agreement on behalf of PIM by any individual who on or after the
date of this Agreement shall have been an Authorized Officer of PIM, and who the
Company in good faith believes to be an Authorized Officer of PIM at the time
of such action shall be binding on PIM even though such individual shall have
ceased to be an Authorized Officer of PIM.

 

“Available Facility Amount”
is defined in Section 2B(1).

 

“Beneficiaries”
is defined in Section 20.

 

“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 Company on such date that is pari passu in rank to
the indebtedness under the Credit Agreement other than the Obligations (as
defined in the Credit Agreement on the date hereof).

 

“Borrowing Base Certificate”
means the certificate in the form of Exhibit E hereto, or in such other
form acceptable to the Required Holders, to be delivered pursuant to Sections
4A(4) and 7.1(c) hereof.

 

“Borrowing Base
Determination Date” means each date on which the Borrowing Base is
certified to each holder of Notes which is an Institutional Investor, as
follows:

 

(a) Quarterly -- on the 50th day following the end of
each Fiscal Quarter (except for the fourth Fiscal Quarter, in which event it
shall be on the 60th day following the end of such quarter); and

 

(b) Property Adjustments -- upon each addition or
deletion of an Eligible Property pursuant to Section 9.10.

 

Schedule B-2

 

“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 the Company 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 SNFs or ALFs; (c) no more than 15% of the Borrowing Base Value may be
comprised of Eligible Properties which are not 100% owned by the Company and/or
any Guarantor (exclusive of Eligible Properties attributable to (a) above); and
(d) no more than 10% of the Borrowing Base Value may be comprised of any one
Eligible Property.

 

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

 

“Business Day”
means:  (a) for the purposes of Section
2B(3) only, any day which is both a New York Business Day and a day on which
PIM is open for business; and (b) for the purposes of any other provision of
this Agreement, a New York Business Day.

 

“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 the owner’s percentage ownership of such Eligible
Property.

 

“Cancellation Date”
is defined in Section 2B(8)(iv).

 

“Cancellation Fee”
is defined in Section 2B(8)(iv).

 

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

 

“Capitalization Rate”
means 8.5% for ALFs and 12% for SNFs.

 

“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.

 

“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 Company 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 Company (together with any new
directors whose election by the Board of Directors or whose nomination for
election by the shareholders of the Company 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.

 

Schedule B-3

 

“Closing Day”
means, with respect to the Series A Notes, the Series A Closing Day and, with
respect to any Accepted Note, the Business Day specified for the closing of the
purchase and sale of such Accepted Note in the Confirmation of Acceptance with
respect to such Accepted Note; provided
that (i) if the Company and the Purchaser which is obligated to purchase such
Accepted Note agree on an earlier Business Day for such closing, the “Closing
Day” for such Accepted Note shall be such earlier Business Day, and (ii) if the
closing of the purchase and sale of such Accepted Note is rescheduled pursuant
to Section 2B(7), the “Closing Day” for such Accepted Note, for all purposes of
this Agreement except references to “original Closing Day” in Section
2B(8)(iii), shall mean the Rescheduled Closing Day with respect to such
Accepted Note.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time.

 

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

 

“Confirmation of
Acceptance” is defined in Section 2B(5).

 

“Credit Agreement”
means that certain Second Amended and Restated Credit Agreement, dated as of
July 17, 2008, by and among the Company, the Guarantors, the Lenders named
therein and from time to time party thereto and the other parties from time to
time party thereto, as amended, restated, supplemented, replaced or otherwise
modified from time to time.

 

“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 (as such terms are defined as of the date hereof in the Credit Agreement).

 

“Credit Parties”
means the Company and the Guarantors.

 

“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 voluntary prepayments of
principal paid on such Total Indebtedness) less scheduled principal
amortization payments received on mortgage loans receivable or its REMIC
Certificate investments (exclusive of any balloon payments or voluntary
prepayments of principal received on mortgage loans receivable or on the
underlying mortgage loans of investments in REMIC Certificates).

 

“Default”
means an event or condition the occurrence or existence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.

 

“Default Rate”
means (i) as to any Series A-1 Note, that rate of interest that is the greater
of (a) 7.26% per annum, and (b) 2% over the rate of interest publicly announced
by JPMorgan Chase Bank as its “base” or “prime” rate, (ii) as to any Series A-2
Note, that rate of interest that is the greater of (a) 7.74% per annum, and (b)
2% over the rate of interest publicly announced by JPMorgan Chase Bank as its
“base” or “prime” rate, and (iii) as to any Shelf Note, that rate of interest
that is the greater of (1) 2% over the Interest Rate specified in the caption
at set forth at the top of such Shelf Note, and (2) 2% over the rate of
interest publicly announced by JPMorgan Chase Bank from time to time in New
York City as its “base” or “prime” rate.

 

Schedule B-4

 

“Delayed Delivery Fee”
is defined in Section 2B(8)(iii).

 

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

 

“EBITDA” means,
for any period, determined on a consolidated basis for the Company and its
Subsidiaries in accordance with GAAP, the sum of net income (or loss) plus, to
the extent deducted in the calculation thereof: 
(i) depreciation and amortization expense; (ii) interest expense; (iii)
income tax expense; (iv) extraordinary, unrealized or nonrecurring losses,
including impairment charges and reserves, minus, to the extent included in the
calculation thereof:  (v) funds received
by the Company 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.

 

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

 

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

 

(a) such Property is real property which is at least
majority owned in fee simple, or 100% leased by the Company or a Material
Subsidiary pursuant to a Qualified Ground Lease; provided that for any
Property owned less than 100%, the Company or such Material Subsidiary shall
have the unilateral right (i) to 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) such Property is currently in service (not under
development or non-stabilized);

 

(c) such Property constitutes a Senior Housing Asset
located in the United States of America;

 

(d) neither such Property nor the ownership interest
therein is subject to any Lien (other than Permitted Liens) or to any negative
pledge;

 

(e) if such Property is owned by a Material
Subsidiary, (i) none of the Company’s beneficial ownership interest in such
Material Subsidiary is subject to any Lien (other than certain Permitted Liens)
or to any negative pledge, (ii) such Material Subsidiary has the unilateral
right to sell, transfer or otherwise dispose of such Property and to create a
Lien on such Property as security for Indebtedness for Borrowed Money, and
(iii) such Material Subsidiary has become a Guarantor pursuant to Section 9.9
hereof;

 

(f) such Property, based on the Company’s or such
Material Subsidiary’s 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; and

 

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

 

Schedule B-5

 

“Eligible Property NOI”
means, for any given period, the aggregate Property NOI attributable to the
Eligible Properties owned by the Company 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 Company or a
Material Subsidiary for such period.

 

“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 from time
to time, and the rules and regulations promulgated thereunder from time to time
in effect.

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that is treated as a
single employer together with the Company or a Subsidiary under section 414 of
the Code.

 

“Event of Default”
is defined in Section 11.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, and
the rules and regulations promulgated thereunder from time to time in effect.

 

“Facility”
is defined in Section 2B(l).

 

“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.

 

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

 

“GAAP” means
generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the date of determination; provided,
that (except with respect to SEC filings referenced in Section 7.1(a) and (b))
“GAAP” shall exclude the effects of Accounting Standards Codification 825-10-25
(previously referred to as SFAS 159) or any successor or similar provision to
the extent it relates to “fair value” accounting for liabilities.

 

Schedule B-6

 

“Governmental
Authority” means the government of

 

(a)        the United States of America or any
state or other political subdivision thereof, or

 

(b)        any other jurisdiction in which any of
the Company or any Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of such Person, or

 

(c)        any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, any such government.

 

“Guaranteed Obligations”
is defined in Section 20.1(a).

 

“Guarantors”
means the Persons from time to time party hereto and obligated under the
Multiparty Guaranty, including (i) the Persons signatory hereto and identified
on the signature pages hereto as “Guarantors”, and (ii) each other Person which
from time to time hereafter executes and delivers a Joinder to Multiparty
Guaranty pursuant to the requirements of Section 9.9; as any of the foregoing
Persons in clauses (i) and (ii) from time to time may be released and
discharged from its obligations under the Multiparty Guaranty pursuant to the
provisions of Section 20.4.

 

“Guaranty” shall
mean, with respect to any Person, any direct or indirect obligation or
liability, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness for Borrowed Money, lease,
dividend or other obligation payable or performable by another Person in any
manner, including, without limitation, any obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable or
obligated, and including, without limitation, any obligation of such Person
(contingent or otherwise, direct or indirect) to:  (i) maintain working capital, equity capital,
the solvency or any balance sheet condition or other financial condition or
liquidity or level of income or cash flow of another Person in any manner; (ii)
to purchase the obligations of or equity interests in another Person from the
holders of such obligations or interests; (iii) to purchase or lease property,
securities or services or supply or advance any funds, goods or services to or
on behalf of another Person in any manner; (iv) to guarantee (a) the completion
of any work or any other schedule or deliverable obligations or requirements of
another Person in any manner, (b) the quality of any construction work, means
or methods of another Person in any manner, (c) any warranty or indemnity obligations
of another Person in any manner, or (d) any other payment, performance or
contractual obligations of another Person in any manner; or (v) purchase or
otherwise pay (or advance or supply funds for the 

 

Schedule B-7

 

purchase or payment of) any Indebtedness for Borrowed Money or other
obligation of another Person or to purchase or otherwise make payment for (or
advance or supply funds for the purchase or payment for) any products,
materials, supplies or other property, or for any transportation or services,
regardless of the non-delivery or non-furnishing thereof, in any such case if
the purpose or effect of such agreement is to provide assurance that such
obligation will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be protected
against loss in respect thereof. 
Guaranties shall include obligations of partnerships and joint ventures
of which such Person is a general partner or co-venturer that are not expressly
non-recourse to such Person.  In any
computation of the indebtedness or other liabilities of the obligor under any
Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

 

“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.

 

“Hedge Treasury
Note(s)” means, with respect to any Accepted Note, the United States
Treasury Note or Notes whose average life (as determined by PIM) most closely
matches the average life of such Accepted Note.

 

“holder”
means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

 

“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.

 

“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.

 

“include”
or “including” means, unless the
context clearly requires otherwise, “including without limitation.”

 

“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, (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, and (f) all obligations of the sort described
in the foregoing clauses with respect to which such Person has become liable by
way of a Guaranty.

 

Schedule B-8

 

“Institutional
Investor” means (a) any Purchaser of a Note, (b) any holder of a
Note holding (together with one or more of its affiliates) more than 5% of the
aggregate principal amount of the Notes then outstanding, (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.

 

“Interest Expense”
means, for any period of determination, the interest expense, whether paid,
accrued or capitalized (without deduction of consolidated interest income) of
the Company and its Subsidiaries on a consolidated basis 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).

 

“Issuance Period”
is defined in Section 2B(8)(ii).

 

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

 

“Joinder to Multiparty
Guaranty” means a joinder agreement entered into by an Additional
Guarantor in substantially the form of Exhibit F.

 

“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.

 

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

 

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

 

Schedule B-9

 

“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.

 

“Make-Whole Amount”
is defined in Section 8.6.

 

“Material”
means material in relation to the business, operations, affairs, financial
condition, assets, properties, or prospects of the Credit Parties taken as a
whole.

 

“Material Adverse Effect”
means a material and adverse effect on (a) the business, condition (financial
or otherwise), operations, performance or properties of the Company and its
Subsidiaries taken as a whole, (b) the ability of the Company or any Guarantor
to perform its obligations under the Transaction Documents to which it is a
party, or (c) the validity or enforceability of any of the Transaction
Documents or the rights or remedies of PIM or the holders of Notes 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 buildings that contain 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. and any successor thereto.

 

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

 

“Multiparty Guaranty”
is defined in Section 20.

 

“NAIC” means the National Association of Insurance Commissioners
or any successor thereto.

 

“New York Business
Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City are required or authorized to be closed.

 

“Notes”
is defined in Section 1C.

 

“Officer’s Certificate”
means a certificate of a Senior Financial Officer or of any other officer of
the Company whose responsibilities extend to the subject matter of such
certificate.

 

“PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
or any successor thereto.

 

“Pension Act”
means the Pension Protection Act of 2006, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time in
effect.

 

Schedule B-10

 

“Pension Funding Rules”
means the rules of the Code and ERISA regarding minimum required contributions
(including any installment payment thereof) to certain Plans and set forth in,
with respect to plan years ending prior to the effective date as to such Plan
of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as
in effect prior to the Pension Act and, thereafter, Sections 412 and 430 of the
Code and Sections 302 and 303 of ERISA.

 

“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 Subsidiary is formed or acquired as a
result of or in connection with the Acquisition, the Company shall have
complied with the requirements of Section 9.9 hereof (to the extent applicable)
in connection therewith; and

 

(e) after giving effect to the Acquisition, no Default
or Event of Default shall exist, including with respect to the financial
covenants contained in Section 10.10 hereof, provided, further,
that if such Acquisition, together with any other Acquisitions made during the
then current Fiscal Quarter and the preceding three Fiscal Quarters of the
Company, 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 Company shall
provide to the holders of Notes which are Institutional Investors covenant
calculations for the covenants contained in Section 10.10, showing that the
projected effect of the Acquisition, in terms of additional asset value,
liabilities incurred if any, and additional revenues and expenses associated
therewith have been contemplated and have been projected into the expected
operating results and financial position of the Company 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 10.10 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 9.4; (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 

 

Schedule B-11

 

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 Company 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 and not included for purpose of the
calculation of TMVUA.

 

“Person”
means an individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a Governmental Authority.

 

“PIM”
means Prudential Investment Management, Inc.

 

“Plan”
means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject
to Title I of ERISA that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company,
any Subsidiary or any ERISA Affiliate or with respect to which the Company, any
Subsidiary or any ERISA Affiliate may have any liability.

 

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

 

“Principal Credit Facility”
means any loan agreement, credit agreement, note purchase agreement or similar
agreement under which credit facilities in the aggregate original principal or
commitment amount of at least $10,000,000 are provided for.

 

“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 Company
or any of its Subsidiaries.

 

“Property Expenses”
means the costs (including, but not limited to, payroll, taxes, assessments,
insurance, utilities, landscaping and other similar charges) of operating and
maintaining any TMVUA Real Property which are the responsibility of the Company
or the applicable Guarantor that are not paid directly by the tenant, but
excluding depreciation, amortization, interest costs and maintenance capital
expenditures to the extent such TMVUA Real Property is under a triple-net
lease.

 

“Property Income”
means cash rents (excluding, as an abundance of caution,  non-cash straight-line rent) and other cash
revenues received by the Company or a Guarantor in the ordinary course for any
TMVUA Real Property, but excluding security deposits and prepaid rent except to
the extent applied in satisfaction of tenants’ obligations for rent.

 

Schedule B-12

 

“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 prepaid 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 Company or
a Guarantor, whether as rent or mortgage payments for the property, will be
excluded from the calculation of (b) above.

 

“Prudential Affiliate”
means (i) any corporation or other entity controlling, controlled by, or under
common control with, PIM and (ii) any managed account or investment fund which
is managed by PIM or a Prudential Affiliate described in clause (i) of this
definition.  For purposes of this
definition, the terms “control,” “controlling” and “controlled” shall mean the
ownership, directly or through subsidiaries, of a majority of a corporation’s
or other Person’s Voting Interests or equivalent voting securities or
interests.

 

“Purchasers”
means the Series A Purchasers and PIM and/or the Prudential Affiliate(s) which
are purchasing any Accepted Notes.

 

“Qualified Ground Lease”
means each of the ground leases or subground leases set forth on Schedule
5.10(b) 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 Required
Holders, including, without limitation, provisions to the effect that (i) the
lessor shall notify any holder of a Lien in such lease of the occurrence of any
default by the lessee under such lease and shall afford such holder the option
to cure such default, and (ii) in the event that such lease is terminated, such
holder shall have the option to enter into a new lease having terms
substantially identical to those contained in the terminated lease, and (g)
which is otherwise acceptable in form and substance to the Required Holders.

 

“Qualified
Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in Rule
144A(a)(1) under the Securities Act.

 

“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 (but not limited to) of the following services:  physical therapy, occupational therapy,
speech therapy and other related services.

 

Schedule B-13

 

“REIT” means a
Person that is qualified to be treated for tax purposes as a real estate
investment trust under Sections 856-860 of the Code.

 

“Related Fund”
means, with respect to any holder of any Note, any fund or entity that (i)
invests in Securities or bank loans, and (ii) is advised or managed by such
holder, the same investment advisor as such holder or by an affiliate of such
holder or such investment advisor.

 

“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.

 

“Request for
Purchase” is defined in Section 2B(2).

 

“Required Holders”
means, at any time, the holder or holders of a majority of the aggregate
principal amount of the Notes or of a Series of Notes, as the context may
require, from time to time outstanding (exclusive of Notes then owned by any
Credit Party, any Subsidiary or any of their respective Affiliates).

 

“Rescheduled Closing
Day” is defined in Section 2B(7).

 

“Responsible Officer”
means any Senior Financial Officer and any other officer with responsibility
for the administration of the relevant portion of this Agreement or any other
Transaction Document.

 

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

 

“Securities”
or “Security” shall have the
meaning specified in Section 2(1) of the Securities Act.

 

“Secured Debt”
means, as of any given date, the aggregate principal amount of all Total
Indebtedness outstanding at such date that is secured by a Lien.

 

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

 

“Securities Act”
means the Securities Act of 1933, as amended from time to time, and the rules
and regulations promulgated thereunder from time to time in effect.

 

Schedule B-14

 

“Senior Financial
Officer” means the chief executive officer, chief financial officer,
principal accounting officer, treasurer or controller of the Company.

 

“Senior Housing Assets”
means any Properties 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 Properties
primarily used for senior citizen residences or health care services, together
with other improvements incidental thereto.

 

“Series”
is defined in Section 1C.

 

“Series A Closing Day”
is defined in Section 3.

 

“Series A Purchasers”
means (i) The Prudential Insurance Company of America, as the purchaser of the
Series A-1 Notes, and (ii) Pruco Life Insurance Company and United of Omaha
Life Insurance Company, as the purchasers of the Series A-2 Notes.

 

“Series A Notes”
is defined in Section 1B.

 

“Series A-1 Notes”
is defined in Section 1A.

 

“Series A-2 Notes”
is defined in Section 1B.

 

“Shelf Notes” is
defined in Section 1C.

 

“Significant Lease”
means, for any specified calendar year, any Lease under which the Company or
one of its Subsidiaries is the lessor and which Lease provides for annual
minimum cash rent payments of $1,000,000 or more during such calendar year
(notwithstanding the amount of lease payments in prior or subsequent years).

 

“SNFs” means
skilled nursing facilities.

 

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

 

“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.

 

Schedule B-15

 

“Subsidiary” of
any Person means any corporation, partnership, joint venture, limited liability
company, trust or estate (i) of which (or in which) more than 50% of (a) the
issued and outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such partnership, joint venture or
limited liability company, or (c) the beneficial interest in such trust or
estate, in each case, is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person’s other Subsidiaries, or (ii) the accounts of which
would appear on the consolidated financial statements of such Person in
accordance with GAAP.  Unless the context
otherwise clearly requires, any reference to a “Subsidiary” is a reference to a
Subsidiary of the Company.

 

“SVO”
means the Securities Valuation Office of the National Association of Insurance
Commissioners (or any successor organization acceding to the authority
thereof).

 

“Tangible Net Worth”
means for each applicable period, total stockholders’ equity on the Company’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.

 

“TMVUA” means,
at any time of determination, the “total market value of unencumbered assets”,
to be computed as the sum of the following at such time (a) TMVUA Real Property
NOI divided by the applicable TMVUA Cap Rates for all TMVUA Real
Properties owned for four consecutive quarters or longer at such time, and (b)
the Investment Amount of all TMVUA Real Properties owned for less than four
consecutive quarters at such time.

 

“TMVUA Cap Rates”
means:  (i) 8.00% for ALFs or, if any one
or more Principal Credit Facilities provides for a higher capitalization rate
for ALFs, then the highest capitalization rate for ALFs; (ii) 10.00% for SNFs
or, if any one or more Principal Credit Facilities provides for a higher
capitalization rate for SNFs, then the highest capitalization rate for SNFs;
and (iii) 11.50% for schools or, if any one or more Principal Credit Facilities
provides for a higher capitalization rate for schools, then the highest such
capitalization rate for schools.

 

“TMVUA Real Properties”
means real property interests in ALFs, SNFs or schools, in each case which are
(i) located in the United States of America, (ii) 100% owned in fee simple by
the Company or a Guarantor, and (iii) not subject to any consensual Lien, and “TMVUA Real Property” means any one of them.

 

“TMVUA Real Property NOI”
means, with respect to any TMVUA Real Property for the Rolling Period then or
most recently ended (without duplication), (i) Property Income for such period minus
(ii) Property Expenses for such period.

 

“Total Asset Value”
means the book value, without giving effect to depreciation, of all assets of
the Company and its Subsidiaries at such time, less (a) the amount, if any, of
any investments in any unconsolidated subsidiaries, joint ventures or other
similar entities, 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 any date of determination and without duplication, all
Indebtedness for Borrowed Money of the Company and its Subsidiaries.

 

Schedule B-16

 

“Transaction
Documents” means this Agreement (including the Multiparty Guaranty),
the Notes, and any and all other agreements, documents, certificates and
instruments from time to time executed and delivered by or on behalf of any
Credit Party related thereto.

 

“Unsecured Debt”
means, as of any date of determination, the aggregate principal amount of all
Total Indebtedness outstanding at such date that is not Secured Debt.

 

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

 

“USA Patriot Act”
means United States Public Law 107-56, Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA)
PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.

 

“Voting Interests”
means shares of capital stock issued by a corporation, or equivalent equity
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.

 

“Wholly-owned Subsidiary”
means, at any time, any Subsidiary one hundred percent of all of the equity
interests (except directors’ qualifying shares) and voting interests of which
are owned by any one or more of the Company and the Company’s other
Wholly-Owned Subsidiaries at such time.

 

Schedule B-17

 

 

EXHIBIT
A-1

 

[FORM OF
SERIES A-1 NOTE]

 

LTC PROPERTIES, INC.

 

5.26% SERIES A-1 SENIOR NOTE DUE JULY 14, 2015

 

	
  No. [___]

  	
  [Date]

  
	
  $[____]

  	
  PPN 502175 A*3

  

 

FOR VALUE RECEIVED, the undersigned, LTC
PROPERTIES, INC. (herein called the “Company”),
a corporation organized under the laws of the State of Maryland, hereby
promises to pay to [_____________], or registered assigns, the principal sum of
[___________] DOLLARS on July 14, 2015, with interest (computed on the basis of
a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 5.26% per annum from the date hereof, payable at maturity and
quarterly, on the 14th day of each January, April, July and October in each
year, commencing with the January 14, April 14, July 14 or October 14 next
succeeding the date hereof until the principal hereof shall have become due and
payable, and (b) at a rate per annum from time to time equal to the greater of
(i) 7.26% and (ii) 2% over the rate of interest publicly announced by JPMorgan
Chase Bank from time to time in New York, New York as its “base” or “prime”
rate (i) on any overdue payment of interest, and (ii) following the occurrence
and during the continuance of an Event of Default (as defined in the Agreement
referred to below) on the unpaid principal balance, any overdue payment of
interest and any overdue payment of any Make-Whole Amount, in the case of each
of clause (i) and (ii), payable quarterly as aforesaid (or, at the option of
the registered holder hereof, on demand).

 

Payments
of principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at JPMorgan
Chase Bank, New York, New York or at such other place as the holder hereof
shall designate to the Company in writing as provided in the Agreement referred
to below.

 

This
Note is one of a series of senior notes (herein called the “Notes”) issued pursuant to a Note Purchase
and Private Shelf Agreement, dated as of July 14, 2010 (as from time to time
amended, restated, supplemented or otherwise modified, the “Agreement”), between the Company and the
other Credit Parties named therein, on the one hand, and the other Persons
party thereto, on the other hand, and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by
its acceptance hereof, to have made the representation set forth in Section
6.2.

 

This
Note is a registered Note and, as provided in the Agreement, upon surrender of
this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof
or such holder’s attorney duly authorized in writing, a replacement Note for a
like principal amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

 

Schedule A-1-1

 

This
Note is subject to optional prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Agreement, but not otherwise.

 

The
Notes have been unconditionally guaranteed by certain of the Company’s
Subsidiaries and other Affiliates pursuant to the terms of the Multiparty
Guaranty.

 

If
an Event of Default occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect, provided in
the Agreement.

 

Capitalized
terms used and not otherwise defined herein shall have the meanings provided in
the Agreement.

 

This
Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such state that would permit the
application of the laws of a jurisdiction other than such state.

 

	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Schedule A-1-2

 

EXHIBIT
A-2

 

[FORM OF
SERIES A-2 NOTE]

 

LTC PROPERTIES, INC.

 

5.74% SERIES A-2 SENIOR NOTE DUE
JANUARY 14, 2019

 

	
  No. [___]

  	
  [Date]

  
	
  $[____]

  	
  PPN 502175 A@1

  

 

FOR VALUE RECEIVED, the undersigned, LTC
PROPERTIES, INC. (herein called the “Company”),
a corporation organized under the laws of the State of Maryland, hereby
promises to pay to [_____________], or registered assigns, the principal sum of
[___________] DOLLARS on January 14, 2019, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 5.74% per annum from the date hereof, payable at maturity and
quarterly, on the 14th day of each January, April, July and October in each
year, commencing with the January 14, April 14, July 14 or October 14 next
succeeding the date hereof until the principal hereof shall have become due and
payable, and (b) at a rate per annum from time to time equal to the greater of
(i) 7.74% and (ii) 2% over the rate of interest publicly announced by JPMorgan
Chase Bank from time to time in New York, New York as its “base” or “prime”
rate (i) on any overdue payment of interest, and (ii) following the occurrence
and during the continuance of an Event of Default (as defined in the Agreement
referred to below) on the unpaid principal balance, any overdue payment of
interest and any overdue payment of any Make-Whole Amount, in the case of each
of clause (i) and (ii), payable quarterly as aforesaid (or, at the option of
the registered holder hereof, on demand).

 

Payments
of principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at JPMorgan
Chase Bank, New York, New York or at such other place as the holder hereof
shall designate to the Company in writing as provided in the Agreement referred
to below.

 

This
Note is one of a series of senior notes (herein called the “Notes”) issued pursuant to a Note Purchase
and Private Shelf Agreement, dated as of July 14, 2010 (as from time to time
amended, restated, supplemented or otherwise modified, the “Agreement”), between the Company and the
other Credit Parties named therein, on the one hand, and the other Persons
party thereto, on the other hand, and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by
its acceptance hereof, to have made the representation set forth in Section
6.2.

 

This
Note is a registered Note and, as provided in the Agreement, upon surrender of
this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof
or such holder’s attorney duly authorized in writing, a replacement Note for a
like principal amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

 

Exhibit A-2-1

 

The
Company will make required prepayments of principal on the dates and in the
amounts specified in the Agreement.  This
Note is also subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Agreement, but not
otherwise.

 

The
Notes have been unconditionally guaranteed by certain of the Company’s
Subsidiaries and other Affiliates pursuant to the terms of the Multiparty
Guaranty.

 

If
an Event of Default occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect, provided in
the Agreement.

 

Capitalized
terms used and not otherwise defined herein shall have the meanings provided in
the Agreement.

 

This
Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such state that would permit the
application of the laws of a jurisdiction other than such state.

 

	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Exhibit A-2-2

 

EXHIBIT
A-3

 

[FORM OF
SHELF NOTE]

 

LTC PROPERTIES, INC.

 

SERIES ____ SENIOR NOTE

 

No. [___]

ORIGINAL PRINCIPAL
AMOUNT:

ORIGINAL ISSUE DATE:

INTEREST RATE:

INTEREST PAYMENT
DATES:  [Quarterly][Semi-annually] on
each [STATE DATES]

FINAL MATURITY DATE:1

PRINCIPAL PREPAYMENT
DATES AND AMOUNTS:2

 

FOR VALUE RECEIVED, the undersigned, LTC
PROPERTIES, INC. (herein called the “Company”),
a corporation organized under the laws of the State of Maryland, hereby
promises to pay to [________________], or registered assigns, the principal sum
of [_____________________] [DOLLARS] [on the Final Maturity Date specified
above] [, payable on the Principal Prepayment Dates and in the amounts
specified above, and on the Final Maturity Date as specified above in an amount
equal to the unpaid balance of the principal hereof,] with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the Interest Rate per annum specified above, payable on the
Final Maturity Date specified above and on each Interest Payment Date specified
above, commencing with the Interest Payment Date next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b)
at a rate per annum from time to time equal to the Default Rate (i) on any
overdue payment of interest, and (ii) following the occurrence and during the
continuance of an Event of Default (as defined in the Agreement referred to
below) on the unpaid principal balance, any overdue payment of interest and any
overdue payment of any Make-Whole Amount, in the case of each of clause (i) and
(ii), payable on each Interest Payment Date as aforesaid (or, at the option of
the registered holder hereof, on demand).

 

Payments
of principal, Make-Whole Amount, if any, and interest are to be made in lawful
money of the United States of America at JPMorgan Chase Bank, New York, New
York or at such other place as the holder hereof shall designate to the Company
in writing.

 

This
Note is one of a series of senior notes (herein called the “Notes”) issued pursuant to a Note Purchase
and Private Shelf Agreement, dated as of July 14, 2010 (as from time to time
amended, restated, supplemented or otherwise modified, the “Agreement”), between the Company and the
other Credit Parties named therein, on the one hand, and the other Persons party
thereto, on the other hand, and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by
its acceptance hereof, to have made the representations set forth in Section
6.2 of the Agreement.

 

1 The Final Maturity Date must be no more than 10
years after the original issuance date

2 The Remaining Average Life must be no more than 7
years after the original issuance date.

 

Exhibit A-3-1

 

This
Note is a registered Note and, as provided in the Agreement, upon surrender of
this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof
or such holder’s attorney duly authorized in writing, a replacement Note for
the then outstanding principal amount will be issued to, and registered in the
name of, the transferee.  Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company shall not be
affected by any notice to the contrary.

 

This
Note is also subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Agreement, but not
otherwise.

 

The
Notes have been unconditionally guaranteed by certain of the Company’s
Subsidiaries and other Affiliates pursuant to the terms of the Multiparty
Guaranty.

 

If
an Event of Default shall occur and be continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount), and with the effect, provided in
the Agreement.

 

Capitalized
terms used and not otherwise defined herein shall have the meanings provided in
the Agreement.

 

This Note shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such state that would permit the application of the
laws of a jurisdiction other than such State.

 

	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Exhibit A-3-2

 

EXHIBIT B

 

[FORM OF REQUEST FOR PURCHASE]

 

LTC PROPERTIES, INC.

 

Reference
is made to the Note Purchase and Private Shelf Agreement (the “Agreement”), dated as of July 14, 2010, between LTC
Properties, Inc. (the “Company”) and
the other Persons named therein as parties thereto.  All terms herein that are defined in the
Agreement have the respective meanings specified in the Agreement.  Pursuant to Section 2B(3) of the Agreement, the
Company hereby makes the following Request for Purchase:

 

Individual
specifications of the notes covered hereby (the “Notes”):

 

 

	
  Principal Amount

  	
  Final Maturity Date

  	
  Principal Prepayment

  Dates and Amounts

  	
  Interest Payment

  Period

  
	
   

  	
   

  	
   

  	
   

  
	
  *

  	
  **

  	
  ***

  	
  [quarterly] [semi-annually]

  

 

Use
of proceeds of the Notes:

 

Proposed
day for the closing of the purchase and sale of the Notes:

 

The
purchase price of the Notes is to be transferred to:

 

	
  Name, Address and ABA

  Routing Number of Bank

  	
  Number of Account

  	
  Name & Telephone No. of Bank Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

The
Company certifies (a) that the representations and warranties contained in
Section 5 of the Agreement are true on and as of the date of this Request for
Purchase, and (b) that there exists on 

 

 

* Minimum of $10,000,000

 

** Not more than ten years after original
issuance.

 

*** Remaining Average Life to be not more than 7
years after original issuance.

 

Exhibit B-1

 

the
date of this Request for Purchase no Event of Default or Default (both before
and after giving effect to the issuance and purchase of the Notes contemplated
hereby).

 

 

Dated:  _______________  _____, ________

 

 

	
   

  	
  LTC PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Exhibit B-2

 

EXHIBIT C

 

[FORM OF CONFIRMATION OF ACCEPTANCE]

 

 

LTC PROPERTIES, INC.

 

Reference is made to the
Note Purchase and Private Shelf Agreement (the “Agreement”),
dated as of July 14, 2010, between LTC Properties, Inc. (the “Company”) and
the other Persons named therein as parties thereto.  All terms used herein that are defined in the
Agreement have the respective meanings specified in the Agreement.

 

PIM or the Prudential
Affiliate which is named below as a Purchaser of Notes hereby confirms the
representations as to such Notes set forth in Section 6 of the Agreement,
and agrees to be bound by the provisions of Sections 2B(5) and 2B(7) of the
Agreement.

 

Pursuant to Section 2B(5)
of the Agreement, an Acceptance with respect to the following Accepted Shelf
Notes is hereby confirmed:

 

I.          Accepted Notes: 
Aggregate principal amount $_____________.

 

(A)       (a)        Name
of Purchaser:

(b)        Principal amount:

(c)        Final maturity date:

(d)        Principal prepayment dates and amounts:

(e)                               Interest
rate:

(f)                                  Interest
payment period:  [quarterly]
[semi-annually]

(g)                               Payment and
notice instructions:  As set forth on
attached Purchaser Schedule.

 

(B)       (a)        Name
of Purchaser:

(b)                              Principal
amount:

(c)                               Final
maturity date:

(d)                              Principal
prepayment dates and amounts:

(e)                               Interest
rate:

(f)                                  Interest
payment period:  [quarterly] [semi-annually]

(g)                               Payment and
notice instructions:  As set forth on
attached Purchaser Schedule.

 

[(C), (D) . . . same information as above.]

 

II.         Closing Day: _______________  _____, _______

 

Dated:  _______________  _____, ________

 

Exhibit E-1

 

LTC PROPERTIES, INC.

 

 

By:  _________________________

Name:

Title:

 

 

PRUDENTIAL
INVESTMENT MANAGEMENT, INC.

 

By:  _________________________

Name:  

Title:     Vice President

 

 

[PRUDENTIAL
AFFILIATE]

 

By:  _________________________

Name:  

Title:     Vice President

 

Exhibit E-2

 

EXHIBIT E

 

FORM OF BORROWING BASE CERTIFICATE

 

To:  Prudential Investment Management, Inc. and
the holders of Notes issued pursuant to the Note Agreement described below
which are Institutional Investors

 

Pursuant
to the terms of the Note Purchase and Private Shelf Agreement, dated as of July
14, 2010, among us (the “Note Agreement”,
with capitalized terms used herein and not defined herein having the meanings
given to them in the Note 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 the Obligations (as defined in the Credit Agreement
on July 14, 2010)) $                        

 

4.
Borrowing Base (Line 2 minus by Line 3 above) $                                         

 

The
Company represents and warrants that the aggregate outstanding principal amount
of the Notes and the Loans and L/C Obligations (as defined in the Credit
Agreement) 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:                                         

 

Exhibit E-1

 

SCHEDULE I TO BORROWING BASE CERTIFICATE

 

Exhibit E-2

 

EXHIBIT F

 

[FORM OF JOINDER TO MULTIPARTY
GUARANTY]

 

JOINDER NO. [__], dated as of [________] (this “Joinder”), to the Multiparty Guaranty
set forth as Section 20 (as amended or otherwise modified from time to time,
the “Multiparty Guaranty”) to that certain
Note Purchase and Private Shelf Agreement, dated as of July 14, 2010 (as
amended or otherwise modified from time to time, the “Note
Agreement”), executed by LTC Properties, Inc. (the “Company”), the Guarantors party thereto, and the Purchasers
party thereto.  Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Note Agreement.

 

1.         Pursuant to the Multiparty Guaranty,
certain obligations owing by the Company to the holders of Notes under the Note
Agreement and evidenced by the Notes (together with their respective
Transferees, the “Beneficiaries”) are
guaranteed by the Guarantors.

 

2.         The undersigned (the “Additional Guarantor”) is
executing this Joinder in accordance with the requirements of Section 20.8 of
the Multiparty Guaranty.

 

3.         The Additional Guarantor by its
signature below becomes a Guarantor under the Multiparty Guaranty and the other
provisions of the Agreement with the same force and effect as if originally
named therein as a Guarantor and the Additional Guarantor hereby
(a) agrees to all the terms and provisions of the Agreement applicable to
it as a Guarantor thereunder, and (b) represents and warrants that the
representations and warranties made by it as a Guarantor set forth in Section 5
of the Note Agreement are true and correct on and as of the date hereof.  Each reference to a Guarantor in the
Multiparty Guaranty and the other provisions of the Agreement shall be deemed
to include the Additional Guarantor.  The
Multiparty Guaranty and the other provisions of the Agreement are hereby
incorporated herein by reference.

 

4.         The Additional Guarantor represents and
warrants to the Beneficiaries that this Joinder has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

 

5.         This Joinder may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery of an executed signature page to
this Joinder by facsimile transmission shall be as effective as delivery of a
manually-signed original thereof.

 

6.         Except as expressly modified hereby,
the Multiparty Guaranty and the other provisions of the Agreement shall remain
in full force and effect.

 

7.         Any provision of this Joinder that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

Exhibit F-1

 

8.         All communications and notices
hereunder to the Additional Guarantor shall be given to it at the address set
forth under its signature below.

 

IN WITNESS WHEREOF, the Additional Guarantor has
executed this Joinder by its duly authorized officer as of the day and year
first above written.

 

[NAME],
a [________] [corporation]

 

By:                                                                

 

Name:                                                           

 

Title:                                                              

 

Address:     c/o LTC Properties, Inc.

31365 Oak Crest
Drive

Suite 200

Westlake Village,
California 91361

Attn:  Pamela Shelley-Kessler

SVP & Chief
Financial Officer

Facsimile:  (805) 981-8663

 

Exhibit F-2

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