$175,540,000 ILLINOIS FINANCE AUTHORITY REVENUE BONDS (PARK PLACE OF ELMHURST PROJECT) consisting of $7,875,000 Revenue Bonds, Series 2010B

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1 NEW ISSUES/BOOK-ENTRY RATING: NOT RATED In the opinion of Jones Day, Bond Counsel, assuming compliance with certain covenants, under present law, interest on the Tax-Exempt Series 2010 Bonds (as defined herein) will not be includable in gross income of the owners thereof for federal income tax purposes, will not be treated as an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and will not be taken into account as an adjustment in computing a corporation s alternative minimum taxable income for purposes of determining the federal alternative minimum tax imposed on certain corporations. Interest on the Taxable Series 2010 Bonds (as defined herein) is not excluded from the gross income of the owners thereof who are United States persons for United States federal income tax purposes. See TAX MATTERS for a more detailed discussion of some of the federal income tax consequences of owning the Tax-Exempt Series 2010 Bonds. Interest on the Tax-Exempt Series 2010 Bonds and the Taxable Series 2010 Bonds (as defined herein) is not exempt from present Illinois income taxes. $109,115,000 Revenue Bonds, Series 2010A $175,540,000 ILLINOIS FINANCE AUTHORITY REVENUE BONDS (PARK PLACE OF ELMHURST PROJECT) consisting of $7,875,000 Revenue Bonds, Series 2010B $5,000,000 Revenue Bonds, Series 2010C (Accelerated Redemption Reset Option Securities (ARROS SM )) $10,275,000 Revenue Bonds, Series 2010D-1 (Tax-Exempt Mandatory Paydown Securities (TEMPS-75 SM )) $15,350,000 Revenue Bonds, Series 2010D-2 (Tax-Exempt Mandatory Paydown Securities (TEMPS-65 SM )) $15,275,000 Revenue Bonds, Series 2010D-3 (Tax-Exempt Mandatory Paydown Securities (TEMPS-50 SM )) $12,650,000 Taxable Revenue Bonds, Series 2010E (Taxable Mandatory Paydown Securities (Taxable MPS)) Dates, Interest Rates, Prices, Yields and CUSIPs Are Shown on the Inside of the Front Cover The Illinois Finance Authority (the Authority ) is issuing its $109,115,000 Revenue Bonds, Series 2010A (Park Place of Elmhurst Project) (the Series 2010A Bonds ); its $7,875,000 Revenue Bonds, Series 2010B (Park Place of Elmhurst Project) (the Series 2010B Bonds ); its $5,000,000 Revenue Bonds, Series 2010C (Park Place of Elmhurst Project) (Accelerated Redemption Reset Option Securities (ARROS SM )) (the Series 2010C Bonds ); its $10,275,000 Revenue Bonds, Series 2010D-1 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-75 SM )) (the Series 2010D-1 Bonds ); its $15,350,000 Revenue Bonds, Series 2010D-2 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-65 SM) ) (the Series 2010D-2 Bonds ); its $15,275,000 Revenue Bonds, Series 2010D-3 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-50 SM )) (the Series 2010D-3 Bonds and together with the Series 2010D-1 Bonds and the Series 2010D-2 Bonds, the Series 2010D Bonds and together with the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds, the Tax-Exempt Series 2010 Bonds ); and its $12,650,000 Taxable Revenue Bonds, Series 2010E (Park Place of Elmhurst Project) (Taxable Mandatory Paydown Securities (Taxable MPS)) (the Series 2010E Bonds or the Taxable Series 2010 Bonds and, together with the Tax-Exempt Series 2010 Bonds, the Series 2010 Bonds ). The Series 2010A Bonds, the Series 2010B Bonds, the Series 2010D Bonds and the Series 2010E Bonds are occasionally referred to herein as the Fixed Rate Series 2010 Bonds. The Series 2010 Bonds will be issued and secured under two Bond Trust Indentures (with regard to the Tax-Exempt Series 2010 Bonds, the Tax-Exempt Bond Indenture, and with regard to the Taxable Series 2010 Bonds, the Taxable Bond Indenture and together, the Bond Indentures ) each between the Authority and Wells Fargo Bank, N.A., as bond trustee (as applicable, the Tax-Exempt Bond Trustee or the Taxable Bond Trustee or, in all capacities, the Bond Trustee ). The proceeds of each series of the Series 2010 Bonds will be loaned to Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst (the Corporation ) and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation (the Foundation and together with the Corporation, the Borrowers ), each an Illinois not for profit corporation, pursuant to the Loan Agreements (as described herein) and will be used primarily to (i) pay or reimburse the Corporation for the payment of certain costs of acquiring, constructing, developing, marketing and equipping of a continuing care retirement community containing independent living apartments, catered living apartments, assisted living apartments, memory support assisted living units and nursing facilities known as Park Place Christian Community of Elmhurst (the Project ), including refinancing certain taxable indebtedness with respect thereto; (ii) fund debt service reserve funds; (iii) pay a portion of the interest on the Series 2010 Bonds; (iv) provide working capital; and (v) pay certain of the costs relating to the issuance of the Series 2010 Bonds, all as permitted by the Illinois Finance Authority Act (the Act ). A more detailed description of the use of the proceeds from the sale of the Series 2010 Bonds is included under the captions ESTIMATED SOURCES AND USES OF FUNDS and PLAN OF FINANCE. Except as described in this Official Statement, each series of the Series 2010 Bonds will be payable solely from and secured by a pledge of payments to be made under the related Loan Agreement and the related Series 2010 Obligation issued by the Borrowers under a Master Trust Indenture (the Master Indenture ) among the Borrowers and Wells Fargo Bank, N.A., as master trustee (the Master Trustee ). The sources of payment of, and security for, each series of the Series 2010 Bonds are more fully described in this Official Statement. The Series 2010 Bonds, when issued, will be registered initially only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Series 2010 Bonds. Purchasers of the Series 2010 Bonds will not receive certificates representing their interests in the Series 2010 Bonds purchased. Ownership by the beneficial owners of the Series 2010 Bonds will be evidenced by book-entry only. Principal of and interest on the Series 2010 Bonds and the purchase price of tendered Series 2010 Bonds will be paid by the Bond Trustees to DTC, which in turn will remit such principal, interest and purchase price payments to its participants for subsequent disbursement to the beneficial owners of Series 2010 Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments on the Series 2010 Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. See BOOK-ENTRY ONLY SYSTEM. An investment in the Series 2010 Bonds involves a certain degree of risk related to the nature of the business of the Borrowers, the regulatory environment, and the provisions of the principal documents. Prospective Series 2010 Bondholders are advised to read SECURITY FOR SERIES 2010 BONDS, SECURITY FOR THE SERIES 2010 OBLIGATIONS and RISK FACTORS herein for a description of the security for the Series 2010 Bonds and for a discussion of certain risk factors which should be considered in connection with an investment in the Series 2010 Bonds. THE SERIES 2010 BONDS WILL BE SUBJECT TO OPTIONAL, MANDATORY AND EXTRAORDINARY REDEMPTION, AS MORE FULLY DESCRIBED HEREIN. THE SERIES 2010 BONDS AND THE INTEREST THEREON DO NOT CONSTITUTE AN INDEBTEDNESS OR AN OBLIGATION, GENERAL OR MORAL, OR A PLEDGE OF THE FULL FAITH OR A LOAN OF CREDIT OF THE AUTHORITY, THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE PURVIEW OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR PROVISION. THE AUTHORITY IS OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2010 BONDS AND OTHER COSTS INCIDENTAL THERETO ONLY FROM THE SOURCES SPECIFIED IN THE BOND INDENTURES. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWERS, IF ANY, OF THE AUTHORITY OR THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2010 BONDS OR OTHER COSTS INCIDENTAL THERETO, EXCEPT AS OTHERWISE PROVIDED IN THE BOND INDENTURES. NO OWNER OF ANY SERIES 2010 BOND SHALL HAVE THE RIGHT TO COMPEL THE TAXING POWER, IF ANY, OF THE AUTHORITY, THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2010 BONDS. THE AUTHORITY DOES NOT HAVE THE POWER TO LEVY TAXES FOR ANY PURPOSES WHATSOEVER. The Series 2010 Bonds are being offered when, as and if issued and received by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice and to the approval of legality of the Series 2010 Bonds and the tax-exempt status of the Tax-Exempt Series 2010 Bonds by Jones Day, Chicago, Illinois, Bond Counsel. Certain legal matters will be passed upon for the Authority by its special counsel, Schiff Hardin LLP; for the Underwriter by its counsel, Katten Muchin Rosenman LLP, Chicago, Illinois; and for the Borrowers, Providence Management and Development Company Incorporated and Providence Development Group, LLC, by their counsel, Timothy G. Lawler, Ltd., Hinsdale, Illinois. It is expected that the Series 2010 Bonds in definitive form will be available for delivery to DTC in New York, New York on or about May 27, This cover page contains certain information for ease of reference only. It does not constitute a summary of the Series 2010 Bonds or the security therefor. Potential investors must read this entire Official Statement, including the Appendices, to obtain information essential to the making of an informed investment decision. Official Statement dated May 14, 2010 SM ARROS, TEMPS-75, TEMPS-65 and TEMPS-50 are each a Service Mark of B.C. Ziegler and Company.

2 MATURITY SCHEDULES THE SERIES 2010A BONDS Dated: Date of Delivery Due: May 15, as shown below The Series 2010A Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2010A Bonds will be payable on each May 15 and November 15, commencing on November 15, Due May 15 Principal Amount Interest Rate Price Yield CUSIP 2020 $ 4,725, % % 8.000% 45200F3D ,590, F3E ,365, F3F ,435, F3C1 THE SERIES 2010B BONDS Dated: Date of Delivery Due: May 15, 2020 The Series 2010B Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2010B Bonds will be payable on each May 15 and November 15, commencing on November 15, Principal Amount Interest Rate Price CUSIP $7,875, % % 45200F3G2 THE SERIES 2010C BONDS Dated: Date of Delivery Due: May 15, 2045 The Series 2010C Bonds initially will bear interest at the rate set forth below until the Initial Rate Change Date set forth below. Amount Initial Interest Rate Price Initial Rate Change Date CUSIP $5,000, % % November 15, F3H0 The Series 2010C Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. From and after the Initial Rate Change Date and each subsequent Rate Change Date thereafter, the Series 2010C Bonds will bear interest at a rate and for a period determined in accordance with the Tax-Exempt Bond Indenture. Interest on the Series 2010C Bonds will be payable on each May 15 and November 15, commencing on November 15, On each Rate Change Date, the holders of outstanding Series 2010C Bonds may tender such Series 2010C Bonds to the Tax-Exempt Bond Trustee for purchase at a price equal to the principal amount thereof, subject to the availability of sufficient moneys therefor. The maximum rate payable on the Series 2010C Bonds will be 15% per annum.

3 THE SERIES 2010D-1 BONDS Dated: Date of Delivery Due: August 15, 2016 The Series 2010D-1 Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2010D-1 Bonds will be payable on each May 15 and November 15, commencing on November 15, $10,275, % Term Bonds; Price: % CUSIP: 45200F3J6 THE SERIES 2010D-2 BONDS Dated: Date of Delivery Due: November 15, 2015 The Series 2010D-2 Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2010D-2 Bonds will be payable on each May 15 and November 15, commencing on November 15, $15,350, % Term Bonds; Price: % CUSIP: 45200F3K3 THE SERIES 2010D-3 BONDS Dated: Date of Delivery Due: August 15, 2015 The Series 2010D-3 Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2010D-3 Bonds will be payable on each May 15 and November 15, commencing on November 15, $15,275, % Term Bonds; Price: % CUSIP: 45200F3L1 THE SERIES 2010E BONDS Dated: Date of Delivery Due: May 15, 2015 The Series 2010E Bonds will be issuable in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2010E Bonds will be payable on each May 15 and November 15, commencing on November 15, $12,650, % Term Bonds; Price: % CUSIP: 45200F3M9

4 Artist s Rendering of Park Place Christian Community of Elmhurst

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6 Poplar Ave. Wolf Road N Villa Ave. 83 Park Ave. 64 Elmhurst College Metra Train Station Elmhurst Memorial Healthcare Elmhurst Library Elmhurst Art Museum W S E * Park Place of Elmhurst will be located approximately 18 miles west of downtown Chicago St. Charles Road Sugar Creek Golf Course Villa Ave Oakbrook Center Eldridge Park Future Site of Park Place of Elmhurst 38 22nd Street York Road Faith Christian Reformed Church Visitation Church Butterfield Park 56 Elmhurst Christian Reformed Church York Woods Forest Preserve Fresh Meadows Golf Course Future Site of Park Place of Elmhurst Chicago 94 Lake Michigan 41 Summit Ave. Midwest Rd. Butterfield Country Club Central Park Butler National Golf Club Oakbrook Road Oak Brook Golf Club Fullersburg Woods Forest Preserve York Road Christ Church of Oak Brook Meadowlark Golf Course Bemis Woods Forest Preserve Wolf Road Location Map

7 South Euclid AvEnuE health care center independent living Campus Site Plan Site Plan ProSPEct AvEnuE

8 Artist s Renderings of the Building Exterior

9 Artist s Renderings Lobby/Living Room Indoor Swimming Pool

10 Artist s Renderings Café Main Dining Room

11 Level Plans 1301 POOL & SPA FITNESS CENTER FORMAL DINING CASUAL DINING PRIVATE DINING 1215 BEAUTY SALON/ BARBERSHOP BISTRO GIFT SHOP LIVING ROOM 1316 LIBRARY Level One GAME ROOM MULTI-PURPOSE ROOM/CHAPEL ART STUDIO CLUB ROOM Level Two

12 GUEST SUITES Level Three Level Four

13 Level Five One Bedroom Dover Traditional Unit 2102, 2204, 3102, 3103, 3204, 4101, 4102, 4103, 4204, 5101, 5102, 5103, 5204 Classic Unit 1302, 1303, 1305, 1308, 1310, 2206, 2208, 2302, 2303, 2305, 2308, 2310, 3206, 3208, 3302, 3303, 3305, 3308, 3310, 4206, 4208, 4303, 4305, 4308, 4310, 5303, 5305, 5206, 5208, 5308, 5310 Select Unit 1110 Coventry Premier Unit 1306, 2306, 3210, 3306, 4210, 4306, 5210, 5306 Traditional Unit 1214, 1218, 1219, 2214, 2218, 2219, 3214, 3218, 3219, 4214, 4218, 4219, 5214, 5218, 5219 Classic Unit 4106, 4107, 4108, 4109, 5106, 5107, 5108, 5109 Select Unit 3107, 3109 Levels One Through Five Color Key Signature Unit 3106, 3108 Elite Unit 1215, 2215, 3215, 4215, 5215 Two Bedroom Oxford Traditional Unit 5111 Classic Unit 5104, 5105, 5110, 5202, 5212, 5213, 5220, 5221, 5304, 5312 Signature Unit 1220, 1221, 1304, 1312, 2104, 2110, 2202, 2213, 2220, 2221, 2304, 2312, 3104, 3105, 3110, 3202, 3212, 3213, 3220, 3221, 3304, 3312, 4104, 4105, 4110, 4202, 4212, 4213, 4220, 4221, 4304, 4312 Select Unit 1111, 2111, 3111, 4111 Carlisle Traditional Unit 5112, 5203, 5216, 5217, 5313 Classic Unit 1112, 1216, 1217, 1313, 2112, 2203, 2216, 2217, 2313, 3112, 3203, 3216, 3217, 3313, 4112, 4203, 4216, 4217, 4313 Canterbury Traditional Unit 5113 Classic Unit 2113, 3113, 4113 Select Unit 5314, 5315 Signature Unit 1113, 1314, 1315, 2314, 2315, 3314, 3315, 4314, 4315 Three Bedroom Kensington Traditional Unit 3115 Classic Unit 1115, 2115 Manchester Select Unit 3114 Signature Unit 1114, 2114 Windsor Select Unit 3301, 3316 Signature Unit 1301, 1316, 2301, 2316

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15 TABLE OF CONTENTS Page SUMMARY STATEMENT... i INTRODUCTION... 1 Purpose of this Official Statement... 1 The Authority... 1 The Series 2010 Bonds... 1 Purpose of the Series 2010 Bonds... 2 The Borrowers... 2 Security for the Series 2010 Bonds... 3 The Feasibility Study... 4 THE BORROWERS... 5 PLAN OF FINANCE... 6 Purposes of the Series 2010 Bonds... 6 The Project and the Community... 6 Liquidity Support... 7 Pre-Finance Construction Development Capital... 7 Development of the Project... 8 ESTIMATED SOURCES AND USES OF FUNDS... 9 ANNUAL DEBT SERVICE REQUIREMENTS THE FIXED RATE SERIES 2010 BONDS General Description THE SERIES 2010C BONDS General Description Interest on the Series 2010C Bonds Optional Tender of Series 2010C Bonds Purchase of Tendered Series 2010C Bonds REDEMPTION OF THE SERIES 2010 BONDS Optional and Mandatory Redemption of the Series 2010A Bonds Optional and Mandatory Redemption of the Series 2010B Bonds Optional and Mandatory Redemption of the Series 2010C Bonds Optional and Mandatory Redemption of the Series 2010D Bonds Optional and Mandatory Redemption of the Series 2010E Bonds Provisions Applicable to All Bonds Selection for Redemption Notice of Redemption; Effect Mandatory Tender for Purchase Exchange and Transfer SECURITY FOR THE SERIES 2010 BONDS General Tax-Exempt Debt Service Reserve Fund Taxable Debt Service Reserve Fund Other (i)

16 REMARKETING BOOK-ENTRY ONLY SYSTEM SECURITY FOR THE SERIES 2010 OBLIGATIONS General Collateral State of Illinois Not Liable on the Series 2010 Bonds; Agreement of the State Additional Indebtedness Certain Covenants of the Borrowers and any Future Member of the Obligated Group LIQUIDITY SUPPORT AGREEMENT Providence Liquidity Support Fund Special Liquidity Support Fund Supplemental Liquidity Support Fund Reductions of the Support Obligation Draws on Each Support Obligation General Investment Subordination Provisions Amendments and Waivers PRIORITY OF DRAWINGS FROM VARIOUS FUNDS THE AUTHORITY Description of the Authority Bonds of the Authority Members of the Authority Authority Advisors ILLINOIS HEALTH FACILITIES PLANNING ACT RISK FACTORS General Impact of Market Turmoil Sale of Personal Residences Changes in Members of the Obligated Group Feasibility Study Purchase of Series 2010C Bonds Construction Risks Construction Consultant Approval of Construction Draws Adequacy of Remedies Development and Management Application of Amounts on Deposit in Project Funds Uncertainty of Revenues Failure to Achieve or Maintain Turnover or Occupancy Utilization Demand Competition Nature of Facilities Malpractice Claims and Losses Rights of Residents Regulation Licensing Delay Medicare Certification Present and Prospective Federal and State Regulation (ii)

17 Health Care Reform Medicare and Medicaid Programs Regulation of Health Care Industry Increases in Medical Costs Other Legislation Taxpayer Relief Act of Intermediate Sanctions Possible Changes in Tax Status Lack of Marketability for the Series 2010 Bonds Increases in Medical Costs Nursing Shortage Amendments to the Documents Bankruptcy Additional Debt Certain Matters Relating to Enforceability of the Master Indenture Interest Rate Swap and Other Hedge Risk Environmental Matters Uncertainty of Investment Income Other Possible Risk Factors Absence of a Bond Rating FINANCIAL REPORTING AND CONTINUING DISCLOSURE Financial Reporting Continuing Disclosure LITIGATION The Authority The Borrowers LEGAL MATTERS TAX MATTERS Tax-Exempt Series 2010 Bonds Taxable Series 2010 Bonds State Taxation of the Taxable Series 2010 Bonds FEASIBILITY STUDY RATING UNDERWRITING MISCELLANEOUS APPENDICES APPENDIX A The Obligated Group APPENDIX B Financial Feasibility Study APPENDIX C Summary of Principal Documents APPENDIX D Forms of Opinions of Bond Counsel (iii)

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19 REGARDING USE OF THIS OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING OF THE SERIES 2010 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2010 BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, sales representative or other person has been authorized by the Authority, the Borrowers or the Underwriter to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2010 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information contained in this Official Statement has been furnished by the Borrowers, the Authority, DTC and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above since the date hereof. The information set forth herein relating to the Authority under the headings THE AUTHORITY and LITIGATION The Authority has been obtained from the Authority. All other information herein has been obtained by the Underwriter from the Borrowers, the Underwriter and other sources deemed by the Underwriter to be reliable, and is not to be construed as a representation by, the Authority or Underwriter. The Authority has not reviewed or approved any information in this Official Statement except information relating to the Authority under the headings THE AUTHORITY and LITIGATION The Authority. The information herein is subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority or the Borrowers since the date hereof. THE SERIES 2010 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE BOND INDENTURES AND THE MASTER INDENTURE HAVE NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2010 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF LAWS OF THE STATES IN WHICH SERIES 2010 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SERIES 2010 BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

20 CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, budget or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in APPENDIX A THE OBLIGATED GROUP and APPENDIX B FINANCIAL FEASIBILITY STUDY herein. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE BORROWERS DO NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.

21 SUMMARY STATEMENT The information set forth in this Summary Statement is subject in all respects to more complete information set forth elsewhere in this Official Statement, which should be read in its entirety. The offering of the Series 2010 Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this Summary Statement from this Official Statement or otherwise to use it without this entire Official Statement. The Series 2010 Bonds The Illinois Finance Authority (the Authority ), a body politic and corporate of the State of Illinois, proposes to issue its $109,115,000 Revenue Bonds, Series 2010A (Park Place of Elmhurst Project) (the Series 2010A Bonds ); its $7,875,000 Revenue Bonds, Series 2010B (Park Place of Elmhurst Project) (the Series 2010B Bonds ); its $5,000,000 Revenue Bonds, Series 2010C (Park Place of Elmhurst Project) (Accelerated Redemption Reset Option Securities (ARROS SM )) (the Series 2010C Bonds ); its $10,275,000 Revenue Bonds, Series 2010D-1 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-75 SM )) (the Series 2010D-1 Bonds ); its $15,350,000 Revenue Bonds, Series 2010D-2 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-65 SM )) (the Series 2010D-2 Bonds ); its $15,275,000 Revenue Bonds, Series 2010D-3 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-50 SM )) (the Series 2010D-3 Bonds and together with the Series 2010D-1 Bonds and the Series 2010D-2 Bonds, the Series 2010D Bonds and together with the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds, the Tax-Exempt Series 2010 Bonds ); and its $12,650,000 Taxable Revenue Bonds, Series 2010E (Park Place of Elmhurst Project) (Taxable Mandatory Paydown Securities (Taxable MPS)) (the Series 2010E Bonds or the Taxable Series 2010 Bonds and, together with the Tax-Exempt Series 2010 Bonds, the Series 2010 Bonds ). The Series 2010A Bonds, the Series 2010B Bonds, the Series 2010D Bonds and the Series 2010E Bonds are occasionally referred to herein as the Fixed Rate Series 2010 Bonds. Each series of the Series 2010 Bonds will be subject to optional, mandatory and extraordinary redemption, as described in this Official Statement. The Series 2010C Bonds will also be subject to optional and mandatory tender, as described in this Official Statement. A description of the Series 2010 Bonds is contained in this Official Statement under the captions THE FIXED RATE SERIES 2010 BONDS and THE SERIES 2010C BONDS. The Tax-Exempt Series 2010 Bonds will be issued pursuant to the Illinois Finance Authority Act (the Act ), a resolution of the Authority (the Resolution ) and a Bond Trust Indenture, dated as of May 1, 2010 (the Tax-Exempt Bond Indenture ), by and between the Authority and Wells Fargo Bank, N.A., as bond trustee (the Tax-Exempt Bond Trustee ). The proceeds of the Tax-Exempt Series 2010 Bonds will be loaned to Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst or Park Place of Elmhurst (the Corporation ) and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation (the Foundation and together with the Corporation, the Borrowers ), each an Illinois not for profit corporation, pursuant to a Loan Agreement dated as of May 1, 2010 (the Tax-Exempt Loan Agreement ), by and among the Borrowers and the Authority. The Taxable Series 2010 Bonds will be issued pursuant to the Act, the Resolution and a Bond Trust Indenture, dated as of May 1, 2010 (the Taxable Bond Indenture and together with the Tax- Exempt Bond Indenture, the Bond Indentures ), by and between the Authority and Wells Fargo Bank, N.A., as bond trustee (the Taxable Bond Trustee and together with the Tax-Exempt Bond Trustee, the Bond Trustee ). The proceeds of the Taxable Series 2010 Bonds will be loaned to the Borrowers, pursuant to a Loan Agreement dated as of May 1, 2010 (the Taxable Loan Agreement and together with the Tax-Exempt Loan Agreement, the Loan Agreements ) by and among the Borrowers and the Authority. (i)

22 Purpose of the Series 2010 Bonds Purpose of the Tax-Exempt Series 2010 Bonds. The Borrowers will use the proceeds from the sale of the Tax-Exempt Series 2010 Bonds, together with other available funds, to (i) pay or reimburse the Corporation for the payment of all or a portion of the costs of acquiring, constructing, renovating, remodeling and equipping certain health facilities owned by the Borrowers, and all necessary and attendant facilities, equipment, site work, zoning, entitlements and utilities related thereto, including, but not limited to, the acquisition, construction and equipping of a continuing care retirement community consisting of approximately 173 independent living units, 10 catered living units, 46 assisted living units, 20 memory support assisted living units and 37 nursing beds, related common areas and parking, all known as Park Place Christian Community of Elmhurst and located in Elmhurst, Illinois (the Project ) including refinancing certain taxable indebtedness incurred to pay a portion of the costs related to the Project; (ii) provide working capital; (iii) fund debt service reserve funds; (iv) pay a portion of the interest on the Tax-Exempt Series 2010 Bonds; and (v) pay certain expenses incurred in connection with the issuance of the Tax-Exempt Series 2010 Bonds; all as permitted by the Act. A more detailed description of the use of the proceeds from the sale of the Tax-Exempt Series 2010 Bonds is included under the captions ESTIMATED SOURCES AND USES OF FUNDS and PLAN OF FINANCE. Purpose of the Taxable Series 2010 Bonds. The Borrowers will use the proceeds from the sale of the Taxable Series 2010 Bonds together with other available funds to (i) pay or reimburse the Corporation for the payment of certain costs of acquiring, constructing, developing, marketing and equipping a portion of the Project which will not be financed by the Tax-Exempt Series 2010 Bonds, including refinancing certain taxable indebtedness incurred to pay a portion of the costs related to the Project; (ii) provide working capital; (iii) fund a debt service reserve fund; (iv) pay a portion of the interest on the Series 2010 Bonds; and (v) pay certain of the costs relating to the issuance of the Series 2010 Bonds, all as permitted by the Act. A more detailed description of the use of the proceeds from the sale of the Taxable Series 2010 Bonds is included under the captions ESTIMATED SOURCES AND USES OF FUNDS and PLAN OF FINANCE. Security for the Series 2010 Bonds Limited Obligation of the Authority. The Series 2010 Bonds and the interest thereon do not constitute indebtedness or an obligation, general or moral, or a pledge of the full faith or a loan of credit of the Authority, the State of Illinois or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision. The Authority is obligated to pay the principal of, premium, if any, and interest on the Series 2010 Bonds and other costs incidental thereto only from the sources specified in the Bond Indentures. Neither the full faith and credit nor the taxing powers, if any, of the Authority, the State of Illinois or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, and interest on the Series 2010 Bonds or other costs incidental thereto, except as otherwise provided in the Bond Indentures. No owner of any Series 2010 Bond shall have the right to compel the taxing power, if any, of the Authority, the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any, or interest on the Series 2010 Bonds. The Authority does not have the power to levy taxes for any purposes whatsoever. Loan Agreements. The Authority and the Borrowers will enter into the Loan Agreements with respect to the Series 2010 Bonds, whereby the Authority will loan the proceeds of the Series 2010 Bonds to the Borrowers, and the Borrowers will agree to make loan repayments sufficient to pay in full when due all principal of, and redemption premium, if any, and interest on the Series 2010 Bonds. The Master Indenture and the Series 2010 Obligations. The Series 2010A Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010A in the aggregate principal amount of $109,115,000 (the Series 2010A Obligation ); the (ii)

23 Series 2010B Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010B in the aggregate principal amount of $7,875,000 (the Series 2010B Obligation ); the Series 2010C Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010C in the aggregate principal amount of $5,000,000 (the Series 2010C Obligation ); the Series 2010D-1 Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010D-1 in the aggregate principal amount of $10,275,000 (the Series 2010D-1 Obligation ); the Series 2010D-2 Bonds will be limited obligations of the Authority and will be secured in part by the Borrower s Direct Note Obligation, Series 2010D-2 in the aggregate principal amount of $15,350,000 (the Series 2010D-2 Obligation ); the Series 2010D-3 Bonds will be limited obligations of the Authority and will be secured in part by the Borrower s Direct Note Obligation, Series 2010D-3 in the aggregate principal amount of $15,275,000 (the Series 2010D-3 Obligation ); and the Series 2010E Bonds will be limited obligations of the Authority and will be secured in part by the Borrower s Direct Note Obligation, Series 2010E in the aggregate principal amount of $12,650,000 (the Series 2010E Obligation and together with the Series 2010A Obligation, the Series 2010B Obligation, the Series 2010C Obligation, the Series 2010D-1 Obligation, the Series 2010D-2 Obligation and the Series 2010D-3 Obligation, the Series 2010 Obligations ). The Series 2010 Obligations will each be issued by the Borrowers pursuant to a Master Trust Indenture dated as of May 1, 2010 (the Master Indenture ), among the Borrowers, as the initial members of an obligated group (each a Member, and collectively, the Obligated Group ), and Wells Fargo Bank, N.A., as master trustee (the Master Trustee ). The Authority will pledge and assign the related Series 2010 Obligations and certain of its rights under each Loan Agreement to the respective Bond Trustee as security for the respective series of Series 2010 Bonds. The terms of each Series 2010 Obligation will require payments by the Borrowers which, together with other moneys available therefor (and interest earned thereon), will be sufficient to provide for the payment of the principal of and interest on the respective series of Series 2010 Bonds. Each Series 2010 Obligation will entitle the respective Bond Trustee, as the respective holder thereof, to the protection of the covenants, restrictions and other obligations imposed upon the Borrowers by the Master Indenture. The Members of the Obligated Group will be jointly and severally liable for all Obligations, including the Series 2010 Obligations, which are issued pursuant to the Master Indenture. All Obligations issued by the Borrowers will be equally and ratably secured by (i) a mortgage on the Mortgaged Property described below and (ii) a security interest in the Gross Revenues of the Obligated Group, subject in each case only to Permitted Encumbrances. See SECURITY FOR THE SERIES 2010 OBLIGATIONS General. In certain circumstances, the Borrowers may issue Additional Obligations under the Master Indenture that may be equally and ratably secured with the Obligations outstanding under the Master Indenture, including the Series 2010 Obligations, or that may be entitled to the benefit of security in addition to that securing the Obligations outstanding under the Master Indenture, which security need not be extended to any other Obligations. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Additional Indebtedness as well as the subsections The Mortgage and Security Interest in Gross Revenues below. The Mortgage. Pursuant to a Mortgage and Security Agreement dated as of May 1, 2010 (the Mortgage ), the Corporation will grant the Master Trustee: (i) a first mortgage lien on the real property on which the Community, as defined herein, is being constructed, and (ii) a security interest in the personal property and fixtures located in the hereinafter defined Community (the Mortgaged Property ), in each case subject to Permitted Encumbrances, as security for the payment of the Series 2010 Obligations and all other Obligations hereafter issued under the Master Indenture. (iii)

24 Security Interest in Gross Revenues. Pursuant to the Master Indenture, each Member of the Obligated Group has granted a security interest in its Gross Revenues (subject to Permitted Encumbrances) as security for the payment of the Series 2010 Obligations and all other Obligations hereafter issued under the Master Indenture. See SECURITY FOR THE SERIES 2010 BONDS and RISK FACTORS Certain Matters Relating to Enforceability of the Master Indenture herein. Gross Revenues means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third-party payments), condemnation awards, Entrance Fees and other moneys received by or on behalf of any Obligated Group Member, including (without limitation) revenues derived from (a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, and (b) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities; provided, however, that there shall be excluded from Gross Revenues (i) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent, (ii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use for payments required under the Master Indenture, (iii) any moneys received by any Obligated Group Member from prospective residents or commercial tenants in order to pay for customized improvements to those Independent Living Units or other areas of the Facilities to be occupied or leased to such residents or tenants, (iv) payments or deposits under a Residency Agreement that by its terms or applicable law are required to be held in escrow or trust for the benefit of a resident until the conditions for the release of such payment or deposit have been satisfied, and (v) all deposits and/or advance payments made in connection with any residency of the Independent Living Units or other areas of the Facilities to be occupied by residents or tenants and received prior to receipt of such certificate and licenses for occupancy of such units. The Bond Indentures. Under the Bond Indentures, the Authority will pledge and assign to the related Bond Trustee as security for the payment of principal of, premium, if any, and interest on the related series of Series 2010 Bonds, all of its right, title and interest in and to (i) the Loan Agreements and all payments derived by the Authority from the Borrowers under the Loan Agreements (except the Authority s Unassigned Rights), and (ii) all moneys and securities (except moneys and securities held in the Rebate Fund and the Purchase Fund) held by the Bond Trustee under the Bond Indentures. See SECURITY FOR THE SERIES 2010 BONDS herein. Payment of the principal of and interest on each series of the Series 2010 Bonds will be additionally secured by moneys deposited to the credit of the accounts in the related respective Debt Service Reserve Fund, as each is established under the respective Bond Indenture. See SECURITY FOR THE SERIES 2010 BONDS. The Borrowers intend that the Debt Service Reserve Funds will collectively satisfy its continuing obligation to maintain an escrow to protect its life care residents as required under the Illinois Life Care Facilities Act. For more information, see APPENDIX A REGULATION, PERMITS AND APPROVALS. The Borrowers. The Corporation is an Illinois not for profit corporation, formed in May 2004 for the purpose of constructing, owning and operating a continuing care retirement community known as Park Place Christian Community of Elmhurst (the Community ) in Elmhurst, Illinois. The Corporation received a determination letter from the Internal Revenue Service dated February 21, 2007 stating that the (iv)

25 Corporation is an organization exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the Code ), as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was May 5, The Foundation is an Illinois not for profit corporation, formed in January 2004 to support and advance Christian care and services to the elderly and infirm by supporting health-related research, the development of a continuum of appropriate living arrangements, and programs and services to support a quality of life for those who suffer from disabilities and age-related illnesses and infirmities. The Foundation received a determination letter from the Internal Revenue Service dated April 7, 2004 stating that the Foundation is an organization exempt from federal income tax under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was January 9, The Corporation and the Foundation are controlled affiliates of Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services ( Providence ). Providence was founded in 1956 as an Illinois not for profit corporation to furnish health care and retirement living facilities for the proper care and treatment of the elderly. Providence operates 11 separate facilities accounting for 1,697 units on eight campuses located in South Holland, Downers Grove, Crete, Palos Heights and Homer Glen, Illinois and Grand Rapids and Zeeland (two campuses), Michigan. Providence Management & Development Company Incorporated ( PM&D ), an Illinois corporation, is a wholly-owned subsidiary of Providence formed in 1991 to develop and manage health care and retirement living facilities. The Corporation has entered into a Development Services Agreement and a Management Services Agreement with respect to the Community each with PM&D. See DEVELOPMENT OF THE COMMUNITY PM&D Development Agreement and MANAGEMENT OF THE COMMUNITY PM&D Management Experience in APPENDIX A. Providence Development Group, LLC ( PDG ), an Illinois limited liability company whose sole member is Providence, has agreed to provide up to $2,600,000 of liquidity support to the Project and the Borrowers. Repayment of any draws with respect to PDG s liquidity support are subject to certain repayment restrictions described in SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates below. See also LIQUIDITY SUPPORT AGREEMENT herein. PDG is also providing a $1,000,000 contribution to the Borrowers for the Project. See APPENDIX A and APPENDIX B hereto for additional information regarding Providence, PM&D, PDG and the Borrowers. THE BORROWERS ARE THE SOLE MEMBERS OF THE OBLIGATED GROUP. PROVIDENCE, PDG AND PM&D HAVE NO PAYMENT OBLIGATIONS WITH RESPECT TO THE LOAN AGREEMENTS, THE MASTER INDENTURE, THE SERIES 2010 OBLIGATIONS OR THE SERIES 2010 BONDS. HOWEVER, PDG HAS AGREED UNDER THE LIQUIDITY SUPPORT AGREEMENT TO PROVIDE CERTAIN LIMITED SUPPORT TO THE BORROWERS. As of May 21, 2010, the Corporation had received entrance fee deposits for 133 independent living units, representing approximately 77% of the 173 total planned. Development of the Project Greystone Development Company. The Corporation and Greystone Development Company II, LP ( GDC ) have entered into an Amended and Restated Development Services Agreement (the Development Consulting Agreement ), pursuant to which GDC (or its assignee Greystone Development Services XVII ( GDS ) will provide certain development consulting services for the Project through achievement of 90% occupancy. Payment of certain fees will be contingent until certain conditions are met. See APPENDIX A DEVELOPMENT OF THE COMMUNITY for more information (v)

26 regarding the development of the Project. GDC is a Delaware limited partnership and an affiliate of Greystone Communities, Inc. ( GCI ). PM&D. The Corporation has entered into a separate development services agreement with PM&D, whereby PM&D will serve as co-developer and provide support, assistance and oversight of GDS efforts. PM&D will defer receipt of certain of its development fees until certain conditions are met. Furthermore, repayment of these deferred fees will be subordinated to payments on the Series 2010 Bonds, amounts paid under the Loan Agreements and payments with respect to all Obligations issued under the Master Indenture, including the Series 2010 Obligations. See APPENDIX A DEVELOPMENT OF THE COMMUNITY PM&D Development Agreement for more information. Management of the Project The Corporation and PM&D have entered into a management agreement (the Management Agreement ) under which PM&D will provide management and related support services to the Project. The term of the Management Agreement begins approximately 180 days prior to the date the first independent living unit is expected to be occupied by a resident. Payment of all unpaid portions of the annual management fee will be deferred until certain conditions in the Master Indenture have been met. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Payments of Management Fees and APPENDIX A MANAGEMENT OF THE COMMUNITY Management Agreement for more information. Certain Pre-Finance Construction Development Expenses Greystone Development Services XVII ( GDS ) is a Delaware joint venture comprised of GCI Elmhurst, L.P. (the Limited Partnership ) and GDC. Pursuant to the joint venture agreement, the Limited Partnership s role is to fund the preconstruction financing related to the Project. The General Partner (the General Partner ) of the partnership is GDC Elmhurst, LLC, a Delaware limited liability company. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. ( Greystone Partners ). Limited Partners include The Ziegler Companies, Inc., Ziegler Equity Funding III, LLC ( ZEFIII ), Ziegler Equity Funding IV, LLC ( ZEFIV ), Ziegler Equity Funding V, LLC ( ZEFV ) and Greystone Senior Living Investors LP ( GSLI ). The Borrowers received $6,000,000 in preconstruction financing in March 2006, $2,800,000 in preconstruction financing in October 2007, $1,500,000 in preconstruction financing in June 2008, $1,600,000 in preconstruction financing in June 2009 and $500,000 in preconstruction financing in March 2010 (collectively, the Pre-Finance Capital, a total of $12,400,000). The Borrowers have no obligation to reimburse advances made by the Limited Partnership unless and until the closing of the Series 2010 Bonds. All risks for such advances associated with the failure to achieve closing on the Series 2010 Bonds will be borne by the Limited Partnership. ZEFIII is an investment fund comprised exclusively of Ziegler and employees of the Underwriter. ZEFIV and ZEFV is each an investment fund which primarily includes third party investors and certain employees of the Underwriter. Certain employees of GDC and its affiliates, and Ziegler and its affiliates are also participating as limited partners in the Limited Partnership. See DEVELOPMENT OF THE COMMUNITY in APPENDIX A. (vi)

27 Liquidity Support Agreement The Borrowers, PDG and Wells Fargo Bank, N.A., the Master Trustee and Bond Trustee, will enter into a liquidity support agreement (the Liquidity Support Agreement ) upon closing of the Series 2010 Bonds. Pursuant to the Liquidity Support Agreement, PDG will provide liquidity support to the Borrowers of up to $2,600,000. Such moneys will be deposited in the Providence Liquidity Support Fund held by the Master Trustee. Additionally, pursuant to the Liquidity Support Agreement, the Corporation will deposit $3,000,000 in the Special Liquidity Support Fund held by the Master Trustee as well as $400,000 in the Supplemental Liquidity Support Fund held by the Master Trustee. Collectively, these funds of $6,000,000 are referred to herein as the Liquidity Support Funds. Liquidity Support Funds available under the Liquidity Support Agreement may be drawn by the Bond Trustee or the Master Trustee or the Borrowers to pay for Project construction costs, interest on the Series 2010 Bonds, or any operating expenses in conjunction with the Project, if no other funds are available for those purposes in any trustee-held fund held by the Bond Trustee (other than the Debt Service Reserve Fund) or Master Trustee subject to the provisions of the Liquidity Support Agreement. The Supplemental Liquidity Support Fund will be drawn upon prior to any draws on either the Providence Liquidity Support Fund or the Special Liquidity Support Fund. Repayments of draws under the Providence Liquidity Support Fund ( Borrowers Repayment Obligations ) are subject to certain repayment restrictions. No payment of the Borrowers Repayment Obligations and any Affiliate Related Subordinated Debt set forth in the Master Indenture may be made except as described in SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates, below. Also see THE LIQUIDITY SUPPORT AGREEMENT herein. Certain Covenants of the Borrowers and any Future Member of the Obligated Group For the definitions of certain words and terms used in this section, see SUMMARY OF PRINCIPAL DOCUMENTS Definitions of Certain Terms in APPENDIX C. For remedies, see SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group. Rates and Charges. The Members of the Obligated Group covenant and agree that the Obligated Group Agent will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year, commencing with the Fiscal Year ending on the earlier of (a) the last day of the first full Fiscal Year after Stable Occupancy for the Project has been achieved, or (b) December 31, 2016 (the Initial Testing Date ), and to deliver a copy of such calculation to the Required Information Recipients. For the purposes of the Master Indenture covenant described under this heading, when calculating the Historical Debt Service Coverage Ratio of the Obligated Group, principal and interest payable on the Liquidity Support Repayment Obligations or any Affiliate Related Subordinated Indebtedness shall be excluded from Debt Service Requirements. If for the Fiscal Year with respect to which the Initial Testing Date relates, the Historical Debt Service Coverage Ratio of the Obligated Group is less than 1.10:1, the Master Trustee shall require the Obligated Group, at the Obligated Group s expense, to select a Consultant within 30 days following the calculation described in the Master Indenture, to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group s methods of operation and other factors affecting its financial condition in order to generate an Historical Debt Service Coverage Ratio of at least 1.20:1 for the following Fiscal Year. If the Historical Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Fiscal Year with respect to which the Initial Testing Date relates, and for any Fiscal Year thereafter, is less than 1.20:1, the Master Trustee shall require the Obligated Group, at the Obligated (vii)

28 Group s expense, to select a Consultant within 30 days following the calculation described in the second preceding paragraph to make recommendations with respect to the rates, fees and charges of the Obligated Group s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year. The Consultants selected as described in this heading shall be approved and retained as summarized below and in APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants. If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required by the Master Indenture and summarized above, the Master Trustee shall not be obligated to require the Obligated Group to select a Consultant to make recommendations in certain instances. If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year such failure shall constitute an event of default under the Master Indenture. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Rates and Charges herein and SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Rates and Charges in APPENDIX C. Liquidity Covenant. The Obligated Group covenants that it will calculate the Days Cash on Hand or the Cash to Indebtedness Ratio of the Obligated Group as of June 30 and December 31 of each Fiscal Year (each such date being a Testing Date ), commencing with the Initial Testing Date. The Obligated Group shall deliver an Officer s Certificate setting forth such calculation as of June 30 to the Master Trustee no later than August 15, and include such calculation as of December 31 in the Officer s Certificate delivered pursuant to the Master Indenture and described under the heading FINANCIAL REPORTING AND CONTINUING DISCLOSURE herein. The Master Indenture requires that each Obligated Group Member conduct its business so that on each Testing Date the Obligated Group shall have a Cash to Indebtedness Ratio of (a) no less than 0.25 for the first two Testing Dates, starting with the Initial Testing Date, and (b) no less than for the next year (the next two Testing Dates), and (c) no less than 0.30 thereafter (the Liquidity Requirement ). At the option of the Obligated Group Agent, the Liquidity Requirement can be converted to a covenant to maintain no less than 180 Days Cash on Hand on each Testing Date if for three consecutive Fiscal Years the Obligated Group has reported (a) a Historical Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30 or more on each Testing Date. The Obligated Group Agent may elect to convert the Liquidity Requirement as of a specified date (the Liquidity Requirement Conversion Date ) in an Officer s Certificate, demonstrating compliance with the test in the preceding sentence. After the Liquidity Requirement Conversion Date, the Liquidity Requirement will be a covenant to maintain no less than 180 Days Cash on Hand on each June 30 and December 31. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Liquidity Covenant and SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Liquidity Covenant in APPENDIX C. Marketing Covenant. Beginning with the fiscal quarter ending June 30, 2010 and ending at the end of the first full fiscal quarter following the date on which Stable Occupancy for the Independent Living Units included in the Project has been achieved, the Obligated Group will use its best efforts to maintain the percentage of Independent Living Units which are Reserved (the Percentage of Reserved Independent Living Units ) at or above the applicable levels set forth below, which determinations shall (viii)

29 be measured as of the last day of the applicable quarter (the Marketing Requirements ). The applicable Marketing Requirements for the applicable quarter shall be (i) the Level I Marketing Requirements as long as the Adjusted Level I Occupancy Requirements set forth under Occupancy Covenant below have not been satisfied or (ii) the Adjusted Level I Marketing Requirements if the Adjusted Level I Occupancy Requirements set forth under Occupancy Covenant below have been satisfied. Percentage of Reserved Independent Living Units (%) Quarter Ending Level I Adjusted Level I June 30, % N/A September 30, % N/A December 31, % N/A March 31, % N/A June 30, % N/A September 30, % N/A December 31, % N/A March 31, % 72.20% June 30, % 72.20% September 30, % 73.40% December 31, % 74.50% March 31, % N/A June 30, % N/A September 30, % N/A December 31, % N/A March 31, % N/A June 30, % N/A September 30, % N/A December 31, % N/A March 31, % N/A June 30, % N/A through Stable Occupancy For information regarding the marketing covenant and remedies, see SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Marketing Covenant and SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Marketing and Occupancy Covenants Marketing Covenant in APPENDIX C. Occupancy Covenant. For each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of all of the Occupancy Certificates for all of the Independent Living Units included in the Project and (b) ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved (an Occupancy Quarter ), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units included in the Project (the Percentage of Units Occupied ) at or above the Level I Occupancy requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the Occupancy Requirements ): (ix)

30 Level I Adjusted Level I Occupancy Occupancy Requirements Projected Occupancy Requirements Quarter (%) Occupancy (1) (%) (2) % 23.7% 25.4% % 39.3% 50.3% % 54.3% 65.3% % 64.7% 72.3% % 71.1% N/A % 76.3% N/A % 79.8% N/A % 83.2% N/A % 86.7% N/A % 90.2% N/A % 93.6% N/A % 95.0% N/A % 95.0% N/A % 95.0% N/A % 95.0% N/A 16 and thereafter 90.0% 95.0% N/A (1) This information is based on Management s forecast as contained in the Feasibility Study, which should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B FINANCIAL FEASIBILITY STUDY. This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will achieve the occupancy levels forecasted. (2) This information is for use with the marketing covenant only, as set forth in Marketing Covenant above. For information regarding the Occupancy Covenant and remedies, see SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Occupancy Covenant and SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Marketing and Occupancy Covenants Occupancy Covenant in APPENDIX C. Cumulative Cash Operating Loss Covenant. The Obligated Group covenants that during the period commencing with (a) the first fiscal quarter ending after the earliest date a resident has taken physical possession of one of the Independent Living Units included in the Series 2010 Project (the Initial Occupancy Date ) if such date is more than 30 days prior to the end of such fiscal quarter or (b) the first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (a Testing Date ). Each Member is required to conduct its business so that as of each Testing Date the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount set forth below: (x)

31 Quarter Cumulative Cash Operating Loss Covenant Forecast Cumulative Cash Operating Loss (1) 1 ($ 1,200,000) ($ 141,157) 2 (2,500,000) (1,353,944) 3 (4,400,000) (2,981,594) 4 (8,000,000) (5,831,045) 5 (10,600,000) (7,801,425) 6 (13,100,000) (9,718,592) 7 (14,400,000) (10,685,160) 8 (15,100,000) (11,219,126) 9 (15,500,000) (11,469,409) 10 (15,800,000) (11,705,331) 11 (16,200,000) (11,775,078) 12 (16,400,000) (11,775,078) 13 and thereafter (16,700,000) (11,775,078) (1) This information is based on Management s forecast as contained in the Feasibility Study which should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B FINANCIAL FEASIBILITY STUDY. This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will achieve the occupancy levels forecasted. Incurrence of Additional Indebtedness. The Obligated Group agrees in the Master Indenture to restrictions on the incurrence of additional indebtedness, as more fully described under the captions SECURITY FOR THE SERIES 2010 OBLIGATIONS Additional Indebtedness herein and APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Permitted Additional Indebtedness. To the extent that the conditions provided in the Master Indenture are met, such indebtedness may be secured on a parity basis with the Series 2010 Obligations. Disposition of Property. The Borrowers and each future Member of the Obligated Group agrees in the Master Indenture to restrictions on the disposition of its Property, as more fully described under the caption APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Sale, Lease or Other Disposition of Property hereto. Application for Rating. The Master Indenture provides that not later than 150 days after receipt by the Obligated Group Agent of audited financial statements of the Obligated Group for the first full Fiscal Year following the achievement of Stable Occupancy with respect to the Project, and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains a credit rating of BBB- (or an equivalent rating) or better from any Rating Agency (an Investment Grade Credit Rating ). Notwithstanding the foregoing, (a) the requirement to annually approach a Rating Agency shall terminate when the Obligated Group obtains an Investment Grade Credit Rating; and (b) the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group Agent reasonably believes that the Obligated Group will not meet the criteria of any Rating Agency for an Investment Grade Credit Rating based on the then-existing published rating criteria of the Rating Agencies. Also see APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Application for Rating. (xi)

32 Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates. The Obligated Group agrees in the Master Indenture that a Member will not make payments on Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates (except for repayments to the Liquidity Support Fund as described herein under the subcaption Entrance Fees Fund ) unless the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee prior to any payment on Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates that contains the following certifications: (a) there have been two full fiscal quarters of Stable Occupancy with respect to the independent living units included in the Project; (b) if the proposed payment on the Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates had occurred as of the last day of the most recent fiscal quarter for which financial statements have been delivered under the provisions of the Master Indenture, the Obligated Group would have had a Cash to Indebtedness Ratio of at least 0.30 after that payment; (c) if the proposed payment on the Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates had occurred during the most recent Fiscal Year for which audited financial statements of the Obligated Group are available, the Historical Debt Service Coverage Ratio for that Fiscal Year would have been not less than 1.30; (d) no Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds remain outstanding; and (e) there is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under the Master Indenture or the Loan Agreements. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates herein and APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates hereto. Approval of Consultants. Pursuant to the Master Indenture, the Owners of outstanding Obligations have certain approval rights as to Consultants selected by the Obligated Group Representative. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Approval of Consultants, and APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants. Entrance Fees Fund. Pursuant to the Master Indenture, the Members of the Obligated Group agree that all Initial Entrance Fees received by the Members of the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fees Fund established with the Master Trustee and held under the Master Indenture. Moneys in the Entrance Fees Fund shall be disbursed by the Master Trustee on the first Business Day of each month (or as otherwise described under FIFTH below) as follows: FIRST: to the Members to pay refunds required by Residency Agreements. Such disbursements shall be made upon receipt by the Master Trustee of a written certificate of an Authorized Officer of a Member certifying that it is required by a Residency Agreement to pay refunds within the next 30 days and the amount of such refunds. SECOND: to the Working Capital Fund established under the Master Indenture, until the total principal amount deposited into the Working Capital Fund equals $16,700,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund or transfer Entrance Fees from the Entrance Fees Fund into the Working Capital Fund in excess of a total of $16,700,000. (xii)

33 THIRD: to the Operating Reserve Fund described below: (i) until the amount deposited from the Entrance Fees Fund in the Operating Reserve Fund equals $5,000,000; (ii) thereafter the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $5,000,000, provided that the aggregate amount transferred from the Entrance Fees Fund into the Operating Reserve Fund pursuant to this clause (B) shall not exceed $10,000,000; and (iii) if a transfer has occurred of moneys from the Liquidity Support Funds to the Operating Reserve Fund, the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $1,000,000. FOURTH: to the Providence Liquidity Support Fund and the Special Liquidity Support Fund on a pro rata basis and then to the Supplemental Liquidity Support Fund, any amount necessary to reimburse any amounts advanced under the Liquidity Support Agreement to pay costs related to the Project prior to initial occupancy thereof. FIFTH: after the transfers pursuant to the preceding numbered paragraphs have been made, the Master Trustee shall review the amount on deposit in the Entrance Fees Fund on the first day of each January, April, July and October (each such day a Review Date ) (or, upon request of the Obligated Group Agent, on any Business Day). Moneys in the Entrance Fees Fund on each Review Date shall be disbursed by the Master Trustee as follows: (i) to the Taxable Bond Trustee, into the Optional Redemption Fund established under the Taxable Bond Indenture for redemption of Series 2010E Bonds pursuant to the provisions of the Taxable Bond Indenture and prepayment of the Series 2010E Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (ii) to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010D-3 Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010D-3 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (iii) after making all of the transfers described in (i) and (ii) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010D-2 Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010D-2 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (iv) after making all of the transfers described in (i) through (iii) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010D-1 Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010D-1 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (xiii)

34 (v) after making all of the transfers described in (i) through (iv) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010C Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010C Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (vi) after making all of the transfers described in (i) through (v) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010B Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010B Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (vii) Funds shall be transferred on each Review Date as described above regardless of the amount to be so transferred. There is no minimum amount that may be transferred on a regularly scheduled quarterly Review Date. However, any funds transferred at the request of the Obligated Group Agent on a Business Day other than a regularly scheduled Review Date may be transferred only if the amount to be so transferred from the Entrance Fees Fund is at least $100,000. SIXTH: when the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee stating that (A) all Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds have been redeemed, (B) no Event of Default has occurred and is continuing under the Master Indenture, and (C) requesting that any funds on deposit in the Entrance Fees Fund be transferred to the Corporation, the Members of the Obligated Group need not deposit any Entrance Fees into the Entrance Fees Fund, any amounts on deposit in the Entrance Fees Fund shall be remitted to the Corporation by the Master Trustee, and the Entrance Fees Fund shall be closed. For information regarding the Entrance Fee Fund, see SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Entrance Fees Fund and APPENDIX C -- SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Entrance Fees Fund. Working Capital Fund. The Master Trustee shall establish and maintain a separate account to be known as the Working Capital Fund Timothy Place, NFP (the Working Capital Fund ). All moneys received by the Master Trustee and held in the Working Capital Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. Moneys in the Working Capital Fund shall be disbursed by the Master Trustee to or for the account of the Borrowers within seven days after receipt by the Master Trustee of a Written Request to the Master Trustee certifying that such request is for (A) costs of the initial construction and equipping of the Project, (B) development and marketing fees and expenses relating to the Project, (C) operating expenses relating to the Project, (D) the costs of needed repairs to the Project, (E) routine capital expenditures relating to the Project, (F) judgments against any Member of the Obligated Group, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (H) amounts required to restore funds on deposit to each Debt Service Reserve Fund created under the Bond Indentures to their required levels, or (I) amounts due on any Obligations (other (xiv)

35 than optional prepayment or redemption), but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by an Affiliate. All amounts on deposit in the Working Capital Fund may be released to the Corporation, and the Working Capital Fund will be closed, upon receipt by the Master Trustee of an Officer s Certificate of the Obligated Group Agent requesting such release which Officer s Certificate shall state that (i) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D and the Series 2010E Bonds have been redeemed, (ii) Stable Occupancy with respect to the Project has been achieved, and (iii) no Event of Default has occurred and is continuing under the Master Indenture. Operating Reserve Fund. The Master Trustee shall establish and maintain a separate account to be known as the Operating Reserve Fund Timothy Place, NFP (the Operating Reserve Fund ). All moneys received by the Master Trustee and held in the Operating Reserve Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. Moneys in the Operating Reserve Fund shall be disbursed by the Master Trustee to or for the account of the Borrowers within seven days of receipt by the Master Trustee of an Officer s Certificate of the Borrowers to the effect that (i) the withdrawal is made to pay (A) costs of the initial construction and equipping of the Project, (B) development and marketing fees and expenses relating to the Project, (C) operating expenses relating to the Project, (D) the costs of needed repairs to the Project, (E) routine capital expenditures relating to the Project, (F) judgments against any Member of the Obligated Group, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received or (H) amounts due on any Obligations (other than optional prepayment or redemption), but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by an Affiliate, (ii) moneys anticipated to be expended in the calendar month following the month in which such Officer s Certificate is submitted, together with an itemized budget describing the uses for which such moneys are needed and the amount needed for each such use, and (iii) no other funds are available or will reasonably be available to make such payments. All amounts on deposit in the Operating Reserve Fund may be released to the Corporation upon receipt by the Master Trustee of an Officer s Certificate of the Obligated Group Agent requesting such release which Officer s Certificate shall state that (i) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds have been redeemed, and (ii) Stable Occupancy with respect to the Project has been achieved, and (iii) no Event of Default has occurred and is continuing under the Master Indenture. Investment of Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund. Any moneys held by the Master Trustee in the Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Agent, in Permitted Investments. Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Agent in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Any investment income or other gain from any investment of moneys on deposit in the Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund shall be retained therein. Any loss resulting from such investments shall be charged to the Entrance Fees Fund, Working Capital Fund or Operating Reserve Fund, as the case may be. (xv)

36 The investment of the moneys held in the Entrance Fee Fund, Working Capital Fund and Operating Reserve Fund shall be subject to yield restriction as provided in the Tax Exemption Agreement until the Obligated Group Agent delivers an opinion of nationally recognized municipal bond counsel (which counsel and opinion are in a form acceptable to the Master Trustee) to the Master Trustee to the effect that no such yield restriction is required to maintain any exemption from federal income taxation to which the interest on any Related Bonds would otherwise be entitled. For more information, see SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Entrance Fees Fund, Working Capital Fund, Operating Reserve Fund, and Investment of Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund as well as SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Entrance Fees Fund, Working Capital Fund, Operating Reserve Fund and Investment of Entrance Fees Fund, Operating Reserve Fund and Working Capital Fund in APPENDIX C. Feasibility Study Dixon Hughes PLLC, independent certified public accountants, have prepared a financial feasibility study dated May 14, 2010 (the Feasibility Study ), which is included as APPENDIX B hereto. The Feasibility Study includes management s financial forecast of the Borrowers for the six years ending December 31, The Feasibility Study updates, replaces and supersedes the Feasibility Study dated March 13, 2010 which was included as APPENDIX B to the Preliminary Official Statement dated March 15, As stated in the Feasibility Study, there will usually be differences between the forecasted data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. THE FEASIBILITY STUDY SHOULD BE READ IN ITS ENTIRETY, INCLUDING MANAGEMENT S NOTES AND ASSUMPTIONS SET FORTH THEREIN. See APPENDIX B hereto. Forecasted Financial Information of the Borrowers The following table reflects the forecasted funds available for debt service and other financial ratios as of and for the fiscal year ending December 30, 2015 and has been extracted from management s financial forecast included in the Feasibility Study. For purposes of calculating debt service requirements in the table below, the Underwriter has provided to Dixon Hughes, PLLC the assumed structure and terms of the Series 2010 Bonds as follows: The Series 2010A Bonds are planned to consist of $109,115,000 nonrated tax-exempt fixed rate bonds, with annual principal payments assumed maturing on or before May 15, The Series 2010A Bonds are assumed to bear average interest rates ranging between 8.00% and 8.25% per annum and average yields ranging from 8.00% to 8.45% per annum. The Series 2010B Bonds are planned to consist of $7,875,000 nonrated tax-exempt fixed rate bonds, with annual principal payments are anticipated to be redeemed in full by approximately August 15, The Series 2010B Bonds are assumed to bear average interest rates of 7.75% per annum. The Series 2010C Bonds are planned to consist of $5,000,000 which are tax-exempt ARROS SM anticipated to be redeemed in full by approximately 80% initial occupancy of the Independent Living Units by approximately February 15, 2014 and an average interest rate of 7.50% per annum. The Series 2010D-1 Bonds are planned to consist of $10,275,000 tax-exempt fixed rate bonds with an average interest rate of 7.25% per annum and anticipated to be redeemed in full by 75% initial occupancy of the Independent Living Units by approximately August 15, (xvi)

37 The 2010D-2 Bonds are planned to consist of $15,350,000 tax-exempt fixed rate bonds with an average interest rate of 7.00% per annum and anticipated to be redeemed in full by 65% initial occupancy of the Independent Living Units by approximately May 15, The 2010D-3 Bonds are planned to consist of $15,275,000 tax-exempt fixed rate bonds with an average interest rate of 6.25% per annum and anticipated to be redeemed in full by 50% initial occupancy of the Independent Living Units by approximately November 15, The 2010E Bonds are planned to consist of $12,650,000 taxable fixed rate bonds with an average interest rate of 8.625% per annum and are anticipated to be redeemed in full by approximately August 15, The Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds each have early call provisions that provide for repayment prior to the maturity date without penalties, and are assumed to be redeemed in full prior to their respective maturities based on the availability of Project-related entrance fee receipts. (xvii)

38 FORECASTED SCHEDULE OF FINANCIAL RATIOS FOR THE YEAR ENDING DECEMBER 31, (000s Omitted, Except Ratios) Long-Term Debt Service Coverage Ratio 2015 Increase in net deficit $ 16 Deduct: Entrance fee amortization (3,820) Add: Depreciation 3,283 Amortization 1,076 Interest expense 8,981 Accrued management fees(a) 513 Entrance fees received from resident turnover 6,122 Entrance fees refunded (2,564) Income Available for Debt Service $ 13,607 Maximum Annual Debt Service(b) $ 9,763 Maximum Annual Debt Service Coverage Ratio 1.39x Annual Debt Service $ 8,893 Annual Debt Service Coverage Ratio 1.53x Days Cash on Hand 2015 Cash and cash equivalents $ 841 Investments 22,379 Supplemental Liquidity Support Fund 400 Cash on hand $23,620 Total expenses 23,703 Less: Accrued management fees(a) $ (513) Depreciation (3,283) Amortization (1,076) Total expenses less depreciation and amortization 18,831 Daily operating expenses(c) 52 Days cash on hand 454 Cash to Debt Ratio 2015 Cash and Cash Equivalents $ 841 Investments 22,379 Debt Service Reserve Fund Series 2010A Bonds 9,763 Supplemental Liquidity Support Fund 400 Funds Available for Debt Service $ 33,383 Long-Term Indebtedness Outstanding $ 108,645 Cash to Debt Ratio 0.31x (a) Management fees payable to Providence Management and Development Company Incorporated are to be deferred during the forecast period as described in the management agreement with Providence Management and Development Incorporated. (b) The Maximum Annual Debt Service is equal to the greatest debt service requirement in the then current or any future fiscal year, other than the debt service requirements on the Series 2010B, Series 2010C, Series 2010D and Series 2010E Bonds, and excludes the principal and interest payment on the Series 2010A Bonds due May 15, (c) Daily operating expenses are equal to total operating expenses less depreciation and amortization divided by 365 days. (xviii)

39 The above tables should be considered in conjunction with the entire Feasibility Study to understand management s assumptions upon which the Feasibility Study is based. There will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Financial Reporting and Continuing Disclosure Financial Reporting. Under the Master Indenture, the Obligated Group Agent will furnish or cause to be furnished to, among others, the Master Trustee, the Underwriter, each Related Bond Trustee, EMMA (as described below) and any other nationally recognized municipal securities information repositories identified by the Securities and Exchange Commission, the Authority and all owners of any Related Bonds who request such reports in writing (which written request shall include a certification as to such ownership) (the Required Information Recipients ) the following: (i) Until the end of the quarter in which the Obligated Group achieves Stable Occupancy with respect to the Project, a monthly statement of the Obligated Group as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including: (A) prior to the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) a summary statement as to the status of construction; (III) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (IV) statements of the balances for each fund and account required to be held under the Master Indenture, or under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (to the extent available from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Agent, and (B) after the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) information with respect to the payor mix for the health center portion of the Project; (III) occupancy levels of the Project as of the end of such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; (IV) a summary statement on the status of construction until the issuance of the last Occupancy Certificate for the Project; (V) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last Occupancy Certificate for the Project; (VI) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month with a comparison to the operating budget, and an unaudited balance sheet of the Obligated Group as of the end of such month; (VII) a calculation of the Cumulative Cash Operating Loss as of the end of such month; (VIII) statements of the balances for each fund and account held under the Master Indenture, under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee); and (IX) a statement showing the amount of Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds that have been redeemed in the aggregate and during that calendar month, all in reasonable detail and certified by an officer of the Obligated Group Agent. The Obligated Group Agent does not need to deliver any monthly statement of the Obligated (xix)

40 Group described in this subparagraph (i) after the end of the fiscal quarter in which Stable Occupancy with respect to the Project has been achieved and the Obligated Group has commenced delivery of the quarterly reports required by subparagraph (B)(ii) below. (ii) Beginning with the first full fiscal quarter following the date that Stable Occupancy with respect to the Project is achieved, the following information as soon as practicable after it is available but in no event more than 45 days after the completion of such fiscal quarter: (A) quarterly unaudited financial statements of the Obligated Group (including a report with respect to the fourth quarter of each Fiscal Year), including a combined or combining statement of revenues and expenses and a statement of cash flows of the Obligated Group during such period, and a combined or combining balance sheet as of the end of each such fiscal quarter with a comparison to the operating budget, (B) a calculation of Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, as of the last day of such quarter, the Historical Debt Service Coverage Ratio of the Obligated Group for such quarter, the Cumulative Cash Operating Loss, if required to be calculated or submitted for such fiscal quarter, (C) information with respect to the payor mix of the health center portion of the Project and (D) a calculation of the marketing/reservation levels for the Project as of the end of each month in the quarter, including the number of units that have been reserved or cancelled during that month and on an aggregate basis; and occupancy levels of the Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Agent, with a management s discussion and analysis of results. (iii) If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 or the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Test Date as provided in the Master Indenture, the Obligated Group will deliver the financial information and the calculations described in paragraph (ii) above on a monthly basis with the Historical Debt Service Coverage Ratio calculated on a year-to-date basis each month, within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the applicable Liquidity Requirement. (iv) Within 150 days of the end of each Fiscal Year commencing with the Fiscal Year ending December 31, 2010, an annual financial report of the Obligated Group audited by a firm of certified public accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of changes in fund balances for such Fiscal Year and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the accountants auditing such report containing calculations of the Obligated Group s Historical Debt Service Coverage Ratio for said Fiscal Year and of the Obligated Group s Cash to Indebtedness Ratio or Days Cash on Hand, as applicable (beginning with the Fiscal Year in which such calculations are first required to be made) as of the last day of such Fiscal Year and if such accountants shall have obtained knowledge of any default or defaults under the Master Indenture, they shall disclose in such statement the default or defaults and the nature thereof. (v) On or before the date of delivery of the financial reports referred to in subsection (iv) above, an Officer s Certificate of the Obligated Group Agent (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture or if not, specify all such defaults and the nature thereof, (B) calculating and certifying the (xx)

41 marketing and occupancy percentages, Cumulative Cash Operating Loss, Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, and Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such fiscal period or Fiscal Year, as appropriate, and (C) commencing with the Fiscal Year ending December 31, 2011, a comparison of the audited financial statements with the operating budget for the preceding Fiscal Year, and (D) an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any. (vi) Within 45 days of the end of each Fiscal Year, the Obligated Group Agent shall deliver a summary of the operating and capital budgets for the Fiscal Year then started. (vii) At any time during the Fiscal Year, copies of (A) any board-approved revisions to the annual budget or (B) any correspondence to or from the Internal Revenue Service questioning or contesting the status of a Member as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of the Series 2010 Bonds or any Related Bonds the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes, promptly upon receipt. (viii) Within 30 days of receipt of any Occupancy Certificate for any portion of the Project, the Corporation will notify the Master Trustee that such Occupancy Certificate has been received and include a copy of the Occupancy Certificate with such notice. (ix) Within 45 days of achieving Stable Occupancy with respect to the Project, the Corporation will notify the Master Trustee that Stable Occupancy has been achieved. (x) Upon withdrawal of any funds from the Liquidity Support Funds as provided under the Master Indenture, the Corporation shall notify the Master Trustee and each Required Information Recipient submit the information required under the Master Indenture. See FINANCIAL REPORTING AND CONTINUING DISCLOSURE Financial Reporting herein and SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Financial Statements and Related Matters in APPENDIX C hereto for further information. Continuing Disclosure. Offerings of municipal securities must comply with the provisions of Rule 15c2-12 of the Securities and Exchange Commission (as amended from time to time, the Rule ). Given the sources of repayment for the Series 2010 Bonds and the Authority s limited obligation in respect thereof, the Authority has determined that its financial and operating data are not material to a decision to purchase, hold or sell the Bonds. Consequently, the Authority will not provide any such information. However, the Borrowers have agreed pursuant to a Continuing Disclosure Agreement to make certain financial information and certain operating data with respect to it available to holders of the Bonds through EMMA ( the information repository of the Municipal Securities Rulemaking Board, to comply with the Rule. The Borrowers are solely responsible for providing such continuing disclosure, and the Authority will not provide any such information. In addition, the Borrowers will provide a copy of the information described below under the heading FINANCIAL REPORTING AND CONTINUING DISCLOSURE Financial Reporting to EMMA. See FINANCIAL REPORTING AND CONTINUING DISCLOSURE herein. (xxi)

42 Risk Factors AN INVESTMENT IN THE SERIES 2010 BONDS INVOLVES A CERTAIN DEGREE OF RISK INCLUDING THOSE SET FORTH UNDER THE HEADING RISK FACTORS HEREIN. A PROSPECTIVE SERIES 2010 BONDHOLDER IS ADVISED TO READ SECURITY FOR THE SERIES 2010 BONDS, SECURITY FOR THE SERIES 2010 OBLIGATIONS AND RISK FACTORS FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SERIES 2010 BONDS. Careful consideration should be given to these risks and other risks described elsewhere in this Official Statement. Among other things, careful evaluation should be made of management s assumptions and rationale described in the Feasibility Study, and certain factors that may adversely affect the ability of the Borrowers or any future Members of the Obligated Group to generate sufficient revenues to pay expenses of operation, including the principal of, premium, if any, and interest on the Series 2010 Bonds. (xxii)

43 OFFICIAL STATEMENT $175,540,000 ILLINOIS FINANCE AUTHORITY REVENUE BONDS (PARK PLACE OF ELMHURST PROJECT) consisting of $109,115,000 Revenue Bonds, Series 2010A $7,875,000 Revenue Bonds, Series 2010B $5,000,000 Revenue Bonds, Series 2010C (Accelerated Redemption Reset Option Securities (ARROS SM )) $10,275,000 Revenue Bonds, Series 2010D-1 (Tax-Exempt Mandatory Paydown Securities (TEMPS-75 SM )) $15,350,000 Revenue Bonds, Series 2010D-2 (Tax-Exempt Mandatory Paydown Securities (TEMPS-65 SM )) $15,275,000 Revenue Bonds, Series 2010D-3 (Tax-Exempt Mandatory Paydown Securities (TEMPS-50 SM )) $12,650,000 Taxable Revenue Bonds, Series 2010E (Taxable Mandatory Paydown Securities (Taxable MPS)) INTRODUCTION Purpose of this Official Statement The purpose of this Official Statement, including the cover page, the summary statement and the appendices, is to set forth certain information in connection with the offering by the Illinois Finance Authority (the Authority ) of $109,115,000 Revenue Bonds, Series 2010A (Park Place of Elmhurst Project) (the Series 2010A Bonds ); its $7,875,000 Revenue Bonds, Series 2010B (Park Place of Elmhurst Project) (the Series 2010B Bonds ); its $5,000,000 Revenue Bonds, Series 2010C (Park Place of Elmhurst Project) (Accelerated Redemption Reset Option Securities (ARROS SM )) (the Series 2010C Bonds ); its $10,275,000 Revenue Bonds, Series 2010D-1 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-75 SM )) (the Series 2010D-1 Bonds ); its $15,350,000 Revenue Bonds, Series 2010D-2 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-65 SM )) (the Series 2010D-2 Bonds ); its $15,275,000 Revenue Bonds, Series 2010D-3 (Park Place of Elmhurst Project) (Tax-Exempt Mandatory Paydown Securities (TEMPS-50 SM )) (the Series 2010D-3 Bonds and together with the Series 2010D-1 Bonds and the Series 2010D-2 Bonds, the Series 2010D Bonds and together with the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010C Bonds, the Tax-Exempt Series 2010 Bonds ); and its $12,650,000 Taxable Revenue Bonds, Series 2010E (Park Place of Elmhurst Project) (Taxable Mandatory Paydown Securities (Taxable MPS)) (the Series 2010E Bonds or the Taxable Series 2010 Bonds and, together with the Tax-Exempt Series 2010 Bonds, the Series 2010 Bonds ). The Series 2010A Bonds, the Series 2010B Bonds, the Series 2010D Bonds and the Series 2010E Bonds are occasionally referred to herein as the Fixed Rate Series 2010 Bonds. Certain capitalized terms used in this Official Statement and not otherwise defined herein are defined in APPENDIX C. The Official Statement speaks only as of its date, and the information contained herein is subject to change. The Authority The Authority is a body politic and corporate of the State of Illinois. The Authority was created under the Illinois Finance Authority Act, as amended (the Act ). For further information concerning the Authority, its powers, members, financing program and bonds, see the information under the caption THE AUTHORITY. The Series 2010 Bonds The Tax-Exempt Series 2010 Bonds will be issued pursuant to the Illinois Finance Authority Act (the Act ), a resolution of the Authority (the Resolution ) and a Bond Trust Indenture, dated as of May

44 1, 2010 (the Tax-Exempt Bond Indenture ), by and between the Authority and Wells Fargo Bank, N.A., as bond trustee (the Tax-Exempt Bond Trustee ). The proceeds of the Tax-Exempt Series 2010 Bonds will be loaned to Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst or Park Place of Elmhurst (the Corporation ) and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation (the Foundation and together with the Corporation, the Borrowers ), pursuant to a Loan Agreement dated as of May 1, 2010 (the Tax-Exempt Loan Agreement ), by and among the Borrowers and the Authority. The Taxable Series 2010 Bonds will be issued pursuant to the Act, the Resolution and a Bond Trust Indenture, dated as of May 1, 2010 (the Taxable Bond Indenture and together with the Tax- Exempt Bond Indenture, the Bond Indentures ), by and between the Authority and Wells Fargo Bank, N.A., as bond trustee (the Taxable Bond Trustee and together with the Tax-Exempt Bond Trustee, the Bond Trustee ). The proceeds of the Taxable Series 2010 Bonds will be loaned to the Borrowers, pursuant to a Loan Agreement dated as of May 1, 2010 (the Taxable Loan Agreement and together with the Tax-Exempt Loan Agreement, the Loan Agreements ) by and among the Borrowers and the Authority. Purpose of the Series 2010 Bonds The Tax-Exempt Series 2010 Bonds. The Borrowers will use the proceeds from the sale of the Tax-Exempt Series 2010 Bonds, together with other available funds to (i) pay or reimburse the Borrowers for the payment of all or a portion of the costs of acquiring, constructing, renovating, remodeling and equipping certain health facilities owned by the Borrowers, and all necessary and attendant facilities, equipment, site work, zoning, entitlements and utilities related thereto, including, but not limited to, the acquisition, construction and equipping of a continuing care retirement community consisting of approximately 173 independent living units, 10 catered living units, 46 assisted living units, 20 memory support assisted living units and 37 nursing beds, related common areas and parking, all known as Park Place Christian Community of Elmhurst and located in Elmhurst, Illinois (the Project ) including refinancing certain taxable indebtedness incurred to pay a portion of the costs related to the Project; (ii) provide working capital; (iii) fund debt service reserve funds; (iv) pay a portion of the interest on the Tax- Exempt Series 2010 Bonds; and (v) pay certain expenses incurred in connection with the issuance of the Tax-Exempt Series 2010 Bonds; all as permitted by the Act. A more detailed description of the use of the proceeds from the sale of the Tax-Exempt Series 2010 Bonds is included under the captions ESTIMATED SOURCES AND USES OF FUNDS and PLAN OF FINANCE. The Taxable Series 2010 Bonds. The Borrowers will use the proceeds from the sale of the Taxable Series 2010 Bonds together with other available funds to (i) pay or reimburse the Borrowers for the payment of certain costs of acquiring, constructing, developing, marketing and equipping a portion of the Project which will not be financed by the Tax-Exempt Series 2010 Bonds, including refinancing certain taxable indebtedness incurred to pay a portion of the costs related to the Project; (ii) provide working capital; (iii) fund a debt service reserve fund; (iv) pay a portion of the interest on the Series 2010 Bonds; and (v) pay certain of the costs relating to the issuance of the Series 2010 Bonds, all as permitted by the Act. A more detailed description of the use of the proceeds from the sale of the Taxable Series 2010 Bonds is included under the captions ESTIMATED SOURCES AND USES OF FUNDS and PLAN OF FINANCE. The Borrowers The Corporation is an Illinois not for profit corporation, formed in May 2004 for the purpose of constructing, owning and operating a continuing care retirement community known as Park Place Christian Community of Elmhurst (the Community ) in Elmhurst, Illinois. The Corporation received a determination letter from the Internal Revenue Service dated February 21, 2007 stating that the -2-

45 Corporation is an organization exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the Code ), as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was May 5, The Foundation is an Illinois not for profit corporation, formed in January 2004 to support and advance Christian care and services to the elderly and infirm by supporting health-related research, the development of a continuum of appropriate living arrangements, and programs and services to support a quality of life for those who suffer from disabilities and age-related illnesses and infirmities. The Foundation received a determination letter from the Internal Revenue Service dated April 7, 2004 stating that the Foundation is an organization exempt from federal income tax under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was January 9, The Corporation and the Foundation are controlled affiliates of Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services ( Providence ). See THE BORROWERS herein for more information. THE BORROWERS ARE THE SOLE MEMBERS OF THE OBLIGATED GROUP. PROVIDENCE AND PROVIDENCE DEVELOPMENT GROUP, LLC AND PROVIDENCE MANAGEMENT AND DEVELOPMENT COMPANY INCORPORATED, BOTH AFFILIATES OF PROVIDENCE AND THE BORROWERS, HAVE NO PAYMENT OBLIGATIONS WITH RESPECT TO THE LOAN AGREEMENTS, THE MASTER INDENTURE, THE SERIES 2010 OBLIGATIONS OR THE SERIES 2010 BONDS. HOWEVER, PROVIDENCE DEVELOPMENT GROUP, LLC HAS AGREED UNDER THE LIQUIDITY SUPPORT AGREEMENT TO PROVIDE CERTAIN LIMITED SUPPORT TO THE BORROWERS. SEE LIQUIDITY SUPPORT AGREEMENT HEREIN. As of May 21, 2010, the Corporation has received entrance fee deposits for 133 independent living units, representing approximately 77% of the 173 total planned. See APPENDICES A and B for a more detailed description of the history, organization and financial performance of the Borrowers and with respect to its affiliates and the Development Consultant. Security for the Series 2010 Bonds Limited Obligation of the Authority. The Series 2010 Bonds and the interest thereon do not constitute indebtedness or an obligation, general or moral, or a pledge of the full faith or a loan of credit of the Authority, the State of Illinois or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision. The Authority is obligated to pay the principal of, premium, if any, and interest on the Series 2010 Bonds and other costs incidental thereto only from the sources specified in the Bond Indentures. Neither the full faith and credit nor the taxing powers, if any, of the Authority, the State of Illinois or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, and interest on the Series 2010 Bonds or other costs incidental thereto, except as otherwise provided in the Bond Indentures. No owner of any Series 2010 Bond shall have the right to compel the taxing power, if any, of the Authority, the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any, or interest on the Series 2010 Bonds. The Authority does not have the power to levy taxes for any purposes whatsoever. The Master Indenture and the Series 2010 Obligations. The Series 2010A Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010A in the aggregate principal amount of $109,115,000 (the Series 2010A Obligation ); the Series 2010B Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010B in the aggregate principal amount of $7,875,000 (the Series 2010B Obligation ); the Series 2010C Bonds will be limited obligations of the Authority and will -3-

46 be secured in part by the Borrowers Direct Note Obligation, Series 2010C in the aggregate principal amount of $5,000,000 (the Series 2010C Obligation ); the Series 2010D-1 Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010D-1 in the aggregate principal amount of $10,275,000 (the Series 2010D-1 Obligation ); the Series 2010D-2 Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010D-2 in the aggregate principal amount of $15,350,000 (the Series 2010D-2 Obligation ); the Series 2010D-3 Bonds will be limited obligations of the Authority and will be secured in part by the Borrowers Direct Note Obligation, Series 2010D-3 in the aggregate principal amount of $15,275,000 (the Series 2010D-3 Obligation ); the Series 2010E Bonds will be limited obligations of the Authority and will be secured in part by the Borrower s Direct Note Obligation, Series 2010E in the aggregate principal amount of $12,650,000 (the Series 2010E Obligation and together with the Series 2010A Obligation, the Series 2010B Obligation, the Series 2010C Obligation, the Series 2010D-1 Obligation, the Series 2010D-2 Obligation and the Series 2010D-3 Obligation, the Series 2010 Obligations ). The Series 2010 Obligations will each be issued pursuant to a Master Trust Indenture dated as of May 1, 2010 (the Master Indenture ), among the Borrowers, as the initial members of an obligated group (each a Member, and collectively, the Obligated Group ), and Wells Fargo Bank, N.A., as master trustee (the Master Trustee ). The members of the Obligated Group are jointly and severally liable for all obligations, including the Series 2010 Obligations, issued under the Master Indenture. The Authority will pledge and assign the related Series 2010 Obligations and certain of its rights under each Loan Agreement to the respective Bond Trustee as security for the respective series of Series 2010 Bonds. The terms of each Series 2010 Obligation will require payments by the Borrowers which, together with other moneys available therefor (and interest earned thereon), will be sufficient to provide for the payment of the principal of and interest on the respective series of Series 2010 Bonds. Payment of the principal of and interest on each series of the Series 2010 Bonds will be additionally secured by moneys deposited to the credit of the accounts in the related Debt Service Reserve Funds created under the Bond Indentures. See SECURITY FOR SERIES 2010 BONDS, SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indenture Funds; Disposition of Revenues 4. Debt Service Reserve Fund and Summary of Certain Provisions of the Series 2010E Bond Indenture Funds; Disposition of Revenues 4. Debt Service Reserve Fund in APPENDIX C. Additional Obligations and Additional Indebtedness. The Master Indenture permits the Borrowers to issue Additional Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by an Additional Obligation issued under the Master Indenture. In certain circumstances, the Borrowers may issue Additional Obligations under the Master Indenture to the Authority or to persons other than the Authority that will not be pledged under either of the Bond Indentures but will be equally and ratably (except as described herein) secured with the Series 2010 Obligations. Under the terms of the Master Indenture, Additional Obligations may also be entitled to the benefit of security in addition to that securing the Obligations outstanding under the Master Indenture (including the Series 2010 Obligations). See SECURITY FOR THE SERIES 2010 OBLIGATIONS Additional Indebtedness. The Series 2010 Obligations and any Additional Obligations to be issued by the Borrowers under the Master Indenture (whether or not pledged under either of the Bond Indentures or any Related Bond Indentures) are collectively referred to herein as the Obligations. The Feasibility Study Dixon Hughes PLLC, independent certified public accountants, has prepared a Financial Feasibility Study dated May 14, 2010 (the Feasibility Study ), which is included as APPENDIX B hereto. The Feasibility Study includes management s financial forecast of the Borrowers for the six years ending December 31, The Feasibility Study updates, replaces and supersedes the Feasibility Study dated March 13, 2010 which was included as APPENDIX B to the Preliminary Official Statement dated -4-

47 March 15, As stated in the Feasibility Study, there will usually be differences between the forecasted data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B hereto. THE BORROWERS The Corporation is an Illinois not for profit corporation, formed in May 2004 for the purpose of constructing, owning and operating a continuing care retirement community known as Park Place Christian Community of Elmhurst (the Community ) in Elmhurst, Illinois. The Corporation received a determination letter from the Internal Revenue Service dated February 21, 2007 stating that the Corporation is an organization exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the Code ), as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was May 5, The Foundation is an Illinois not for profit corporation, formed in January 2004 to support and advance Christian care and services to the elderly and infirm by supporting health-related research, the development of a continuum of appropriate living arrangements, and programs and services to support a quality of life for those who suffer from disabilities and age-related illnesses and infirmities. The Foundation received a determination letter from the Internal Revenue Service dated April 7, 2004 stating that the Foundation is an organization exempt from federal income tax under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was January 9, The Corporation and the Foundation are controlled affiliates of Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services ( Providence ). Providence was founded in 1956 as an Illinois not for profit corporation to furnish health care and retirement living facilities for the proper care and treatment of the elderly. Providence operates 11 separate facilities accounting for 1,697 units on eight campuses located in South Holland, Downers Grove, Crete, Palos Heights and Homer Glen, Illinois and Grand Rapids and Zeeland (two campuses), Michigan. Providence Management and Development Company Incorporated ( PM&D ), an Illinois corporation, is a wholly-owned subsidiary of Providence formed in 1991 to develop and manage health care and retirement living facilities. The Corporation has entered into a Development Services Agreement and a Management Services Agreement with respect to the Community each with PM&D. See DEVELOPMENT OF THE COMMUNITY PM&D Development Agreement and MANAGEMENT OF THE COMMUNITY PM&D Management Experience in APPENDIX A. Providence Development Group, LLC ( PDG ), an Illinois limited liability company whose sole member is Providence, has agreed to provide up to $2,600,000 of liquidity support to the Project and the Borrowers. Furthermore, repayment of any draws with respect to PDG s liquidity support are subject to certain repayment restrictions described in SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates below. See LIQUIDITY SUPPORT AGREEMENT herein. PDG is also providing a $1,000,000 contribution to the Borrowers for the Project. See APPENDIX A hereto for additional information regarding Providence, PM&D, PDG and the Borrowers. THE BORROWERS ARE THE SOLE MEMBERS OF THE OBLIGATED GROUP. PROVIDENCE, PDG AND PM&D HAVE NO PAYMENT OBLIGATIONS WITH RESPECT TO THE LOAN AGREEMENTS, THE MASTER INDENTURE, THE SERIES 2010 OBLIGATIONS OR THE SERIES 2010 BONDS. HOWEVER, PDG HAS AGREED UNDER THE LIQUIDITY SUPPORT AGREEMENT TO PROVIDE CERTAIN LIMITED SUPPORT TO THE BORROWERS. -5-

48 As of May 21, 2010, the Corporation has received entrance fee deposits for 133 independent living units, representing approximately 77% of the 173 total planned. Purposes of the Series 2010 Bonds PLAN OF FINANCE The Borrowers will use the proceeds from the sale of the Tax-Exempt Series 2010 Bonds, together with other available funds, to (i) pay or reimburse the Borrowers for the payment of certain costs of the Project including refinancing certain taxable indebtedness incurred to pay a portion of the costs related to the Project; (ii) fund a debt service reserve fund; (iii) pay a portion of the interest on the Tax- Exempt Series 2010 Bonds; (iv) provide working capital; and (v) pay certain expenses incurred in connection with the issuance of the Series 2010 Bonds; all as permitted by the Act. A more detailed description of the use of the proceeds from the sale of the Tax-Exempt Series 2010 Bonds is included under the caption ESTIMATED SOURCES AND USES OF FUNDS. The Borrowers will use the proceeds from the sale of the Taxable Series 2010 Bonds together with other available funds to (i) pay or reimburse the Borrowers for the payment of certain costs of acquiring, constructing, developing, marketing and equipping a portion of the Project which will not be financed by the Tax-Exempt Series 2010 Bonds, including refinancing certain taxable indebtedness with respect thereto; (ii) provide working capital; (iii) fund a debt service reserve fund; (iv) pay a portion of the interest on the Series 2010 Bonds; and (v) pay certain of the costs relating to the issuance of the Series 2010 Bonds, all as permitted by the Act. A more detailed description of the use of the proceeds from the sale of the Taxable Series 2010 Bonds is included under the caption ESTIMATED SOURCES AND USES OF FUNDS. The Project site is currently owned by PDG. Upon issuance of the Series 2010 Bonds, the Corporation will pay PDG approximately $14,600,000 (the Land Acquisition Amount ) to purchase the Project site. PDG is also providing a $1,000,000 contribution to the Borrowers for the Project. The Project and the Community The Community will be located on an approximately 12.6 acre property in Elmhurst, Illinois. When completed it is anticipated that the Community will consist of approximately 173 independent living units, 10 catered living units, 46 assisted living units, 20 assisted living memory support units and 37 nursing beds, related common areas and parking. The independent living units and catered living units are expected be located in a residential building with a five-story configuration. The assisted living units, memory support units and health center are expected be located in a building with a three story configuration. The gross square footage of the Community is anticipated to approximate 437,000 square feet. Common areas at the Community are planned to include a central gathering space, multi-purpose room, living room, main dining room, café/bistro, private dining room, aquatic/fitness center, business center/library, beauty salon/barber shop, card lounge/game room, creative arts center, residential storage, mail alcove, administrative offices and two guest suites. The Community will include both underground and surface parking. Management of the Corporation anticipates that primary construction of the Project will begin in June Management of the Corporation anticipates that the independent living units and catered living units would be available for occupancy in December 2011 and the assisted living and memory support apartments would be available for occupancy in May Occupancy of the nursing units is anticipated to begin during May See APPENDIX A for additional information. -6-

49 As of May 21, 2010, the Corporation has received entrance fee deposits for 133 independent living units, representing approximately 77% of the 173 total planned. The Authority makes no warranty or representation, whether express or implied, with respect to the Project or the location, use, operation, design, workmanship, merchantability, fitness, suitability or use for particular purpose, condition or durability thereof or title thereto. Liquidity Support The Borrowers, PDG and Wells Fargo Bank, N.A., the Master Trustee and Bond Trustee, will enter into a liquidity support agreement (the Liquidity Support Agreement ) upon closing of the Series 2010 Bonds. Pursuant to the Liquidity Support Agreement, PDG will provide liquidity support to the Borrowers of up to $2,600,000. Such moneys will be deposited in the Providence Liquidity Support Fund held by the Master Trustee. Additionally, pursuant to the Liquidity Support Agreement, the Corporation will deposit $3,000,000 in the Special Liquidity Support Fund held by the Master Trustee as well as $400,000 in the Supplemental Liquidity Support Fund held by the Master Trustee. The Supplemental Liquidity Support Fund consists of $400,000 from the proceeds of the Series 2010E Bonds. Collectively, these funds of $6,000,000 are referred to herein as the Liquidity Support Funds. PDG s total contribution pursuant to the Liquidity Support Agreement is $2,600,000. Liquidity Support Funds available under the Liquidity Support Agreement may be drawn by the Bond Trustee or the Master Trustee or the Borrowers to pay for Project construction costs, interest on the Series 2010 Bonds, or any operating expenses in conjunction with the Project, if no other funds are available for those purposes in any trustee-held fund held by the Bond Trustee (other than the Debt Service Reserve Fund) or Master Trustee subject to the provisions of the Liquidity Support Agreement. The Supplemental Liquidity Support Fund will be drawn upon prior to any draws on either the Providence Liquidity Support Fund or the Special Liquidity Support Fund. Repayments of draws under the Providence Liquidity Support Fund ( Borrowers Repayment Obligations ) are subject to certain repayment restrictions. No payment of the Borrowers Repayment Obligations and any Affiliated Related Subordinated Debt set forth in the Master Indenture may be made except as described in SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates below. Also see THE LIQUIDITY SUPPORT AGREEMENT herein. Pre-Finance Construction Development Capital Greystone Development Services XVII ( GDS ) is a Delaware joint venture comprised of GCI Elmhurst, L.P. (the Limited Partnership ) and Greystone Development Company II, LP ( GDC ). Pursuant to the joint venture agreement, the Limited Partnership s role is to fund the preconstruction financing. The General Partner (the General Partner ) of the partnership is GDC Elmhurst, LLC, a Delaware limited liability company. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. ( Greystone Partners ). Limited Partners include The Ziegler Companies, Inc., Ziegler Equity Funding III, LLC ( ZEFIII ), Ziegler Equity Funding IV, LLC ( ZEFIV ), Ziegler Equity Funding V, LLC ( ZEFV ) and Greystone Senior Living Investors LP ( GSLI ). The Corporation received $6,000,000 in preconstruction financing in March 2006, $2,800,000 in preconstruction financing in October 2007, $1,500,000 in preconstruction financing in June 2008, $1,600,000 in preconstruction financing in June 2009 and $500,000 in preconstruction financing in March 2010 (collectively, the Pre- Finance Capital, a total of $12,400,000). It is anticipated that the preconstruction financing described above, along with a portion of a fixed development fee (the Fixed Base Fee ), will be repaid upon delivery of the Series 2010 Bonds. The Borrowers have no obligation to reimburse advances made by the Limited Partnership unless and until the closing of the Series 2010 Bonds. All risks for such advances associated with the failure to achieve closing on the Series 2010 Bonds will be borne by the Limited Partnership. See DEVELOPMENT OF THE COMMUNITY in APPENDIX A. -7-

50 ZEFIII is an investment fund comprised exclusively of Ziegler and employees of the Underwriter. ZEFIV and ZEFV is each an investment fund which primarily includes third party investors and certain employees of the Underwriter. Certain employees of GDC and its affiliates and Ziegler and its affiliates are also participating as limited partners in the Limited Partnership. See DEVELOPMENT OF THE COMMUNITY in APPENDIX A. Development of the Project Greystone Development Company. The Corporation entered into an Amended and Restated Development Services Agreement dated January 26, 2006, and as subsequently amended (collectively, the Development Consulting Agreement ), with Greystone Development Company II, LP ( GDC ) on behalf of itself and its permitted assignee Greystone Development Services XVII, a joint venture ( GDS ), to provide development consulting services for the Community and to be responsible for the marketing of the Community until ninety percent (90%) overall occupancy is achieved. GDS is a joint venture comprised of a limited partnership organized and existing under the laws of the State of Delaware. GDC has assigned its rights and duties to GDS. See APPENDIX A DEVELOPMENT OF THE COMMUNITY for more information regarding the development of the Project. GDC is a Delaware limited partnership and an affiliate of Greystone Communities, Inc. ( GCI ). PM&D. The Corporation has entered into a separate Development Services Agreement with PM&D dated as of December 15, 2005 (as amended and supplemented from time to time, the Providence Development Agreement ) whereby PM&D will serve as co-developer and provide support, assistance and oversight of GDS efforts. PM&D will defer receipt of $1,600,000 of its development fee of $2,600,000 ( PM&D Development Fee ) until certain conditions set forth in the Master Indenture have been satisfied as described below under the caption SECURITY FOR THE SERIES 2010 OBLIGATIONS Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates herein. See APPENDIX A DEVELOPMENT OF THE COMMUNITY PM&D Development Agreement for more information regarding the development of the Project and the terms of the Providence Development Agreement. -8-

51 ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds, net of investment earnings, are as follows: SOURCES OF FUNDS Series 2010A Bonds $109,115,000 Series 2010B Bonds 7,875,000 Series 2010C Bonds 5,000,000 Series 2010D-1 Bonds 10,275,000 Series 2010D-2 Bonds 15,350,000 Series 2010D-3 Bonds 15,275,000 Series 2010E Bonds 12,650,000 Original Issue Discount (2,682,301) PDG Contribution 1,000,000 Entrance Fees (1) 21,700,000 USES OF FUNDS Total Sources of Funds $195,557,699 Project Costs $125,612,641 Special Liquidity Support Fund (2) 3,000,000 Supplemental Liquidity Support Fund (2) 400,000 Special Interest Account 25,577,684 Debt Service Reserve Account Series 2010A Bonds 9,762,844 Debt Service Reserve Account Series 2010B Bonds 610,313 Debt Service Reserve Account Series 2010C Bonds 375,000 Debt Service Reserve Account Series 2010D-1 Bonds 744,938 Debt Service Reserve Account Series 2010D-2 Bonds 1,074,500 Debt Service Reserve Account Series 2010D-3 Bonds 954,688 Debt Service Reserve Account Series 2010E Bonds 1,091,063 Costs of Issuance (3) 4,654,028 Working Capital Fund (4) 16,700,000 Operating Reserve Fund (4) 5,000,000 Total Uses of Funds $195,557,699 (1) To be received over several years after completion of the Project. (2) Three separate Liquidity Support Funds will exist for the benefit of the Project. The total of the three Liquidity Support Funds will be $6.0 million. The initial amounts and funding sources are as follows: the Providence Liquidity Support Fund of $2.6 million will be funded with $2.6 million from PDG; the Special Liquidity Support Fund of $3.0 million will be funded with $3.0 million of Series 2010E Bonds; the Supplemental Liquidity Support Fund will be funded with $400,000 from Series 2010E Bonds. The total amount of liquidity support from Series 2010E Bonds (comprised of $3.0 million in the Special Liquidity Support Fund and $400,000 in the Supplemental Liquidity Support Fund) is $3.4 million. (3) Includes Underwriter s discount, legal, accounting, administrative and miscellaneous fees and expenses. Certain amounts will be paid from Series 2010E Bond proceeds and the PDG Contribution. (4) Funded from Entrance Fees which will be received over several years after completion of the Project. -9-

52 ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth the amounts required for the payment of principal of the Series 2010A Bonds at maturity or by mandatory sinking fund redemption, and for the anticipated optional redemption and prepayment of principal of the Series 2010B Bonds, Series 2010C Bonds, the Series 2010D-1 Bonds, the Series 2010D-2 Bonds, the Series 2010D-3 Bonds and the Series 2010E Bonds from anticipated entrance fees, and for the payment of interest on the Bonds for each Bond Year ending May 15. Bond Year Ending May 15 The Series 2010A Bonds The Series 2010B Bonds The Series 2010C Bonds The Series 2010D-1 Bonds The Series 2010D-2 Bonds The Series 2010D-3 Bonds The Series 2010E Bonds Total Debt Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Service 2011 $8,596,802 $589,969 $362,500 $720,106 $1,038,683 $922,865 $1,054,694 $13,285, ,893, , , ,938 1,074, ,688 1,091,063 13,743, ,893, , ,000 $5,480, ,938 $15,350, ,075 $15,275, ,953 $12,650, ,766 60,848, ,893,244 $6,660, ,922 $5,000, ,375 4,795,000 86,909 26,154, ,893,244 1,215,000 23,541 10,131, $470,000 8,893,244 9,363, ,000 8,855,644 9,800, ,020,000 8,780,044 9,800, ,100,000 8,698,444 9,798, ,190,000 8,610,444 9,800, ,285,000 8,515,244 9,800, ,385,000 8,412,444 9,797, ,500,000 8,301,644 9,801, ,615,000 8,181,644 9,796, ,745,000 8,052,444 9,797, ,885,000 7,912,844 9,797, ,035,000 7,762,044 9,797, ,200,000 7,599,244 9,799, ,375,000 7,423,244 9,798, ,565,000 7,233,244 9,798, ,770,000 7,028,044 9,798, ,995,000 6,802,981 9,797, ,240,000 6,559,638 9,799, ,500,000 6,296,388 9,796, ,785,000 6,012,013 9,797, ,095,000 5,704,481 9,799, ,425,000 5,371,763 9,796, ,785,000 5,012,231 9,797, ,175,000 4,623,450 9,798, ,595,000 4,202,981 9,797, ,050,000 3,748,388 9,798, ,550,000 3,249,263 9,799, ,090,000 2,708,888 9,798, ,675,000 2,123,963 9,798, ,070,000 1,490,775 19,560,775 Total $109,115,000 $238,336,885 $7,875,000 $2,379,058 $5,000,000 $1,286,875 $10,275,000 $2,296,891 $15,350,000 $2,888,258 $15,275,000 $2,299,506 $12,650,000 $2,418,523 $427,445,996 (1) The Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D-1 Bonds, the Series 2010D-2 Bonds, the Series 2010D-3 Bonds and the Series 2010E Bonds will mature on May 15, 2020, May 15, 2045, August 15, 2016, November 15, 2015, August 15, 2015, May 15, 2015, respectively, and are not subject to mandatory bond sinking fund redemption. Management of the Obligated Group anticipates redeeming the Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and Series 2010B Bonds in full in compliance with the terms of the Master Indenture and the Bond Indenture from entrance fees by August 15, 2012, November 15, 2012, May 15, 2013, August 15, 2013, February 15, 2014, August 15, 2014, respectively. The actual timing of the prepayment of the Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C and the Series 2010B Bonds may differ from the assumed timing because of timing differences in the receipt of Entrance Fees. (2) The Series 2010C Bonds are variable rate obligations. The interest rate on the Series 2010C Bonds is assumed to be 7.50% (for the life of the Series 2010C Bonds). Actual interest rates may differ from the assumed interest rates. -10-

53 THE FIXED RATE SERIES 2010 BONDS The information in this section applies only to the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010D Bonds and the Series 2010E Bonds (collectively, the Fixed Rate Series 2010 Bonds ). The Series 2010A Bonds, the Series 2010B Bonds and the Series 2010D Bonds will be issued pursuant to the Tax-Exempt Bond Indenture and the proceeds of the Series 2010A Bonds, the Series 2010B Bonds and the Series 2010D Bonds will be loaned to the Borrowers pursuant to the Tax-Exempt Loan Agreement. Contemporaneously with the issuance of the Series 2010A Bonds, the Series 2010B Bonds, and the Series 2010D Bonds and to secure repayment of the loan made by the Authority to the Borrowers under the Tax-Exempt Loan Agreement, the Corporation will issue and deliver to the Authority the Series 2010A Obligation, the Series 2010B Obligation, the Series 2010D-1 Obligation, the Series 2010D-2 Obligation and the Series 2010D-3 Obligation. The Series 2010C Bonds are also being issued pursuant to the Tax-Exempt Bond Indenture. See THE SERIES 2010C BONDS below. The Series 2010E Bonds will be issued pursuant to the Taxable Bond Indenture and the proceeds of the Series 2010E Bonds will be loaned to the Borrowers under the Taxable Loan Agreement. Contemporaneously with the issuance of the Series 2010E Bonds and to secure repayment of the loan made by the Authority to the Borrowers under the Taxable Loan Agreement, the Borrowers will issue and deliver to the Authority the Series 2010E Obligation. General Description The Fixed Rate Series 2010 Bonds will be issued only in fully registered form in Authorized Denominations of $5,000 or any integral multiple thereof. The Fixed Rate Series 2010 Bonds will bear interest (based on a 360-day year of twelve 30-day months) at the respective rates per annum and will mature, subject to earlier redemption, in the amounts and on the dates set forth on the inside cover page of this Official Statement. The Fixed Rate Series 2010 Bonds will bear interest from their dated date, payable on May 15 and November 15 (the Fixed Rate Interest Payment Dates ) of each year, commencing November 15, The Fixed Rate Series 2010 Bonds, as initially issued, will be dated the date of issuance of the Fixed Rate Series 2010 Bonds (the Closing Date ). Except as described in the next sentence, subsequently issued Fixed Rate Series 2010 Bonds will be dated as of the later of the Closing Date or the most recent preceding Fixed Rate Interest Payment Date to which interest has been paid thereon. Fixed Rate Series 2010 Bonds issued on a Fixed Rate Interest Payment Date to which interest has been paid will be dated as of such date. So long as Cede & Co. is the registered owner, the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, will pay such principal of and redemption price, if any, and interest on the Fixed Rate Series 2010 Bonds to DTC, which will remit such principal, redemption price, if any, and interest to the Beneficial Owners (as hereinafter defined) on the Fixed Rate Series 2010 Bonds, as described under the caption BOOK-ENTRY ONLY SYSTEM herein. THE SERIES 2010C BONDS The information in the following section applies only to the Series 2010C Bonds. The Series 2010C Bonds will be issued pursuant to the Tax-Exempt Bond Indenture and the proceeds of the Series 2010C Bonds will be loaned to the Borrowers pursuant to the Tax-Exempt Loan Agreement. Contemporaneously with the issuance of the Series 2010C Bonds and to secure repayment of the loan made by the Authority to the Borrowers under the Tax-Exempt Loan Agreement, the Corporation will issue and deliver the Series 2010C Obligation. The Series 2010A Bonds, the Series 2010B Bonds and the Series 2010D Bonds are also being issued pursuant to the Tax-Exempt Bond Indenture. See THE FIXED RATE SERIES 2010 BONDS above. -11-

54 General Description The Series 2010C Bonds are issuable only in fully registered form, without coupons, in Authorized Denominations of $5,000 or any integral multiple thereof. The Series 2010C Bonds will bear interest from their dated date or from the most recent interest payment date to which interest has been paid, payable on May 15 and November 15 (the 2010C Interest Payment Dates ) of each year, commencing November 15, The Series 2010C Bonds, as initially issued, will be dated the Closing Date. Except as described in the next sentence, subsequently issued Series 2010C Bonds will be dated as of the later of the Closing Date or the most recent preceding 2010C Interest Payment Date to which interest has been paid thereon. The Series 2010C Bonds shall bear interest computed on the basis of a 360-day year of twelve 30-day months. So long as Cede & Co. is the registered owner, the Tax-Exempt Bond Trustee will pay such principal of, premium, if any, and redemption price, if any, and interest on the Series 2010C Bonds, to DTC, which will remit such principal, premium, if any, redemption price, if any, and interest to the Beneficial Owners (as hereinafter defined) of the Series 2010C Bonds, as described in BOOK-ENTRY ONLY SYSTEM herein. Interest on the Series 2010C Bonds The Series 2010C Bonds shall initially bear interest at the Adjustable Long-Term Rate equal to the Initial Interest Rate shown on the inside front cover of this Official Statement until but not including the Initial Rate Change Date (November 15, 2016). The Series 2010C Bonds will bear interest at the Reset Rate from and after such Initial Rate Change Date, or from any succeeding Rate Change Date (which is November 15 of each year after the Initial Rate Change Date), until the next succeeding Rate Change Date. AFTER THE INITIAL RATE CHANGE DATE, THE INTEREST RATE ON THE SERIES 2010C BONDS WILL RESET ANNUALLY ON EACH RATE CHANGE DATE. The Reset Rate shall be the lowest rate that, in the judgment of the Remarketing Agent (having due regard to the prevailing market conditions and the credit quality of the Borrowers), would be necessary to enable the Series 2010C Bonds to be sold at par on the Rate Change Date, and shall not exceed 15% per annum (the Maximum Rate ). Other than for the period commencing upon issuance of the Series 2010C Bonds and ending with the Initial Rate Change Date, the initial Reset Rate for the Series 2010C Bonds from and after any Rate Change Date (with respect to the Series 2010C Bonds, the Initial Reset Rate ) shall be the interest rate determined by the Remarketing Agent on a date not less than 40 days prior to such Rate Change Date, except as otherwise provided in Tax-Exempt Bond Indenture and summarized below. Upon such determination of the Initial Reset Rate, the Remarketing Agent shall promptly notify the Tax-Exempt Bond Trustee and the Borrowers of the Initial Reset Rate. Not less than 35 days prior to the applicable Rate Change Date, the Tax-Exempt Bond Trustee shall promptly notify each owner of the Series 2010C Bonds of the Initial Reset Rate that will be applicable to the Series 2010C Bonds on and after the Rate Change Date. If the Series 2010C Bonds are tendered for purchase by the owners thereof as described below and the Remarketing Agent is unable to remarket all of such tendered Series 2010C Bonds at the Initial Reset Rate, the Remarketing Agent may, on a date no more than fifteen (15) days and no less than three (3) days prior to Rate Change Date, increase (but may not decrease) the Initial Reset Rate to that rate of interest which shall be the lowest rate that, in the judgment of the Remarketing Agent (having due regard to the prevailing market conditions) would be necessary to enable the Series 2010C Bonds to be sold at par on the Rate Change Date (the Revised Reset Rate ); provided that the applicable Revised Reset Rate shall not exceed the Maximum Rate. The Remarketing Agent will give notice to the Tax-Exempt Bond Trustee and the Borrowers of the Revised Reset Rate. Within one Business Day after receiving notice of the Revised Reset Rate, the Tax-Exempt Bond Trustee shall promptly notify each registered owner of the -12-

55 Series 2010C Bonds in writing by first class mail postage prepaid of the Revised Reset Rate that will be applicable to the Series 2010C Bonds on or after the Rate Change Date. If the Remarketing Agent has been unable to remarket all of such tendered Series 2010C Bonds at the Revised Reset Rate as described above, the Revised Reset Rate on the Series 2010C Bonds (the Final Reset Rate ) will be the greater of (i) the Revised Reset Rate; (ii) an annual interest rate equal to the yield of The Bond Buyer 25-Bond Revenue Index (as published in The Bond Buyer or any successor publication thereto) for the most recent period for which such information is available before the giving of notice of the Reset Rate by the Tax-Exempt Bond Trustee to the owners of Series 2010C Bonds, plus 300 basis points, or if such index or its equivalent is no longer published, the interest rate currently in effect; or (iii) the then highest market yield on any maturity of the Series 2010A Bonds, provided the Final Reset Rate may not exceed the Maximum Rate. The Remarketing Agent will give notice to the Tax-Exempt Bond Trustee and the Borrowers of the Final Reset Rate. Within one Business Day after receiving notice of the Final Reset Rate, the Tax-Exempt Bond Trustee shall promptly notify each registered owner of the Series 2010C Bonds in writing by first class mail postage prepaid of the Final Reset Rate that will be applicable to the Series 2010C Bonds, on or after the Rate Change Date. The Series 2010C Bonds are subject to optional tender by the registered owners thereof on each Rate Change Date. See THE SERIES 2010 BONDS Optional Tender of Series 2010C Bonds below. Optional Tender of Series 2010C Bonds The Series 2010C Bonds are subject to optional tender for purchase by the Tax-Exempt Bond Trustee on behalf of the Borrowers on each Rate Change Date. The Borrowers obligation to purchase Series 2010C Bonds on any Rate Change Date is limited as described below under Purchase of Tendered Series 2010C Bonds. The Tax-Exempt Bond Trustee shall give written notice of any Rate Change Date to the owners of the Series 2010C Bonds when delivering notice of the Initial Reset Rate. Any owner of a Series 2010C Bond may exercise the option to tender such Series 2010C Bond for purchase by delivering a Tender Notice to the Tax-Exempt Bond Trustee and the Remarketing Agent no later than 4:00 p.m., Chicago time, on a Business Day not less than 15 days and not more than 35 days prior to the applicable Rate Change Date. The Tender Notice must state (i) the principal amount of such Series 2010C Bonds that are to be purchased (which amount shall be in an Authorized Denomination of $5,000 or an integral amount thereof) and the portion retained, if any (which amount must be in an Authorized Denomination of $5,000 or an integral multiple thereof), and (ii) if less than all of the owner s Series 2010C Bonds are to be purchased, the CUSIP number(s) of the Series 2010C Bonds to be purchased. The delivery of the Tender Notice by an owner of Series 2010C Bonds in connection with a Rate Change Date shall be irrevocable and binding on such owner and cannot be withdrawn. Failure of any owner of Series 2010C Bonds to give a Tender Notice not less than 15 days nor more than 35 days prior to a Rate Change Date, or otherwise to comply with the procedures described above, shall result in such owner s loss of the right to tender Series 2010C Bonds for purchase on such Rate Change Date. Not later than 9:30 a.m., Chicago time, on the Rate Change Date, the owner of Series 2010C Bonds to be tendered for purchase on such date shall deliver to the Tax-Exempt Bond Trustee the Series 2010C Bonds for purchase. If the owner of a Series 2010C Bond has properly exercised such owner s option to tender such Series 2010C Bond for purchase in accordance with the terms of the Tax-Exempt Bond Indenture, and sufficient funds for the payment of the Tender Price are on deposit with the Tax-Exempt Bond Trustee, the owner of such Series 2010C Bond immediately prior to any such Rate Change Date shall be entitled from and after such Rate Change Date solely to payment of the Tender Price for such Series 2010C Bond (without interest) and such owner shall not be entitled to the payment of any interest or principal -13-

56 becoming due thereon after such date. If the Tender Notice with respect to a Series 2010C Bond has been given pursuant to the Tax-Exempt Bond Indenture, funds for the payment of the Tender Price of such Series 2010C Bond are on deposit with the Tax-Exempt Bond Trustee, and such Series 2010C Bond is not timely delivered to the Tax-Exempt Bond Trustee in accordance with the instructions provided by the Tax-Exempt Bond Trustee, such Series 2010C Bond shall be deemed to be purchased and shall from and after such Rate Change Date not be Outstanding under the Tax-Exempt Bond Indenture. Purchase of Tendered Series 2010C Bonds The Remarketing Agent shall offer for sale and use its best efforts to remarket any optionally tendered Series 2010C Bonds for purchase at their principal amount on each Rate Change Date, any remarketing to be made on the date on which the Series 2010C Bonds are to be purchased, at a price equal to 100% of the principal amount thereof plus accrued interest, if any. In the event that the tendered Series 2010C Bonds cannot be remarketed, amounts received by the Tax-Exempt Bond Trustee from or on behalf of the Borrowers for deposit into the Purchase Fund will be applied to purchase the Series 2010C Bonds to the extent that such deposit shall not reduce the Cash and Investments of the Obligated Group below the amount necessary to permit the Obligated Group to meet the Liquidity Requirement set forth in the Master Indenture plus an additional 20 Days Cash on Hand. See SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Liquidity Covenant below. In the event that all or a portion of the Series 2010C Bonds tendered for purchase are purchased by the Borrowers through the deposit of funds as described in the preceding paragraph, the Remarketing Agent shall continue to use its best efforts to remarket such Series 2010C Bonds and such bonds will not be cancelled unless so directed by the Borrowers. In the event that there are not sufficient moneys available from the proceeds of remarketing or purchase or amounts received from or on behalf of the Borrowers to pay the Tender Price of the Series 2010C Bonds tendered for purchase the Series 2010C Bonds to be purchased on such date shall be selected in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate. Any tendered Series 2010C Bonds which are not purchased shall be the first Series 2010C Bonds redeemed on the next succeeding Bond Sinking Fund payment date, or any other redemption date provided for in the provisions of the Tax-Exempt Bond Indenture summarized in REDEMPTION OF THE SERIES 2010 BONDS Optional and Mandatory Redemption of the Series 2010C Bonds below, such Series 2010C Bonds to be redeemed to be selected, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate, and the owner of such unpurchased Series 2010C Bonds will remain the owner for all purposes under the Tax-Exempt Bond Indenture. Such unpurchased Series 2010C Bond will bear interest at the Reset Rate, which such Series 2010C Bond would have borne if it had not been tendered for purchase. THERE CAN BE NO ASSURANCE THAT SUFFICIENT FUNDS WILL BE AVAILABLE TO PURCHASE ANY OR ALL SERIES 2010C BONDS TENDERED FOR PURCHASE ON ANY RATE CHANGE DATE. THE FAILURE OF THE BORROWERS TO PURCHASE ALL SERIES 2010C BONDS TENDERED FOR PURCHASE ON A RATE CHANGE DATE BECAUSE OF A FAILURE TO MEET THE LIQUIDITY COVENANT AS DESCRIBED ABOVE SHALL NOT CONSTITUTE AN EVENT OF DEFAULT UNDER THE RELATED LOAN AGREEMENT, BOND INDENTURE OR SERIES 2010 OBLIGATION. -14-

57 REDEMPTION OF THE SERIES 2010 BONDS Optional and Mandatory Redemption of the Series 2010A Bonds Optional Redemption of the Series 2010A Bonds. The Series 2010A Bonds maturing on May 15, 2020 are callable for redemption prior to maturity on or after May 15, 2015, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010A Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The Series 2010A Bonds maturing on or after May 15, 2030 are callable for redemption prior to maturity on or after May 15, 2020, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010A Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010A Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date, without premium. Mandatory Sinking Fund Redemption of Series 2010A Bonds. The Authority shall pay or redeem Series 2010A Bonds (to the extent funds are deposited in the Series 2010A Account of the Bond Sinking Fund from the Revenue Fund) from moneys on deposit in the Series 2010A Account of the Bond Sinking Fund, at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, in the amounts and at the times, as follows: Series 2010A Bonds Maturing May 15, 2020 Mandatory Sinking Redemption Dates (May 15) Mandatory Sinking Fund Redemption Amounts 2016 $ 470, , ,020, ,100, * 1,190,000 *Scheduled Maturity -15-

58 Series 2010A Bonds Maturing May 15, 2030 Mandatory Sinking Redemption Dates (May 15) Mandatory Sinking Fund Redemption Amounts 2021 $ 1,285, ,385, ,500, ,615, ,745, ,885, ,035, ,200, ,375, * 2,565,000 *Scheduled Maturity Series 2010A Bonds Maturing May 15, 2040 Mandatory Sinking Redemption Dates (May 15) Mandatory Sinking Fund Redemption Amounts 2031 $ 2,770, ,995, ,240, ,500, ,785, ,095, ,425, ,785, ,175, * 5,595,000 *Scheduled Maturity Series 2010A Bonds Maturing May 15, 2045 Mandatory Sinking Redemption Dates (May 15) Mandatory Sinking Fund Redemption Amounts 2041 $ 6,050, ,550, ,090, ,675, * 18,070,000 *Scheduled Maturity -16-

59 These shall be reduced (a) by the amount of Series 2010A Bonds acquired and delivered in accordance with the Tax-Exempt Bond Indenture in satisfaction of such Bond Sinking Fund requirements, and (b) in connection with a partial redemption of the Series 2010A Bonds if the Obligated Group Agent elects to reduce mandatory Bond Sinking Fund redemptions in the manner provided in the Tax-Exempt Bond Indenture and described below under REDEMPTION OF THE SERIES 2010 BONDS Provisions Applicable to All Bonds. See additional provisions relating to the redemption of all Bonds under the caption REDEMPTION OF THE SERIES 2010 BONDS Provisions Applicable to All Bonds below. Optional and Mandatory Redemption of the Series 2010B Bonds Optional Redemption of the Series 2010B Bonds. The Series 2010B Bonds are callable for redemption prior to maturity on or after August 15, 2013, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010B Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010B Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date without premium. Mandatory Optional Redemption of Series 2010B Bonds from Entrance Fees. The Series 2010B Bonds are callable for redemption prior to maturity from Entrance Fees transferred to the Tax- Exempt Bond Trustee by the Master Trustee in accordance with the Master Indenture. If Series 2010B Bonds are called for redemption from Entrance Fees as provided in the Tax-Exempt Bond Indenture, the Series 2010B Bonds shall be subject to redemption by the Authority, in whole or in part at any time, applying such Entrance Fees first to the redemption of Series 2010E Bonds outstanding, then to the redemption of Series 2010D-3 Bonds outstanding, then to the redemption of Series 2010D-2 Bonds outstanding, then to the redemption of Series 2010D-1 Bonds outstanding, then to the redemption of the Series 2010C Bonds then outstanding and then to the redemption of Series 2010B Bonds then Outstanding, at the principal amount thereof plus accrued interest to the redemption date, without premium. No Mandatory Sinking Fund Redemption of Series 2010B Bonds. The Series 2010B Bonds are not redeemable with sinking fund payments prior to their maturity. See additional provisions relating to the redemption of all Bonds under the caption REDEMPTION OF THE SERIES 2010 BONDS Provisions Applicable to All Bonds below. Optional and Mandatory Redemption of the Series 2010C Bonds Optional Redemption of Series 2010C Bonds. The Series 2010C Bonds are callable for redemption prior to maturity on or after August 15, 2012, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010C Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010C Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date, without premium. Mandatory Optional Redemption of Series 2010C Bonds from Entrance Fees. The Series 2010C Bonds are callable for redemption prior to maturity from Entrance Fees transferred to the Bond Trustee by the Master Trustee in accordance with the Master Indenture. If Series 2010C Bonds are called -17-

60 for redemption from Entrance Fees as provided in the Tax-Exempt Bond Indenture, the Series 2010C Bonds shall be subject to redemption by the Authority, in whole or in part at any time, applying such Entrance Fees first to the redemption of Series 2010E Bonds outstanding, then to the redemption of Series 2010D-3 Bonds outstanding, then to the redemption of Series 2010D-2 Bonds outstanding, then to the redemption of Series 2010D-1 Bonds outstanding, then to the redemption of the Series 2010C Bonds then outstanding and then to the redemption of Series 2010B Bonds then Outstanding, at the principal amount thereof plus accrued interest to the redemption date, without premium. No Mandatory Sinking Fund Redemption of Series 2010C Bonds. The Series 2010C Bonds are not redeemable with sinking fund payments prior to their maturity. See additional provisions relating to the redemption of all Bonds under the caption REDEMPTION OF THE SERIES 2010 BONDS Provisions Applicable to All Bonds below. Optional and Mandatory Redemption of the Series 2010D Bonds Optional Redemption of Series 2010D-1 Bonds. The Series 2010D-1 Bonds are callable for redemption prior to maturity on or after February 15, 2013, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010D-1 Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010D-1 Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date, without premium. Optional Redemption of Series 2010D-2 Bonds. The Series 2010D-2 Bonds are callable for redemption prior to maturity on or after August 15, 2012, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010D-2 Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010D-2 Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date, without premium. Optional Redemption of Series 2010D-3 Bonds. The Series 2010D-3 Bonds are callable for redemption prior to maturity on or after May 15, 2012, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010D-3 Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Tax-Exempt Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010D-3 Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date, without premium. Mandatory Optional Redemption of Series 2010D Bonds from Entrance Fees. The Series 2010D Bonds are callable for redemption prior to maturity from Entrance Fees transferred to the Tax- Exempt Bond Trustee by the Master Trustee in accordance with the Master Indenture. If Series 2010D Bonds are called for redemption from Entrance Fees as provided in the Tax-Exempt Bond Indenture, the Bonds shall be subject to redemption by the Authority, in whole or in part at any time, applying such Entrance Fees first to the redemption of the Series 2010E Bonds outstanding, then to the redemption of Series 2010D-3 Bonds outstanding, then to the redemption of Series 2010D-2 Bonds outstanding, then to the redemption of Series 2010D-1 Bonds outstanding, then to the redemption of Series 2010C Bonds outstanding and then to the redemption of Series 2010B Bonds outstanding, at the principal amount thereof plus accrued interest to the redemption date, without premium. -18-

61 No Mandatory Sinking Fund Redemption of Series 2010D Bonds. The Series 2010D Bonds are not redeemable with sinking fund payments prior to their maturity. See additional provisions relating to the redemption of all Bonds under the caption REDEMPTION OF THE SERIES 2010 BONDS Provisions Applicable to All Bonds below. Optional and Mandatory Redemption of the Series 2010E Bonds Optional Redemption of Series 2010E Bonds. The Series 2010E Bonds are callable for redemption prior to maturity on or after May 15, 2012, by the Authority upon the direction of the Obligated Group Agent, out of amounts prepaid on the Series 2010E Obligation and deposited in the Optional Redemption Fund, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a single maturity is being redeemed, in such random manner as the Taxable Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to the principal amount of the Series 2010E Bonds to be redeemed on the redemption date, plus accrued interest to the redemption date, without premium. Mandatory Optional Redemption of Series 2010E Bonds from Entrance Fees. The Series 2010E Bonds are callable for redemption prior to maturity from Entrance Fees transferred to the Taxable Bond Trustee by the Master Trustee in accordance with the Master Indenture. If Series 2010E Bonds are called for redemption from Entrance Fees as provided in the Taxable Bond Indenture, the Bonds shall be subject to redemption by the Authority, in whole or in part at any time, applying such Entrance Fees first to the redemption of Series 2010E Bonds outstanding, then to the redemption of Series 2010D-3 Bonds outstanding, then to the redemption of the Series 2010D-2 Bonds outstanding, then to the redemption of the Series 2010D-1 Bonds outstanding, then to the redemption of Series 2010C Bonds outstanding, then to the redemption of Series 2010B Bonds then outstanding, at the principal amount thereof plus accrued interest to the redemption date, without premium. No Mandatory Sinking Fund Redemption of Series 2010E Bonds. The Series 2010E Bonds are not redeemable with sinking fund payments prior to their maturity. See additional provisions relating to the redemption of all Bonds under the caption REDEMPTION OF THE SERIES 2010 BONDS Provisions Applicable to All Bonds below. Provisions Applicable to All Bonds Extraordinary Optional Redemption of Series 2010 Bonds Resulting from Damage or Condemnation. The Series 2010 Bonds are callable for redemption prior to maturity, in the event of damage to or destruction of the Facilities of any Member or any part thereof or condemnation or sale consummated under threat of condemnation of the Facilities of any Member or any part thereof if the Net Proceeds of insurance, condemnation or sale received in connection therewith exceed $3,000,000, but only to the extent of the funds provided for pursuant to the Master Indenture. See APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Damage or Destruction and Condemnation. In such cases, the Series 2010 Bonds shall be subject to redemption by the Authority at any time, in whole or in part on any date, and, if in part, by maturities or portions thereof designated by the Obligated Group Agent (and if less than all of a maturity is being redeemed, in such random manner as the Bond Trustee deems appropriate), at the principal amount thereof plus accrued interest to the redemption date and without premium; provided, however, that in no event shall the principal amount of Series 2010 Bonds so redeemed exceed the amount of such Net Proceeds. Required Optional Redemption. If any recalculation of the average reasonably expected economic life of the facilities financed or refinanced with the proceeds of the Tax-Exempt Series

62 Bonds demonstrates that the average maturity of the Tax-Exempt Series 2010 Bonds exceeds 120 percent of the average reasonably expected economic life of such facilities, the Bond Trustee will call Series 2010 Tax-Exempt Bonds for optional redemption from funds deposited in the Optional Redemption Fund by the Borrowers. The Borrowers have agreed pursuant to the Tax-Exempt Loan Agreement to deposit in the Optional Redemption Fund established under the Tax-Exempt Bond Indenture as a prepayment of the related Series 2010 Obligations an amount which, when applied by the Tax-Exempt Bond Trustee to redeem Tax-Exempt Series 2010 Bonds, is sufficient in the Opinion of Bond Counsel to cause the average maturity of the Tax-Exempt Series 2010 Bonds, to be no more than 120 percent of the average reasonably expected economic life of the facilities financed or refinanced with the proceeds of the Tax-Exempt Series 2010 Bonds. Selection for Redemption No redemption of less than all of the Series 2010 Bonds at the time outstanding, other than in accordance with the mandatory bond sinking fund redemption provisions of the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable, shall be made unless the total aggregate principal amount of Bonds of such series to be redeemed is equal to or more than $100,000 and is an Authorized Denomination and the aggregate principal amount of Bonds outstanding after the redemption is an Authorized Denomination. In lieu of redeeming Series 2010 Bonds, the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, may, at the request of the Obligated Group Agent, use such funds otherwise available under the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable, for redemption of Series 2010 Bonds to purchase for cancellation Series 2010 Bonds specifically designated by the Obligated Group Agent in the open market at a price not exceeding the redemption price then applicable under the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable. In the case of any optional or extraordinary redemption or any purchase and cancellation of Series 2010 Bonds with serial maturities, the Authority shall receive credit against its required Bond Sinking Fund deposits with respect to Bonds of such serial maturities. In the case of any optional or extraordinary redemption or any purchase and cancellation of term Series 2010 Bonds, the Authority shall receive credit against its required Bond Sinking Fund deposits with respect to the Series 2010 Bonds in such order as the Obligated Group Agent shall designate in writing prior to such optional or extraordinary redemption or purchase and cancellation or, if no such election is made, in the inverse order thereof. Notice of Redemption; Effect Notice of the redemption of Series 2010 Bonds pursuant to the provisions summarized above will be given by mailing a copy of such notice of redemption by first-class mail, postage prepaid not less than 20 days prior to the redemption date to the registered owners of the Series 2010 Bonds to be redeemed at the address shown on the Bond Register; provided, however, that failure to give such notice by mailing, or any defect therein, will not affect the validity of any proceedings for the redemption of Series 2010 Bonds as to which notice has been properly given. Except for mandatory bond sinking fund redemptions, prior to the date that a redemption notice is first mailed, funds shall be placed with the Bond Trustee to pay the Series 2010 Bonds to be redeemed and the accrued interest thereon to the redemption date and the premium, if any, or such notice shall state that the redemption is conditional on such funds being deposited on the redemption date and that failure to make such a deposit shall not constitute an event of default under the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable. If notice of redemption has been given and if funds have been placed with the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, to pay such Series 2010 Bonds and accrued interest thereon to the redemption date and the premium, if any, then the Series 2010 Bonds, or portions thereof, thus called for redemption will not bear interest after such redemption date, will no longer be protected by the Tax- Exempt Bond Indenture or the Taxable Bond Indenture, as applicable, and will not be deemed to be outstanding under the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable. -20-

63 Mandatory Tender for Purchase The Authority and, by their acceptance of the Series 2010 Bonds, the Bondholders irrevocably grant to the Obligated Group Agent and any assigns of the Obligated Group Agent with respect to this right, the option to purchase, at any time and from time to time, any Series 2010 Bond which would be otherwise subject to optional redemption as described above at a purchase price equal to the optional redemption price therefore. To exercise such option, the Obligated Group Agent shall give the Tax- Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, a Written Request exercising such option within the time period specified in the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable as though such Written Request were a written request of the Authority for redemption, and the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, shall thereupon give the holders of the Series 2010 Bonds to be purchased notice of such mandatory tender and purchase in the same manner as a notice of redemption as described above. The purchase of such Series 2010 Bonds shall be mandatory and enforceable against the Bondholders and Bondholders will not have the right to retain their Series 2010 Bonds. On the date fixed for purchase pursuant to any exercise of such option, the Borrowers shall pay or cause to be paid the purchase price of the Series 2010 Bonds then being purchased to the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, in immediately available funds not later than 10:00 a.m. Chicago time on the purchase date, and the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, shall pay the same to the sellers of such bonds against delivery thereof. Following such purchase, the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, shall cause such Series 2010 Bonds to be registered in the name of the Obligated Group Agent or its nominee or as otherwise directed by the Obligated Group Agent and shall deliver them to the Obligated Group Agent or its nominee or as otherwise directed by the Obligated Group Agent. In the case of the purchase of less than all of a series of Series 2010 Bonds, the particular bonds to be purchased shall be selected in accordance with the selection process for redemption of Series 2010 Bonds as described above. No purchase of the Series 2010 Bonds shall operate to extinguish the indebtedness of the Authority evidenced thereby. Notwithstanding the foregoing, no such purchase shall be made unless the Obligated Group Agent shall have delivered to the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, and the Authority concurrently with such purchase an Opinion of Bond Counsel to the effect that such purchase and any resale thereof will not affect the validity of the Series 2010 Bonds, or any exemption from federal income taxation to which the interest on the Tax-Exempt Series 2010 Bonds would otherwise be entitled. Exchange and Transfer Upon surrender for transfer or exchange of any Series 2010 Bond at the principal corporate trust office of the Tax-Exempt Bond Trustee or Taxable Bond Trustee, as applicable, accompanied by a written instrument or instruments of transfer or authorization for exchange in form and with guaranty of signature satisfactory to the Tax-Exempt Bond Trustee or the Taxable Bond Trustee, as applicable, and duly executed by the registered owner or such owner s duly authorized attorney, the Authority shall execute and the Tax-Exempt Bond Trustee or Taxable Bond Trustee, as applicable, shall authenticate and deliver in the name of the transferee or transferees a new fully registered Series 2010 Bond in Authorized Denominations of the same series and the same maturity for the aggregate principal amount that the registered owner is entitled to receive. Any Series 2010 Bonds may be exchanged at said office of the Tax-Exempt Bond Trustee or Taxable Bond Trustee, as applicable, for a like aggregate principal amount of Bonds of other Authorized Denominations of the same series and the same maturity. No service charge shall be imposed upon the owner of any Series 2010 Bond requesting an exchange or transfer of any Series 2010 Bond, but the Authority and the Tax-Exempt Bond Trustee or Taxable Bond Trustee, as applicable, may require the payment by the Series 2010 Bondholder requesting an exchange or transfer of a sum sufficient to cover any tax, fee or other governmental charge that may be -21-

64 imposed in relation thereto, except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption in part. The Authority and the Tax-Exempt Bond Trustee or Taxable Bond Trustee, as applicable, shall not be required to register the transfer of or exchange of any 2010 Bond after notice calling such Bond or portion thereof for redemption has been mailed or during the period of 15 days next preceding mailing of a notice of redemption of any Series 2010 Bonds of the same series and maturity. As to any Series 2010 Bond, the person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and/or interest on any such Series 2010 Bond, shall be made only to or upon the written order of the registered owner thereof or such owner s legal representative, but such registration may be changed only as described in the Tax-Exempt Bond Indenture or the Taxable Bond Indenture. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2010 Bond to the extent of the sum or sums so paid. General SECURITY FOR THE SERIES 2010 BONDS The Series 2010 Bonds will be limited obligations of the Authority and will be payable solely from (i) payments or prepayments on the Series 2010A Obligation, the Series 2010B Obligation, the Series 2010C Obligation, the Series 2010D-1 Obligation, the Series 2010D-2 Obligation, the Series 2010D-3 Obligation and the Series 2010E Obligation, respectively; (ii) payments or prepayments made under the Tax-Exempt Loan Agreement or the Taxable Loan Agreement, as applicable (other than payments with respect to Unassigned Rights); (iii) moneys and investments held by the Bond Trustee under, and to the extent provided in, the Tax-Exempt Bond Indenture or the Taxable Bond Indenture, as applicable; and (iv) in certain circumstances, proceeds from insurance and condemnation awards or proceeds of sales made under the threat of condemnation. Certain investment earnings on moneys held by the Tax-Exempt Bond Trustee, may be transferred to a Rebate Fund established pursuant to a Tax Exemption Agreement. Amounts held in such Rebate Fund will not be part of the trust estate pledged to secure the Series 2010 Bonds, and consequently will not be available to make payments on the Series 2010 Bonds. Similarly, amounts held in the Purchase Fund will not be part of the trust estate pledged to secure the Series 2010 Bonds, and consequently will not be available to make payments on the Series 2010 Bonds other than to pay the Tender Price of optionally tendered Series 2010C Bonds. The Authority will enter into the Loan Agreement with respect to the Tax-Exempt Series 2010 Bonds with the Borrowers, whereby the Authority will loan the proceeds of the Tax-Exempt Series 2010 Bonds to the Borrowers, and the Borrowers will agree to make loan repayments sufficient to pay in full when due all principal of, and redemption premium, if any, and interest on the Tax-Exempt Series 2010 Bonds. The Tax-Exempt Loan Agreement will provide that the Borrowers shall make designated payments to the Tax-Exempt Bond Trustee in amounts sufficient to pay the principal of, premium, if any, and interest on the Tax-Exempt Series 2010 Bonds when due. The Borrowers obligation to make payments on the Series 2010A Obligation, the Series 2010B Obligation, the Series 2010C Obligation, the Series 2010D-1 Obligation, the Series 2010D-2 Obligation and the Series 2010D-3 Obligation shall be satisfied to the extent payments are made by the Borrowers under the Tax-Exempt Loan Agreement. The Tax-Exempt Loan Agreement will also impose certain restrictions on the actions of the Borrowers for the benefit of the Authority and the owners of the Tax-Exempt Series 2010 Bonds. The Authority will enter into the Loan Agreement with respect to the Series 2010E Bonds with the Borrowers, whereby the Authority will loan the proceeds of the Series 2010E Bonds to the Borrowers, and the Borrowers will agree to make loan repayments sufficient to pay in full when due all principal of, -22-

65 and redemption premium, if any, and interest on the Series 2010E Bonds. The Taxable Loan Agreement will provide that the Borrowers shall make designated payments to the Taxable Bond Trustee in amounts sufficient to pay the principal of, premium, if any, and interest on the Series 2010E Bonds when due. The Borrowers obligation to make payments on the Series 2010E Obligation shall be satisfied to the extent payments are made by the Borrowers under the Taxable Loan Agreement. The Taxable Loan Agreement will also impose certain restrictions on the actions of the Borrowers for the benefit of the Authority and the owners of the Series 2010E Bonds. The rights of the Authority in and to the Series 2010 Obligations with respect to the Tax-Exempt Series 2010 Bonds and the amounts payable thereon and the amounts payable to the Authority under the Tax-Exempt Loan Agreement (other than payments with respect to Unassigned Rights) will be assigned to the Tax-Exempt Bond Trustee under the Tax-Exempt Bond Indenture to provide for and to secure the payment of principal of, premium, if any, and interest on the Tax-Exempt Series 2010 Bonds. The Borrowers agree under the Tax-Exempt Loan Agreement to make payments on the Series 2010 Obligations pledged under the Tax-Exempt Bond Indenture directly to the Tax-Exempt Bond Trustee. See SECURITY FOR THE SERIES 2010 OBLIGATIONS General below. The rights of the Authority in and to the Series 2010E Obligation with respect to the Series 2010E Bonds and the amounts payable thereon and the amounts payable to the Authority under the Taxable Loan Agreement (other than payments with respect to Unassigned Rights) will be assigned to the Taxable Bond Trustee under the Taxable Bond Indenture to provide for and to secure the payment of principal of, premium, if any, and interest on the Series 2010E Bonds. The Borrowers agree under the Taxable Loan Agreement to make payments on the Series 2010E Obligation pledged under the Taxable Bond Indenture directly to the Taxable Bond Trustee. See SECURITY FOR THE SERIES 2010 OBLIGATIONS General below. Tax-Exempt Debt Service Reserve Fund Pursuant to the Tax-Exempt Bond Indenture, a Debt Service Reserve Fund will be established and held by the Tax-Exempt Bond Trustee for the benefit of the Tax-Exempt Series 2010 Bonds (the Tax-Exempt Debt Service Reserve Fund ). At the time of issuance of the Tax-Exempt Series 2010 Bonds, $9,762, will be deposited into the Series 2010A Account of the Tax-Exempt Debt Service Reserve Fund, $610, will be deposited into the Series 2010B Account of the Tax-Exempt Debt Service Reserve Fund, $375, will be deposited in the Series 2010C Account of the Tax-Exempt Debt Service Reserve Fund, $744, will be deposited in the Series 2010D-1 Account of the Tax- Exempt Debt Service Reserve Fund, $1,074, will be deposited in the Series 2010D-2 Account of the Tax-Exempt Debt Service Reserve Fund and $954, will be deposited in the Series 2010D-3 Account of the Tax-Exempt Debt Service Reserve Fund. Such deposits are equal to the initial Debt Service Reserve Requirement for each such Account. See DEFINITIONS OF CERTAIN TERMS Debt Service Reserve Fund Requirement in APPENDIX C hereto. Moneys in the Series 2010A Account, the Series 2010B Account, the Series 2010C Account, the Series 2010D-1 Account, the Series 2010D-2 Account and the Series 2010D-3 Account of the Tax-Exempt Debt Service Reserve Fund will be maintained in an amount equal to the Debt Service Reserve Fund Requirement with respect to the related series of Tax-Exempt Series 2010 Bonds. Moneys on deposit in each Debt Service Reserve Account shall be used to make up any deficiencies in the Interest Fund and the Bond Sinking Fund (in the order listed) attributable to the series of Tax-Exempt Series 2010 Bonds for which the Debt Service Reserve Account was established and shall be available to pay the interest on or principal of the Tax-Exempt Series 2010 Bonds of such series and are not available to pay the interest on or principal of the Tax-Exempt Series 2010 Bonds with respect to any other series of Tax-Exempt Series 2010 Bonds; provided, however, that in connection with any partial redemption or defeasance prior to maturity of the Tax-Exempt Series 2010 Bonds of any series, the -23-

66 Tax-Exempt Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in the Debt Service Reserve Account established for such series of Tax-Exempt Series 2010 Bonds which will be in excess of the Debt Service Reserve Account Requirement for such series of Tax-Exempt Series 2010 Bonds after such redemption or defeasance to pay the principal portion of the redemption price of the Tax-Exempt Series 2010 Bonds of such series to be redeemed or defeased. Money on deposit in each Debt Service Reserve Fund shall be invested in Qualified Investments as provided in the Tax-Exempt Bond Indenture. Qualified Investments deposited in each account of the Tax-Exempt Debt Service Reserve Fund shall be valued by the Bond Trustee on each October 15 (the Valuation Date ) on the basis of fair market value (which valuation shall take into account any accrued and unpaid interest). If on any Valuation Date the amount on deposit in the Series 2010A Account, the Series 2010B Account, the Series 2010C Account, the Series 2010D-1 Account, the Series 2010D-2 Account or the Series 2010D-3 Account of the Tax-Exempt Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement for such accounts as a result of the Tax-Exempt Debt Service Reserve Fund account having been drawn upon as provided in the Tax-Exempt Bond Indenture, the Tax-Exempt Loan Agreement requires the Borrowers to restore the amount on deposit in the applicable Tax-Exempt Debt Service Reserve Fund account to an amount equal to the applicable Debt Service Reserve Fund Requirement by deposit with the Tax-Exempt Bond Trustee of an amount equal to such deficiency in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred. If on any Valuation Date the amount on deposit in the Series 2010A Account, the Series 2010B Account, the Series 2010C Account, the Series 2010D-1 Account, the Series 2010D-2 Account or the Series 2010D-3 Account of the Tax-Exempt Debt Service Reserve Fund is less than 90% of the Service Reserve Fund Requirement, for such accounts as a result of a decline in the market value of the investments on deposit in the Tax-Exempt Debt Service Reserve Fund, the Tax- Exempt Loan Agreement requires the Borrowers to deposit in the applicable Tax-Exempt Debt Service Reserve Fund account the amount necessary to restore the amount on deposit in the applicable Tax- Exempt Debt Service Reserve Fund account to an amount equal to the applicable Debt Service Reserve Fund Requirement within 120 days following the date on which the Borrowers receive notice of such deficiency. For more information concerning the Tax-Exempt Debt Service Reserve Fund, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indenture Funds; Disposition of Revenues 4. Debt Service Reserve Fund in APPENDIX C. Certain moneys on deposit in the Tax-Exempt Debt Service Reserve Fund will collectively satisfy the Borrowers obligation to maintain an escrow under the Illinois Life Care Facilities Act with respect to the Tax-Exempt Series 2010 Bonds. If at any time the amount on deposit in the Debt Service Reserve Fund is less than the maximum amount of principal and interest payable on the Tax-Exempt Series 2010 Bonds during the next succeeding six month period, the Tax-Exempt Bond Trustee shall give notice of such event by first class mail, postage prepaid, to the Director of the Illinois Department of Public Health. For more information about the requirements of the Illinois Life Care Facilities Act, see APPENDIX A REGULATION, PERMITS AND APPROVALS. See also SECURITY FOR THE SERIES 2010 OBLIGATIONS for information about additional Security for the Series 2010 Bonds. Taxable Debt Service Reserve Fund Pursuant to the Taxable Bond Indenture, a Debt Service Reserve Fund will be established and held by the Taxable Bond Trustee for the benefit of the Series 2010E Bonds (the Series 2010B Debt Service Reserve Fund ). At the time of issuance of the Series 2010E Bonds, $1,091, will be deposited into the Series 2010E Debt Service Reserve Fund established under the Taxable Bond -24-

67 Indenture. Such deposit equals the initial Debt Service Reserve Fund Requirement. See DEFINITIONS OF CERTAIN TERMS Debt Service Reserve Fund Requirement in APPENDIX C hereto. Moneys in the Series 2010E Debt Service Reserve Fund will be maintained in an amount equal to the Series 2010E Debt Service Reserve Fund Requirement. Money on deposit in the Series 2010E Debt Service Reserve Fund shall be invested in Qualified Investments. Qualified Investments deposited in the Series 2010E Debt Service Reserve Fund shall be valued by the Taxable Bond Trustee on each October 15 (the Valuation Date ) on the basis of fair market value (which valuation shall take into account any accrued and unpaid interest). If on any Valuation Date the amount on deposit in the Series 2010E Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement for the Series 2010E Bonds, as a result of the Series 2010E Debt Service Reserve Fund account having been drawn upon as provided in the Taxable Bond Indenture, the Taxable Loan Agreement requires the Borrowers to restore the amount on deposit in the Series 2010E Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement for the Series 2010E Bonds by the deposit with the Taxable Bond Trustee of an amount equal to such deficiency in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred. If on any Valuation Date the amount on deposit in the Series 2010E Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement for the Series 2010E Bonds as a result of a decline in the market value of the investments in the Series 2010E Debt Service Reserve Fund, the Taxable Loan Agreement requires the Borrowers to deposit in the Series 2010E Debt Service Reserve Fund the amount necessary to restore the amount on deposit in the Series 2010E Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement for the Series 2010E Bonds within not more than 120 days following the date on which the Borrowers receive notice of such deficiency. For more information concerning the Series 2010E Debt Service Reserve Fund, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010E Bond Indenture Funds; Disposition of Revenues 4. Debt Service Reserve Fund in APPENDIX C. Certain moneys on deposit in the Series 2010E Debt Service Reserve Fund will satisfy the Borrower s obligation to maintain an escrow under the Illinois Life Care Facilities Act with respect to the Series 2010E Bonds. If at any time the amount on deposit in the Series 2010E Debt Service Reserve Fund is less than the maximum amount of principal and interest payable on the Series 2010E Bonds during the next succeeding six month period, the Taxable Bond Trustee shall give notice of such event by first class mail, postage prepaid, to the Director of the Illinois Department of Public Health. For more information about the requirements of the Illinois Life Care Facilities Act, see APPENDIX A REGULATION, PERMITS AND APPROVALS. Other All or any portion of the Series 2010 Bonds may be advance refunded through the deposit in escrow of cash or Government Obligations for the benefit of the owners of such refunded Series 2010 Bonds. See SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indenture Satisfaction of the Bond Indenture and Summary of Certain Provisions of the Series 2010E Bond Indenture Satisfaction of the Bond Indenture in APPENDIX C. The Series 2010 Bonds and the obligation to pay principal and interest thereon and any premium, if any, with respect thereto do not constitute an indebtedness or an obligation, general or moral, or a pledge of the faith or loan of credit of the Authority, the State of Illinois or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision. The Authority is obligated to pay the principal of, premium, if any, and interest on the Series 2010 Bonds and other costs incidental thereto only from the sources specified in the Tax-Exempt Bond Indenture or Taxable Bond -25-

68 Indenture, as appropriate. Neither the full faith and credit nor the taxing powers, if any, of the Authority or the State of Illinois or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, and interest on the Series 2010 Bonds or other costs incidental thereto. No owner of any Series 2010 Bond shall have the right to compel the taxing power, if any, of the Authority, the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any, or interest on the Series 2010 Bonds. The Authority does not have the power to levy taxes for any purpose whatsoever. REMARKETING B.C. Ziegler and Company d/b/a Ziegler Capital Markets has been appointed as Remarketing Agent for the Series 2010C Bonds. The Remarketing Agent may be removed or replaced at any time by the Authority upon 30 days notice at the direction of the Borrowers with the Authority. The Remarketing Agent may also resign upon 30 days written notice to the Borrowers, the Bond Trustees and the Authority. Under certain circumstances, there shall be no remarketing of the Series 2010C Bonds. Anything in the Bond Indentures to the contrary notwithstanding, the Remarketing Agreement contains a number of circumstances in which the Remarketing Agent is not obligated to remarket the Series 2010C Bonds which include, but are not limited to, circumstances in which the Borrowers are in default of their obligations, an event has occurred adversely affecting the tax exempt status of the interest on the Series 2010C Bonds and the occurrence of certain material adverse changes in the properties, business or operations of the Borrowers. Further, the Remarketing Agreement provides that the Remarketing Agent can suspend remarketing of the Series 2010C Bonds if, in its sole judgment, the Remarketing Agent believes that it cannot remarket the Series 2010C Bonds at reasonable rates of interest. The Remarketing Agent for its own account or as broker or agent for others may deal in Series 2010C Bonds and may do anything any other Series 2010C Bondholder may do to the same extent as if the Remarketing Agent were not serving as such. The registered owners of Series 2010C Bonds have the option to tender their Series 2010C Bonds to the Bond Trustee for purchase on each Rate Change Date. (See THE SERIES 2010C BONDS Optional Tender of Series 2010C Bonds above.) The only sources of moneys available to make payments of the purchase price of the Series 2010C Bonds on each Rate Change Date are (i) the proceeds of the remarketing thereof, and (ii) moneys required to be deposited in the Purchase Fund by the Borrowers pursuant to the Loan Agreements. THERE CAN BE NO ASSURANCE THAT SUFFICIENT FUNDS WILL BE AVAILABLE TO PURCHASE ANY OR ALL SERIES 2010C BONDS TENDERED FOR PURCHASE ON ANY RATE CHANGE DATE. Failure to purchase Series 2010C Bonds tendered for purchase on any Rate Change Date does not constitute an event of default under the Bond Indenture, the Loan Agreement or the Series 2010 Obligations. See THE SERIES 2010C BONDS Purchase of Tendered Series 2010C Bonds above. BOOK-ENTRY ONLY SYSTEM The Depository Trust Company ( DTC ), New York, New York, will act as the depository for the Series 2010 Bonds. The Series 2010 Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. The ownership of one fully-registered Series 2010 Bond for each maturity, each in the aggregate principal amount of such maturity, will be registered in the name of Cede & Co. -26-

69 DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard and Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of the Series 2010 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2010 Bonds on DTC s records. The ownership interest of each actual purchaser of each Series 2010 Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2010 Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2010 Bonds, except in the event that use of the book-entry system for the Series 2010 Bonds is discontinued. To facilitate subsequent transfers, all Series 2010 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2010 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2010 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2010 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time. Beneficial Owners may desire to make arrangements with a Direct Participant or Indirect Participant so that all notices of redemption or other communications to DTC which affect such Beneficial Owners will be forwarded in writing by such Direct Participant or Indirect Participant. If less than all of the Series 2010 Bonds are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant to be redeemed. -27-

70 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2010 Bonds unless authorized by a Direct Participant in accordance with DTC s Money Market Instruments ( MMI ) Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the Record Date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Series 2010 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy ). Principal and interest payments on the Series 2010 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Bond Trustee or the Authority, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Bond Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Bond Trustee or the Authority. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Series 2010 Bonds purchased or tendered, through its Participant, to the Bond Trustees or the Remarketing Agent, and shall effect delivery of such Series 2010 Bonds by causing the Direct Participant to transfer the Participant s interest in the Series 2010 Bonds, on DTC s records, to the Bond Trustee or the Remarketing Agent. The requirement for physical delivery of Series 2010 Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2010 Bonds are transferred by Direct Participants on DTC s records and followed by a book-entry credit of tendered Series 2010 Bonds to the Remarketing Agent s DTC account. DTC may discontinue providing its services as depository with respect to the Series 2010 Bonds at any time by giving reasonable notice to the Authority and the Bond Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2010 Bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor depository with respect to the Series 2010 Bonds). In that event, Series 2010 Bond certificates will be printed and delivered as described. THE INFORMATION PROVIDED ABOVE HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE AUTHORITY, THE BORROWERS OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY OF SUCH INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF. For so long as the Series 2010 Bonds are registered in the name of DTC or its nominee, Cede & Co., the Authority and the Bond Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the Series 2010 Bonds for all purposes, including payments, notices and voting. Under the Bond Indentures, payments made by the related Bond Trustee to DTC or its nominee will satisfy the Authority s obligations under the Bond Indenture and the Borrowers obligations under the Loan Agreements and on the related Series 2010 Obligation, to the extent of the payments so made. -28-

71 Neither the Authority, the Underwriter, the Borrowers nor the Bond Trustee will have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, its nominee or any Direct Participant or Indirect Participant with respect to any beneficial ownership interest in any Series 2010 Bond, (ii) the delivery to any Direct Participant or Indirect Participant or any other Person, other than an owner, as shown in the Bond Register, of any notice with respect to any Series 2010 Bond including, without limitation, any notice of redemption, tender, purchase or any event which would or could give rise to a tender or purchase right or option with respect to any Series 2010 Bond, (iii) the payment of any Direct Participant or Indirect Participant or any other Person, other than an owner, as shown in the Bond Register, of any amount with respect to the principal of, premium, if any, or interest on, or the purchase price of, any Series 2010 Bond or (iv) any consent given by DTC as registered owner. Prior to any discontinuation of the book-entry only system described above, the Authority and the Bond Trustee may treat DTC as, and deem DTC to be, the absolute owner of the Series 2010 Bonds for all purposes whatsoever, including, without limitation, (i) the payment of principal of, premium, if any, and interest on the Series 2010 Bonds, (ii) giving notices of redemption and other matters with respect to the Series 2010 Bonds, (iii) registering transfers with respect to the Series 2010 Bonds and (iv) the selection of Series 2010 Bonds for redemption. General SECURITY FOR THE SERIES 2010 OBLIGATIONS The Borrowers obligations under each Loan Agreement will be secured by a related Series 2010 Obligation, which will be issued and secured under the Master Indenture. The Series 2010 Obligations will entitle the Bond Trustee, as the holder of the Series 2010 Obligations, to the protection and benefit of the covenants, restrictions and other obligations imposed on the Borrowers by the Master Indenture. The Master Indenture provides that payments on the Series 2010 Obligations and any Additional Obligations issued under the Master Indenture will be the obligations of the Borrowers, as the initial Members of the Obligated Group, and any future Member of the Obligated Group. The accounts of the Borrowers and any future Member of the Obligated Group will be combined for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the issuance of Additional Indebtedness) are satisfied. See RISK FACTORS Certain Matters Relating to Enforceability of the Master Indenture. Collateral The Obligations, including the Series 2010 Obligations, will be secured by a mortgage on certain real property of the Borrowers and all buildings, structures, improvements and appurtenances standing or thereafter placed upon such real estate, and a security interest in all machinery, equipment, furniture and spare parts on such real estate, all judgments, awards of damages, settlements and other compensation heretofore or hereafter made resulting from condemnation proceeds or the taking of the real estate subject to the Mortgage, and any and all other property of every kind and nature owned by the Borrowers conveyed, pledged, assigned or transferred as additional security to the Master Trustee (collectively, the Mortgaged Property ), subject only to Permitted Encumbrances. The Mortgaged Property includes all of the property on which the primary operations of the Borrowers, including the Project, will be located. For a summary of certain provisions of the Mortgage, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Mortgage in APPENDIX C. The Borrowers will also deliver a title insurance policy for the mortgaged property, with the Master Trustee being the named insured. The title policy will be for an amount at least equal to the initial aggregate principal amount of the Series 2010 Obligations. -29-

72 The Obligations, including the Series 2010 Obligations, will also be secured by a security interest in the Gross Revenues of the Borrowers and any future Member of the Obligated Group, subject only to Permitted Encumbrances. See SUMMARY OF PRINCIPAL DOCUMENTS Definitions of Certain Terms Gross Revenues in APPENDIX C. State of Illinois Not Liable on the Series 2010 Bonds; Agreement of the State The Series 2010 Bonds will not constitute a debt or liability of the State of Illinois (the State ) or of any political subdivision thereof other than the Authority (to the limited extent set forth in the Bond Indenture) or a pledge of the faith and credit of the State or any political subdivision thereof other than the Authority (to the limited extent set forth in the Bond Indentures). The Series 2010 Bonds are payable solely from the funds pledged therefore in accordance with the Bond Indentures. The issuance of the Series 2010 Bonds under the provisions of the Act will not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation for the payment thereof or to make any appropriation for their payment. The Series 2010 Bonds and the interest payable thereon shall never constitute a debt of the State within the meaning of the Constitution or the statutes of the State and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof. The State shall not in any event be liable for the payment of the principal of, premium, if any, or interest on the Series 2010 Bonds or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever which may be undertaken by the Authority. No breach by the Authority of any such pledge, mortgage, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any charge upon its general credit or against its taxing power. The Authority has no taxing power. The Act provides that the State pledges to, and agrees with, owners of any obligation issued under the Act that it will not limit or alter the rights vested in the Authority by the Act until such obligations, together with the interest thereon, are fully met and discharged; however, nothing in the Act precludes such limitation or alteration if and when adequate provision shall be made by law for the protection of the owners of such obligations. Additional Indebtedness The Master Indenture permits the Obligated Group to incur Additional Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by an Additional Obligation issued under the Master Indenture. Under certain conditions specified therein, the Master Indenture will permit the Obligated Group to issue Additional Obligations that will not be pledged under the Bond Indentures, but will be equally and ratably secured by the Master Indenture with the Series 2010 Obligations. In addition, the Master Indenture will permit such Additional Obligations to be secured by security including Liens on the Property, of the Obligated Group and letters and lines of credit and insurance), which additional security or Liens need not be extended to secure any other Obligations (including the Series 2010 Obligations). See SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Liens on Property and Permitted Additional Indebtedness in APPENDIX C. In determining compliance with a number of provisions of the Master Indenture, including the provisions governing the incurrence of Additional Indebtedness, the Obligated Group may assume that certain types of Indebtedness which bear interest at varying rates and which may not be payable over an extended term will bear interest over time at interest rates approximating current or recent long term fixed rates, will remain outstanding for a long term and will be amortized on a level debt service basis. The actual interest rates and payments on such Indebtedness may vary from such assumptions, and such variance may be material. See SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain -30-

73 Provisions of the Master Indenture Calculation of Debt Service and Debt Service Coverage in APPENDIX C. Certain Covenants of the Borrowers and any Future Member of the Obligated Group For the definitions of certain words and terms used in this section, see SUMMARY OF PRINCIPAL DOCUMENTS in APPENDIX C. Rates and Charges. The Members covenant and agree that the Obligated Group Agent will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year, commencing with the Fiscal Year ending on the earlier of (a) the first full Fiscal Year after Stable Occupancy for the Project has been achieved, or (b) December 31, 2016 (the Initial Testing Date ), and to deliver a copy of such calculation to the Required Information Recipients. For the purposes of the Master Indenture covenant described under this heading, when calculating the Historical Debt Service Coverage Ratio of the Obligated Group, principal and interest payable on Liquidity Support Repayment Obligations or any Affiliate Related Subordinated Indebtedness shall be excluded from Debt Service Requirements. If the Historical Debt Service Coverage Ratio of the Obligated Group is less than 1.10:1 for the Fiscal Year with respect to which the Initial Testing Date relates, the Master Trustee shall require the Obligated Group, at the Obligated Group s expense, to select a Consultant within 30 days following the calculation described in the Master Indenture, to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group s methods of operation and other factors affecting its financial condition in order to generate an Historical Debt Service Coverage Ratio of at least 1.20:1 for the following Fiscal Year. The Consultant selected shall be approved and retained as described in Approval of Consultants below. If the Historical Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Fiscal Year with respect to which the Initial Testing Date relates, and for any Fiscal Year thereafter, is less than 1.20:1, the Master Trustee shall require the Obligated Group, at the Obligated Group s expense, to select a Consultant within 30 days following the calculation described in the second preceding paragraph to make recommendations with respect to the rates, fees and charges of the Obligated Group s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year. The Consultant selected shall be approved and retained as described in Approval of Consultants below. For specific information regarding the process under the Master Indenture for selection of Consultants, see Approval of Consultants below and SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants in APPENDIX C hereto. A copy of the Consultant s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days of retaining the Consultant. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. This provision of the Master Indenture shall not be construed to prohibit any Member from serving indigent patients or residents to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from serving any other class or classes of patients or residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements of the Master Indenture summarized in this section. The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required above, the Master Trustee shall not -31-

74 be obligated to require the Obligated Group to retain a Consultant to make such recommendations if: (a) there is filed with the Master Trustee (who shall provide a copy to each Required Information Recipient) a written report addressed to them of a Consultant (which Consultant and report, including without limitation the scope, form, substance and other aspects of such report, are not objected to by the Master Trustee) which contains an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet the requirements of this provision of the Master Indenture, and, if requested by the Master Trustee, such report is accompanied by a concurring opinion of Independent Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not objected to by the Master Trustee) as to any conclusions of law supporting the opinion of such Consultant; (b) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (c) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group provides to the Master Trustee (who shall provide a copy to each Related Bond Trustee) an opinion of Independent Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not objected to by the Master Trustee) to the effect that the applicable laws and regulations underlying the Consultant s report delivered in respect of the previous Fiscal Year have not changed in any material way. If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year, such failure shall constitute an event of default under the Master Indenture. For specific information regarding the process under the Master Indenture for selection of Consultants, see Approval of Consultants below and APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants. Also see APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Rates and Charges. Liquidity Covenant. The Obligated Group covenants that it will calculate the Days Cash on Hand or the Cash to Indebtedness Ratio of the Obligated Group as of June 30 and December 31 of each Fiscal Year (each such date being a Testing Date ), commencing with the Initial Testing Date. The Obligated Group shall deliver an Officer s Certificate setting forth such calculation as of June 30 to the Master Trustee no later than August 15, and include such calculation as of December 31 in the Officer s Certificate delivered pursuant to the Master Indenture and described under the heading FINANCIAL REPORTING AND CONTINUING DISCLOSURE herein. The Master Indenture requires that each Obligated Group Member conduct its business so that on each Testing Date the Obligated Group shall have a Cash to Indebtedness Ratio of (a) no less than 0.25 for the first two Testing Dates, starting with the Initial Testing Date, (b) no less than for the next year (the next two Testing Dates), and (c) no less than 0.30 thereafter (the Liquidity Requirement ). At the option of the Obligated Group Agent, the Liquidity Requirement can be converted to a covenant to maintain no less than 180 Days Cash on Hand on each Testing Date if for three consecutive Fiscal Years the Obligated Group has reported (a) a Historical Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30 or more on each Testing Date. The Obligated Group Agent may elect to convert the Liquidity Requirement as of a specified date (the Liquidity Requirement Conversion Date ) in an Officer s Certificate, demonstrating compliance with the test in the preceding sentence. -32-

75 After the Liquidity Requirement Conversion Date, the Liquidity Requirement will be a covenant to maintain no less than 180 Days Cash on Hand on each June 30 and December 31. If the Cash to Indebtedness Ratio or the amount of Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Agent shall, within 30 days after delivery of the Officer s Certificate disclosing such deficiency, deliver an Officer s Certificate approved by a resolution of the Governing Body of the Obligated Group Agent to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of the Cash to Indebtedness Ratio or Days Cash on Hand to the Liquidity Requirement for future periods. If the Obligated Group has not raised the level of the Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, to the Liquidity Requirement by the Testing Date immediately subsequent to delivery of the Officer s Certificate required in the preceding paragraph, the Obligated Group Agent shall, within 30 days after delivery of the Officer s Certificate disclosing such deficiency, retain a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. Such Consultant shall be approved and retained as set forth in the Master Indenture. A copy of the Consultant s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days after the date such Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Liquidity Requirement for any Testing Date shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan or retaining a Consultant and follows each recommendation contained in such plan or Consultant s report to the extent feasible (as determined by the Governing Body of the Obligated Group Agent) and permitted by law. For specific information regarding the process under the Master Indenture for selection of Consultants, see Approval of Consultants below and APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants. For more information regarding the liquidity covenant, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Liquidity Covenant in APPENDIX C. Marketing Covenant. Beginning with the fiscal quarter ending June 30, 2010 and ending at the end of the first full fiscal quarter following the date on which Stable Occupancy for the Independent Living Units included in the Project has been achieved, the Obligated Group will use its best efforts to maintain the percentage of Independent Living Units which are Reserved (the Percentage of Reserved Independent Living Units ) at or above the applicable levels set forth below, which determinations shall be measured as of the last day of the applicable quarter (the Marketing Requirements ). The applicable Marketing Requirements for the applicable quarter shall be (i) the Level I Marketing Requirements as long as the Adjusted Level I Occupancy Requirements set forth under Occupancy Covenant below have not been satisfied or (ii) the Adjusted Level I Marketing Requirements if the Adjusted Level I Occupancy Requirements set forth under Occupancy Covenant below have been satisfied. -33-

76 Percentage of Reserved Independent Living Units (%) Quarter Ending Level I Adjusted Level I June 30, % N/A September 30, % N/A December 31, % N/A March 31, % N/A June 30, % N/A September 30, % N/A December 31, % N/A March 31, % 72.20% June 30, % 72.20% September 30, % 73.40% December 31, % 74.50% March 31, % N/A June 30, % N/A September 30, % N/A December 31, % N/A March 31, % N/A June 30, % N/A September 30, % N/A December 31, % N/A March 31, % N/A June 30, % N/A through Stable Occupancy If the report submitted pursuant to the financial reporting requirements of the Master Indenture states that the Percentage of Reserved Independent Living Units for any fiscal quarter is less than the applicable Marketing Requirements set forth above for that fiscal quarter, the Obligated Group Agent shall submit to the Master Trustee, within 45 days after the end of such fiscal quarter, a marketing corrective action plan (a Marketing Corrective Action Plan ) which includes the following information: (a) the Percentage of Reserved Independent Living Units, including the number of reservations and cancellations during such fiscal quarter and on an aggregate basis, (b) a forecast, prepared by management of the Corporation, of the number of reservations expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Marketing Corrective Action Plan is being prepared, and (c) a detailed description of the reasons for the Obligated Group s failure to satisfy the Marketing Requirements and management s plan to increase the Percentage of Reserved Independent Living Units to at least the level required by the Marketing Requirements set forth herein by the end of the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Officer s Certificate is being submitted. If the report submitted pursuant to the financial reporting requirements of the Master Indenture states that the Obligated Group has failed to meet the Marketing Requirement for any two consecutive fiscal quarters, the Obligated Group Agent shall select a Consultant within 45 days after the end of such second consecutive fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to at least the Marketing Requirement set forth above on the earliest date practicable. Such Consultant shall be approved and retained as set forth in the Master Indenture. Within 60 days of retaining any such Consultant, the Obligated Group Agent shall cause a copy of Consultant s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the -34-

77 Governing Board of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant s report more than one time in any six month period. Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Marketing Requirements for any fiscal quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Marketing Corrective Action Plan or obtaining a Consultant s report and adopting a plan and follows each recommendation contained in such Marketing Corrective Action Plan or Consultant s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Agent) and permitted by law. For more information regarding the marketing covenant, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Marketing and Occupancy Covenants Marketing Covenant in APPENDIX C. For specific information regarding the process under the Master Indenture for selection of Consultants, see Approval of Consultants below and APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants. Occupancy Covenant. For each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of all of the Occupancy Certificates for all of the Independent Living Units included in the Project and (b) ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved (an Occupancy Quarter ), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units included in the Project (the Percentage of Units Occupied ) at or above the Level I Occupancy requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the Occupancy Requirements ): -35-

78 Level I Adjusted Level I Occupancy Occupancy Requirements Projected Occupancy Requirements Quarter (%) Occupancy (1) (%) (2) % 23.7% 25.4% % 39.3% 50.3% % 54.3% 65.3% % 64.7% 72.3% % 71.1% N/A % 76.3% N/A % 79.8% N/A % 83.2% N/A % 86.7% N/A % 90.2% N/A % 93.6% N/A % 95.0% N/A % 95.0% N/A % 95.0% N/A % 95.0% N/A 16 and thereafter 90.0% 95.0% N/A (1) This information is based on Management s forecast as contained in the Feasibility Study, which should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B FINANCIAL FEASIBILITY STUDY. This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will achieve the occupancy levels forecasted. (2) This information is for use with the marketing covenant only, as set forth in Marketing Covenant above. If the report submitted pursuant to the financial reporting requirements of the Master Indenture states that the Percentage of Units Occupied for any Occupancy Quarter is less than the Level I Occupancy Requirement set forth above for that Occupancy Quarter, the Obligated Group Agent shall within 45 days of the end of such Occupancy Quarter submit an occupancy corrective action plan prepared by management to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above by the Occupancy Quarter immediately succeeding the Occupancy Quarter with respect to which the corrective action plan is being submitted (a Corrective Occupancy Action Plan ). If the report submitted pursuant to the financial reporting requirements of the Master Indenture states that the Percentage of Units Occupied for any two consecutive Occupancy Quarters is less than the Level I Occupancy Requirement set forth above for those Occupancy Quarters, the Obligated Group Agent shall select a Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above on the earliest date practicable. Such Consultant shall be approved and retained as set forth in the Master Indenture. Within 60 days after retaining any such Consultant, the Obligated Group Agent shall cause a copy of the Consultant s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant s report more than one time during any six month period. -36-

79 Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Occupancy Requirement for any Occupancy Quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Corrective Occupancy Action Plan or obtaining a Consultant s report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Agent) and permitted by law. For more information regarding the occupancy covenant, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Marketing and Occupancy Covenants Occupancy in APPENDIX C. Cumulative Cash Operating Loss Covenant. The Obligated Group covenants that commencing with (a) the first fiscal quarter ending after the earliest date a resident has taken physical possession of one of the Independent Living Units included in the Project (the Initial Occupancy Date ) if such date is more than 30 days prior to the end of such fiscal quarter or (b) the first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (a Testing Date ). The requirement to test Cumulative Cash Operating Loss shall end on the Initial Testing Date. Each Member is required to conduct its business so that as of each such Testing Date the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount described below: Quarter Cumulative Cash Operating Loss Covenant Forecast Cumulative Cash Operating Loss (1) 1 ($ 1,200,000) ($ 141,157) 2 (2,500,000) (1,353,944) 3 (4,400,000) (2,981,594) 4 (8,000,000) (5,831,045) 5 (10,600,000) (7,801,425) 6 (13,100,000) (9,718,592) 7 (14,400,000) (10,685,160) 8 (15,100,000) (11,219,126) 9 (15,500,000) (11,469,409) 10 (15,800,000) (11,705,331) 11 (16,200,000) (11,775,078) 12 (16,400,000) (11,775,078) 13 and thereafter (16,700,000) (11,775,078) (1) This information is based on Management s forecast as contained in the Feasibility Study, which should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B FINANCIAL FEASIBILITY STUDY. This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will achieve the occupancy levels forecasted. If the report submitted pursuant to the financial reporting requirements of the Master Indenture states that as of any Testing Date, the Cumulative Cash Operating Loss of the Obligated Group is greater than the amounts required above, the Obligated Group Agent shall, within 45 days of such Testing Date, deliver an Officer s Certificate to each Required Information Recipient setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to achieve the required level of Cumulative Cash for future periods. -37-

80 If, as of any two consecutive Testing Dates, the Cumulative Cash Operating Loss is greater than the levels set forth above required, the Obligated Group Agent shall, within 45 days after the second such Testing Date select a Consultant to make recommendations with respect to the Obligated Group s methods of operation and other factors affecting its financial condition in order to decrease Cumulative Cash Operating Loss to the required level for future periods. Such Consultant shall be approved and retained as set forth in the Master Indenture. A copy of the Consultant s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days after the date the Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the required Cumulative Cash Operating Loss level will not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the required procedures for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined by the Governing Body of the Obligated Group Agent) and permitted by law. Approval of Consultants. The Master Indenture provides that if at any time the Members of the Obligated Group are required to engage a Consultant under the provisions of the Master Indenture summarized under Rates and Charges, Liquidity Covenant, Marketing Covenant, Occupancy Covenant and Cumulative Cash Operating Loss Covenant described above or LIQUIDITY SUPPORT AGREEMENT General below, such Consultant shall be engaged in the manner set forth below in this section. Upon selecting a Consultant as required under the provisions of the Master Indenture, the Obligated Group Agent will notify the Master Trustee of such selection. The Master Trustee shall, as soon as practicable but in no case longer than five Business Days after receipt of notice, notify the holders of all Obligations outstanding under the Master Indenture of such selection. Such notice shall (i) include the name of the Consultant and a brief description of the Consultant, (ii) state the reason that the Consultant is being engaged including a description of the covenant(s) of the Master Indenture that require the Consultant to be engaged and (iii) state that the holder of the Obligation will be deemed to have consented to the selection of the Consultant named in such notice unless such Obligation holder submits an objection to the selected Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Obligation holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If more than two-thirds in aggregate principal amount of the holders of the outstanding Obligations have been deemed to have consented to the selection of the Consultant, the Obligated Group Agent may engage the Consultant. If more than one-third in aggregate principal amount of the owners of the Obligations outstanding have objected to the Consultant selected, the Obligated Group Agent shall select another Consultant which may be engaged upon compliance with the procedures as described. When the Master Trustee notifies the holders of Obligations of such selection, the Master Trustee will also request any Related Bond Trustee send a notice containing the information required by above to the owners of all of the Related Bonds outstanding. Such Related Bond Trustee shall, as the owner of an Obligation securing such Related Bonds, consent or object to the selection of the Consultant in accordance with the response of the owners of such Related Bonds. If more than two-thirds in aggregate principal amount of the Related Bonds have been deemed to have consented to the selection of the Consultant, the Bond Trustee shall approve the Consultant. If more than one-third in aggregate principal amount of the owners of the Related Bonds have objected to the Consultant selected, the Bond Trustee shall not approve the Consultant. -38-

81 The 15-day notice period described above may be extended by the Master Trustee in order to permit each Related Bond Trustee to give the owners of the Related Bonds 15 days to respond to the notice given by the Related Bond Trustee. By acceptance of an Obligation securing any Related Bonds, the Related Bond Trustee agrees to comply with the provisions of the Master Indenture summarized under this heading. The Master Indenture further provides that all Consultant reports required thereunder shall be prepared in accordance with then-effective industry-appropriate standards. For further information about the approval of consultants, see APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Approval of Consultants. Application for Rating. Not later than 150 days after receipt by the Obligated Group Agent of audited financial statements of the Obligated Group for the first full Fiscal Year following the achievement of Stable Occupancy with respect to the Project, and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains a credit rating of BBB- (or an equivalent rating) or better from any Rating Agency (an Investment Grade Credit Rating ). Notwithstanding the foregoing, (a) the requirement to annually approach a Rating Agency shall terminate when the Obligated Group obtains an Investment Grade Credit Rating; and (b) the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group Agent reasonably believes that the Obligated Group will not meet the criteria of any Rating Agency for an Investment Grade Credit Rating based on the then-existing published rating criteria of the Rating Agencies. Also see APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Application for Rating. Disposition of Property. The Borrowers and each future member of the Obligated Group agrees in the Master Indenture to restrictions on the disposition of its Property, as more fully described under the caption APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of the Master Indenture Sale, Lease or Other Disposition of Property hereto. Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates. The Obligated Group agrees in the Master Indenture that a Member will not make payments on Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates (except for repayments to the Liquidity Support Fund as described herein under the subcaption Entrance Fees Fund ) unless the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee prior to any payment on Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates, that contains the following certifications: (a) there have been two full fiscal quarters of Stable Occupancy with respect to the independent living units included in the Project; (b) if the proposed payment on the Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates had occurred as of the last day of the most recent fiscal quarter for which financial statements have been delivered under the provisions of the Master Indenture, the Obligated Group would have had a Cash to Indebtedness Ratio of at least 0.30 after that payment; (c) if the proposed payment on the Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates had occurred during the most recent Fiscal Year for which audited financial statements of the Obligated Group are available, the Historical Debt Service Coverage Ratio for that Fiscal Year would have been not less than 1.30; (d) no Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds remain outstanding; and (e) there is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under the Master Indenture or the Loan Agreements. See APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Payments on Affiliate Related Subordinated Debt and Management Fees to Affiliates hereto. -39-

82 Entrance Fees Fund. Pursuant to the Master Indenture, the Members of the Obligated Group agree that all Initial Entrance Fees received by the Members of the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fees Fund established with the Master Trustee and held under the Master Indenture. Moneys in the Entrance Fees Fund shall be disbursed by the Master Trustee on the first Business Day of each month (or as otherwise described under FIFTH below) as follows: FIRST: to the Members to pay refunds required by Residency Agreements. Such disbursements shall be made upon receipt by the Master Trustee of a written certificate of an Authorized Officer of a Member certifying that it is required by a Residency Agreement to pay refunds within the next 30 days and the amount of such refunds. SECOND: to the Working Capital Fund established under the Master Indenture, until the total principal amount deposited into the Working Capital Fund equals $16,700,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund or transfer Entrance Fees from the Entrance Fees Fund into the Working Capital Fund in excess of a total of $16,700,000. THIRD: to the Operating Reserve Fund described below: (i) until the amount deposited from the Entrance Fees Fund in the Operating Reserve Fund equals $5,000,000; (ii) thereafter the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $5,000,000, provided that the aggregate amount transferred from the Entrance Fees Fund into the Operating Reserve Fund pursuant to this clause (B) shall not exceed $10,000,000; and (iii) if a transfer has occurred of moneys from the Liquidity Support Funds to the Operating Reserve Fund, the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $1,000,000. FOURTH: to the Providence Liquidity Support Fund and the Special Liquidity Support Fund on a pro rata basis and then to the Supplemental Liquidity Support Fund, any amount necessary to reimburse any amounts advanced under the Liquidity Support Agreement to pay costs related to the Project prior to initial occupancy thereof. FIFTH: after the transfers pursuant to the preceding numbered paragraphs have been made, the Master Trustee shall review the amount on deposit in the Entrance Fees Fund on the first day of each January, April, July and October (each such day a Review Date ) (or, upon request of the Obligated Group Agent, on any Business Day). Moneys in the Entrance Fees Fund on each Review Date shall be disbursed by the Master Trustee as follows: (i) to the Taxable Bond Trustee, into the Optional Redemption Fund established under the Taxable Bond Indenture for redemption of Series 2010E Bonds pursuant to the provisions of the Taxable Bond Indenture and prepayment of the Series 2010E Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (ii) to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010D-3 Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of -40-

83 the Series 2010D-3 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (iii) after making all the transfers described in (i) and (ii) above, to the Tax- Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax- Exempt Bond Indenture for redemption of Series 2010D-2 Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010D-2 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (iv) after making all the transfers described in (i) through (iii) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010D-1 Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010D-1 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (v) after making all the transfers described in (i) through (iv) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010C Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010C Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (vi) after making all the transfers described in (i) through (v) above, to the Tax-Exempt Bond Trustee, into the Optional Redemption Fund established under the Tax-Exempt Bond Indenture for redemption of Series 2010B Bonds pursuant to the provisions of the Tax-Exempt Bond Indenture and prepayment of the Series 2010B Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000, no such transfer shall be made. (vii) Funds shall be transferred on each Review Date as described above regardless of the amount to be so transferred. There is no minimum amount that may be transferred on a regularly scheduled quarterly Review Date. However, any funds transferred at the request of the Obligated Group Agent on a Business Day other than a regularly scheduled Review Date may be transferred only if the amount to be so transferred from the Entrance Fees Fund is at least $100,000. SIXTH: when the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee stating that (A) all Series 2010B Bonds, Series 2010C Bonds, Series 2010D-1 Bonds, Series 2010D-2 Bonds, the Series 2010D-3 Bonds and Series 2010E Bonds have been redeemed, (B) no Event of Default has occurred and is continuing under the Master Indenture, and (C) requesting that any funds on deposit in the Entrance Fees Fund be transferred to the Corporation, the Members of the Obligated Group need not deposit any Entrance Fees into the Entrance Fees Fund, any amounts on deposit in the Entrance Fees Fund shall be remitted to the Corporation by the Master Trustee, and the Entrance Fees Fund shall be closed. For information regarding the Entrance Fee Fund, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Entrance Fees Fund. The following sets forth a diagram of the flow of Initial Entrance Fees funds as described above, but assumes the costs of the Project are fully paid from the Project Fund and the earnings thereon and that there is no draw on the Liquidity Support Fund to pay those Project Costs: -41-

84 Borrowers Receive Initial Entrance Fees and transfer them to the Master Trustee within five Business Days of receipt ($95.2 million total entrance fee pool at 100% occupancy) ($90.5 million total entrance fee pool at 95% occupancy) Trustee Deposits Initial Entrance Fees into Entrance Fees Fund upon receipt from the Borrowers. The Master Trustee will apply these funds on the first Business Day of such month (or on the First Business Day of each January, April, July and October in the case of FOURTH below) as shown below. First, to pay Refunds (As required by Residency Agreements) Approximate Percentage Occupancy (1) Second, Working Capital Fund 18% $16.70 million The initial deposit to the Operating Reserve Fund will be $5.0 million and the Operating Reserve Fund is subject to $5.0 million of replenishment, for a maximum deposit, prior to the transfers described in the paragraph below, of $10 million. Third Operating Reserve Fund $5.0 million 23% After the Working Capital Fund and the Operating Reserve Fund have received the full amount of the initial deposit, subsequent Initial Entrance Fees not to exceed $6.0 million (equal to the Support Obligation under the Liquidity Support Agreement) may be used to restore the balance in the Liquidity Support Fund to $6.0 million after draws on the Liquidity Support Agreement prior to the opening of the Project. If the Liquidity Support Agreement is drawn upon and the remaining Support Obligation balance falls below $1.0 million, an amount equal to the remaining Support Obligation will be transferred to the Operating Reserve Fund. Thereafter, Initial Entrance Fees may be transferred to the Operating Reserve Fund on a monthly basis in order to maintain a minimum balance of $1.0 million. The Entrance Fee Fund will automatically be swept on a quarterly basis (or on any Business Day at the request of the Obligated Group Agent). The Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds, in that order, will be repaid gradually during the fill-up period. Quarterly redemptions of the Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds, in that order, will only occur if the three steps described above have occurred. Once the preceding items are satisfied and all Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds, in that order, have been repaid, all future Entrance Fee proceeds can be used by the Borrowers as unrestricted cash. Fourth, Temporary Debt Redemption Debt Service Reserve Funds will be released at the final redemption date of each of the Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds Par amounts to be redeemed are: $ million Series 2010E Bonds, Debt Service Reserve Fund $1,091, $ million Series 2010D-3 Bonds, Debt Service Reserve Fund $954, $ million Series 2010D-2 Bonds, Debt Service Reserve Fund $1,074,500 $ million Series 2010D-1 Bonds, Debt Service Reserve Fund $744, $5.000 million Series 2010C Bonds, Debt Service Reserve Fund $375,000 $7.875 million Series 2010B Bonds, Debt Service Reserve Fund $610, Fifth, Unrestricted Cash to Borrowers Remaining proceeds of Initial Entrance Fees $11.9 million (at 100% occupancy, assuming no replenishment) $7.3 million (at 95% occupancy, assuming no replenishment) (1) This information is based on Management s forecast as contained in the Feasibility Study. See APPENDIX B FINANCIAL FEASIBILITY STUDY. This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will achieve the occupancy levels forecasted. 35% 50% 65% 75% 80% 88% -42-

85 Working Capital Fund. The Master Trustee shall establish and maintain a separate account to be known as the Working Capital Fund Timothy Place, NFP (the Working Capital Fund ). All moneys received by the Master Trustee and held in the Working Capital Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. Moneys in the Working Capital Fund shall be disbursed by the Master Trustee to or for the account of the Borrowers within seven days after receipt by the Master Trustee of a Written Request to the Master Trustee certifying that such request is for (A) costs of the initial construction and equipping of the Project, (B) development and marketing fees and expenses relating to the Project, (C) operating expenses relating to the Project, (D) the costs of needed repairs to the Project, (E) routine capital expenditures relating to the Project, (F) judgments against any Member of the Obligated Group, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (H) amounts required to restore funds on deposit in the Debt Service Reserve Fund created under the Bond Indentures to their required levels, or (I) amounts due on any Obligations (other than optional prepayment or redemption), but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by an Affiliate. All amounts on deposit in the Working Capital Fund may be released to the Obligated Group Agent, and the Working Capital Fund will be closed, upon receipt by the Master Trustee of an Officer s Certificate of the Obligated Group Agent requesting such release which Officer s Certificate shall state that (i) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D-1 Bonds, the Series 2010D-2 Bonds, the Series 2010D-3 Bonds and the Series 2010E Bonds have been redeemed, (ii) Stable Occupancy with respect to the Project has been achieved, and (iii) no Event of Default has occurred and is continuing under the Master Indenture. Operating Reserve Fund. The Master Trustee shall establish and maintain a separate account to be known as the Operating Reserve Fund Timothy Place, NFP (the Operating Reserve Fund ). All moneys received by the Master Trustee and held in the Operating Reserve Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. Moneys in the Operating Reserve Fund shall be disbursed by the Master Trustee to or for the account of the Borrowers within seven days of receipt by the Master Trustee of an Officer s Certificate of the Borrowers to the effect that (i) the withdrawal is made to pay (A) costs of the initial construction and equipping of the Project, (B) development and marketing fees and expenses relating to the Project, (C) operating expenses relating to the Project, (D) the costs of needed repairs to the Project, (E) routine capital expenditures relating to the Project, (F) judgments against any Member of the Obligated Group, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received or (H) amounts due on any Obligations (other than optional prepayment or redemption), but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by an Affiliate, (ii) moneys anticipated to be expended in the calendar month following the month in which such Officer s Certificate is submitted, together with an itemized budget describing the uses for which such moneys are needed and the amount needed for each such use, and (iii) no other funds are available or will reasonably be available to make such payments. All amounts on deposit in the Operating Reserve Fund may be released to the Corporation upon receipt by the Master Trustee of an Officer s Certificate of the Obligated Group Agent requesting such -43-

86 release which Officer s Certificate shall state that (i) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D-1 Bonds, the Series 2010D-2 Bonds, the Series 2010D-3 Bonds and the Series 2010E Bonds have been redeemed, and (ii) Stable Occupancy with respect to the Project has been achieved, and (iii) no Event of Default has occurred and is continuing under the Master Indenture. Investment of Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund. Any moneys held by the Master Trustee in the Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Agent, in Permitted Investments. Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Agent in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Any investment income or other gain from any investment of moneys on deposit in the Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund shall be retained therein. Any loss resulting from such investments shall be charged to the Entrance Fees Fund, Working Capital Fund or Operating Reserve Fund, as the case may be. The investment of the moneys held in the Entrance Fee Fund, Working Capital Fund and Operating Reserve Fund shall be subject to yield restriction as provided in the Tax Exemption Agreement until the Obligated Group Agent delivers an opinion of nationally recognized municipal bond counsel (which counsel and opinion are in a form acceptable to the Master Trustee) to the Master Trustee to the effect that no such yield restriction is required to maintain any exemption from federal income taxation to which the interest on any Related Bonds would otherwise be entitled. For more information, see SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Entrance Fees Fund, Working Capital Fund, Operating Reserve Fund and Investment of the Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund in APPENDIX C. Providence Liquidity Support Fund LIQUIDITY SUPPORT AGREEMENT Under the Liquidity Support Agreement, PDG has agreed to provide up to $2,600,000 (the Providence Support Obligation ) to the Borrowers for Project completion costs, working capital or operating expenses, and interest on the Series 2010 Bonds, all as provided therein and summarized below. PDG is referred to for purposes of the Liquidity Support Agreement as the Liquidity Provider. See LIQUIDITY SUPPORT AGREEMENT Supplemental Liquidity Support Fund below. The Liquidity Provider will establish the Providence Liquidity Support Fund with the Master Trustee pursuant to the Liquidity Support Agreement and fund it initially with $2,600,000 in unrestricted cash, money market funds, certificates of deposit or U.S. Treasury Securities. The Liquidity Support Fund shall be the property of the Liquidity Provider, but shall be pledged to fund and secure the Liquidity Provider s obligations under the Liquidity Support Agreement. The Support Obligation of the Liquidity Provider is payable solely from the Providence Liquidity Support Fund. Special Liquidity Support Fund The Corporation will direct the Bond Trustee to deposit $3,000,000 (the Special Support Obligation ) with the Master Trustee in a separate fund to be known as the Special Liquidity Support Fund for Project completion costs, working capital or operating expenses, and interest on the Series 2010 Bonds, all as provided therein and summarized below. -44-

87 Supplemental Liquidity Support Fund The Corporation will direct the Bond Trustee to deposit $400,000 (the Supplemental Support Obligation ) with the Master Trustee in a separate fund to be known as the Supplemental Liquidity Support Fund for Project completion costs, working capital or operating expenses, and interest on the Series 2010 Bonds, all as provided therein and summarized below. The Supplemental Support Obligation consists of $400,000 from the proceeds of the Series 2010E Bonds. Reductions of the Support Obligation The aggregate amount available for payment under each Support Obligation shall be reduced to each of the amounts described in clauses (A), (B) and (C) of this paragraph if the conditions described therein have been met. The amount of any excess shall be promptly transferred as follows: (i) with respect to the Providence Liquidity Support Fund, the Liquidity Provider, (ii) with respect to the Special Liquidity Support Fund, the Special Liquidity Support Fund, except as otherwise provided in the Liquidity Support Agreement and (iii) with respect the Supplemental Liquidity Support Fund, to the Corporation. Anticipated Reductions. (A) The Providence Support Obligation and the Special Support Obligation shall be reduced to the greater of the amount currently drawn under the related Support Obligation or $1,300,000 and $1,500,000, respectively, when (i) the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds are no longer Outstanding, and (ii) the Borrowers deliver to the Master Trustee, the Bond Trustee and the Liquidity Provider an Officer s Certificate certifying that: (w) for the most recent fiscal quarter or the most recent six-month period at the option of the Corporation, the average overall occupancy of the Independent Living Units, the Catered Living Units, the Assisted Living Units, the Memory Support Units and the nursing beds included in the Project was, in the aggregate, at least 90% Occupied; (x) the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year was not less than 1.20; (y) the Cash to Debt Ratio of the Obligated Group as of the most recent June 30 or December 31 was no less than 0.25; and (z) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreements and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreements both prior to such reduction and as a result of such reduction. (B) The Providence Support Obligation, the Special Support Obligation and the Supplemental Support Obligation, each shall be reduced to the greater of the amount currently drawn down under the related Support Obligation and the Liquidity Support Agreement shall cease to be of any further force and effect, when (i) the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds are no longer Outstanding, (ii) at least 12 months have lapsed since the reduction in the Support Obligations described in subsection (A) above has occurred, and (iii) the Borrowers deliver to the Master Trustee, the Bond Trustee and the Liquidity Provider an Officer s Certificate certifying that: (v) for the most recent fiscal quarter or the most recent six-month period at the option of the Corporation, the average overall occupancy of the Independent Living Units, the -45-

88 Catered Living Units, the Assisted Living Units, the Memory Support Units and the nursing beds included in the Project was, in the aggregate, at least 90% Occupied; (w) the Cash to Debt Ratio of the Obligated Group as of the most recent June 30 or December 31 was no less than 0.30; (x) the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year for which audited financial statements are available was not less than 1.25; (y) the Historical Debt Service Coverage Ratio of the Obligated Group for the last fiscal year prior to the year for which audited financial statements are available was not less than 1.20; and (z) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreements and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreements both prior to such reduction and as a result of such reduction. High Performance Reductions. (C) The Providence Support Obligation, the Special Support Obligation and the Supplemental Support Obligation, each shall be reduced to the greater of the amount currently drawn down under the related Support Obligation or zero and this Agreement shall terminate and cease to be of any further force and effect, when (i) the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds are no longer Outstanding; and (ii) the Borrowers deliver to the Master Trustee, the Bond Trustee and the Liquidity Provider an Officer s Certificate certifying that: (v) for the most recent fiscal quarter or the most recent six-month period at the option of the Corporation, the average overall occupancy of the independent living units, the catered living units, the assisted living units, the memory support units and the nursing beds included in the Project was, in the aggregate, at least 90%; (w) the Cash to Debt Ratio of the Obligated Group as of the most recent June 30 or December 31 was no less than 0.35; (x) the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year for which audited financial statements are available was not less than 1.40; (y) the Historical Debt Service Coverage Ratio of the Obligated Group for the last fiscal year from Operations only was not less than 1.00; and (z) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreement and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreement both prior to such reduction and as a result of such reduction. Draws on Each Support Obligation The Supplemental Support Obligation will be drawn upon prior to any draws on either the Providence Support Obligation or the Special Support Obligation. The Supplemental Support Obligation is closed after, and only after, the Providence Support Obligation and the Special Support Obligation have been repaid in full. The Supplemental Support Obligation is not subject to repayment. -46-

89 Moneys can be drawn on a pro rata basis from the Providence Liquidity Support Fund and the Special Liquidity Support Fund to the extent necessary to pay costs of the Project in accordance with the Liquidity Support Agreement. The Borrowers may withdraw moneys on a pro rata basis from the Providence Liquidity Support Fund and the Special Liquidity Support Fund for any other purposes in accordance with the Liquidity Support Agreement for which funds in the Working Capital Fund or the Operating Reserve Fund may be used. Moneys deposited in each Liquidity Support Fund shall be paid out on a pro rata basis, from time to time by the Master Trustee as follows: (a) If moneys are on deposit in the Project Fund under the Bond Indentures and all other available funds (including project contingency funds and immediately available insurance proceeds, if any) are insufficient to pay costs of the Project an Approved Change in Services or Facilities (as defined in the Liquidity Support Agreement) or additional construction costs and expenses arising from unanticipated events or problems including without limitation changes required pursuant to applicable law or requirements of governmental authorities (and not arising from a Discretionary Change (as defined in the Liquidity Support Agreement)), the Borrowers will deliver to the Master Trustee a written request for payment of funds required to pay those costs of the Project. Upon receipt of the written request, the Master Trustee shall transfer moneys requested thereby from the Liquidity Support Funds to the Bond Trustee for deposit in the Project Funds under the Bond Indentures but only if they are to pay those costs of the Project. Notwithstanding the foregoing, no moneys in the Liquidity Support Funds shall be used to pay interest on the Series 2010 Bonds until all moneys in the Special Interest Accounts of Interest Funds under the Bond Indentures are exhausted. (b) If at any time (i) the Borrowers need money for payment of any expenses that (A) would have been payable from the Working Capital Fund or the Operating Reserve Fund under the Master Indenture and (B) are either (1) consistent with the level of services described in the form of Residency Agreement as of the Closing Date, (2) the result of an Approved Change in Services or Facilities, or (3) required pursuant to applicable law or requirements of governmental authorities (which expenses may include without limitation interest payments on the Series 2010 Obligations), and (ii) no moneys are on deposit in the Working Capital Fund and the Operating Reserve Fund held under the Master Indenture (other than amounts on deposit therein previously committed to pay such costs and expenses), then the Borrowers will deliver a Written Request to the Master Trustee to transfer moneys from the Liquidity Support Funds to the Borrowers for the payment of any such expenses (other than Management Fees to an Affiliate, as those terms are used in the Master Indenture). Upon receipt of any such Written Request, the Master Trustee shall make such transfer, but only so long as the total amount remaining in the Liquidity Support Funds after that transfer is not less than $1,000,000. Notwithstanding the foregoing, no moneys in the Liquidity Support Funds shall be used to pay interest on the Series 2010 Bonds until all moneys in the Special Interest Accounts of the Interest Funds under the Bond Indentures are exhausted. (c) If at any time (i) the total amount in the Liquidity Support Funds drops below $1,000,000 and (ii) no moneys are on deposit in the Working Capital Fund and the Operating Reserve Fund held under the Master Indenture, then the Master Trustee shall promptly, without further authorization or direction, transfer all remaining moneys in the Liquidity Support Funds to the Operating Reserve Fund under the Master Indenture (unless the Operating Reserve Fund has been closed in accordance with the Master Indenture, in which case no transfer shall be made pursuant to this subsection). -47-

90 General (d) If (i) the Borrowers need money for payment of any expenses that (A) would have been payable from the Working Capital Fund or the Operating Reserve Fund under the Master Indenture and (B) are either (i) consistent with the level of services described in the form of Residency Agreement as of the Closing Date, (ii) the result of an Approved Change in Services or Facilities, or (iii) required pursuant to applicable law or requirements of governmental authorities (which expenses may include without limitation interest payments on the Series 2010 Obligations), and (ii) the Entrance Fees Fund and the Operating Reserve Fund have been closed in accordance with the Master Indenture, then the Borrowers may deliver a Written Request to the Master Trustee to transfer moneys from the Liquidity Support Funds to the Borrowers for the payment of any such expenses (other than Management Fees to an Affiliate). Upon receipt of such a Written Request, the Master Trustee shall make such transfer. Notwithstanding the foregoing, no moneys in the Liquidity Support Funds shall be used to pay interest on the Series 2010 Bonds until all moneys in the Special Interest Accounts of the Interest Funds under the Bond Indentures are exhausted. (e) If funds held in an account in the Special Interest Accounts of the Interest Funds and the Bond Sinking Funds under the Bond Indentures are insufficient to pay the principal of or interest on a related series of Series 2010 Bonds as the same come due, then moneys in the Working Capital Fund, the Operating Reserve Fund and the Liquidity Support Funds (in that order) shall be used for that purpose before any moneys in the related Debt Service Reserve Fund held under the Bond Indentures are used. The Master Trustee shall transfer such funds to the Bond Trustee in accordance with the preceding sentence as needed for that purpose without further instructions from the Borrowers. The Master Trustee shall undertake at all times to monitor the amount in the Providence Liquidity Support Fund, the Special Liquidity Support Fund and the Supplemental Liquidity Support Fund. If the combined amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to the terms of the Master Indenture, then the Master Trustee shall transfer the remaining moneys in the Liquidity Support Funds to the Operating Reserve Fund. If there is an initial withdrawal from the Liquidity Support Funds, (i) within five days of the initial withdrawal, the Master Trustee shall notify each Required Information Recipient of the withdrawal and (ii) within 30 days of the initial withdrawal, the Obligated Group Agent shall submit an Officer s Certificate to each Required Information Recipient containing a management report setting forth (A) the expected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Project costs and debt service until management expects to achieve a Historical Debt Service Coverage Ratio of 1.0, (B) whether management expects that the Liquidity Support Funds, together with other moneys expected to be available, will be sufficient for that purpose, (C) a revised fill-up schedule for the Project, and (D) the expected schedule for the redemption of the Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds. If funds in the Liquidity Support Funds are transferred to the Operating Reserve Fund pursuant to the terms of the Master Indenture, (i) within five days of that transfer, the Master Trustee shall notify each Required Information Recipient of the transfer and (ii) the Obligated Group Agent shall engage a Consultant to make recommendations regarding (A) an overall corrective action plan, (B) the projected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Project costs and debt service until the Obligated Group is projected to achieve a Historical Debt Service Coverage Ratio of 1.0, (C) a revised fill-up schedule for the Series 2010 Project, (D) a plan for the payment of the Series 2010E Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series -48-

91 2010D-1 Bonds, the Series 2010C Bonds and the Series 2010B Bonds, (E) a plan to improve the profitability of the Obligated Group and (F) a recommendation regarding additional sources of working capital. The Obligated Group Agent shall select a Consultant and notify the Master Trustee of the selection within 30 days after the transfer and shall thereafter engage the Consultant in accordance with the terms of the Master Indenture described above under SECURITY FOR THE SERIES 2010 OBLIGATIONS Certain Covenants of the Borrowers and any Future Member of the Obligated Group Approval of Consultants. The Obligated Group shall not be required to obtain a Consultant s report more than one time in any six-month period. Investment Moneys held in the Liquidity Support Funds shall, pursuant to written direction of the Liquidity Provider be invested and reinvested by the Master Trustee in accordance with the provisions thereof in Permitted Investments (as defined in the Master Indenture). The interest earned on and any profit realized from Permitted Investments held in each Liquidity Support Fund shall be deposited into such Liquidity Support Fund. Any loss resulting from such Permitted Investments shall be charged to such account. Permitted Investments held in the Liquidity Support Funds shall be valued as of April 15 and October 15 in each Fiscal Year, at the time of any withdrawal from the Liquidity Support Funds, at the time of any reduction of the Support Obligation, and with respect to the Providence Liquidity Support Fund only, upon the substitution of any Permitted Investment by the Liquidity Provider, and at such other times as the Master Trustee deems appropriate and at any other time requested by the Liquidity Provider. If on any valuation date, the amount on deposit in a Liquidity Support Fund is less than the applicable Support Obligation less any amounts drawn on the applicable Support Obligation plus any amounts by which such Liquidity Support Fund has been replenished from the Entrance Fees Fund, the Master Trustee shall immediately notify the Liquidity Provider of such deficiency, and the Liquidity Provider shall make up such deficiency by making payments directly to the Master Trustee for deposit in the Liquidity Support Fund. Investment income on the amounts on deposit in the Providence Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the Providence Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the Providence Liquidity Support Fund in excess of the Providence Support Obligation shall be transferred to the Provider. Investments of funds on deposit in the Special Liquidity Support Fund and the Supplemental Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the related Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the Special Liquidity Support Fund in excess of the Special Support Obligation shall be retained in the Special Liquidity Support Fund until such excess is paid annually to GDS after the October 15 valuation and any amounts on deposit in the Supplemental Liquidity Support Fund shall be transferred to the Corporation. Subordination Provisions The Liquidity Provider and the Corporation covenant and agree as follows: (a) The Borrowers obligation to repay any Liquidity Support Payments made under the Liquidity Support Agreement (the Repayment Obligations ) will constitute Subordinated Indebtedness of the Borrowers, as defined in the Master Indenture, and as such the Borrowers Repayment Obligations are subject to the following provisions. -49-

92 (1) The Borrowers Repayment Obligations shall, to the extent and in the manner hereinafter described, be subordinated and subject in right to the prior payment in full of Superior Indebtedness. The term Superior Indebtedness shall mean all Obligations now or hereafter issued and secured under the Master Indenture, as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified. (2) No payment on the Borrowers Repayment Obligations shall be made by the Borrowers, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the Borrowers Repayment Obligations, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness is made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on the Borrowers Repayment Obligations shall be made, nor shall any property or assets be applied to the retirement of the Borrowers Repayment Obligations, if, at the time of such payment or application or immediately after giving effect thereto, (i) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (ii) there shall have occurred any other Event of Default with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is outstanding, permitting the Owners thereof to accelerate the maturity thereof and such Event of Default is not cured or waived or shall not have ceased to exist. (3) The Liquidity Provider may not accelerate the payment of the Borrowers Repayment Obligations. Upon any payment or distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding up or total or partial liquidation, reorganization or arrangement of any Member (as defined in the Master Indenture), whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon all Superior Indebtedness shall first be paid in full, or payment thereof provided for in accordance with the terms of such Superior Indebtedness, before any payment is made on account of the Borrowers Repayment Obligations, and upon any such dissolution or winding up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Liquidity Provider would be entitled, except for the provisions hereof, shall be paid by the Borrowers, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay all Superior Indebtedness in full, before any payment or distribution is made to the Liquidity Provider with respect to the Borrowers Repayment Obligations. (4) In the event that, in violation of any of the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Liquidity Provider before all Superior Indebtedness is paid in full, or provision made for such payment in accordance with the terms of such Superior Indebtedness, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to the Master Trustee for application to the payment of all Superior Indebtedness remaining unpaid to the extent necessary to pay all such Superior Indebtedness in full in accordance with its terms. (5) No present or future Owner of Superior Indebtedness shall be prejudiced in his right to enforce subordination of the Borrowers Repayment Obligations by any act or failure to act on the part of any Member or anyone in custody of its assets or property. -50-

93 (6) The foregoing described subordination provisions are for the benefit of the Owners of Superior Indebtedness and may be enforced by the Master Trustee against the Liquidity Provider, as applicable; provided, however: (i) that the foregoing described provisions are solely for the purpose of defining the relative rights of the Owners of Superior Indebtedness on the one hand and the Liquidity Provider, as applicable on the other hand, and that nothing herein shall impair, as between the Members and the Liquidity Provider, as applicable, the obligation of the Members, which is unconditional and absolute, to pay to the Liquidity Provider, as applicable in accordance with the terms of the Support Agreement, nor shall anything herein prevent the Liquidity Provider, as applicable, from exercising all remedies otherwise permitted by applicable law or hereunder upon default under the Liquidity Support Agreement, subject to the rights set forth above of the Owners of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Liquidity Provider, as applicable, (ii) that upon any payment or distribution of assets of any Member of the character referred to in the paragraph (4) of the foregoing described provisions, the Liquidity Provider, as applicable, shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation, reorganization or arrangement proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or distribution, delivered to the Liquidity Provider, as applicable, for the purpose of ascertaining the persons entitled to participate in such distribution, the Owners of Superior Indebtedness and other indebtedness of such Member, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to the foregoing provisions, and (iii) that the Liquidity Provider, as applicable shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to the Liquidity Provider, as applicable, unless and until the Liquidity Provider, as applicable, shall have received written notice thereof from any Member or from one or more Owners of Superior Indebtedness, or from the Master Trustee. (b) In addition to the foregoing and in accordance with the Master Indenture, the Borrowers will not make payments on the Borrowers Repayment Obligations unless the Borrowers deliver an Officer s Certificate to the Master Trustee prior to any payment on the Borrowers Repayment Obligations that contains the certifications required by the Master Indenture. (c) Notwithstanding the foregoing, no distributions of moneys to the Liquidity Provider, as applicable by the Master Trustee pursuant to the terms of the Liquidity Support Agreement (other than distributions of earnings on amounts held in the Providence Liquidity Support Fund) shall constitute a violation under the Liquidity Support Agreement. (d) Notwithstanding the foregoing, no deposit in a Liquidity Support Fund from the Entrance Fees Fund held by the Master Trustee under the Master Indenture shall constitute a violation under the Liquidity Support Agreement. The Master Indenture provides that the Borrowers shall not make any principal or interest payment on Affiliate Related Subordinated Debt (except for repayments to the Liquidity Provider from the Entrance Fees Fund as described above) unless all of the following conditions have been satisfied. The Borrowers shall evidence satisfaction of the following conditions by delivering to the Master Trustee an Officer s certificate of a duly authorized officer of the Borrower certifying that: -51-

94 (a) The Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds are no longer Outstanding; (b) Project; There have been two full fiscal quarters of Stable Occupancy with respect to the (c) If the proposed payment on the Affiliate Related Subordinated Indebtedness had occurred as of the last day of the most recent fiscal quarter for which financial statements have been delivered under the Master Indenture, the Obligated Group would have had a Cash to Debt Ratio of at least 0.30 after that payment; (d) If the proposed payment on the Subordinated Indebtedness had occurred as of the last day of the most recent Fiscal Year for which audited financial statements of the Obligated Group are available, Obligated Group would have had a Historical Debt Service Coverage Ratio for that Fiscal Year of at least 1.30 after that payment; and (e) There is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under the Master Indenture or the Loan Agreements. Amendments and Waivers (a) Except as described subparagraph (b) below, the Master Trustee, the Bond Trustee, the Liquidity Provider and the Borrowers may amend or modify the Liquidity Support Agreement, or any provision hereof, or may consent to the amendment or modification thereof, in any manner not inconsistent with the terms and provisions of the Liquidity Support Agreement, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect in the Liquidity Support Agreement; (b) to grant to or confer upon the Master Trustee or the Bond Trustee, for the benefit of the owners of the Series 2010 Obligations and the Series 2010 Bonds, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Bond Trustee or the Master Trustee; (c) to amend or modify the Liquidity Support Agreement, or any part thereof, in any manner specifically required or permitted by the terms hereof, including, without limitation, as may be necessary to maintain the exclusion from gross income for purposes of federal income taxation of the interest on the Tax-Exempt Series 2010 Bonds; (d) to modify, amend or supplement the Liquidity Support Agreement, or any part thereof, or any supplement thereto, in such manner as the Master Trustee, the Bond Trustee and the Borrowers deem necessary in order to comply with any statute, regulation, judicial decision or other law; (e) to provide for the appointment of a successor Bond Trustee as provided in the Bond Indentures or a successor Master Trustee as provided in the Master Indenture and (f) to make any other change which does not, in the opinion of the Bond Trustee, have a material adverse effect upon the interests of the Bondholders. (b) Other than the amendments described in subparagraph (a) above, the Borrowers shall submit a copy of any proposed amendment to GDS, the Master Trustee and the Bond Trustee. As soon as practicable but in no case longer than five Business Days after receipt of such proposed amendment, the Master Trustee or the Bond Trustee, as applicable, shall send notice of such proposed amendments to the Required Information Recipients (as such term is defined in the Master Indenture) and the owners of all of the Series 2010 Bonds outstanding. Such notice shall (i) include a summary of the proposed amendments and information describing how the Required Information Recipients and Bondholders may obtain a copy of the proposed amendment and the Liquidity Support Agreement and (ii) state that each owner of the Series 2010 Bonds will be deemed to have consented to the proposed amendment unless such owner submits an objection to the proposed amendment in writing to the Bond Trustee within 15 days of the date that the notice is sent to the owners of the Series 2010 Bonds. No later than two Business Days after the end of the 15-day objection period, the Bond Trustee shall notify the Master Trustee, the -52-

95 Liquidity Provider, GDS and the Borrowers of the number of objections. If the owners of more than twothirds in aggregate principal amount of the Series 2010 Bonds have been deemed to have consented to the proposed amendment or have not responded to the request for consent, the amendment shall become effective. If the owners of more than one-third in aggregate principal amount of the outstanding Series 2010 Bonds have objected to the proposed amendment, the amendment shall not become effective. PRIORITY OF DRAWINGS FROM VARIOUS FUNDS The following diagrams illustrate the priorities of drawings from the Working Capital Fund, Operating Reserve Fund, Debt Service Reserve Fund and under the Liquidity Support Agreement. Expected Priority of Draws Upon Various Reserves and Funds (In the Event of a Funding Shortfall) Priority of Draws on These Funds: Comments 1st 2nd Working Capital Fund Draw it down until the balance is fully depleted, no replenishment permitted Operating Reserve Fund Draw down the initial $5.0 million, plus $5.0 million replenishment, if necessary. Additional replenishment will begin only when the balance of the Liquidity Support Funds reaches $1 million (see below) 3rd Liquidity Support Funds Once the balance in the Liquidity Support Draw down funds in the Liquidity Support Funds provided by the Liquidity Provider and the Corporation in the following order: (1) Supplemental Liquidity Support Fund and (2) on a pro rata basis Providence Liquidity Support Fund and Special Liquidity Support Fund Funds is equal to $1.0 million or less, the remaining funds in the Liquidity Support Funds are transferred to the Operating Reserve Fund. At this point, Entrance Fees will be used on a monthly basis to insure that the balance in the Operating Reserve Fund is at least $1.0 million. 4th Operating Reserve Fund Draw on the Operating Reserve Fund as Maintained at a minimum $1.0 million balance on a necessary to the extent funds are monthly basis (replenished with Entrance Fees) available. 5th Debt Service Reserve Funds To be drawn upon only if the funds above are fully depleted, and only to pay debt service Note: The chart above relates to the period after the Project has opened. Prior to opening of the Project, the Liquidity Support Funds are available but only after all other funding sources have been depleted, including the Project Fund including all contingency funds. If the Liquidity Support Funds are drawn upon prior to opening of the Project for this purpose, Entrance Fees can be used to replenish the Liquidity Support Funds after opening, as shown in the preceding diagram. Such reimbursement would occur after the Working Capital Fund is funded and the Operating Reserve Fund is funded but before any of the redemptions of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds or the Series 2010E Bonds. -53-

96 THE AUTHORITY Description of the Authority The Authority is a body politic and corporate of the State of Illinois (the State ). The Authority was created under the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq., as supplemented and amended (the Act ), which consolidates seven of the State s previously existing financing authorities (the Predecessor Authorities ), including the Illinois Health Facilities Authority. All bonds, notes or other evidences of indebtedness of the Predecessor Authorities were assumed by the Authority effective January 1, Under the Act, the Authority may not have outstanding at any one time bonds for any of its corporate purposes in an aggregate principal amount exceeding $28,150,000,000, excluding bonds issued to refund the bonds of the Authority or bonds of the Predecessor Authorities. Pursuant to the Act, the Authority is governed by a 15-member board appointed by the Governor of the State of Illinois with the advice and consent of the State Senate. Presently, fourteen members have been duly appointed and one vacancy exists. The members receive no compensation for the performance of their duties but are entitled to reimbursement for all necessary expenses incurred in connection with the performance of such duties. The offices of the Authority are located at Two Prudential Plaza, 180 North Stetson Avenue, Suite 2555, Chicago, Illinois and its telephone number is (312) Bonds of the Authority The Authority may from time to time issue bonds as provided in the Act for the purposes set forth in the Act. Any bonds issued by the Authority (and any interest thereon) shall not be or become an indebtedness or obligation, general or moral, of the State or any political subdivision thereof nor be or become a pledge of the full faith and credit of the State or any political subdivision thereof, other than the Authority. The Series 2010 Bonds of the Authority as described herein are limited obligations of the Authority payable solely from the specific sources and revenues of the Authority specified in the Resolution and Indenture authorizing the issuance of such bonds. No Owner of any Series 2010 Bond shall have the right to compel any taxing power of the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any or interest on the Series 2010 Bonds, and the Authority has no taxing power. The Authority makes no warranty or representation, whether express or implied, with respect to the Project or the location, operation, design, workmanship, merchantability, fitness, suitability or use for a particular purpose, condition or durability thereof. Further, the Authority has not prepared any material for inclusion in this Official Statement, except that material under the headings THE AUTHORITY and LITIGATION The Authority. The distribution of this Official Statement has been duly approved and authorized by the Authority. Such approval and authorization does not, however, constitute a representation or approval by the Authority of the accuracy or sufficiency of any information contained herein except to the extent of the material under the headings referenced in this paragraph. Members of the Authority Pursuant to the Act, the Authority is to consist of fifteen members appointed by the Governor of the State of Illinois with the advice and consent of the State Senate. Presently, fourteen members have been duly appointed and one vacancy exists. The members receive no compensation for the performance of their duties but are entitled to reimbursement for all necessary expenses incurred in connection with the performance of such duties. The Act provides that no member, officer, agent or employee of the Authority may be an officer or director or, directly or indirectly, have a specified ownership interest in any person, association, trust, corporation, partnership or other entity that is, directly or indirectly, a party to a contract or agreement upon which such member, officer, agent or employee may be called upon to act -54-

97 or vote. No member serves as a director or officer of the Community, the Borrowers or any affiliate thereof or of the Underwriter. Authority Advisors Scott Balice Strategies, LLC serves as senior financial advisor to the Authority. Additionally, certain legal matters with respect to the Series 2010 Bonds will be passed upon for the Authority by its special counsel Schiff Hardin LLP. ILLINOIS HEALTH FACILITIES PLANNING ACT The Illinois Health Facilities Planning Act, as amended (the Planning Act ), has among its purposes the establishment of procedures designed to reverse the trends of increasing costs of health care resulting from unnecessary construction or modification of health care facilities, the orderly and economical development of health care facilities in the State, the avoidance of unnecessary duplication of such facilities and the promotion of planning for and development of such facilities. Pursuant to the Planning Act and the accompanying regulations, no health care facility (which, as defined in the Planning Act, includes hospitals, nursing homes and certain other facilities) may initiate a project that (i) requires a capital expenditure in excess of the capital expenditure minimum, or (ii) substantially changes the scope or functional operation of a health care facility, or (iii) results in the establishment or discontinuation of a health care facility, or (iv) increases or decreases the number of beds or redistributes the bed capacity among various categories of service or physical facilities by more than 20 beds or by more than 10% of the total bed capacity, whichever is less, over a two-year period, or (v) establishes or discontinues a regulated category of service, or (vi) involves the change of ownership of a health care facility unless an exemption has been granted by the Illinois Health Facilities and Services Review Board (the Review Board ), the issuance of which is governed by the provisions of the Planning Act. The Review Board, in consultation with the Illinois Department of Public Health, drafts rules, regulations, standards and criteria required to carry out the provisions and purposes of the Planning Act, which are subject to approval by the State Joint Committee on Administrative Rules. The Planning Act establishes capital expenditure minimum thresholds for projects applied for by (i) hospitals, (ii) skilled and intermediate care long-term care facilities under the Illinois Nursing Home Care Act, and (iii) all other applicants, to be adjusted annually for inflation. Projects exceeding these capital expenditure minimum thresholds require a CON issued by the Review Board. Effective July 1, 2009, these thresholds are set at $11,500,000, $6,500,000 and $3,000,000 respectively. The Corporation has received a Certificate of Need under the Planning Act for 37 nursing beds in its proposed Health Center. See APPENDIX A REGULATIONS, PERMITS AND APPROVALS for more information. RISK FACTORS Set forth below are certain risk factors which should be considered before any investment in the Series 2010 Bonds is made. These risk factors should not be considered definitive or exhaustive. General As described herein under the caption, INTRODUCTION Security for the Series 2010 Bonds, the principal of, premium, if any, purchase price of, and interest on the Series 2010 Bonds, except to the extent that the Series 2010 Bonds will be payable from the proceeds thereof or investment income thereon, under certain circumstances, proceeds of insurance, sale or condemnation awards or net -55-

98 amounts by recourse to the Mortgage, are payable solely from amounts payable by the Borrowers under the Loan Agreements or the Borrowers and any future Member of the Obligated Group under the Master Indenture. No representation or assurance is given or can be made that revenues will be realized by the Borrowers and any future Member of the Obligated Group in amounts sufficient to pay debt service on the Series 2010 Bonds when due and other payments necessary to meet the obligations of the Borrowers. The bondholders risks discussed below should be considered in evaluating the ability of the Borrowers, to make payments in amounts sufficient to provide for the payment of the principal of, the premium, if any, and interest on the Series 2010 Bonds. The receipt of future revenues by the Borrowers and any future Member of the Obligated Group will be subject to, among other factors, federal and state policies affecting the senior housing and health care industries (including changes in reimbursement rates and policies), increased competition from other senior housing and health care providers, the capability of the management of the Borrowers and any future Member of the Obligated Group and future economic and other conditions that are impossible to predict. The extent of the ability of the Borrowers and any future Member of the Obligated Group to generate future revenues has a direct effect upon the payment of, principal of, premium, if any, and interest on the Series 2010 Bonds. Neither the Underwriter nor the Authority has made any independent investigation of the extent to which any such factors may have an adverse effect on the revenues of the Borrowers and any future Member of the Obligated Group. Impact of Market Turmoil The current economic turmoil has had and will continue to have negative repercussions upon the United States and global economies. To date, this turmoil has particularly impacted the financial sector, prompting a number of banks and other financial institutions to seek additional capital, to merge, and, in some cases, to cease operating. These events collectively have led to a scarcity of credit, lack of confidence in the financial sector, volatility in the financial markets, fluctuations in interest rates, reduced economic activity, increased business failures and increased consumer and business bankruptcies. In addition, as investor confidence has waned, investments previously recognized as stable, such as taxexempt money market funds (which are one of the largest purchasers of tax-exempt bonds), have experienced significant withdrawals. This could affect the market and demand for the Series 2010 Bonds. In addition, the general market disruption has affected and could continue to adversely affect the value of any investments the Borrower and the Liquidity Support Providers may have. The current credit market conditions will cause the Borrowers ability to borrow to fund capital expenditures to be more limited and more expensive. The credit market situation has also caused a number of financial institutions to restrict lending, including the extension of liquidity and credit facilities. This has also resulted in the unwillingness of financial institutions to extend the term of existing liquidity facilities or credit facilities. Sale of Personal Residences It is anticipated that a number of prospective residents of the Community and the Project will be required to sell their current homes to pay the entrance fee prior to occupancy or to meet other financial obligations under their residency agreements. If prospective residents encounter difficulties in selling their current homes due to local or national economic conditions affecting the sale of residential real estate, such prospective residents may not have sufficient funds to pay the entrance fee or to meet other financial obligations under their residency agreements, thereby causing a delay in remarketing of vacated units which would have an adverse impact on the revenues of the Borrowers. -56-

99 Changes in Members of the Obligated Group The Borrowers are the initial Members of the Obligated Group. Upon satisfaction of certain conditions in the Master Indenture, other corporations can become members of the Obligated Group or certain members of the Obligated Group can exit. See APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Entrance into the Obligated Group. Management of the Borrowers currently has no plans to add additional members to the Obligated Group. However, if and when new members are added, the Obligated Group s financial situation and operations will likely be altered from that of the Borrowers alone. Feasibility Study The financial forecast contained in the Feasibility Study included in APPENDIX B hereto is based upon assumptions made by the management of the Borrowers. As stated in the Feasibility Study, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. In addition, the financial forecast is only for the six years ending December 31, 2015 and consequently does not cover the whole period during which the Series 2010 Bonds may be outstanding. See the Feasibility Study included herein as APPENDIX B, which should be read in its entirety, including management s notes and assumptions as set forth therein. BECAUSE THERE IS NO ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND WITH THE ASSUMPTIONS MADE, NO GUARANTEE CAN BE MADE THAT THE FINANCIAL FORECAST IN THE FEASIBILITY STUDY WILL CORRESPOND WITH THE RESULTS ACTUALLY ACHIEVED IN THE FUTURE. ACTUAL OPERATING RESULTS MAY BE AFFECTED BY MANY UNCONTROLLABLE FACTORS, INCLUDING BUT NOT LIMITED TO INCREASED COSTS, LOWER THAN ANTICIPATED REVENUES, EMPLOYEE RELATIONS, TAXES, GOVERNMENTAL CONTROLS, CHANGES IN APPLICABLE GOVERNMENTAL REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, CHANGES IN THE RETIREMENT LIVING AND HEALTH CARE INDUSTRIES, AND GENERAL ECONOMIC CONDITIONS. Purchase of Series 2010C Bonds The registered owners of Series 2010C Bonds have the option to tender their Series 2010C Bonds, as appropriate, to the Bond Trustee for purchase on each Optional Tender Date. The only sources of moneys available to make payments of the purchase price of the Series 2010C Bonds, as appropriate, on each Optional Tender Date are (i) the proceeds of the remarketing thereof, (ii) moneys required to be deposited in the Purchase Fund by the Borrowers pursuant to the Tax-Exempt Loan Agreement will be applied to purchase the Series 2010C Bonds to the extent that such deposit shall not reduce the Cash and Investments of the Obligated Group below the amount necessary to permit the Obligated Group to meet the Liquidity Requirement set forth in the Master Indenture plus an additional 20 Days Cash on Hand, and (iii) any additional amounts deposited into the Purchase Fund by the Borrowers, at its sole option, from any available moneys of the Borrowers. Therefore, if any of the Series 2010C Bonds tendered on any Optional Tender Date are not remarketed at par, the Tender Agent may not have available funds with which to purchase such Series 2010C Bonds. In the event sufficient funds are not available, the registered owners of the tendered but unpurchased Series 2010C Bonds will be required to retain their Series 2010C Bonds, as appropriate, at the new interest rate determined by the Remarketing Agent. THERE CAN BE NO ASSURANCE THAT SUFFICIENT FUNDS WILL BE AVAILABLE TO PURCHASE ANY OR ALL SERIES 2010C BONDS TENDERED FOR PURCHASE ON ANY OPTIONAL TENDER DATE. Failure to purchase Series 2010C Bonds tendered for purchase on any Optional Tender Date does not constitute an event of default under the Tax-Exempt Bond Indenture, the Taxable Bond Indenture, the Tax-Exempt Loan Agreement or the Taxable Loan Agreement. See THE SERIES 2010C BONDS -57-

100 Adjustable Long-Term Mode Optional Tender during Adjustable Long-Term Mode herein. In addition, there can be no assurance that any Reset Rate with respect to some or all the Series 2010C Bonds will not cause a material burden on the financial condition of the Borrowers. Construction Risks There can be no assurances given that the Project will be completed, or that it can be completed for the cost and within the time as set forth in this Official Statement. Failure to complete the Project, or to complete it in a timely fashion at the estimated cost could adversely affect the ability of the Borrowers to generate sufficient revenues to continue its planned operations and to make payments with respect to the Bonds. For example, the plan of finance assumes that Entrance Fees payable on or before initial occupancy of the Project by individual residents will be used to fund the Operating Reserve Fund and the Working Capital Fund and to redeem Series 2010E Bonds, Series 2010D Bonds, Series 2010C Bonds and Series 2010B Bonds. If the completion of the Project is delayed, the receipt of Entrance Fees necessary for such purposes, as well as the receipt of monthly service fees necessary to fund operations, may be adversely impacted. Whether or not the Project will be completed on schedule depends upon a large number of factors, many of which may be beyond the control of the Borrowers. These include, but are not limited to, adverse weather, strikes, delays in the delivery of or shortages of materials, delays in the issuance of required building permits, environmental restrictions or similar unknown or unforeseeable contingencies. Further, although construction work will be inspected periodically by the Construction Consultant, there can be no assurance that the Project will conform to construction specifications or state or local regulations. The occurrence of any of the foregoing could result in increases in construction costs or considerable delays in, or complete impossibility of, completion of the Project, resulting in a failure to achieve anticipated operating results. Construction costs could exceed the amounts originally forecast due to a number of factors. See THE LIQUIDITY SUPPORT AGREEMENT above with respect to certain situations where the Borrowers can access certain funds to cover any increased construction costs. Construction of the Project is subject to the usual risks associated with construction projects, including, but not limited to, delays in issuance of required building permits or other necessary approvals or permits, strikes, shortages of materials and adverse weather conditions. Such events could result in delaying occupancy of the Project and thus the Entrance Fees and other revenue flow therefrom. Management of the Borrowers anticipate that the building permits will be obtained in due course. See APPENDIX A REGULATIONS, PERMITS AND APPROVALS. It is anticipated that the proceeds from the sale of the Series 2010 Bonds, together with anticipated investment earnings thereon and certain funds of the Borrowers, will be sufficient to complete the construction and equipping of the Project based upon the fixed price obtained from the construction manager for the Project. However, cost overruns for projects of this magnitude may occur due to change orders and other factors. In addition, the date of substantial completion may be extended by reason of changes authorized by the Borrowers, delays due to acts or neglect of the Borrowers or by independent contractors employed by the Borrowers or by labor disputes, fire, unusual delay in transportation, adverse conditions not reasonably anticipated, unavoidable casualties or any causes beyond the control of the contractors. Cost overruns could also result in the Borrowers not having sufficient moneys to complete construction of the Project, thereby materially affecting the receipt of revenues needed to pay debt service on the Series 2010 Bonds. Construction Consultant Approval of Construction Draws The ability of the Borrowers to receive disbursements from the Project Fund held under the Bond Indenture is subject to compliance by the Borrowers with various requirements of the Construction Disbursement and Monitoring Agreement by and among the Borrowers, the Construction Consultant and the Master Trustee. If the conditions to receipt of disbursements are not met, the Construction Consultant -58-

101 may temporarily suspend certain items within a construction draw or the entire construction draw. A temporary suspension of funding might cause delay in completion and related cost overruns. Proceeds remaining in the Project Funds together with other funds held under the Bond Indentures may not be sufficient to pay the principal of the Series 2010 Bonds upon acceleration. Adequacy of Remedies There can be no assurance that upon an acceleration the amount of money or foreclosure receipts available will be adequate to repay the Obligated Group s Indebtedness. Furthermore, whatever is realized will be distributed pro rata to all holders of Indebtedness under the Master Indenture. Development and Management The successful development and operation of the Community is heavily dependent upon the efforts of PM&D (the Manager and Developer ) and Greystone Development Company II, LP (the Development Consultant ). The Corporation has contracted for development services with the Developer and Development Consultant and for management services with the Manager for the day-today management and operation of the Community. The Corporation does not currently have the capacity to duplicate the services offered by the Developer, Development Consultant and the Manager. If the Corporation were to terminate its relationships with the Developer, Development Consultant or the Manager, it would need to hire and train a development and/or management team for the Community or contract for similar services at equivalent rates with other companies. For more information, see APPENDIX A DEVELOPMENT OF THE COMMUNITY and MANAGEMENT OF THE COMMUNITY. Application of Amounts on Deposit in Project Funds Except as described in the next sentence, if the principal of and interest on the Series 2010 Bonds become due or are declared due and payable but are not paid, the Bond Indentures require that all moneys in the funds maintained by the applicable Bond Trustee be applied (i) to the payment of the amounts, if any, payable pursuant to the Tax Exemption Agreement (as hereinafter defined) and (ii) to the payment of interest and principal then due on the related Series 2010 Bonds. However, the moneys held in the Project Funds created under the Bond Indentures are required to be retained in the Project Funds and held by the Bond Trustees to be used to pay the costs of the Project except to the extent required to be transferred to the rebate fund in accordance with the Tax Exemption Agreement. See SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indenture Application of Moneys and Summary of Certain Provisions of the Series 2010E Bond Indenture Application of Moneys in APPENDIX C. Uncertainty of Revenues The Corporation is a development stage company and has not previously built or operated a project. Additionally, the Corporation has no assets other than the Project and is not expected to have any revenues except those derived from operations of the Project. As noted elsewhere, except to the extent that the Series 2010 Bonds will be payable from the proceeds thereof or investment income thereon or, under certain circumstances, proceeds of insurance, sale or condemnation awards, each series of the Series 2010 Bonds will be payable solely from payments or prepayments to be made by the Borrowers under the Loan Agreements and by the Borrowers and any future Member of the Obligated Group on the related Series 2010 Obligation. The ability of the Borrowers to make payments under the Loan Agreements and the Series 2010 Obligations is dependent upon the generation by the Borrowers of revenues in the amounts necessary for the Borrowers to pay the principal, premium or purchase price, if any, and interest on the Series 2010 Bonds, as well as other -59-

102 operating and capital expenses. The realization of future revenues and expenses are subject to, among other things, the capabilities of the management of the Borrowers and by the Borrowers and any future Member of the Obligated Group, government regulation and future economic and other conditions that are unpredictable and that may affect revenues and payment of principal of and interest on the Series 2010 Bonds. No representation or assurance can be made that revenues will be realized by the Borrowers and any future Member of the Obligated Group in amounts sufficient to make the required payments with respect to debt service on the Series 2010 Bonds. Failure to Achieve or Maintain Turnover or Occupancy The economic feasibility of the Project depends in large part upon the ability of the Corporation to initially attract sufficient numbers of residents to the Project and to achieve and maintain substantial occupancy throughout the term of the Series 2010 Bonds. This depends to some extent on factors outside management s control, such as the residents right to terminate their residency agreements, subject to the conditions provided in the residency agreements. Moreover, if a substantial number of residents live beyond the anticipated life expectancies assumed by the Corporation or if the permanent transfers to the nursing component of the Community are substantially less than assumed by the Corporation as the nursing beds are filled only from independent living residents, or if market changes require a reduction in the amount of the Entrance Fees payable by new residents, the receipt of additional Entrance Fees would be curtailed, with a consequent impairment of the revenues of the Project. Such impairment would also result if the Corporation is unable to remarket units becoming available when residents die, withdraw, or are permanently transferred to a health care facility or any other facility. If the Project fails to maintain occupancy levels as management forecasted in the Feasibility Study, there may be insufficient funds to pay the debt service on the Series 2010 Bonds. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B FINANCIAL FEASIBILITY STUDY hereto. Utilization Demand Several factors could, if implemented, affect demand for services of the Community including: (i) efforts by insurers and governmental agencies to reduce utilization of nursing home and long-term care facilities by such means as preventive medicine and home health care programs; (ii) advances in scientific and medical technology; (iii) a decline in the population, a change in the age composition of the population or a decline in the economic conditions of the service area of the Project; and (iv) increased or more effective competition from nursing home, assisted living facilities and long-term care facilities now or hereafter located in the service area of the Community. See Entrance Fee Communities Within the Primary Market Area, Rental Communities Within the Primary Market Area, Comparable Assisted Living Facilities Within the Health Care PMA and Comparable Nursing Facilities Within the Health Care PMA in APPENDIX B hereto. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. Competition The Corporation provides services in areas where other competitive facilities exist and may face additional competition in the future as a result of the construction or renovation of competitive facilities in the primary or secondary market area of the Corporation. There may also arise in the future competition from other continuing care facilities, some of which may offer similar facilities, but not necessarily similar services, at lower prices. See APPENDIX A and APPENDIX B. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. See APPENDIX B FINANCIAL FEASIBILITY STUDY hereto. -60-

103 Nature of Facilities The Community and the Project are not and will not be comprised of general purpose buildings and generally would not be suitable for industrial or commercial use. Consequently, it could be difficult to find a buyer or lessee for such facilities and, upon any default, the Master Trustee may not realize the amount of the outstanding Series 2010 Bonds or any other Additional Indebtedness outstanding from the sale or lease of such facilities if it were necessary to proceed against such facilities, pursuant to a judgment, if any, against the Corporation including in the event of foreclosure under the Mortgage. Further, the real property upon which the Community is located, and upon which the Project is to be located, is subject to certain covenants which run with the land, including a covenant that restricts any additions or alterations or change of use of the property unless a special use permit or approval of the City of Elmhurst, Illinois is obtained. Such covenants could also affect the value of the Community and the Project to any potential buyer or lessee. Malpractice Claims and Losses The operations of the Corporation may be affected by increases in the incidence of malpractice lawsuits against physicians, elder care facilities and care providers in general and by increases in the dollar amount of client damage recoveries. These may result in increased insurance premiums and an increased difficulty in obtaining malpractice insurance. It is not possible at this time to determine either the extent to which malpractice coverage will continue to be available to the Corporation or the premiums at which such coverage can be obtained. Rights of Residents The Corporation enters into residency agreements with its residents. For more information about the residency agreements, see APPENDIX A RESIDENCY AGREEMENT. Although these agreements give to each resident a contractual right to use space and not any ownership rights in the Community, in the event that a Bond Trustee or the holders of the Series 2010 Bonds seek to enforce any of the remedies provided by the Bond Indentures upon the occurrence of a default or the Master Trustee seeks to enforce remedies under the Mortgage or the Master Indenture, it is impossible to predict the resolution that a court might make of competing claims among the Master Trustee, the Bond Trustee, the Authority or the holders of the Series 2010 Bonds and a resident of the Community who has fully complied with all the terms and conditions of his or her Residency Agreement. Regulation As described under the heading APPENDIX A REGULATIONS, PERMITS AND APPROVALS, the Community is and will continue to be subject to certain governmental regulation. Illinois has enacted comprehensive legislation which regulates the Community. Such legislation is not expected to have a material adverse effect on operations at the Community or the Project. A portion of this regulation requires the Borrowers to maintain a debt service reserve escrow, which must be funded in an amount at least equal to aggregate principal and interest payments due during the next six months on account of any first mortgage or other long-term financing. If at any time the amount on deposit in any of the Debt Service Reserve Funds is less than the amount of principal and interest payable with respect to the respective Series 2010 Bonds during the succeeding six month period, the related Bond Trustee shall give notice of such event by first class mail, postage prepaid, to the Director of the Illinois Department of Public Health. For more information about the requirements of the Illinois Life Care Facilities Act, see APPENDIX A REGULATIONS, PERMITS AND APPROVALS. -61-

104 Management of the Borrowers intends that the respective Debt Service Reserve Funds for the Series 2010 Bonds will satisfy this regulatory requirement. See also APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indenture Funds; Disposition of Revenues 4. Debt Service Reserve Fund, and Summary of Certain Provisions of the Series 2010E Bond Indenture Funds; Disposition of Revenues 4. Debt Service Reserve Fund. Licensing Delay The timeline to achieve licensure for the Community s assisted living, memory support and nursing beds may be longer than expected and negatively impact occupancy levels and revenues of the Borrowers. In certain other similar projects completed by GDC, the timing associated with opening the assisted living, memory support or nursing beds exceeded the number of months assumed in the facility's financial forecast causing greater operating losses than had been forecast for such facility. Any delay in the licensing and full operation of the assisted living, memory support or nursing beds would result in losses in excess of those projected in the Feasibility Study in APPENDIX B. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. Medicare Certification The Corporation anticipates receiving certification to provide services that are reimbursed by Medicare in the Community s nursing facility. Any delay in receipt of or failure to receive Medicare certification may negatively impact revenues of the Corporation. The Corporation has made certain assumptions upon receipt of Medicare certification regarding reimbursement rates and the timeframe to receive reimbursement. A delay in receipt of reimbursement or a lower than anticipated reimbursement rate may negatively impact revenues of the Corporation. Present and Prospective Federal and State Regulation General. The operations of the Community, like other health care facilities throughout the country, will be affected on a day-to-day basis by numerous legislative, regulatory and industry-imposed operations and financial requirements which are administered by a variety of federal and state governmental agencies as well as by self-regulatory associations and commercial medical insurance reimbursement programs. It is impossible, however, to predict the effect of any such legislation and regulation on the operations or financial condition of the Corporation s facilities. Nursing care facilities, including those of the Corporation, are subject to numerous licensing, certification, accreditation, and other governmental requirements. These include, but are not limited to, requirements relating to Medicare participation and payment, requirements relating to state licensing agencies, private payors and accreditation organizations and certificate of need approval by state agencies of certain capital expenditures. Sheltered and assisted living facilities, including those of the Corporation, are also subject to licensing requirements. Renewal and continuance of certain of these licenses, certifications, approvals and accreditations are based upon inspections, surveys, audits, investigations or other review, some of which may require or include affirmative action or response by the Corporation. An adverse determination could result in a loss, fine or reduction in the Corporation s scope of licensure, certification or accreditation, could affect the ability to undertake certain expenditures or could reduce the payment received or require the repayment of the amounts previously remitted. The Corporation currently anticipate no difficulty obtaining the necessary licenses, certifications and accreditations. Third-Party Payment Programs. A portion of the net resident service revenues of the Corporation will be from third party payors that reimburse or pay for the services and items provided to residents covered by such third parties for such services, including the federal Medicare program, state Medicaid program and private health plans and insurers. These third-party payors may make payments to -62-

105 the Corporation at rates other than the direct charges of the Corporation, which rates may be determined other than on the basis of the actual costs incurred in providing services and items to residents. Accordingly, there can be no assurance that payments made under these programs will be adequate to cover the actual costs incurred by the Corporation in furnishing health care services and items. In addition, the financial performance of the Corporation could be adversely affected by the insolvency of, or other delay in receipt of payments from, third-party payors, which provide coverage for services to their residents. Changes to reimbursement rates or reimbursement methodologies in the future are likely to directly affect the Corporation and those effects could be material and adverse. Health Care Reform The Patient Protection and Affordable Care Act and The Health Care and Education Affordability Reconciliation Act of 2010 (together referred to herein as the Health Reform Act ) were signed into law by President Obama on March 23, 2010 and March 30, 2010, respectively and are expected to have a significant impact on the entire healthcare industry. Some of the provisions of the Health Reform Act have taken effect immediately and others will be phased in during a period of time ranging from one to ten years. New guidelines and regulations related to the Health Reform Act will likely be enacted. The Health Reform Act provides changes with respect to how consumers will pay for their own and their families health care and how employers will procure health insurance for their employees. In addition, the Health Reform Act requires insurers to change certain underwriting practices and benefit structures in order to cover individuals who previously would have been ineligible for health insurance coverage. As a result, there is expected to be a tremendous increase in the number of individuals eligible for health insurance coverage. The overall stated goal of the Health Reform Act is to provide access to health insurance coverage to an additional 32 million people. The legislation intends to accomplish this objective through various provisions, including: (i) creating active markets (referred to as exchanges) in which individuals and small employers can purchase health insurance for themselves and their families or their employees and dependents, (ii) providing subsidies for premium costs to individuals and families based upon their income relative to federal poverty levels, (iii) mandating that individuals obtain and certain employers provide a minimum level of health insurance, and providing for penalties or taxes on individuals and employers that do not comply with these mandates, (iv) establishing insurance reforms that expand coverage generally through such provisions as prohibitions on denials of coverage for pre-existing conditions and elimination of lifetime or annual cost caps, and (v) expanding existing public programs, including Medicaid, for individuals and families. It is expected that there will be an increase in demand for health care services as a result of the increase in people now eligible for health care coverage. Some of the specific provisions of the Health Reform Act that may affect the Corporation s operations, financial performance or the financial condition include the following. This listing is not, is not intended to be, nor should be considered to be comprehensive. With varying effective dates, the annual Medicare market basket updates for many providers, including skilled nursing, would be reduced, and adjustments to payment for expected productivity gains would be implemented. The Health Reform Act includes the Community Living Assistance Services and Supports (CLASS) Act, which creates a national, voluntary, long-term care insurance program to supplement Medicaid and private long-term care insurance, effective

106 With varying effective dates, the Health Reform Act mandates a reduction of waste, fraud, and abuse in public programs by allowing provider enrollment screening, enhanced oversight periods for new providers and suppliers, and enrollment moratoria in areas identified as being at elevated risk of fraud in all public programs, and by requiring Medicare and Medicaid program providers and suppliers to establish compliance programs. The legislation requires the development of a database to capture and share healthcare provider data across federal healthcare programs and also provides for increased penalties for fraud and abuse violations, and increased funding for anti-fraud activities. Commencing in 2014, an Independent Payment Advisory Board is to be established to develop proposals to improve the quality of care and limitations on cost increases. Those proposals would be automatically implemented if Congress does not act to invalidate them. The Health Reform Act provides for the implementation of various demonstration programs and pilot projects to test, evaluate, encourage and expand new payment structures and methodologies to reduce health care expenditures while maintaining or improving quality of care, including bundled payments under Medicare and Medicaid, and comparative effectiveness research programs that compare the clinical effectiveness of medical treatments and develop recommendations concerning practice guidelines and coverage determinations. Other provisions encourage the creation of new health care delivery programs, such as accountable care organizations, or combinations of provider organizations, that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. The outcomes of these projects and programs, including their effect on payments to providers and financial performance, cannot be predicted. In addition, many states, including Illinois, have enacted, or are considering enacting, measures designed to reduce their Medicaid expenditures and change private health care insurance. States have also adopted, or are considering, legislation designed to reduce coverage and program eligibility, enroll Medicaid recipients in managed care programs and/or impose additional taxes on hospitals to help finance or expand states Medicaid systems. This focus on health care reform may increase the likelihood of significant changes affecting the health care industry. Possible future changes in the Medicare, Medicaid, and other state programs, including Medicaid supplemental payments pursuant to upper payment limit programs, may reduce reimbursements to the Corporation and any future Members of the Obligated Group and may also increase their operating expenses. Medicare and Medicaid Programs Medicare and Medicaid are the commonly used names for reimbursement or payment programs governed by certain provisions of the federal Social Security Act. Medicare is an exclusively federal program and Medicaid is a combined federal and state program. Medicare provides certain health care benefits to beneficiaries who are 65 years of age or older, disabled or qualify for the End Stage Renal Disease Program. Medicare Part A covers inpatient services and certain other services, and Medicare Part B covers outpatient services, certain physician services, medical supplies and durable medical equipment. Medicare Part D provides a prescription drug benefit. Medicaid is designed to pay providers for care given to the medically indigent and others who receive federal aid. Medicaid is funded by federal and state appropriations and is administered by an agency of the applicable state. The Centers for Medicare & Medicaid Services ( CMS ), an agency of the United States Department of Health & Human Services ( HHS ), administers the Medicare Program and works with the states to administer the Medicaid Program, as well as other health care programs. The Corporation plans to participate in the Medicare program and may participate in the Medicaid program in the future. Certification under either -64-

107 program will subject the Corporation to various regulatory requirements relating thereto, including, without limitation, limits on reimbursement, anti-fraud and abuse provisions, restrictions on referrals, and various reporting requirements. The participation in any such programs could affect the Corporation s operation. Medicare. Medicare Audits. The Corporation and any future Member of the Obligated Group will receive payments for various services provided to Medicare beneficiaries based upon charges or other reimbursement methodologies, including prospective payment systems, which are then reconciled annually based upon the annual cost reports prepared by the Corporation and any future Member of the Obligated Group and submitted to Medicare. Estimates for the annual cost reports are reflected as amounts due to/from third- party payors and represent several years of open cost reports due to time delays in the fiscal intermediaries audits and the basic complexity of billing and reimbursement regulations. These estimates are adjusted periodically based upon correspondence received from the Medicare fiscal intermediary. Medicare regulations also provide for withholding Medicare payment in certain circumstances if it is determined that an overpayment of Medicare funds has been made. In addition, under certain circumstances, payments may be determined to have been made as a consequence of improper claims subject to the Federal False Claims Act or other federal statutes, subjecting the Corporation and any future Member of the Obligated Group to civil or criminal penalties or administrative sanctions. Management is not aware of any situation whereby a material Medicare payment is being withheld from the Corporation and any future Member of the Obligated Group. Skilled Nursing Care. Health care providers, including the Corporation and any future Member of the Obligated Group, may participate in the Medicare program subject to certain conditions of participation and acceptance of a provider agreement from the Secretary of the HHS. Only covered services, upon the satisfaction of certain criteria, are eligible for Medicare reimbursement. Medicare Part A reimburses for certain post-hospital inpatient skilled nursing and rehabilitation care for up to 100 days during the same spell of illness. For skilled nursing facilities ( SNFs ), the federal government has implemented a Prospective Payment System ( PPS ) for Medicare reimbursement, which utilizes prospective, case-mix adjusted per diem rates applicable to all covered SNF services. Reimbursement under PPS also incorporates adjustments to account for resident specific case-mix using the Resource Utilization Groups ( RUGs ) system. SNF PPS payment rates are adjusted annually based on the skilled nursing facility market basket index, or the cost of providing SNF services. For federal Fiscal Year 2007, SNFs are entitled to the full market basket increase of 3.1%, Future actions by the federal government relative to limiting or reducing the total amount of funds available under Medicare, or otherwise restructuring Medicare, may decrease or eliminate the amount of reimbursement available to the Borrowers. No assurance can be given as to the timing, nature or extent of any further changes. Medicaid. Medicaid (Title XIX of the federal Social Security Act) is a health insurance program for certain low-income and needy individuals that is jointly funded by the federal government and the states. The Illinois Department of Health and Family Services ( IHFS ), formerly known as the Illinois Department of Public Aid, is the designated agency for Illinois responsible for reimbursing health care providers that provide covered services to Medicaid eligible persons, in accordance with rates determined by the IHFS. Nursing Facility Services. The reimbursement system used by IHFS is a prospective payments system that sets rates for each facility for future periods with no retroactive reconciliation of rates paid to actual expenditures. Components of a facility s rate include: (a) support costs laundry, food, housekeeping, utility, and administrative expenses limited to actual allowable costs, of that facility, up -65-

108 to specified ceilings and allowing a profit for facilities that operate below the ceilings; (b) nursing and program costs a case mix reimbursement system is used to reimburse nursing and program costs based on the use of minimum data set assessments on each resident; (c) capital costs depreciation, rent, interest and property taxes per diem rates are determined through a blending of the uniform building value and the building specific historical cost per bed, subject to certain limitations. Property taxes are reimbursed as part of the capital costs but are determined separately and are not included in the uniform building value. As a result of budget constraints, Medicaid funding has been limited to levels below the funding that would have otherwise been calculated. The Corporation does not believe that this reduced Medicaid funding or delay in payment will materially adversely affect its financial condition. Regulation of Health Care Industry General. The health care industry is highly dependent on a number of factors which may limit the ability of the Borrowers and any future Member of the Obligated Group to meet their respective obligations under the Loan Agreements, the Master Indenture and the Series 2010 Obligations. Among other things, participants in the health care industry (such as the Corporation) are subject to significant regulatory requirements of federal, state and local governmental agencies and independent professional organizations and accrediting bodies, technological advances and changes in treatment modes, various competitive factors and changes in third party reimbursement programs. Discussed below are certain of these factors which could have a significant effect on the future operations and financial condition of the Borrowers. State Laws. States are increasingly regulating the delivery of health care services in response to the federal government s failure to adopt comprehensive health care reform measures. State legislatures have cited their right and obligation to regulate and oversee health care insurance and have enacted sweeping measures that aim to protect consumers and, in some cases, providers. Illinois Regulations Governing Assisted Living and Life Care Facilities. Independent living facilities require no licensure or certificate of need ( CON ) from any of the relevant Illinois state regulatory bodies. Because there is no licensure requirement for an independent living facility, there is no legal definition of an independent living facility. Such facilities tend to provide residential living accommodations, communal meals, housekeeping and concierge services. Independent living with supportive living services facilities neither offer nor arrange for assistance with daily living activities, health assessments or continuing or intermittent health care services. Illinois life care facilities require a permit from the Illinois Department of Public Health ( IDPH ). Residents must execute a life care contract to provide to a person for the duration of such person s life or for a term in excess of one (1) year, nursing services, medical services or personal care services, in addition to maintenance services. Illinois assisted living facilities, like independent living facilities, also tend to provide residential living accommodations, communal meals and concierge services. In addition, assisted living facilities usually offer or arrange for some personal care assistance, including bathing, dressing and ambulating. Assisted living facilities in Illinois are subject to licensure as described below. The Assisted Living and Shared Housing Act (the ALSH Act ) establishes a licensing and regulatory framework for assisted living establishments in Illinois. An assisted living establishment refers to a facility which provides sleeping accommodations for at least three unrelated adults, at least 80% of whom are 55 years of age or older, and where the following are provided: (1) services consistent with a social model based on the premise that the resident s unit in assisted living and shared housing is his or her own home; (2) community-based residential care for persons who need assistance with -66-

109 activities of daily living ( ADL ); (3) mandatory services; and (4) a physical environment that is a homelike setting. Excluded from the definition of an assisted living establishment are long-term care facilities licensed under the Illinois Nursing Home Care Act (the Nursing Home Act ) and community living facilities as defined in the Community Living Facilities Licensing Act. Facilities licensed under the Nursing Home Care Act are allowed to convert all or any of their nursing and/or sheltered care beds to assisted living beds. Such conversions are exempt from review by the Illinois Health Facilities Planning Board. Mandatory services may be provided by an assisted living establishment either directly or through arrangement with another provider. Mandatory services include: preparation of three meals per day; housekeeping services; personal laundry and linen services; 24-hour security; an emergency communication response system; and assistance with ADL such as eating, dressing, bathing, toileting, transferring and personal hygiene, as required by each resident. In addition to mandatory services, an assisted living establishment may also provide optional services, including medication reminders, supervision of self-administered medications, medication administration and non-medical services. Annual licensure and on-site review of an assisted living establishment is required by the IDPH. A licensed assisted living establishment will be subject to regulation with respect to a number of matters including: construction standards; personnel qualifications; sanitation; physical plant and equipment; safety plans; and financial requirements. The ALSH Act further regulates the ability of the facility to terminate a residency agreement and sets forth minimum requirements for the service delivery contract between an assisted living establishment and each resident. The ALSH Act establishes requirements for residency in an assisted living establishment, including the identification of residents who require certain kinds of care; specifically, intravenous therapy or intravenous feedings, gastrostomy feedings, catheter care (other than routine maintenance of urinary catheters), sterile wound care and sliding scale insulin administration. According to the ALSH Act, an assisted living establishment may not accept or retain such residents unless such residents either self-administer the above-specified care or receive such care from licensed health care professionals. For the purposes of the above enumerated conditions, a licensed health care professional may not be employed by the owner or operator of the establishment, its parent entity, or any other entity with ownership common to either the owner or operator of the establishment or parent entity, including but not limited to an affiliate of the owner or operator of the establishment. This provision could have some impact on Member of the Obligated Group who establish or partially own their own home health agency for some portions of services provided to residents. Significantly, the ALSH Act does not include any grandfather provisions for existing facilities which might exempt such facilities from all or some requirements of the ALSH Act. An entity that qualifies as an assisted living establishment which operates without a license will be subject to the Nursing Home Act, including its penalty provisions. The IDPH adopted regulations implementing the ALSH Act which became effective as of December 1, The regulations address licensure requirements, license retention, remedies and sanctions for violations of the ALSH Act, resident eligibility, personnel requirements, resident care and services, medication administration, resident rights and representation, record keeping, food service, and physical plant and environmental requirements. The regulations require assisted living establishments to have sufficient staff to meet the 24 hour needs of residents and provide that a resident of an assisted living establishment may terminate residency by providing 30 days written notice to the establishment. -67-

110 Failure to comply with Illinois law and regulating governing life care and assisted living facilities could have a material adverse effect on the operations of the Corporation and any future Member of the Obligated Group. Illinois Licensure of Long-Term Care Facilities. The IDPH licenses, regulates and inspects at least annually all long-term care facilities within the state. The IDPH also assists the CMS with certifying these facilities for participation in federal payment reimbursement programs. The IDPH s Bureau of Long-term Care is responsible for ensuring that nursing homes comply with the provisions of the Illinois Nursing Home Care Act. In addition, under a cooperative agreement with CMS, the IDPH conducts certification surveys to ensure facilities receiving Medicaid or Medicare money for resident payment abide by applicable federal regulations. According to the IDPH, the IDPH conducts about 10,000 surveys each year, including annual licensure inspections, complaint investigations and re-inspections. Nursing homes in Illinois are licensed, regulated, inspected and certified by a number of public and private agencies at the state and federal levels, including the IDPH and the US Department of Health and Human Services Health Care Financing Administration ( HCFA ). Illinois licensure surveys are generally conducted on-site over a three- to four-day period during which the state s inspection teams evaluate all aspects of resident care and nursing home procedures and practices, assessing facility compliance with more than 1,500 specific state and federal standards. Samples of specific areas of care reviewed include resident rights, access to care, activities, assessment and care plans, health care and dietary services, housekeeping, staffing, quality of care and quality assurance. Failure to obtain and maintain licensure with the IDPH would have a material adverse effect upon the Corporation and any future Member of the Obligated Group s ability to operate its facilities. Medicare and Medicaid Anti-Fraud and Abuse Provisions. The Medicare and Medicaid antifraud and abuse provisions of the Social Security Act (the Anti-Kickback Law ) make it a felony, subject to certain exceptions, to engage in illegal remuneration arrangements with physicians and other health care providers for the referral of Medicare beneficiaries or Medicaid recipients. Violation of these provisions constitutes a felony and may result in imprisonment for up to five years and fines of up to $25,000. In addition, HHS has the authority to impose civil assessments and fines, and may exclude providers engaged in prohibited activities from participation in the Medicare and Medicaid programs, as well as certain other state and federal health care programs. The Secretary of HHS is required to exclude from such programs any providers convicted of a criminal offense relating to the delivery of Medicare or Medicaid services, for not less than five years. Exclusion from these programs would have a material adverse effect on the operations and financial condition of the Corporation and any future Member of the Obligated Group. The scope of prohibited payments in the Anti-Kickback Law is broad. HHS has published regulations which describe certain arrangements that will not be deemed to constitute violations of the Anti-Kickback Law. The safe harbors described in the regulations are narrow and do not cover a wide range of economic relationships which many hospitals, physicians and other health care providers consider to be legitimate business arrangements not prohibited by the statute. Because the regulations describe safe harbors and do not purport to describe comprehensively all lawful or unlawful economic arrangements or other relationships between health care providers and referral sources, health care providers having these arrangements or relationships may be required to alter them in order to ensure compliance with the Anti-Kickback Law. Management of the Corporation has a compliance program to ensure material compliance with the Anti-Kickback Law. In light of the narrowness of the safe harbor regulations and the scarcity of case law interpreting the Anti-Kickback Law, there can be no assurances that the Corporation and any future Member of the Obligated Group will not be found to have violated the Anti-Kickback Law, and, if so, whether any sanction imposed would have a material adverse effect on the operations of facilities owned by the Corporation and any future Member of the Obligated Group. -68-

111 Restrictions on Referrals. Current federal law (known as the Stark law provisions) prohibits providers of designated health services from billing Medicare or Medicaid when the patient is referred by a physician or an immediate family member with a financial relationship with the designated health services provider, with limited exceptions. Designated health services include the following: clinical laboratory services; physical therapy services; occupational therapy services; radiology services, including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services; radiation therapy services and supplies; durable medical equipment and services; parenteral and enteral nutrients, equipment and supplies; prosthetics, orthotics, and prosthetic devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services. The sanctions under the Stark law include denial and refund of payments, civil monetary penalties and exclusion from the Medicare and Medicaid programs. Management of the Corporation has a compliance program to ensure material compliance with the Stark provisions. However, in light of the scarcity of case law interpreting the Stark law provisions, there can be no assurances that the Corporation and any future Members of the Obligated Group will not be found to have violated the Stark law provisions, and if so, whether any sanction imposed would have a material adverse effect on the operations or the financial condition of the Corporation and any future Member of the Obligated Group. False Claims Act/Qui Tam Actions. Medicare requires that extensive financial information be reported on a periodic basis and in a specific format or content. These requirements are numerous, technical and complex and may not be fully understood or implemented by billing or reporting personnel. With respect to certain types of required information, the False Claims Act and the Social Security Act may be violated by mere negligence or recklessness in the submission of information to the government even without any specific intent to defraud. New billing systems, new medical procedures and procedures for which there is not clear guidance may all result in liability. The penalties for violation include criminal or civil liability and may include, for serious or repeated violations, exclusion from participation in the Medicare program. On May 20, 2009, Secretary of Health and Human Services Kathleen Sebelius and Attorney General Eric Holder announced the creation of the Health Care Fraud Prevention and Enforcement Action Team ( HEAT ), an interagency effort focused specifically on combating health care fraud. HEAT includes senior officials from the Department of Justice ( DOJ ) and HHS who are strengthening existing programs, as well as investing in new resources and technologies, to prevent and combat fraud, waste, and abuse. As a key component of its efforts, the HEAT taskforce utilizes and supports the joint HHS-DOJ Medicare Fraud Strike Force team in select locations across the country, including, since 2008, Los Angeles. The Strike Force teams coordinate law enforcement operations with other Federal, State and local law enforcement entities. The False Claims Act provides that an individual may bring a civil action for a violation of the Act. These actions are referred to as Qui Tam actions. In this way, an individual would be able to sue on behalf of the U.S. government if he/she believes that the healthcare entity has violated the False Claims Act. If the government proceeds with an action brought by this individual, then he/she could receive as much as 25 percent of any money recovered. The potential exists that a Qui Tam action could be brought against the Corporation or any future Members of the Obligated Group. Increases in Medical Costs Because the Corporation and any future Member of the Obligated Group are obligated to provide a majority of its residents with certain medical care, a deviation from the anticipated mortality rate or medical care requirements of the resident population or substantial unanticipated increases in the cost of medical care could have a negative impact on the operations of the Corporation and any future Member of the Obligated Group. The undertaking to provide such medical care is a contractual obligation of the Corporation and any future Member of the Obligated Group, and no assurance can be given that the -69-

112 Corporation and any future Member of the Obligated Group will have sufficient funds to meet its anticipated obligations. Residents are required to obtain Medicare Part A, Medicare Part B and supplemental insurance satisfactory to the Corporation; however, Medicare does not cover the cost of nursing home care except under certain limited circumstances (including up to 100 days of skilled nursing care following a 3-day hospital stay). In addition, the cost of providing healthcare services may increase due to increases in salaries paid to nurses and other healthcare personnel and due to shortages in such personnel which may require use of employment agencies. Licensure. The Corporation and its operations are subject to regulation and certification by various federal, state and local government agencies. No assurance can be given as to the effect on future operations of the Corporation of existing laws, regulations and standards for certification or accreditation or of any future changes in such laws, regulations and standards. The Corporation s assisted living units, memory support units and nursing facility are subject to various licensing requirements. HITECH Act. On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the Recovery Act ). Title XIII of the Recovery Act, otherwise known as the Health Information Technology for Economic and Clinical Health Act (the HITECH Act ), provides for an investment of almost $20 billion in public monies for the development of a nationwide health information technology ( HIT ) infrastructure. The HIT infrastructure is intended to improve health care quality, reduce health care costs and facilitate access to necessary information. Among other things, the HITECH Act provides financial incentives, through the Medicaid and Medicare programs, loans and grants to encourage practitioners and providers to adopt and use qualified electronic health records. Eventually, Medicare payments are reduced for providers and practitioners who do not use electronic health records. In addition to the HITECH Act, President Obama s federal fiscal year 2010 budget ( Budget ) establishes a reserve fund of more than $630 billion over ten years to finance fundamental reform of America s healthcare system in an effort to reduce costs and expand healthcare coverage. The fund will be paid for by a combination of tax revenue and reductions in Medicare and Medicaid spending. The HITECH Act also expands the scope and application of the administrative simplification provisions of HIPAA, and its implementing regulations. Among other things, the HITECH Act imposes a written notice obligation upon covered entities for security breaches involving unsecured protected health information, expands the scope of an electronic health record provider s disclosure tracking obligations, and substantially limits the ability of health care providers to sell protected health information without patient authorization. The HITECH Act also increases penalties for violations of HIPAA, and provides for enforcement of HIPAA violations by State attorneys general. While the effect of the HITECH Act and the Budget cannot be predicted at this time, the obligations imposed by the HITECH Act and the Budget could have a material adverse effect on the financial condition of the Corporation. In addition, there is no guarantee that the financial incentives for adopting qualified electronic health records system will be sufficient to offset the Corporation s costs for development and implementation of such a system. Other Legislation Section 7872 of the Code (Treatment of Loans with Below-Market Interest Rates), provides for, in certain circumstances, the imputation of interest income to a lender when the rate of interest charged by the lender is below prevailing market rates (as determined under a formula) or, even if the below market interest rate loan would otherwise be exempt from the provisions of Section 7872, when one of the principal purposes for such below-market rate loan is the avoidance of federal income taxation. -70-

113 A refundable entrance fee payment made by a resident to certain continuing care facilities has been determined under Section 7872 to constitute a below market interest rate loan by the resident to the facility to the extent that the resident is not receiving a market rate of interest on the refundable portion of the entrance fee. Section 7872(g) provides a safe harbor exemption for certain types of refundable entrance fees. The statutory language of Section 7872 does not permit a conclusive determination as to whether the Residency Agreements come within the scope of the continuing care facility safe harbor or within the statute itself. Section 7872 is applicable only to loans in excess of $90,000, as annually increased by inflation. Current Entrance Fees for some units are in excess of the applicable threshold of Section 7872 and it will have to be determined whether the Residency Agreements involve a loan for purposes of Section Any determination of applicability of Section 7872 could have the effect of discouraging potential residents from becoming or remaining residents of the Community. Taxpayer Relief Act of 1997 The Taxpayer Relief Act of 1997 includes the following provision which could have an impact on the Borrowers. Passive Income Received from Health System Subsidiary. This tax law tightens the ownership rules for determining whether certain types of income received from subsidiaries are subject to the unrelated business income tax ( UBIT ). Under prior law, tax-exempt organizations were required to pay tax on rents, royalties, annuities, and interest income only if such income was received from a taxable or tax-exempt subsidiary that was at least 80 percent controlled by the tax-exempt organization. Nevertheless, UBIT did not apply if the income came from a second-tier subsidiary (i.e., a subsidiary owned by a subsidiary). Under this tax law, such income is subject to UBIT if the parent organization owns more than 50 percent of the subsidiary, based on voting power or value. In addition, a parent exempt organization will be deemed to control any subsidiary which it controls either directly or indirectly (e.g., as a second-tier subsidiary). The new 50 percent control test is effective for taxable years beginning after December 31, This provision may force some multi-member health care systems to chose between maintaining control and incurring UBIT liability where business considerations dictate the use of intra-system loans, leases, and licensing arrangements. It is not clear at this time how this provision will affect the Borrowers. Intermediate Sanctions On July 31, 1996, the Taxpayers Bill of Rights 2 (the Taxpayers Act ) was signed into law. The Taxpayers Act provides the IRS with an intermediate tax enforcement tool to combat violations by taxexempt organizations of the private inurement prohibition of the Code. Previous to the intermediate sanctions law, the IRS could punish such violations only through revocation of an entity s tax-exempt status. Intermediate sanctions may be imposed where there is an excess benefit transaction, defined to include a disqualified person (i.e., an insider) (1) engaging in a non-fair market value transaction with the tax-exempt organization; (2) receiving unreasonable compensation from the tax-exempt organization; or (3) receiving payment in an arrangement that violates the private inurement proscription. A disqualified person who benefits from an excess benefit transaction will be subject to a first tier penalty excise tax equal to 25% of the amount of the excess benefit. Organizational managers who participate in an excess benefit transaction knowing it to be improper are subject to a first-tier penalty excise tax of 10% of the amount of the excess benefit, subject to a maximum penalty of $10,000. A second tier penalty excise tax of 200% of the amount of the excess benefit may be imposed on the -71-

114 disqualified person (but not the organizational manager) if the excess benefit transaction is not corrected in a specified time period. The IRS has issued Revenue Rulings dealing specifically with the manner in which a facility providing residential services to the elderly must operate in order to maintain its exemption under Section 501(c)(3) of the Code. Revenue Rulings and state that, if otherwise qualified, a facility providing residential services to the elderly is exempt under Section 501(c)(3) if the organization: (1) is dedicated to providing, and in fact provides or otherwise makes available services for, care and housing to aged individuals who otherwise would be unable to provide for themselves without hardship; (2) to the extent of its financial ability, renders services to all or a reasonable proportion of its residents at substantially below actual cost; and (3) rendered services that minister to the needs of the elderly and relieve hardship or distress. Revenue Ruling states that a facility providing residential services to the elderly may admit only those tenants who are able to pay full rental charges, provided that those charges are set at a level that is within the financial reach of a significant segment of the community s elderly person. The Revenue Ruling also states that the facility must be committed, by established policy, to maintain persons as residents, even if they become unable to pay their monthly charges after being admitted to the facility. The IRS has audit guidelines which implement a policy to scrutinize more closely the activities of health care providers to ensure that they satisfy the requirements for tax-exempt status. Given these audit guidelines and other related pronouncements by the IRS, it may be more difficult for health care providers to maintain their tax-exempt status. Health-care providers, such as the Corporation, may be forced to forego otherwise favorable opportunities for certain joint ventures, recruitment and other arrangements to maintain their tax-exempt status or to avoid other sanctions. Possible Changes in Tax Status General. The possible modification or repeal of certain existing federal income or state tax laws or other loss by the Borrowers of the present advantages of certain provisions of the federal income or state tax laws could materially and adversely affect the status of the Borrowers and thereby the revenues of any future Member of the Obligated Group. Failure of the Borrowers or the Authority to comply with certain requirements of the Code, or adoption of amendments to the Code to restrict the use of tax-exempt bonds for facilities such as those being financed or refinanced with Tax-Exempt Series 2010 Bond proceeds, could cause interest on the Tax-Exempt Series 2010 Bonds to be included in the gross income of Bondholders or former Bondholders for federal income tax purposes. In such event, the Bond Indentures do not contain any specific provision for acceleration of the Tax-Exempt Series 2010 Bonds nor provide that any additional interest will be paid to the owners of the Tax-Exempt Series 2010 Bonds. See APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indentures Events of Default. Each Borrower is a not for profit corporation, exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (referred to as the Code). As not for profit tax-exempt organizations, the Borrowers are subject to federal, state and local laws, regulations, rulings and court decisions relating to its organization and operation, including its operation for charitable purposes. At the same time, the Corporation conducts large-scale complex business transactions and is a major employer in its geographic area. There can often be a tension between the rules designed to regulate a wide range of charitable organizations and the day-to-day operations of a complex healthcare organization. Over the past several years, an increasing number of the operations or practices of healthcare providers have been challenged or questioned to determine if they are consistent with the regulatory requirements for nonprofit tax-exempt organizations. These challenges are broader than concerns about -72-

115 compliance with federal and state statutes and regulations, such as Medicare and Medicaid compliance, and in many cases are examinations of core business practices of the healthcare organizations. Areas which have come under examination have included pricing practices, billing and collection practices, charitable care, executive compensation, exemption from real property taxation, and others. These challenges and questions have come from a variety of sources, including state Attorneys General, the Internal Revenue Service (referred to as the IRS), labor unions, Congress, state legislatures, and patients, and in a variety of forums, including hearings, audits and litigation. These challenges or examinations include the following, among others: Federal Congressional Hearings. The Senate Finance Committee has conducted hearings on required reforms to the nonprofit sector and released staff discussion drafts on proposals for reform in the area of tax-exempt organizations, including a proposal for a five-year review of tax-exempt status by the IRS. The House Committee on Ways and Means has held several hearings to examine the tax-exempt sector, hospital tax exemptions and the use of tax-preferred bond financings. It is uncertain if any of these Committees will pursue further investigations or will recommend legislative changes as a result of these inquiries. IRS Examination of Compensation Practices. In August 2004, the IRS announced a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders. The IRS announced that it would contact nearly 2,000 charities and foundations to seek more information about their compensation practices and procedures. In February 2009, the IRS issued its Hospital Compliance Project Final Report (the IRS Final Report ) based on its examination of such tax-exempt organizations. The IRS Final Report indicates that the IRS (i) will continue to heavily scrutinize executive compensation arrangements, practices and procedures and (ii) in certain circumstances, may conduct further investigations or impose fines on tax-exempt organizations. In February 2009, Senator Kohl, of the Senate s Special Committee on Aging, requested that the U.S. Government Accountability Office ( GAO ) study the finances, operations and governance of Continuing Care Retirement Communities ( CCRCs ). The GAO has not yet delivered its report and it is uncertain whether the report will lead the Special Committee on Aging to pursue further investigation into CCRCs or legislative changes that could affect CCRCs. Revision of IRS Form 990 for Tax-Exempt Organization. The IRS Form 990 is used by most 501(c)(3) not-for-profit organizations exempt from federal income taxation to submit information required by the federal government. On December 20, 2007, the IRS released a revised Form 990 that requires detailed public disclosure of compensation practices, corporate governance, loans to management and others, joint ventures and other types of transactions, political campaign activities, and other areas the IRS deems to be compliance risk areas. The revised form also requires the disclosure of a significantly greater amount of information on community benefit and establishes uniform standards for reporting of information relating to tax-exempt bonds, including compliance with the arbitrage rules and rules limiting private use of bond-financed facilities, including compliance with the safe harbor guidance in connection with management contracts and research contracts. The redesigned Form 990 is intended to result in enhanced transparency as to the operations of exempt organizations. It is also likely to result in enhanced enforcement, as the redesigned Form 990 will make detailed information on compliance risk areas available to the IRS and other stakeholders. At this time it is difficult to predict the additional burden that completion of the revised Form 990 may place on the Borrowers and any future Member of the Obligated Group. -73-

116 Lack of Marketability for the Series 2010 Bonds Although the Underwriter intends, but is not obligated, to make a market for the Series 2010 Bonds, there can be no assurance that there will be a secondary market for the Series 2010 Bonds, and the absence of such a market for the Series 2010 Bonds could result in investors not being able to resell the Series 2010 Bonds should they need to or wish to do so. The Underwriter is the initial Remarketing Agent for the Series 2010B Bonds. Increases in Medical Costs Because the Corporation are obligated to provide a majority of its residents with certain medical care, a deviation from the anticipated mortality rate or medical care requirements of the resident population or substantial unanticipated increases in the cost of medical care could have a negative impact on the operations of the Community. The undertaking to provide such medical care is a contractual obligation of the Corporation, and no assurance can be given that the Corporation will have sufficient funds to meet its anticipated obligations. Residents are required to obtain supplemental insurance satisfactory to the Corporation. In addition, the cost of providing healthcare services may increase due to increases in salaries paid to nurses and other healthcare personnel and due to shortages in such personnel which may require use of employment agencies. Nursing Shortage From time to time, the healthcare industry has experienced a shortage of nursing and other technical staff, which has resulted in increased costs due to the need to hire agency nursing personnel at higher rates and increased compensation levels. If such shortages occur, it could adversely affect the Corporation s operations or financial condition. Amendments to the Documents Certain amendments to the Bond Indentures and Loan Agreements may be made with the consent of the owners of a majority of the principal amount of the outstanding related Series 2010 Bonds and certain amendments to the Master Indenture and the Mortgage may be made with the consent of the holders of a majority of the principal amount of outstanding Obligations. Such amendments may adversely affect the security of the Bondholders and, with respect to the Master Indenture and the Mortgage, such percentage may be composed wholly or partially of the holders of Additional Obligations. See APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Supplemental Master Indentures and Amendments to the Mortgage not Requiring Consent of Obligation Holders, and Supplemental Master Indentures and Amendment of the Mortgage Requiring Consent of Obligation Holders, Summary of Certain Provisions of the Series 2010 Tax-Exempt Bond Indenture Supplemental Bond Indentures, Summary of Certain Provisions of the Series 2010E Bond Indenture Supplemental Bond Indenture and Summary of Certain Provisions of the Loan Agreements Supplements and Amendments to the Loan Agreements. Bankruptcy If the Borrowers were to file a petition for relief under Chapter 11 of the Federal Bankruptcy Code, its revenues and certain of its accounts receivable and other property acquired after the filing (and under certain conditions some or all thereof acquired within 120 days prior to the filing) would not be subject to the security interests created under the Master Indenture. The filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Borrowers and their property and as an automatic stay of any act or proceeding to enforce a lien upon its -74-

117 property. If the bankruptcy court so ordered, the Borrowers property, including their accounts receivable and proceeds thereof, could be used for the benefit of the Borrowers despite the security interest of the Master Trustee therein, provided that adequate protection is given to the lienholder. In a bankruptcy proceeding, the petitioner could file a plan for the adjustment of its debts which modifies the rights of creditors generally, or any class of creditors, secured or unsecured. The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interests of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly in favor of junior creditors. Additional Debt The Master Indenture permits the Obligated Group to incur Additional Indebtedness which may be equally and ratably secured with the Series 2010 Obligations. Any such additional parity indebtedness would be entitled to share ratably in security interest with the owners of the Series 2010 Obligations. Any moneys realized from the exercise of remedies in the event of a default by the Obligated Group could reduce the Maximum Annual Debt Service Coverage Ratio and could impair the ability of the Obligated Group to maintain its compliance with certain covenants described in APPENDIX C under the caption SUMMARY OF PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Rates and Charges. There is no assurance that, despite compliance with the conditions upon which Additional Indebtedness may be incurred at the time such debt is created, the ability of the Obligated Group to make the necessary payments to repay the Series 2010 Obligations may not be materially, adversely affected upon the incurrence of Additional Indebtedness. Certain Matters Relating to Enforceability of the Master Indenture The obligations of the Obligated Group under the Series 2010 Obligations will be limited to the same extent as the obligations of debtors typically are affected by bankruptcy, insolvency and the application of general principles of creditors rights and as additionally described below. The accounts of the Obligated Group will be combined for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the incurrence of Additional Indebtedness) are met, notwithstanding the uncertainties as to the enforceability of certain obligations of the Obligated Group contained in the Master Indenture which bear on the availability of the assets and revenues of the Obligated Group to pay debt service on Obligations, including the Series 2010 Obligations pledged under the related Bond Indenture as security for the related series of Series 2010 Bonds. The obligations described herein of the Obligated Group to make payments of debt service on Obligations issued under the Master Indenture (including transfers in connection with voluntary dissolution or liquidation) may not be enforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar laws affecting the enforcement of creditors rights and by general equitable principles and (2) such payments (i) are requested with respect to payments on any Obligations issued by a Member other than the Member from which such payment is requested, issued for a purpose which is not consistent with the charitable purposes of the Member of the Obligated Group from which such payment is requested or issued for the benefit of a Member of the Obligated Group which is not a Tax-Exempt Organization; (ii) are requested to be made from any moneys or assets which are donor-restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (iii) would -75-

118 result in the cessation or discontinuation of any material portion of the health care or related services previously provided by the Member of the Obligated Group from which such payment is requested; or (iv) are requested to be made pursuant to any loan violating applicable usury laws. The extent to which the assets of any future Member of the Obligated Group may fall within the categories (ii) and (iii) above with respect to the Series 2010 Obligations cannot now be determined. The amount of such assets which could fall within such categories could be substantial. A Member of the Obligated Group may not be required to make any payment on any Obligation, or portion thereof, the proceeds of which were not loaned or otherwise disbursed to such Member of the Obligated Group to the extent that such payment would render such Member of the Obligated Group insolvent or which would conflict with or not be permitted by or which is subject to recovery for the benefit of other creditors of such member of the Obligated Group under applicable laws. There is no clear precedent in the law as to whether such payments from a member of the Obligated Group in order to pay debt service on the Series 2010 Obligations may be voided by a trustee in bankruptcy in the event of bankruptcy of a member of the Obligated Group, or by third-party creditors in an action brought pursuant to Illinois fraudulent conveyance statutes. Under the United States Bankruptcy Code, a trustee in bankruptcy and, under Illinois fraudulent conveyance statutes and common law, a creditor of a related guarantor, may avoid any obligation incurred by a related guarantor if, among other bases therefor, (1) the guarantor has not received fair consideration or reasonably equivalent value in exchange for the guaranty and (2) the guaranty renders the guarantor insolvent, as defined in the United States Bankruptcy Code or Illinois fraudulent conveyance statutes, or the guarantor is undercapitalized. Application by courts of the tests of insolvency, reasonably equivalent value and fair consideration has resulted in a conflicting body of case law. It is possible that, in an action to force a Member of the Obligated Group to pay debt service on an Obligation for which it was not the direct beneficiary, a court might not enforce such a payment in the event it is determined that the Member of the Obligated Group is analogous to a guarantor of the debt of the Member of the Obligated Group who directly benefited from the borrowing and that sufficient consideration for such Member s guaranty was not received and that the incurrence of such Obligation has rendered or will render the Member of the Obligated Group insolvent. The effectiveness of the security interest in the Obligated Group s Gross Revenues granted in the Master Indenture may be limited by a number of factors, including: (i) present or future prohibitions against assignment contained in any applicable statutes or regulations; (ii) certain judicial decisions which cast doubt upon the right of the Master Trustee, in the event of the bankruptcy of any member of the Obligated Group, to collect and retain accounts receivable from Medicare, Medicaid, General Assistance and other governmental programs; (iii) commingling of the proceeds of Gross Revenues with other moneys of a member of the Obligated Group not subject to the security interest in Gross Revenues; (iv) statutory liens; (v) rights arising in favor of the United States of America or any agency thereof; (vi) constructive trusts, equitable or other rights impressed or conferred by a federal or state court in the exercise of its equitable jurisdiction; (vii) federal bankruptcy laws which may affect the enforceability of the Mortgage or the security interest in the Gross Revenues of the Obligated Group which are earned by the Obligated Group within 90 days preceding or, in certain circumstances with respect to related corporations, within one year preceding and after any effectual institution of bankruptcy proceedings by or against a member of the Obligated Group; (viii) rights of third parties in Gross Revenues converted to cash and not in the possession of the Master Trustee; and (ix) claims that might arise if appropriate financing or continuation statements are not filed in accordance with the Illinois Uniform Commercial Code as from time to time in effect. Pursuant to the Master Indenture, each member of the Obligated Group who pledges its Gross Revenues under the Master Indenture covenants and agrees that, if an event of default involving a failure to pay any installment of interest or principal on an Obligation should occur and be continuing, it will -76-

119 deposit daily the proceeds of its Gross Revenues. Such deposits will continue daily until such default is cured. It is unclear whether the covenant to deposit the proceeds of Gross Revenues with the Master Trustee is enforceable. In light of the foregoing and of questions as to limitations on the effectiveness of the security interest granted in such Gross Revenues, as described above, no opinion will be expressed by counsel to the Borrowers as to enforceability of such covenant with respect to the required deposits. There exists, in addition to the foregoing, common law authority and authority under Illinois statutes pursuant to which the Illinois courts may terminate the existence of a not for profit corporation or undertake supervision of its affairs on various grounds, including a finding that such corporation has insufficient assets to carry out its stated charitable purposes or has taken some action which renders it unable to carry out such purposes. Such court action may arise on the court s own motion pursuant to a petition of the Illinois Attorney General or such other persons who have interests different from those of the general public, pursuant to the common law and statutory power to enforce charitable trusts and to see to the application of their funds to their intended charitable uses. Interest Rate Swap and Other Hedge Risk Currently, the Borrowers are not parties to an interest rate swap or other hedge agreement. However, the Borrowers or any future Members of the Obligated Group may enter into such an agreement in the future. Any interest rate swap or other hedge agreement to which the Borrowers or any future Members of the Obligated Group is a party may, at any time, have a negative value to the Obligated Group. If either a swap or other hedge counterparty or the Borrowers or any future Members of the Obligated Group terminates such an agreement when the agreement has a negative value to the Obligated Group, the Obligated Group would be obligated to make a termination payment to the counterparty in the amount of such negative value, and such payment could be substantial and potentially materially adverse to the financial condition of the Obligated Group. A counterparty generally may only terminate such an agreement upon the occurrence of defined termination events such as nonpayment by the Obligated Group, a bankruptcy type event, cross default to specified indebtedness or other swaps, other breaches of covenants in such agreements or the withdrawal of the ratings assigned to the Obligated Group s indebtedness, if applicable, or a downgrade of such ratings below specified levels. Many swap agreements require each party to provide additional security for its obligations in certain circumstances including without limitation a downgrade of the rating assigned to the long-term Indebtedness issued on its behalf and the occurrence of certain other events. The Master Indenture permits the Obligated Group to grant a security interest and lien on collateral for this purpose. Environmental Matters In its role as the owner and operator of properties or facilities, the Borrowers and any future Member of the Obligated Group may be subject to liability and practical, financial and legal risks for investigating and remedying any hazardous substances that exist on its property or that may have migrated off of its property. Such risks may (a) result in damage to individuals, property or the environment, (b) interrupt operations and increase their cost, (c) result in legal liability, damages, injunctions or fines and (d) result in investigations, administrative proceedings, penalties or other governmental agency actions. There is no assurance that the Borrowers and any future Member of the Obligated Group will not encounter such risks in the future, and such risks may result in material adverse consequences to the operations or financial condition of the Borrowers and any future Member of the Obligated Group. At the present time, and based on environmental assessments performed on the property on which the Project will be located, management of the Borrowers are not aware of any pending or threatened -77-

120 claim, investigation or enforcement action regarding such environmental issues which, if determined adversely to the Borrowers, would have a material adverse effect on its operations or financial condition. Uncertainty of Investment Income The investment earnings of, and accumulations in, certain funds established pursuant to the Bond Indentures have been estimated and are based on assumed interest rates as indicated. While these assumptions are believed to be reasonable in view of the rates of return presently and previously available on the types of securities in which the Bond Trustee is permitted to invest under the Bond Indentures there can be no assurance that similar interest rates will be available on such securities in the future, nor can there be any assurance that the estimated funds will actually be realized. Guaranteed investment contracts may be entered into with respect to certain of the funds held under the Bond Indentures. See ESTIMATED SOURCES AND USES OF FUNDS above. Other Possible Risk Factors The occurrence of any of the following events, or other unanticipated events, could adversely affect the operations of the Borrowers or any future Members of the Obligated Group: 1. Inability to control increases in operating costs, including salaries, wages and fringe benefits, supplies and other expenses, given an inability to obtain corresponding increases in revenues from residents whose incomes will largely be fixed; 2. Unionization, employee strikes and other adverse labor actions which could result in a substantial increase in expenditures without a corresponding increase in revenues; 3. Adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Borrowers or any future Members of the Obligated Group; 4. A decline in the population, a change in the age composition of the population or a decline in the economic conditions of the market area of the Corporation; 5. The cost and availability of energy; 6. Increased unemployment or other adverse economic conditions in the service area of the Borrowers and any future Member of the Obligated Group which would increase the proportion of patients who are unable to pay fully for the cost of their care; 7. Any increase in the quantity of indigent care provided which is mandated by law or required due to increased needs of the community in order to maintain the charitable status of the Borrowers or any future Members of the Obligated Group; 8. Inflation or other adverse economic conditions; 9. Changes in tax, pension, social security or other laws and regulations affecting the provisions of health care, retirement benefits and other services to the elderly; 10. Inability to control the diminution of patients assets or insurance coverage with the result that the patients charges are reimbursed from government reimbursement programs rather than private payments or funded from assets of the Borrowers or any future Members of the Obligated Group; -78-

121 11. The occurrence of natural disasters, including floods and earthquakes, which may damage the facilities of the Obligated Group, interrupt utility service to the facilities, or otherwise impair the operation and generation of revenues from said facilities; or 12. Cost and availability of any insurance, such as malpractice, fire, automobile and general comprehensive liability, that organizations such as the Borrowers generally carry. Absence of a Bond Rating The Series 2010 Bonds are unrated. When any Bondholder attempts to sell his or her Series 2010 Bonds, this absence of a rating could adversely affect the market price and marketability thereof. The Underwriter is the initial Remarketing Agent for the Series 2010C Bonds. Financial Reporting FINANCIAL REPORTING AND CONTINUING DISCLOSURE Under the Master Indenture, the Obligated Group Agent will furnish or cause to be furnished to, among others, the Master Trustee, the Underwriter, each Related Bond Trustee, EMMA (as described below) and any other nationally recognized municipal securities information repositories identified by the Securities and Exchange Commission, the Authority and all owners of any Related Bonds who request such reports in writing (which written request shall include a certification as to such ownership) (the Required Information Recipients ) the following: (i) Until the end of the quarter in which the Obligated Group achieves Stable Occupancy with respect to the Project, a monthly statement of the Obligated Group as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including: (A) prior to the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) a summary statement as to the status of construction; (III) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (IV) statements of the balances for each fund and account required to be held under the Master Indenture, or under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (to the extent available from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Agent, and (B) after the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) occupancy levels of the Project as of the end of such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; (III) a summary statement on the status of construction until the issuance of the last Occupancy Certificate for the Project; (IV) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last Occupancy Certificate for the Project; (V) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month with a comparison to the operating budget, and an -79-

122 unaudited balance sheet of the Obligated Group as of the end of such month; (VI) a calculation of the Cumulative Cash Operating Loss as of the end of such month; (VII) statements of the balances for each fund and account held under the Master Indenture, under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee); and (VIII) a statement showing the amount of Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds that have been redeemed in the aggregate and during that calendar quarter, all in reasonable detail and certified by an officer of the Obligated Group Agent. The Obligated Group Agent does not need to deliver any monthly statement of the Obligated Group described in this subparagraph (i) after the end of the fiscal quarter in which Stable Occupancy with respect to the Project has been achieved and the Obligated Group has commenced delivery of the quarterly reports described in subparagraph (B)(ii) below. (ii) Beginning with the first full fiscal quarter following the date that Stable Occupancy with respect to the Project is achieved, the following information as soon as practicable after it is available but in no event more than 45 days after the completion of such fiscal quarter: (A) quarterly unaudited financial statements of the Obligated Group (including a report with respect to the fourth quarter of each Fiscal Year), including a combined or combining statement of revenues and expenses and a statement of cash flows of the Obligated Group during such period, and a combined or combining balance sheet as of the end of each such fiscal quarter with a comparison to the operating budget, (B) a calculation of Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, as of the last day of such quarter, the Historical Debt Service Coverage Ratio of the Obligated Group for such quarter, the Cumulative Cash Operating Loss, if required to be calculated or submitted for such fiscal quarter, (C) information with respect to the payor mix of the health center portion of the Project, and (D) a calculation of the marketing/reservation levels for the Project as of the end of each month in the quarter, including the number of units that have been reserved or cancelled during that month and on an aggregate basis; occupancy levels of the Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Agent, with a management s discussion and analysis of results. (iii) If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 or the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Test Date as provided in the Master Indenture, the Obligated Group will deliver the financial information and the calculations described in paragraph (ii) above on a monthly basis with the Historical Debt Service Coverage Ratio calculated on a year-to-date basis each month, within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the applicable Liquidity Requirement. (iv) Within 150 days of the end of each Fiscal Year commencing with the Fiscal Year ending December 31, 2010, an annual financial report of the Obligated Group audited by a firm of certified public accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of changes in fund balances for such Fiscal Year and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the accountants auditing such report containing calculations of the Obligated Group s Historical Debt Service Coverage Ratio for said Fiscal Year and of the Obligated Group s Cash to Indebtedness Ratio or Days Cash on Hand, as applicable (beginning with the Fiscal Year in which such -80-

123 calculations are first required to be made) as of the last day of such Fiscal Year and if such accountants shall have obtained knowledge of any default or defaults under the Master Indenture, they shall disclose in such statement the default or defaults and the nature thereof. (v) On or before the date of delivery of the financial reports referred to in subsection (iv) above, an Officer s Certificate of the Obligated Group Agent (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture or if not, specify all such defaults and the nature thereof, (B) calculating and certifying the marketing and occupancy percentages, Cumulative Cash Operating Loss, Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, and Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such fiscal period or Fiscal Year, as appropriate, and (C) commencing with the Fiscal Year ending December 31, 2011, a comparison of the audited financial statements with the operating budget for the preceding Fiscal Year, and (D) an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any. (vi) Within 45 days of the end of each Fiscal Year, the Obligated Group Agent shall deliver a summary of the operating and capital budgets for the Fiscal Year then started. (vii) At any time during the Fiscal Year, copies of (A) any board-approved revisions to the annual budget or (B) any correspondence to or from the Internal Revenue Service questioning or contesting the status of a Member as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of the Series 2010 Bonds or any Related Bonds the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes, promptly upon receipt. (viii) Within 30 days of receipt of any Occupancy Certificate for any portion of the Project, the Corporation will notify the Master Trustee that such Occupancy Certificate has been received and include a copy of the Occupancy Certificate with such notice. (ix) Within 45 days of achieving Stable Occupancy with respect to the Project, the Corporation will notify the Master Trustee that Stable Occupancy has been achieved. (x) Upon withdrawal of any funds from the Liquidity Support Funds as provided under the Master Indenture, the Corporation shall notify the Master Trustee and each Required Information Recipient submit the information required under the Master Indenture. Continuing Disclosure General. Offerings of municipal securities must comply with the provisions of Rule 15c2-12 of the Securities and Exchange Commission (as amended from time to time, the Rule ). Inasmuch as the Series 2010 Bonds are limited obligations of the Authority, the Authority has determined that no financial or operating data concerning it is material to any decision to purchase, hold or sell the Series 2010 Bonds, and the Authority will not provide any such information. The Obligated Group has undertaken all responsibilities for any continuing disclosure to holders of the Series 2010 Bonds as described below, and the Authority shall have no liability to the holders or any other person with respect to such disclosures. The Obligated Group has covenanted for the benefit of the Series 2010 Bondowners, and the Beneficial Owners (as hereinafter defined under this caption), pursuant to a Continuing Disclosure Agreement (the Disclosure Agreement ) to be executed and delivered by the Obligated Group, to provide or cause to be provided (i) on a monthly basis, certain financial information for the Obligated Group (the Additional Monthly Report ) by not later than the date 30 days after the end of each month, commencing with the Additional Monthly Report for the month ended June 30, 2010 and ending upon the -81-

124 earlier of Stable Occupancy (as defined in the Master Indenture) or December 31, 2016; (ii) on a quarterly basis, certain financial information for the Obligated Group (the Quarterly Report ) by not later than the date 45 days after the last day of the fiscal quarter of the Obligated Group, commencing with the Quarterly Report for the quarter ended June 30, 2010; (iii) each year, certain financial information for the Obligated Group and operating data relating to the Obligated Group (the Annual Report ) by not later than the date 150 days after the last day of the fiscal year of the Obligated Group, commencing with the Annual Report for the fiscal year ended December 31, 2010; provided, however, that if the audited financial statements of the Obligated Group are not available by such date, unaudited financial statements for such party will be included in the Quarterly Report or the Annual Report, as appropriate, and audited financial statements will be provided when and if available; and (iv) timely notices of the occurrence of certain enumerated events, if material. Currently the fiscal year of the Obligated Group commences on January 1. Beneficial Owners means, under this caption only, any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2010 Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. If not otherwise provided previously, the Obligated Group will also provide, as soon as practicable after the information described in APPENDIX C SUMMARY OF THE PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Financial Statements and Related Matters is requested by and actually provided to the Required Information Recipients, but in any case not later than 45 days after such information is provided to Required Information Recipients and to EMMA (as defined below), to the NRMSIRs and SID the information described in APPENDIX C SUMMARY OF THE PRINCIPAL DOCUMENTS Summary of Certain Provisions of the Master Indenture Financial Statements and Related Matters. The information will be made available to holders of the Bonds through EMMA ( ( EMMA ), the information repository of the Municipal Securities Rulemaking Board, to comply with the Rule. The month, quarterly and annual reports described above under Financial Reporting Under the Master Indenture will be filed by or on behalf of the Obligated Group with EMMA and with any Illinois state information depository, in each case as designated from time to time by the SEC for so long as such monthly, quarterly and annual reports are required to be delivered under the Master Indenture. There is currently no Illinois state information depository. In addition, any notice of the following Material Events will be filed with EMMA: Principal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financing difficulties; Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions or events adversely affecting the Series 2010 Bonds or adverse tax opinions or events affecting the tax-exempt status of the Tax-Exempt Series 2010 Bonds; Modifications to rights of the security holders; Bond calls; Defeasances; Release, substitution, or sale of property securing repayment of the securities; and -82-

125 Rating changes. Annual Report. The Annual Report will contain or incorporate by reference at least the following items: (a) The audited financial statements of the Borrowers for the fiscal year ending immediately preceding the due date of the Annual Report; provided, however, that if either of such audited financial statements are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements shall be included in the Annual Report. The financial statements shall be audited and prepared pursuant to accounting and reporting policies conforming in all material respects to generally accepted accounting principles. (b) An update of the material financial information including but not limited to the data of the same general nature as that contained in the chart in SUMMARY STATEMENT Feasibility Study as well as material operating data, including marketing, occupancy and turnover information. Quarterly Reports. Quarterly Reports will be submitted beginning with the first full fiscal quarter following the issuance of a certificate of occupancy for any independent living units, in no event more than 45 days after the end of each quarterly fiscal period of each Fiscal Year, and will contain the following: (a) the unaudited financial statements for that period, including a statement of revenues and expenses (including a comparison to budgeted revenues and expenses) and a statement of cash flow during that period, and a balance sheet as of the end of that period, in each case on either a combined or combining basis for the Obligated Group; (b) a calculation of the Cash to Debt Ratio or Days Cash on Hand, and of the Historical Debt Service Coverage Ratio, if required to be calculated or submitted as of the end of that fiscal quarter, all of the foregoing to be in reasonable detail and certified, subject to year end adjustment, by the chief executive officer, the chief financial officer or other authorized financial officer of the Obligated Group Agent; and (c) an occupancy report and a management s discussion and analysis. Additional Monthly Reports. If the Historical Debt Service Coverage Ratio for any Fiscal Year is less than 1.00 and the Cash to Debt Ratio or the number of Days Cash on Hand, as applicable, is less than the Liquidity Requirement for any Liquidity Testing Date, the Obligated Group will deliver the financial information and the calculations described in FINANCIAL REPORTING AND CONTINUING DISCLOSURE Financial Reporting paragraph (iii) above on a monthly basis within 45 days of the end of each month until the Historical Debt Service Coverage Ratio is at least 1.00 and the Cash to Debt Ratio or the Days Cash on Hand, as applicable, is at least equal to the Liquidity Requirement. Any or all of the items listed above may be included by specific reference to other documents which previously have been provided to EMMA or the SEC. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Borrowers shall clearly identify each such other document as included by reference. Failure to Comply. In the event of a failure of the Obligated Group to comply with any provision of the Disclosure Agreement, any Series 2010 Bondowner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to -83-

126 cause the Obligated Group to comply with the obligations under the Disclosure Agreement. A failure to comply with the Disclosure Agreement shall not be deemed an Event of Default under the Bond Indenture or the Loan Agreement. The sole remedy under the Disclosure Agreement in the event of any failure of the Obligated Group to comply with the Disclosure Agreement shall be an action to compel performance, and no person or entity shall be entitled to recover monetary damage thereunder under any circumstances. This will be the first Disclosure Agreement to which the Obligated Group will be a party, and consequently, there has been no previous history of the Obligated Group s compliance with the Rule. Amendment of the Disclosure Agreement. The Obligated Group and the Dissemination Agent may amend the Disclosure Agreement, and any provision of the Disclosure Agreement may be waived by the Dissemination Agent, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule or adjudication of the Rule by a final decision of a court of competent jurisdiction. The Obligated Group may modify from time to time the specific types of information provided in an Annual Report to the extent necessary as a result of a change in legal requirements, change in law or change in the nature of the Obligated Group or its businesses, provided that any such modification will be done in a manner consistent with the Rule and will not, in the opinion of the Dissemination Agent or another party unaffiliated with the Issuer or the Obligated Group, materially impair the interests of the Bondholders. The Authority LITIGATION There is not now pending (as to which the Authority has received service of process) or, to the actual knowledge of the Authority, threatened, any litigation against the Authority restraining or enjoining the issuance or delivery of the Series 2010 Bonds or questioning or affecting the validity of the Series 2010 Bonds or the proceedings or authority under which the Series 2010 Bonds are to be issued. Neither the creation, organization or existence of the Authority nor the title of the present members or other officers of the Authority to their respective offices is being contested. There is no litigation against the Authority pending (as to which the Authority has received service of process) or, to the actual knowledge of the Authority, threatened which in any manner questions the right of the Authority to enter into the Bond Indentures, the Loan Agreements, or the Bond Purchase Contract or to secure the Series 2010 Bonds in the manner provided in the Bond Indentures, the Resolution, and the Act. The Borrowers The Borrowers have advised that no litigation, proceedings or investigations are pending or, to their knowledge, threatened against it except (i) litigation, proceedings or investigations in which the probable ultimate recoveries and the estimated costs and expenses of defense, in the opinion of management, will be entirely within the applicable insurance policy limits (subject to applicable deductibles) or are not in excess of the total reserves held under the applicable self-insurance program, or (ii) litigation, proceedings or investigations which if adversely determined will not, in the opinion of management, have a material adverse effect on the operations or condition, financial or otherwise, of the Borrowers. The Borrowers also have advised that there is no litigation pending or, to the knowledge of the Borrowers, threatened, which in any manner questions the right of the Borrowers to enter into the financing described herein. -84-

127 LEGAL MATTERS All legal matters incidental to the authorization and issuance of the Series 2010 Bonds by the Authority are subject to the approval of Jones Day, Chicago, Illinois, Bond Counsel. Bond Counsel has been retained by the Borrowers. Certain legal matters with respect to the Series 2010 Bonds will be passed upon for the Authority by its special counsel, Schiff Hardin LLP, for the Borrowers, Providence Management and Development Company Incorporated and Providence Development Group LLC by their special counsel, Timothy G. Lawler, Ltd., Hinsdale, Illinois, and for the Underwriter by its counsel, Katten Muchin Rosenman LLP, Chicago, Illinois. Tax-Exempt Series 2010 Bonds TAX MATTERS General. The Code contains several requirements and restrictions which apply to the Tax- Exempt Series 2010 Bonds, including investment restrictions, a requirement of periodic payments of arbitrage profits to the United States of America, requirements regarding the timing and proper use of bond proceeds and the facilities financed or refinanced therewith, and certain other matters. The Authority and the Borrowers have covenanted to comply with all requirements of the Code that must be satisfied in order for the interest on the Tax-Exempt Series 2010 Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Tax-Exempt Series 2010 Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Tax-Exempt Series 2010 Bonds. Subject to compliance by the Authority and the Borrowers with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Tax-Exempt Series 2010 Bonds will not be includible in the gross income of the owners thereof for federal income tax purposes, will not be treated as an item of tax preference in computing the alternative minimum tax for individuals and corporations, and will not be taken into account in computing an adjustment used in determining the branch profits tax imposed on certain foreign corporations but as described below, will not be treated as an adjustment in computing a corporation s alternative minimum taxable income for purposes of determining the federal alternative minimum tax imposed on certain corporations, as described below. In rendering its opinion, Bond Counsel will rely upon certifications of the Borrowers with respect to certain material facts solely within the knowledge of the Borrowers relating to, among other things, the property financed or refinanced with the proceeds of the Tax-Exempt Series 2010 Bonds and the application of the proceeds of the Tax-Exempt Series 2010 Bonds. The Code includes provisions for an alternative minimum tax ( AMT ) for corporations. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing AMTI of a corporation (excluding S corporations, Regulated Investment Companies, Real Estate Investment Trusts and REMICS) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Pursuant to the American Recovery and Reinvestment Tax Act of 2009 (the 2009 Tax Act ) interest on the Tax-Exempt Series 2010 Bonds will not be included in adjusted current earnings in computing a corporation s alternative minimum taxable income for purposes of determining the federal alternative minimum tax imposed on certain corporations. Ownership of the Series 2010 Bonds may result in collateral federal income tax consequences to certain taxpayers, including without limitation, financial institutions, certain insurance companies, certain S corporations and individual recipients of Social Security or Railroad Retirement benefits. -85-

128 Interest on the Tax-Exempt Series 2010 Bonds will be taken into account as described below in computing the branch profits tax imposed on certain foreign corporations. Under the provisions of Section 884 of the Code, a branch profits tax is levied on the effectively connected earnings and profits ( ECEP ) of certain foreign corporations. ECEP includes tax-exempt interest such as interest on the Tax- Exempt Series 2010 Bonds. Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry tax exempt bonds. Indebtedness may be allocated to tax exempt bonds for this purpose even though not directly traceable to the purchase of those bonds. Pursuant to the 2009 Tax Act, in the case of a holder that is a financial institution, the Tax-Exempt Series 2010 Bonds are not taken into account for purposes of determining the financial institution's interest expense subject to the pro-rata interest disallowance rule of Code Section 265(b) so long as the tax exempt bonds issued during 2009 and 2010 and held by the financial institution do not exceed two percent of the adjusted basis of the financial institution's assets as provided in Code Section 265(b)(7), and as limited by Code Sections 265(a)(2) and 291. Prospective purchasers of the Tax-Exempt Series 2010 Bonds should consult their tax advisors as to the applicability of any such collateral consequences. The market value and marketability of the Tax-Exempt Series 2010 Bonds may be adversely affected by future changes in federal or State of Illinois tax treatment of interest on the Tax-Exempt Series 2010 Bonds or by future modifications of the Code or the regulations issued thereunder. Interest on the Tax-Exempt Series 2010 Bonds is not exempt from present Illinois income taxes. Ownership of the Tax-Exempt Series 2010 Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Tax-Exempt Series 2010 Bonds. Prospective purchasers of the Tax-Exempt Series 2010 Bonds should consult with their tax advisors regarding the applicability of any state and local taxes. Original Issue Discount. The initial public offering prices of certain maturities of the Tax- Exempt Series 2010 Bonds are less than the principal amount payable at maturity (collectively, the Tax- Exempt Discount Bonds ) as set forth on the inside cover of the Official Statement. As a result, such Tax-Exempt Discount Bonds will be considered to be issued with original issue discount. The difference between the initial public offering price of each maturity of the Tax-Exempt Discount Bonds, as set forth on the inside cover page of this Official Statement (assuming it is the first price during the initial offering (the Issue Price ) at which a substantial amount of such maturity and series is sold to the public), and the principal amount payable at maturity of the Tax-Exempt Discount Bonds will be treated as original issue discount. With respect to a taxpayer who purchases a Tax-Exempt Discount Bond in the initial public offering at the Issue Price and who holds such Tax-Exempt Discount Bond to maturity, and subject to the condition that the Authority and the Borrowers comply with the covenants referred to in the first paragraph under the caption TAX MATTERS above, original issue discount will constitute interest which is not includable in the gross income of the owner of such Tax-Exempt Discount Bond for federal income tax purposes to the same extent as current interest on the Tax-Exempt Series 2010 Bonds and such owner will not, under present federal income tax law, realize taxable capital gain upon payment of such Tax-Exempt Discount Bond upon maturity. In general, the original issue discount on each Tax-Exempt Discount Bond is treated as accruing daily over the term of such Tax-Exempt Discount Bond on the basis of a constant interest rate compounded on an accrual basis at the end of each accrual period (with straight line interpolation between compounding dates). -86-

129 Code Section 1288 provides, with respect to tax-exempt obligations such as the Tax-Exempt Discount Bonds, that the amount of original issue discount accruing each period will be added to the owner s tax basis for such Tax-Exempt Discount Bonds. Such adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Tax-Exempt Discount Bonds (including sale, redemption or payment at maturity). An owner of a Tax-Exempt Discount Bond who disposes of such Tax-Exempt Discount Bond prior to maturity should consult such owner s tax advisor as to the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or other disposition of such Tax-Exempt Discount Bond prior to maturity. As described above regarding tax-exempt interest, a portion of the original issue discount that accrues in each year to an owner of a Tax-Exempt Discount Bond may result in certain collateral federal income tax consequences. In the case of a corporation, such portion of the original issue discount will be included in the calculation of the corporation s branch profits tax liability. A corporate owner of any Tax- Exempt Discount Bond should be aware that the accrual of original issue discount in each year may result in a branch profits tax liability, although the owner of such Tax-Exempt Discount Bond will not receive a corresponding cash payment until a later date. Owners who purchase Tax-Exempt Discount Bonds in the initial public offering but at a price different than the Issue Price should consult their own tax advisors with respect to the tax consequences of the ownership of the Tax-Exempt Discount Bonds. The Code contains certain provisions relating to the accrual of original issue discount in the case of subsequent purchasers of bonds such as the Tax-Exempt Discount Bonds. Owners who do not purchase Tax-Exempt Discount Bonds in the initial public offering should consult their own tax advisors with respect to the tax consequences of the ownership of the Tax-Exempt Discount Bonds. Owners of the Tax-Exempt Discount Bonds should consult their own tax advisors with respect to the state and local tax consequences of owning the Tax-Exempt Discount Bonds. It is possible that under the applicable provisions governing the determination of state or local income taxes, accrued original issue discount on the Tax-Exempt Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment until a later year. Taxable Series 2010 Bonds TO ENSURE COMPLIANCE WITH UNITED STATES TREASURY DEPARTMENT CIRCULAR 230, PROSPECTIVE INVESTORS IN THE TAXABLE SERIES 2010 BONDS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF UNITED STATES FEDERAL TAX MATTERS CONTAINED OR REFERRED TO HEREIN (OR ANY DOCUMENT REFERRED TO HEREIN) IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER THE CODE; (B) SUCH DISCUSSION IS WRITTEN FOR USE IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN BY THE AUTHORITY AND THE UNDERWRITER; AND (C) PROSPECTIVE INVESTORS IN THE TAXABLE SERIES 2010 BONDS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. General. Interest on the Taxable Series 2010 Bonds is not excluded from the gross income of bondholders who are U.S. holders for United States federal income tax purposes. See the discussion below for a more detailed summary of certain federal income tax consequences of owning the Taxable Series 2010 Bonds. The following discussion is a summary of certain United States federal income tax considerations relevant to the purchase, ownership and disposition of the Taxable Series 2010 Bonds by holders thereof, -87-

130 based upon current provisions of the Code, regulations promulgated thereunder, judicial decisions, published rulings and administrative interpretations, each as of the date hereof and each of which is subject to change, possibly with retroactive effect, and subject to differing interpretations. Interest on the Taxable Series 2010 Bonds is not excluded from the gross income of owners who are United States persons for United States federal income tax purposes. See the discussion below for a more detailed summary of certain federal income tax consequences of owning the Taxable Series 2010 Bonds. The following discussion is a summary of certain United States federal income tax considerations relevant to the purchase, ownership and disposition of the Taxable Series 2010 Bonds by holders thereof, based upon current provisions of the Code, regulations promulgated thereunder, judicial decisions, published rulings and administrative interpretations, each as of the date hereof and each of which is subject to change, possibly with retroactive effect, and subject to differing interpretations. This summary does not purport to be a complete analysis of all the potential federal income tax considerations relating to the purchase, ownership and disposition of the Taxable Series 2010 Bonds and does not deal with all tax considerations that may be relevant to prospective investors in light of their personal circumstances (including, but not limited to, estate and gift tax considerations, alternative minimum tax considerations, or state, local or foreign tax considerations). This discussion is applicable only to initial beneficial owners of the Taxable Series 2010 Bonds who purchase Taxable Series 2010 Bonds in the initial public offering at their Issue Price, which is the first price at which a substantial amount of the Taxable Series 2010 Bonds of such maturity is sold to investors (excluding bond houses, brokers, or similar organizations acting in the capacity of underwriters, placement agents or wholesalers), and who hold their Taxable Series 2010 Bonds as capital assets, within the meaning of Section 1221 of the Code. In addition, this summary does not address all aspects of United States federal income taxation that may be relevant to holders in light of their particular circumstances or who are subject to special treatment under United States federal income tax laws, including but not limited to: (i) brokers, dealers or traders in securities, currencies or commodities, including those who use the mark-to-market method of accounting; (ii) banks and other financial institutions; (iii) insurance companies; (iv) grantor trusts; (v) pension funds and tax-exempt organizations; (vi) regulated investment companies and real estate investment trusts; (vii) persons who hold Taxable Series 2010 Bonds as part of a position in a hedging or constructive sale transaction, straddle, conversion or other integrated transaction for tax purposes; (viii) U.S. holders (defined below) whose functional currency for tax purposes is not the United States dollar; (ix) United States expatriates, certain former U.S. citizens and certain former long-term residents of the United States; (x) corporations that accumulate earnings in order to avoid United States federal income tax; (xi) foreign persons (defined below) subject to special rules under the Code, including controlled foreign corporations and passive foreign investment companies ; and (xii) partnerships or other pass-through entities and investors therein. This summary constitutes neither tax nor legal advice. Prospective purchasers of the Taxable Series 2010 Bonds are strongly urged to consult their own tax advisors with respect to their particular tax situations and possible changes in the tax laws and regulations. As used herein, the term U.S. holder means a beneficial owner of a Taxable Series 2010 Bond who, for United States federal income tax purposes, is: (i) a citizen or individual resident of the United States; (ii) a corporation, or other entity taxable as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate, the income of which is subject to United States federal income taxation regardless of its source; or (iv) a trust if it (a) is subject to the primary supervision of a court within the -88-

131 United States and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable regulations to be treated as a United States person. The tax consequences to a partner in a partnership, including any entity or arrangement treated as a partnership for United States federal income tax purposes, that holds Taxable Series 2010 Bonds generally will depend upon the status of the partner and the activities of the partnership. Partners and partnerships should consult their tax advisors regarding an investment in the Taxable Series 2010 Bonds. For purposes of this discussion, a foreign person means any beneficial owner of a Taxable Series 2010 Bond who is neither a U.S. holder nor a partnership or other entity or arrangement treated as a partnership for United States federal income tax purposes. Certain United States federal income tax consequences to foreign persons are discussed below. Interest. Stated interest on a Taxable Series 2010 Bond held by a U.S. holder generally will be included in the holder s gross income as ordinary income at the time that it is paid or accrued, in accordance with the holder s method of accounting for United States federal income tax purposes. Sale, Exchange, Redemption or Other Taxable Disposition of Taxable Series 2010 Bonds. In the case of a sale, exchange, redemption or other taxable disposition of a Taxable Series 2010 Bond by a U.S. holder, the holder generally will recognize gain or loss equal to the difference, if any, between the amount of cash and fair market value of other property received (excluding any such amount attributable to accrued and unpaid interest) and the holder s adjusted tax basis in the disposed Taxable Series 2010 Bond. A holder s tax basis in a Taxable Series 2010 Bond generally will be equal to the amount paid for the Taxable Series 2010 Bond, increased by the amount of original issue discount, if any, included in gross income, and decreased by the amount of bond premium, if any, amortized with respect to the Taxable Series 2010 Bond. Any amount received that is attributable to accrued but unpaid interest will be taxed as such, as described above. Any gain or loss generally will be treated as a capital gain or loss, except to the extent that any gain is treated as ordinary income under the market discount rules. Any capital gain or loss will be treated as a long-term capital gain or loss if, at the time of the sale or exchange, the Taxable Series 2010 Bond has been held by the holder for more than one year. Long-term capital gain recognized by certain non-corporate U.S. holders, including individuals, generally will be subject to a reduced tax rate. The deductibility of capital losses is subject to limitations. Certain United States Tax Consequences to Foreign Persons. Payments attributable to stated interest or original issue discount on a Taxable Series 2010 Bond held by a foreign person generally will be exempt from United States federal income tax and federal withholding tax if certain conditions are satisfied, including: (i) such payments are not (a) effectively connected with the conduct by the foreign person of a trade or business within the United States (or, in the case of an applicable tax treaty, are not attributable to the foreign person s permanent establishment or fixed base in the United States) or (b) contingent interest within the meaning of Section 871(h)(4) of the Code; (ii) the foreign person is not a bank that is purchasing Taxable Series 2010 Bonds pursuant to an extension of credit made in the ordinary course of its trade or business; and (iii) prior to the payment, the foreign person certifies, under penalty of perjury, on a properly executed and delivered Internal Revenue Service Form W-8BEN or appropriate substitute form, that it is not a United States person for United States federal income tax purposes. Such certification may be provided by (i) a securities clearing organization, (ii) a bank or other financial institution that holds customers securities in the ordinary course of its trade or business or (iii) a qualified intermediary that has entered into a withholding agreement with the Internal Revenue Service and other conditions are satisfied. -89-

132 Any interest or original issue discount on a Taxable Series 2010 Bond held by a foreign person that is not exempt from tax under the above rules generally will be subject to United States federal withholding tax at a gross rate of 30%, subject to any exemption or reduction under an applicable income tax treaty, unless the interest or original issue discount is effectively connected with the conduct by the foreign person of a United States trade or business. Subject to the discussion below concerning backup withholding, any gain realized by a foreign person on a sale, exchange, redemption or other taxable disposition of a Taxable Series 2010 Bond generally will not be subject to United States federal income tax or withholding tax, unless either (i) the gain is effectively connected with the conduct of a trade or business within the United States or, in the case of an applicable income tax treaty, is attributable to a permanent establishment or fixed base of the foreign person, or (ii) in the case of a nonresident alien, such individual is present in the United States for 183 days or more in the taxable year of the sale or exchange and certain other conditions are satisfied. All income or gain on a Taxable Series 2010 Bond that is effectively connected with the foreign person s conduct of a trade or business within the United States or, in the case of certain applicable income tax treaties, attributable to the foreign person s permanent establishment or fixed base in the United States generally will be subject to United States federal income tax in the same manner as income or gain of a U.S. holder. Income or gain on a Taxable Series 2010 Bond effectively connected with a United States trade or business may also be taken into account in computing the branch profits tax imposed on certain corporate foreign persons. Certain foreign partnerships are subject to special United States federal income and withholding tax rules. Holders of Taxable Series 2010 Bonds who are foreign persons or foreign partnerships are urged to consult their own tax advisors regarding the specific tax consequences to them of purchasing, owning and disposing of Taxable Series 2010 Bonds. Backup Withholding and Information Reporting. Information reporting and, in certain circumstances, a 28% backup withholding tax, may apply to certain payments on, and proceeds of, a sale, exchange, redemption or other disposition of, the Taxable Series 2010 Bonds paid to non-exempt holders. In the case of a U.S holder, backup withholding generally will apply only if such holder (i) fails to supply a taxpayer identification number and certain other information, certified under penalty of perjury, (ii) fails to certify eligibility for an exemption to backup withholding or (iii) otherwise fails to comply with the applicable backup withholding rules. In the case of a holder that is a foreign person, backup withholding generally will not apply to payments on, or proceeds of a sale, exchange, redemption or other disposition of, the Taxable Series 2010 Bonds, if such holder has provided the required certification under penalties of perjury that it is a foreign person, as defined above, or has otherwise established an exemption. Any amounts withheld from payment under the backup withholding rules will be allowed as a credit against a holder s United States federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished by the holder to the Internal Revenue Service. State Taxation of the Taxable Series 2010 Bonds Interest and original issue discount on the Taxable Series 2010 Bonds is not exempt from present Illinois income taxation. Ownership of the Taxable Series 2010 Bonds may result in other state and local tax consequences to certain prospective purchasers. Prospective purchasers of the Taxable Series 2010 Bonds should consult their own tax advisors concerning the specific state and local tax consequences of the ownership of the Taxable Series 2010 Bonds. -90-

133 FEASIBILITY STUDY Management s financial forecast, included as part of the Feasibility Study included in APPENDIX B hereto, has been examined by Dixon Hughes PLLC, independent certified public accountants, as stated in their report appearing in APPENDIX B. As stated in the Feasibility Study, there will usually be differences between the forecasted data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The Feasibility Study should be read in its entirety, including management s notes and assumptions set forth therein. RATING THE SERIES 2010 BONDS ARE NOT RATED; THE AUTHORITY HAS NOT APPLIED TO ANY RATING SERVICE FOR A RATING OF THE SERIES 2010 BONDS. UNDERWRITING Pursuant to a purchase contract by and among the Authority, the Borrowers, and B.C. Ziegler and Company d/b/a Ziegler Capital Markets (the Underwriter ), the Underwriter will (i) purchase the Series 2010A Bonds at a purchase price of $104,465,440.20, which purchase price reflects $1,967, of underwriter s discount and $2,682, of original issue discount; (ii) purchase the Series 2010B Bonds at a purchase price of $7,660,406.25, which purchase price reflects $214, of underwriter s discount; (iii) purchase the Series 2010C Bonds at a purchase price of $4,851,250, which purchase price reflects $148,750 of underwriter s discount; (iv) purchase the Series 2010D-1 Bonds at a purchase price of $10,120,693.75, which purchase price reflects $154, of underwriter s discount; (v) purchase the Series 2010D-2 Bonds at a purchase price of $15,126,962.50, which purchase price reflects $223, of underwriter s discount; (vi) purchase the Series 2010D-3 Bonds at a purchase price of $15,057,006.25, which purchase price reflects $217, of underwriter s discount; and (vii) purchase the Series 2010E Bonds at a purchase price of $12,336,912.50, which reflects an underwriter s discount of $313, The purchase contract will provide that the Underwriter will purchase all of the Series 2010 Bonds if any are purchased. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2010 Bonds to the public. The purchase contract will provide for the Borrowers to indemnify the Underwriter and the Authority against certain liabilities. The obligation of the Underwriter to accept delivery of the Series 2010 Bonds will be subject to various conditions of the purchase contract. The Ziegler Companies, Inc.; Ziegler Equity Funding III, LLC ( ZEFIII ), Ziegler Equity Funding IV, LLC ( ZEFIV ) and Ziegler Equity Funding V, LLC ( ZEFV ) are all limited partners in GCI Elmhurst, L.P., which has provided pre-finance capital to the Borrowers. ZEFIII is an investment fund comprised exclusively of Ziegler and employees of the Underwriter. Each of ZEFIV and ZEFV is an investment fund which includes primarily third party investors and certain employees of the Underwriter. Certain employees of GDC and its affiliates, and Ziegler and its affiliates are also participating as limited partners in the Limited Partnership. See DEVELOPMENT OF THE COMMUNITY in APPENDIX A. In connection with this financing, the Borrowers will establish various funds and accounts with the Bond Trustee that will hold net bond proceeds and various funds and accounts held with the Master Trustee that will be funded with entrance fees and other funds provided for the benefit of the Project, in each case, until they are withdrawn and expended. Under the terms of the Bond Indenture and the Master Indenture, the Borrowers may direct the Bond Trustee and/or the Master Trustee, respectively to invest some or all of the funds within the investment parameters established in the Bond Indenture or the Master -91-

134 Indenture, as applicable. Management of the Borrowers anticipate that the Borrowers will elect to hire Ziegler Capital Management LLC, an affiliate of Ziegler to direct the investment of these funds. If that occurs, Ziegler Capital Management, LLC will receive a fee for managing those assets. At this time, no relationship has been formally established. MISCELLANEOUS The references herein to the Act, the Master Indenture, the Series 2010 Obligations, the Bond Indentures, the Loan Agreements, the Mortgage and the Disclosure Agreement are brief summaries of certain provisions thereof. Such summaries do not purport to be complete, and for full and complete statements of the provisions thereof reference is made to the Act, the Master Indenture, the Series 2010 Obligations, the Bond Indentures, the Loan Agreements, the Mortgage and the Disclosure Agreement. Copies of such documents are on file at the office of the Authority and following the delivery of the Series 2010 Bonds will be on file at the office of the relevant Bond Trustee. All estimates and other statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. It is anticipated that CUSIP identification numbers will be printed on the Series 2010 Bonds, but neither the failure to print such numbers on any Series 2010 Bond nor any error in the printing of such numbers shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for any Series 2010 Bonds. The attached APPENDICES are integral parts of this Official Statement and must be read together with all of the foregoing statements. The Borrowers have reviewed the information contained herein which relates to them, their Property and operations, and have approved all such information for use within this Official Statement. [Signature Page Follows] -92-

135 This Official Statement is approved on behalf of: TIMOTHY PLACE, NFP By: /s/ Richard C. Schutt Chief Executive Officer CHRISTIAN HEALTHCARE FOUNDATION, NFP By: /s/ William De Young Chief Financial Officer -93-

136 [THIS PAGE INTENTIONALLY LEFT BLANK]

137 APPENDIX A TIMOTHY PLACE, NFP D/B/A PARK PLACE CHRISTIAN COMMUNITY OF ELMHURST AND CHRISTIAN HEALTHCARE FOUNDATION, NFP The Information in this Appendix has been provided by Timothy Place, NFP and Christian Healthcare Foundation, NFP

138 [THIS PAGE INTENTIONALLY LEFT BLANK]

139 TABLE OF CONTENTS Page THE OBLIGORS...A-1 General...A-1 Affiliated Entities...A-1 Board of Directors The Obligors...A-5 Providence Corporate Officers...A-6 THE CONSTITUENCY...A-7 THE COMMUNITY...A-7 General Description...A-7 Land Acquisition and Entitlements...A-8 Independent Living Units...A-8 Catered Living Units...A-10 Assisted Living Center...A-10 Health Center...A-11 Future Plans...A-12 REGULATIONS, PERMITS AND APPROVALS...A-12 Zoning...A-12 Healthcare Licensure...A-12 Life Care Permit...A-12 Certificate of Need...A-13 Building Permits...A-13 Environmental Study/Geotechnical Testing...A-14 COMPETITION AND SERVICE AREA...A-14 RESERVATION AGREEMENT...A-14 RESIDENCY AGREEMENT...A-15 Resident Fee Structure...A-15 Charter Resident Benefit...A-18 Financial Assistance...A-18 Nondiscrimination...A-18 Services to Life Care Residents...A-19 Life Care Benefit...A-19 Termination and Refunds...A-20 MARKETING...A-21 Marketing Program...A-21 Reservation of Independent Living Units...A-21 DEVELOPMENT OF THE COMMUNITY...A-23 PM&D Development Agreement...A-23 PM&D Development Experience...A-24 Greystone Communities, Inc....A-25 GCI Elmhurst, L.P....A-25 Greystone Development Experience...A-26 Greystone Corporate Officers...A-30 Greystone Development Services Agreement...A-32 MANAGEMENT OF THE COMMUNITY...A-35 PM&D Management Experience...A-35 Management Agreement...A-36 OTHER PROFESSIONAL SERVICES...A-37 The General Contractor...A-37 (i)

140 Construction Contract...A-38 The Architect...A-39 Construction Consultant...A-41 (ii)

141 THE OBLIGORS General Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst or Park Place of Elmhurst (the Corporation ), was incorporated as an Illinois not for profit corporation in May 2004 exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ). The Corporation s mission is to maintain residential and related facilities and provide for the proper care and nurture of the elderly and infirm people who seek compassionate services in a spirit of Christian charity and nurture in the later years of their life. The Internal Revenue Service (the IRS ) issued a letter, dated February 21, 2007, stating its determination that the Corporation is a charitable organization as described in Section 501(c)(3) of the Code, and is, therefore, exempt from federal income taxation under Section 501(a) of the Code. The effective date of the exemption was May 5, Park Place Christian Community of Elmhurst (the Community ) represents the first life care continuing care retirement community ( CCRC ) for the Corporation. Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation (the Foundation, and collectively with the Corporation, the Obligors ), an Illinois not for profit corporation, was formed in January 2004 for charitable purposes as set forth in Section 501(c)(3) of the Code. The Foundation s mission is to support and advance Christian care and services to the elderly and infirm by supporting health-related research, the development of a continuum of appropriate living arrangements, and programs and services to support a quality of life for those who suffer from disabilities and age related illnesses and infirmities. The IRS issued a letter, dated April 7, 2004, stating its determination that the Foundation is a charitable organization as described in Section 501(c)(3) of the Code, and is, therefore, exempt from federal income taxation under Section 501(a) of the Code. The effective date of the exemption was January 9, In the Fall of 2000, Richard Schutt, CEO of Providence (as hereinafter defined), and Kurt Nelson, Providence Board Member, met with representatives of Timothy Christian School and Elmhurst Christian Reformed Church to discuss development opportunities in Elmhurst, Illinois. Management of Providence then met with officials of the City of Elmhurst (the City ) to discuss development possibilities and received support for a proposed CCRC. Providence engaged Greystone (as hereinafter defined) to prepare a development plan in September The development plan indicated that a positive market and financial opportunity existed for development of a new life care CCRC. The Corporation engaged Providence Management and Development Company Incorporated ( PM&D ), an affiliated corporation of Providence, to begin land acquisitions and to develop the project. The Corporation signed a co-development agreement with Greystone Development Company II, LP ( GDC ) in November See DEVELOPMENT OF THE COMMUNITY and MANAGEMENT OF THE COMMUNITY herein. Together with PM&D and GDC, the project team consists of Perkins+Will CRA, LP (the Architect ) and Bovis Lend Lease (the General Contractor ). Neither Providence nor any of its affiliated entities (other than the Obligors) has any obligation or liability with respect to the Master Indenture, the Series 2010 Bonds, or the Series 2010 Obligations. Affiliated Entities The Obligors are affiliates of Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services (formerly d/b/a Rest Haven Christian Services and referred to herein as A-1

142 Providence ), a charitable organization described in Section 501(c)(3) of the Code. Providence has received a determination letter from the IRS that it is exempt from federal income taxation under Section 501(a) of the Code. Founded in 1956 as an Illinois not for profit corporation to furnish healthcare and retirement living facilities for the proper care and treatment of the elderly, Providence has over fifty years of direct experience in the operation and management of retirement communities and currently operates eleven separate facilities accounting for 1,693 units on eight campuses located in Illinois and Michigan. Providence is the sole corporate member of each of the Corporation and the Foundation. Providence elects all voting members of the Corporation s Board of Directors and the Foundation s Board of Trustees (each as hereinafter defined). In addition to the Corporation and the Foundation, Providence serves as the sole corporate member of the following controlled affiliates: Haven Park Christian Housing and Nursing Association of Zeeland, a Michigan nonprofit corporation that owns and operates a skilled nursing facility in Zeeland, Michigan; Christian Living Campus, NFP, an Illinois not for profit corporation which owns and operates a senior living community in South Holland, Illinois; Park Place Christian Community of St. John, Inc., an Indiana nonprofit corporation that is developing a senior living community in St. John, Indiana; Hudsonville Park Place, Inc. a Michigan nonprofit corporation that is developing a senior living community in Hudsonville, Michigan; Park Place Realty Group, LLC, a Michigan limited liability company whose purpose is to resell independent living units in Michigan; Providence Development Group, LLC ( PDG ), an Illinois limited liability company that seeks to develop new independent and assisted living communities and holds the real estate of those communities until construction commences; PM&D, an Illinois business corporation that provides real estate development, construction, marketing and management services to the long-term care industry. Royal Park Place, II, L.L.C., a Michigan limited liability company, is a wholly-owned subsidiary of Haven Park whose purpose is to own and rent independent living units to seniors in Michigan. Home-Aid Health Network, Inc., an Illinois business corporation is a wholly-owned subsidiary of PM&D that provides home health services to persons in their residences. The Oaks at Village Woods SLF NFP, Inc, an Illinois not for profit corporation, serves as general partner of The Oaks at Village Woods SLF, LP, an Illinois limited partnership that is developing a supportive living facility in Crete, Illinois. PM&D will provide development and management services to the Corporation. See DEVELOPMENT OF THE COMMUNITY PM&D Development Agreement and MANAGEMENT OF THE COMMUNITY herein. PDG has agreed to provide up to $2.6 million of liquidity support to the Community and the Obligors. See the description under the caption LIQUIDITY SUPPORT AGREEMENT in the front section of this Official Statement for additional information. The following diagram depicts the current organization structure and relationships among Providence and its affiliates. A-2

143 Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services Timothy Place, NFP Christian Healthcare Foundation, NFP Hudsonville Park Place, Inc. Christian Living Campus, NFP Park Place Christian Community of St. John, Inc. Providence Development Group, LLC Park Place Realty Group, LLC The Oaks at Village Woods SLF NFP, Inc. Haven Park Christian Housing and Nursing Association of Zeeland The Oaks at Village Woods SLF, LP Royal Park Place, II, L.L.C. Providence Management and Development Company Incorporated Not for Profit Corporation Obligated Group Member Home-Aid Health Network, Incorporated For Profit Entity A-3

144 The following map shows the locations of Providence and its affiliates. A-4

145 Board of Directors The Obligors The business affairs of the Corporation are governed by a voluntary Board of Directors (the Directors or the Board ). The Board is structured to consist of not less than three but no more than fourteen directors, each of whom serves without compensation. Each Director is appointed by the board of directors of Providence and serves for a five year term of office; provided that initial terms shall be established such that terms of office are staggered whereby approximately one-third of the Directors expire each year. No Director of the Corporation may serve on the Board for more than two consecutive terms of office. An individual may be eligible for reappointment after a one-year lapse in service as a Director. Any Director of the Corporation may resign from the Board at any time by giving written notice to the President or Secretary of the Corporation. A Director may be removed with or without cause at any time by Providence. Any vacancy on the Board of the Corporation may be filled by Providence for the remainder of the unexpired term. The Board of the Corporation currently consists of seven Directors. The business affairs of the Foundation are governed by a voluntary Board of Trustees (the Trustees ). The Board of the Foundation is structured to consist of not less than three but no more than nine Trustees, each of whom serves without compensation. One (but no more than one) of the Trustees shall also be a member of the Board of Providence. Each Trustee serves for a five year term of office; provided that initial terms shall be established such that terms of office are staggered whereby approximately one-third of the Trustees expire each year. No Trustee of the Foundation may serve on the Board for more than two consecutive terms of office. An individual may be eligible for reappointment after a one-year lapse in service as a Trustee. Any Trustee of the Foundation may resign from the Board at any time by giving written notice to the President or Secretary of the Foundation. A Trustee may be removed with or without cause at any time by resolution adopted by a two-thirds majority of the Board. Any vacancy on the Board of the Foundation may be filled by the Board for the remainder of the unexpired term. The Board of the Foundation currently consists of seven Trustees. Currently both Obligors have identical board members which represent the members of the Executive Committee of the Board of Directors of Providence. The current Boards of the Obligors are comprised of the following persons. Steve Vryhof, President. Mr. Vryhof works as a consultant, writer, and teacher. Mr. Vryhof worked as an adjunct professor of Calvin College and prior to that taught at Illiana Christian High School. Mr. Vryhof is the coauthor of two books titled Twelve Affirmations: Reformed Christian Schooling for the Twenty-First Century and A Vision with a Task: Christian Schooling for Responsive Discipleship. Mr. Vryhof earned his Ph.D. from the University of Chicago. Rich Van Hattem, Vice President. Mr. Van Hattem is retired from Allied Waste Industries, a company that owned and operated waste collection businesses, now known as Republic Services, Inc. Mr. Van Hattem owned National Waste Services in Chicago from 1972 until 1992 when he merged with Allied Waste Industries. Mr. Van Hattem currently owns and manages commercial real estate and participates in development projects. Bob Workman, Secretary/Treasurer. Mr. Workman is a Certified Public Accountant for his own company; Robert J. Workman, CPA. Mr. Workman holds a Bachelors in Business Administration from Trinity Christian College and became a Certified Public Accountant in Jan DeBoer, Assistant Secretary/Treasurer. Ms. DeBoer volunteers in a number of ways, including various church committees and having served on the Board to other Christian organizations. Ms. DeBoer holds a Bachelors of Education from Calvin College in Grand Rapids, Michigan. A-5

146 Ken Mels, Board Member. Mr. Mels is a retired mechanical engineer from the Electro- Motive Division of General Motors, currently named Electro-Motive Diesel, Inc., the world s second largest builder of railroad locomotives. Mr. Mels holds a Masters in Mechanical Engineering from the Illinois Institute of Technology, and a Masters in Business from Benedictine University. Cathy Larsen, Board Member. Ms. Larsen works as a Registered Nurse for Elim Christian Services, which serves adults and children with disabilities. Ms. Larsen received her nursing degree from Calvin College in Grand Rapids, Michigan. Arnold Koldenhoven, Board Member. Mr. Koldenhoven is President and Owner of Arrowhead Steel Company, a steel distribution company in the western suburbs of Chicago. Mr. Koldenhoven received his Bachelors of Science in Finance and a Masters in Business Administration from DePaul University. Providence Corporate Officers The senior corporate officers of Providence include the following individuals: Richard C. Schutt, Chief Executive Officer. Mr. Schutt has been with Providence for over 30 years. He has the responsibility for overseeing the operations, finance, marketing, development and administrative divisions of Providence. Mr. Schutt was the past-chair of the American Association of Homes & Services for the Aging ( AAHSA ) Board of Directors and has served on his local church and school boards. He is also the past-chair of the state AAHSA affiliate in Illinois, which is known as the Life Services Network ( LSN ), where he is currently a board member. He is President of PM&D, which owns a technology company and development company. In addition, Mr. Schutt is the past-chair of an alliance of long term care agencies in Chicago, known as the Health Resources Alliance, which has over 25 facilities and over 7,000 clients in the Chicago marketplace. Mr. Schutt has a Masters in Health Administration from Governors State University where he has taught courses in Nursing Home Administration and Concepts of Long-Term Care. Ray Hemphill, Executive Vice President. Mr. Hemphill joined PM&D in He has the responsibility for overseeing the development of all projects on behalf of PM&D and Providence. Additional responsibilities include the procurement of outside management contracts. Prior to joining PM&D, Mr. Hemphill was the Chief Operating Officer for Lutheran Social Services of Illinois. He has served as the State Chair of LSN and served on the House of Delegates for AAHSA. He is currently a licensed nursing home administrator and a licensed real estate broker. Mr. Hemphill received his B.S. degree from Lewis University. William De Young, Chief Financial Officer. Mr. De Young joined PM&D in He has responsibility for all corporate finance, risk management and accounting activities. Prior to joining PM&D, Mr. De Young was Regional Finance Manager for Harris Bank, and Senior Vice President and Controller for Harris Bank Frankfort. He has served as Board Member and Treasurer of Caring Communities Insurance Company since its inception, Finance Committee Member for Health Resource Alliance and Board Member of Alliance Rehab SRA. Mr. De Young received a B.S. in Accounting from Trinity Christian College. Cheryl Widdowson, Chief Administrative Officer. Mrs. Widdowson has devoted 33 years to the mission of Providence. Her tenure with Providence includes serving as the Director of Management Information Systems, Chief Financial Officer, Chief Operations Officer and currently as the Chief Administrative Officer. Mrs. Widdowson currently serves on the Health Resources Alliance Board A-6

147 and has served on the board of LSN and worked with various LSN committees. Mrs. Widdowson is active in her community where she has started several ministries reaching out to women and the poor. Dan Holwerda, Chief Operations Officer. Mr. Holwerda has served in this capacity since November He has the responsibility of overseeing all operations of Providence. Prior to joining Providence, Mr. Holwerda served as Chief Operating Officer of the Metro Health Hospital System, Grand Rapids, Michigan, and as President and Chief Executive Officer of Pine Rest Christian Mental Health Services, also located in Grand Rapids. During this time, he served on a number of committees for the Michigan Health and Hospital Association. Additionally, he has served on numerous non-profit community boards during his professional career. Mr. Holwerda has a Masters in Business Administration from Iowa State University, Ames, Iowa. THE CONSTITUENCY Providence has an affinity group consisting of more than 70 congregations of the Reformed Faith in the Metropolitan Chicago area. Two of these congregations are located immediately adjacent to the proposed site for the Community Faith Christian Reformed Church and the newly constructed Elmhurst Christian Reformed Church. Timothy Christian School is a parochial, Christian day school (grades K 12), which shares an overlapping constituency with Providence. The two organizations are planning intergenerational programs between the school and the Community. Approximately 25% of the Life Care Residents (as hereinafter defined) who have paid a Reservation Deposit (as hereinafter defined) are members of this constituency. General Description THE COMMUNITY The Community will be constructed on an approximately 12 acre site located south of West Butterfield Road between Prospect and Euclid Avenues, approximately 600 feet north of Brush Hill Road/Roosevelt Road in Elmhurst, Illinois. The northern property boundary is adjacent to Timothy Christian School, a private K-12 Christian School serving approximately 1,100 students, and the southern property boundary is adjacent to the new Elmhurst Christian Reformed Church. To the west lies Faith Christian Reformed Church. To the east Elmhurst Memorial Hospital, DuPage County s first acute care hospital founded in 1926, is constructing a new replacement healthcare campus across the street from the Community. The new 50-acre hospital campus will open in 2011 and includes an acute care hospital with all private rooms, a state-of-the-art Emergency Department, technologically advanced surgical suites, individual physician offices and a retail complex. The Community will consist of 173 independent living apartment-style residences (the Independent Living Units ), 10 catered living units (the Catered Living Units ), 46 residential-style assisted living suites (the Assisted Living Units ), 20 memory support assisted living suites (the Memory Support Units and collectively with the Assisted Living Units, the Assisted Living Center ) and a nursing facility including 37 nursing beds (the Health Center ). Each level of care has its own common and support areas; however, all residents of the Community are served by a common kitchen. The Community will contain an underground parking garage as well as surface parking. Construction of the Community is expected to commence in June 2010 with the first occupancy of the Independent Living Units expected approximately 20 months later in December See the inside front cover of this Official Statement for a location map and site plan of the Community. A-7

148 Land Acquisition and Entitlements In September 2004, PDG initiated a strategy to acquire individual single family residences adjacent to Timothy Christian School to consolidate parcels of land sufficient for construction of the proposed continuing care retirement community. During a fourteen month period ending November 2005, PDG secured control of and/or acquired sixteen residential lots encompassing approximately 12 acres of land. At the time of acquisition, the residential lots were located outside the incorporated limits of the City and required annexation by the City prior to receipt of zoning approvals. The land was annexed by the City and the Corporation secured zoning approvals in September As part of the annexation agreement, the City agreed to vacate Bryan Street, a necessary step for development of the Community. In addition, as part of the zoning approvals, the sixteen parcels were consolidated into a single subdivision plat. Prior to or concurrently with the issuance of the Series 2010 Bonds, PDG will transfer title and ownership of the land on which the Community will be constructed to the Corporation in exchange for $14.6 million. Independent Living Units The 173 Independent Living Units in the Community will be in one-, two- and threebedroom configurations within a five-story building. The common areas, located on the first and second floors of the building, include a central gathering space, multi-purpose room, living room, main dining room, café/bistro, private dining room, aquatic/fitness center, business center/library, beauty salon/barber shop, card lounge/game room, creative arts center, residential storage, a mail alcove, two guest suites and administrative offices. The following table summarizes the unit types and approximate square footage of the Independent Living Units. A-8

149 Independent Living Unit Style Number of Units Approximate Square Footage One Bedroom Units Dover Classic Dover Select Dover Traditional One Bedroom w/ Den Units Coventry Premier 8 1,031 Coventry Traditional 12 1,031 Coventry Classic 8 1,031 Coventry Signature 2 1,031 Coventry Select 2 1,031 Coventry Elite 4 1,031 Two Bedroom Units Oxford Traditional 1 1,107 Oxford Classic 10 1,107 Oxford Select 4 1,160 Oxford Signature 28 1,160 Carlisle Traditional 5 1,248 Carlisle Classic 17 1,312 Canterbury Traditional 1 1,384 Canterbury Classic 3 1,436 Canterbury Select 2 1,407 Canterbury Signature 9 1,463 Three Bedroom Units Kensington Traditional 1 1,447 Kensington Classic 2 1,517 Manchester Select 1 1,495 Manchester Signature 2 1,545 Windsor Select 2 1,510 Windsor Signature 4 1,611 Overall Total/Wtd. Average 173 1,117 Each of the Independent Living Units will be furnished with window blinds, wall-to-wall carpeting (except in the kitchen and bathroom(s)), a full kitchen with refrigerator/freezer, range with oven, microwave oven, dishwasher, utility room with washer/dryer, fire and smoke alarms, fire sprinkler system, emergency call system and individually controlled heating and air conditioning units. Some Independent Living Units also include a balcony or patio. Telephone and cable television jacks will also be installed. All utilities, except telephone, internet service and expanded cable television services, are included in the monthly service fee (the Monthly Service Fee ). By entering into a Residency Agreement (as hereinafter defined), a resident (the Life Care Resident ) will be entitled to life care services provided by the Corporation at the Community (the Life Care Benefit ). See RESIDENCY AGREEMENT Services to Life Care Residents herein for a further description of the services provided to Life Care Residents of the Community and RESIDENCY AGREEMENT Resident Fee Structure for a description of the types of fees paid by Life Care Residents. In addition, underground garage parking spaces will be made available to Life Care Residents of the Independent Living Units. See the information under the caption RESIDENCY AGREEMENT Charter Resident Benefit for a description of the fees associated with such garage parking spaces. A-9

150 Catered Living Units The Catered Living Units will be located on the third floor of the five-story residential building and will consist of one- and two-bedroom configurations. The Catered Living Units will be designed for seniors who wish to live independently, but prefer a nominal entrance fee and prefer not to participate in the Life Care Benefit at the Community (the Catered Living Residents ). Residents will receive three meals daily, more frequent housekeeping and thirty minutes daily of concierge service. The Catered Living Units will be marketed approximately six months prior to initial occupancy of the Community. Catered Living Residents are not Life Care Residents and are not entitled to the Life Care Benefit. The following table summarizes the planned types, number, monthly fees, entrance fees and approximate square footage of the Catered Living Units at the Community. Catered Living Unit Type Number of Units Approximate Square Footage 2011 Monthly 2011 Service Fee (1) Entrance Fee One Bedroom Deluxe w/ Den 4 1,031 $6,295 $37,500 Two Bedroom Traditional 4 1,160 $6,495 $37,500 Two Bedroom Deluxe 2 1,312 $6,895 $37,500 Overall Total/Wtd. Average 10 1,139 $6,495 $37,500 (1) Catered Living second person fees are $2,195 in 2011 dollars. Assisted Living Center The Assisted Living Center will consist of 46 Assisted Living Units and 20 secured Memory Support Units located in a three-story building along with the Health Center. The Assisted Living Units have been designed to foster the continued independence of Life Care Residents who require varying amounts of assistance with activities of daily living. The Assisted Living Units will be private apartments with kitchenettes and full baths and will be furnished with amenities similar to the Independent Living Units, but do not include the kitchen range with oven, dishwasher, or washer and dryer. The Assisted Living Unit s common areas will include a lobby, lounge, arts and crafts area, multipurpose room, dining room and administrative and support areas. There is a separate entrance, shared with the Health Center, to the Assisted Living Center as well as access from the Independent Living Units through building connections. The Memory Support Units will be private suites with full baths that will be furnished with amenities similar to the Assisted Living Units, but without kitchenettes. The Memory Support Units will have secured access and separate common areas which include similar amenities as the Assisted Living Unit common areas. Admission to the Assisted Living Center will be provided for Life Care Residents of the Community in accordance with the terms of the Residency Agreement. The Assisted Living Center will be available for occupancy by persons other than Life Care Residents of the Community ( Direct Admit Residents ). Direct Admit Residents will be admitted, pursuant to the terms of a separate admissions agreement, on an as-available basis to the extent the Assisted Living Units or Memory Support Units are not required to accommodate Life Care Residents of the Community. Direct Admit Residents will pay a monthly service fee (the Direct Admit Monthly Service Fee ) and an entrance fee (the Direct Admit Entrance Fee ) and have access to the Assisted Living Center as described below. A-10

151 Summarized below is the Direct Admit Monthly Service Fee and the Direct Admit Entrance Fee planned to be effective through December 31, 2011, for Direct Admit Residents and the types of Assisted Living Units and Memory Support Units for the Assisted Living Center and approximate square footage of each unit type. Assisted Living and Memory Support Unit Type Number of Units Approximate Square Footage Direct Admit Monthly Service Fee (1)(2) Direct Admit Entrance Fee Alcove Standard $4,895 $37,500 Alcove Deluxe $4,995 $37,500 One Bedroom A $5,095 $37,500 One Bedroom B $5,195 $37,500 One Bedroom C $5,395 $37,500 One Bedroom D $5,595 $37,500 One Bedroom E $5,695 $37,500 Assisted Living Total/Wtd. Average $5,408 $37,500 Memory Support Suite A $5,995 $37,500 Memory Support Suite B $6,295 $37,500 Memory Support Total/Wtd. Average $6,115 $37,500 Overall Total/Wtd. Average $5,622 $37,500 (1) Assisted Living second person fees are $2,195 in 2011 dollars. (2) In addition to Direct Admit Monthly Service Fees, Direct Admit Residents may be assessed level of care fees. There are three additional level of care fees based on the specific needs of the resident. Level I is an additional $437 per month, Level II is an additional $874 per month and Level III is an additional $1,311 per month, in 2011 dollars. Health Center The Health Center will consist of 32 rooms containing 27 private nursing rooms and five semi-private nursing rooms for a total of 37 beds located in a three-story building along with the Assisted Living Center. The rooms with the private beds are approximately 360 square feet and the semi-private rooms, each containing two beds, are also approximately 360 square feet. Health Center common areas will include administrative, service and support areas, a common therapy suite and resident dining, activity, lounge, and bathing areas. There will be a separate entrance, shared with the Assisted Living Center, as well as access to and from the Independent Living Units through building connections. The Health Center will be available for occupancy by Life Care Residents and Direct Admit Residents who transfer from another level of care when their physical condition so requires. The Corporation anticipates that admission to the Health Center for Direct Admit Residents will be on a space-available basis. Direct admissions into the Health Center are restricted under the Certificate of Need received by the Corporation. See below under REGULATIONS, PERMITS AND APPROVALS Certificate of Need for a discussion of limitations on admission to the Health Center. The private room private pay per diem rate for Direct Admit Residents ( Direct Admit Per Diem Fee ) is currently planned to be $320 in 2011 dollars. A-11

152 The Community intends to obtain Medicare certification for the Health Center. Summarized below are the Direct Admit Per Diem Fees planned to be effective through December 31, 2011, for Direct Admit Residents and the types of Health Center beds and approximate square footage of each unit type. Health Center Unit Type (1) Number of Beds Approximate Square Footage of Room Direct Admit Per Diem Fee (2011$) Private $320 Semi-Private $300 Total/Weighted Average $315 (1) All of the nursing beds are expected to be Medicare certified. The anticipated net reimbursement rate (including ancillary charges) for Medicare stays is approximately $375 per day. Future Plans The master plan for the Community includes a second phase development consisting of approximately 60 to 80 independent living units. Development of the expansion will depend, in part, on the market demand at the time of development. The expansion has not been included in management s forecast in the Feasibility Study. There is no assurance that any of the Phase II improvements will be built. REGULATIONS, PERMITS AND APPROVALS The various approvals and permits necessary for the Obligors to begin construction and commence operations are outlined below. Zoning Healthcare Licensure The site is zoned to permit development of the Community as planned. Once the development is complete, the Corporation anticipates that the Community will obtain licensure as an Assisted Living Facility under the Illinois Assisted Living and Shared Housing Act. The Corporation will be required to obtain licensure of the Assisted Living Center and the Health Center from the Illinois Department of Public Health (the Department ) upon completion of construction. For purposes of licensure, the Memory Support Unit is considered assisted living. Management of the Corporation anticipates that the Health Center will be certified for Medicare. Life Care Permit Under Illinois law, a continuing care provider is required to obtain approval as a Life Care Facility from the Department pursuant to the Illinois Life Care Facilities Act (the Act ) if it offers life care contracts. Prior to entering into Residency Agreements with Life Care Residents, the Corporation must apply for and receive a Life Care Permit from the Department. The Corporation will apply for a Life Care Permit after issuance of the Series 2010 Bonds. A-12

153 The Act requires that a prospective resident must have the right to rescind his or her life care contract without penalty or forfeiture before the latest of the following: 14 days following the first full calendar day following: (i) the initial deposit, or (ii) signing the life care contract, or (iii) receipt of the financial disclosure statement reflecting the financial condition of the Borrowers required to be furnished by the Borrowers pursuant to the Act. Additionally, the Act requires that the provider establish and maintain a letter of credit or an escrow account in an Illinois financial institution into which the entrance fees are to be deposited. The Borrowers entered into an Escrow Agreement to establish such an escrow account on February 12, 2007 with MB Financial Bank, NA, as escrow agent. The Act further requires that at all times of resident occupancy, the escrow account maintain an amount which equals or exceeds the aggregate principal and interest payments due during the next six months on account of any first mortgage or any long term financing of the facility. Notwithstanding the above requirement, the escrow monies required herein may be released to the provider upon approval by the Director of the Department. The Department s practice is to permit facilities such as the Community to satisfy this statutory requirement using funds in the Debt Service Reserve Fund established under the Bond Indentures. If at any time the amount on deposit in the Debt Service Reserve Fund is less than the aggregate amount of principal and interest payable with respect to the Series 2010 Bonds during the succeeding six month period, however, the bond trustee for the Series 2010 Bonds will be required to give notice of such event by first class mail, postage prepaid, to the Director of the Department. The Director of the Department or his authorized designee may conduct an audit or other examination of the financial affairs of any provider of a facility as often as he deems it necessary and he shall have access to the books, records, financial data and other documents maintained by the facility. Certificate of Need The Corporation received a Certificate of Need ( CON ) under the continuum of care variance authorizing construction of a 37-bed Health Center from the Illinois Health Facilities and Services Review Board (the IHFSRB ). Under the continuum of care variance, only residents of the Community (Life Care Residents and Direct Admit Residents) are eligible for admission to the Health Center, because CONs granted under the continuum of care variance limit the source of admissions to the approved beds. Subsequent to receipt of the CON, the IHFSRB updated the bed inventory for the planning district in which the Community is located whereby a bed need has been identified. The Corporation anticipates applying for an amendment to its CON, after issuance of the Series 2010 Bonds, to allow for direct admissions into the Health Center from outside the Community. Building Permits The Corporation submitted the construction documents and application for the building permit to the Elmhurst Building Department on August 18, The Elmhurst Building Department, along with their third-party plan reviewer, completed their review on September 18, 2009 and found the drawings to be in conformance with the applicable City of Elmhurst codes and ordinances and have been approved. The City of Elmhurst has issued a letter indicating that the building permit will be released upon payment of the applicable building permit fees and all contractors being licensed and registered with the City of Elmhurst. Nothing has come to the attention of the Corporation which would lead it to believe that such conditions will not be met and that such permits will not be granted in due course. A-13

154 Environmental Study/Geotechnical Testing An Environmental Site Assessment was completed on November 21, 2008 and revealed no adverse environmental conditions requiring any further investigation or mitigation. A second Environmental Site Assessment was completed on November 23, 2009 and confirmed the findings of the November 21, 2008 report that no adverse environmental conditions requiring further investigation or mitigation exist. A comprehensive geotechnical investigation revealed no unexpected site conditions which would adversely affect the development of the Community. The Illinois Department of Natural Resources issued a floodplain determination for the proposed Community dated March 28, 2007 which indicated that the proposed development is located within a designated 100-year floodplain and therefore falls under the floodplain development requirements set forth in Illinois Executive Order 5. The Community has been designed to be in conformance with Executive Order 5 such that the lowest floor elevation is above and protected from damage by the 100-year flood and the lowest floor elevation is above the 500-year frequency flood elevation. In addition, the Federal Emergency Management Agency ( FEMA ) has issued a Conditional Letter of Map Revision stating that the design intent of the Community is in conformance with the floodplain requirements set forth by FEMA. An endangered species study found that there are no federally endangered or threatened species within the vicinity of the project site. The Illinois Historical Preservation Agency found that there are no significant historic, archeological, or architectural resources located in the vicinity of the project site. As with all major construction projects, the Obligors must obtain numerous licenses, permits, or approvals from various governmental agencies, both for construction work and to operate various portions of the Community after completion. Applications for certain approvals may not be made until certain site work and detailed plans have been prepared or construction is completed. In some cases, approvals may only involve an administrative review to ensure compliance with approvals already obtained or payment of a fee and in other cases approvals may involve the exercise of discretion by governmental authorities. See RISK FACTORS Regulation. COMPETITION AND SERVICE AREA Information with respect to the service area and competition of the Community can be found under the caption Summary of Significant Forecast Assumptions and Accounting Policies Underlying Utilization Assumptions and Rationale in the Feasibility Study, which is attached as APPENDIX B to the Official Statement. THE FEASIBILITY STUDY SHOULD BE READ IN ITS ENTIRETY, INCLUDING MANAGEMENT S NOTES AND ASSUMPTIONS SET FORTH THEREIN. RESERVATION AGREEMENT In order to reserve an Independent Living Unit at the Community, a prospective resident must execute a Reservation Agreement ( Reservation Agreement ), provide a self-disclosure of his or her health and finances and place a deposit equal to 10% of the Entrance Fee on the selected Independent Living Unit. To qualify to be a Resident at the Community the prospective Resident must meet health and financial parameters as established by the Corporation. The prospective Resident must have assets at least equal to two times the Entrance Fee (as hereinafter defined) as well as receive monthly income equal to one hundred and sixty percent (160%) of the Monthly Service Fee for the specific Independent Living A-14

155 Unit selected. To qualify based on health parameters a prospective Resident must have the ability to live independently, have no diagnosis of Alzheimer s or dementia and be at least 62 years old. See MARKETING Reservations of Independent Living Units. The Reservation Agreement reserves the right of the prospective resident to choose his or her specific Independent Living Unit and to indicate his or her intent to execute a Residency Agreement upon the Corporation s receiving its Life Care Permit from the Department. The Reservation Agreement also provides each prospective resident guaranteed direct admission, upon payment of the full Entrance Fee due, to an Assisted Living Unit, Memory Support Unit or the Health Center under the Life Care Benefit should his or her health needs change prior to the opening of the Community. Once the Life Care Permit is received, the Reservation Agreement will no longer be utilized. See REGULATIONS, PERMITS AND APPROVALS Life Care Permit herein. RESIDENCY AGREEMENT The Residency Agreement ( Residency Agreement ) is a contract under which the Corporation is obligated, if a prospective Life Care Resident establishes occupancy, to provide certain services to that prospective Life Care Resident. See Services to Life Care Residents below. The Corporation cannot present Residency Agreements for execution until after receipt of its Life Care Permit from the Department. See REGULATIONS, PERMITS AND APPROVALS Life Care Permit herein. The Corporation considers applications for residence at the Community based upon the guidelines for the acceptance of Life Care Residents described below and maintains sole discretion on the decision to accept a Life Care Resident. An application for residence at the Community will be accepted only if the applicant demonstrates the ability to live independently and to meet the financial obligations as a Life Care Resident of the selected Independent Living Unit. Each Life Care Resident must be 62 years of age or older at the time of establishing occupancy. In the event of two Life Care Residents, only one must be 62 years of age or older. No dependent children may reside in the Community unless otherwise agreed by the Corporation. Persons who have not executed a Residency Agreement may be admitted to the Health Center or Assisted Living Center as Direct Admit Residents if beds are available in excess of those needed to satisfy the needs of Life Care Residents. Life Care Residents requiring care in the Health Center or Assisted Living Center will have priority utilization of the Health Center and Assisted Living Center over Direct Admit Residents. Resident Fee Structure There are two types of residency fees required of all Life Care Residents executing Residency Agreements: an Entrance Fee and ongoing Monthly Service Fees. The Entrance Fee is a lump sum, one-time payment based on the type of Independent Living Unit to be occupied by the Life Care Resident and the type of Entrance Fee Plan selected. To reserve an Independent Living Unit, a prospective Life Care Resident must make an initial payment equal to 10% of the Entrance Fee ( Reservation Deposit ) prior to or upon execution of the Residency Agreement and pay the remaining 90% of the Entrance Fee on or before the date of occupancy. There is no additional Entrance Fee required for a second Life Care Resident living in an Independent Living Unit. The Monthly Service Fees are based on the type of Independent Living Unit selected by the Life Care Resident. In addition to the first resident Monthly Service Fee, an additional Monthly Service Fee is payable for a second Life Care Resident living in an Independent Living Unit. A-15

156 The Corporation offers three residency plans to Life Care Residents of the Community. Plan A is a 90% refundable contract ( Plan A ). Plan B is a 50% refundable contract ( Plan B ), and Plan C is a nonrefundable plan ( Plan C ). Under Plan B, the Entrance Fee will amortize 2% per month from the date of occupancy to the date of termination, but in no event will the Entrance Fee refund amortize below 50% of the Entrance Fee, and the Monthly Service Fee will be discounted 20% per month from the Plan A pricing. Under Plan C, the Entrance Fee will be discounted by 30% and will amortize 2% per month from the date of occupancy to the date of termination, until the Entrance Fee is no longer refundable. The Monthly Service Fee under Plan C is the same as Plan A. All three plans offer a Life Care Benefit. See the information under the caption Life Care Benefit for a detailed description of the Life Care Benefit. A limited number of prospective Life Care Residents have chosen Plan A or Plan B at the time of reservation and placed a Reservation Deposit equal to ten percent (10%) of the Entrance Fee under the Plan C contract. These residents have signed an addendum acknowledging that the full Entrance Fee under Plan A or Plan B of the Agreement will be due and payable at the time of occupancy. The Corporation offered this program to prospective Life Care residents beginning in 2008, and as of May 21, 2010, 74 of the 133 depositors placed a deposit under this option and executed the required addendum. Plan A is the base pricing plan for the Community. Plans B and C are adjusted from Plan A pricing to reflect the refundability options. The Corporation plans to only offer a limited number of Plans B and C. The following table illustrates the planned Monthly Service Fees and Entrance Fees under Plan A (expressed in 2011 dollars): A-16

157 Plan A Resident Pricing 2011 Charter 2011 Entrance Fees Independent Living Number Monthly Service Charter Construction Standard Unit Style of Units Fee (1)(2) Pricing (3) Pricing (4) Pricing One Bedroom Units Dover Classic 31 $2,695 $325,000 $350,000 $375,000 Dover Select 1 $2,695 $325,000 $350,000 $375,000 Dover Traditional 13 $2,695 $331,923 $350,923 $375,000 One Bedroom w/den Units Coventry Premier 8 $2,995 $450,000 $464,000 $475,000 Coventry Traditional 12 $3,195 $512,900 $525,000 $540,000 Coventry Classic 8 $3,195 $501,913 $525,000 $540,000 Coventry Signature 2 $3,195 $512,900 $525,000 $540,000 Coventry Select 2 $3,195 $468,950 $525,000 $540,000 Coventry Elite 4 $3,195 $500,925 $535,000 $550,000 Two Bedroom Units Oxford Traditional 1 $3,495 $561,500 $579,000 $595,000 Oxford Classic 10 $3,495 $554,340 $579,000 $595,000 Oxford Select 4 $3,495 $565,250 $589,000 $599,000 Oxford Signature 28 $3,495 $557,943 $589,000 $599,000 Carlisle Traditional 5 $3,895 $642,860 $657,000 $671,000 Carlisle Classic 17 $3,895 $644,941 $664,000 $678,000 Canterbury Traditional 1 $4,195 $747,500 $785,000 $799,000 Canterbury Classic 3 $4,195 $745,000 $785,000 $799,000 Canterbury Select 2 $4,195 $706,150 $785,000 $799,000 Canterbury Signature 9 $4,195 $747,133 $785,000 $799,000 Three Bedroom Units Kensington Traditional 1 $4,295 $794,000 $825,000 $849,000 Kensington Classic 2 $4,295 $790,000 $825,000 $849,000 Manchester Select 1 $4,295 $773,000 $825,000 $849,000 Manchester Signature 2 $4,295 $788,250 $825,000 $849,000 Windsor Select 2 $4,395 $844,425 $859,000 $885,000 Windsor Signature 4 $4,395 $834,000 $880,000 $899,000 Overall Total/Wtd. Average 173 $3,386 $528,823 $544,653 $571,526 (1) Independent Living second person fees are $495 for all charter residents and $1,095 for all non-charter residents in 2011 dollars. (2) Monthly service fees shown are for all charter residents. Non-charter residents would pay an additional $100 in monthly service fees in 2011 dollars. (3) Charter Resident Pricing includes a discount on the Standard Entrance Fee. (4) Construction Pricing includes a discount on the Standard Entrance Fee. A-17

158 Plan Type The following table highlights the key differences between Plan A and the other plans. Entrance Fee Discount off of Plan A Pricing Refundability Amortization Period (1) Monthly Fee Discount off of Plan A Pricing Plan B 0% 50% 25 months 20% Plan C 30% 0% 50 months 0% (1) See Residency Agreements herein. Refunds under Plan B and C reduce monthly over time (2% per month) to 50% and 0%, respectively. Charter Resident Benefit To encourage early commitments to residency at the Community, the Corporation offers members of the Priority Program (as hereinafter defined) a package of benefits ( Charter Resident Benefits ). Charter Resident Benefits include, but are not limited to, the following: (i) a 5% discount on the Entrance Fee ( Charter Entrance Fee ); (ii) 100% refund of the Entrance Fee after occupancy, upon termination of the Residency Agreement (Plan A only); (iii) no increase in Monthly Service Fees through December 31, 2011; (iv) interest paid at the rate of 4.5% on the Entrance Fee deposit until the date the Independent Living Unit is ready for occupancy provided that Life Care Resident occupies their respective Independent Living Unit, otherwise interest will be paid at prevailing rate on escrow account; (v) two months of complimentary Monthly Service Fees from available occupancy date; (vi) $500 lifetime discount on second person Monthly Service Fee; (vii) opportunity to customize independent living residence; (viii) upon permanent transfer to the Health Center or Assisted Living Center, the Monthly Service Fee will be adjusted to the current Monthly Service Fee for a One Bedroom Dover Traditional Independent Living Unit, plus the cost of two additional meals per day; (ix) one underground garage parking space at no charge; (x) 30 lifetime free days of temporary care in the Assisted Living Center or Health Center; and (xi) guaranteed occupancy regardless of changes in health between signing of the Reservation Agreement and occupancy, as long as the Corporation is able to provide the care needed in a safe environment. Financial Assistance If a Life Care Resident of the Community no longer can pay the Monthly Service Fee in full due to lack of funds for reasons beyond the control of the Life Care Resident, the Corporation may subsidize, in whole or in part, the Monthly Service Fees and other charges, provided the ability of the Community to operate on a sound financial basis for all Life Care Residents is not materially impaired. In the event that financial assistance is provided by the Corporation, such amounts, plus interest, may be charged against the refund of the Entrance Fee owed to a Life Care Resident upon termination of the Residency Agreement. The Corporation may also require a Life Care Resident receiving financial assistance to move to a smaller or less expensive Independent Living Unit. Nondiscrimination The Community will be operated on a non-discriminatory basis, and will provide the facilities and services described in the Residency Agreement to individuals without unlawful discrimination due to race, color, religion, sex, age, national origin, ancestry, disability or any other unlawful reason. A-18

159 Services to Life Care Residents Upon payment in full of the Entrance Fee and ongoing payment of the Monthly Service Fee, each Life Care Resident will be provided an Independent Living Unit and receive certain basic services. Services provided include: (i) one meal credit per person for each day of the month; (ii) all utilities, except telephone, internet services and premium cable television services; (iii) weekly housekeeping of the Independent Living Unit; (iv) weekly cleaning and changing of personal bed linens; (v) maintenance of all common areas and equipment; (vi) repair, maintenance or replacement of furnishings provided in the Independent Living Units; (vii) regularly scheduled local transportation; (viii) 24-hour monitoring of the emergency alert system; (ix) a variety of social, recreational, educational, cultural, and health wellness programs; and (x) use of dining rooms, lounges, surface parking, storage lockers, social and recreational rooms and other common activity facilities. Life Care Benefit The Corporation will provide Life Care Residents with nursing services that are available in the Health Center or assisted living/memory support services that are available in the Assisted Living Center when a determination is made by the Life Care Resident s physician, in consultation with the Life Care Resident s family, and approved by the Community s medical director, that the Life Care Resident needs nursing care or assisted living care (the Life Care Benefit ). The Corporation will pay for routine assisted living and nursing care to the extent that it is not covered by the Life Care Resident s insurance, Medicare, or other governmental benefits or entitlements that Life Care Residents are required to possess and maintain under the Residency Agreement provided, that, residents of the Independent Living Units will be required to pay the monthly service fee applicable to the Two Bedroom Oxford Signature Independent Living Unit. Assisted living services will be provided in an Assisted Living Unit or Memory Support Unit and are designed to assist Life Care Residents with the activities of daily living, such as dressing, eating, bathing, toileting, and ambulating, which are approved by the Community s medical director and delivered in accordance with the routine care included in the applicable Monthly Service Fee then in effect. Nursing services will be provided in a private nursing room and delivered in accordance with the routine care included in the traditional nursing room rate then in effect. For single occupancy, upon permanent transfer to the Health Center or Assisted Living Center and release of the Independent Living Unit, the Life Care Resident s Monthly Service Fee will be adjusted to the then-current Monthly Service Fee for a Two Bedroom Oxford Signature Independent Living Unit plus the cost of two additional meals per day. In the case of double occupancy of an Independent Living Unit, in the event of a permanent transfer of both Life Care Residents and release of the Independent Living Unit, the Monthly Service Fee will be adjusted to the then-current Monthly Service Fee for a Two Bedroom Oxford Signature Independent Living Unit, plus the then-current second person Monthly Service Fee and the cost of two additional meals per day per person. If space is not available in the Health Center or Assisted Living Center, until such space becomes available, the Corporation will arrange and pay for a Life Care Resident s temporary care in another facility of comparable quality to the same extent as if it were provided by the Corporation. Residents transferred to the Assisted Living Center or Health Center will be billed for non-routine care and ancillary services at the then-current rates for such items. Additional services may be available on a fee-for-service basis including, but not limited to, additional housekeeping, laundry services for personal items, catering for special occasions, tray service when medically advisable, additional Life Care Resident and guest meals, barber and beauty services and temporary guest quarters. A-19

160 Termination and Refunds Termination Prior to Occupancy. Prior to occupancy, prospective Life Care Residents will be entitled to reimbursement of their Reservation Deposit in full with interest at the prevailing rate on the escrow account within 30 days after notice of termination of the Residency Agreement under any one of the following conditions: (i) if a Life Care Resident dies, or if, because of illness, injury or incapacity, the Life Care Resident would be precluded from occupying the Independent Living Unit; (ii) if a Life Care Resident terminates the Residency Agreement within 14 days after the first calendar day following the later of: (1) the date on which the Residency Agreement was signed, (2) the date of receipt of the financial Disclosure Statement, or (3) the date on which the Reservation Deposit was paid ( Rescission Period ); (iii) if a Life Care Resident submits a written termination of the Residency Agreement after the Rescission Period, but prior to occupancy; (iv) if the Corporation terminates its intention to fully construct the Community; or (v) the residence is not available for occupancy within three years after the date of execution of the Residency Agreement. Termination After Occupancy. After occupancy, the Residency Agreement may be terminated by the Life Care Resident at any time by providing 60 days written notice of termination to the Corporation. Upon termination of the Residency Agreement and release of the Independent Living Unit, the Corporation will refund the appropriate percentage of the Entrance Fee by the departing Life Care Resident (depending on the Entrance Fee Plan selected), without interest, on the later of: (i) the effective date of termination of the Residency Agreement, or (ii) the date a new Entrance Fee and executed Residency Agreement have been received from a new Life Care Resident, and the new Life Care Resident has taken occupancy of the vacated Independent Living Unit. The Corporation may terminate the Residency Agreement: (i) if a misrepresentation or omission in the Confidential Data Profile, Confidential Medical Profile, or related materials, which, if such information had been accurately provided, would have been material to the Corporation s decision to accept the resident for residency; (ii) there is a failure to comply with the Policies, or a creation of a situation detrimental to the health, safety, or the quiet enjoyment of a Life Care Resident, any other Life Care Resident or individual, or any staff member of the Community or the property of other residents or individuals or staff of the Community; (iii) filing for protection under the bankruptcy laws of the United States, under any chapter, or your conveyance of substantially all or all of a Life Care Resident s assets, or a Life Care Resident s involuntary placement in bankruptcy; (iv) failure to pay the Monthly Service Fee, fees for additional services, or other amounts owed when due; (v) a material breach of any of the terms or conditions of the Residency Agreement; and (vi) the Residence is no longer fit for occupancy, such as in the event of fire or a natural disaster, and the Corporation elects not to restore the residence to habitable condition. If the Corporation seeks to terminate the Residency Agreement and occupancy for non-medical reasons, not including any emergency situations, the Corporation shall give 60 days prior written notice of termination, which shall reasonably describe the conduct alleged to warrant the termination of this Residency Agreement and shall set the time, place, and date for a meeting between the Life Care Resident and representatives of the Community, which shall not be earlier than 30 days nor later than 45 days after the notice of termination. At this meeting the Life Care Resident may avoid termination by demonstrating to the Corporation s reasonable satisfaction that he has cured the conduct alleged to warrant the termination. If two Life Care Residents occupy an Independent Living Unit and one dies, the Residency Agreement will continue in full force and effect for the surviving Resident, except the Monthly Service Fee will be reduced by the then-current charge for a second person for the Residence occupied by the surviving Life Care Resident. No refund of the Entrance Fee will occur until the surviving Resident leaves. A-20

161 MARKETING Marketing Program Marketing efforts for the Community began in May 2006 with a Priority Program. Greystone conducted a direct mail campaign, on behalf of the Corporation, including a business reply card, to age and income qualified seniors in the Elmhurst area. Prospective Life Care Residents (the Priority Members ) were placed on a priority list and given a priority number. Approximately 387 Priority Members signed up prior to the start of conversions in February Reservation of Independent Living Units A prospective Life Care Resident may reserve an Independent Living Unit at the Community by submitting a confidential data profile, including health and financial disclosure, executing a Reservation Agreement (or a Residency Agreement after receipt of the Life Care Permit) and submitting a Reservation Deposit for the Independent Living Unit selected. The execution of a Reservation Agreement does not constitute a binding commitment to establish occupancy at the Community on the part of any prospective Life Care Resident. Prospective Life Care Residents may terminate their Residency Agreements and receive refunds of all amounts paid to the Corporation. See RESIDENCY AGREEMENT Termination and Refunds herein. Priority Members were offered the opportunity to enter into a Reservation Agreement beginning in February As part of the reservation process, a prospective Life Care Resident is provided a financial disclosure statement and a draft Residency Agreement. Through May 21, 2010, 133 of the 173 available Independent Living Units (representing approximately 78% of the total available Independent Living Units of the Community) are reserved by prospective Life Care Residents who have paid a Reservation Deposit and executed a Reservation Agreement. The following table depicts the net and cumulative deposits. A-21

162 Month Number of Units Reserved Net and Cumulative Deposits Number of Cancellations/ Refunds Net Reservations for Month Cumulative Units Reserved Cumulative % of Total Units February % March % April % May % June % July % August % September % October % November % December % January % February % March % April % May % June % July % August % September % October % November % December % January % February % March % April % May % June % July % August % September % October % November % December % January % February % March % April % May 2010 (1) 0 2 (2) % TOTAL: (1) Represents Reservation Deposits through May 21, A-22

163 The data submitted by applicants for residency is evaluated and reviewed by the Corporation to determine the suitability of such applicant for residency at the Community. A description of the criteria used to evaluate prospective residents applications is described under the caption RESIDENCY AGREEMENTS herein. Each applicant is subsequently notified of the Corporation s decision to accept or reject his or her application. In the case of applicants accepted for residency, a Reservation Agreement (or Residency Agreement after receipt of the Life Care Permit) is executed by the prospective resident and the Corporation. In the case of applicants rejected for residency, their initial 10% Entrance Fee deposit is refunded within thirty (30) days. The Corporation has not yet initiated marketing for services contemplated for the Health Center or the Assisted Living Center. The Corporation anticipates that it will initiate a comprehensive health care oriented training of marketing personnel, direct marketing and presentations to the network of senior caregivers in the greater Elmhurst area and personal contact with hospital discharge planners and physicians shortly before completion of construction of those portions of the Community. DEVELOPMENT OF THE COMMUNITY The Corporation has entered into separate development services agreements with PM&D and Greystone Development Company II, LP. The following sections summarize the development services agreements with PM&D and GDC. PM&D Development Agreement The Corporation entered into a Development Services Agreement effective December 15, 2005, as amended (the PM&D Development Agreement ), with PM&D to provide development services for the Community. As compensation for services rendered pursuant to the PM&D Development Agreement, the Corporation will pay PM&D a development fee ( PM&D Development Fee ), equal to $2,600,000. The PM&D Development Fee has been/will be earned as follows: (i) $325,500 within ten days following the execution of the PM&D Development Agreement; (ii) $487,500 paid pro-rata over 12 months commencing in the month following the execution of the PM&D Development Agreement; (iii) $1,137,000 upon the earlier of commencement of construction or closing of construction financing of the Community; (iv) $487,500 paid in equal monthly payments during the construction period; and (v) $162,500 upon issuance of occupancy permits. Based on an amendment to the PM&D Development Agreement, the PM&D Development Fees are to be payable to PM&D in the following manner: (i) an amount equal to $500,000 upon the closing of the Series 2010 Bonds; (ii) $500,000 to be paid on a pro rata basis upon the occupancy of each Independent Living Unit up to 95% occupancy; (iii) $1,600,000 to be paid based upon available cash above a level equal to a ratio of thirty percent cash to outstanding debt of the Community. The following table summarizes the payment terms related to the PM&D Development Fee in connection with the Community. A-23

164 Base Development Fee Earned Paid Ten (10) days following execution of Development Agreement $ 325, Monthly following execution of Development Agreement 487, Closing of the Series 2010 Bonds 1,137,000 $ 500,000 During Construction Period (monthly) 487, Upon issuance of occupancy permits 162, Pro-rata over fill-up to 95% occupancy ,000 Upon available cash above a level equal to a ratio of 30% cash to outstanding debt -- 1,600,000 Total Base Development Fee $2,600,000 $2,600,000 Pursuant to the terms of the PM&D Development Agreement, the Corporation will also reimburse PM&D for all reasonable out-of-pocket travel expenses for personnel employed by PM&D. Such bills shall be paid within 30 days after submittal. An annual interest of 3.5% will be charged for all unpaid bills presented by PM&D. PM&D Development Experience PM&D is currently, or has been, responsible for more than fifteen (15) senior living community development and expansion projects. Selected senior living communities, both completed and in-process, for which PM&D has provided development services include: Facility Project Status Park Place Christian Community of St. John St. John, Indiana (Providence Life Services Community) 146 Independent Living Apartments 50 Nursing Home Beds 2011 estimated construction start The Oaks of Village Woods Crete, Illinois (Providence Life Services Community) 125 Supportive Living Apartments 2010 estimated construction start Victorian Village Homer Glen, Illinois (Providence Life Services Community) 65 Independent Living Townhomes 54 Independent Living Apartments 60 Assisted Living Apartments 50 Nursing Home Beds Completed Completed Completed 2010 Construction Start Willow Falls Crest Hill, Illinois 116 Assisted Living Apartments Completed 2002 Oak Grove Christian Retirement Village Demotte, Indiana 44 Assisted Living Apartments 36 Nursing Home Beds Completed 1999 Villas of South Holland South Holland, Illinois Fairways Crete, Illinois (Providence Life Services Community) 64 Independent Living Townhomes Completed Independent Living Townhomes Completed 1997 The Corporation has entered into separate development services agreements with Greystone Development Company II, LP and PM&D. GDC s role is the lead development consultant for the Community. PM&D s role is co-developer of the Community to provide support, assistance and A-24

165 oversight of GDC s efforts. The following sections summarize the development services agreements with GDC and PM&D. Greystone Communities, Inc. The Corporation entered into a Development Services Agreement effective November 2005 with Greystone Development Company II, LP including its affiliated entity Greystone Development Services XVII ( GDS ). GDC and GDS are collectively referred to herein as Greystone. GDC, a Delaware limited partnership, has been engaged to provide development consulting services during the planning and development of the Community. GDC specializes in providing planning, development, marketing, management and strategic consulting services related to all areas critical to the senior housing and services business. GDC currently has a staff of approximately 175 persons. Greystone Communities, Inc. ( GCI ), the operating predecessor and an affiliate of GDC, was formed in 1989 as the successor to VHA Development Company, Inc., which was formed in GDC, GCI, and their affiliates are owned by Greystone Partners II LP, a privately held partnership including employees of GDC. GCI Elmhurst, L.P. Greystone is responsible for the development of the Community under the direction of the Corporation. GDS is a Delaware joint venture comprised of GCI Elmhurst, L.P. (the Limited Partnership ) and GDC. Pursuant to the joint venture agreement, the Limited Partnership s role is to fund the pre-finance development costs (the Pre-finance Capital ) associated with providing pre-finance development services under the Greystone Development Services Agreement (as hereinafter defined). GDC s role is to manage the joint venture and to provide all services, on behalf of Greystone, which are required to be performed pursuant to the Greystone Development Services Agreement. See Greystone Development Services Agreement below. Neither the Limited Partnership nor Greystone is obligated to make payments under the Loan Agreement or on the Series 2010 Obligations or for payment on the Series 2010 Bonds. The Limited Partnership was formed to fund the Pre-finance Capital. Pre-finance Capital in the amount of $6,000,000 was funded in March 2006, $2,800,000 was funded in October 2007, $1,500,000 was funded in June 2008, $1,600,000 was funded in June 2009 and $500,000 was funded in March The general partner (the General Partner ) of the partnership is GDC Elmhurst, LLC, a Delaware limited liability company. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. ( Greystone Partners ), which is controlled by principals of Greystone. Limited Partners currently include The Ziegler Companies, Inc., Ziegler Equity Funding III, LLC, Ziegler Equity Funding IV, LLC, Ziegler Equity Funding V, LLC and Greystone Senior Living Investors LP ( GSLI ). GSLI is also controlled by principals of Greystone. The Pre-finance Capital, along with $3,055,556 of the Fixed Base Fee (as hereinafter defined) will be repaid upon delivery of the Series 2010 Bonds. The remaining $4,000,000 of the Fixed Base Fee will be paid subject to the terms and provisions of the Greystone Development Services Agreement, as amended, which are consistent with the support obligation reduction provisions of the Liquidity Support Agreement. See Greystone Development Services Agreement below. The Corporation has no obligation to reimburse advances made by the Limited Partnership unless and until the closing of the Series 2010 Bonds. All risk for such advances associated with the failure to achieve closing on the financing will be borne by the Limited Partnership. A-25

166 Greystone Development Experience Greystone is currently, or has been, responsible for more than 100 senior living community development and expansion projects. Senior living communities, both completed and inprocess, for which Greystone has provided development services within the past five years include: Sponsor Project Status Piedmont Gardens Oakland, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates) 63 Independent Living Apartments 20 Assisted Living Apartments 2014 estimated construction start East Ridge Retirement Village Cutler Bay, Florida (East Ridge Retirement Village, Inc., an affiliate of SantaFe Senior Living, Inc.) Pilgrim Haven Los Altos, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates) Arbor Oaks at Crestview Bryan, Texas (Methodist Retirement Communities, Inc.) Phase II 125 Independent Living Apartments 105 Independent Living Apartments 30 Assisted Living Apartments 18 Memory Support Apartments 30 Nursing Home Beds Phase II 92 Independent Living Apartments 2012 estimated construction start 2012 estimated construction start 2011 estimated construction start The Terraces at San Joaquin Gardens Fresno, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates) The Barrington of Carmel Carmel, Indiana (Mayflower Communities, Inc.) The Terraces at Harris Ranch Boise, Idaho (Boise Retirement Community, an affiliate of Cornerstone Affiliates) Crestview Retirement Community Bryan, Texas (Methodist Retirement Communities, Inc.) The Terraces at Bonita Springs Bonita Springs, Florida (Bonita Springs Retirement Village, an affiliate of SantaFe Senior Living, Inc.) High Acres at Seneca Lake Geneva, New York (FLH Senior Communities, Inc.) Phase II 142 Independent Living Apartments 56 Assisted Living Apartments 24 Memory Support Apartments 54 Nursing Home Beds 126 Independent Living Apartments 6 Catered Living Apartments 56 Assisted Living Apartments 24 Memory Support Apartments 48 Nursing Home Beds 153 Independent Living Apartments 12 Independent Living Cottages 40 Assisted Living Apartments 18 Memory Support Apartments 36 Nursing Home Beds Phase I 48 Assisted Living Apartments 18 Memory Support Apartments 48 Nursing Home Beds 150 Independent Living Apartments 48 Assisted Living Apartments 18 Memory Support Apartments 40 Nursing Home Beds 75 Independent Living Apartments 5 Catered Living Apartments 6 Independent Living Cottages 41 Assisted Living 2011 estimated construction start 2011 estimated construction start 2011 estimated construction start 2010 estimated construction start 2010 estimated construction start 2010 estimated construction start A-26

167 Sponsor Project Status GreenFields of Geneva Geneva, Illinois (Friendship Village of Mill Creek, NFP, an affiliate of Friendship Senior Options, Inc.) 147 Independent Living Apartments 51 Assisted Living Apartments 26 Memory Support Apartments 43 Nursing Home Beds 2010 estimated construction start East Ridge Retirement Village Cutler Bay, Florida (East Ridge Retirement Village, Inc., an affiliate of SantaFe Senior Living, Inc.) The Admiral at the Lake Chicago, Illinois (The Admiral at the Lake, an affiliate of The Old People s Home of the City of Chicago, Inc.) Aberdeen Heights Kirkwood, Missouri (Ashfield Active Living and Wellness Communities, Inc., an affiliate of Presbyterian Manors of Mid-America Corp.) Mirador Corpus Christi, Texas (SQLC Senior Living Center at Corpus Christi, Inc., an affiliate of Senior Quality Lifestyles Corp.) The Stayton at Museum Way Fort Worth, Texas (Tarrant County Senior Living Center, Inc., an affiliate of Senior Quality Lifestyles Corp.) The Amsterdam at Harborside Port Washington, New York (Amsterdam House CCRC, Inc.) Brethren Village Lancaster, Pennsylvania (Brethren Village Retirement Community) The Boulders at RiverWoods Exeter, New Hampshire (The RiverWoods Company, at Exeter, New Hampshire, Inc.) Skyline at First Hill Seattle, Washington (Presbyterian Retirement Communities Northwest) Edgewater West Des Moines, Iowa (Wesley Retirement Services, Inc.) 220 Existing Independent Living Cottages 60 Assisted Living Apartments 23 Memory Support Apartments 60 Nursing Home Beds 200 Independent Living Apartments 39 Assisted Living Apartments 17 Memory Support Apartments 36 Nursing Home Beds 243 Independent Living Apartments 30 Assisted Living Apartments 15 Memory Support Apartments 38 Nursing Home Beds 125 Independent Living Apartments 44 Assisted Living Apartments 18 Memory Support Apartments 41 Nursing Home Beds 181 Independent Living Apartments 7 Catered Living Apartments 42 Assisted Living Apartments 20 Memory Support Apartments 46 Nursing Home Beds 229 Independent Living Apartments 26 Assisted Living Apartments 18 Memory Support Apartments 56 Nursing Home Beds Phase II 36 Assisted Living Apartments 24 Memory Support Apartments 120 Nursing Home Beds 76 Independent Living Apartments 24 Independent Living Cottages 24 Assisted Living Apartments 16 Nursing Home Beds 199 Independent Living Apartments 60 Assisted Living Apartments 16 Memory Support Apartments 34 Nursing 137 Independent Living Apartments 14 Independent Living Cottages 32 Assisted Living Apartments 16 Memory Support Apartments 40 Nursing Home Beds 2010 estimated construction start 2010 estimated construction start To Open 2011 To Open 2011 To Open 2011 To Open 2010 To Open 2010 Opened 3/10 Opened 10/09 Opened 8/09 A-27

168 Sponsor Project Status The Terraces at San Joaquin Gardens Fresno, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates) Phase I 47 Independent Living Apartments Opened 7/09 The Village Gainesville, Florida (North Florida Retirement Village, Inc., an affiliate of SantaFe HealthCare, Inc.) Redstone Village Huntsville, Alabama (Redstone Military Residence Association) Newcastle Place Mequon, Wisconsin (Newcastle Place, Inc., an affiliate of Milwaukee Protestant Home, Inc.) The Woodlands at Furman Greenville, South Carolina (Upstate Senior Living, Inc. / Affiliated with Furman University) Existing Units 289 Independent Living Apartments 45 Independent Living Cottages 46 Assisted Living Apartments 20 Memory Support Apartments Expansion 170 Independent Living Apartments 60 Assisted Living Apartments Phase III 32 Memory Support Apartments Phase II 50 Independent Living Apartments 19 Independent Living Cottages 132 Independent Living Apartments 32 Assisted Living Apartments 16 Memory Support Apartments 30 Nursing Home Beds Opened 7/09 Opened 7/09 Opened 06/09 Opened 3/09 Brethren Village Lancaster, Pennsylvania (Brethren Village Retirement Community) The Clare at Water Tower Chicago, Illinois (The Clare at Water Tower, Inc., an affiliate of Franciscan Sisters of Chicago Service Corporation) Redstone Village Huntsville, Alabama (Redstone Military Residence Association) The Village at Gleannloch Farms Spring, Texas (The Village at Gleannloch Farms, Inc., an affiliate of Lutheran Social Services of the South) The Legacy at Willow Bend Plano, Texas (The Legacy Senior Communities, Inc., an affiliate of Dallas Home for Jewish Aged, Inc.) Phase I 135 Independent Living Apartments 248 Independent Living Apartments 39 Assisted Living Apartments 15 Memory Support Apartments 32 Nursing Home Beds Phase II 3 Independent Living Apartments 5 Independent Cottages 10 Assisted Living Apartments 103 Independent Living Apartments 20 Independent Living Cottages 30 Assisted Living Apartments 18 Memory Support Apartments 35 Nursing Home Beds 103 Independent Living Apartments 12 Independent Living Villas 40 Assisted Living Apartments 18 Memory Support Apartments 60 Nursing Home Beds Opened 1/09 Opened 12/08 Opened 8/08 Opened 6/08 Opened 4/08 A-28

169 Sponsor Project Status The Terraces of Phoenix Phoenix, Arizona (American Baptist Estates, an affiliate of Cornerstone Affiliates) Phase II and III 50 Independent Living Apartments Opened 2/08 Santa Marta Olathe, Kansas (The Archdiocese of Kansas City in Kansas) The Landing at Plymouth Place La Grange Park, Illinois (Plymouth Place, Inc.) Holy Cross Village at Notre Dame Notre Dame, Indiana (Holy Cross Village at Notre Dame, Inc., an affiliate of Brothers of Holy Cross) Edgemere Dallas, Texas (Northwest Senior Housing Corporation, an affiliate of Senior Quality Lifestyles Corp.) Luther Oaks Bloomington, Illinois (Luther Oaks, Inc., an affiliate of Lutheran Life Communities) Hartsfield Village Munster, Indiana (Community Hospital) Querencia at Barton Creek Austin, Texas (Barton Creek Senior Living Center, Inc., an affiliate of Senior Quality Lifestyles Corp.) The Chelsea Columbus, Ohio (First Community Village) Concordia Life Care Community Oklahoma City, Oklahoma (Lutheran Senior Citizens, Inc.) Eastcastle Place Milwaukee, Wisconsin (Eastcastle Place, Inc., an affiliate of Milwaukee Protestant Home, Inc.) 138 Independent Living Apartments 24 Independent Living Cottages 32 Assisted Living Apartments 16 Memory Support Apartments 32 Nursing Home Beds 182 Independent Living Apartments 55 Existing Independent Living Cottages 52 Assisted Living Apartments 26 Memory Support Apartments 86 Nursing Home Beds 96 Independent Living Apartments 30 Assisted Living Apartments 12 Nursing Home Beds Phase II 48 Independent Living Apartments 90 Independent Living Apartments 40 Assisted Living Apartments 18 Memory Support Apartments Phase II 24 Assisted Living Apartments 24 Memory Support Apartments 158 Independent Living Apartments 10 Independent Living Cottages 40 Assisted Living Apartments 23 Memory Support Apartments 42 Nursing Home Beds 88 Independent Living Apartments 12 Independent Living Cottages 38 Assisted Living Apartments 36 Memory Support Apartments 84 Independent Living Apartments 12 Independent Living Cottages 37 Assisted Living Apartments 16 Memory Support Apartments 30 Nursing Home Beds 104 Independent Living Apartments 52 Existing Assisted Living Apartments 18 Memory Support Apartments 40 Nursing Home Beds Opened 11/07 Opened 10/07 Opened 10/07 Opened 9/07 Opened 8/07 Opened 07/07 Opened 6/07 Opened 6/07 Opened 4/07 Opened 9/06 A-29

170 Sponsor Project Status Harbor s Edge Norfolk, Virginia (Ft. Norfolk Retirement Community, Inc.) 163 Independent Living Apartments 33 Assisted Living Apartments 17 Memory Support Apartments 33 Nursing Home Beds Opened 8/06 Hickory Point Christian Village Forsyth, Illinois (Fair Havens Christian Homes, Inc.) St. George Village Atlanta, Georgia (Catholic Continuing Care Retirement Communities, Inc.) St. Mary of the Woods Avon, Ohio (Franciscan Communities St. Mary of the Woods, Inc., an affiliate of Franciscan Sisters of Chicago Service Corporation) The Buckingham Houston, Texas (Buckingham Senior Living Center, Inc., an affiliate of Senior Quality Lifestyles Corp.) The Terraces of Phoenix Phoenix, Arizona (American Baptist Estates, an affiliate of Cornerstone Affiliates) Kahala Nui Honolulu, Hawaii (Kahala Senior Living Community, Inc.) The Ridge at RiverWoods Exeter, New Hampshire (The RiverWoods Company, at Exeter, New Hampshire, Inc.) Greystone Corporate Officers 30 Assisted Living Apartments 18 Memory Support Apartments 153 Independent Living Apartments 25 Assisted Living Apartments 14 Memory Support Apartments 15 Nursing Home Beds 81 Independent Living Apartments 48 Assisted Living Apartments 30 Nursing Home Beds 205 Independent Living Apartments 43 Assisted Living Apartments 16 Memory Support Apartments 60 Nursing Home Beds 95 Existing Independent Living Apts. 124 Independent Living Apartments 49 Assisted Living Apartments 25 Memory Support Apartments 64 Nursing Home Beds 270 Independent Living Apartments 41 Assisted Living Apartments 22 Memory Support Apartments 60 Nursing Home Beds Phase III 81 Independent Living Apartments 11 Independent Living Cottages 27 Assisted Living Apartments 8 Memory Support Apartments 15 Nursing Home Beds Opened 1/06 Opened 11/05 Opened 10/05 Opened 5/05 Opened 4/05 Opened 02/05 Opened 11/04 The senior corporate officers of Greystone include the following individuals: Michael B. Lanahan, Chairman. Mr. Lanahan founded Greystone in Formerly, he was Senior Vice President at Blyth Eastman Paine Webber Health Care Funding, Inc., where in addition to financing hospitals, he initiated the firm s activities financing senior living communities and long-term care facilities using conventional debt, tax-exempt and taxable revenue bonds and FHA programs. Before joining Blyth, Mr. Lanahan was in the commercial real estate division of Citibank in New York. He has authored numerous articles on senior housing and is a frequent speaker at national conferences. Mr. Lanahan received a B.A. from Syracuse University and an M.B.A. from the University of Virginia. A-30

171 Paul F. Steinhoff, Jr., Vice Chairman and Chief Executive Officer. Mr. Steinhoff joined Greystone in He has responsibility for overseeing the planning, finance, marketing, development and management divisions of Greystone. Prior to joining Greystone, Mr. Steinhoff was a Partner at Touche Ross & Co. (now Deloitte & Touche) where he specialized in financial consulting to a wide range of industries including health care, senior housing, and real estate. Mr. Steinhoff was National Director of Touche Ross Life Care Consulting Practice and conducted the feasibility study for the first life care community financed with tax-exempt debt in Mr. Steinhoff is a frequent speaker at national conferences. Mr. Steinhoff received his B.B.A. in Business Statistics and his M.B.A. in Accounting and Finance from the University of Texas. Mr. Steinhoff is a Certified Public Accountant. Mark P. Andrews, President and Chief Operating Officer. Mr. Andrews joined Greystone in Mr. Andrews is responsible for overseeing the delivery of development services, including planning, finance, development and marketing to Greystone clients; and establishing new business opportunities, and client and lender relationship management. He also provides direction to Greystone s consulting practice, including strategic planning, financial advisory, mergers and acquisitions and management consulting. He has been involved with the planning, development and financing of more than $3 billion of senior living projects. Prior to joining Greystone Mr. Andrews was with Deloitte & Touche in the management consulting practice. Mr. Andrews received an MBA in finance from the A.B. Freeman School of Business at Tulane University. John C. Spooner, Executive Vice President. Mr. Spooner joined Greystone in He has responsibility for the occupancy development of senior living communities developed and managed by Greystone, as well as third-party marketing engagements. Mr. Spooner s experience includes 25 years in marketing a variety of housing options to seniors involving more than 30,000 units. Mr. Spooner s responsibilities included sales, marketing, recruitment, advertising and market evaluation. Mr. Spooner received a B.A. in Public Administration/Economics from Drake University, an Advanced Fellowship in Economics from University of London, and completed graduate work in marketing at the University of Pittsburgh. Bruce C. Byers, Senior Vice President. Mr. Byers is responsible for the overall marketing efforts of senior living communities developed by Greystone. He coordinates and assists Greystone s marketing efforts between regional sales team members and clients. He has worked in the senior living industry for twenty years and has been involved with the marketing of over seventy senior living communities from California to Maine. Prior to joining Greystone, Mr. Byers was the Senior Vice President of Sales for a senior living development company. Mr. Byers is a graduate of Indiana University of Pennsylvania. Richard W. Cumberland, Senior Vice President. Mr. Cumberland has direct responsibility for supervising Greystone s Management Operations and Financial Services teams. These teams include approximately thirty professionals providing corporate support to Executive Directors who oversee Greystone managed communities. Prior to joining Greystone in 1999, Mr. Cumberland was Regional Executive Director for a Florida CCRC corporation for over twelve years, including oversight of two large CCRC s of approximately 2,000 residents and staff of 1,400. James D. Knox, Senior Vice President. Mr. Knox is responsible for Greystone Financial Support Services, including oversight of community accounting functions, preparation of monthly financial and operational reports and coordination of the annual budget process. He is also responsible for analysis of operating results, projection of future performance and compliance with regulatory reporting requirements. Prior to his current position, Mr. Knox was part of Greystone s Planning and Financial Services Department. Prior to joining the company in 1994, Mr. Knox was a Senior Associate with Coopers & Lybrand in Dallas, Texas, where he provided accounting and financial services to clients A-31

172 in several industries. Mr. Knox received a B.S. from Iowa State University and a Masters of Professional Accounting from The University of Texas at Austin. Mr. Knox is a Certified Public Accountant. David C. McDowell, AIA, Senior Vice President. Mr. McDowell is responsible for overseeing and managing the development activities at Greystone. In addition, he is responsible for reviewing the design efforts of outside consultants to insure consistency of product design with Greystone s senior living philosophy. Prior to joining Greystone in 1994, Mr. McDowell was a Partner in the architectural firm of Fusch Serold and Partners, Inc. and was the principal architect for the firm s senior living work. Mr. McDowell is a registered architect with over 25 years of senior living experience. Mr. McDowell received a Bachelor of Architecture from Texas Tech University in Brian G. Schiff, Senior Vice President. Mr. Schiff is responsible for the planning and financing of new project developments and acquisitions. He has responsibility for Greystone s consulting services including strategic planning, financial advisory, mergers and acquisitions and troubled-project advisory services. Prior to joining Greystone, Mr. Schiff served as a partner and practice leader in two national consulting practices as well as serving as an officer for the post acute services of a regional hospital system and a national long term care organization. He has over 20 years experience in the health care industry. Mr. Schiff received a B.A. from Colgate University and an M.B.A. from the University of Virginia. Patrick D. Gleason, First Vice President. Mr. Gleason is a Project Director responsible for the delivery of the full range of development services to Greystone clients. This involves responsibility for supervising and coordinating all outside consultants including architects, contractors, engineers, land planners, interior designers and local planning agencies. Prior to joining Greystone in 1997, Mr. Gleason was Vice President of Southampton Memorial Hospital where he was responsible for the development of projects providing the full continuum of care for seniors including post acute care, independent and assisted living and long-term care, including Wood s Edge, developed in conjunction with Greystone. He has over 20 years of healthcare and project management experience. Mr. Gleason received his B.A. from George Mason University and did his graduate work at the University of Dallas. Janelle E. Wood, First Vice President and Chief Financial Officer. Ms. Wood s primary responsibilities include the financial planning and management functions. She has responsibility for all corporate finance and accounting activities, including customer billing, financial reporting, budgeting and cash management. In addition, Ms. Wood is responsible for oversight of the accounting and financial management of costs related to construction and development of communities for which Greystone provides development consulting services. Prior to joining the company in 2000, Ms. Wood was the Controller for a company in Richardson, Texas, and a consultant with Price Waterhouse where she provided accounting and financial services to clients in several industries. Ms. Wood received a B.B.A. from Baylor University. Ms. Wood is a Certified Public Accountant. Greystone Development Services Agreement The Corporation entered into an Amended and Restated Development Services Agreement effective January 26, 2006, as amended (the Greystone Development Services Agreement ), with GDC on behalf of itself and its permitted assignee GDS, to provide development consulting services for the Community and to be responsible for the marketing of the Community until ninety percent (90%) overall occupancy is achieved. GDS is a joint venture comprised of a limited partnership organized and existing under the laws of the State of Delaware. GDC has assigned its rights and duties to GDS. GDS has agreed to advance funds to and/or on behalf of the Corporation in an estimated amount of approximately $12,400,000 to pay for all such development costs of the Community prior to Permanent Financing, and to allow provision of development services prior to Permanent Financing at no obligation A-32

173 to the Corporation unless and until a closing and funding of Permanent Financing for the Community occurs. See the information under the caption DEVELOPMENT OF THE COMMUNITY GCI Elmhurst, L.P. for a description of the pre-finance capital. The Greystone Development Services Agreement calls for GDS to provide the following services: (a) all necessary planning to implement the Development Plan approved by the Corporation, including any revisions thereto; (b) preparation of detailed budgets for each phase of development activity, which are to be submitted for approval by Corporation; (c) assistance in obtaining all necessary governmental approvals required for the development and construction of the Community; (d) assist Corporation with selection of design consultants and a pre-construction consultant, and coordinate submission of plans and specifications to the Corporation for Corporation s approval; (e) development of a Life Care Resident services program; (f) development and supervision of the marketing plan for the Community to prospective Life Care Residents; (g) assistance in securing permanent financing for the Community; (h) assistance in negotiating and awarding a construction contract for the Community, and thereafter monitoring the progress of construction; (i) preparation of monthly cost reports; and (j) funding of $12.4 million of Pre-finance Capital (provided by Limited Partnership investors). Pursuant to the Development Services Agreement, GDS is responsible for the marketing of the Community until 90% occupancy of the aggregate total of Independent Living Units, Catered Living Units, Assisted Living Units, Memory Support Units, and nursing beds in the Health Center is achieved. In connection therewith, GDS will (a) coordinate and manage the marketing staff to implement the overall marketing program for the Community; (b) develop and supervise implementation of a marketing and sales program, including promotional, advertising and media campaigns in conjunction with an advertising firm; (c) recruit, hire, train and monitor the marketing and sales staff; (d) coordinate the design, construction, and equipping of an information center; (e) develop a program for responding to public inquiries; (f) assist the Corporation in preparing any Life Care Resident disclosure documents; and (g) develop Life Care Resident admission criteria and coordinate the process for the Corporation s approval of Reservation Agreements and Residency Agreements with prospective Life Care Residents. The Corporation will exercise final authority on the following matters: (a) selection and approval of architect, other design professionals, engineering professionals, and pre-construction consultants; (b) approval of final working drawings; (c) selection and engagement of a source of permanent financing, as defined in the Greystone Development Services Agreement, and the execution of all commitments with respect to financing; (d) selection and engagement of a general contractor for construction; (e) negotiation and execution of a construction contract; (f) approval of regulatory filings; (g) approval of marketing materials; and (h) final approval of all budgets for planning, development, construction and marketing prepared by GDS. As compensation for services rendered pursuant to the Greystone Development Services Agreement, the Corporation will pay GDS a fee ( Greystone Development Fee ), consisting of a Base Development Fee, a Marketing Fee and an Incentive Occupancy Fee. The Base Development Fee is comprised of two components, the Fixed Base Fee and the Variable Base Fee. The Fixed Base Fee is equal to $7,055,556. The Variable Base Fee is equal to $3,444,750. The Marketing Fee will be equal to approximately $1,760,680 (or 2% of entrance fees collected up to and including 95% independent living occupancy). The Incentive Occupancy Fee is $350,000 and will be paid only if 90% combined occupancy is achieved within twenty-four months after receipt of a Final Certificate of Occupancy for the Community. Based on the project budget, the Corporation will pay total development fees to Greystone of approximately $5,205,430 which includes a Base Development Fee of $3,444,750 and a Marketing Fee of $1,760,680. The Incentive Occupancy Fee is not assumed to be included in the total development fee, as ninety percent (90%) combined occupancy is not forecasted to be achieved within twenty four months from the date of opening. A-33

174 The Fixed Base Fee of $7,055,556 will be paid as follows: (i) $3,055,556 upon closing on the Series 2010 Bonds; and (ii) $4,000,000, subject to the terms and provisions of the Greystone Development Services Agreement, as amended, which are consistent with the support obligation reduction provisions of the Liquidity Support Agreement. The Variable Base Fee has been/will be paid as follows: (i) $324,000 on January 2006; (ii) $486,000 paid pro-rata over 12 months commencing February 2006; (iii) $162,000 upon achievement of 50% pre-sales of the Independent Living Units; (iv) $1,347,750 upon the earlier of commencement of construction or the closing of construction financing of the Community; (v) $486,000 paid in equal monthly payments during the construction period; and (vi) $639,000 to be paid on a pro-rata basis as the Community achieves each 5% increment of occupancy up to and including 90% occupancy of Independent Living Units. The Marketing Fee will be paid upon achieving key milestones relating to occupancy of the Independent Living Units. The Marketing Fee will be paid as follows: (i) $440,170 paid on a pro-rata basis upon the occupancy of each Independent Living Unit up to 95% occupancy; (ii) $440,170 paid upon the Community having achieved 65% occupancy of the Independent Living Units; (iii) $440,170 paid upon the Community having achieved 85% occupancy of the Independent Living Units; and (iv) $440,170 upon the Community having achieved 90% occupancy of the Independent Living Units. In addition, upon achieving an accelerated fill-up, Greystone would be eligible to receive additional compensation of $350,000 if 90% aggregate occupancy is achieved within 24 months of obtaining a Final Certificate of Occupancy. The following table summarizes the payment terms related to Greystone s Development Fee in association with the development of the Community. Fixed Base Fee (1) $7,055,556 Fees Paid Prior to Construction (January 2006 to September 2008) 972, ,000 FEES PAID AFTER ISSUANCE OF SERIES 2010 BONDS: Fees To Be Paid Prior to Opening Upon closing of construction financing 1,347,750 During construction (May 2010 to April 2012) 486,000 Subtotal Fees Paid Prior to Opening $1,833,750 $1,833,750 Fees To Be Based on Achieving Occupancy (December 2011 to November 2014) During fill-up, upon occupancy of Independent Living Units 1,079,170 Upon achieving of 65% Occupancy 440,170 Upon achieving of 85% Occupancy 440,170 Upon achieving of 90% Occupancy 440,170 Incentive occupancy fee (2) -- Subtotal Fees Paid After Opening $2,399,680 2,399,680 Total Variable Base Fee, Marketing Fee and Incentive Fees $5,205,430 (1) Payment of $4,000,000 of the Fixed Base Fee will be subject to the terms and provisions of the Greystone Development Services Agreement, as amended, which are consistent with the support obligation reduction provisions of the Liquidity Support Agreement. (2) Contingent upon 90% aggregate occupancy of the Community. The incentive fee of $350,000 is paid upon achieving 90% aggregate occupancy within twenty-four (24) months from the date of opening. A-34

175 Pursuant to the terms of the Greystone Development Services Agreement, the Community will also reimburse Greystone for all reasonable out-of-pocket travel expenses for personnel employed by Greystone, and a 3.5% administrative fee on the portion of Base Development Fee paid prior to financing. MANAGEMENT OF THE COMMUNITY PM&D is an Illinois business corporation that provides full-service management, development and consulting services for organizations that provide senior services. PM&D is a wholly owned subsidiary of Providence. PM&D Management Experience PM&D management experience encompasses more than 13 facilities that span the continuum of aging services. The senior management of PM&D possess over 200 years of healthcare or aging services experience. PM&D is providing management services for the senior living communities described below: Managed: Function Community Scope Providence Life Services Tinley Park, Illinois 635 Independent Living Apartments 396 Assisted Living Apartments 662 Nursing Beds Providence Healthcare and Rehabilitation Center Palos Heights Palos Heights, Illinois Holland Home South Holland, Illinois Providence Healthcare and Rehabilitation Center South Holland South Holland, Illinois Village Woods Crete, Illinois Providence Healthcare and Rehabilitation Center Downers Grove Downers Grove, Illinois Saratoga Grove Downers Grove, Illinois Grand Victorian Homer Glen, Illinois Victorian Inn Homer Glen, Illinois A-35

176 Function Community Scope Royal Park Place and Royal Atrium Inn Zeeland, Michigan Emerald Meadows Grand Rapids, Michigan Providence Healthcare and Rehabilitation Center Zeeland Zeeland, Michigan Plum Creek Rolling Meadows, Illinois 102 Supportive Living Apartments The Landing at Plymouth Place La Grange Park, Illinois 86 Nursing Home Beds IT and Accounting Managed: The Landing at Plymouth Place La Grange Park, Illinois 182 Independent Living Apartments 55 Existing Cottages 52 Assisted Living Apartments 26 Memory Support Apartments 86 Nursing Beds IT Contracts: Management Agreement Christian Living Campus Greenwood Village, Colorado King Bruwaert House Burr Ridge, Illinois United Methodist Home Chicago, Illinois 125 Independent Living Apartments 63 Assisted Living Apartments 174 Nursing Beds 90 Independent Living Apartments 73 Assisted Living Apartments 45 Nursing Beds 65 Independent Living Apartments 29 Assisted Living Apartments 131 Nursing Beds On October 27, 2009, the Corporation and PM&D entered into a management services agreement (the Management Agreement ), pursuant to which PM&D provides management and related support services to the Corporation. Specifically, PM&D is responsible for providing management and related support services to enable the Corporation to fulfill its charitable tax-exempt purposes which include, but are not limited to, the ownership and operation of quality, cost effective CCRC with component sections involving skilled care, retirement housing, assisted living, and other long-term care and senior housing facilities. Under the terms of the Management Agreement, PM&D shall provide Owner with professional, administrative, management and support services including: (i) Assigning personnel to perform administrative, management and other support services for the Corporation, as set forth in the Management Agreement; (ii) Performing any and all other activities which may from time to time be requested by the Board of Directors of the Corporation; and (iii) Consulting with the Board of Directors of the Corporation with regard to current nursing home, retirement housing, and assisted living programs of the Corporation, as well as other senior housing projects in which the Corporation may from time to time become involved. A-36

177 Pursuant to the Management Agreement, the Corporation will pay PM&D an annual management fee of approximately $456,000 annually, payable in 12 equal monthly installments, in advance. This fee is approximately 2% of gross revenues, which is significantly below market rates. The management fee payments are to be subject to the provisions of the Master Indenture with respect to Management Fees are met. For each year upon the Community opening, the amount of management fees to be paid shall be restricted and reduced by deferring the annual management fee payment if such payment would create an Event of Default as defined in the Master Indenture. Deferred management fees for a fiscal year would be paid in subsequent fiscal years when the provisions of the Master Indenture with respect to Affiliate Related Subordinated Debt are met. Any management fees due but not paid to PM&D are to accrue with interest at a rate of five percent per annum until paid. The Corporation shall also reimburse PM&D monthly for all of its reasonable direct expenses incurred in the performance of its duties under the Management Agreement including, but not limited to, stationery, direct supplies, mailing, public relations efforts, third-party professional services and professional and direct consulting fees. The term of the Management Agreement commences approximately 180 days prior to the date the first unit is expected to be occupied by a resident. The term of the Management Agreement is for a period of five years and shall be automatically renewed for another five year term unless terminated by either party upon the giving of 30 days prior written notice to the other party. The Series 2010 Obligations and the Series 2010 Bonds are solely the obligation of the Obligors under the Loan Agreements and the Master Indenture. Neither PM&D nor Providence is obligated on the Series 2010 Obligations or the Series 2010 Bonds or under the Loan Agreements or the Master Indenture. The General Contractor OTHER PROFESSIONAL SERVICES The Obligors have selected Bovis Lend Lease (the General Contractor ) as the General Contractor for the Community. The General Contractor was founded in 1885 and is a global, national and local leader in the construction field with over 2,300 employees in the United States. The Chicago office of the General Contractor was established in 1976, and has completed over 500 projects valued at over $14 billion in the Chicagoland area. The General Contractor has provided preconstruction services for the Community including, but not limited to, coordination with the Architect and the other design consultants, construction sequencing and scheduling, value engineering and estimating the cost of work and general conditions. The General Contractor s Chicagoland senior living experience includes the following: Facility and Location Project Size Construction Cost Completion Year GreenFields of Geneva 267 Units $50,000, Geneva, Illinois The Admiral at the Lake 292 Units $102,000, Chicago, Illinois Levy House 53 Units $6,500, Chicago, Illinois A-37

178 Facility and Location Project Size Construction Cost Completion Year Friendship Village Senior Living 170 Units $62,000, Schaumburg, Illinois Plymouth Place 346 Units $80,000, La Grange Park, Illinois The Clare at Water Tower 334 Units $105,000, Chicago, Illinois Sunrise Senior Living 75 Units $11,000, Highland Park, Illinois Residences at Autumn Green 126 Units $13,100, Chicago, Illinois Chicago Housing Authority- Judge 200 Units $9,000, Fisher Apartments Chicago, Illinois Wyndemere Assisted Living 71 Units $6,100, Wheaton, Illinois Wynscape Skilled Nursing Center 210 Beds $3,400, Wheaton, Illinois British Home for Retired Men and Women 66 Units $2,800, Construction Contract The Obligors have entered into a guaranteed maximum price construction contract (the Construction Contract ) with the General Contractor. The sum of the cost of the Work (as defined therein) and the General Contractor s Fee is guaranteed by the General Contractor not to exceed $75,986,000, subject to additions and deductions by change order as provided in the Construction Contract. The difference as of the date of final payment between (i) the total aggregate sum of the cost of the Work plus the General Contractor s Fee and (ii) the Guaranteed Maximum Price upon final completion of the Work less the first $800,000 of buy-out savings paid to the General Contractor (such difference equals the savings) will be shared by the Obligors and the General Contractor as follows: sixty percent (60%) of such savings will inure to the benefit of the Obligors and the remainder (40%) will be paid to the General Contractor as an additional fee. The Construction Contract requires the General Contractor to substantially complete construction of the Community within 22 months from the Commencement Date with the first delivery of Independent Living Units complete within approximately 18 months of the Commencement Date. In the event the General Contractor does not substantially complete each construction component within the specified construction period, the Construction Contract provides for the reimbursement for actual damages incurred by the Obligors, in accordance with the following schedule of actual damages to be paid for each day of delay as measured from the date of required substantial completion to the date of actual substantial completion. In addition to the reimbursement for the cost of debt service, the General Contractor will also reimburse the Obligors for the actual cost of delayed resident occupancy measured A-38

179 from the individual scheduled date of resident move-in to the actual date of resident move-in, which amount is not to exceed $115,000 per month. The General Contractor s liability with respect to reimbursement to the Corporation of actual damages is limited to 400% of the General Contractor s fee in the aggregate (approximately $7,180,000). Number of Days of Delay Per Unit of Turnover Cost of Debt Service Per Day of Delay Occupancy Area A/B, floors Independent Living Units 1 30 $1, $2, $4, Days and thereafter $5,978 Occupancy Area A/B, floors Independent Living Units 1 30 $1, $2, $3, Days and thereafter $5,706 Occupancy Area C 30 Independent Living Units and 10 Catered Living Units 1 30 $1, $2, $3, Days and thereafter $5,435 Occupancy Area D/E, Assisted Living Center, Health Center 57 Independent Living Units 1 30 $4, $10, $14, Days and thereafter $21,058 Days from Notice to Proceed 553 Days 617 Days 645 Days 673 Days The General Contractor is required under the Construction Contract to furnish the Obligors with a performance bond and a labor and materials payment bond, each in the amount of 100% of the guaranteed maximum price under the Construction Contract. The performance portion of the bond shall extend through the warranty period. The Construction Contract requires the General Contractor to execute and deliver to the Obligors a Performance Bond and a Labor and Material Payment Bond, each written in the amount of 100% of the Contract Sum (as defined therein), and showing the Corporation and the Master Trustee as named insureds/obligees. The General Contractor shall furnish performance and payment bonds with a surety qualified to do business in Illinois. The Architect Perkins+Will CRA, L.P. (the Architect ), a commercial architect design firm has been engaged to provide architectural, engineering and related designed services to the Corporation. Founded in 1935, the Architect is internationally recognized for its health care, corporate, commercial, civic, higher education, and science and technology work. The Architect is involved with the programming, master planning and full service design of senior living and health care facilities on a daily basis. Based A-39

180 in Chicago, Illinois, with offices in numerous locations across the United States and around the world, the Architect has completed projects in 49 states and 43 countries since its inception. A representative list of the Architect s projects includes the following: Sponsor The Admiral at the Lake CCRC The Admiral at the Lake Chicago, Illinois Westminster Manor Expansion Eventus Strategic Partners Austin, Texas Napoleon Oaks CCRC CRSA/Ochsner Hospital JV New Orleans, Louisiana Skyline at First Hill Presbyterian Retirement Communities Northwest Seattle, Washington The Arbors at Crabapple Cannon Advisory Partners, LLC The Arbor Company Roswell, Georgia Project Size 200 Independent Living Apartments 39 Assisted Living Apartments 17 Memory Support Apartments 36 Nursing Home Beds 75 Independent Living Apartments 22 Assisted Living Apartments 24 Special Care Apartments 44 Nursing Home Beds 143 Independent Living Apartments 23 Assisted Living Apartments 16 Special Care Apartments 200 Independent Living Apartments 60 Assisted Living Apartments 16 Memory Support Apartments 30 Nursing Home Beds 67 Assisted Living Apartments 26 Memory Support Apartments Construction Cost Completion Date $102 million TBD $65 million TBD $51 million TBD $130 million 2009 $9.6 million 2009 Eden Terrace of Spartanburg Bristol Capital Corporation Spartanburg, South Carolina 16 Memory Support Apartments $2 million 2009 The Wellington Capital Senior Development Miami Township, Ohio The Clare at Water Tower Franciscan Sisters of Chicago Service Corporation Chicago, Illinois 120 Independent Living Apartments 45 Assisted Living Apartments 248 Independent Living Apartments 45 Assisted Living Apartments 15 Memory Support Apartments 32 Nursing Home Beds $16.7 million 2009 $124 million 2008 Keller Oaks Preferred Continuum Care, Inc. Keller, Texas 150 Nursing Home Beds $4.75 million 2004 Edenbrook EdenCare Senior Living Louisville, Kentucky The Waterford Capital Senior Development Various locations in the U.S. 65 Assisted Living Apartments 28 Memory Support Apartments 120 Independent Living Apartments 45 Assisted Living Apartments $7.1 million 2001 $6.2 million 2000 A-40

181 Construction Consultant The construction consulting firm of zumbrunnen, Inc. ( zumbrunnen ), a full-service national construction consulting company founded in 1989 that specializes in the senior living industry, has been selected and retained by the Corporation to review construction progress, quality, and contractor requisition requests on a monthly basis for the Community during the construction period. In addition, zumbrunnen has provided the pre-construction consulting services described in the next paragraph. zumbrunnen has developed unique and proprietary, industry-specific due-diligence, construction consulting and facility assessment services to fulfill financial institutions requirements for start-up, expansion and renovation projects. Prior to construction, zumbrunnen s responsibilities include conducting a review of the project s scope, including engineering designs, project budgets, drawings, specifications, permits, construction contracts and fees, including a meeting with the project team at the project site to verify current site conditions, review outstanding issues and documents, and establish an action list, and issue a final pre-closing report. During the construction process, zumbrunnen will be responsible for the following actions in connection with the construction of the project that are included in the construction contract: (i) reviewing and certifying all disbursement requests for the payment of expenses incurred by the Corporation for work, labor, materials and equipment furnished by or on behalf of the general contractor under the construction contract; and (ii) monitoring such items as change orders, budget amendments, updates to the construction schedule, releases of liens, governmental approvals and the final as-built survey. A-41

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183 APPENDIX B FINANCIAL FEASIBILITY STUDY

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185 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation NFP d/b/a Providence Healthcare Foundation Financial Feasibility Study Six Years Ending December 31, 2015 B-1

186 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Financial Feasibility Study Six Years Ending December 31, 2015 TABLE OF CONTENTS Independent Accountants Examination Report... B-1 Forecasted Financial Statements: Forecasted Statements of Activities and Changes in Net (Deficit)... B-5 Forecasted Statements of Cash Flows... B-6 Forecasted Balance Sheets... B-7 Forecasted Financial Ratios... B-8 Summary of Significant Forecast Assumptions and Accounting Policies Basis of Presentation... B-9 Background of the Corporation and Foundation... B-9 Description of the Community.... B-12 Development of the Community... B-16 Management of the Community... B-19 Liquidity Support Agreement... B-20 Summary of Financing... B-21 Description of the Residency Agreement... B-25 Characteristics of the Market Area... B-30 Marketing the Community... B-61 Assumed Independent Living Utilization... B-82 Assumed Assisted Living and Health Center Utilization... B-88 Summary of Significant Accounting Policies... B-90 Revenue... B-92 Operating Expenses... B-93 Assets Limited as to Use... B-95 Property and Equipment and Depreciation Expense... B-96 Long-Term Debt and Interest Expense... B-97 Development Fees and Deferred Development Fees... B-99 Current Assets and Current Liabilities... B-99 Independent Accountant s Report on Supplemental Information... B-100

187 INDEPENDENT ACCOUNTANTS EXAMINATION REPORT Board of Directors and Board of Trustees Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Tinley Park, Illinois We have prepared a financial feasibility study of the plans of Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst (the Corporation ) and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation (the Foundation ), collectively referred to as the Obligors, to construct 173 new independent living apartments, 10 catered living apartments, 46 assisted living apartments, 20 memory support assisted living suites, 37 nursing beds, and related common areas (collectively, the Community ). The Community is to be located on an approximately 12 acre site in Elmhurst, Illinois and is to be known as Park Place Christian Community of Elmhurst. The Obligors are controlled affiliates of Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services ( Providence ). Providence Management and Development Company, Incorporated ( PM&D ), which is a wholly owned subsidiary of Providence, has been retained by the Corporation to manage the Community and provide development services. Management of the Corporation, the Foundation and PM&D are collectively referred to as Management. Providence Development Group, LLC ( PDG ), which is a wholly owned subsidiary of Providence, is anticipated to provide liquidity support to the Obligors through the deposit of $2,600,000 into a special trust fund held in the custody of Wells Fargo Bank, N.A. (as the bond trustee and master trustee (the Bond Trustee and Master Trustee ) in the name of PDG under a liquidity support agreement (the Liquidity Support Agreement ). In addition, the Corporation is anticipated to provide liquidity support through the deposit of an additional $3,400,000 into special trust funds held in the custody of the Bond Trustee and Master Trustee in the name of the Corporation under the Liquidity Support Agreement. The Corporation has also retained Greystone Development Company II, LP ( GDC ) to provide development consulting services to the Community. GDC is to lead the development activities for the Community. PM&D s role in development activities is to provide support, assistance and oversight of Greystone s development activity. GDC is an affiliate of Greystone Communities, Inc. ( GCI ). GDC and GCI are collectively referred to as Greystone. B-1

188 The study was undertaken to evaluate the Corporation s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed $175,540,000 Illinois Finance Authority Revenue Bonds (Park Place of Elmhurst Project), Series 2010 (the Series 2010 Bonds ). The Corporation s underwriter, Ziegler Capital Markets (the Underwriter ), has provided the assumed structure and terms of the Series 2010 Bonds as follows: $109,115,000 of non-rated tax-exempt fixed rate bonds (the Series 2010A Bonds ), assumed to be issued at a discount, consisting of term maturities to May 15, 2045, with average interest rates ranging between 8.00 and 8.25 percent per annum and average yields ranging from 8.00 to 8.45 percent per annum; $7,875,000 of non-rated tax-exempt fixed rate bonds (the Series 2010B Bonds ) with an average interest rate of 7.75 percent per annum. The Series 2010B Bonds are anticipated to be redeemed in full by approximately August 15, 2014; $5,000,000 of non-rated tax-exempt Accelerated Redemption Reset Option Securities (ARROS SM ) (the Series 2010C Bonds ) with an average interest rate of 7.50 percent per annum. The Series 2010C Bonds are anticipated to be redeemed in full by approximately 80 percent initial occupancy of the independent living units at the Community (the Independent Living Units ) by approximately February 15, 2014; $40,900,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities (TEMPS SM ) (the Series 2010D Bonds ) with average interest rates ranging from 6.25 to 7.25 percent per annum. The Series 2010D Bonds consist of $10,275,000 of Series 2010D-1 Bonds (TEMPS-75 SM ) anticipated to be redeemed in full by approximately 75 percent initial occupancy of the Independent Living Units by approximately August 15, 2013; $15,350,000 of Series 2010D-2 Bonds (TEMPS-65 SM ) anticipated to be redeemed in full by approximately 65 percent initial occupancy of the Independent Living Units by approximately May 15, 2013; and $15,275,000 of Series 2010D-3 Bonds (TEMPS-50 SM ) anticipated to be redeemed in full by approximately 50 percent initial occupancy of the Independent Living Units by approximately November 15, 2012; and, $12,650,000 of non-rated fixed rate Taxable Mandatory Paydown Securities (Taxable MPS) (the Series 2010E Bonds ) with an interest rate of percent per annum. The Series 2010E Bonds are anticipated to be redeemed in full by approximately August 15, Principal on the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds is anticipated to be repaid from a portion of the entrance fees assumed to be available from initial residents moving into the Community. Providence, PM&D and Greystone are not obligated to pay debt service on the Series 2010 Bonds. PDG is only obligated with respect to the Series 2010 Bonds or other financial obligations to the extent of its commitment of the $2,600,000 deposit provided for under the Liquidity Support Agreement. B-2

189 The proceeds from the sale of the Series 2010 Bonds, a contribution from PDG, entrance fees, and interest earnings on trustee-held funds are assumed to be used to fund: All project related costs for the Community, including development, construction, architectural, pre-opening and marketing costs through fill-up; Interest for the Series 2010 Bonds for a period of approximately 24.5 months; Debt Service Reserve Funds for the Series 2010 Bonds; Costs of issuance, including Underwriter s discount; A Working Capital Fund and an Operating Reserve Fund; and, A Special Liquidity Support Fund and a Supplemental Liquidity Support Fund to be established under the Liquidity Support Agreement. Our procedures included analysis of: The Corporation s history, objectives, timing and financing; Future demand for the Corporation s services, including consideration of: Socioeconomic and demographic characteristics of the Community s defined primary market area ( PMA ); Locations, capacities and competitive information pertaining to other existing and planned facilities in the PMA; and Forecasted occupancy and utilization levels. Project-related costs, debt service requirements and estimated financing costs; Staffing requirements, salaries and wages, related fringe benefits and other operating expenses; Anticipated entrance fees, monthly fees and per diem charges for the Community s residents; Sources of other operating and non-operating revenues; Revenue/expense/volume relationships; and, Depositor files. The accompanying financial forecast for each of the years in the six-year period ending December 31, 2015 is based on assumptions that were provided by Management. The financial forecast includes the following financial statements and the related summary of significant forecast assumptions and accounting policies: Forecasted Statements of Activities and Changes in Net (Deficit); Forecasted Statements of Cash Flows; and Forecasted Balance Sheets. We have examined the financial forecast. Management is responsible for the forecast. Our responsibility is to express an opinion on the forecast based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included such procedures as we considered necessary to evaluate both the assumptions used by Management and the preparation and presentation of the forecast. We believe that our examination provides a reasonable basis for our opinion. B-3

190 Legislation and regulations at all levels of government have affected and may continue to affect the operations of CCRCs. The financial forecast is based upon legislation and regulations currently in effect. If future legislation or regulations related to the Corporation s operations are subsequently enacted, such legislation or regulations could have a material effect on future operations. Management s financial forecast is based on the achievement of occupancy levels as determined by Management. We have not been engaged to evaluate the effectiveness of Management and we are not responsible for future marketing efforts and other Management actions upon which actual results will depend. The assumed interest rates, principal payments, project costs and other financing assumptions are described in the section entitled Summary of Significant Forecast Assumptions and Accounting Policies. If actual interest rates, principal payments or funding requirements are different from those assumed in this study, the amount of the Series 2010 Bonds and associated debt service requirements would need to be adjusted accordingly from those indicated in the forecast. If such interest rates, principal payments and funding requirements are lower than those assumed, such adjustments would not adversely affect Management s forecast. Our conclusions are presented below: In our opinion, the accompanying financial forecast is presented in conformity with guidelines for presentation of a financial forecast established by the American Institute of Certified Public Accountants. In our opinion, the underlying assumptions provide a reasonable basis for Management s forecast. However, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. The accompanying financial forecast indicates that sufficient funds could be generated to meet the Corporation s operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed Series 2010 Bonds, during the forecast period. However, the achievement of any financial forecast is dependent upon future events, the occurrence of which cannot be assured. We have no responsibility to update this report for events and circumstances occurring after the date of this report. Atlanta, Georgia May 14, 2010 B-4

191 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Forecasted Statements of Activities and Changes in Net (Deficit) For the Years Ending December 31, (In Thousands) Revenue: Independent living monthly service fees $ - $ 18 $ 3,103 $ 7,104 $ 8,511 $ 9,077 Assisted living monthly service fees ,785 4,748 4,666 Nursing service fees ,113 4,338 4,344 Other revenue Entrance fee amortization ,290 2,769 3,440 3,820 Investment income - 7 1,074 1, ,144 Total revenue ,105 18,366 22,662 23,719 Expenses: Administrative services ,177 1,212 1,249 Activities services Assisted living services ,054 1,311 1,350 Nursing services ,292 1,519 1,565 Building and grounds maintenance Dining services ,214 2,054 2,329 2,404 Emergency system services Housekeeping and laundry services Transportation services Utilities Insurance Catered living Marketing services , Pastoral services Management fees Interest expense - 1,100 13,127 10,346 9,144 8,981 Depreciation ,193 3,226 3,259 3,283 Amortization ,643 1,670 1,370 1,076 Total expenses 581 1,888 23,950 24,908 24,185 23,703 Increase (decrease) in unrestricted net (deficit) (581) (1,764) (16,845) (6,542) (1,523) 16 Contributions 1, Increase (decrease) in net (deficit) 419 (1,764) (16,845) (6,542) (1,523) 16 Net (deficit), beginning of year (1,345) (18,190) (24,732) (26,255) Net (deficit), ending of year $ 419 $ (1,345) $ (18,190) $ (24,732) $ (26,255) $ (26,239) See Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants Examination Report B-5

192 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Forecasted Statements of Cash Flows For the Years Ending December 31, (In Thousands) Cash flows from operating activities: Change in net (deficit) $ 419 $ (1,764) $ (16,845) $ (6,542) $ (1,523) $ 16 Adjustments to reconcile change in net (deficit) to net cash provided by (used in) operating activities: Depreciation ,193 3,226 3,259 3,283 Amortization ,643 1,670 1,370 1,076 Amortization of earned entrance fees - (98) (1,290) (2,769) (3,440) (3,820) (Decrease) increase in interest payable - Series 2010 Bonds 1,786 - (302) (247) (82) - Net change in other current assets and liabilities (15) Increase in accrued management fees Increase in interest payable - accrued management fees Entrance fees received from resident turnover ,643 4,165 6,122 Entrance fees refunded - - (558) (1,389) (1,938) (2,564) Net cash provided by (used in) operating activities 2,205 (1,468) (12,446) (2,859) 2,433 4,699 Cash flows from investing activities: Purchase of property and equipment (43,615) (49,655) (24,460) (1,025) (847) (400) Interest cost capitalized during construction period (7,471) (11,496) (Increase) decrease in assets limited as to use (120,146) 57,938 21,324 16,106 6,615 5,000 (Increase) decrease in assets limited as to use, current - - (660) (485) 33 (291) (Increase) in investments - (21) (2,401) (847) (10,097) (9,013) Deferred marketing costs (6,839) (1,207) (989) (313) - - Net cash provided by (used in) investing activities (178,071) (4,441) (7,186) 13,436 (4,296) (4,704) Cash flows from financing activities: Initial entrance fees received - 5,050 55,838 17,956 11,316 - Issuance of long term debt 175, Deferred financing costs (4,514) - (140) Principal payments on Series 2010 Bonds - - (31,505) (26,655) (8,265) - Increase (decrease) in deferred development fees 1, (307) (98) (61) - (Decrease) increase in resident deposits 5, (3,819) (1,540) (981) - Net cash provided by (used in) financing activities 175,866 5,934 20,067 (10,337) 2,009 - Net increase in cash and cash equivalents $ - $ 25 $ 435 $ 240 $ 146 $ (5) Beginning balance of cash and cash equivalents Ending balance of cash and cash equivalents $ - $ 25 $ 460 $ 700 $ 846 $ 841 See Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants Examination Report B-6

193 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assets Forecasted Balance Sheets For the Years Ending December 31, (In Thousands) Current assets: Cash and cash equivalents $ - $ 25 $ 460 $ 700 $ 846 $ 841 Assets limited as to use - Series 2010 Bonds ,145 1,112 1,403 Accounts receivable, net Prepaid expenses and other assets Inventory Total current assets ,460 2,508 2,774 3,068 Investments ,422 3,269 13,366 22,379 Assets limited as to use: Project Fund 76,411 25,917 1, Special Liquidity Support Fund 3,000 3,000 3,000 3,000 3,000 3,000 Supplemental Liquidity Support Fund Funded Interest Fund - Series 2010 Bonds 19,893 7, Debt Service Reserve Fund - Series 2010A Bonds 9,763 9,763 9,763 9,763 9,763 9,763 Debt Service Reserve Fund - Series 2010B Bonds Debt Service Reserve Fund - Series 2010C Bonds Debt Service Reserve Fund - Series 2010D-1 Bonds Debt Service Reserve Fund - Series 2010D-2 Bonds 1,075 1,075 1, Debt Service Reserve Fund - Series 2010D-3 Bonds Debt Service Reserve Fund - Series 2010E Bonds 1,091 1, Entrance Fee Fund ,189 4, Operating Reserve Fund - - 5,000 5,000 5,000 - Working Capital Fund - 4,639 5, Resident deposits 5,828 6,340 2, Total assets limited as to use 120,146 62,208 40,884 24,778 18,163 13,163 Property and equipment 51, , , , , ,969 less accumulated depreciation - (206) (3,399) (6,625) (9,884) (13,167) Net property and equipment 51, , , , , ,802 Other assets Deferred marketing costs, net 6,839 7,989 8,206 7,720 6,921 6,122 Deferred bond costs, net 4,514 4,453 3,819 3,045 2,571 2,391 Total assets $ 182,585 $ 186,740 $ 190,089 $ 172,417 $ 172,480 $ 172,925 Liabilities and Net (Deficit) Current liabilities: Accounts payable $ - $ 25 $ 460 $ 700 $ 846 $ 841 Accrued expenses Interest payable - Series 2010 Bonds 1,786 1,786 1,484 1,237 1,155 1,155 Current maturities of long term debt Resident deposits 5,828 6,340 2, Total current liabilities 7,614 8,163 4,680 3,245 2,396 2,859 Long-term debt, less current maturities 175, , , , , ,645 Original issue discount (2,682) (2,674) (2,577) (2,480) (2,383) (2,286) Deferred PM&D Development Fees 1,694 2,066 1,759 1,661 1,600 1,600 Accrued management fees ,490 2,003 Interest payable - accrued management fees Deferred revenue from advance fees, net of amortization - 4,952 59,860 76,301 86,404 86,142 Total liabilities 182, , , , , ,164 Net (deficit): Undesignated 419 (1,345) (18,190) (24,732) (26,255) (26,239) Net (deficit) 419 (1,345) (18,190) (24,732) (26,255) (26,239) Total liabilities and net assets (deficit) $ 182,585 $ 186,740 $ 190,089 $ 172,417 $ 172,480 $ 172,925 See Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants Examination Report B-7

194 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Forecasted Financial Ratios For the Year Ending December 31, (In Thousands, Except for Ratios) Long-Term Debt Service Coverage Ratio 2015 Increase in net (deficit) $ 16 Deduct: Entrance fee amortization (3,820) Add: Depreciation 3,283 Amortization 1,076 Interest expense 8,981 Accrued management fees (a) 513 Entrance fees received from resident turnover 6,122 Entrance fees refunded (2,564) Income Available for Debt Service $ 13,607 Maximum Annual Debt Service (b) $ 9,763 Maximum Annual Debt Service Coverage Ratio 1.39x Annual Debt Service $ 8,893 Annual Debt Service Coverage Ratio 1.53x Days Cash on Hand 2015 Cash and cash equivalents $ 841 Investments 22,379 Supplemental Liquidity Support Fund 400 Cash on hand $ 23,620 Total expenses 23,703 Less: Accrued management fees (a) $ (513) Depreciation (3,283) Amortization (1,076) Total expenses less depreciation and amortization 18,831 Daily operating expenses (c) 52 Days cash on hand 454 Cash to Debt Ratio 2015 Cash and cash equivalents $ 841 Investments 22,379 Debt Service Reserve Fund - Series 2010A Bonds 9,763 Supplemental Liquidity Support Fund 400 Funds Available for Debt Service $ 33,383 Long-Term Indebtedness Outstanding $ 108,645 Cash to Debt Ratio 0.31x (a) Management fees payable to Providence Management & Development Incorporated are to be deferred during the forecast period as described in the management agreement with Providence Management and Development Incorporated. (b) The Maximum Annual Debt Service is equal to the greatest debt service requirement in the then current or any future fiscal year, other than the debt service requirements on the Series 2010B, Series 2010C, Series 2010D, and Series 2010E Bonds, and excludes the principal and interest payment on the Series 2009A Bonds due May 15, (c) Daily operating expenses are equal to total operating expenses less depreciation and amortization divided by 365 days. See Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants Examination Report B-8

195 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies Basis of Presentation The accompanying financial forecast presents, to the best of the knowledge and belief of Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst (the Corporation ), Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation (the Foundation ), and Providence Management and Development Company, Incorporated ( PM&D ), (collectively referred to as Management ), the expected financial position, results of operations, and cash flows of the Corporation as of and for each of the six years ending December 31, Accordingly, the financial forecast reflects Management s judgment as of May 14, 2010, the date of this forecast, of the expected conditions and its expected course of action during the forecast period. However, there will usually be differences between the forecast and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Management s forecast was originally prepared March 13, Management s forecast and this feasibility study report were updated on May 14, 2010 to reflect changes in the project budget; financing structure for the Series 2010 Bonds, including the amount of and interest rates on the Series 2010 Bonds; the liquidity support agreement; and the development consulting agreement. Background of the Corporation and the Foundation The Corporation is an Illinois not for profit corporation, formed in May 2004 for the purpose of constructing, owning and operating a continuing care retirement community ( CCRC ) known as Park Place Christian Community of Elmhurst (the Community ) in Elmhurst, Illinois. The Corporation received a determination letter from the Internal Revenue Service dated February 21, 2007 stating that the Corporation is an organization exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the Code ), as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was May 5, The Foundation is an Illinois not for profit corporation formed in January 2004 to support and advance Christian care and services to the elderly and infirm by supporting health-related research, the development of a continuum of appropriate living arrangements, and programs and services to support a quality of life for those who suffer from disabilities and age-related illnesses and infirmities. The Foundation received a determination letter from the Internal Revenue Service dated April 7, 2004 stating that the Foundation is an organization exempt from federal income tax under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code. The effective date of the exemption was January 9, The Corporation is governed by a voluntary Board of Directors and the Foundation is governed by a voluntary Board of Trustees (collectively the Boards ). See Independent Accountants Examination Report B-9

196 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Currently, each Board consists of seven members (the Board Members ), both Boards have identical Board Members, and the Board Members represent members of the executive committee of the board of directors for Providence (as hereinafter defined). Members of each Board serve for a term of five years. No Board Member may serve for more than two consecutive terms of office. Providence elects all voting members of the Boards. The Corporation and Foundation are referred to collectively as the Obligors. Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services The Corporation and the Foundation are affiliates of Rest Haven Illiana Christian Convalescent Home d/b/a Providence Life Services ( Providence ). Providence is the sole corporate member of the Corporation and the Foundation. Providence was founded in 1956 as an Illinois not for profit corporation to furnish health care and retirement living facilities for the proper care and treatment of the elderly. Providence operates 11 separate facilities accounting for 1,693 units on eight campuses located in South Holland, Downers Grove, Crete, Palos Heights and Homer Glen, Illinois and Grand Rapids and Zeeland (two campuses), Michigan. Providence Management and Development Company, Incorporated Providence Management and Development Company, Incorporated ( PM&D ), which is a wholly owned subsidiary of Providence, has been retained by the Corporation to manage the Community and provide development services. PM&D is an Illinois business corporation, incorporated in 1991, that provides full-service management, development and consulting services for organizations that provide senior services. PM&D is currently, or has been, responsible for more than 15 senior living community development and expansion projects. PM&D s management experience encompasses more than 16 communities, including approximately 3,000 housing and support care units. Providence Development Group, LLC Providence Development Group, LLC ( PDG ) is an Illinois limited liability company which is a wholly owned subsidiary of Providence. Providence is the sole corporate member of PDG. PDG was formed to procure and develop real estate for senior housing, long term care, assisted living, independent living, government subsidized (HUD) housing for seniors, or any other purpose relating to the housing or health care needs of older persons and/or the infirm. Providence and PM&D would not be obligated to make payments with respect to the debt or other financial obligations of the Obligors. PDG is only obligated with respect to the debt or other financial obligations of the Obligors to the extent of its commitment under the Liquidity Support Agreement (as hereinafter defined) up to $2,600,000. See Independent Accountants Examination Report B-10

197 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Greystone Communities, Inc. Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Corporation has also retained Greystone Development Company II, LP ( GDC ) and its affiliated entity, Greystone Development Services XVII ( GDS ), to provide development consulting services to the Community. GDC is to lead the development activities for the Community. PM&D s role in development activities is to provide support, assistance and oversight of Greystone s development activity. GDC is an affiliate of Greystone Communities, Inc. ( GCI ). GDC, GDS and GCI are collectively referred to as Greystone. Greystone specializes in providing planning, development, marketing, management and strategic consulting services related to all areas of the senior housing and services business. Greystone currently has a staff of approximately 150 people. GCI Elmhurst, L.P. GDS is a Delaware joint venture comprised of GCI Elmhurst, L.P. (the Limited Partnership ) and GDC. The Limited Partnership was formed to fund a total of $12,400,000 of pre-finance development costs (the Pre-finance Capital ) associated with pre-finance development services Greystone is to provide under the Greystone Development Services Agreement (hereinafter defined). The general partner (the General Partner ) of the Limited Partnership is GDC Elmhurst, LLC, a Delaware limited liability company (referred to as the General Partner or GDC Elmhurst ). The General Partner is a wholly owned subsidiary of Greystone Partners, Ltd. ( Greystone Partners ) which is controlled by principals of Greystone. Limited Partners currently include The Ziegler Companies, Inc., Ziegler Equity Funding III, LLC, Ziegler Equity Funding IV, LLC, Ziegler Equity Funding V, LLC and Greystone Senior Living Investors LP ( GSLI ). GSLI is also controlled by principals of Greystone. Neither the Limited Partnership nor Greystone has any obligation with respect to the debt or other financial obligations of the Obligors. See Independent Accountants Examination Report B-11

198 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Description of the Community Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Corporation is developing a CCRC to be known as Park Place Christian Community of Elmhurst on an approximately 12.6-acre site in Elmhurst, Illinois to include 173 independent living apartments (the Independent Living Units ), 10 catered living apartments (the Catered Living Units ), 46 assisted living apartments (the Assisted Living Units ), 20 memory support assisted living suites (the Memory Support Units ), 37 nursing beds (the Health Center ), and related common areas. The Independent Living Units and Catered Living Units are expected be located in a residential building with a five-story configuration. The Assisted Living Units, Memory Support Units and Health Center are expected be located in a building with a three-story configuration. The gross square footage of the Community is anticipated to approximate 437,000 square feet, excluding 56,000 square feet of underground parking. Common areas at the Community are planned to include a central gathering space, multi-purpose room, living room, main dining room, café/bistro, private dining room, aquatic/fitness center, business center/library, beauty salon/barber shop, card lounge/game room, creative arts center, residential storage, mail alcove, administrative offices and two guest suites. The Community is to include both underground and surface parking. The following table summarizes the type, number, approximate square footage, monthly fees ( Monthly Fees ), and entrance fees ( Entrance Fees ) for the proposed units at the Community: See Independent Accountants Examination Report B-12

199 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Source: Management and Greystone Table 1 Proposed Configuration The Community Number of Units Square Footage Monthly Fees (1)(2)(3)(4) Entrance Fees (1)(2) Independent Living One-Bedroom Apartments: Dover Classic One Bedroom Standard $2,695 $325,000 Dover Select One Bedroom Standard $2,695 $325,000 Dover Traditional One Bedroom Standard $2,695 $331,923 Coventry Premier One Bedroom Deluxe w/ Den 8 1,031 $2,995 $450,000 Coventry Traditional One Bedroom Deluxe w/ Den 12 1,031 $3,195 $512,900 Coventry Classic One Bedroom Deluxe w/ Den 8 1,031 $3,195 $501,913 Coventry Signature One Bedroom Deluxe w/ Den 2 1,031 $3,195 $512,900 Coventry Select One Bedroom Deluxe w/ Den 2 1,031 $3,195 $468,950 Coventry Elite One Bedroom Deluxe w/ Den 4 1,031 $3,195 $500,925 Two-Bedroom Apartments: Oxford Traditional Two Bedroom Traditional 1 1,107 $3,495 $561,500 Oxford Classic Two Bedroom Traditional 10 1,107 $3,495 $554,340 Oxford Select Two Bedroom Traditional 4 1,160 $3,495 $565,250 Oxford Signature Two Bedroom Traditional 28 1,160 $3,495 $557,943 Carlisle Traditional Two Bedroom Deluxe 5 1,248 $3,895 $642,860 Carlisle Classic Two Bedroom Deluxe 17 1,312 $3,895 $644,941 Canterbury Traditional Two Bedroom Grand 1 1,384 $4,195 $747,500 Canterbury Classic Two Bedroom Grand 3 1,436 $4,195 $745,000 Canterbury Select Two Bedroom Grand 2 1,407 $4,195 $706,150 Canterbury Signature Two Bedroom Grand 9 1,463 $4,195 $747,133 Three-Bedroom Apartments: Kensington Traditional Three Bedroom Traditional 1 1,447 $4,295 $794,000 Kensington Classic Three Bedroom Traditional 2 1,517 $4,295 $790,000 Manchester Select Three Bedroom Deluxe 1 1,495 $4,295 $773,000 Manchester Signature Three Bedroom Deluxe 2 1,545 $4,295 $788,250 Windsor Select Three Bedroom Custom 2 1,510 $4,395 $844,425 Windsor Signature Three Bedroom Custom 4 1,611 $4,395 $834,000 Total/Weighted Average Independent Living 173 1,117 $3,386 $528,823 Catered Living (5) Coventry Traditional One Bedroom Deluxe w/ Den 4 1,031 $6,295 $37,500 Oxford Signature Two Bedroom Traditional 4 1,160 $6,495 $37,500 Carlisle Classic Two Bedroom Deluxe 2 1,312 $6,895 $37,500 Total/Weighted Average Catered Living 10 1,139 $6,495 $37,500 See Independent Accountants Examination Report B-13

200 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 1 (continued) Proposed Configuration The Community Number of Units Square Footage Monthly Fees (1)(2)(3)(4) Entrance Fees (1)(2) Assisted Living (6) Alcove Standard $4,895 $37,500 Alcove Deluxe $4,995 $37,500 One Bedroom A $5,095 $37,500 One Bedroom B $5,195 $37,500 One Bedroom C $5,395 $37,500 One Bedroom D $5,595 $37,500 One Bedroom E $5,695 $37,500 Total / Weighted Average Assisted Living $5,408 $37,500 Memory Support Memory Support Suite A $5,995 $37,500 Memory Support Suite B $6,295 $37,500 Total / Weighted Average Memory Support $6,115 $37,500 Health Center (7) Per Diem Rates Semi-Private Nursing Beds $300 Not applicable Private Nursing Beds $320 Not applicable Total Nursing 37 Source: Management and Greystone (1) The Monthly Fees and Entrance Fees shown for the Independent Living Units are for the 90% Refundable Plan ( Plan A ) in 2011 dollars. Entrance Fees shown reflect an approximate five percent Entrance Fee discount from the standard Plan A pricing, which is the only plan to be offered after construction commences. Entrance Fees shown are 100% refundable for charter residents (i.e. residents who have made an Entrance Fee deposit prior to commencement of construction) choosing Plan A. Once construction commences, the Monthly Fees shown for the Independent Living Units will increase $100, in 2011 dollars. (2) Management also offers a 50% Refundable Plan ( Plan B ) and a Traditional Amortizing Plan ( Plan C ) to firstgeneration residents. Entrance Fees under Plan B are equal to those for Plan A. Entrance Fees for Plan C are 30 percent less than the Entrance Fees for Plan A. Once construction commences, Management plans to offer residents only Plan A. (3) The Monthly Fees for Plan B are 20 percent less than those for Plan A. The Monthly Fees for Plan C are the same as the Monthly Fees for Plan A. (4) The second person Monthly Fee for the Independent Living Units is $495 for all charter residents regardless of Entrance Fee plan chosen, in 2011 dollars. All non-charter Residents are expected to pay a $1,095 second person Monthly Fee, in 2011 dollars. The second person Monthly Fee for a Catered Living Unit and an Assisted Living Unit is $2,195, in 2011 dollars. (5) There is no associated health care benefit with the Catered Living Units. (6) Three additional levels of care will be offered in Assisted Living; Level 1 is $437 per month, Level 2 is $874 per month and Level 3 is $1,311 per month in 2011 dollars. (7) All nursing beds at the Community are expected be Medicare certified. For purposes of the forecast, ten nursing beds are expected to be utilized by Medicare residents. The assumed Medicare daily rate is $375 (net of ancillary expenses) in 2011 dollars. See Independent Accountants Examination Report B-14

201 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Construction of the Community is expected to commence in June Management anticipates the Independent Living Units and Catered Living Units to be available for occupancy beginning in December 2011 and the Assisted Living Units, Memory Support Units and Health Center to be available for occupancy in May The anticipated timeline for the Community is shown below: Table 2 Development Timeline Permanent financing May 2010 Construction commences June 2010 Delivery of first Independent Living Units and Catered Living Units November 2011 First Independent Living Units available for occupancy December 2011 Catered Living Units available for occupancy December 2011 Delivery of Assisted Living Units, Memory Support Units and Health Center beds March 2012 Assisted Living Units available for occupancy May 2012 Memory Support Units available for occupancy May 2012 Health Center beds available for occupancy May 2012 Catered Living Units achieve stabilized occupancy of 95% September 2012 Assisted Living Units achieve stabilized occupancy of 95% October 2013 Memory Support Units achieve stabilized occupancy of 95% October 2013 Health Center achieves stabilized occupancy of 95% April 2014 Independent Living Units achieve stabilized occupancy of 95% November 2014 Source: Management and Greystone See Independent Accountants Examination Report B-15

202 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Development of the Community Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Corporation has entered into separate development services agreements with Greystone and PM&D. Greystone s role is the lead development consultant for the Community. PM&D s role is as the co-developer of the Community and is to provide support, assistance and oversight of Greystone s efforts. The following sections summarize the development services agreements with Greystone and PM&D. PM&D Development Agreement The Corporation entered into a Development Services Agreement effective December 15, 2005 and amended on October 27, 2009, (the PM&D Development Agreement ) with PM&D to provide development services for the Community. As compensation for services rendered pursuant to the PM&D Development Agreement, the Corporation is to pay PM&D a development fee (the PM&D Development Fee ) equal to $2,600,000. The following table summarizes the terms of the PM&D Development Fee in connection with the Community. Table 3 Anticipated PM&D Development Fee PM&D Development Fee Earned Paid (1) Ten days following execution of the PM&D Development $325,500 - Agreement Monthly payments following execution of PM&D Development 487,500 - Agreement Upon the closing of the Series 2010 Bonds 1,137,000 $500,000 Monthly during the construction period 487,500 - Upon obtaining certificate of occupancy 162,500 - Pro-rata over fill-up to 95% occupancy - 500,000 Upon available cash above a level equal to a ratio of 30% cash to - 1,600,000 outstanding debt Total PM&D Development Fee $2,600,000 $2,600,000 Source: Management (1) For purposes of the forecast, Management has assumed payment of $1,000,000 of the PM&D Development Fee during the forecast period. The remaining PM&D Development Fee of $1,600,000 is assumed to be deferred and paid after the forecast period. Pursuant to the terms of the PM&D Development Agreement, the Corporation is also expected to reimburse PM&D for all reasonable out-of-pocket travel expenses for personnel employed by PM&D. See Independent Accountants Examination Report B-16

203 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Greystone Development Services Agreement Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Corporation and Greystone entered into an amended and restated development services agreement dated January 26, 2006, and subsequently amended (the Greystone Development Services Agreement ). The Greystone Development Services Agreement provides that Greystone is to provide development, consulting, marketing and pre-opening activities related to the Community. Along with Greystone, PM&D is also expected to provide development services necessary for the Community. Pursuant to the Greystone Development Services Agreement, Greystone is also to be responsible for the marketing and initial leasing program of the Community until 90 percent occupancy of the aggregate total of Independent Living Units, Catered Living Units, Assisted Living Units, Memory Support Units and Health Center is achieved ( Stabilized Occupancy ). As compensation for services rendered pursuant to the Greystone Development Services Agreement, Greystone has been and is to be paid a development consulting fee consisting of a variable base fee (the Variable Base Fee ), a marketing fee (the Marketing Fee ), an incentive occupancy fee (the Incentive Occupancy Fee ) (collectively, the Greystone Development Consulting Fees ) and a fixed base fee (the Fixed Base Fee ). The Fixed Base Fee is equal to $7,055,556 based on the Limited Partnership s contribution to development costs. Of the Fixed Base Fee, $3,055,556 is to be earned and paid upon issuance of the Series 2010 Bonds. The remaining $4,000,000 of the Fixed Base Fee is to be earned and paid subject to the terms and provisions of the Greystone Development Services Agreement, as amended, which are consistent with the support obligation reduction provisions of the Liquidity Support Agreement (as hereinafter defined). For purposes of the forecast, the remaining $4,000,000 Fixed Base Fee is assumed to be earned and paid after the forecast period. The Variable Base Fee represents a fee for development consulting services rendered and is equal to $3,444,750. The Variable Base Fee is earned and payable as follows: (i) $324,000 upon commencement of development services, (ii) $486,000 paid pro-rata over 12 months after commencement of development services, (iii) $162,000 upon achievement of 50 percent presales of the Independent Living Units, (iv) $1,347,750 upon issuance of the Series 2010 Bonds, (v) $486,000 paid in equal installments during the construction period, (vi) $639,000 to be paid on a pro-rata basis as the Community achieves each 5 percent increment of occupancy up to and including 90 percent occupancy of the Independent Living Units. The Marketing Fee will be paid upon achieving key milestones relating to occupancy of the Independent Living Units and would be equal to $1,760,680 (or 2.0 percent of Entrance Fees collected up to 95 percent occupancy of the Independent Living Units). The Marketing Fee will be paid as follows: (i) $440,170 paid on a pro-rata basis upon the occupancy of each Independent Living Unit up to 95 percent occupancy, (ii) $440,170 paid upon the Community having achieved 65 percent occupancy of the Independent Living Units, (iii) $440,170 paid upon the Community having achieved 85 percent occupancy of the Independent Living Units, and (iv) $440,170 upon the Community having achieved 90 percent occupancy of the Independent Living Units. See Independent Accountants Examination Report B-17

204 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued In addition, upon achieving an accelerated fill-up, Greystone would be eligible to receive additional compensation of $350,000 if 90 percent aggregate occupancy of all units is achieved within 24 months of obtaining a certificate of occupancy. No Incentive Occupancy Fee is assumed to be earned for purposes of the Management s forecast. An overview of the Fixed Base Fee and Greystone Development Consulting Fees assumed to be paid to Greystone in association with the development of the Community is presented in the following table. Table 4 Anticipated Greystone Development Consulting Fees and Fixed Base Fee Fixed Base Fee (1) $7,055,556 Fees Paid Prior to Construction Commencement Upon commencement of development services $324, months following commencement of development services 486,000 Upon achieving 50% pre-sales of the Independent Living Units 162,000 Total Fees Paid Prior to Construction Commencement $972,000 Fees Paid Prior to Opening Upon closing of the Series 2010 Bonds $1,347,750 During construction period 486,000 Total Fees Paid Prior to Opening $1,833,750 Fees Paid After Opening Pro-rata over fill-up to 90% occupancy $1,079,170 Upon 65% occupancy 440,170 Upon 90% occupancy 440,170 Upon 90% occupancy 440,170 Incentive Occupancy Fee (2) 0 Total Fees Paid After Opening $2,399,680 Total Variable Base Fee, Marketing Fee and Incentive Fees $5,205,430 Source: Greystone (1) According to the Greystone Development Consulting Agreement and related amendments, the Fixed Base Fee is to be earned and paid as follows: $3,055,556 of the Fixed Base Fee is to be earned and paid upon issuance of the Series 2010 Bonds. The remaining $4,000,000 of the Fixed Base Fee is to be earned and paid subject to the terms and provisions of the Greystone Development Services Agreement, as amended, which are consistent with the support obligation reduction provisions of the Liquidity Support Agreement. For purposes of the forecast, the $4,000,000 Fixed Base Fee is assumed to be earned and paid after the forecast period. (2) Management assumes aggregate occupancy of 90 percent occurs within 31 months for forecast purposes. Therefore, no Incentive Occupancy Fee is forecasted. However, the Incentive Occupancy Fee can be $350,000 if 90 percent overall occupancy of the Community is attained within 24 months. See Independent Accountants Examination Report B-18

205 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Pursuant to the terms of the Greystone Development Services Agreement, the Corporation is also expected to reimburse Greystone for all reasonable out-of-pocket travel expenses for personnel employed by Greystone and miscellaneous office expenses. The aggregate amount of the miscellaneous office expenses is not to exceed an amount equal to three and a half percent (3.5%) of the Greystone Development Consulting Fee paid prior to construction commencement. Management of the Community Management Agreement - PM&D The Obligors entered into a management agreement with PM&D dated October 27, 2009 (the Management Agreement ) under which PM&D is to provide management and related support services for the Community. Pursuant to the terms of the Management Agreement, PM&D is required to provide professional, administrative, management and support services including assigning personnel, performing activities which may be required by the Boards and consulting with the Boards among other services. The term of the Management Agreement commences approximately 180 days prior to the date the first Independent Living Unit is expected to be occupied by a resident. The term of the Management Agreement is for a period of five years and shall be automatically renewed another five years unless terminated by either party upon giving a 30 day written notice. The Obligors are required to pay PM&D monthly, in advance, a pro rata management fee equal to $38,000 monthly ($456,000 annually) in 2011 dollars. Management fees are adjusted annually for changes in services rendered and for annual inflation as measured by the federal Consumer Price Index s Cost of Living adjustment. The Obligors shall also reimburse PM&D monthly for all of its reasonable direct expenses incurred in the performance of its duties under the Management Agreement including, but not limited to, stationery, direct supplies, mailing, public relations efforts, third-party professional services and professional and direct consulting fees. Per an amendment of the PM&D Management Agreement, dated October 27, 2009, the management fee payments are to be subordinate to the rights of holders of the Series 2010 Bonds (as hereinafter defined). For each year upon the Community opening, the amount of management fees to be paid shall be restricted and reduced by deferring the annual management fee payment if such payment would create an Event of Default as defined in the Master Indenture. Deferred management fees for a fiscal year would be paid in subsequent fiscal years when the provisions of the Master Indenture with respect to the management fees are met. Any management fees due but not paid to PM&D are to accrue with interest at a rate of five percent per annum until paid. Management assumes all management fees due to PM&D are accrued for future payment and interest is to accrue at five percent per annum during the forecast period. Management assumes that no payment of current management fees, accrued management fees or accrued interest on deferred management fees is made during the forecast period. See Independent Accountants Examination Report B-19

206 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Liquidity Support Agreement Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Obligors, PDG and Wells Fargo Bank, N.A., as the bond trustee and master trustee (the Bond Trustee and Master Trustee ) plan to enter into a liquidity support agreement (the Liquidity Support Agreement ), expected to be executed upon closing of the Series 2010 Bonds, to provide liquidity support to the Corporation. Pursuant to the Liquidity Support Agreement, a special trust account is to be created and established in the name of PDG and held in the custody of the Master Trustee in the amount of $2,600,000, to be called the Providence Liquidity Support Fund (the Providence Liquidity Support Fund ). Additionally, pursuant to the Liquidity Support Agreement, the Corporation is to cause the Bond Trustee to pay to the Master Trustee a deposit of $3,000,000 into a special trust account to be called the Special Liquidity Support Fund (the Special Liquidity Support Fund ), to be held in the custody of the Master Trustee in the name of the Corporation. Additionally, pursuant to the Liquidity Support Agreement, the Corporation is to cause the Bond Trustee to pay to the Master Trustee a deposit of $400,000 into a special trust account to be called the Supplemental Liquidity Support Fund (the Supplemental Liquidity Support Fund ), to be held in the custody of the Master Trustee in the name of the Corporation. The moneys available in the Providence Liquidity Support Fund, the Special Liquidity Support Fund and the Supplemental Liquidity Support Fund may be drawn by the Bond Trustee or the Obligors to pay for project completion costs related to the Community, interest on the Series 2010 Bonds, or any operating expenses in conjunction with the Community, if no other funds are available for those purposes in any trustee-held fund held by the Bond Trustee (other than the Debt Service Reserve Fund) or Master Trustee. If drawn upon, repayment is subject to certain payment conditions outlined in the Liquidity Support Agreement and is subordinate to the Series 2010 Bonds. Upon the repayment of the Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds (as hereinafter defined) and assuming no event of default has occurred under the Master Trust Indenture and certain stabilization tests are met, amounts remaining on deposit in the Special Liquidity Support Fund may be used to pay a portion of the Fixed Base Fee equal to $3,000,000. For purposes of the forecast, Management has not assumed draws on the Liquidity Support Agreement from the Providence Liquidity Support Fund, the Special Liquidity Support Fund or the Supplemental Liquidity Support Fund. See Independent Accountants Examination Report B-20

207 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Financing Summary of Significant Forecast Assumptions and Accounting Policies, Continued Pre-finance Capital It is anticipated that pre-finance development costs, to include costs to obtain regulatory approvals, design costs, Greystone Development Consulting Fees and marketing activities, will total approximately $12,400,000. Pre-finance development costs were funded by the Limited Partnership through the Pre-finance Capital. The Pre-finance Capital is anticipated to be reimbursed at the closing of the Series 2010 Bonds. Permanent Financing The total financial requirements for the Community are assumed to approximate $197,949,000. The Obligors propose to fund these financial requirements primarily through the issuance of $175,540,000 Illinois Finance Authority Revenue Bonds (Park Place of Elmhurst Project), Series 2010 (the Series 2010 Bonds ). See Independent Accountants Examination Report B-21

208 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Management has assumed the following sources and uses of funds in preparing its financial forecast based on information provided by Ziegler Capital Markets (the Underwriter ): Table 5 Sources and Uses of Funds (In Thousands) Sources of Funds: Series 2010A Bonds (A) $ 109,115 Series 2010B Bonds (A) 7,875 Series 2010C Bonds (A) 5,000 Series 2010D Bonds (A) 40,900 Series 2010E Bonds (A) 12,650 Original Issue Discount (B) (2,682) Total Series 2010 Bonds proceeds $ 172,858 Initial Entrance Fees (C) 21,700 Contribution (D) 1,000 Interest Earnings on Trustee Held Funds (E) 2,391 Total Sources of Funds $ 197,949 Uses of Funds: Direct construction costs (F) $ 79,576 Design and engineering costs (G) 5,860 Contingency (H) 2,750 Indirect construction costs (I) 3,470 Fixed Base Fee (J) 3,056 PM&D Development Fees (K) (P) 1,000 Greystone Development Consulting Fees (L) (P) 5,205 Marketing costs (M) 11,267 Miscellaneous costs (N) 1,478 Land (O) 14,848 Total Project Related Costs $_128,510 Working Capital (P) 13,800 Operating Reserve Fund (P) 5,000 Special Liquidity Support Fund (Q) 3,000 Supplemental Liquidity Support Fund (R) 400 Funded Interest (S) 27,972 Debt Service Reserve Fund Series 2010A Bonds (T) 9,763 Debt Service Reserve Fund Series 2010B Bonds (T) 610 Debt Service Reserve Fund Series 2010C Bonds (T) 375 Debt Service Reserve Fund Series 2010D Bonds (T) 2,774 Debt Service Reserve Fund Series 2010E Bonds (T) 1,091 Cost of issuance and other costs (U) 4,654 Total Estimated Financing and Other Costs $ 69,439 Total Uses of Funds $ 197,949 Sources: Management, Greystone and the Underwriter See Independent Accountants Examination Report B-22

209 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP Summary of Significant Forecast Assumptions d/b/a Providence Healthcare Foundation and Accounting Policies, Continued (A) According to the Underwriter, the following series of bonds are assumed to be issued: $109,115,000 of non-rated tax-exempt fixed rate term bonds (the Series 2010A Bonds ); $7,875,000 of non-rated tax-exempt fixed rate term bonds (the Series 2010B Bonds ); $5,000,000 of non-rated tax-exempt Accelerated Redemption Reset Option Securities (ARROS SM ) (the Series 2010C Bonds ); $40,900,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities (TEMPS SM ) (the Series 2010D Bonds ); and, $12,650,000 of non-rated fixed rate Taxable Mandatory Paydown Securities (Taxable MPS) (the Series 2010E Bonds ). (B) The Series 2010A Bonds are assumed to be issued at a discount of approximately $2,682,000. (C) Management assumes that approximately $21,700,000 of initial resident Entrance Fees are to be used to fund start-up losses, operating reserves and a portion of the development fees related to the Community. (D) A contribution in the approximate amount of $1,000,000 is assumed to be made by PDG. (E) Management has estimated interest in the amount of $2,391,000 to be earned as follows: on the Project Fund at 1.05 percent, on the Funded Interest Fund at 1.15 percent, on the Series 2010A Bonds Debt Service Reserve Fund at 2.75 percent, on the Series 2010B Bonds Debt Service Reserve Fund at 2.70 percent, on the Series 2010C Bonds Debt Service Reserve Fund at 2.75 percent, on the Series 2010D-1 Bonds Debt Service Reserve Fund at 2.15 percent, on the Series 2010D-2 Bonds Debt Service Reserve Fund at 1.90 percent, on the Series 2010D-3 Bonds Debt Service Reserve Fund at 1.60 percent, and on the Series 2010E Bonds Debt Service Reserve Fund at 1.60 percent, based upon information provided by the Underwriter. (F) Management has assumed construction, site work, and other costs related to the construction of the Community approximate $79,576,000, inclusive of: construction costs, based on a guaranteed maximum price contract totaling $75,986,000 provided by the Corporation s general contractor, Bovis Lend Lease (including a contractor s contingency of approximately $1,535,000); an owner held construction contingency of $2,290,000; and $1,300,000 in owner supplied construction including permits, testing and builders risk insurance. (G) Design and engineering costs are assumed to approximate $5,860,000 based on a contractual agreement with the Corporation s architect, Perkins+Will CRA, L.P., in addition to contractual agreements with the Corporation s interior designer and civil engineer. (H) A project contingency of $2,750,000 is included on the overall project related costs of the Community. (I) Indirect construction costs for the Community are assumed to approximate $3,470,000, and include procurement fees, furniture and equipment costs (based on contractual arrangements and comparable projects), as well as the costs of an owner s representative, tap fees, and other preconstruction services. (J) A Fixed Base Fee of approximately $3,056,000 is anticipated to be due to the Limited Partnership upon the closing of the Series 2010 Bonds. An additional $4,000,000 Fixed Base Fee is anticipated to be due and paid at a future date, subject to the terms and conditions of the Greystone Development Services Agreement, as amended, which are consistent with the support obligation reduction provisions of the Liquidity Support Agreement. For purposes of the forecast, Management and Greystone have assumed the unearned $4,000,000 to be earned and paid after the forecast period. For additional details, see the Greystone Development Services Agreement section of this report. (K) PM&D Development Fees of approximately $1,000,000 are anticipated to be paid as follows: $500,000 upon the closing of the Series 2010 Bonds and $500,000, which has been deferred, to be paid during the initial fillup of the Community. An additional $1,600,000 of the PM&D Development Fee has been deferred and is assumed to be paid after the forecast period. For additional details, see the PM&D Development Agreement section of this report. (L) Management has assumed that the Greystone Development Consulting Fees approximate $5,205,000 including a Variable Base Fee of approximately $3,445,000 and a Marketing Fee of approximately $1,760,000, based on the Greystone Development Services Agreement. (M) Management has estimated marketing costs related to the initial fill-up of the Community to approximate $11,267,000 and include direct marketing costs, salaries and other promotional materials. Marketing costs are assumed to be funded through stabilized occupancy. See Independent Accountants Examination Report B-23

210 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP Summary of Significant Forecast Assumptions d/b/a Providence Healthcare Foundation and Accounting Policies, Continued (N) Miscellaneous costs related to the Community approximate $1,478,000 and include expenses related to travel, legal and other professional fees, and other administrative costs as provided by Management. (O) Land and land related costs approximate $14,848,000 and include costs for purchasing the land, engineering reports, permitting and legal fees. (P) Subsequent to the issuance of the Series 2010 Bonds and after completion of the Community, initial Entrance Fees of $21,700,000 are assumed to be available to fund approximately $2,400,000 of Greystone Development Consulting Fees, approximately $500,000 of PM&D Development Fees, approximately $13,800,000 of Working Capital, and $5,000,000 into the Operating Reserve Fund (prior to any replenishment). (Q) The deposit to the Special Liquidity Support Fund is assumed to approximate $3,000,000. For additional details, see the Liquidity Support Agreement section of this report. (R) The deposit to the Supplemental Liquidity Support Fund is assumed to approximate $400,000. For additional details, see the Liquidity Support Agreement section of this report. (S) The Underwriter has estimated $27,972,000 to be used to fund interest for approximately 24.5 months from the date of issuance of the Series 2010 Bonds. (T) The deposits to the Debt Service Reserve Funds for the Series 2010 Bonds are assumed to approximate $14,613,000. (U) Costs of issuance related to the Series 2010 Bonds approximate $4,654,000 and include Underwriter s discount, accounting fees, legal fees, the feasibility consulting fee, the construction monitoring fee, the bond issuance fees, the cost for the printing of the preliminary official statement and official statement and other miscellaneous financing costs. See Independent Accountants Examination Report B-24

211 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Description of the Residency Agreement Summary of Significant Forecast Assumptions and Accounting Policies, Continued To reserve an Independent Living Unit, a prospective resident must execute a reservation agreement (the Reservation Agreement ), provide a self-disclosure of his or her health and finances and place a deposit equal to 10 percent of the Entrance Fee (the Reservation Deposit ) on the selected Independent Living Unit (the Depositor ). The remaining 90 percent of the Entrance Fee is due on or before the occupancy date (the Occupancy Date ) of the Independent Living Unit. The Reservation Agreement reserves the right of the prospective resident to choose the selected Independent Living Unit and indicate his or her intent to execute a residency agreement (the Residency Agreement ) following the Corporation's receipt of its life care facilities permit from the Illinois Department of Public Health. Under the terms of the Residency Agreement, the Corporation accepts persons at least 62 years of age at the time of occupancy, who demonstrate the ability to live independently, and as to all levels at the Community, to meet the financial obligations as a resident of the Community (the Resident ). Upon occupancy, Residents are expected to pay any unpaid portion of the Entrance Fee and an ongoing Monthly Fee. Payment of the Entrance Fee and Monthly Fee entitles the Resident to occupy the selected Independent Living Unit and receive life care services, as described hereinafter, in addition to the following services and amenities: Continental breakfast and one meal credit per person per each day of the month; Housekeeping and bed linen laundry service weekly; All utilities, except telephone, premium cable television and internet services; 24-hour security and emergency alert system; Maintenance of buildings, grounds and common areas; A U.S. mailbox; One underground parking space (for charter residents only); Scheduled local transportation; Social, recreational, educational, cultural and wellness programs; Property and casualty insurance on the building and grounds; One individual storage locker per Independent Living Unit; Use of common areas; and Priority admission to the Assisted Living Units, Memory Support Units, and Health Center. If, at any time in the future, a tax or assessment is levied against a portion of the Community or if the Community makes payments in lieu of such taxes or assessments, the Community reserves the right to allocate the cost of such tax or assessment to the Resident. See Independent Accountants Examination Report B-25

212 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued In addition to the items included in the Monthly Fee, certain services are available to Residents at an additional cost including guest meals, additional resident meals, catering for special occasions, tray service when medically required, barber and beauty service, underground garage parking, laundry service for personal items and additional housekeeping services. The Monthly Fee may be revised based on the experience of the Corporation and estimates of its future costs, at its sole discretion. The Corporation expects to make such adjustments not more than once a year and is expected to provide 60 days prior written notice of any such adjustments. Life Care Benefit Under the Residency Agreement, the Corporation provides Residents priority access at discounted rates to the Assisted Living Units, Memory Support Units and Health Center (collectively, the Health Care Center ). For permanent transfers in the case of single occupancy, Residents needing to vacate their Independent Living Unit and permanently transfer to the Health Care Center are charged the then published Monthly Fee for the Dover Traditional (One Bedroom Apartment) Independent Living Unit (Residents under the charter benefit program) or the Oxford Signature (Two Bedroom Apartment) Independent Living Unit (Residents not under the charter benefits program) plus the cost of two additional meals per day (the Life Care Benefit ). In the case of double occupancy, if one occupant is making a permanent transfer to the Health Care Center, the Monthly Fee remains unchanged, and the cost of two additional meals per day is added. Should both Residents transfer to the Health Care Center, the cost is expected to be equal to the Life Care Benefit plus the then current second person Monthly Fee and the cost of two additional meals per day. Residents needing temporary care in the Health Care Center continue to pay the current Monthly Fee for their Independent Living Unit in addition to the current prorated monthly rate in the Health Care Center. Residents under a charter benefit program will receive a credit against the applicable Health Care Center rate for the first 30 days of care. The Resident is expected to obtain and maintain Medicare Parts A and B (or an equivalent substitute policy approved by the Corporation). The Life Care Benefit is not available to those residents in the Catered Living Units or residents admitted directly into the Assisted Living Units or Memory Support Units. Financial Assistance and Charity Care The Residency Agreement may not be terminated solely because of a Resident s financial inability to pay monthly charges by reason of circumstances beyond the Resident s control. If the Resident justifies special financial consideration, Management can consider deferring or waiving part or all of the Monthly Fee, so long as such deferral or waiver can be made without financially impairing the objectives of the Community. Any deferrals or waivers may be charged against the refundable portion of the Entrance Fee of the Independent Living Unit. In addition, the Resident may be asked to move to a smaller or less expensive unit. See Independent Accountants Examination Report B-26

213 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Entrance Fee Options Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Corporation offers three Entrance Fee plans for the Independent Living Units until construction of the Community commences. The Entrance Fee options, related amortization schedules and refunds upon termination of the Residency Agreement are as follows: Entrance Fee Option Amortization Schedule Plan A - 90% Refundable Plan (1) Upon termination of the Residency Agreement, 90 percent (90%) of the total Entrance Fee paid is to be refunded to the Resident. Plan B - 50% Refundable Plan (2) The Entrance Fee amortizes two percent for each month of occupancy up to 25 months, at which point the Entrance Fee is 50 percent refundable. Plan C - Traditional Amortizing Plan (2) The Entrance Fee amortizes two percent for each month of occupancy up to 50 months, at which point the Entrance Fee is no longer refundable. (1) The Entrance Fee for charter Residents on Plan A (i.e. Residents who have made a Reservation Deposit prior to the commencement of construction) is to be 100 percent refundable. (2) These Entrance Fee plans are only being offered to charter Residents of the Community. Once construction on the Community begins, only Plan A is expected to be offered. As of February 28, 2010, 39 Depositors for the Community have chosen Plan A, two have chosen Plan B and 92 have chosen Plan C. Of the two who have chosen Plan B, one has signed an addendum stating that they intend to change to Plan A at move-in and pay the additional Entrance Fee required. Of the 92 who have chosen Plan C, 72 have signed an addendum stating that they intend to change to Plan A at move-in and pay the additional Entrance Fee required, and four have signed an addendum stating that they intend to change to Plan B at move-in and pay the additional Entrance Fee required. If the Residency Agreement is terminated prior to assuming occupancy at the Community, the Resident is expected to receive a 100 percent refund of all monies paid, including interest as earned at the prevailing investment rate on the Reservation Deposit. If the Residency Agreement is terminated after assuming occupancy at the Community, the Corporation is expected to refund the refundable portion of the Entrance Fee (without interest) on the latter of (1) the effective date of termination of the Residency Agreement or (2) the date a new Entrance Fee and executed Residency Agreement have been received from a new Resident and the new Resident has taken occupancy of the vacated Independent Living Unit. See Independent Accountants Examination Report B-27

214 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Charter Benefit Program Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Corporation has offered a Charter Benefit Program (the Charter Benefit Program ) to prospective residents for the Independent Living Units (the Charter Residents ). As of February 28, 2010, the Corporation currently has 133 Charter Residents (135 Independent Living Units). Management intends to offer the Charter Benefit Program to Depositors for the Community until construction commences. For purposes of Management s forecast, Management has assumed that 50 percent of first generation residents would utilize the Charter Benefit Program. Some of the benefits of the Charter Benefit Program include: A five percent reduction in the Entrance Fee amount; A reduction in the second person Monthly Fee of $500 per month (in 2011 dollars) for the lifetime of the Charter Resident for all levels of care; Interest paid on the Reservation Deposit of 4.5 percent (interest applied in the form of a credit to the Monthly Fee and is available only if the Depositor occupies an Independent Living Unit at the Community); A 100 percent refundable Entrance Fee (for the 90% refundable Entrance Fee plan only); Two months of complimentary Monthly Fees; Adjustment to the Life Care Benefit rate (as described in the Life Care Benefit section of this report); Thirty (lifetime) temporary days of care in the Healthcare Center at no additional cost; and, One free underground parking space. Approximately 92 Depositors have signed a Reservation Agreement for an Independent Living Unit under Plan C as of February 28, Of these 92 Depositors, 72 have paid an Entrance Fee equal to seven percent of the Reservation Deposit under Plan A for their designated Independent Living Unit. These 72 Depositors have signed an addendum indicating that prior to assuming occupancy of the designated Independent Living Unit, he or she must pay the balance of the Entrance Fee equal to the Entrance Fee of Plan A for the Independent Living Unit chosen. Also, four of the 92 Depositors who have chosen Plan C have paid an Entrance Fee equal to seven percent of the Reservation Deposit under Plan B for their designated Independent Living Unit. These four Depositors have signed an addendum indicating that prior to assuming occupancy of the designated Independent Living Unit, he or she must pay the balance of the Entrance Fee equal to the Entrance Fee of Plan B for the Independent Living Unit chosen. The following table summarizes Management s assumption for the number of Depositors on Plan A, B and C for purposes of Management s forecast. The table also summarizes the number of Depositors who have chosen each plan as of February 28, 2010, based on Depositor information provided by Management. See Independent Accountants Examination Report B-28

215 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 6 The Community Utilization of Entrance Fee Options As of Percentage of Management s Percent of February 28, Initial Forecast Management s Plan 2010 Deposits Assumption Assumption Plan A 90% Refundable Plan Charter % % Plan B 50% Refundable Plan (1) 2 1.6% 4 2.5% Plan C 0% Refundable Plan (2)(3) % % Construction 90% Refundable Plan (4) 0 0.0% % Standard Plan A 90% Refundable Plan (5) 0 0.0% % Total 133 (6) 100.0% % Source: Management and Greystone (1) Of the two Depositors who have chosen Plan B, one has signed an addendum stating that they intend to change to Plan A at the time of move-in. (2) Of the 92 Depositors who have chosen Plan C, 72 have placed a Reservation Deposit equal to seven percent of the Entrance Fee for the selected unit under Plan A (equal to ten percent under Plan C) and have signed an addendum indicating that prior to assuming occupancy of the designated Independent Living Unit, he or she must pay the balance of the Entrance Fee equal to the Entrance Fee of Plan A for the Independent Living Unit chosen. (3) Of the 92 Depositors who have chosen Plan C, four have placed a Reservation Deposit equal to seven percent of the Entrance Fee for the selected unit under Plan B (equal to ten percent under Plan C) and have signed an addendum indicating that prior to assuming occupancy of the designated Independent Living Unit, he or she must pay the balance of the Entrance Fee equal to the Entrance Fee of Plan B for the Independent Living Unit chosen. (4) Construction pricing is expected to be offered upon commencement of construction until the Community opening. (5) Management plans to offer only Standard Plan A to first generation Residents after the Community is open and to all second generation Residents of the Community. (6) Represents the total number of Depositors (135 Independent Living Units) as of February 28, Combination Apartments According to Management, two Depositors have reserved two Independent Living Units each (a Combination Apartment ). Upon vacancy, the Combination Apartments could be separated and remarketed as their original floor plans. The Monthly Fees for the Combination Apartments approximate the combined Monthly Fee of each floor plan, less $500. Catered Living Units The Community is also expected to have a residency agreement for residents seeking to live in the Catered Living Units. The Catered Living Units would serve residents who wish to live independently but prefer to pay a nominal entrance fee and prefer not to participate in the Life Care Benefit program. Residents paying the entrance fee and monthly service fee in the Catered Living Units would receive the same services as independent living Residents (with the exception of a Life Care Benefit), plus the following additional services: Two additional meals per day; Additional housekeeping services (the equivalent of two additional housekeeping visits per month); Concierge service (approximately 30 minutes daily); and 24-hour supervision. See Independent Accountants Examination Report B-29

216 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Characteristics of the Market Area Summary of Significant Forecast Assumptions and Accounting Policies, Continued Assumptions for the future utilization of the Community were developed by Management based on analysis of the following factors that may affect the demand for the Community s accommodations and services: Site description and general area analysis; Defined primary market area for the Community; Demographic and socioeconomic characteristics of the defined primary market area; Estimated age- and income-qualified households within the defined primary market area; Description and utilization of existing and proposed comparable retirement communities within and near the defined primary market area; Management s ability to market the Independent Living Units, Catered Living Units, Assisted Living Units, Memory Support Units and Health Center; and Penetration rates for independent living and assisted living services. Each of the above factors and the resulting assumed utilization of the Community are described in the following sections. Site Description The Community is anticipated to be located on approximately 12-acres of land (the Site ) in Elmhurst, DuPage County, Illinois, approximately 18 miles west of downtown Chicago. The northern boundary of the Site is adjacent to Timothy Christian School and the southern property boundary is adjacent to the new Elmhurst Christian Reformed Church. The western boundary of the Site is adjacent to the Faith Christian Reformed Church. On the eastern property boundary Elmhurst Memorial Hospital is constructing a new healthcare campus, which will include an acute care hospital, and is scheduled to open in General Area Analysis Highways The Community is planned to be located south of West Butterfield Road between Prospect Avenue and Euclid Avenues, approximately 600 feet north of Brush Hill Road and Roosevelt Road. Roosevelt Road connects with Interstate 88 ( I-88 ) approximately one mile southeast of the Community and Interstate 294 ( I-294 ) approximately one and one-half miles east of the Community. I-294 circles the Chicago metro area to the west. I-88 provides access to Interstate 290 ( I-290 ) to the north, Interstate 55 ( I-55 ) to the south and Interstates 74 and 80 to the west. I-290 provides access to downtown Chicago and I-55 is a major north-south link connecting Chicago to St. Louis. Interstate 355 is approximately five miles west of the Community and provides access to the western and southwestern suburbs of Chicago. The Community is approximately 12 miles south of Interstate 90 which provides access northwest through Wisconsin. In addition, State Highways 38, 56, 8 and 83 are all accessible within one mile of the Community. See Independent Accountants Examination Report B-30

217 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Public Transportation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Regional Transportation Authority ( RTA ) is the oversight and planning agency for Pace, Metra Rail and the Chicago Transit Authority. Pace is the suburban bus division of the RTA and offers 240 fixed-route public transportation services traveling through DuPage, Kane, Lake, McHenry, Will and Cook Counties. The closest Pace station is approximately three miles northeast of the Community in Hillside. The Chicago Transit Authority travels through the City of Chicago and 40 surrounding suburbs, offering over 154 public transportation bus routes and over eight public transportation routes via rail with the closest station approximately eight miles southeast of the Community in Riverside. The Metra Rail is a 495-mile rail system serving 230 stations in the counties of Cook, DuPage, Lake, Will, McHenry and Kane with the closest station approximately three miles northeast of the Community in downtown Elmhurst. In addition, there is a Greyhound Bus line approximately 14 miles northeast of the Community in Chicago and an Amtrak Station approximately eight miles southeast of the Community in La Grange. Airport Chicago O Hare International Airport is approximately 15 miles northwest of the Community and provides commercial airline services for 41 commercial carriers to both domestic and international destinations. Chicago Midway International Airport is approximately 22 miles southwest of the Community and provides commercial airline services for six major commercial carriers to both domestic and international destinations. Hospitals The following table provides five hospitals and medical centers that serve the areas surrounding the Community. Table 7 Hospitals Near The Community Hospital Name Elmhurst Memorial Hospital (1) Adventist Hinsdale Hospital Advocate Good Samaritan Hospital Adventist La Grange Memorial Hospital Location Elmhurst Hinsdale Downers Grove La Grange Driving Miles from the Community Type Number of Beds 3.5 Short Term Acute Care Short Term Acute Care Short Term Acute Care Short Term Acute Care 176 RML Specialty Hospital Hinsdale Long Term 90 Source: American Hospital Directory (1) Elmhurst Memorial Healthcare, the parent organization of Elmhurst Memorial Hospital, is currently constructing a new 50-acre integrated healthcare campus at the corner of York and Roosevelt roads in Elmhurst, to be located across the street from the Community. The new campus is scheduled for completion in 2011 and will include an acute care hospital with all private rooms, emergency department, surgical suites, individual physician offices and a retail complex. See Independent Accountants Examination Report B-31

218 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Shopping/Cultural Summary of Significant Forecast Assumptions and Accounting Policies, Continued Oak Brook Shopping Center is located within three miles of the Community and has over 166 retail options. There are two additional shopping centers within approximately five miles of the Community including Yorktown Center and North Park Mall. The Elmhurst Historical Museum is approximately three miles northeast of the Community. Other attractions in Elmhurst include the Theatre Historical Society of America, which is approximately three miles northeast of the Community, and the Elmhurst Symphony Orchestra, which is approximately three miles north of the Community. Sugar Creek Golf Course is a nine-hole public golf course approximately one and one-half miles northwest of the Community. Oak Brook Golf Club and Fresh Meadow Golf Course are 18- hole, public golf courses located approximately two and one-half miles and four miles southeast of the Community, respectively. Elmhurst has several collegiate and university options, including Elmhurst College, Midwestern University, and Triton College. Elmhurst College is approximately three miles north of the Community and offers 51 majors for undergraduates, four accelerated majors for adults, and nine graduate programs. Elmhurst is approximately 18 miles southwest of downtown Chicago. The Chicago area offers major cultural and entertainment venues, museums, and recreational activities. The Chicago area is home to over 28 colleges and universities including The University of Chicago, University of Illinois Chicago, Northwestern University, Loyola University Chicago and DePaul University. Professional sports teams located in the Chicago metropolitan area include the Chicago White Sox, Chicago Cubs, Chicago Bears, Chicago Bulls and the Chicago Blackhawks. See Independent Accountants Examination Report B-32

219 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Primary Market Area of the Community Summary of Significant Forecast Assumptions and Accounting Policies, Continued The primary market area for providers of senior living services is typically defined as the geographic area from which a majority of prospective residents reside prior to assuming occupancy at the Community. As of February 28, 2010, there were 135 Independent Living Units reserved by 133 Depositors out of the 173 available Independent Living Units, representing approximately 78 percent of the total Independent Living Units at the Community. Based on the zip code origin of the Depositors, discussions with existing senior living providers in the area and experience with similar communities, the primary market area has been defined to be a 15 zip code area surrounding the Community primarily located within DuPage County and reaches into Cook County, spanning approximately 16 miles from north to south, and 19 miles from east to west at the widest points (the PMA ). The following table lists the 15 zip codes comprising the PMA. Table 8 Independent Living Depositor Origin Data Zip Code Town Number of Depositors (1) of Total Percentage (2) Elmhurst % Oak Brook % Hinsdale 9 6.8% Willowbrook 7 5.2% La Grange 7 5.2% Lombard 5 3.8% Westmont 5 3.8% Glen Ellyn 5 3.8% Western Springs 4 3.0% Wheaton 4 3.0% Villa Park 2 1.5% Clarendon Hills 2 1.5% Downers Grove 1 0.7% Downers Grove 1 0.7% (3) Darien 0 0.0% Total from PMA Zip Codes % Other Illinois areas % Out of state 4 3.0% Total % Source: Management (1) Depositors include individuals with a Reservation Deposit for an Independent Living Unit as of February 28, According to Management, two depositors have reserved two adjacent Independent Living Units each at the Community, for 135 units total. (2) The Site for the Community is located in zip code (3) Zip code was added for purposes of contiguity. See Independent Accountants Examination Report B-33

220 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP Summary of Significant Forecast Assumptions d/b/a Providence Healthcare Foundation and Accounting Policies, Continued The following map depicts the Community, other existing communities, and the PMA. 5 Miles 10 Miles Source: Microsoft MapPoint Legend The Primary Market Area The Community Existing Comparable Entrance Fee Communities in or near the PMA 1 Lexington Square of Elmhurst 2 Beacon Hill 3 Lexington Square of Lombard 4 Fairview Village Campus 5 Wyndemere Senior Living 6 The Landing at Plymouth Place 7 Monarch Landing Population Existing Comparable Rental Communities 8 Sunrise at Fountain Square 9 Cordia Senior Living 10 Meadows of Glen Ellyn See Independent Accountants Examination Report B-34

221 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The age distribution of the population in a geographic area is a key factor in the determination of an area s retirement housing needs. The U.S. Census Bureau has compiled demographic data based on the 2000 census figures. Nielsen Claritas, a firm that specializes in the analysis of demographic data, has extrapolated the 2000 census information to derive the estimated 2009 figures and projected statistics for The following table presents population data by age cohort and the anticipated average annual compounded percentage change between 2000 and 2009 and 2009 and 2014 in the PMA, the State of Illinois, and the United States. Table 9 Historical, Estimated and Interpolated Primary Market Area, State of Illinois and United States Populations 2000 Population (Census) 2009 Population (Estimated) 2014 Population (Projected) Compounded Annual Percentage Change Compounded Annual Percentage Change PMA Total Population 411, , , % 0.0% Age 65 to 74 Population 27,634 30,270 37, % 4.2% Age 75 to 84 Population 21,174 20,352 20, % -0.2% Age 85 Plus Population 8,003 9,694 10, % 2.0% Total 65 Plus 56,811 60,316 68, % 2.5% Total 75 Plus 29,177 30,046 30, % 0.5% State of Illinois Total Population 12,419,293 12,937,547 13,251, % 0.5% Age 65 to 74 Population 772, , , % 3.7% Age 75 to 84 Population 535, , , % 0.3% Age 85 Plus Population 192, , , % 1.8% Total 65 Plus 1,500,025 1,594,643 1,787, % 2.3% Total 75 Plus 727, , , % 0.8% United States Total Population 281,421, ,624, ,320, % 1.0% Age 65 to 74 Population 18,390,986 20,707,408 25,684, % 4.4% Age 75 to 84 Population 12,361,180 13,131,796 13,807, % 1.0% Age 85 Plus Population 4,239,587 5,738,990 6,513, % 2.6% Total 65 Plus 34,991,753 39,578,194 46,005, % 3.1% Total 75 Plus 16,600,767 18,870,786 20,320, % 1.5% Source: Nielsen Claritas See Independent Accountants Examination Report B-35

222 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table presents the percentage of total population by age group for the targeted age population in the PMA, the State of Illinois, and the United States. Table 10 Percentage of Total Population by Age Cohort 2000 (Census) PMA Illinois United States Age Groupings 65 plus 13.8% 12.1% 12.4% 75 plus 7.1% 5.9% 5.9% 85 plus 1.9% 1.5% 1.5% 2009 (Estimated) PMA Illinois United States Age Groupings 65 plus 14.7% 12.3% 12.9% 75 plus 7.3% 5.9% 6.2% 85 plus 2.4% 1.9% 1.9% 2014 (Projected) PMA Illinois United States Age Groupings 65 plus 16.6% 13.5% 14.3% 75 plus 7.5% 6.0% 6.3% 85 plus 2.6% 2.0% 2.0% Source: Nielsen Claritas See Independent Accountants Examination Report B-36

223 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Estimated Eligible Households within the PMA Summary of Significant Forecast Assumptions and Accounting Policies, Continued In order to qualify for residency at the Community, a prospective resident must be at least 62 years of age and demonstrate sufficient financial resources to pay the Entrance Fee, required Monthly Fee and other expenses related to independent living services not provided for in the Residency Agreement. Accordingly, Management has established certain criteria to identify potential residents who are eligible to reside in an Independent Living Unit. Management estimates that prospective independent living residents should have a minimum monthly income of approximately 1.6 times the Monthly Fee and an asset level approximately 2.0 times the Entrance Fee required to become a Resident of the Community. For purposes of quantifying the number of income-qualified households in the PMA, households age 75 or older are considered to be the most likely to establish residency in an Independent Living Unit. The composition of the Community s Depositors as of February 28, 2010 is described in the table below: Age Group of Primary Depositors Table 11 The Community Depositor Composition Number of Depositors Percentage Under % 75 and older % Total Primary Depositors on entry into the Community (1) % Source: Management (1) Represents the age of Depositors upon entry into the Community in In addition, the following two annual household income scenarios are presented for estimating the number of income-qualified households in the PMA: Annual household income approximately $50,000 or more based on the Monthly Fee of a Dover One Bedroom apartment, which is the smallest and least expensive unit at the Community; and Annual household income approximately $60,000 or more based on the weighted average Monthly Fee of the Independent Living Units at the Community. Of the Community s Depositors, the median annual income is approximately $81,000 and the median net worth is approximately $1,500,000, based on information provided by Management as of February 28, The average age of Depositors upon entry to the Community approximates 82 years of age when the Community opens in See Independent Accountants Examination Report B-37

224 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table illustrates the 2009 estimated and the 2014 projected household income distribution for householders age 65 to 74 and 75 or over in the PMA. Table 12 Income Eligible Households for Independent Living Services Within the Primary Market Area 2009 (Estimated) Total Total Households: 18,562 17,417 35,979 Household Income Under $50,000 8,247 11,841 20,088 $50,000 and over $50,000 59,999 1,838 1,277 3,115 $60,000 74,999 2,057 1,218 3,275 $75,000 99,999 2,290 1,240 3,530 $100,000 plus 4,130 1,841 5,971 Total $50,000 and over 10,315 5,576 15,891 Percentage of Income Eligible Households to Total Households - $50,000 and over 55.6% 32.0% 44.2% Total $60,000 and over 8,477 4,299 12,776 Percentage of Income Eligible Households to Total Households - $60,000 and over 45.7% 24.7% 35.5% 2014 (Projected) Total Total Households: 22,673 17,661 40,334 Household Income Under $50,000 9,338 11,318 20,656 $50,000 and over $50,000 59,999 2,134 1,355 3,489 $60,000 74,999 2,587 1,378 3,965 $75,000 99,999 2,899 1,349 4,248 $100,000 plus 5,715 2,261 7,976 Total $50,000 and over 13,335 6,343 19,678 Percentage of Income Eligible Households to Total Households - $50,000 and over 58.8% 35.9% 48.8% Total $60,000 and over 11,201 4,988 16,189 Percentage of Income Eligible Households to Total Households - $60,000 and over 49.4% 28.2% 40.1% Source: Nielsen Claritas See Independent Accountants Examination Report B-38

225 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table compares the percentage of income-qualified households to total households for the $50,000 and $60,000 income qualification levels by age groups for the elderly population within the PMA, the State of Illinois, and the United States. Table 13 Comparison of Income Qualified Households 2014 PMA Illinois United States Total Households Age 75+: 17, ,373 12,529,022 Household Income Under $50,000 11, ,657 8,769,737 $50,000 and over $50,000 59,999 1,355 32, ,581 $60,000 74,999 1,378 32, ,643 $75,000 99,999 1,349 29, ,222 $100,000 plus 2,261 46,645 1,294,839 Total $50,000 and over 6, ,716 3,759,285 Percentage of Income Qualified Households to Total Households - $50, % 28.6% 30.0% Total $60,000 and over 4, ,258 2,928,704 Percentage of Income Qualified Households to Total Households - $60,000 Source: Nielsen Claritas 28.2% 22.1% 23.4% See Independent Accountants Examination Report B-39

226 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Market Area Real Estate Summary of Significant Forecast Assumptions and Accounting Policies, Continued The ability of potential residents to sell their home prior to assuming occupancy at a senior living community may have an impact on the ability of residents to pay the required entrance fee. Often, entrance fees are paid with funds received through the sale of a prospective resident s home. The following tables summarize the real estate statistics for the PMA. Zip Code Number of Homes Sold Table 14 Market Area Real Estate Trends for PMA Zip Codes (1) (2) Average Sales Price Average Days on Market Number of Homes Sold Average Sales Price Average Days on Market Number of Homes Sold Average Sales Price Average Days on Market Number of Homes Sold Average Sales Price Elmhurst 399 $544, $501, $418, $649, Glen Ellyn 354 $520, $488, $403, $467, Lombard 326 $305, $303, $248, $252, Villa Park 210 $288, $240, $214, $244, Wheaton 473 $434, $416, $372, $352, Clarendon Hills 96 $815, $697, $536, $383, Downers Grove 265 $524, $494, $394, $281, Downers Grove 155 $430, $388, $348, $305, Hinsdale 205 $1,281, $1,188, $958, $819, Oak Brook 66 $1,126, $1,060, $1,270, $779, La Grange 201 $602, $494, $420, $330, Willowbrook 133 $821, $710, $643, $1,487, Western Springs 119 $672, $661, $557, $616, Westmont 125 $388, $356, $322, $387, Darien 123 $385, $340, $324, $253, Total/Weighted Avg. 3,250 $552, ,640 $509, ,634 $446, $490, Source: Illinois MLS, February (1) Information includes single-family homes sold through the MLS. (2) Reflects data through January 31, Average Days on Market See Independent Accountants Examination Report B-40

227 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table summarizes the real estate statistics for the top five PMA zip codes from which depositors originate broken down by sale price based on the following categories: $299,000 and under, based on the entrance fee of the smallest Independent Living Unit at the Community (the One Bedroom Standard Dover Classic); $300,000 $499,000, based on the approximate weighted average entrance fee of the Independent Living Units at the Community; $500,000 $799,000, based on the entrance fee of the largest Independent Living Unit at the Community (the Three Bedroom Custom Windsor Signature); and $800,000 and above, to reflect home values above the highest entrance fee at the Community. Table 15 Homes Sold Within Selected PMA Zip Codes (1) Sale Price Zip Code / Town $299,000 and Under $300,000 - $499,000 $500,000 - $799,000 $800,000 and Above Total Elmhurst Oak Brook Hinsdale Willowbrook La Grange Total , Percent of Total Home Sales in Top Five PMA Zip Codes 9% 17% 28% 28% 31% 28% 30% 24% 23% 33% 28% 21% 100% 100% 100% Source: Illinois MLS, February (1) Information includes single-family homes sold through the MLS. (2) The Community is to be located in zip code See Independent Accountants Examination Report B-41

228 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table shows the Case-Shiller Home Price Index value for the Chicago-Naperville- Joilet, IL Metropolitan Statistical Area ( MSA ) as compared to the U.S. National Index for the fourth quarter of 2009 as well as the Composite-10 and Composite-20 Home Price Indices as of December Also shown is the percent change in value for each of the past five years, as well as the nine-year overall change. Table 16 The S&P Case-Shiller Home Price Index Percent Change Q Year 2-Year 3-Year 4-Year 5-Year 9-Year Level (Q4 08 to Q4 09) (Q4 07 to Q4 09) (Q4 06 to Q4 09) (Q4 05 to Q4 09) (Q4 04 to Q4 09) (Q4 00 to Q4 09) U.S. National Index % -20.3% -27.0% -27.2% -16.5% 26.1% Percent Change December 1-Year 2-Year 3-Year 4-Year 5-Year 9-Year Metropolitan Area 2009 Level (12/08 to 12/09) (12/07 to 12/09) (12/06 to 12/09) (12/05 to 12/09) (12/04 to 12/09) (12/00 to 12/09) Composite-10 Boston % -6.6% -9.7% -14.3% -11.3% 31.9% Chicago % -20.5% -24.1% -22.0% -14.5% 18.0% Denver % -2.9% -7.2% -7.5% -3.9% 11.3% Las Vegas % -46.8% -54.9% -54.5% -49.7% -0.9% Los Angeles % -26.4% -36.5% -35.3% -21.1% 55.6% Miami % -35.8% -47.1% -43.9% -26.2% 36.5% New York % -14.9% -19.6% -19.2% -7.2% 53.7% San Diego % -22.8% -34.4% -37.1% -32.9% 34.4% San Francisco % -27.9% -35.7% -36.6% -26.6% 6.1% Washington DC % -18.1% -25.6% -27.7% -13.2% 59.7% Composite-20 (includes Composite-10) Atlanta % -16.3% -19.0% -16.7% -12.2% 2.0% Charlotte % -10.7% -8.6% -2.5% 3.2% 15.0% Cleveland % -7.3% -13.1% -15.3% -13.1% 0.0% Dallas % -1.6% -3.9% -2.7% 1.9% 11.9% Detroit % -29.7% -39.3% -42.9% -41.1% -32.1% Minneapolis % -20.8% -27.0% -27.6% -23.2% 9.9% Phoenix % -40.0% -49.2% -49.0% -26.2% 6.3% Portland % -17.8% -16.8% -8.6% 11.1% 44.4% Seattle % -20.2% -19.8% -10.1% 6.4% 38.2% Tampa % -30.6% -39.9% -38.8% -20.2% 26.1% Composite % -21.2% -28.9% -28.7% -17.4% 39.3% Composite % -21.1% -28.2% -27.8% -16.5% 30.8% Source: Case-Shiller, March See Independent Accountants Examination Report B-42

229 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Unemployment Trends Summary of Significant Forecast Assumptions and Accounting Policies, Continued The unemployment trends for the City of Elmhurst, DuPage County, Cook County, the State of Illinois and the United States are shown in the following table. Table 17 Unemployment Trends (1) City of Elmhurst 2.9% 3.2% 4.2% 7.1% DuPage County 3.4% 3.8% 5.0% 8.2% Cook County 4.8% 5.2% 6.5% 10.1% Illinois 4.6% 5.1% 6.5% 9.8% United States 4.6% 4.6% 5.8% 9.2% Source: U.S. Department of Labor, Bureau of Labor Statistics Data, January (1) Unemployment data for the City of Elmhurst, DuPage County, Cook County and the State of Illinois is through November Unemployment data for the United States is through December Elmhurst is supported by DuPage County s major employers such as DuPage County Public Schools, seven hospitals including Elmhurst Memorial Hospital and Jewel/Osco. Life Care Regulatory Requirements Life care facilities are licensed and regulated by the Illinois Department of Public Health (the Department ) under the Life Care Facilities Act, 210 ILCS 40/1-12 (the Life Care Act ) and under the Life Care Facilities Contract Code, 77 Ill. Adm. Code 396 (the Life Care Rules ). The Life Care Act defines a life care facility as a place or places in which a provider undertakes to provide a resident with nursing services, medical services or personal care services, in addition to maintenance services for a term in excess of one year or for life pursuant to a life care contract. The term also means a place or places in which a provider undertakes to provide such services to a non-resident. A life care facility is required to obtain a permit from the Department prior to entering into life care contracts. An application for a permit must include a copy of the proposed form of life care contract; a copy of the letter-of-credit or escrow agreement, in an amount and form acceptable to the Department; a complete, detailed, written description of any long-term financing; and an audited statement of the life care facility s financial position in each of the three years prior to the application. At the time of or prior to the execution of a life care contract and the transfer of any money or other property to a provider or escrow agent, the provider will deliver to the resident a copy of a financial disclosure statement, reflecting the provider s financial condition. This statement includes, but is not limited to, disclosure of the short-term assets and liabilities of the provider. In addition, the Department may conduct an audit or examination of the facility s financial operations in order to protect the interests of the residents and the State of Illinois. See Independent Accountants Examination Report B-43

230 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Comparable Retirement Communities Summary of Significant Forecast Assumptions and Accounting Policies, Continued Comparable communities include those offering independent living units and at least one level of health care services, such as assisted living and/or nursing care for age restricted seniors. Independent living units may be apartments, cottages, and/or free-standing homes where residents have access to on-site amenities, which typically include a choice of dining venues, library, lounge areas, fitness facilities, banking, game room, multi-purpose room, arts and crafts area, hair salon, a chapel, and more. Services typically include one meal per resident per day, weekly or bi-weekly housekeeping, all utilities except telephone, scheduled transportation, activities program, emergency call system in each residence, 24-hour security, interior and exterior maintenance, maintenance of grounds, and discounted health care services in on-site assisted living and nursing care facilities. Comparable facilities are defined as those facilities that: (i) include independent living services; (ii) provide one or more other levels of care such as assisted living, dementia care and/or nursing care services; (iii) offer similar services and amenities within the PMA of the Community; and/or (iv) compete for similar age- and income-qualified residents. Continuing care retirement communities ( CCRCs ) may provide a variety of contracts to residents. Generally, the major distinction in contract types relates to the health care benefit. The most common contract types are as follows: Extensive or Life Care Contract ( Type A ) - Under a Type A contract, a resident typically pays an upfront entrance fee and an ongoing monthly service fee in exchange for the right to lifetime occupancy of an independent living unit with certain services and amenities. Residents of independent living who require assisted living or nursing care may transfer to the appropriate level of care and continue to pay essentially the same monthly service fee they had been paying for their residence, or upon permanent transfer, the fee may be adjusted to the weighted average of all monthly service fees. The Community is considered a Type A contract. Modified Contract ( Type B ) - Under a Type B contract, the resident also generally pays an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under a Type B contract, the CCRC typically provides assisted living or skilled nursing care to residents either (a) at a discounted rate on the per diem, e.g., 20 percent (20%) discount; (b) a certain number of days per year or per lifetime, e.g., days; or (c) a combination of the two. Fee-for-Service Contract ( Type C ) - A Type C contract also generally requires an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under the Type C contract, residents who require assisted living or nursing care do not receive any discount on assisted living or skilled nursing services. See Independent Accountants Examination Report B-44

231 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued In addition to the three contract types described above, comparable retirement communities may also include rental communities that offer independent living housing and health care services, such as assisted living or nursing care. The resident is not required to pay an entrance fee, but rather signs a lease for the independent living unit selected and pays for various additional services utilized on a monthly or per diem basis at prevailing market rates. The following tables profile the Community, the eight existing comparable retirement communities within the PMA and two existing comparable retirement communities near the PMA. See Independent Accountants Examination Report B-45

232 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 18 Entrance Fee Communities Within the Primary Market Area The Community Lexington Square of Elmhurst Beacon Hill Location Elmhurst Elmhurst Lombard Miles from the Community Sponsor/Developer Timothy Place, NFP Lexington Health Lifespace Care Group & Affiliates Communities, Inc. Year Opened Type of Contract Type A Type A/Rental Type A For Profit/Not-for-profit Not-for-profit Not-for-profit Not-for-profit Unit Configuration Independent Living Units (ILUs) Studios One-bedroom apartments Two-bedroom apartments Three-bedroom apartments 12 Homes/Cottages/Villas Total ILUs Assisted Living Units 66 Nursing Care Beds Independent Living Square Footage Studios One-bedroom apartments 846 1, , Two-bedroom apartments 1,107 1,463 1, ,440 Three-bedroom apartments 1,447 1,611 Homes/Cottages/Villas Entrance Fees Studios $100, ,287 $105,600 One-bedroom apartments $325, ,900 $145, ,425 $149, ,000 Two-bedroom apartments $554, ,500 $203, ,205 $200, ,600 Three-bedroom apartments $773, ,425 Homes/Cottages/Villas 2 nd Person Entrance Fee Monthly Fees Studios $2,211 $1,963 One-bedroom apartments $2,617 3,102 $2,445 2,976 $2,178 2,606 Two-bedroom apartments $3,393 4,073 $2,975 3,235 $2,803 4,040 Three-bedroom apartments $4,170 4,267 Homes/Cottages/Villas 2 nd Person Monthly Fee $481 $515 $1,176 Refund Options 0%, 50% & 90% (shown) 55% & 100% (shown) 0%, 50% & 90% (shown) Assisted Living Entrance Fee $37,500 Monthly Fee $4,752 5,432 Nursing Care Daily Rate $ $ $210 Occupancy Rate Independent Living 84% 97% Assisted Living Nursing Care 97% 98% Source: Management, surveys and site visits conducted by Dixon Hughes PLLC through January See Independent Accountants Examination Report B-46

233 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 18 (continued) Entrance Fee Communities Within the Primary Market Area Lexington Square of Lombard Fairview Village Campus Wyndemere Location Lombard Downers Grove Wheaton Miles from the Community Sponsor/Developer Lexington Health VibrantLiving Communities Life Care Care Group & Affiliates & Services Services LLC Year Opened / /1993 Type of Contract Type A&B/Rental Type B Type A and C For Profit/Not-for-profit Not-for-profit Not-for-profit Not-for-profit Unit Configuration Independent Living Units (ILUs) Studios 40 8 One-bedroom apartments Two-bedroom apartments Three-bedroom apartments 16 Homes/Cottages/Villas Total ILUs Assisted Living Units Nursing Care Beds Independent Living Square Footage Studios One-bedroom apartments Two-bedroom apartments 1,050 1, , ,287 Three-bedroom apartments 1,520 2,230 Homes/Cottages/Villas 1,100 1,612 1,744 2,031 Entrance Fees Studios $88, ,400 $182,300 One-bedroom apartments $121, ,800 $163, ,800 $107, ,800 Two-bedroom apartments $188, ,200 $242, ,100 $167, ,100 Three-bedroom apartments $284, ,100 Homes/Cottages/Villas $317, ,800 $374, ,600 2 nd Person Entrance Fee $21,800 26,300 $11,000 Monthly Fees Studios $2,208 $1,821 One-bedroom apartments $2,417 2,594 $1,914 2,211 $2,115 3,467 Two-bedroom apartments $2,973 3,231 $2,211 2,859 $3,769 4,609 Three-bedroom apartments $4,673 5,189 Homes/Cottages/Villas $1,134 $3,973 4,931 2 nd Person Monthly Fee $500 $ $1,364 Refund Options 55% & 100% (shown) 90 & 100% (shown) 75% (shown) & 90% Assisted Living Entrance Fee Monthly Fee $3,317 3,845 $5,000 6,000 $4,906 Nursing Care Daily Rate $ $ $ Occupancy Rate Independent Living 86% 85% 85% Assisted Living 84% 96% 78% Nursing Care 94% 92% 95% Source: Surveys and site visits conducted by Dixon Hughes PLLC through January See Independent Accountants Examination Report B-47

234 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Notes: The Community (1) The 183 independent living units at the Community include 10 Catered Living Units. There are four onebedroom Catered Living Units that are 1,031 square feet and six two bedroom Catered Living Units ranging from 1,160 to 1,312 square feet. (2) Of the 66 assisted living units planned at the Community, 20 are designated for memory support with an Entrance Fee of $37,500 (in 2011 dollars) and monthly rates ranging from $5,820 to $6,112 per month (in 2010 dollars, deflated three percent annually). (3) There are three refund plans available to Charter Residents at the Community: Plan A (shown), Plan B and Plan C. Plan A is 90 percent refundable (100 percent refundable for Charter Residents), Plan B is 50 percent refundable and Plan C is zero percent refundable. Once the Community opens for occupancy, Management only plans to offer Plan A. (4) Charter Residents receive a five percent discount on Entrance Fees at the Community. Entrance Fees listed represent Plan A rates, with the Charter Resident discount applied. Entrance Fees for Plan B are equal to Plan A and Entrance Fees for Plan C are 30 percent less than Plan A. (5) The Entrance Fees shown for the Community are those currently being marketed to potential residents. The monthly and daily fees shown have been deflated from the 2011 rates currently being marketed to potential residents to 2010 dollars (at three percent annually) and are shown for comparative purposes only. Monthly Fees for Plan B are the same as Plan A, and Monthly Fees for Plan C are, on average, $690 less than those for Plan A. (6) The second person Monthly Fee shown is for Charter Residents. The non-charter Resident second person fee is $1,063 (in 2010 dollars, deflated three percent annually). (7) The Entrance Fee for the Catered Living Units is $37,500, and the Monthly Fees range from $6,112 to $6,694 with a second person monthly fee of $2,131 (in 2010 dollars, deflated three percent annually). (8) Three levels of care will be offered in Assisted Living at the Community. Level I is an additional $424 per month, Level II is an additional $849 per month and Level III is an additional $1,273 per month (in 2010 dollars, deflated three percent annually). (9) The second person fee in an Assisted Living Unit at the Community is $2,131 (in 2010 dollars, deflated three percent annually). (10) Monthly Fees for a Memory Support Unit at the Community range from $5,820 to $6,112 (in 2010 dollars, deflated three percent annually). Lexington Square of Elmhurst (1) Monthly rates shown reflect the unlimited healthcare benefit plan. Lexington Square of Elmhurst also offers plans which include: 60 days of healthcare with monthly rates ranging from $1,502 to $2,530, 180 days of healthcare with rates ranging from $1,638 to $2,667, and 360 days of healthcare with rates ranging from $1,728 to $2,754. (2) Lexington Square of Elmhurst also offers a rental plan with no healthcare days included. At this time, approximately four residents are utilizing the rental plan. The average monthly service fee under the rental plan is approximately $2,800. (3) Management at Lexington Square of Elmhurst indicated that occupancy appears low due to the reluctance of seniors to sell their home and the economic conditions. (4) Residents requiring assisted living services can receive personalized care in their independent living units. (5) Residents requiring nursing care receive services at Lexington Healthcare Center of Elmhurst, located adjacent to the community. The nursing rates shown are for direct admits into the nursing facility. Lexington Square of Elmhurst lifecare residents transferring to a nursing unit are expected to pay the then current monthly service fee paid in their independent living unit at Lexington Healthcare Center of Elmhurst plus the cost of two additional meals. (6) Entrance fees and monthly fees are expected to increase two and a half percent (2.5%) in July See Independent Accountants Examination Report B-48

235 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Notes (continued): Summary of Significant Forecast Assumptions and Accounting Policies, Continued Beacon Hill (1) The entrance fees shown are for the 90 percent refundable plan. The zero percent refundable plan amortizes two percent per month for 50 months and thereafter the resident does not receive any refund. The 50 percent refundable plan amortizes two percent per month for 25 months and thereafter, the resident receives a 50 percent refund. (2) There is a $1,500 premium added to the entrance fee for units on the first floor. Lexington Square of Lombard (1) Lexington Square of Lombard offers two entrance fee plan options, including a 100 percent refundable plan and a 55 percent refundable plan with either an unlimited or limited life care option (i.e., 60 free days of healthcare, then a 10 percent discount off of published rates), and a rental plan. Entrance fees for the 100 percent refundable plan are the same as the 55 percent refundable plan. The monthly services fees for the 55 percent refund plan are lower than the 100 percent refund plan. According to management, the 100 percent refundable lifecare plan is the most popular plan at the community. There are no residents utilizing the 55 percent refundable plan and approximately 12 residents utilizing the rental plan. (2) Monthly fees reflect the 100 percent refundable with unlimited life care option. Monthly fees for the 100 percent refundable plan with limited life care range from $1,499 to $2,527. Monthly fees for the 55 percent refundable plan with unlimited life care range from $1,859 to $2,519 and monthly fees for the 55 percent refundable plan with limited life care range from $1,275 to $2,164. Residents selecting the rental option pay a monthly fee between $1,955 and $2,120 for a studio apartment and $2,695 for a one-bedroom apartment (prices not disclosed for two-bedroom units due to limited availability) and a second person monthly fee of $898. (3) Management at Lexington Square of Lombard indicated that occupancy appears low due to current economic conditions. (4) The assisted living rates shown reflect monthly base rate. Four additional levels of care are available for an additional cost per month, as follows: Level I is $735, Level II is $1,050, Level III is $1,365 and Level IV is $1,732. The second person monthly fee in assisted living is $996 plus any additional care needed. (5) Residents requiring nursing care receive services at Lexington Healthcare Center of Lombard, located adjacent to the community. The nursing rates shown are for direct admits into the nursing facility. Lexington Square of Lombard lifecare residents are expected to pay the then current monthly service fee paid in their independent living unit at Lexington Healthcare Center of Lombard, plus the cost of two additional meals daily. (6) Entrance fees and monthly fees are expected to increase two and a half percent (2.5%) in July Fairview Village (1) In addition to the 100 percent refundable plan shown, Fairview Village also offers a 90 percent refundable plan, with entrance fees ranging from $40,000 to $50,000 less than the 100 percent refundable plan. Monthly fees for the 90 percent refundable plan are equal to those of the 100 percent refundable plan. (2) Management of Fairview Village was planning an expansion to its existing campus, which has been put on hold indefinitely due to economic conditions. Original plans for the expansion included 196 new independent living apartments and the demolition of six existing independent living cottages. In addition, the 56 sheltered care beds were expected to be increased by 24 beds and converted to an assisted living licensure resulting in a total of 80 assisted living beds. The expansion was also expected to involve the demolition of the skilled nursing building, which was expected to be replaced with a 117 bed skilled nursing facility. Due to the uncertainty surrounding the timing of the project, the expansion information is disclosed for informational purposes only and is not included in the penetration rate analysis which follows. (3) The monthly fee listed includes 60 lifetime days in the health and rehabilitation center on the Fairview Village campus at the then monthly rate of the respective independent living unit chosen plus the cost of two meals. For the townhomes, the rate is based on the smallest two-bedroom apartment plus the cost of two extra meals. Residents receive a 10 percent discount on days in the health and rehabilitation center once the 60 lifetime day benefit has been passed. Residents have the option to increase the number of free healthcare days at the following monthly rates: 180 days total - $255 per month; 360 days total - $370 per month; and lifetime - $920 per month. See Independent Accountants Examination Report B-49

236 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Notes (continued): Wyndemere (1) Wyndemere, previously owned by Central DuPage Hospital, was acquired by Life Care Services LLC ( LCS ) in December LCS was expected to officially assume operations of the community in January (2) The nursing beds at Wyndemere (known as Wyndescape ) were opened in The independent living units were opened in 1993 and the assisted living units were opened in (3) Management of Wyndemere indicated that new residents have six months from the time that they pay a deposit on an independent living unit before they are required to move into the community. This policy was instituted due to declining home sales in the area. (4) Wyndescape operates 146 nursing beds of which 96 are utilized for long-term care and 50 are utilized for subacute care. The daily rates shown in the table for the nursing beds reflects information for the long-term care nursing beds. Rates for sub-acute care range from $300 to $350 per day. (5) Wyndemere offers two entrance fee plans: a 75 percent refundable lifecare plan (shown in the table) and a 90 percent refundable fee-for-service entrance fee plan. The entrance fees and monthly fees shown are for the 75 percent refundable lifecare plan, the most popular plan at the community. Entrance fees for the fee-for-service program are 90 percent refundable and range from $180,000 to $625,100 with a second person entrance fee of $16,000. (6) Monthly fees for the fee-for-service program range from $1,444 to $4,469 with a second person monthly fee of $762. (7) The second person fee in assisted living at Wyndemere is $1,236. See Independent Accountants Examination Report B-50

237 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 19 Rental Communities Within the Primary Market Area Sunrise of Fountain Cordia Senior Living Square of Westmont Meadows of Glen Ellyn Location Lombard Westmont Glen Ellyn Miles from the Community Sponsor/Developer Sunrise Senior Living Cordia Senior Living Brookdale Senior Living Communities Inc. Year Opened Type of Contract Rental Rental Rental For Profit/Not-for-profit For Profit For Profit For Profit Unit Configuration Independent Living Units (ILUs) Studios n/a 8 33 One-bedroom apartments n/a Two-bedroom apartments n/a Three-bedroom apartments Homes/Cottages/Villas Total ILUs Assisted Living Units Nursing Care Beds Independent Living Square Footage Studios One-bedroom apartments Two-bedroom apartments 1, ,005 1,085 Three-bedroom apartments Homes/Cottages/Villas Monthly Fees Studios Starting from $3,164 $3,005 $2,990 3,360 One-bedroom apartments Starting from $4,201 $3,550 $3,535 4,610 Two-bedroom apartments Starting from $5,265 $4,630 $4,965 5,330 Three-bedroom apartments Homes/Cottages/Villas 2 nd Person Monthly Fee $967 $500 $598 Assisted Living Entrance Fee Monthly Fee $3,741 5,749 $3,930 5,660 $4,280 5,355 Nursing Care Daily Rate Occupancy Rate Independent Living 18% 90% 93% Assisted Living 39% 90% 94% Nursing Care Source: Surveys and site visits conducted by Dixon Hughes PLLC through January n/a: Declined to provide See Independent Accountants Examination Report B-51

238 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Notes: Summary of Significant Forecast Assumptions and Accounting Policies, Continued Sunrise of Fountain Square (1) Sunrise of Fountain Square opened in June (2) Of the 80 assisted living units at Sunrise of Fountain Square, 20 are dedicated towards memory care with rates ranging from $4,562 to $6,539. Additional levels of care are offered in memory care, with rates ranging from $1,034 to $2,342 per month. The second person fee in assisted living is $3,923, and in memory care is $4,137. (3) There is a one-time non-refundable community fee equal to one month s rent due upon move-in. Cordia Senior Living of Westmont (1) The second person fee in assisted living is $500. (2) Occupancy at Cordia Senior Living includes both independent and assisted living combined because management does not calculate occupancy separately. (3) There is a one-time non-refundable $4,000 community fee due upon occupancy of an independent living unit. Meadows of Glen Ellyn (1) The Meadows of Glen Ellyn offers two different monthly service fee plans: Plan A services include daily breakfast, 20 evening meals and monthly housekeeping; Plan B services include daily breakfast, 30 evening meals and weekly housekeeping. The information in the table reflects information for Plan B. (2) The range of assisted living monthly fees reflects the basic care rates. Three higher levels of care are offered for the following range of monthly fees: Level I fees range from $280 to $300, Level II is $600, and Level III is $900. The second person fee ranges from $1,450 to $2,395, depending on level of care. See Independent Accountants Examination Report B-52

239 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 20 Retirement Communities Near the Primary Market Area The Landing at Plymouth Place Monarch Landing Location La Grange Park Naperville Miles from the Community Sponsor/Developer Plymouth Place, Inc. Erickson Retirement Communities Year Opened 1944/ Type of Contract Type A Type C For Profit/Not-for-profit Not-for-profit Not-for-profit Unit Configuration Independent Living Units (ILUs) Studios One-bedroom apartments Two-bedroom apartments Three-bedroom apartments 13 Homes/Cottages/Villas 55 Total ILUs Assisted Living Units 78 Nursing Care Beds 86 Independent Living Square Footage Studios One-bedroom apartments 764 1, ,249 Two-bedroom apartments 1,173 1, ,123 Three-bedroom apartments 1,886 1,937 Homes/Cottages/Villas 1,006 1,667 Entrance Fees Studios One-bedroom apartments $289, ,000 $203, ,000 Two-bedroom apartments $420, ,000 $282, ,000 Three-bedroom apartments $731, ,000 Homes/Cottages/Villas $595, ,000 2 nd Person Entrance Fee Monthly Fees Studios One-bedroom apartments $2,093 3,075 $1,417 1,463 Two-bedroom apartments $3,215 4,428 $1,656 1,796 Three-bedroom apartments $5,298 5,416 Homes/Cottages/Villas $1,664 2 nd Person Monthly Fee $708 1,092 $571 Refund Options 90% 100% Assisted Living Entrance Fee $27,500 65,000 Monthly Fee $3,867 6,793 Nursing Care Daily Rate $ Occupancy Rate Independent Living 69% 72% Assisted Living 98% Nursing Care 79% Source: Surveys and site visits conducted by Dixon Hughes PLLC through January See Independent Accountants Examination Report B-53

240 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Notes: Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Landing at Plymouth Place ( Plymouth Place ) (1) Plymouth Place completed a renovation and expansion project to the community, which opened in October According to management, occupancy is low due to the economic environment and the effect the real estate market has had on depositors being able to sell their homes. (2) In addition to the occupied units, Plymouth Place has ten independent living units which have been reserved with a reservation deposit. (3) The entrance fees and monthly fees shown for the cottages reflect fees for the available inventory. The monthly fee for cottages does not include utilities, housekeeping or meals. (4) Of the 78 assisted living units at Plymouth Place, 26 are dedicated towards memory care. (5) The entrance fees and monthly fee shown for the assisted living and nursing units are for direct admits only. The assisted living entrance fee is 90 percent refundable, and the second person monthly fee in assisted living is $1,040. (6) The direct admit memory care monthly fee ranges from $5,094 to $5,617. The second person monthly fee is $1,040 plus the cost of two additional meals daily. (7) Based on discussions with management of Plymouth Place, the community attracts from a similar primary market area as the Community. Therefore, for purposes of the penetration rate analyses that follow, all of the independent living units at Plymouth Place (237 units) are included. Monarch Landing (1) The number of independent living units shown represents the number of available units as of September Monarch Landing was originally planned to be built in phases, with full build-out to include 1,504 independent living units, 96 assisted living units and 132 nursing beds planned to be achieved by March According to management, the exact timeframe for full build-out is currently unknown. Therefore, planned units at Monarch Landing are disclosed for informational purposes only and are not included in the penetration rate analyses that follow. (2) Based on historical resident origin information for Monarch Landing, the community draws approximately 25 percent of their residents from the Community s PMA. Therefore, for purposes for the penetration rate analyses that follow, 25 percent of the existing independent living units at Monarch Landing (92 units) are included. See Independent Accountants Examination Report B-54

241 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Comparable Retirement Communities Planned or Under Development in or Near the PMA Based on discussions with representatives of the local planning and permitting agencies and interviews with management at existing retirement communities, other than the 183 Independent Living and Catered Living Units at the Community, there are no independent living units planned in or near the PMA during Management s forecast period. Comparable Retirement Communities Under Development Outside of the PMA GreenFields of Geneva ( GreenFields ) is a planned not-for-profit entrance fee community to be located in Geneva, Illinois, approximately 25 miles west of the Community. According to the management of GreenFields, the community is planned to contain a total of 140 independent living units, seven catered living units, 51 assisted living units, 26 memory support assisted living units and 43 nursing beds. Independent living square footages per unit are planned to range from 747 to 1,227. Independent living monthly service fees are expected to range from $2,040 to $3,055, in 2012 dollars. Independent living entrance fees range from approximately $260,000 to approximately $415,000 for a 90% refundable lifecare contract. The independent living units are expected to be available for occupancy in August The assisted living units, memory support units are expected to be available for occupancy in April 2013 and the nursing beds are expected to be available for occupancy in May As of March 2010, 109 (78 percent) of the GreenFields independent living units were reserved with a 10 percent deposit. Due to its distance outside of the PMA, GreenFields has been excluded from the penetration rate analyses that follow and has been described for informational purposes only. See Independent Accountants Examination Report B-55

242 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Independent Living Units Summary of Significant Forecast Assumptions and Accounting Policies, Continued There are 2,073 existing independent living units at the 10 aforementioned retirement communities located within or near the PMA. Including the 183 planned units at the Community, the total number of existing and planned independent living units within or near the PMA is 2,256. Table 21 Summary of Existing and Planned Comparable Independent Living Units Within and Near the PMA Comparable Retirement Communities Existing Planned Total Entrance Fee Communities Lexington Square of Elmhurst Beacon Hill Lexington Square of Lombard Fairview Village Wyndemere The Landing at Plymouth Place (1) Monarch Landing (2) Total Entrance Fee Units 1, ,774 Rental Communities Sunrise of Fountain Square Cordia Senior Living Meadows of Glen Ellyn Total Rental Units The Community (3) Total Existing and Planned Comparable Independent Living Units 2, ,256 Source: Surveys and site visits conducted by Dixon Hughes PLLC through January (1) The Landing at Plymouth Place is located outside the PMA. For purposes of the penetration rate analysis that follows, all units are included. (2) Monarch Landing is located outside the PMA and based on historical resident origin, 25 percent of residents originated from the PMA. The number of existing units shown for Monarch Landing represents 25 percent of the total existing units at the community (368*25% = 92). (3) The total number of planned units at the Community includes 10 Catered Living Units. See Independent Accountants Examination Report B-56

243 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Independent Living Penetration Analysis Summary of Significant Forecast Assumptions and Accounting Policies, Continued Penetration rates are one measure of the degree to which the PMA is either under-served or saturated. As penetration rates increase, units may become more difficult to fill. However, higher penetration rates may not necessarily be an indication of the difficulty in achieving expected occupancy levels. Some markets may have a higher acceptance level for senior living housing options and may support higher penetration rates. Three penetration rate calculations are shown in the following tables: Project Penetration Rate The Project Penetration Rate is the percentage of age- and incomequalified households in the PMA the Community is expected to capture in order to achieve stabilized occupancy in the year of opening. The Project Penetration Rate is calculated by dividing the number of Independent Living Units and Catered Living Units at the Community by the number of age- and income-qualified households in the PMA. Seniors currently living in competitive independent living units in the PMA are subtracted from the pool of age- and income-qualified households. Calculations are based on demographics interpolated for the year the Community is expected to be available for occupancy (2011). Net Market Penetration Rate (Absorption Rate) The Net Market Penetration Rate is the percentage of age- and income-qualified households the available units in the market are expected to capture in order for the entire market to achieve stabilized occupancy in the year of opening. The Net Market Penetration Rate is calculated by dividing the number of available independent living units in the PMA by the number of age- and income-qualified households in the PMA. Available units include planned units of the Community, proposed units at other communities and units becoming available due to attrition. This calculation is of particular significance when more than one project is entering the market during the same timeframe. Calculations are based on demographics interpolated for the year the Community is expected to be available for occupancy (2011). Gross Market Penetration Rate The Gross Market Penetration Rate is the percentage of ageand income-qualified households that the total market must absorb for the entire market to achieve stabilized occupancy. Market penetration is calculated by dividing the total number of existing and planned independent living units in the PMA by the number of age- and incomequalified households in the PMA. Calculations are based on the demographics projected for the current year and interpolated for the year the Community is expected to achieve stabilized occupancy (assuming the Community represents the newest units in the market). In all three calculations, the total independent living units are adjusted to reflect assumptions about the percentage of units expected to be filled from qualified households in the PMA and occupancy. These rates should be considered in conjunction with each other and other market factors such as occupancy levels at existing communities within and near the PMA, the number of proposed facilities in the PMA, the design of the units and community spaces at the Community, alternatives for potential residents, and marketing plans and efforts of Management. See Independent Accountants Examination Report B-57

244 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table represents the Project Penetration Rates which represent the percentage of age- and income-qualified households in the PMA the Community is expected to capture upon opening in order to achieve stabilized occupancy, assuming annual household incomes of $50,000 and over and $60,000 and over, based upon demographic projections for Table 22 Project Penetration Rate 2011 Age 75 and Above with Income $50,000 and Above Age 75 and Above with Income $60,000 and Above Planned units at the Community (1) Percentage of units to be filled from the PMA (2) 80% 80% Planned units to be filled from the PMA Percentage of units to be filled by age 75 and older (2) 90% 90% Planned units to be filled by age 75 and older Total units at the Community to be filled at 95% occupancy (a) Number of age- and income-qualified households (3) 5,884 4,575 Less: Existing inventory of available comparable units (4) (1,762) (1,762) Net number of age- and income-qualified households (b) 4,122 2,813 Project Penetration Rate (a/b) 3.0% 4.4% Source: Management and Nielsen Claritas (1) The number of planned units at the Community includes 10 Catered Living Units. (2) Based upon Depositor information provided by Management as of February 28, (3) Interpolated using 2009 estimated and 2014 projected population statistics as provided by Nielsen Claritas. (4) Reflects the 2,073 existing comparable units in the PMA, based on an 85 percent current weighted average occupancy in the PMA (1,762 units). See Independent Accountants Examination Report B-58

245 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table presents the Net Market Penetration Rate for the year of the Community s planned opening, and indicates the percentage of the age- and income-qualified households in the PMA that must be absorbed in order to fill the available units during that year, based upon demographic projections for Table 23 Net Market Penetration Rate 2011 Age 75 and Above with Income $50,000 and Above Age 75 and Above with Income $60,000 and Above Planned units in the PMA: The Community (1) Other planned units 0 0 Total planned units Percent of units to be occupied by age 75 and older (2) 90% 90% Total planned units to be occupied by age 75 and older Total planned units to be occupied at 95% occupancy from the PMA Unoccupied existing comparable units to be filled within the PMA (3) Total existing units available due to attrition (4) Total units to be occupied Percent of units to be occupied from the PMA (2) 80% 80% Total units to be occupied from within the PMA by 75 and older (a) Estimated number of age- and income-qualified households (5) 5,884 4,575 Less: Existing inventory of available comparable units (6) (1,762) (1,762) Estimated number of age- and income-qualified households (b) 4,122 2,813 Net Market Penetration Rate (a/b) 11.1% 16.3% Source: Management and Nielsen Claritas (1) The number of planned units at the Community includes 10 Catered Living Units. (2) Based upon Depositor information provided by Management as of February 28, (3) Based on the weighted average occupancy of approximately 85 percent in the PMA, approximately 200 additional existing units would need to be filled to achieve 95 percent occupancy at comparable existing communities in the PMA. (4) Reflects the 1,774 existing entrance fee units in or near the PMA at 85 percent occupancy, assuming 10.8 percent attrition (163 units) and the 299 existing rental units in the PMA at 85 percent occupancy, assuming 21.0 percent attrition (53 units) for a total of 216 units available due to attrition. (Source: AAHSA State of Seniors Housing, 2009) (5) Interpolated using 2009 estimated and 2014 projected population statistics as provided by Nielsen Claritas. (6) Reflects the 2,073 existing comparable units in the PMA based on an 85 percent current weighted average occupancy in the PMA (1,762 units). See Independent Accountants Examination Report B-59

246 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table presents the Gross Market Penetration Rate, which represents the percentage of age- and income-qualified households in the PMA that the entire market is expected to capture when the entire market has reached stabilized occupancy, based upon demographic projections for 2009 and Table 24 Gross Market Penetration Rate Age 75 and Above Income $50,000 and Above Income $60,000 and Above Market inventory of retirement communities: The Community (1) Comparable retirement communities Existing units 2,073 2,073 2,073 2,073 Proposed units Total units in the PMA 2,073 2,256 2,073 2,256 Percent of units to be occupied from the PMA (2) 80% 80% 80% 80% Total units to be occupied from the PMA 1,658 1,805 1,658 1,805 Total units to be filled at 95% occupancy (a) 1,575 1,715 1,575 1,715 Number of age- and income-eligible households (b) 5,576 6,343 4,299 4,988 Market Penetration Rate (a/b) 28.2% 27.0% 36.6% 34.4% Source: Management and Nielsen Claritas (1) The number of planned units at the Community includes 10 Catered Living Units. (2) Based upon Depositor information provided by Management as of February 28, See Independent Accountants Examination Report B-60

247 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Marketing the Community Summary of Significant Forecast Assumptions and Accounting Policies, Continued The success of the Community is dependent, in part, on Management s ability to achieve specified pre-sales, fill-up rates and turnover rates for Independent Living Units. Management began accepting non-binding priority deposit agreements on Independent Living Units in May 2006 and began converting priority deposits to Reservation Deposits in February Reservation Deposits are being held in an interest-bearing escrow account. If a Depositor withdraws a Reservation Agreement and Reservation Deposit prior to occupancy, all money is expected to be refunded to the Depositor, including the Reservation Deposit and accumulated interest on the Reservation Deposit. As of February 28, 2010, 133 Depositors have reserved 135 Independent Living Units (net of cancellations) out of a total of 173 Independent Living Units at the Community, or 78 percent of the total Independent Living Units. The following table presents the total number of Independent Living Units reserved by month reported by Management, as of February 28, See Independent Accountants Examination Report B-61

248 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Number of Units Reserved Table 25 Marketing of the Community Number of Cancellations/Refunds Net Reservations for Month Cumulative Units Reserved See Independent Accountants Examination Report B-62 Cumulative Percentage of Total Units Year 2007: February (1) % March % April % May % June % July % August % September % October % November % December % 2008: January % February % March % April % May % June % July % August % September % October % November % December % 2009: January % February % March % April % May % June % July % August % September % October % November % December (2) % 2010: January % February % Total 159 (24) (3) 78.0% Source: Management (1) Conversion of priority deposits to depositors began February 21, (2) Information through February 28, (3) The total number of Depositors as of February 28, 2010 equals 133. According to Management, two Depositors have reserved two Independent Living Units each, creating two Coventry Classic/Coventry Classic combinations.

249 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table presents the total number and type of Independent Living Units available at the Community in relation to the Independent Living Units reserved with a Reservation Deposit as of February 28, Table 26 Inventory of Independent Living Units at the Community Unit Type Square Footage Total Units Number of Units Sold Percentage of Available Units Sold One Bedroom Apartments: Dover Classic One Bedroom Standard % Dover Select One Bedroom Standard % Dover Traditional One Bedroom Standard % Coventry Premier One Bedroom Deluxe w/ Den (1) 1, % Coventry Traditional One Bedroom Deluxe w/ Den 1, % Coventry Classic One Bedroom Deluxe w/ Den 1, % Coventry Signature One Bedroom Deluxe w/ Den 1, % Coventry Select One Bedroom Deluxe w/ Den 1, % Coventry Elite One Bedroom Deluxe w/ Den 1, % Two Bedroom Apartments Oxford Traditional Two Bedroom Traditional 1, % Oxford Classic Two Bedroom Traditional 1, % Oxford Select Two Bedroom Traditional 1, % Oxford Signature Two Bedroom Traditional 1, % Carlisle Traditional Two Bedroom Deluxe 1, % Carlisle Classic Two Bedroom Deluxe 1, % Canterbury Traditional Two Bedroom Grand 1, % Canterbury Classic Two Bedroom Grand 1, % Canterbury Select Two Bedroom Grand 1, % Canterbury Signature Two Bedroom Grand 1, % Three Bedroom Apartments Kensington Traditional Three Bedroom Traditional 1, % Kensington Classic Three Bedroom Traditional 1, % Manchester Select Three Bedroom Deluxe 1, % Manchester Signature Three Bedroom Deluxe 1, % Windsor Select Three Bedroom Custom 1, % Windsor Signature Three Bedroom Custom 1, % Total Independent Living Units % Source: Management (1) According to Management, two Depositors have reserved two Independent Living Units each, creating two Coventry Classic/Coventry Classic combinations. Upon vacancy of these units, Management could remarket these units as separate units. See Independent Accountants Examination Report B-63

250 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Independent Depositor Confirmation Summary of Significant Forecast Assumptions and Accounting Policies, Continued An independent confirmation process was performed by Dixon Hughes PLLC through the mailing of a questionnaire to the 133 Depositors (135 Independent Living Units) as of February 28, As of March 1, 2010, 129 of the 133 Depositors (97 percent) had completed the questionnaire. The following information was compiled for the 129 completed questionnaires. 129 (100 percent) of the respondents indicated that they had paid a deposit for their Independent Living Unit. 120 (93 percent) indicated that they intend to reside in their chosen Independent Living Unit at the Community, seven (five percent) indicated they were unsure as to whether they would reside in their chosen unit, and two (two percent) did not respond to the question. 42 (33 percent) indicated that they expect to reside alone, 86 (67 percent) indicated that they expect to reside with a spouse, relative or friend and one (one percent) did not respond to the question. 126 (98 percent) indicated that they currently own their home. 91 (72 percent) of the 126 Depositors who currently own their home indicated that they intend to sell their home before paying the balance of their Entrance Fee and assuming occupancy of their Independent Living Unit. 16 (12 percent) of the respondents indicated they had reserved an independent living unit or were on a waiting list of a competitive community; nine of these respondents indicated that they intend to reside in an Independent Living Unit at the Community and the remaining seven indicated that they were unsure where they would reside. See Independent Accountants Examination Report B-64

251 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table illustrates which communities the respondents have placed a deposit as well as the amount of the deposit: Community Table 27 Deposits at Other Communities Number of Respondents Less than $5,000 $5,000 to $25,000 Amount of Deposit $25,000 to $50,000 Greater than $50,000 Amount not specified (1) The New Admiral at the Lake 1 1 Beacon Hill 1 1 GreenFields of Geneva (2) 3 3 Monarch Landing Plymouth Place 2 2 Out-of-state Did not respond 1 1 Total Source: Questionnaire responses (1) Two respondents indicated they had placed a 10 percent deposit at another community. (2) GreenFields of Geneva is approximately 25 miles west of the Community. Two respondents reside in zip codes outside the PMA for the Community. Respondents indicated the following as to how soon they intended to move into their Independent Living Unit after it becomes available: Table 28 Move-ins After Unit Becomes Available Number of Respondents Percentage of Respondents 1 30 days % days % days 4 3.1% Upon the sale of home % Other/did not respond 5 3.9% Total % Source: Questionnaire responses See Independent Accountants Examination Report B-65

252 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP Summary of Significant Forecast Assumptions d/b/a Providence Healthcare Foundation and Accounting Policies, Continued Respondents indicated their primary reason(s) for choosing the Community were as follows: Table 29 Community Suitability Number of Respondents (1) Percentage of Respondents Life Care % Geographic location % Proximity to friends and relatives % Access to health care and wellness programs % Social/recreational activities and fellowship % Reputation of Providence % Security % Other 7 5.4% Source: Questionnaire responses (1) Respondents were given the option of choosing more than one reason for choosing the Community. The following table presents information regarding the self-reported net worth (including home values) before payment of the Entrance Fee and estimated annual income of the 133 Depositors: Annual Income Table 30 Reported Annual Income and Net Worth of Depositors Net Worth Not Avail. Less than $500,000 $500,000 to $999,999 Net Worth $1,000,000 to $1,999,999 $2,000,000 and greater Total Percent of Total Income Not Available % Less than $50, % $50,000 to $74, % $75,000 to $99, % $100,000 to $149, % $150,000 and greater % Total (1) % Percent of Total 0.0% 3.0% 21.8% 39.8% 35.3% 100.0% Source: Depositor applications (1) The median net asset amount of the 133 Depositors (135 Independent Living Units) who reported their financial information is approximately $1,500,000 and the median annual income amount is approximately $81,000. See Independent Accountants Examination Report B-66

253 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Depositor File Vouching Summary of Significant Forecast Assumptions and Accounting Policies, Continued Dixon Hughes read Management s policies and procedures for accepting Depositors and confirmed that each Depositor met Management s criteria. Dixon Hughes performed the following procedures regarding the 133 Depositors (135 Independent Living Units) for the Community: Confirmed 100 percent to have a Reservation Agreement executed by both the Depositor(s) and the Corporation; Confirmed 100 percent to include copies of a deposit check equal to the Entrance Fee Deposit for the selected Independent Living Unit and plan; Confirmed 100 percent that the amount of the Entrance Fee and the Monthly Service Fee matched the Independent Living Unit and plan selected; and Based on reported income and asset levels, confirmed that 100 percent of the Depositors either met Management s asset and income qualification test, or displayed sufficient financial resources as approved by Management. In addition to the above, Dixon Hughes reconciled the Entrance Fee Deposits to an escrow account statement through January 31, See Independent Accountants Examination Report B-67

254 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Description and Utilization of Assisted Living Summary of Significant Forecast Assumptions and Accounting Policies, Continued Assisted living facilities are licensed and regulated by the Department under the Assisted Living and Shared Housing Act, 210 ILCS 9/1-199 (the Assisted Living Act ), and the Assisted Living and Shared Housing Code, 77 Ill. Adm. Code 295 (the Assisted Living Rules ). Licenses are valid for one year and an on-site inspection by Department staff is required prior to license renewal. Section of the Assisted Living Rules defines an assisted living establishment as: a home, building, residence, or any other place where sleeping accommodations are provided for at least three unrelated adults, at least 80 percent of whom are 55 years of age or older and where the following are provided consistent with the purpose of the Assisted Living Act: Services consistent with a social model that is based on the premise that the resident's unit in assisted living and shared housing is his or her own home; community-based residential care for persons who need assistance with activities of daily living, including personal, supportive, and intermittent health-related services available 24 hours per day, if needed, to meet the scheduled and unscheduled needs of a resident; mandatory services, whether provided directly by the establishment or by another entity arranged for by the establishment, with the consent of the resident or resident's representative; and a physical environment that is a homelike setting that includes the following and such other elements as established by the Department in conjunction with the Assisted Living and Shared Housing Advisory Board: individual living units each of which shall accommodate small kitchen appliances and contain private bathing, washing, and toilet facilities, or private washing and toilet facilities with a common bathing room readily accessible to each resident. Units shall be maintained for single occupancy except in cases in which two residents choose to share a unit. Sufficient common space shall exist to permit individual and group activities. The Assisted Living Act, as applicable to the Community, addresses community-based residential care for persons who need assistance with the activities of daily living, including personal, supportive, and intermittent health related services available 24 hours per day, if needed, to meet the scheduled and unscheduled needs of the resident. No person may establish, operate, or maintain an assisted living establishment without a license. Prior to admission, the assisted living provider must conduct a comprehensive assessment of the resident s physical, cognitive, and psychological condition, develop a plan of services for the resident, and enter into a written service delivery contract with the resident or resident s representative. Licensure requirements, policy and staffing requirements, resident rights, physical plant and environmental requirements and regulations pertaining to resident services are set forth in the Assisted Living Rules. See Independent Accountants Examination Report B-68

255 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Primary Market Area for Assisted Living Services Summary of Significant Forecast Assumptions and Accounting Policies, Continued There are 46 Assisted Living Units and 20 Memory Support Units planned for the Community. Seniors requiring assisted living, memory support or nursing care services generally originate from within a smaller geographic area because of the immediate, need-driven based services; therefore, a five-mile radius surrounding the Community (the Health Care PMA ) has been defined for both assisted living and nursing care services. See Independent Accountants Examination Report B-69

256 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following map depicts the Community and the seven existing assisted living facilities within the Health Care PMA. Source: Microsoft MapPoint Legend The Health Care PMA The Community Existing Assisted Living Competition in the Health Care PMA 1 Sunrise at Fountain Square 2 Cordia Senior Living of Westmont 3 Concord Place Retirement Community 4 Lexington Square of Lombard Retirement Community 5 Bethlehem Woods Retirement Living Center 6 The Landing at Plymouth Place 7 Saratoga Grove See Independent Accountants Examination Report B-70

257 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Existing Comparable Assisted Living Facilities The following table identifies the seven comparable existing assisted living facilities located within the Health Care PMA and summarizes the number of units, the percentage occupied and current monthly fees of the comparable facilities based on surveys conducted through January Table 31 Comparable Assisted Living Facilities Within the Health Care PMA Miles from the Community Number of Assisted Living Units Number of Memory Support Units Assisted Living Monthly Fees Memory Support Monthly Fees Facility Name Year Square Occupancy Level of Opened Footage Percentage Care Fees I $424 The Community (1) $4,752 5,432 $5,820 6,112 II $849 III $1,273 I $1,034 Sunrise at Fountain Square (2) % $3,741 5,749 $4,562 6,539 II $1,642 III $2,342 Cordia Senior Living (3) % $3,930 5,660 See note Concord Place Retirement Community (4) % $2,961 Lexington Square of Lombard (5) % $3,317 3,845 I $735 II $1,056 III $1,315 IV $1,732 Bethlehem Woods (6) % $3,544 3,986 I $375 The Landing at Plymouth Place (7) ,140 98% $3,867 6,793 $5,094 5,617 Saratoga Grove (8) $2,275 Total Number of Units (excluding the Community) Weighted average occupancy (9) 96% Source: Management, surveys and site visits conducted by Dixon Hughes PLLC through January I $1,325 II $1,608 III $2,393 See Independent Accountants Examination Report B-71

258 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP Summary of Significant Forecast Assumptions d/b/a Providence Healthcare Foundation and Accounting Policies, Continued Notes: (1) There is a $37,500 entrance fee for new residents in Assisted Living and Memory Support Units at the Community. The monthly fees shown for the Community have been deflated three percent annually from 2011 rates to reflect 2010 dollars for purposes of comparison. The second person monthly fee for the Assisted Living Units is $2,131 (in 2010 dollars). (2) Sunrise at Fountain Square opened in June Additional levels of care for memory care at Sunrise at Fountain Square range from $1,427 to $1,973 per month. (3) There is a one-time, refundable community fee of $4,000 at Cordia Senior Living. The second person assisted living monthly fee is $500, plus the cost of additional care if needed. According to management, additional care is available on a case-by-case basis; therefore, the community does not have published level of care fees. (4) In addition to the 144 assisted living units at Concord Place Retirement Community, the community also offers 254 independent living apartments. The community, which is located within five-miles of the Community, is located outside of the PMA and therefore, has not been included in the independent living analysis. The second person monthly fee in assisted living is $1,000. As of December 16, 2009, rate information for 2010 is not yet available. (5) There is a second person monthly fee of $996 (plus the cost of additional care if needed) in the assisted living units at Lexington Square of Lombard. (6) A $6,000 entrance fee is required for direct admit residents into assisted living at Bethlehem Woods and it is 90 percent refundable. The second person fee for residents requiring no assistance is $763. The second person fee for residents requiring assisted living care is $1,550. (7) The monthly fees shown are for direct admit residents only. In addition, direct admit residents pay an entrance fee ranging from $27,500 to $65,000 depending on the type of unit chosen. The second person monthly fee in assisted living is $1,040, and the second person monthly fee in memory care is $1,040 plus the cost of two additional meals daily. (8) Saratoga Grove, which is operated by Providence, has 91 total units at the community which can be designated as independent or assisted living apartments. Overall occupancy for Saratoga Grove is 65 percent. Although not a secured area, the second floor of the community is designated for residents with cognitive impairment. According to management of Saratoga Grove, approximately 36 percent of residents are currently utilizing assisted living services. Therefore, for purposes of the penetration rate analysis that follows, 36 percent of the apartments at Saratoga Grove (33 units) have been included. Although the units at Saratoga Grove can be designated as independent living, due to the pricing structure and the level of services offered the units are not considered comparable to the Community and are not included in the preceding independent living analysis. (9) Weighted average occupancy does not include the units at Sunrise at Fountain Square, because the facility opened in June 2009 and is still considered to be in the fill-up stage. In addition, the weighted average occupancy does not include the units at Saratoga Grove because occupancy is based on independent and assisted living units combined. Planned Assisted Living Development Based on discussions with representatives of the local planning agencies and interviews with existing assisted living facilities and retirement communities, there are no assisted living beds planned in addition to the Community within the Health Care PMA. See Independent Accountants Examination Report B-72

259 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assisted Living Penetration Analysis Summary of Significant Forecast Assumptions and Accounting Policies, Continued The increased size of the private paying frail elderly market has in recent years attracted providers to develop new and creative options for caring for this population. There have been few barriers to entering this market, since existing regulations generally do not restrict or limit supply. Methodologies for projecting bed need or demand for assisted living vary. The Department does not have a methodology for determining the need for assisted living units. Research studies have identified impairment levels in activities of daily living ( ADL ) such as dressing, bathing, eating, toileting, mobility and taking medications, and instrumental activities of daily living ( IADL ) such as meal preparation, home maintenance, shopping and personal finance, all of which generally are used to measure levels of functioning and estimate the care needs of a specific population. The decision by elderly persons to enter an assisted living facility to meet their need for assistance often depends on alternatives available and is somewhat more discretionary than the decision to enter a nursing care facility, according to industry research studies. Population data and income statistics may be utilized to some extent to estimate the number of qualified households (75+) for assisted living services, yet should not be relied upon entirely as a measure of success for a facility. The amount of cross subsidization that occurs between adult caregivers (assumed to be those households aged 45 to 64 earning in excess of $75,000 annually) and their relatives may provide the financial means for a non-income-qualified senior to afford this level of care. Additionally, non-income-qualified seniors may have an asset base that provides the financial means to afford this level of care. Thus, market penetration rates are shown as a range between age-qualified individuals and age- and income-qualified individuals. See Independent Accountants Examination Report B-73

260 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Market and project penetration estimates have been computed using the following data to estimate the size of the qualified market. Table 32 Percentage of Elderly Requiring Assistance with ADL and IADL Percentage of Population Requiring and Seeking Age Group Assistance with ADL and IADL % 80 and over 30.0% Source: U.S. Census Bureau, Americans with Disabilities: p.4, Washington, DC, May Elderly requiring ADL and IADL assistance may seek care in a nursing home, boarding home, through home health services, or through other supportive programs, including a family caregiver. Management anticipates that the prospective residents of the Assisted Living Units and Memory Support Units at the Community will generally meet the following profile prior to occupancy: 75 years of age or older; Living alone; and Requiring some assistance with activities of daily living. Additionally, income characteristics have been applied to determine a range of market penetration rates for age-qualified and age- and income-qualified individuals. The income assumption is that a prospective assisted living resident has an annual income of at least $35,000, or has an annual income between $25,000 and $34,999, and owns their home. This assumption allows those with a home to be included as qualified households on the basis that proceeds from the sale of a home provides additional financial resources to allow a prospective resident with an annual income of at least $25,000 to afford the cost of assisted living care. See Independent Accountants Examination Report B-74

261 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table presents the income eligible households for assisted living within the Health Care PMA. Table 33 Income Eligible Households for Assisted Living Services Within the Health Care PMA (Estimated) 2014 (Projected) Total Households: 13,529 13,413 Household Income Under $25,000 4,882 4,406 Renters $25,000 34, Homeowners $25,000 34,999 1,657 1,657 Total Under $35,000 7,027 6,551 $35,000 49,999 2,523 2,508 $50,000 74,999 1,799 1,950 $75,000 99, $100,000+ 1,342 1,524 Total $35,000+ 6,502 6,862 Total Assisted Living Income Eligible Households (1) 8,159 8,519 Percentage of Assisted Living Income Eligible Households 60.3% 63.5% Source: Nielsen Claritas (1) Age- and income-eligible households include households (age 75 and over) with income over $35,000 and homeowners (age 75 and over) with income between $25,000 and $34,999 annually. The following table estimates the number of age- and income-qualified individuals living alone and requiring assistance with ADLs in the Health Care PMA. Estimates of the percentage of households requiring assistance and the percentage living alone are based on demographic projections for Estimated Age Eligible Households (1) Table 34 Estimated Number of Assisted Living Eligible Individuals in the Health Care PMA 2014 Estimated Age and Income Eligible Households (2) Percentage Requiring Assistance (3) Percentage Living Alone (4) Estimated Age Eligible Individuals 13, % 52.4% 2,003 8, % 52.4% 1,272 Estimated Age and Income Eligible Individuals Source: Nielsen Claritas (1) Age eligible households are those households age 75 and over. (2) Age and income eligible households include households (age 75 and over) with income over $35,000 and homeowners (age 75 and over) with income between $25,000 and $34,999. (3) Percentage requiring assistance is a weighted average of the eligible households and the percentage of the population requiring assistance with activities of daily living for the respective age groups. (4) Based on Nielsen Claritas demographic estimates. See Independent Accountants Examination Report B-75

262 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assisted Living Project Penetration Rate Summary of Significant Forecast Assumptions and Accounting Policies, Continued The project penetration rate is the percentage of estimated age- and income-eligible households within the Health Care PMA that need to move into the Assisted Living Units and Memory Support Units of the Community in order for the Community to achieve expected occupancy levels. The following table presents project penetration rates for assisted living services. Table 35 Assisted Living Project Penetration Rate 2014 Age-Eligible Individuals Age- and Income- Eligible Individuals Number of Qualified Individuals 2,003 1,272 Number of Individuals in Existing Comparable Units 391 (1) 391 (1) Total Qualified Individuals (b) 2,394 1,663 Number of Planned Units at the Community (a) 52 (2) 52 (2) Project Penetration Rate for the PMA (a/b) 2.2% 3.1% Source: Management and Nielsen Claritas (1) Reflects the 494 assisted living units and memory support assisted living units in existing comparable facilities assuming that approximately 85 percent (420 units) have originated from the Health Care PMA and a 93 percent occupancy rate (391 units). (2) Reflects the 66 planned Assisted Living Units and Memory Support Units at the Community, assuming that approximately 85 percent (56 units) originate from the Health Care PMA and a 93 percent occupancy rate (52 units). See Independent Accountants Examination Report B-76

263 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assisted Living Market Penetration Rate Summary of Significant Forecast Assumptions and Accounting Policies, Continued The assisted living market penetration rate is presented as the percentage of age- and incomeeligible individuals that the total market has absorbed or must absorb for the entire market to achieve stabilized occupancy. The assisted living market penetration rate is calculated by dividing the total number of assisted living units, including those planned for the Community, within the Health Care PMA by the total number of age- and income-eligible individuals residing within the Health Care PMA. The following table presents market penetration rates for assisted living services. Table 36 Assisted Living Market Penetration Rate 2014 Age-Eligible Individuals Age- and Income- Eligible Individuals Number of Eligible Individuals 2,003 1,272 Number of Individuals in Existing Comparable Units 391 (1) 391 (1) Total Eligible Individuals (b) 2,394 1,663 Number of Individuals in Existing Comparable Units 391 (1) 391 (1) Number of Planned Units at the Community 52 (2) 52 (2) Number of Other Planned Units in the Health Care PMA 0 0 Total Units, Including the Community (a) Market Penetration Rate for the Health Care PMA (a/b) 18.5% 26.6% Source: Management and Nielsen Claritas (1) Reflects the 494 assisted living units and memory support assisted living units in existing comparable facilities assuming that approximately 85 percent (420 units) have originated from the Health Care PMA and a 93 percent occupancy rate (391 units). (2) Reflects the 66 planned Assisted Living Units and Memory Support Units at the Community, assuming 85 percent (56 units) originate from the Health Care PMA and assuming 93 percent occupancy (52 units). See Independent Accountants Examination Report B-77

264 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Skilled Nursing Care Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Health Facilities Act, 20 ILCS 3960 (the Planning Act ), established Illinois Certificate of Need ( CON ) program. The Planning Act established the Health Facilities and Services Review Board (the Review Board ), which issues permits for construction or modification of projects proposed by or on behalf of healthcare facilities and for the acquisition of major medical equipment. To obtain a permit, a person must justify that a proposed project is needed and financially and economically feasible. Included in the application review is the opportunity for public comments and a public hearing that provides for community input into the process. The Review Board is an independent five member commission appointed by the Governor, with Senate confirmation. The Secretary of the Illinois Department of Human Services, the Director of the Illinois Department of Healthcare and Family Services, and the Director of the Illinois Department of Public Health serve as ex-officio non-voting members. The issuance of a permit requires three affirmative votes. The Illinois Department of Public Health s Division of Health Systems Development provides primary staff support for the Review Board. The Corporation received a CON under the continuum of care variance authorizing construction of a 37 bed Health Center from the Review Board. Under the continuum of care variance, only residents of the Community are eligible for admission to the Health Center, because CONs granted under the continuum of care variance limit the source of admissions to the approved beds. Subsequent to receipt of the CON, the Review Board updated the bed inventory for the planning district in which the Community is located whereby a bed need has been identified. The Corporation anticipates applying for an amendment to its CON, after issuance of the Series 2010 Bonds, to allow for direct admissions into the Health Center from outside the Community. There are 37 nursing beds planned for the Community. Management has defined the primary market area for nursing services as the same Health Care PMA as assisted living. See Independent Accountants Examination Report B-78

265 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following map depicts the Community and the fifteen skilled nursing facilities within the Health Care PMA. Source: Microsoft MapPoint Legend The Primary Market Area The Community Skilled Nursing Facilities Within the Health Care PMA 1 Lexington Healthcare Center of Elmhurst 13 The Grove at 2 Oak Brook Healthcare Center La Grange Park 3 Renaissance at Hillside 14 The Landing at 4 Oakridge Convalescent Center Plymouth Place 5 Elmhurst Extended Care Center 15 Providence Healthcare 6 Westchester Lodge Healthcare Center and Rehab Center 7 Elm Brook Healthcare and Rehab 8 ManorCare Hinsdale 9 Lexington Healthcare Center of Lombard 10 ManorCare Westmont 11 Beacon Hill 12 Villa Scalabrini Nursing & Rehabilitation Center See Independent Accountants Examination Report B-79

266 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table identifies the Community and the fifteen skilled nursing facilities located within the Health Care PMA and summarizes the number of units, the percentage occupied and lowest daily rate based on surveys conducted through January Table 37 Comparable Nursing Facilities Within the Health Care PMA Driving Miles from the Year Community Licensed Number of Nursing Beds Private Beds Semi- Private Beds Percent Occupied Private Rate Semi- Private Rate The Community (1) $311 $291 Lexington Healthcare Center of Elmhurst (2) % $276 $220 Oak Brook Healthcare Center % $255 $209 Renaissance at Hillside (3) % $190 $154 Oakridge Convalescent Center (4) % $145 $ Elmhurst Extended Care Center % $203 $ Westchester Health and Rehab % $321 $ Elm Brook Healthcare and Rehab (5) % $255 $ ManorCare Hinsdale (6) % $330 $ Lexington Healthcare Center of Lombard (7) % $276 $220 ManorCare Westmont (8) % $250 $ Beacon Hill (9) n/a n/a 98% $210 $210 Villa Scalabrini Nursing & Rehab Center (10) % $260 $220 The Grove at La Grange Park % $160 $145 The Landing at Plymouth Place % $276 $234 Providence Healthcare and Rehab Center (11) % $289 $234 Total number of beds (excluding the Community) 2,113 Weighted average occupancy 90% Source: Management, surveys and site visits conducted by Dixon Hughes PLLC through January n/a = not available See Independent Accountants Examination Report B-80

267 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP Summary of Significant Forecast Assumptions d/b/a Providence Healthcare Foundation and Accounting Policies, Continued Notes to Table (1) The daily fees shown for the Community have been deflated three percent from the 2011 rate to reflect 2010 dollars for comparison purposes. (2) Direct admit residents to Lexington Healthcare Center of Elmhurst pay a deposit of $1,400, which covers the first 60 days of care. Although five beds are currently under renovation, management indicated they are still included in the census. (3) Of the 188 beds at Renaissance at Hillside, 74 are designated for memory care in a secured unit. Rates for memory care are the same as the skilled nursing rates. (4) Oakridge Convalescent Center is also licensed for 51 intermediate care beds. (5) Elm Brook Healthcare and Rehab is licensed for 173 beds, but only has 162 beds in operation at this time. Of the 173 skilled nursing beds, 54 beds are designated for memory care in a secured unit with rates equal to those for skilled care. In addition to the 173 skilled nursing beds, the community also has seven isolation beds not included in the daily census. (6) ManorCare Hinsdale has 40 beds dedicated for memory care in a secure unit. The daily rate for memory care is $269. (7) Lexington Healthcare of Lombard is currently renovating the dining and family room areas of the facility, and has removed 10 beds in the process. Renovation is scheduled to be completed in February (8) ManorCare Westmont has 30 beds dedicated for memory care in a secure unit. The daily rate for memory care is $250. (9) Management declined to provide 2009 information for Beacon Hill. Therefore, information shown is as of November (10) Villa Scalabrini offers an additional 45 nursing beds for intermediate care with a private daily rate of $241 and semi-private daily rate of $201. Of the 194 semi-private skilled beds, 20 are designated for memory care in a secured unit with daily rates ranging from $201 to $220. (11) Previously called Rest Haven West, Providence Healthcare and Rehab Center is operated by Providence and is licensed for 145 beds, but only has 125 beds in operation at this time. The occupancy shown is based on the number of beds in operation. See Independent Accountants Examination Report B-81

268 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Assumed Independent Living Units Utilization The Independent Living Units are assumed to achieve and maintain a 95 percent occupancy level in November 2014 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Independent Living Units. Year Ending December 31, Table 38 Utilization of Independent Living Units Average Units Occupied Average Units Available Average Occupancy Percentage 2011 (1) % % % % % Source: Management (1) The Independent Living Units are expected to become available for occupancy in December 2011 and fill to a 95.0 percent occupancy level over a 36-month period at an average of approximately 4.6 units per month. See Independent Accountants Examination Report B-82

269 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation See Independent Accountants Examination Report B-83 Summary of Significant Forecast Assumptions and Accounting Policies, Continued Residents are assumed to begin moving into the Independent Living Units beginning in December The assumed monthly move-in pattern is summarized below. Table 39 Assumed Monthly Move-in for the Independent Living Units (Net of Move-Outs) Fiscal Year/Month Monthly Total Cumulative Total Cumulative Percentage 2011 December % 2012 January % February % March % April % May % June % July % August % September % October % November % December % 2013 January % February % March % April % May % June % July % August % September % October % November % December % 2014 January % February % March % April % May % June % July % August % September % October % November % Total % Source: Management

270 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assumed Independent Living Turnover Summary of Significant Forecast Assumptions and Accounting Policies, Continued The assumed turnover for the Independent Living Units due to death, withdrawal or transfer to the Assisted Living Units, Memory Support Units or the Health Center, and double occupancy of the Independent Living Units has been based, in part, on the report of the Corporation s actuary, A.V. Powell & Associates LLC (the Actuary ). Refunds of Entrance Fees are generated upon death or termination of the Residency Agreement and withdrawal from the Community, subject to the re-occupancy of the vacated Independent Living Units. Entrance Fees may be generated from Independent Living Units turning over without a corresponding refund because the Resident has not withdrawn from the Community, but has permanently transferred to the Assisted Living Units, Memory Support Units or Health Center. The assumed number of refunds for the Independent Living Units is provided by the Actuary. See Independent Accountants Examination Report B-84

271 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The following table presents the forecasted initial and attrition Entrance Fees received and the total Entrance Fee refunds. Table 40 Initial and Turnover Entrance Fees Receipts and Total Entrance Fee Refunds (In Thousands) Number of Independent Living Entrance Fees Received (Initial) Independent Living Entrance Fees Received (Initial) For the Year Ending December 31, $5,012 $54,599 $17,112 $11,316 - Number of Catered Living, Assisted Living and Memory Support Entrance Fees Received (Initial) (1)(2) Catered Living, Assisted Living and Memory Support Entrance Fees Received (Initial) $38 $1,239 $ Number of Entrance Fees Received (Attrition) Entrance Fees Received (Attrition) - $918 $2,643 $4,165 $6,122 Total Number of Entrance Fees Refunded: Total Entrance Fees Refunded: $(558) $(1,389) $(1,938) $(2,564) Entrance Fees Received, Net of Refunds $5,050 $56,198 $19,210 $13,543 $3,558 Source: Management and the Actuary (1) For purposes of the forecast, all initial occupants of the Catered Living Units are assumed to pay an Entrance Fee. (2) For purposes of the forecast, seventy-five percent of initial occupants of the Assisted Living Units and Memory Support Units are assumed to pay an Entrance Fee. See Independent Accountants Examination Report B-85

272 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued A Charter Benefit Program is currently being offered to Depositors for the Independent Living Units. Management intends to offer the Charter Benefit Program until commencement of construction of the Community. For purposes of Management s forecast, Management has assumed that 50 percent of first generation residents would utilize the Charter Benefit Program due to cancellations and re-sales at higher, post-construction pricing. Additional details pertaining to the Charter Benefit Program are located in the Residency Agreement section of this report. After commencement of construction of the Community, Management intends to end the Charter Benefit Program and offer prospective residents Construction Plan A until the Community opens. For the remaining first-generation Residents, Management intends to implement an approximately five percent Entrance Fee price increase upon commencement of construction, and a three percent Entrance Fee pricing increase upon opening of the Community. Based upon the aforementioned utilization of the Charter Benefit Program and the Entrance Fee price increases, Management has assumed an average entrance fee of approximately $522,030 for the first generation of the independent living Residents of the Community. The double occupancy percentage in the Independent Living Units is assumed to be 54.5 percent in fiscal year 2011, declining to 41.8 percent in fiscal year 2015 based upon Management s assumptions and information provided by the Actuary. See Independent Accountants Examination Report B-86

273 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assumed Catered Living Apartments Utilization Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Catered Living Apartments are assumed to achieve and maintain a 95 percent occupancy level in September 2012 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Catered Living Apartments. Year Ending December 31, Table 41 Utilization of Catered Living Apartments Average Units Occupied Average Units Available Average Occupancy Percentage 2011 (1) % % % % % Source: Management (1) The Catered Living Apartments are assumed to become available for occupancy in December 2011 and fill to a 95.0 percent occupancy level over a 10-month period at an average of approximately 1 unit per month. The double occupancy percentage in the Catered Living Apartments is assumed to be 30 percent in fiscal year 2011 and declining to 22 percent in fiscal year 2015, based upon Management s assumptions. See Independent Accountants Examination Report B-87

274 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Assumed Assisted Living and Health Center Utilization The Community is planned to have accommodations, equipment, staffing, programs, services, and supervision necessary for Assisted Living Units, Memory Support Units and Health Center and are available to residents of the Community on a priority basis. However, the Corporation cannot guarantee access to these areas. In the event that space is not available in the Health Care Center, the Corporation can arrange for temporary care in the Independent Living Unit by a certified home health agency until space becomes available. If home health care is not reasonably possible, the Corporation can attempt to arrange for temporary care in another facility that can provide the same care that may have otherwise been provided at the Community. The Assisted Living Units and Memory Support Units are assumed to achieve and maintain a 95.0 percent occupancy level in October 2013 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Assisted Living Units and Memory Support Units during the forecast period. Table 42 Utilization of Assisted Living Units and Memory Support Units Year Ending December 31, Average Number of Residents Permanent Transfer Direct Admit Average Number of Assisted Living and Memory Support Units Occupied Assisted Living and Memory Support Units Available Average Occupancy Percentage 2012 (1) % % % % Source: Management and the Actuary (1) The Assisted Living Units and Memory Support Units are assumed to be available for occupancy in May 2012 and fill to a 95.0 percent occupancy level over an 18-month period at an average of 3.5 units per month. The double occupancy percentage in the Assisted Living Units is assumed to be 10 percent in fiscal year 2012, and remain constant throughout the forecast period, based upon Management s assumptions. See Independent Accountants Examination Report B-88

275 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued The Health Center is assumed to achieve and maintain a 95.0 percent occupancy level in April 2014 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Health Center s nursing beds. Table 43 Health Center Utilization Average Number of Residents Average Number of Year Ending December 31, Permanent Residents Direct Admit Private Pay Medicare (2) Temp. Beds Occupied Beds Available Average Occupancy Percentage 2012 (1) % % % % Source: Management (1) The Health Center is assumed to be available for occupancy in May 2012 and fill to stabilized occupancy of 95.0 percent over a 24-month period at an average of 1.5 beds per month. (2) For purposes of Management s forecast, no Medicaid utilization has been assumed during the forecast period See Independent Accountants Examination Report B-89

276 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Accounting Policies Summary of Significant Forecast Assumptions and Accounting Policies, Continued (a) Basis of Accounting The Corporation maintains its accounting and financial records according to the accrual basis of accounting. (b) Deferred Costs The marketing costs incurred by the Corporation in connection with acquiring initial entrance fee contracts are capitalized and amortized on a straight-line basis over a period approximating the average life expectancy of the initial Residents occupying the Independent Living Units. Costs associated with the issuance of the Series 2010 Bonds are assumed to be capitalized and amortized over the expected life of the Series 2010 Bonds using the effective interest method. (c) Property, Equipment and Depreciation Expense Property and equipment are recorded at cost. Depreciation expense is calculated on the straight-line method over the estimated useful lives of depreciable assets. The cost of maintenance and repairs is charged to operations as incurred, whereas significant renewals and betterments are capitalized. (d) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts on deposit in banks and highly liquid securities with an original maturity of 90 days or less when purchased, excluding amounts whose use is limited. (e) Investments Investments include cash and cash equivalents, mutual funds, common stock, and fixed income funds in the form of U.S. Government and corporate obligations. Management assumes no material changes in fair values that result in material net realized or unrealized gains or losses during the forecast period. (f) Assets Limited as to Use Assets limited as to use are assumed to be carried at fair value, which, based on the nature of the underlying securities (assumed to be high-grade debt securities), is assumed to approximate historical cost. Management assumes no material changes in fair values that result in material net realized or unrealized gains or losses during the forecast period. (g) Investment Income Investment income, other than that capitalized as part of project costs, is reported as operating revenue unless restricted by donor or law. Management does not forecast any unrealized gains or losses on investments. (h) Costs of Borrowing Net interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets. See Independent Accountants Examination Report B-90

277 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued (i) Deferred Revenue from Entrance Fees The non-refundable portion of an Entrance Fee is amortized into income over the estimated remaining life expectancy of the Resident in the Independent Living Units. The refundable portion of an Entrance Fee received is assumed to be earned on a straight-line basis over the remaining useful life of the Community. (j) Taxes Management has included a provision for property taxes or payment in lieu of property taxes, based upon Management s experience. See Independent Accountants Examination Report B-91

278 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Revenue Summary of Significant Forecast Assumptions and Accounting Policies, Continued Independent living monthly service fees Resident service revenue is based upon the Monthly Fees for services provided to residents of the Independent Living Units and Catered Living Units and the assumed occupancy of the respective units. Management assumes the Monthly Fees for the Independent Living Units and Catered Living Units to increase 3.0 percent in January 2012 and annually thereafter. Management intends to implement an annual Entrance Fee price increase for the Independent Living Units of four percent beginning January 2011 and annually thereafter. Assisted living monthly service fees Assisted Living Units and Memory Support Units monthly service fees are based on the assumed occupancy of the respective units and are assumed to be generated from services provided to Residents transferring from the Independent Living Units, residents transferring from the Catered Living Units, as well as direct admissions from the local surrounding area. Charter Residents permanently transferring from the Independent Living Units to the Assisted Living Units and Memory Support Units are assumed to pay the then-current Monthly Fee for a Dover Traditional (One Bedroom Apartment) Independent Living Unit plus the cost of two additional meals daily. Non-Charter Residents permanently transferring from the Independent Living Units to the Assisted Living Units and Memory Support Units are assumed to pay the then-current Monthly Fee for an Oxford Signature (Two Bedroom Apartment) Independent Living Unit plus the cost of two additional meals daily. Management assumes the Assisted Living Units and Memory Support Units Monthly Fees for direct admit residents to increase 3.0 percent beginning January 2012 and annually thereafter. Nursing service fees Nursing service fees are based on the assumed occupancy of the Health Center beds and are assumed to be generated from services provided to residents transferring from the Independent Living Units, Catered Living Units, Assisted Living Units and Memory Support Units. Charter Residents permanently transferring from the Independent Living Units, Assisted Living Units or Memory Support Units to the Health Center are to pay the then-current daily fee for a Dover Traditional (One Bedroom Apartment) Independent Living Unit plus the cost of two additional meals daily. Non-Charter Residents permanently transferring from the Independent Living Units, Assisted Living Units or Memory Support Units to the Health Center are to pay the then-current daily fee for an Oxford Signature (Two Bedroom Apartment) Independent Living Unit plus the cost of two additional meals daily. In addition to the transferred residents, the Health Center is assumed to provide services to Medicare recipients. Management assumes Health Center fees to increase 3.0 percent beginning January 2012 and annually thereafter. See Independent Accountants Examination Report B-92

279 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Earned Entrance Fees Summary of Significant Forecast Assumptions and Accounting Policies, Continued Earned entrance fees are based on the non-refundable portion of the Entrance Fees received each year amortized over the life expectancy of each Resident in the Independent Living Units throughout the forecast period. In addition, the refundable portion of the Entrance Fees received is assumed to be earned on a straight-line basis over the remaining useful life of the Community. Turnover of the Independent Living Units has been forecasted by Management from information provided by the Actuary and based upon its experience with comparable facilities and the Community s existing market and Depositor information. Entrance Fees for the Independent Living Units are assumed to increase four percent annually beginning January Investment Income Management assumes a 4.0 percent average annual rate of return on the Corporation s unrestricted cash. Based upon information provided by the Underwriter, Management has estimated interest to be earned annually on the Project Fund at 1.05 percent, on the Funded Interest Fund at 1.15 percent, on the Series 2010A Bonds Debt Service Reserve Fund at 2.75 percent, on the Series 2010B Bonds Debt Service Reserve Fund at 2.70 percent, on the Series 2010C Bonds Debt Service Reserve Fund at 2.75 percent, on the Series 2010D-1 Bonds Debt Service Reserve Fund at 2.15 percent, on the Series 2010D-2 Bonds Debt Service Reserve Fund at 1.90 percent, on the Series 2010D-3 Bonds Debt Service Reserve Fund at 1.60 percent, and the Series 2010E Bonds Debt Service Reserve Fund at 1.60 percent. Other Income Forecasted other revenue consists of revenues from additional Resident meals and snacks, guest meals, guest apartment rentals, barber and beauty fees, and other miscellaneous sources. These revenues are based upon the assumed occupancies at the Community. Charges for other revenues are assumed to increase 3.0 percent annually beginning January Operating Expenses Operating expenses are estimated by Management based on its experience with the development and operation of other similar retirement communities. Staff salaries and benefits are estimated based on prevailing local salary and wage rates and are assumed to increase 3.0 percent annually throughout the forecast period. The costs of employee fringe benefits are assumed to approximate 25 percent of salaries and wages. The following table summarizes the assumed staffing levels for all departments. See Independent Accountants Examination Report B-93

280 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued Table 44 Schedule of Assumed Staffing Levels FY 2015 Department FTE Totals Administrative services 6.3 Activities services 5.2 Assisted living services 19.3 Memory support services 9.4 Nursing services 25.9 Building and grounds maintenance 4.6 Dining services 41.3 Emergency system services 2.3 Housekeeping & laundry services 16.4 Transportation services 1.4 Marketing services 4.0 Catered living 1.4 Pastoral services 0.5 Total FTE s Source: Management Other non-salary operating expenses are assumed to include ongoing marketing costs, raw food costs, utilities, supplies, maintenance and security contracts, building and general liability insurance, legal and accounting fees, management fees, property taxes or payment in lieu of property taxes, and other miscellaneous expenses. The cost of these non-salary operating expenses is assumed by Management to increase 3.0 percent annually throughout the forecast period. See Independent Accountants Examination Report B-94

281 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Assets Limited as to Use Summary of Significant Forecast Assumptions and Accounting Policies, Continued Permanent financing for the Community is assumed by Management to be obtained from the issuance of the Series 2010 Bonds. The Bond Trustee is assumed to maintain the following funds and accounts for the Series 2010 Bonds in the name of the Obligors under the terms of the Master Indenture and the Bond Trust Indentures: (1) Project Fund, to be gross funded at closing from Series 2010 Bonds proceeds to be used to pay construction costs to complete the Community. (2) Funded Interest Fund, net funded from Series 2010 Bonds proceeds, to be used to fund interest costs for 24.5 months. (3) Debt Service Reserve Funds, to be established at closing from Series 2010 Bonds proceeds. According to the Underwriter, each of the Debt Service Reserve Funds established for each series of the Series 2010 Bonds is to be released and available to pay debt service in the year that the respective series of the Series 2010 Bonds is repaid in full. (4) Entrance Fees Fund, to be funded with initial Entrance Fees from the Community, available to: pay Entrance Fee refunds; fund the Working Capital Fund and the Operating Reserve Fund; and redeem the Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds. (5) Operating Reserve Fund, to be initially funded with $5,000,000 from initial Entrance Fees received. The Operating Reserve Fund is to be available to: make up deficiencies, if any, in the Project Fund; pay operating, marketing and pre-opening expenses of the Community; and pay debt service on the Series 2010 Bonds, to the extent that other moneys are not available. (6) Working Capital Fund, to be initially funded with $16,700,000 from initial Entrance Fees received, to fund the pre-opening costs and ongoing working capital needs of the Community. Approximately $2,400,000 of the Working Capital Fund is assumed to be used to pay a portion of the Greystone Development Consulting Fees and $500,000 of the Working Capital Fund is assumed to be used to a portion of the PM&D Development Fee. (7) Special Liquidity Support Fund, to be funded by the Series 2010 Bonds and held in the custody of the Master Trustee in the name of the Corporation pursuant to the Liquidity Support Agreement, in the amount of $3,000,000. The Special Liquidity Support Fund, in addition to the Supplemental Liquidity Support Fund of $400,000 and the Providence Liquidity Support Fund of $2,600,000, which is held in the custody of the Master Trustee in the name of PDG, would be used to fund project completion costs, working capital, operating expenses and interest on the Series 2010 Bonds, if all funds originally allocated for such purposes have been expended. Upon the repayment of the Series 2010B, Series 2010C, Series 2010D Bonds and Series 2010E Bonds, and assuming no event of default has occurred under the Master Trust Indenture and certain stabilization tests are met, any amounts remaining on deposit in the Special Liquidity Support Fund shall be used to pay a portion of the Fixed Base Fee, equal to $3,000,000, and the Special Liquidity Support Fund shall be closed. For additional information, see the Liquidity Support Agreement and Greystone Development Services Agreement sections of this report. See Independent Accountants Examination Report B-95

282 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued (8) Supplemental Liquidity Support Fund, to be funded by the Series 2010 Bonds and held in the custody of the Master Trustee in the name of the Corporation pursuant to the Liquidity Support Agreement, in the amount of $400,000. The Supplemental Liquidity Support Fund, in addition to the Special Liquidity Support Fund of $3,000,000 and the Providence Liquidity Support Fund of $2,600,000, which is held in the custody of the Master Trustee in the name of PDG, would be used to fund project completion costs, working capital, operating expenses and interest on the Series 2010 Bonds, if all funds originally allocated for such purposes have been expended. Upon the repayment of the Series 2010B, Series 2010C, Series 2010D Bonds and Series 2010E Bonds, and assuming no event of default has occurred under the Master Trust Indenture and certain stabilization tests are met, any amounts remaining on deposit in the Supplemental Liquidity Support Fund shall be released for the Corporation s use and the Supplemental Liquidity Support Fund shall be closed. For additional information, see the Liquidity Support Agreement section of this report. (9) Debt Service Fund, which are to contain the bond principal and interest payments to be used for payment of debt service on the Series 2010 Bonds. Property and Equipment and Depreciation Expense Management anticipates that the Corporation is to incur routine capital additions during the forecast period that are to be capitalized as property and equipment. Depreciation expense for all capital assets is computed based on the straight-line method for buildings and equipment over estimated average useful lives of 40 and 15 years, respectively. Construction-related costs as well as routine capital additions during the forecast period are summarized in the table below. Table 45 Schedule of Property and Equipment (In Thousands) Years Ending December 31, Property and equipment, gross Beginning balance - $51,086 $112,237 $136,697 $137,722 $138,569 Project costs 43,615 49,647 24, Capitalized interest 7,471 11, Routine capital additions Property and equipment, gross 51, , , , , ,969 Accumulated depreciation - (206) (3,399) (6,625) (9,884) (13,167) Property and equipment, net Ending balance $51,806 $112,031 $133,298 $131,097 $128,685 $125,802 Source: Management See Independent Accountants Examination Report B-96

283 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Long-Term Debt and Interest Expense Summary of Significant Forecast Assumptions and Accounting Policies, Continued Series 2010 Bonds The Illinois Finance Authority intends to issue $175,540,000 of tax-exempt and taxable bonds, the proceeds of which are to be lent to the Corporation to pay for the Community construction and other project-related costs. The Series 2010 Bonds are assumed to consist of: $109,115,000 of non-rated fixed rate, tax-exempt Series 2010A Bonds; $7,875,000 of non-rated fixed rate, tax-exempt Series 2010B Bonds; $5,000,000 of Accelerated Redemption Reset Option Securities Series 2010C Bonds (ARROS SM ); $40,900,000 of non-rated fixed rate, Tax-Exempt Mandatory Paydown Securities Series 2010D Bonds (TEMPS SM ); and $12,650,000 of non-rated fixed rate Taxable Mandatory Paydown Securities Series 2010E Bonds (Taxable MPS). The Series 2010A Bonds are assumed to consist of $109,115,000 of non-rated, tax-exempt fixed rate term bonds, which are assumed to be issued at a discount, with average interest rates ranging from 8.00 to 8.25 percent per annum and average yields ranging from 8.00 to 8.45 percent per annum. Interest on the Series 2010A Bonds is to be payable May 15 and November 15 of each year beginning November 15, Principal on the Series 2010A Bonds is to be paid annually commencing May 15, 2016 with a final maturity on May 15, The Series 2010B Bonds are assumed to consist of $7,875,000 of non-rated, tax-exempt fixed rate term bonds, which are assumed to be issued at an average interest rate of 7.75 percent per annum. Interest on the Series 2010B Bonds is to be payable May 15 and November 15 of each year beginning November 15, Principal on the Series 2010B Bonds are anticipated to be redeemed in full by approximately August 15, The Series 2010C Bonds are assumed to consist of $5,000,000 of unrated tax-exempt ARROS SM at an annual interest of 7.50 percent. Interest on the Series 2010C Bonds is to be payable May 15 and November 15 of each year beginning November 15, The Series 2010C Bonds are to be subject to a reset of the initial interest rate on November 15, The Series 2010C Bonds are anticipated to be redeemed in full by approximately 80 percent initial occupancy of the Independent Living Units by approximately February 15, According to the Underwriter, the maximum interest rate for the Series 2010C Bonds is to be 15 percent per annum. The Series 2010D Bonds are assumed to consist of $40,900,000 of unrated, tax-exempt fixed rate TEMPS SM, which are assumed to be issued at average interest rates ranging from 6.25 to 7.25 percent per annum. Interest on the Series 2010D Bonds is to be payable May 15 and November 15 of each year beginning November 15, The Series 2010D Bonds consist of $10,275,000 of Series 2010D-1 Bonds (TEMPS-75 SM ) anticipated to be redeemed in full by approximately 75 See Independent Accountants Examination Report B-97

284 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Summary of Significant Forecast Assumptions and Accounting Policies, Continued percent initial occupancy of the Independent Living Units by approximately August 15, 2013; $15,350,000 of Series 2010D-2 Bonds (TEMPS-65 SM ) anticipated to be redeemed in full by approximately 65 percent initial occupancy of the Independent Living Units by approximately May 15, 2013; and $15,275,000 of Series 2010D-3 Bonds (TEMPS-50 SM ) anticipated to be redeemed in full by approximately 50 percent initial occupancy by approximately November 15, The Series 2010E Bonds are assumed to consist of $12,650,000 of unrated, taxable fixed rate Taxable MPS, which are assumed to be issued at an average interest of percent per annum. Interest on the Series 2010E Bonds is to be payable May 15 and November 15 of each year beginning November 15, The Series 2010E Bonds are anticipated to be redeemed in full by approximately August 15, Principal on the Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and the Series 2010E Bonds is anticipated to be repaid from certain available Entrance Fees from the Community, according to the Underwriter. The following table presents the assumed annual debt service for the Series 2010 Bonds during the forecast period. Table 46 Schedule of Series 2010 Bonds Annual Debt Service (In Thousands) Year Ending December 31, Principal Interest Payment Total Debt Service 2010 $ - $ 6,414 $ 6, ,744 13, ,505 13,416 44, ,655 10,555 37, ,265 9,164 17, ,893 8,893 Thereafter 109, , ,835 Source: Total $175,540 $251,906 $427,446 Management and the Underwriter See Independent Accountants Examination Report B-98

285 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Deferred Development Fees Summary of Significant Forecast Assumptions and Accounting Policies, Continued Portions of the PM&D Development Fee are anticipated to be deferred and are to be paid based upon the ability of the Corporation to achieve certain financial goals and objectives. See the Development of the Community section earlier in this report for additional details. PM&D Development Fees to be earned and the payment or deferrals of these payments are summarized in the table below. Table 47 Schedule of PM&D Development Fees and Deferred Development Fees (In Thousands) Years Ending December 31, Deferred Devlp. Fees, beginning balance - $1,694 $2,066 $1,759 $1,661 $1,600 PM&D Devlp. Fee earned 2, PM&D Devlp. Fee paid (500) (34) (307) (98) (61) - Deferred Devlp. Fees, ending balance $1,694 $2,066 $1,759 $1,661 $1,600 $1,600 Source: Management Current Assets and Current Liabilities Operating expenses exclude amortization, depreciation, other non-cash expenses and interest expense. Operating revenues include Independent Living Unit and Catered Living Unit Monthly Fees, Assisted Living Unit and Memory Support Unit Monthly Fees, and Health Center service fees. Working capital components have been estimated based on industry standards and Management s historical experience as follows: Table 48 Working Capital Days on Hand Cash 30.0 days operating expenses Accounts receivable 7.3 days operating revenues Inventory 1.0 days operating expenses Prepaid expenses 15.0 days operating expenses Accounts payable 30.0 days operating expenses Other accrued liabilities 14.0 days operating expenses Source: Management See Independent Accountants Examination Report B-99

286 INDEPENDENT ACCOUNTANTS REPORT ON SUPPLEMENTAL INFORMATION Board of Directors and Board of Trustees Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Tinley Park, Illinois Our examination of the financial forecast presented in the preceding section of this document was made for the purpose of forming an opinion on whether the financial forecast is presented in conformity with AICPA guidelines for the presentation of a forecast and that the underlying assumptions provide a reasonable basis for the forecast. The study was undertaken to evaluate the Corporation s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed Series 2010 Bonds based on Management s assumptions of future operations of the Corporation. However, future events could occur which could adversely affect the financial forecast of the Corporation and its ability to meet debt service requirements. These factors include, among others, legislation and regulatory action, changes in assumptions concerning occupancy, the rate of entrance fee producing unit turnover, per diem rates, financing and operating costs. The accompanying sensitivity analysis is presented for purposes of additional analysis and is not a required part of the financial forecast. Such information has not been subjected to procedures applied in the examination of the financial forecast and, accordingly, we express no opinion or any other form of assurance on it. The following supplemental analyses are presented for the purpose of demonstrating the significance of certain assumptions and are not to be considered an all inclusive list. Atlanta, Georgia May 14, 2010 B-100

287 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Sensitivity Analysis I Occupancy Supplement Disclosure Occupancy rates can vary depending upon economic conditions, the competitive environment, and Management s ability to execute the marketing and sales plan. The Community s residents are to begin moving into the Independent Living Units in December Management expects the Community to achieve a 95 percent occupancy level in November 2014 and remain constant at that level throughout the forecast period. Sensitivity Analysis IA The period of time it takes to achieve and maintain stabilized occupancy could be longer than Management s forecast. The data presented in the table below demonstrate the impact of an extension in the assumed move-in period of the Independent Living Units from 36 months to 60 months. Sensitivity Analysis IB The data presented in the table below also provide a Breakeven Analysis assuming that the Community s stabilized occupancy percentage decreased to a breakeven point such that the Corporation s Maximum Annual Debt Service Coverage Ratio would approximate near 1.00x. In the Breakeven Analysis, the Community s Independent Living Units stabilized occupancy was reduced to Breakeven while occupancy in the Catered Living Units, Assisted Living Units, Memory Support Units, and the Health Center remained as originally forecasted. Independent Living Units: Table 49 Sensitivity Analysis I Estimated Financial Information For the Year Ending December 31, 2015 As Forecasted Sensitivity IA Sensitivity IB Months of Move-in Period 36 months 60 months 36 months Stable Occupancy Achieved November 2014 November 2016 November 2014 Stabilized Occupancy 95.0% 95.0% 76.5% Average Move-ins per Month Maximum Annual Debt Service Coverage Ratio 1.39x 1.26x 1.08x Annual Debt Service Coverage Ratio 1.53x 1.38x 1.19x Days Cash on Hand (1) Cash to Debt Ratio (1) 31% 21% 9% Source: Management (1) The sensitivity in the liquidity ratios is due to the extended move-in occupancy of the Independent Living Units without a corresponding adjustment to certain fixed or staffing expenses or an adjustment to the repayment of debt. B-101

288 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Sensitivity Analysis II Entrance Fee Cash Flow Predictability Supplement Disclosure Actual net Entrance Fees received from turnover may vary from Management s assumptions included in the forecast in regard to either the number of turnover residents or the number of Entrance Fee refunds paid. Management s assumptions regarding turnover Entrance Fee cash flow receipts and Entrance Fee refunds are based on historical experience and estimates from the Actuary. Sensitivity Analysis IIA Estimates regarding turnover of the Independent Living Units are based on average age, percentage of couples, morbidity tables, assumed transfer rates to other levels of care, and the historical experience of Management. These assumptions are especially sensitive to variation and may or may not occur evenly throughout the forecast period. The data presented in the table below is provided to demonstrate the impact of assuming no turnover Entrance Fee cash flow receipts or refunds in the stabilized year of Sensitivity Analysis IIB Pursuant to the Residency Agreement, refunds of Entrance Fees upon death or withdrawal of a Resident are subject to re-occupancy of the Resident s vacated Independent Living Unit. Independent Living Units that are re-occupied as a result of the prior occupant(s) transferring to an Assisted Living Unit, Memory Support Unit or Health Center nursing bed do not generate a corresponding Entrance Fee refund until the prior occupant(s) died or withdrew from the Community, thereby terminating the Residency Agreement. B-102

289 Timothy Place, NFP d/b/a Park Place Christian Community of Elmhurst and Christian Healthcare Foundation, NFP d/b/a Providence Healthcare Foundation Supplement Disclosure The forecasted financial data presented in the table below is provided to demonstrate the cumulative impact assuming that each Independent Living Unit turnover generating an Entrance Fee also generates a refund paid to Residents in each year of the six-year forecast period ending December 31, Table 50 Sensitivity Analysis II Estimated Financial Information For the Year Ending December 31, 2015 (In Thousands) As Forecasted Sensitivity IIA Sensitivity IIB Turnover Entrance Fee Received $ 6,122 - $ 6,122 Entrance Fee Refunds Paid $(2,564) - $(4,146) Net Entrance Fees Received $ 3,558 - $ 1,976 (1) Maximum Annual Debt Service Coverage Ratio 1.39x 1.02x 1.22x (1) Annual Debt Service Coverage Ratio 1.53x 1.12x 1.34x (1) Days Cash on Hand (2) Cash to Debt Ratio 31% 27% 27% (2) Source: Management (1) The sensitivity in the Maximum Annual Debt Service Coverage Ratio and the Annual Debt Service Coverage Ratio reflects the number of turnover Residents paying Entrance Fees upon entering the Community s Independent Living Units (9.0) matching the number of refunds paid to Residents vacating those units (9.0) without a corresponding adjustment to certain fixed expenses for the fiscal year ending December 31, (2) The sensitivity in the liquidity ratios reflects the cumulative effect of the number of turnover Residents paying Entrance Fees upon entering the Community s Independent Living Units matching the number of refunds paid to Residents vacating those units without a corresponding adjustment to certain fixed expenses during the six-year forecast period ending December 31, B-103

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291 APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS

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293 APPENDIX C SUMMARY OF PRINCIPAL DOCUMENTS THE MASTER INDENTURE, THE BOND INDENTURES THE LOAN AGREEMENTS AND THE MORTGAGE Brief descriptions of the Master Indenture, the Bond Indentures, the Loan Agreements and the Mortgage are included hereafter in this Official Statement. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Master Indenture, the Bond Indentures, the Loan Agreements and the Mortgage are qualified in their entirety by reference to each such document, copies of which are available for review prior to the issuance and delivery of the Series 2010 Bonds at the offices of the Authority and thereafter at the offices of the Bond Trustee. All references to the Series 2010 Bonds are qualified in their entirety by reference to the definitive forms thereof and the information with respect thereto included in the Bond Indentures. DEFINITIONS OF CERTAIN TERMS The following are definitions of certain terms used in the Master Indenture, the Bond Indentures, the Loan Agreements, the Mortgage and this Official Statement. Accelerable Instrument means any Obligation or any mortgage, indenture, loan agreement or other instrument under which there has been issued or incurred, or by which there is secured, any Indebtedness evidenced by an Obligation, which Obligation or instrument provides that, upon the occurrence of an event of default under such Obligation or instrument, the holder thereof may request that the Master Trustee declare such Obligation or Indebtedness due and payable prior to the date on which it would otherwise become due and payable. Act means the Illinois Finance Authority Act of the State of Illinois, as from time to time amended. Additional Indebtedness means Indebtedness incurred by any Member subsequent to the issuance of the Series 2010 Obligations. Additional Obligations means any evidence of Indebtedness or evidence of any repayment obligation under any Interest Rate Agreement issued after the issuance of the Series 2010 Obligations, authorized to be issued by a Member pursuant to the Master Indenture which has been authenticated by the Master Trustee pursuant to the Master Indenture. Adjustable Long-Term Interest Payment Date means, with respect to the Series 2010C Bonds, each May 15 and November 15, commencing November 15, Adjustable Long-Term Mode means the aggregate of the characteristics which apply to the Series 2010C Bonds bearing interest at the Adjustable Long-Term Rate. Adjustable Long-Term Rate means with respect to the Series 2010C Bonds, the interest rate in effect on the Series 2010C Bonds, including the Initial Interest Rate and any Reset Rate applicable thereto. Affiliate means a corporation, partnership, joint venture, association, business trust or similar entity (a) which controls, is controlled by or is under common control with, directly or indirectly, a Member; or (b) a majority of the members of the Directing Body of which are members of the Directing Body of a Member. For the purposes of this definition, control means with respect to: (a) a corporation having stock, the ownership, directly or indirectly, of more than 50% of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the directors of such corporation; (b) a not for profit corporation not having stock, having the power to elect or appoint, directly or indirectly, a majority of the members of the Directing Body of such corporation; or (c) any other entity, the power to direct the management of such entity through the ownership of at least a majority of its voting securities or the right to designate or elect at least a majority of the members of its Directing Body, by contract or otherwise. For the purposes of this definition, Directing Body means with respect to: (a) a corporation having stock, such corporation s board of directors and the owners, directly or indirectly, of more than 50% of the securities C-1

294 (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporation s directors (both of which groups shall be considered a Directing Body); (b) a not for profit corporation not having stock, such corporation s members if the members have complete discretion to elect the corporation s directors, or the corporation s directors if the corporation s members do not have such discretion; and (c) any other entity, its governing board or body. For the purposes of this definition, all references to directors and members shall be deemed to include all entities performing the function of directors or members however denominated. Affiliate Related Subordinated Indebtedness means (a) the Providence Development Subordinated Debt, (b) deferred portions of the management fees due to the Initial Manager as set forth in the Management Agreement, (c) development fees payable but not paid to Providence Management pursuant to the Providence Development Agreement, and (d) fees and other amounts due to an Affiliate of a Member for money borrowed, credit extended or services rendered, the payment of which are deferred or not yet payable at the time of calculation and which are subordinate to payments due on all Obligations issued under the Master Indenture in accordance with written agreements between such Affiliates and a Member. Assisted Living Units means the assisted living units that are part of the Series 2010 Project. Authority means the Illinois Finance Authority, a body politic and corporate created and existing under and by virtue of the Act, and its successors and assigns. Authorized Denomination means $5,000 or any integral multiple thereof. Balloon Indebtedness means Long-Term Indebtedness, 25% or more of the original principal amount of which matures during any consecutive 12-month period, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption or prepayment prior to such 12-month period. Balloon Indebtedness does not include Indebtedness which otherwise would be classified under the Master Indenture as Put Indebtedness. Bond Counsel means a nationally recognized firm of municipal bond attorneys which are Independent Counsel and who are acceptable to the Authority and the Bond Trustee. Bond Financed Property means, with respect to the Series 2010 Tax Exempt Bonds, all of the property of the Borrowers financed or refinanced with the proceeds of the Series 2010 Tax Exempt Bonds and, with respect to the Series 2010E Bonds, all of the property of the Borrowers financed or refinanced with the proceeds of the Series 2010E Bonds. Bond Indentures means, collectively, the Series 2010 Tax Exempt Bond Indenture and the Series 2010E Bond Indenture. Bond Register means the registration books of the Authority kept by the Bond Trustee to evidence the registration and transfer of the applicable Series 2010 Bonds. Bond Trustee means, collectively, the Series 2010 Tax Exempt Bond Trustee and the Series 2010E Bond Trustee. Bond Trustee s Agent means any agent designated as Bond Trustee s Agent pursuant to the applicable Bond Indenture and at the time serving in that capacity. Bondholder, holder, owner, owner of the Series 2010 Bonds or Series 2010 Bondholder means, with respect to the Master Indenture, the registered owner of any Related Bond and, with respect to the Bond Indentures, any registered owner of any Series 2010 Bonds. Bonds means the Series 2010 Bonds. Book Value, when used with respect to Property of a Member, means the value of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited financial statements of such C-2

295 Member which have been prepared in accordance with generally accepted accounting principles, and, when used with respect to Property of all Members, means the aggregate of the values of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited combined or consolidated financial statements of the Obligated Group prepared in accordance with generally accepted accounting principles, provided that such aggregate shall be calculated in such a manner that no portion of the value of any Property of any Member is included more than once. Borrower Bonds means the Series 2010C Bonds purchased with funds of the Borrowers pursuant to the Series 2010 Tax Exempt Bond Indenture. Borrowers means the Corporation and the Foundation. Business Day means a day which is not (a) a Saturday, Sunday, or legal holiday on which banking institutions in the State of Illinois or the State of New York or in any city in which the designated corporate trust office of the Bond Trustee is located, are required or authorized by law to close or (b) a day on which the New York Stock Exchange is closed. Capitalized Lease means any lease of real or personal property which, in accordance with generally accepted accounting principles, is required to be capitalized on the balance sheet of the lessee. Capitalized Rentals means, as of the date of determination, the amount at which the aggregate Net Rentals due and to become due under a Capitalized Lease under which a Person is a lessee would be reflected as a liability on a balance sheet of such Person. Cash and Investments means the sum of cash, cash equivalents, marketable securities, including without limitation board-designated assets, and amounts, if any, on deposit in the Operating Reserve Fund, Working Capital Fund, Entrance Fees Fund and Supplemental Liquidity Support Fund, but excluding (a) trustee-held funds other than those otherwise described in this definition, (b) donor-restricted funds to the extent that the payment of debt service on the Indebtedness of the Obligated Group would be inconsistent with the donor s restrictions and (c) any funds pledged or otherwise subject to a security interest for debt other than the Obligations, as shown on the most recent audited or unaudited financial statements of the Obligated Group. Any amounts on deposit in a Debt Service Reserve Fund created under the Bond Indentures and any other debt service reserve fund created under a Related Bond Indenture, shall be (i) excluded from the calculation of Cash and Investments for the purposes of determining the number of Days Cash on Hand of the Obligated Group and (ii) included in the calculation of Cash and Investments for the purposes of determining the Cash to Indebtedness Ratio of the Obligated Group. For purposes of calculations under the Master Indenture, an Unrestricted Contribution from an Affiliate shall be treated as being made during the period of such calculation so long as the Unrestricted Contribution is made prior to the date the applicable Officer s Certificate is required to be delivered with respect to such calculation. Cash to Indebtedness Ratio means, as of any date of calculation, the number obtained by dividing (a) Cash and Investments, by (b) the aggregate principal amount of Funded Indebtedness Outstanding but excluding the then current portion of the Debt Service Requirements on Funded Indebtedness; provided, however, that for the purposes of calculating Cash to Indebtedness Ratio, the principal amount of any Subordinated Indebtedness will be excluded from Debt Service Requirements. Closing Date means the date of the initial issuance and delivery of the Series 2010 Bonds. Code means the Internal Revenue Code of 1986, as amended from time to time. Each reference to a Section of the Code shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations relating to such section, and for the purpose of the Bond Indentures, which are applicable to the Series 2010 Bonds or the use of the proceeds thereof. Commitment Indebtedness means the obligation of any Member to repay amounts disbursed pursuant to a commitment from a financial institution to refinance or purchase when due, when tendered or when required to be purchased (a) other Indebtedness of such Member, or (b) Indebtedness of a Person who is not a Member, which Indebtedness is guaranteed by a Guaranty of such Member or secured by or payable from amounts paid on Indebtedness of such Member, in either case which Indebtedness or Guaranty of such Member was incurred in C-3

296 accordance with the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PERMITTED ADDITIONAL INDEBTEDNESS, and the obligation of any Member to pay interest payable on amounts disbursed for such purposes, plus any fees, costs or expenses payable to such financial institution for, under or in connection with such commitment, in the event of disbursement pursuant to such commitment or in connection with enforcement thereof, including without limitation any penalties payable in the event of such enforcement. Completion Funded Indebtedness means any Funded Indebtedness for borrowed money: (a) incurred for the purpose of financing the completion of the acquisition, construction, remodeling, renovation or equipping of Facilities with respect to which Funded Indebtedness for borrowed money has been incurred in accordance with the provisions of the Master Indenture; and (b) with a principal amount not in excess of the amount which is required to provide a completed and equipped Facility of substantially the same type and scope contemplated at the time such prior Funded Indebtedness was originally incurred, to provide for Funded Interest during the period of construction, to provide any reserve fund relating to such Completion Funded Indebtedness and to pay the costs and expenses of issuing such Completion Funded Indebtedness. Construction Index means the most recent issue of the Dodge Construction Index for U.S. and Canadian Cities with reference to the city in which the subject property is located (or, if such Index is not available for such city, with reference to the city located closest geographically to the city in which the subject property is located), or, if such Index is no longer published or used by the federal government in measuring costs under Medicare or Medicaid programs, such other index which is certified to be comparable and appropriate by the Obligated Group Agent in an Officer s Certificate delivered to the Master Trustee and which other index is not objected to by the Master Trustee. Consultant means a professional consulting, accounting, investment banking or commercial banking firm selected by the Obligated Group Agent in accordance with the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISION OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS, having the skill and experience necessary to render the particular report required and having a favorable reputation for such skill and experience, which firm is not a Member of the Obligated Group, does not control any Member of the Obligated Group or any Affiliate thereof and is not controlled by or under common control with any Member of the Obligated Group or an Affiliate thereof it being understood that an arm s length contract between Greystone Communities, Inc. or its successor or any other firm and any Member for the performance of consulting, accounting, investment banking or financial analysis or other services is not regarded as creating any such disqualifying interest or employee relationship. Continuing Disclosure Agreement means that certain Continuing Disclosure Agreement dated as of May 1, 2010 among the Borrowers and Wells Fargo Bank, N.A., as dissemination agent. Contributions means the aggregate amount of all contributions, grants, gifts, bequests and devises actually received in cash or marketable securities by any Person in the applicable fiscal year of such Person and any such contributions, grants, gifts, bequests and devises originally received in a form other than cash or marketable securities by any Person which are converted in such fiscal year to cash or marketable securities. Contributions shall include payments received from any Affiliate of an Obligated Group Member. Corporation means Timothy Place, NFP d/b/a Park Place of Elmhurst, an Illinois not for profit corporation, and its successors and assigns and any surviving, resulting or transferee corporation. Cumulative Cash Operating Loss means, commencing with the earliest date a resident has taken physical possession of one of the units included in the Series 2010 Project, (a) the sum on a cumulative basis of (i) resident service revenues (excluding amortization of Entrance Fees), (ii) other operating revenues, (iii) nonoperating revenues (including Contributions that are legally available to meet any of the obligations of any Member incurred in the financing, operation, maintenance or repair of any portion of the facilities of any Member and not otherwise included in (i) above), (iv) other operating revenues, (v) Entrance Fees (excluding Initial Entrance Fees), and (iv) investment earnings (including realized gains and losses, but excluding unrealized gains and losses and temporary or other than temporary impairments) minus (b) the sum of (i) Entrance Fees refunded to residents and (ii) the aggregate of all operating expenses, including Debt Service Requirements on Indebtedness, development fees and capital expenditures paid from the Working Capital Fund or the Operating Reserve Fund; excluding (x) C-4

297 depreciation and amortization and other non-cash expenses, (y) letter of credit fees or any remarketing agent fees, if any, which are paid from the proceeds of Series 2010 Bonds and (z) any Funded Interest or expenses which are paid from amounts held under the Bond Indentures. Current Value means (i) with respect to Property, Plant and Equipment: (a) the aggregate fair market value of such Property, Plant and Equipment as reflected in the most recent written report of an appraiser selected by the Obligated Group Agent and not objected to by the Master Trustee and, in the case of real property, who is a member of the American Institute of Real Estate Appraisers (MAI), delivered to the Master Trustee (which report shall be dated not more than three years prior to the date as of which Current Value is to be calculated) increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated, minus the fair market value (as reflected in such most recent appraiser s report) of any Property, Plant and Equipment included in such report but disposed of since the last such report increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated; plus (b) the Book Value of any Property, Plant and Equipment acquired since the last such report increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such acquisition to the date as of which Current Value is to be calculated, minus (c) the Book Value of any such Property, Plant and Equipment acquired since the last such report but disposed of and (ii) with respect to any other Property, the fair market value of such Property, which fair market value shall be evidenced in a manner satisfactory to the Master Trustee. Days Cash on Hand means, as of the date of calculation, the amount determined by dividing (a) the amount of Cash and Investments on such date by (b) the quotient obtained by dividing Expenses (including interest on Indebtedness but excluding provisions for bad debt, amortization, depreciation or any other non-cash expenses) as shown on the most recent annual audited financial statements of the Obligated Group, by 365. Debt Service Requirements means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment or otherwise) and interest on outstanding Funded Indebtedness of each Person or a group of Persons with respect to which calculated; provided that: (a) the amount of such payments for a future period shall be calculated in accordance with the assumptions contained in the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PERMITTED ADDITIONAL INDEBTEDNESS and CALCULATION OF DEBT SERVICE AND DEBT SERVICE COVERAGE ; (b) interest shall be excluded from the determination of the Debt Service Requirements to the extent that Funded Interest is available to pay such interest; (c) principal of Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal; (d) principal of Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent moneys were initially deposited and are on deposit as of the date of calculation in a debt service reserve fund which requires that moneys on deposit in the debt service reserve fund be used to pay a principal payment in the final year of such Indebtedness, and except for the payment to be received from such debt service reserve fund, the Indebtedness would have had approximately level debt service; (e) any annual fees payable in respect of a credit facility issued to secure any series of Related Bonds, if any (other than annual fees to be paid from proceeds of a bond issue escrowed for such purpose) shall be included in the determination of Debt Service Requirements, (f) with respect to any Funded Indebtedness for which the number of actual payments of principal in any Fiscal Year is greater than those in the immediately preceding and/or succeeding Fiscal Years solely by reason of the fact that such principal payments are scheduled to occur other than on a specified date or dates, the first or last principal payment in such Fiscal Year, as the case may be, for which the number of payments is higher shall be deemed to be required to be made in the next preceding or succeeding Fiscal Year, as appropriate, so as to have an equal number of principal payments in each Fiscal Year and (g) all payments due on the Liquidity Support Repayment Obligations and any other Affiliate Related Subordinated Indebtedness shall be excluded from the determination of Debt Service Requirements. Debt Service Reserve Fund Requirement means, with respect to the Series 2010 Tax Exempt Bond Indenture, (a) with respect to the Series 2010A Account of the Debt Service Reserve Fund, initially, $9,762, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount C-5

298 equal to the lesser of (i) $9,762,843.76, (ii) the Maximum Annual Debt Service Requirement during any Fiscal Year on the Series 2010A Bonds then outstanding, (ii) an amount equal to 10% of the outstanding principal amount of the Series 2010A Bonds (determined in accordance with the provisions of U.S. Treasury Regulation Section (b)) or (iii) an amount equal to 125% of the average Annual Debt Service Requirements during any Fiscal Year on the Series 2010A Bonds; (b) with respect to the Series 2010B Account of the Debt Service Reserve Fund, initially, $610, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount equal to the lesser of (i) $610, or (ii) the Maximum Annual Debt Service Requirement with respect to interest only during any Fiscal Year on the Series 2010B Bonds then outstanding; (c) with respect to the Series 2010C Account of the Debt Service Reserve Fund, initially, $375, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount equal to the lesser of (i) $375, or (ii) the Maximum Annual Debt Service Requirement with respect to interest only during any Fiscal Year on the Series 2010C Bonds then outstanding; (d) with respect to the Series 2010D-1 Account of the Debt Service Reserve Fund, initially, $744, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount equal to the lesser of (i) $744, or (ii) the Maximum Annual Debt Service Requirement with respect to interest only during any Fiscal Year on the Series 2010D-1 Bonds then outstanding; (e) with respect to the Series 2010D-2 Account of the Debt Service Reserve Fund, initially, $1,074, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount equal to the lesser of (i) $1,074, or (ii) the Maximum Annual Debt Service Requirement with respect to interest only during any Fiscal Year on the Series 2010D-2 Bonds then outstanding; (f) with respect to the Series 2010D-3 Account of the Debt Service Reserve Fund, initially, $954, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount equal to the lesser of (i) $954, or (ii) the Maximum Annual Debt Service Requirement with respect to interest only during any Fiscal Year on the Series 2010D-3 Bonds then outstanding; provided that in each case the Maximum Annual Debt Service Requirement and the Debt Service Requirement for any of the Series 2010 Tax Exempt Bonds will be calculated in accordance with the provisions of the Master Indenture. Debt Service Reserve Fund Requirement means, with respect to the Series 2010E Bond Indenture, initially, $1,091, and, upon the maturity or redemption (by mandatory Bond Sinking Fund redemptions or otherwise), an amount equal to the lesser of (i) $1,091, or (ii) the Maximum Annual Debt Service Requirement with respect to interest only during any Fiscal Year on the Series 2010E Bonds then outstanding; provided that the Maximum Annual Debt Service Requirement for the Series 2010E Bonds will be calculated in accordance with the provisions of the Master Indenture. Defaulted Interest means interest on any Related Bond of a particular series which is payable but not duly paid on the date due. Development Agreement means the Development Agreement. Greystone Development Agreement and the Providence Development Managers means collectively, Providence Management and Greystone. C-6

299 EMMA means the Electronic Municipal Market Access system as described in the Securities Exchange Act of 1934, as amended by Release No , and maintained by the Municipal Securities Rulemaking Board for purposes of Rule 15c2-12, or any similar system that is acceptable to the Securities and Exchange Commission. DTC means The Depository Trust Company, New York, New York, and its successors and assigns appointed pursuant to the Bond Indentures. DTC Participants means those broker dealers, banks and other financial institutions reflected on the books of DTC. Encumbered means, with respect to Property, subject to a Lien described in the following subparagraphs of the definition of Permitted Encumbrances: (b) other than a Lien securing Non-Recourse Indebtedness, (d) but including only Capitalized Leases, (l)(ii), (s) and (u)(ii), and all other Liens not described in the definition of Permitted Encumbrances; provided that any amounts on deposit in a construction fund created in connection with the issuance of an Obligation which are held as security for the payment of such Obligation or any Indebtedness incurred to purchase such Obligation or the proceeds of which are advanced or otherwise made available in connection with the issuance of such Obligation, shall not be deemed to be Encumbered if the amounts are to be applied to construct or otherwise acquire Property which is not subject to a Lien. Entrance Fees means fees, other than security deposits, monthly rentals or monthly service charges, paid to a Member by residents of living units for the purpose of obtaining the right to reside in those living units or to obtain a parking space including any refundable resident deposits described in any lease, residency agreement or similar agreement with respect to those living units or parking spaces, but shall not include any such amounts held in escrow or otherwise set aside pursuant to the requirements of any such agreement or a reservation agreement prior to the occupancy of the living unit or parking space covered by such lease, residency agreement or similar agreement (which amounts shall be included if and when occupancy occurs). Entrance Fees Fund means the fund created under the Master Indenture and described under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - ENTRANCE FEES FUND in this Appendix C. Escrow Obligations means, (a) with respect to any Obligation which secures a series of Related Bonds, the obligations permitted to be used to refund or advance refund such series of Related Bonds under the Related Bond Indenture, or (b) in all other cases (i) Government Obligations, (ii) obligations of any agency or instrumentality of the United States Government, (iii) certificates of deposit issued by a bank or trust company which are (A) fully insured by the Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Corporation or similar corporation chartered by the United States or (B) secured by a pledge of any United States Government Obligations having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured, which security is held in a custody account by a custodian satisfactory to the Master Trustee, (iv) obligations issued by any state of the United States or any political subdivision, public instrumentality or public authority of any state, which obligations are not callable before the date the principal thereof will be required and which obligations are fully secured by and payable solely from Government Obligations, which securities are held pursuant to an agreement in form and substance not objected to by the Master Trustee, or (v) shares or certificates in any short-term investment fund which is maintained by the Master Trustee or a Related Bond Trustee or any of their affiliates. Excluded Property means (a) any assets of employee pension benefit plans as defined in the Employee Retirement Income Security Act of 1974, as amended, (b) any moneys and securities held as an entrance fee deposit or security deposit, or in a resident trust fund, for any resident of any Facility of a Member prior to such resident s occupancy of any Facility, and (c) the real estate described as Excluded Property in the Master Indenture, as amended as provided in the Master Indenture from time to time, and all improvements, fixtures, tangible personal property and equipment located thereon and used in connection therewith. Expenses means, for any period, the aggregate of all expenses calculated under generally accepted accounting principles, including without limitation any taxes, incurred by the Person or group of Persons involved during such period, minus (a) interest on Funded Indebtedness (taking into account any Interest Rate Agreement as described under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - CALCULATION OF DEBT SERVICE AND DEBT SERVICE COVERAGE ), (b) depreciation and amortization, (c) extraordinary expenses, C-7

300 losses on the sale, disposal or abandonment of assets other than in the ordinary course of business and losses on the extinguishment of debt or termination of pension plans, (d) any expenses resulting from a forgiveness of or the establishment of reserves against Indebtedness of an Affiliate which does not constitute an extraordinary expense, (e) losses resulting from any reappraisal, revaluation or write-down of assets other than bad debts, (f) any losses from the sale or other disposition of fixed or capital assets, (g) any losses resulting from changes in the valuation of investment securities and unrealized changes in the value of derivative instruments or resulting from the temporary impairment of investment securities, (h) any other non-cash expenses, (i) any development, management, marketing, operating or other subordinated fees that have been deferred from the year in which they were originally due as a result of subordination and (j) interest on Affiliate Related Subordinated Indebtedness. If such calculation is being made with respect to the Obligated Group, any such expenses attributable to transactions between any Member and any other Member shall be excluded. Generally, any transfers of cash made pursuant to the provision of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE SALE, LEASE OR OTHER DISPOSITION OF PROPERTY are not included in the definition of Expenses. Extendable Indebtedness means Indebtedness which is repayable or subject to purchase at the option of the holder thereof prior to its stated maturity, but only to the extent of money available for the repayment or purchase therefor and not more frequently than once every year. Facilities means all land, leasehold interests and buildings and all fixtures and equipment (as defined in the Uniform Commercial Code or equivalent statute in effect in the state where such fixtures or equipment are located) of a Person. Facilities shall not include the land, leasehold interests, buildings, fixtures or equipment constituting Excluded Property. Fiscal Year means any 12-month period beginning on January 1 and ending on December 31 of a calendar year or such other consecutive 12-month period selected by the Obligated Group Agent as the fiscal year for the Members. Fitch means Fitch Ratings Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Fitch shall be deemed to refer to any other nationally recognized securities rating agency designated, with respect to the Master Indenture, by the Master Trustee at the written direction of the Obligated Group Agent and, for the purposes of the Series 2010 Bonds the Obligated Group Agent with written notice to the Bond Trustee, the Authority, the Remarketing Agent, and the Borrowers. Foundation means Christian Healthcare Foundation, NFP, doing business as Providence Healthcare Foundation, an Illinois not-for-profit corporation, and its successors and assigns and any surviving, resulting or transferee corporation. Funded Indebtedness means, with respect to any Person, (a) all Indebtedness of such Person for money borrowed, credit extended, incurred or assumed which is not Short-Term; (b) all Short-Term Indebtedness incurred by the Person which is of the type described in subparagraph (D) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PERMITTED ADDITIONAL INDEBTEDNESS ; (c) the Person s Guaranties of Indebtedness which are not Short-Term; and (d) Capitalized Rentals under Capitalized Leases entered into by the Person; provided, however, that (i) Indebtedness that could be described by more than one of the foregoing categories shall not in any case be considered more than once for the purpose of any calculation made pursuant to the Master Indenture and (ii) the Liquidity Support Repayment Obligations and any other Affiliate Related Subordinated Indebtedness shall not be considered Funded Indebtedness. Funded Interest means amounts irrevocably deposited in an escrow or other trust account to pay interest on Funded Indebtedness or Related Bonds and interest earned on amounts irrevocably deposited in an escrow or other trust account, to the extent such amounts so deposited are required to be applied to pay interest on Funded Indebtedness or Related Bonds. Governing Body means the board of directors, the board of trustees or similar group in which the right to exercise the powers of corporate directors or trustees is vested. C-8

301 Government Obligations means, with respect to the Bond Indentures, securities which consist of (a) United States Government Obligations, or (b) evidences of a direct ownership in future interest or principal payments on United States Government Obligations, which obligations are held in a custody account by a custodian satisfactory to the Bond Trustee pursuant to the terms of a custody agreement, and with respect to the Master Indenture, means securities which consist of (a) United States Government Obligations, or (b) evidences of a direct ownership in future interest or principal payments on United States Government Obligations, which obligations are held in a custody account by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian satisfactory to the Master Trustee pursuant to the terms of a custody agreement. Greystone means Greystone Development Company II, LP or any successor thereto. Greystone Development Agreement means the Amended and Restated Development Services Agreement dated January 26, 2006, as amended, between the Corporation and Greystone. Greystone Deferred Development Fee means the obligation of the Corporation to pay $4,000,000 of the Fixed Base Fee due to Greystone pursuant to the terms of the Greystone Development Agreement and the Fifth Amendment thereto upon the satisfaction of the conditions set forth therein and in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PAYMENT OF GREYSTONE DEFERRED DEVELOPMENT FEES. Greystone Development Fees means the fees payable to Greystone under the Greystone Development Agreement, including the Greystone Deferred Development Fee. Gross Revenues means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third-party payments), condemnation awards, Entrance Fees and other moneys received by or on behalf of any Obligated Group Member, including (without limitation) revenues derived from (a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, and (b) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities; provided, however, that there shall be excluded from Gross Revenues (i) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent, (ii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use for payments required under the Master Indenture, (iii) any moneys received by any Obligated Group Member from prospective residents or commercial tenants in order to pay for customized improvements to those Independent Living Units or other areas of the Facilities to be occupied or leased to such residents or tenants, (iv) payments or deposits under a Residency Agreement that by its terms or applicable law are required to be held in escrow or trust for the benefit of a resident until the conditions for the release of such payment or deposit have been satisfied, and (v) all deposits and/or advance payments made in connection with any residency of the Independent Living Units or other areas of the Facilities to be occupied by residents or tenants and received prior to receipt of such certificate and licenses for occupancy of such units. Guaranty means all obligations of a Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any Primary Obligor in any manner, whether directly or indirectly, including but not limited to obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any Property constituting security therefor; (b) to advance or supply funds: (i) for the purchase or payment of such Indebtedness or obligation, or (ii) to maintain working capital or other balance sheet condition; (c) to purchase securities or other Property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the Primary Obligor to make payment of the Indebtedness or obligation; or (d) otherwise to assure the owner of such Indebtedness or obligation against loss in respect thereof. C-9

302 Historical Debt Service Coverage Ratio means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Debt Service Requirements for such period and a denominator of one; provided, however, that in calculating the Debt Service Requirements for such period, the principal amount of any Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in accordance with the provisions of the Master Indenture and to the extent an Interest Rate Agreement has been entered into in connection with any particular indebtedness, the actual debt service paid after the effect of payments made to or received from the provider of the Interest Rate Agreement. Historical Pro Forma Debt Service Coverage Ratio means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Maximum Annual Debt Service Requirement for the Funded Indebtedness then outstanding (other than any Funded Indebtedness being refunded with the Funded Indebtedness then proposed to be issued) and the Funded Indebtedness then proposed to be issued and a denominator of one. Historical Maximum Annual Debt Service Coverage Ratio means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Historical Maximum Annual Debt Service Requirements on the Indebtedness of the Person or Persons involved during any completed period and a denominator of one; provided, however, that in calculating the Debt Service Requirements for any completed period, the principal amount of any Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in accordance with the provisions of the Master Indenture, and to the extent an Interest Rate Agreement has been entered into in connection with any particular indebtedness, the actual debt service paid after the effect of payments made to or received from the provider of the Interest Rate Agreement. Historical Maximum Annual Debt Service Requirements means the largest total Debt Service Requirements for the Fiscal Year with respect to which an Historical Maximum Annual Debt Service Coverage Ratio is being calculated or any subsequent Fiscal Year on the Indebtedness of the Person or Persons involved which was simultaneously outstanding during the Fiscal Year with respect to which an Historical Maximum Annual Debt Service Coverage Ratio is being calculated. Immediate Notice means notice by telephone, telex, telecopier or electronic mail to such address as the addressee shall have directed in writing, promptly followed by written notice by first class mail, postage prepaid; provided, however, that if any Person required to give an Immediate Notice shall not have been provided with the necessary information as to the telephone, telex, telecopier number or electronic mail address of an addressee, Immediate Notice shall mean written notice by first class mail, postage prepaid. Income Available for Debt Service means for any period, the excess of Revenues over Expenses of the Person or group of Persons involved. Indebtedness means, for any Person, (a) all Guaranties by such Person, (b) all liabilities (exclusive of reserves such as those established for deferred taxes or litigation) recorded or required to be recorded as such on the audited financial statements of such Person in accordance with generally accepted accounting principles, and (c) all obligations for the payment of money incurred or assumed by such Person (i) due and payable in all events or (ii) if incurred or assumed primarily to assure the repayment of money borrowed or credit extended, due and payable upon the occurrence of a condition precedent or upon the performance of work, possession of Property as lessee, rendering of services by others or otherwise; provided that Indebtedness shall not include Indebtedness of one Member to another Member, any Guaranty by any Member of Indebtedness of any other Member, the joint and several liability of any Member on Indebtedness issued by another Member, Interest Rate Agreements or any obligation to repay moneys deposited by patients or others with a Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, elderly housing or similar facilities to Entrance Fees (whether amortized into income or not), endowment or similar funds deposited by or on behalf of such residents including but not limited to any deferred obligations for the refund or repayment of Entrance Fees, any rent, development, marketing, operating or other fees that have been deferred from the year in which they were originally due as a result of deferral or subordination. 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303 Independent Architect means an architect, engineer or firm of architects or engineers selected by the Corporation, acceptable to the Authority and licensed by, or permitted to practice in, the state where the construction involved is located, which architect, engineer or firm of architects or engineers shall have no interest, direct or indirect, in any member of the Obligated Group or any Affiliate thereof and, in the case of an individual, shall not be a partner, member, director, officer, controlling shareholder or employee of any member of the Obligated Group or any Affiliate thereof and, in the case of a firm, shall not have a partner, member, director, officer or employee who is a partner, member, director, officer, controlling shareholder or employee of any member of the Obligated Group or any Affiliate thereof; it being understood that an arm s-length contract with a member of the Obligated Group for the performance of architectural or engineering services shall not in and of itself be regarded as creating an interest in or an employee relationship with such entity and that the term Independent Architect may include an architect or engineer or a firm of architects or engineers who otherwise meet the requirements of this definition and who also are under contract to construct the facility which they have designed. Independent Counsel means an attorney duly admitted to practice law before the highest court of any state and, without limitation, may include independent legal counsel, with respect to the Master Indenture, for any Related Issuer, any Member, the Master Trustee or any Related Bond Trustee, and, with respect to the Bond Indentures, the Authority, the Borrowers, any other Member of the Obligated Group, the Bond Trustee, the Master Trustee, or the Remarketing Agent. Independent Living Units means the newly constructed independent living units (excluding units designated catered living units which have reduced Entrance Fee levels) that are part of the Series 2010 Project. Initial Entrance Fees means Entrance Fees received upon the initial occupancy of any Independent Living Unit (including any such fees collected for the purpose of obtaining a parking space) not previously occupied. Initial Interest Rate means the interest rates applicable to the Series 2010C Bonds in effect from the Closing Date to the Initial Rate Change Date, as said rate is set forth in the Series 2010 Tax Exempt Bond Indenture. Initial Manager means Providence Management. Initial Purchaser means B.C. Ziegler and Company d/b/a Ziegler Capital Markets, as initial purchaser of the Bonds. Initial Rate Change Date means November 15, 2016 with respect to the Series 2010C Bonds. Initial Testing Date means the earlier of (a) the last day of the first full Fiscal Year after Stable Occupancy for the Series 2010 Project has been achieved, or (b) December 31, Insurance Consultant means a person or firm who in the case of an individual is not an employee or officer of any Member or any Related Issuer and which, in the case of a firm, does not control any Member of the Obligated Group or any Affiliate thereof and is not controlled by or under common control with any Member of the Obligated Group or an Affiliate thereof, appointed by the Obligated Group Agent and not objected to by the Master Trustee, qualified to survey risks and to recommend insurance coverage for nursing homes or health care facilities and services of the type involved, and having a favorable reputation for skill and experience in such surveys and such recommendations, and which may include a broker or agent with whom any Member transacts business. Interest Payment Date means (i) for the Series 2010 Fixed Rate Bonds, each May 15 and November 15, commencing November 15, 2010, (ii) the maturity date for each Series 2010D Bond, (iii) each mandatory tender date for the Series 2010C Bonds pursuant to the Series 2010 Tax Exempt Bond Indenture; (iv) with respect to Series 2010C Bonds, each Adjustable Long-Term Interest Payment Date; and (v) the redemption date for each Series 2010C Bond. In each case, if any date so specified is not a Business Day, the Interest Payment Date shall be the immediately following Business Day. Interest Rate Agreement means an interest rate exchange, hedge or similar agreement, expressly identified in an Officer s Certificate of the Obligated Group Agent delivered to the Master Trustee as being entered into in order to hedge the interest payable on all or a portion of any Indebtedness, which agreement may include, C-11

304 without limitation, an interest rate swap, a forward or futures contract or an option (e.g. a call, put, cap, floor or collar) and which agreement does not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof. An Interest Rate Agreement shall not constitute Indebtedness under the Master Indenture. Land means the real Property owned or leased by the Obligated Group upon which the primary operations of the Members are conducted as described in the Master Indenture, as amended as provided therein from time to time, together with all buildings, improvements and fixtures located thereon, but excluding therefrom the Excluded Property. Lien means any mortgage, pledge or lease of, security interest in or lien, charge, restriction or encumbrance on any Property of the Person involved in favor of, or which secures any obligation to, any Person other than any Member, and any Capitalized Lease under which any Member is lessee and the lessor is not another Member. Liquidity Provider means Providence Development, as the provider of the liquidity support under the Liquidity Support Agreement. Liquidity Requirement has the meaning set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE LIQUIDITY COVENANT in this Appendix C. Liquidity Support Agreement means that Liquidity Support Agreement dated as of May 1, 2010 among the Corporation, the Foundation, the Master Trustee, the Bond Trustee and Providence Development. Liquidity Support Funds means the Providence Liquidity Support Fund, the Special Liquidity Support Fund and the Supplemental Liquidity Support Fund. Liquidity Support Repayment Obligations means the Providence Development Subordinated Debt. Loan Agreements means, collectively, the Series 2010 Tax Exempt Loan Agreement and the Series 2010E Loan Agreement. Long-Term Indebtedness means Indebtedness (which also may constitute Balloon Indebtedness or Put Indebtedness) having an original stated maturity or term greater than one year or renewable at the option of the debtor for a period greater than one year from the date of original issuance. Management Agreement means the Management Agreement dated as of October 27, 2009 between the Corporation, the Foundation and Providence Management. Management Fees means all fees payable to a manager of the Series 2010 Project or any other continuing care retirement or senior living community owned by the Corporation for services performed for managing the dayto-day operations of such community. Marketing Requirements has the meaning described under the heading SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - MARKETING AND OCCUPANCY COVENANTS - Marketing Covenant in this Appendix C. Master Indenture means the Master Trust Indenture dated as of May 1, 2010 among the Corporation, the Foundation and the Master Trustee, as it may from time to time be amended or supplemented in accordance with the terms thereof. Master Trustee means Wells Fargo Bank, N.A., its successors and assigns, or any successor trustee under the Master Indenture. Maximum Annual Debt Service Requirement means the largest total Debt Service Requirements for the current or any succeeding Fiscal Year. C-12

305 Maximum Rate means, with respect to Series 2010C Bonds, the lesser of (a) 15% per annum or (b) the maximum interest rate permitted by then applicable Illinois law. Member or Member of the Obligated Group means any Person who is listed in the Master Indenture after designation as a Member of the Obligated Group pursuant to the terms of the Master Indenture. Moody s means Moody s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Moody s shall be deemed to refer to any other nationally recognized securities rating agency designated by, for purposes of the Master Indenture, the Master Trustee at the written direction of the Obligated Group Agent or, for purposes of the Series 2010 Fixed Rate Bonds and the Series 2010C Bonds, the Obligated Group Agent by notice to the Bond Trustee, the Authority, the Borrowers and the Remarketing Agent. Mortgage means the Mortgage and Security Agreement between the Corporation, as mortgagor, and the Master Trustee, as mortgagee, dated as of May 1, 2010, as the same may be supplemented and amended from time to time. Mortgaged Property means the real property and personal property of the Corporation which is subject to the Lien and security interest of the Mortgage. Net Proceeds means, when used with respect to any insurance or condemnation award or sale consummated under threat of condemnation, the gross proceeds from the insurance or condemnation award or sale with respect to which that term is used less all expenses (including attorney s fees, adjuster s fees and any expenses of the Obligated Group or the Master Trustee) incurred in the collection of such gross proceeds. Net Rentals means all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the Property other than upon termination of the lease for a default thereunder) payable under a lease or sublease of real or personal Property excluding any amounts required to be paid by the lessee (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Net Rentals for any future period under any so-called percentage lease shall be computed on the basis of the amount reasonably estimated to be payable thereunder for such period, but in any event not less than the amount paid or payable thereunder during the immediately preceding period of the same duration as such future period; provided that the amount estimated to be payable under any such percentage lease shall in all cases recognize any change in the applicable percentage called for by the terms of such lease. Non-Recourse Indebtedness means any Indebtedness the liability for which is effectively limited to Property, Plant and Equipment (other than the Land) and the income therefrom, with no recourse, directly or indirectly, to any other Property of any Member. Obligated Group means the Corporation, the Foundation and any other Person which has fulfilled the requirements for entry into the Obligated Group set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - ENTRANCE INTO THE OBLIGATED GROUP and which has not ceased such status pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - CESSATION OF STATUS AS A MEMBER OF THE OBLIGATED GROUP. Obligated Group Agent means the Corporation or such other Member as may be designated from time to time pursuant to written notice to the Master Trustee, and the Authority (in the case of the Bond Indentures) executed by the President or Chairman of the Governing Body of the Corporation or, if the Corporation is no longer a Member of the Obligated Group, of each Member of the Obligated Group. Obligation Holder, holder or owner of the Obligation means the registered owner of any fully registered or book entry Obligation unless alternative provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued for establishing ownership of such Obligation in which case such alternative provision shall control. C-13

306 Obligations means the Series 2010 Obligations and any Additional Obligations and any Obligation or Obligations issued in exchange therefor. Occupancy Certificate means the initial, temporary or final certificate of occupancy issued by the appropriate governmental entities having jurisdiction over the Series 2010 Project permitting occupancy of the Series 2010 Project. Occupancy Requirements has the meaning described under the heading SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - MARKETING AND OCCUPANCY COVENANTS - Occupancy Covenant in this Appendix C. Occupied means (i) with respect to any Independent Living Unit, any unit for which a Residency Agreement has been executed, and related Entrance Fee has been paid or a promissory note for such Entrance Fee has been executed and the occupant of such Independent Living Unit continues to reside therein or (ii) with respect to any other type of unit/bed, physical possession of such unit/bed by a resident (other than a resident temporarily transferred from another unit/bed within the community). If two or more units have been combined into a single unit, all such units shall continue to be considered separate units for the purpose of calculating the percentage of units occupied. Officer s Certificate means, with respect to the Master Indenture, a certificate signed, in the case of a certificate delivered by a Member of the Obligated Group, by the President, any Vice President, Executive Director, Chief Financial Officer or any other officer or agent authorized to sign by resolution of the Governing Body of any Member of the Obligated Group or in the case of a certificate delivered by any other organization, by the President, any Vice President, the Executive Director, Director of Finance or any other officer or agent authorized to sign by resolution of the Governing Body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive or chief financial officer of such other Person, in either case whose authority to execute such certificate shall be evidenced to the satisfaction of the Master Trustee and, with respect to the Bond Indentures, a certificate signed, in the case of a certificate delivered by a corporation, by the President, any Vice-President or any other officer or agent authorized to sign by resolution of the Governing Body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive or chief financial officer of such other Person, in either case whose authority to execute such Certificate shall be evidenced to the satisfaction of the Bond Trustee. Official Statement means this Official Statement prepared in connection with the issuance and sale of the Series 2010 Bonds. Opinion of Bond Counsel, with respect to the Master Indenture, means a written opinion of nationally recognized municipal bond counsel, which opinion, including the scope, form, substance and other aspects thereof, is not objected to by the Master Trustee, and which opinion may be based upon a ruling or rulings of the Internal Revenue Service, and with respect to the Bond Indentures, means a written opinion of Bond Counsel in form and substance acceptable to the Authority and the Bond Trustee (which opinion may be based on a ruling or rulings of the Internal Revenue Service). Optional Tender Date means, with respect to the Series 2010C Bonds, each Rate Change Date. Outstanding means, with respect to the Master Indenture, in the case of Indebtedness of a Person other than Related Bonds or Obligations, all such Indebtedness of such Person which has been issued except any such portion thereof canceled after purchase or surrendered for cancellation or because of payment at or redemption prior to maturity, any such Indebtedness in lieu of which other Indebtedness has been duly incurred and any such Indebtedness which is no longer deemed outstanding under its terms and with respect to which such Person is no longer liable under the terms of such Indebtedness. Outstanding Bonds, Outstanding Series 2010 Bonds or Bonds outstanding means, as of any given date, all Series 2010 Bonds which have been duly authenticated and delivered by the Bond Trustee under the Bond Indentures, except: (a) Series 2010 Bonds canceled after purchase thereof in the open market or because of payment at or redemption prior to maturity; C-14

307 (b) Series 2010 Bonds for the payment or redemption of which cash or noncallable Government Obligations or both shall have been theretofore deposited with the Bond Trustee (whether upon or prior to the maturity or redemption date of any such Series 2010 Bonds) in accordance with the Bond Indentures; provided that if such Series 2010 Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Bond Trustee shall have been filed with the Bond Trustee; (c) Indentures; and Series 2010 Bonds in lieu of which others have been authenticated under the Bond (d) For the purpose of determining whether the owners of a requisite aggregate principal amount of outstanding Series 2010 Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions of the Bond Indentures, Series 2010 Bonds which are owned or held by a Member. In determining whether a Bond is held by a Member, only Bonds (i) which are registered in the name of a Member (or with respect to which a Member is the beneficial owner) or (ii) which the Bond Trustee knows to be so owned shall be treated as Bonds owned by a Member; Outstanding Obligations or Obligations outstanding means all Obligations which have been duly authenticated and delivered by the Master Trustee under the Master Indenture, except: (a) Obligations canceled after purchase or because of payment at or prepayment or redemption prior to maturity; (b) (i) Obligations for the payment or redemption of which cash or Escrow Obligations shall have been theretofore deposited with the Master Trustee (whether upon or prior to the maturity or redemption date of any such Obligations); provided that if such Obligations are to be prepaid or redeemed prior to the maturity thereof, notice of such prepayment or redemption shall have been given or irrevocable arrangements satisfactory to the Master Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Master Trustee shall have been filed with the Master Trustee and (ii) Obligations securing Related Bonds for the payment or redemption of which cash or Escrow Obligations shall have been theretofore deposited with the Related Bond Trustee (whether upon or prior to the maturity or redemption date of any such Related Bonds); provided that if such Obligations are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Related Bond Trustee shall have been made therefor, or waiver of notice satisfactory in form to the Related Bond Trustee shall have been filed with the Related Bond Trustee; and (c) (d) Obligations in lieu of which others have been authenticated under the Master Indenture; Obligations held by a Member. Notwithstanding the foregoing, any Obligation securing Related Bonds shall be deemed Outstanding if such Related Bonds are Outstanding. Outstanding Related Bonds or Related Bonds outstanding means all Related Bonds which have been duly authenticated and delivered by the Related Bond Trustee under the Related Bond Indenture and are deemed outstanding under the terms of such Related Bond Indenture or, if such Related Bond Indenture does not specify when Related Bonds are deemed outstanding thereunder, all such Related Bonds which have been so authenticated and delivered, except: (a) Related Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity; (b) Related Bonds for the payment or redemption of which cash or Escrow Obligations of the type described in clause (b)(i) of the definition thereof shall have been theretofore deposited with the Related Bond Trustee (whether upon or prior to the maturity or redemption date of any such Bonds) in C-15

308 accordance with the Related Bond Indenture; provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Related Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Related Bond Trustee shall have been filed with the Related Bond Trustee; (c) Indenture; and Related Bonds in lieu of which others have been authenticated under the Related Bond (d) For the purposes of all covenants, approvals, waivers and notices required to be obtained or given under the Related Bond Indenture, Related Bonds held or owned by a Member. Paying Agent means, with respect to the Master Indenture, the bank or banks, if any, designated pursuant to a Related Bond Indenture to receive and disburse the principal of and interest on any Related Bonds or designated pursuant to the Master Indenture and named in an Obligation to receive and disburse the principal of and interest on such Obligation, and with respect to the Bond Indentures, means the bank or banks, if any, designated pursuant to the Bond Indentures to receive and disburse the principal of and interest on the Series 2010 Bonds. The Paying Agent is, initially, the Bond Trustee. Permitted Encumbrances means the Master Indenture, any Related Loan Document, any Related Bond Indenture and, as of any particular time: (a) Liens arising by reason of good faith deposits with a Member in connection with tenders, leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Member to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges; any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Member to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workers compensation, unemployment insurance, pensions or profit sharing plans or other social security plans or programs, or to share in the privileges or benefits required for corporations participating in such arrangements; (b) any Lien on the Property of any Member permitted under the provisions of the Master Indenture summarized under the heading SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE LIENS ON PROPERTY; (c) the Mortgage and any other security agreement or document securing the Master Trustee in connection with the issuance of the Series 2010 Bonds, and any other Lien on Property if such Lien equally and ratably secures all of the Obligations and only the Obligations; (d) Residency Agreements and leases which relate to Property of the Obligated Group which is of a type that is customarily the subject of such leases, such as office space for physicians and educational institutions, food service facilities, gift shops, commercial, beauty shop, banking, parking for residents, other similar specialty services, pharmacy and similar departments or employee rental apartments; sale/saleback or lease/leaseback or similar arrangements in connection with the issuance of Related Bonds; and any leases, licenses or similar rights to use Property whereunder a Member is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would obtain in a comparable arm s-length transaction; (e) Liens for taxes and special assessments which are not then delinquent, or if then delinquent are being contested in accordance with the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE COVENANTS AS TO CORPORATE EXISTENCE, MAINTENANCE OF PROPERTIES, AND SIMILAR MATTERS; RIGHT OF CONTEST; (f) utility, access and other easements and rights-of-way, restrictions, encumbrances and exceptions which do not materially interfere with or materially impair the operation of the Property affected C-16

309 thereby (or, if such Property is not being then operated, the operation for which it was designed or last modified); (g) any mechanic s, laborer s, materialman s, supplier s or vendor s Lien or right in respect thereof if payment is not yet due under the contract in question or has been due for less than 60 days, or if such Lien is being contested in accordance with the provisions of the Master Indenture; (h) such Liens, defects, irregularities of title and encroachments on adjoining property as normally exist with respect to property similar in character to the Property involved and which do not materially adversely affect the value of, or materially impair, the Property affected thereby for the purpose for which it was acquired or is held by the owner thereof, including without limitation statutory liens granted to banks or other financial institutions, which liens have not been specifically granted to secure Indebtedness and which do not apply to Property which has been deposited as part of a plan to secure Indebtedness; (i) thereby; zoning laws and similar restrictions which are not violated by the Property affected (j) statutory rights under Section 291, Title 42 of the United States Code, as a result of what are commonly known as Hill-Burton grants, and similar rights under other federal statutes or statutes of the state in which the Property involved is located; (k) all right, title and interest of the state where the Property involved is located, municipalities and the public in and to tunnels, bridges and passageways over, under or upon a public way; (l) Liens on or in Property given, granted, bequeathed or devised by the owner thereof existing at the time of such gift, grant, bequest or devise, provided that (i) such Liens consist solely of restrictions on the use thereof or the income therefrom, or (ii) such Liens secure Indebtedness which is not assumed by any Member and such Liens attach solely to the Property (including the income therefrom) which is the subject of such gift, grant, bequest or devise; (m) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which any Member shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall be in existence; (n) Liens on moneys deposited by residents or others with a Member as security for or as prepayment of the cost of resident or patient care or any rights of residents of life care, elderly housing or similar facilities to endowment, prepayment or similar funds deposited by or on behalf of such residents; (o) Liens on Excluded Property; (p) Liens on Property due to rights of third party payors for recoupment of excess reimbursement paid; (q) any security interest in the Rebate Fund, any depreciation reserve, debt service or interest reserve, debt service, construction fund or any similar fund established pursuant to the terms of any Supplemental Master Indenture, Related Bond Indenture or Related Loan Document in favor of the Master Trustee, a Related Bond Trustee, a Related Issuer or the holder of the Indebtedness issued pursuant to such Supplemental Master Indenture, Related Bond Indenture or Related Loan Document or the holder of any related Commitment Indebtedness; (r) any Lien on any Related Bond or any evidence of Indebtedness of any Member acquired by or on behalf of any Member which secures Commitment Indebtedness and only Commitment Indebtedness; C-17

310 (s) any Lien on Property acquired by a Member which Lien secures Indebtedness issued, incurred or assumed by any Member, in connection with and to effect such acquisition or existing Indebtedness which will remain outstanding after such acquisition which Lien encumbers Property other than Land, if in any such case the aggregate principal amount of such Indebtedness does not exceed the fair market value subject to such Lien as determined in good faith by the Governing Body of the Member; (t) Liens on accounts receivable arising as a result of the sale of such accounts receivable with or without recourse, provided that the principal amount of Indebtedness secured by any such Lien does not exceed the face amount of such accounts receivable sold; (u) such Liens, covenants, conditions and restrictions, if any, which do not secure Indebtedness and which are other than those of the type referred to above, as are set forth in the Master Indenture, and which (i) in the case of Property owned by the Obligated Group on the date of execution of the Master Indenture, do not and will not, so far as can reasonably be foreseen, materially adversely affect the value of the Property currently affected thereby or materially impair the same, and (ii) in the case of any other Property, do not materially impair or materially interfere with the operation or usefulness thereof for the purpose for which such Property was acquired or is held by a Member; (v) any Lien to which the Property of a Member is subject at the time it becomes a Member, provided that at the time of becoming a Member, (i) the principal amount of the debt the Lien secures is not more than 80% of the Current Value of the Property subject to the Lien, (ii) the Obligated Group Agent shall deliver to the Master Trustee an Officer s Certificate that, after giving effect thereto, the aggregate amount of the Indebtedness secured by such Lien and by all other Liens permitted by this clause (d), does not exceed 30% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group, (iii) the requirements summarized in subparagraph (c) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ENTRANCE INTO THE OBLIGATED GROUP have been met, (iv) no Lien so described may be modified to apply to any Property of any Member not subject to such Lien on the date of such Member s joining the Obligated Group, (v) no Additional Indebtedness may be thereafter incurred which is secured by such Lien and (vi) no Lien so described may be extended or replaced by another Lien; (w) Liens on funds or securities posted in a collateral account held by a counterparty to an Interest Rate Agreement, or by a third party custodian therefore; (x) Liens securing Indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such Liens; provided that such Liens shall not apply to any Property theretofore owned by an Obligated Group Member other than any theretofore unimproved real property on which the Property so constructed or improved is located; (y) security interests in the accounts (and proceeds thereof), as defined in Article 9 of the Illinois Uniform Commercial Code as now or hereafter in effect, of any Member which may be prior to, on a parity with or subordinate to the security interest in those accounts and proceeds created by the Master Indenture, securing Short-Term Indebtedness provided that at the time of the creation of any such security interest the Current Value of such accounts, together with the Current Value of all other Property subject to Liens classified as Permitted Encumbrances under subparagraph (2) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE LIENS ON PROPERTY, shall not exceed 15% of the Revenues as reflected in the Financial Statements of the Obligated Group; and (z) the items set forth on Schedule B to the title insurance policy delivered in connection with the issuance of the Series 2010 Bonds and attached as Exhibit G to the Master Indenture. Permitted Investments means and includes any of the following: (a) Government Obligations; C-18

311 (b) debt obligations which are (i) at the time of purchase, issued by any state or political subdivision thereof or any agency or instrumentality of such state or political subdivision, and (ii) at the time of purchase, rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency; (c) any bond, debenture, note, participation certificate or other similar obligation issued by a government sponsored agency (such as the Federal National Mortgage Association, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal Farm Credit Bank or the Student Loan Marketing Association) which is either (i) rated in the highest rating category by any Rating Agency, or (ii) backed by the full faith and credit of the United States of America; (d) U.S. denominated deposit account, certificates of deposit and banker s acceptances of any bank, trust company, or savings and loan association, including the Master Trustee or its affiliates, which have a rating on their short-term certificates of deposit on the date of purchase in one of the two highest short-term rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which mature not more than 360 days after the date of purchase; (e) commercial paper which is rated at the time of purchase in one of the two highest shortterm rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which matures not more than 270 days after the date of purchase; (f) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by a corporation which are, at the time of purchase, rated by any Rating Agency in any of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise); (g) investment agreements with banks that at the time such agreement is executed are rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency or investment agreements with nonbank financial institutions, provided that (1) all of the unsecured, direct long-term debt of either the nonbank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency at the time such agreement is executed in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for obligations of that nature; or (2) if such non-bank financial institution and any related guarantor have no outstanding long-term debt that is rated, all of the short-term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency in one of the two highest rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) assigned to short term indebtedness by any Rating Agency. If such non-bank financial institution and any guarantor do not have any short-term or long-term debt, but do have a rating in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise), then investment agreements with such non-bank financial institutions will be permitted; (h) repurchase agreements with respect to and secured by Government Obligations or by obligations described in clause (b) and (c) above, which agreements may be entered into with a bank (including without limitation the Related Bond Trustee or the Master Trustee or any of their affiliates), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Master Trustee or a custodial agent of the Master Trustee has possession of the collateral and that the collateral is, to the knowledge of the Master Trustee, free and clear of third-party claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are valued no less frequently than monthly, and (iv) the fair market value of the collateral securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%, and (v) such obligations must be held in the custody of the Master Trustee or Master Trustee s agent; C-19

312 (i) investments in a money market fund, which may be funds of the Related Bond Trustee or the Master Trustee or an affiliate thereof, rated (at the time of purchase) in the highest rating category for this type of investment by any Rating Agency; and (j) shares in any investment company, money market mutual fund, fixed income mutual fund, Exchange Traded Fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and the majority of whose investments consist solely of Permitted Investments as defined in paragraphs (a) through (i) above, including money market mutual funds from which the Master Trustee, Related Bond Trustee or its affiliates derive a fee for investment advisory or other services to the fund. The Related Bond Trustee and the Master Trustee shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter, absent receipt of written notice or information to the contrary. For the purposes of this definition, obligations issued or held in the name of the Related Bond Trustee or the Master Trustee (or in the name of the Related Issuer and payable to the Related Bond Trustee or the Master Trustee) in book-entry form on the books of the Department of Treasury of the United States shall be deemed to be deposited with the Related Bond Trustee or the Master Trustee, as applicable. Person means any natural person, firm, joint venture, association, partnership, business trust, corporation, limited liability company, public body, agency or political subdivision thereof or any other similar entity. Primary Obligor means the Person who is primarily obligated on an obligation which is guaranteed by another person. Project means the acquisition, construction, renovation, remodeling and equipping of certain facilities of the Borrowers financed with the proceeds of the Series 2010 Bonds. Projected Debt Service Coverage Ratio means, for any future period, the ratio consisting of a numerator equal to the amount determined by dividing the projected Income Available for Debt Service for that period by the Maximum Annual Debt Service Requirement for the Funded Indebtedness expected to be outstanding during such period and a denominator of one. Projected Rate means the projected yield at par of an obligation as set forth in the report of a Consultant (which Consultant and report are not objected to by the Master Trustee). Such report shall state that in determining the Projected Rate such Consultant reviewed the yield evaluations at par of no fewer than three obligations selected by such Consultant, the interest on which is entitled to the exemption from federal income tax afforded by Section 103(a) of the Code or any successor thereto (or, if it is not expected that it will be reasonably possible to issue such tax-exempt obligations, then obligations the interest on which is subject to federal income taxation) which obligations such Consultant states in its report are reasonable comparators for utilizing in developing such Projected Rate and which obligations: (i) were outstanding on a date selected by the Consultant which date so selected occurred during the 90-day period preceding the date of the calculation utilizing the Projected Rate in question, (ii) to the extent practicable, are obligations of Persons engaged in operations similar to those of the Obligated Group and having a credit rating similar to that of the Obligated Group, (iii) are not entitled to the benefits of any credit enhancement including without limitation any letter or line of credit or insurance policy, and (iv) to the extent practicable, have a remaining term and amortization schedule substantially the same as the obligation with respect to which such Projected Rate is being developed. Property means any and all rights, titles and interests in and to any and all property, whether real or personal, tangible (including cash) or intangible, wherever situated and whether now owned or hereafter acquired, other than Excluded Property. Property, Plant and Equipment means all Property of each Member which is classified as property, plant and equipment under generally accepted accounting principles. C-20

313 Providence means Rest Haven Illiana Christian Convalescent Home, doing business as Providence Life Services, an Illinois not for profit corporation, and its successors or assigns. Providence Development means Providence Development Group, LLC, and its successors or assigns. Providence Management means Providence Management and Development Company Incorporated or any successor thereto. Providence Development Agreement means the Development Services Agreement between the Corporation and Providence Management Company dated as of December 15, 2005, as amended. Providence Development Subordinated Debt means the Corporation s obligation to repay Providence Development for any draws on the Providence Liquidity Support Fund as set forth in the Liquidity Support Agreement. Providence Liquidity Support Fund means the fund created under the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PROVIDENCE LIQUIDITY SUPPORT FUND. Purchase Contract means the Bond Purchase Agreement dated the date of its execution and delivery, among the Initial Purchaser, the Borrowers and the Authority providing for the sale of the Series 2010 Bonds. Purchase Price means the price at which Series 2010C Bonds are to be purchased on any mandatory tender date or Optional Tender Date which shall, in each case, be an amount equal to the principal amount of the Series 2010C Bonds plus, for any purchase on an Optional Tender Date that is not an Interest Payment Date, interest accrued but not paid thereon to, but not after, such Tender Date. Put Date means (a) any date on which an owner of Put Indebtedness may elect to have such Put Indebtedness paid, purchased or redeemed by or on behalf of the underlying obligor prior to its stated maturity date or (b) any date on which Put Indebtedness is required to be paid, purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default. Put Indebtedness means Indebtedness which is (a) payable or required to be purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner thereof, prior to its stated maturity date or (b) payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund, other than by reason of an event of taxability with respect to any Related Bond or other than by reason of acceleration upon the occurrence of an event of default. Qualified Investments means dollar denominated investments in any of the following: (a) Government Obligations; (b) debt obligations which are (i) issued by any state or political subdivision thereof or any agency or instrumentality of such state or political subdivision, and (ii) at the time of purchase, rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency; (c) any bond, debenture, note, participation certificate or other similar obligation issued by a government sponsored agency (such as the Federal National Mortgage Association, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal Farm Credit Bank or the Student Loan Marketing Association) which is either (i) at the time of purchase, rated in the highest rating category by any Rating Agency, or (ii) backed by the full faith and credit of the United States of America; C-21

314 (d) U.S. denominated deposit account, certificates of deposit and banker s acceptances of any bank, trust company, or savings and loan association, including the Master Trustee or Bond Trustee or its affiliates, which at the time of purchase have a rating on their short-term certificates of deposit on the date of purchase in one of the two highest short-term rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which mature not more than 360 days after the date of purchase; (e) commercial paper which is rated at the time of purchase in one of the two highest shortterm rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which matures not more than 270 days after the date of purchase; (f) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by a corporation which are, at the time of purchase, rated by any Rating Agency in any of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise); (g) investment agreements with banks (including, without limitation, the Bond Trustee or the Master Trustee) that at the time such agreement is executed are rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency or investment agreements with non-bank financial institutions, provided that (1) all of the unsecured, direct long-term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency at the time such agreement is executed in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for obligations of that nature; or (2) if such non-bank financial institution and any related guarantor have no outstanding long-term debt that is rated, all of the short-term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency in one of the two highest rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) assigned to short term indebtedness by any Rating Agency. If such non-bank financial institution and any guarantor do not have any short-term or long-term debt, but do have a rating in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise), then investment agreements with such non-bank financial institutions will be permitted; (h) repurchase agreements with respect to and secured by Government Obligations or by obligations described in clause (b) and (c) above, which agreements may be entered into with a bank (including without limitation the Bond Trustee or the Master Trustee), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Bond Trustee or a custodial agent of the Bond Trustee has possession of the collateral and that the collateral is, to the knowledge of the Bond Trustee, free and clear of third-party claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are valued no less frequently than monthly, and (iv) the fair market value of the collateral securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%, and (v) such obligations must be held in the custody of the Bond Trustee, Bond Trustee s Agent, Master Trustee or Master Trustee s Agent; (i) investments in a money market fund, which may be funds of the Bond Trustee or an affiliate of the Bond Trustee, rated (at the time of purchase) in the highest rating category for this type of investment by any Rating Agency; and (j) shares in any investment company, money market mutual fund, fixed income mutual fund, Exchange Traded Fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and the majority of whose investments consist solely of Qualified Investments as defined in paragraphs (a) through (i) above, including money market mutual funds from which the Master Trustee, Bond Trustee or its affiliates derive a fee for investment advisory or other services to the fund. C-22

315 The Bond Trustee shall be entitled to assume that any investment which at the time of purchase is a Qualified Investment remains a Qualified Investment thereafter, absent receipt of written notice or information to the contrary. For the purposes of this definition, obligations issued or held in the name of the Bond Trustee (or in the name of the Authority and payable to the Bond Trustee) in book-entry form on the books of the Department of Treasury of the United States shall be deemed to be deposited with the Bond Trustee. Rate Change Date means, with respect to the Series 2010C Bonds, the Initial Rate Change Date and each November 15 thereafter pursuant to the Series 2010 Tax Exempt Bond Indenture. Rating Agency means Moody s, Standard & Poor s or Fitch, and their respective successors and assigns. Rebate Fund means, with respect to the Master Indenture, any Rebate Fund created by a Related Bond Indenture, and, with respect to the Series 2010 Tax Exempt Bond Indenture, the fund created by the Tax Exemption Agreement to comply with Section 148(f) of the Code. Record Date means the May 1 or November 1 (whether or not a Business Day) next preceding an Interest Payment Date; provided, however, that the Record Date with respect to any maturity date is the first day of the month (whether or not a Business Day) next preceding such maturity date. Related Bond Indenture means the Series 2010 Tax Exempt Bond Indenture, the Series 2010E Bond Indenture, and any indenture, bond resolution or similar instrument pursuant to which any series of Related Bonds is issued. Related Bond Trustee means the Series 2010 Tax Exempt Bond Trustee, the Series 2010E Bond Trustee, and any other trustee under any Related Bond Indenture and any successor trustee thereunder or, if no trustee is appointed under a Related Bond Indenture, the Related Issuer. Related Bonds means the Series 2010 Bonds and any other revenue bonds or similar obligations the proceeds of which are loaned or otherwise made available to any Member in consideration, whether in whole or in part, of the execution, authentication and delivery of an Obligation or Obligations. Related Issuer means the Authority and any other issuer of a series of Related Bonds. Related Loan Document means the Series 2010 Tax Exempt Loan Agreement, the Series 2010E Loan Agreement, and any other document or documents (including without limitation any lease, sublease or installment sales contract), pursuant to which any proceeds of any Related Bonds are advanced to any Member (or any Property financed or refinanced with such proceeds is leased, subleased or sold to a Member). Released Property has the meaning set forth as described by the first paragraph summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE - CONDITIONS FOR RELEASE. Remarketing Agent means the placement or remarketing agent at the time serving as such under the Remarketing Agreement and designated as the Remarketing Agent for purposes of the Bond Indentures. The initial Remarketing Agent is B.C. Ziegler and Company d/b/a Ziegler Capital Markets. Remarketing Agreement means the Remarketing Agreement dated as of May 1, 2010 among the Borrowers and the Remarketing Agent as from time to time amended and supplemented, or if such Remarketing Agreement shall be terminated, then such other agreement which may from time to time be entered into with any Remarketing Agent with respect to the remarketing or placement of the Series 2010C Bonds. Representation Letter means the Blanket DTC Letter of Representations dated February 5, 2004 from the Authority accepted by DTC. Required Information Recipients means the Master Trustee, the Initial Purchaser, each Related Bond Trustee, EMMA or any other nationally recognized municipal securities information repositories identified by the C-23

316 Securities and Exchange Commission, the Issuer, and all owners of any Related Bonds who request such reports in writing (which written request shall include a certification as to such ownership). Reserved means an Independent Living Unit (a) which is Occupied or (b) for which a Member of the Obligated Group has received a deposit equal to not less than ten percent (10%) of the Entrance Fee related to such Independent Living Unit or some other amount required by the Corporation in order to hold such Independent Living Unit for a prospective resident. If two or more units have been combined into a single unit, all such units continue to be considered separate units for the purpose of determining the percentage of units Reserved. Reset Rate means the Initial Reset Rate, Revised Reset Rate or Final Reset Rate determined pursuant to the Series 2010 Tax Exempt Bond Indenture to be applicable to the Series 2010C Bonds on and after the next Rate Change Date. Residency Agreement means any written agreement or contract, as amended from time to time, between a Member and a resident or potential resident of a Facility giving the resident certain rights of occupancy in the Facility, including without limitation, independent living units, assisted living units, memory support units, skilled nursing beds or specialty care beds and providing for certain services to such resident including any reservation agreement or other agreement or contract reserving rights of occupancy. Revenues means, for any period, (a) in the case of any Person providing health care services and/or senior living services, the sum of (i) resident service revenues plus (ii) other operating revenues, plus (iii) nonoperating revenues (other than Contributions, income derived from the sale or other disposition of assets not in the ordinary course of business or any gain from the extinguishment of debt or other extraordinary item or earnings which constitute Funded Interest or earnings on amounts which are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness), plus (iv) Unrestricted Contributions, plus (v) Entrance Fees (other than Initial Entrance Fees) received minus (A) Entrance Fees amortized during such Fiscal Year and (B) Entrance Fees refunded to residents; and (b) in the case of any other Person, gross revenues less sale discounts and sale returns and allowances, as determined in accordance with generally accepted accounting principles; but excluding in either case (i) any unrealized gain or loss resulting from changes in the valuation of investment securities or unrealized changes in the value of derivative instruments, (ii) any gains on the sale or other disposition of fixed or capital assets not in the ordinary course, (iii) earnings resulting from any reappraisal, revaluation or write-up of fixed or capital assets, (iv) any revenues recognized from deferred revenues related to entrance fees or (v) insurance (other than business interruption) and condemnation proceeds; provided, however, that if such calculation is being made with respect to the Obligated Group, such calculation shall be made in such a manner so as to exclude any revenues attributable to transactions between any Member and any other Member. For purposes of calculations under the Master Indenture, an Unrestricted Contribution from an Affiliate shall be treated as being made during the period of such calculation so long as the Unrestricted Contribution is made prior to the date the applicable certificate is required to be delivered with respect to such calculation. For purposes of any calculation under the Master Indenture that is made with reference to both Revenues and Expenses, any deduction from gross resident service revenues otherwise required by this definition shall not be made if and to the extent that the amount of such deduction is included in Expenses. Rule 15c2-12 means Rule 15c2-12 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934 as amended. Series 2010 Bonds means, collectively, the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds. Series 2010 Fixed Rate Bonds means, collectively, the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010D Bonds and the Series 2010E Bonds. Series 2010 Fixed Rate Obligations means, collectively, the Series 2010A Obligation, the Series 2010B Obligation and the 2010D Obligation. Series 2010 Obligations means, collectively, the Series 2010A Obligation, the Series 2010B Obligation, the 2010C Obligation, the Series 2010D Obligations and the 2010E Obligation. C-24

317 Series 2010 Project means the facilities originally financed with the proceeds of the Series 2010 Bonds as described in the Project Certificate relating to the Series 2010 Bonds. Series 2010 Tax Exempt Bond Indenture means the Bond Trust Indenture dated as of May 1, 2010, between the Authority and the Series 2010 Tax Exempt Bond Trustee, pursuant to which the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds and the Series 2010D Bonds are being issued, as it may be supplemented and amended from time to time. Series 2010 Tax Exempt Bond Trustee means Wells Fargo Bank, N.A., or any successor thereto under the Series 2010 Tax Exempt Bond Indenture. Series 2010 Tax Exempt Bonds means, collectively, the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds and the Series 2010D Bonds. Series 2010 Tax Exempt Loan Agreement means the Loan Agreement dated as of May 1, 2010 among the Borrowers and the Authority providing for the loan of the proceeds of the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds and the Series 2010D Bonds to the Borrowers. Series 2010A Bonds means the $109,115,000 aggregate principal amount of Illinois Finance Authority Revenue Bonds, Series 2010A (Park Place of Elmhurst Project), initially authorized to be issued pursuant to the terms and conditions of the Series 2010 Tax Exempt Bond Indenture. Series 2010A Obligation means the $109,115,000 Direct Note Obligation, Series 2010A, issued under the Master Indenture, as security for the Series 2010A Bonds. Series 2010B Bonds means the $7,875,000 aggregate principal amount of Illinois Finance Authority Revenue Bonds, Series 2010B (Park Place of Elmhurst Project), initially authorized to be issued pursuant to the terms and conditions of the Series 2010 Tax Exempt Bond Indenture. Series 2010B Obligation means the $7,875,000 Direct Note Obligation, Series 2010B, issued under the Master Indenture, as security for the Series 2010B Bonds. Series 2010C Bonds means the $5,000,000 Illinois Finance Authority Revenue Bonds, Series 2010C (Park Place of Elmhurst Project) (Accelerated Redemption Reset Option Securities (ARROS SM )) authorized to be issued pursuant to the terms and conditions of the Series 2010 Tax Exempt Bond Indenture. Series 2010C Obligation means the $5,000,000 Direct Note Obligation, Series 2010C, issued under the Master Indenture, as security for the Series 2010C Bonds. Series 2010D Bonds means, collectively, the Series 2010D-1 Bonds, the Series 2010D-2 Bonds and the Series 2010D-3 Bonds. Series 2010D Obligations means, collectively, the Series 2010D-1 Obligation, the Series 2010D-2 Obligation and the Series 2010D-3 Obligation. Series 2010D-1 Bonds means the $10,275,000 aggregate principal amount of Illinois Finance Authority Revenue Bonds, Series 2010D-1 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-75 SM )) initially authorized to be issued pursuant to the terms and conditions of the Series 2010 Tax Exempt Bond Indenture. Series 2010D-1 Obligation means the $10,275,000 Direct Note Obligation, Series 2010D-1, issued under the Master Indenture, as security for the Series 2010D-1 Bonds. Series 2010D-2 Bonds means the $15,350,000 aggregate principal amount of Illinois Finance Authority Revenue Bonds, Series 2010D-2 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-65 SM )) initially authorized to be issued pursuant to the terms and conditions of the Series 2010 Tax Exempt Bond Indenture. C-25

318 Series 2010D-2 Obligation means the $15,350,000 Direct Note Obligation, Series 2010D-2, issued under the Master Indenture, as security for the Series 2010D-2 Bonds. Series 2010D-3 Bonds means the $15,275,000 aggregate principal amount of Illinois Finance Authority Revenue Bonds, Series 2010D-3 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-50 SM )) initially authorized to be issued pursuant to the terms and conditions of the Series 2010 Tax Exempt Bond Indenture. Series 2010D-3 Obligation means the $15,275,000 Direct Note Obligation, Series 2010D-3, issued under the Master Indenture, as security for the Series 2010D-3 Bonds. Series 2010E Bond Indenture means the Bond Trust Indenture dated as of May 1, 2010, between the Authority and the Series 2010E Bond Trustee, pursuant to which the Series 2010E Bonds are being issued, as it may be supplemented and amended from time to time. Series 2010E Bond Trustee means Wells Fargo Bank, N.A., or any successor thereto under the Series 2010E Bond Indenture. Series 2010E Bonds means the $12,650,000 aggregate principal amount of Illinois Finance Authority Taxable Revenue Bonds, Series 2010E (Park Place of Elmhurst Project) (Taxable Mandatory Paydown Securities (Taxable MPS)) initially authorized to be issued pursuant to the terms and conditions of the Series 2010E Bond Indenture. Series 2010E Loan Agreement means the Loan Agreement dated as of May 1, 2010 among the Borrowers and the Authority providing for the loan of the proceeds of the Series 2010E Bonds to the Borrowers. Series 2010E Obligation means the $12,650,000 Direct Note Obligation, Series 2010E, issued under the Master Indenture, as security for the Series 2010E Bonds. Short-Term, when used in connection with Indebtedness, means having an original maturity less than or equal to one year and not renewable at the option of the debtor for a term greater than one year beyond the date of original issuance. Special Liquidity Support Fund means the fund created under the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE SPECIAL LIQUIDITY SUPPORT FUND. Special Record Date means the date fixed by the Bond Trustee pursuant to the Bond Indentures for the payment of Defaulted Interest. Stable Occupancy means, (i) with respect to the Independent Living Units financed with the proceeds of the Series 2010 Bonds and included in the Series 2010 Project, the date on which the total percentage of such Independent Living Units which are Occupied is equal to or greater than 95%, calculated as of the last day of any fiscal quarter, (ii) with respect to all living units financed with the proceeds of the Series 2010 Bonds and included in the Series 2010 Project, the date on which the total percentage of all such living units Occupied is equal to or greater than 95%, calculated as of the last day of any fiscal quarter, and (iii) with respect to any facility financed with Indebtedness for which the Master Trustee was furnished a Consultant s report pursuant to the Master Indenture (or, if no Consultant s report was required by the Master Indenture, an Officer s Certificate), the percentage of Occupied units in that facility at the level reflected as substantially at the sustainable capacity for which such facility was designed or stabilized occupancy for that facility in the Consultant s report or the Officer s Certificate. Standard & Poor s or S&P means Standard & Poor s Rating Service, a division of The McGraw-Hill Companies Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Standard & Poor s or S&P shall be deemed to refer to any other nationally recognized securities rating agency designated by, for purposes of the Master Indenture, the Master Trustee, at the direction of C-26

319 the Obligated Group Agent and, for the purposes of the Series 2010 Fixed Rate Bonds and the Series 2010C Bonds, by the Obligated Group Agent by notice to the Bond Trustee, the Authority, the Borrowers, and the Remarketing Agent. State means the State of Illinois. Subordinated Indebtedness means (i) Affiliate Related Subordinated Indebtedness and (ii) Indebtedness which meets the requirements set forth in the Master Indenture. Substituted Property has the meaning set forth as described by the provision summarized under subparagraph (B) of the caption SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE - CONDITIONS FOR RELEASE. Supplemental Liquidity Support Fund means the fund created under the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE SUPPLEMENTAL LIQUIDITY SUPPORT FUND. Supplemental Master Indenture means an indenture amending or supplementing the Master Indenture entered into pursuant to the Master Indenture. Tax-Exempt Organization means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code, which is exempt from federal income taxes under Section 501(a) of the Code and is not a private foundation within the meaning of Section 509(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect. Tax- Exempt Organization shall include a limited liability company which has as its sole member a Tax-Exempt Organization, as it derives its tax status for federal income tax purposes from its sole member. Tax Exemption Agreement means the Tax Exemption Agreement relating to the Series 2010 Tax Exempt Bonds dated the Closing Date among the Borrowers, the Authority and the Bond Trustee, as it may from time to time be amended or supplemented. Tender Agent means the corporation or banking entity designated to act as the Tender Agent pursuant to the terms of the Bond Indentures. The initial Tender Agent is the Bond Trustee. The Tender Agent may discharge its responsibilities through a Bond Trustee s Agent appointed by the Bond Trustee pursuant to the Bond Indentures Tender Notice means the notice delivered by any owner of the Series 2010C Bonds pursuant the Series 2010 Tax Exempt Bond Indenture in order to exercise such owner s option to have its Series 2010C Bonds purchased on an Optional Tender Date. Unassigned Rights means the fees and expenses payable to the Authority, the Authority s right to indemnification in certain circumstances, the Authority s right to execute and deliver supplements and amendments to the Loan Agreement and the Authority s right to exercise the same rights of discretion as are granted to the Master Trustee under the Master Indenture. Uniform Commercial Code means the Illinois Uniform Commercial Code, 810 ILCS 5/1-101 et seq. United States Government Obligations means noncallable direct obligations of, or obligations the timely payment of the principal of and interest on which is fully guaranteed by, the United States of America, including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America. Unrelated Trade or Business means an activity which constitutes an unrelated trade or business within the meaning of Section 513(a) of the Code without regard to whether such activity results in unrelated trade or business income subject to taxation under Section 512(a) of the Code. C-27

320 Unrestricted Contributions means Contributions, including any payment received from an Affiliate of an Obligated Group Member, which are not restricted in any way that would prevent their application to the payment of debt service on Indebtedness of the Person receiving such Contributions. Valuation Date means any date on which the Bond Trustee values the investments on deposit in the Debt Service Reserve Fund pursuant to the provisions of the Bond Indentures summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE - FUNDS; DISPOSITION OF REVENUES 4. Debt Service Reserve Fund and SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010E BOND INDENTURE - FUNDS; DISPOSITION OF REVENUES - 4. Debt Service Reserve Fund. Written Request means, with respect to the Bond Indentures with reference to the Authority, a request in writing (which may be by electronic means acceptable to the Bond Trustee) signed by the Chairman, Vice- Chairman, Executive Director, Treasurer, Secretary or an Assistant Secretary of the Authority, and with reference to the Borrowers, a request in writing signed by the President, a Vice President, Secretary or Assistant Secretary of the Borrowers, or any other officers designated by the Authority or the Borrowers, as the case may be; with respect to the Master Indenture, with reference to a Related Issuer, a request in writing signed by the Chairman, Vice- Chairman, Mayor, Clerk, President, Vice President, Executive Director, Associate Executive Director, Secretary or Assistant Secretary of the Related Issuer and with reference to any Member means a request in writing signed by the President, any Vice President, Chief Executive Officer, Executive Director, Chief Financial Officer or Treasurer of such Member, or any other officers designated by the Related Issuer or such Member, as the case may be. SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE The Master Indenture contains various covenants, security provisions, terms and conditions, certain of which are summarized below. Reference is made to the Master Indenture for a full and complete statement of its provisions. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST Each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member of the Obligated Group pursuant to the terms and conditions of the Master Indenture summarized below under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - CESSATION OF STATUS AS A MEMBER OF THE OBLIGATED GROUP ), jointly and severally covenants that it will promptly pay the principal of, premium, if any, and interest on every Obligation issued under the Master Indenture at the place, on the dates and in the manner provided therein and in said Obligations according to the true intent and meaning thereof. Notwithstanding any schedule of payments upon the Obligations set forth in the Master Indenture or in the Obligations, each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member of the Obligated Group pursuant to the terms and conditions of the Master Indenture summarized below under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - CESSATION OF STATUS AS A MEMBER OF THE OBLIGATED GROUP ), jointly and severally agrees to make payments upon each Obligation and be liable therefor at the times and in the amounts (including principal, interest and premium, if any) equal to the amounts to be paid as interest, principal at maturity or by mandatory sinking fund redemption, or premium, if any, upon any Related Bonds from time to time outstanding. COVENANTS AS TO CORPORATE EXISTENCE, MAINTENANCE OF PROPERTIES, AND SIMILAR MATTERS; RIGHT OF CONTEST Each Member covenants in the Master Indenture to: (a) Except as otherwise expressly provided in the Master Indenture (i) preserve its corporate or other separate legal existence, (ii) preserve all its rights and licenses to the extent necessary or desirable in the operation of its business and affairs and (iii) be qualified to do business and conduct its affairs in each jurisdiction where its ownership of Property or the conduct of its business or affairs requires such qualification; provided, however, that nothing in the Master Indenture contained shall be construed to obligate such Member to retain, preserve or keep in effect the rights, licenses or qualifications no longer used or, in the judgment of its Governing Body, useful in the conduct of its business. C-28

321 (b) With respect to any Member which is, on the date it becomes a Member, a Tax-Exempt Organization, maintain its status as a Tax-Exempt Organization throughout the term of the Master Indenture unless (1) the Governing Body determines that such status is not necessary or useful, and (2) prior to the cessation of such status there is delivered to the Master Trustee (x) an Opinion of Bond Counsel to the effect that such change in status will not have an adverse effect on the exemption of interest on any Related Bond from federal income taxation to which such Bond is otherwise entitled or the validity or enforceability of any Related Bond, and (y) an opinion of Independent Counsel not objected to by the Master Trustee to the effect that registration of the Obligations under the Securities Act of 1933, as amended, is not required or that such Obligations have been so registered. (c) At all times use its Facilities only in furtherance of its lawful corporate purposes and cause its business to be carried on and conducted and its Property and each part thereof to be maintained, preserved and kept in good repair, working order and condition and in as safe condition as its operations will permit and make all necessary and proper repairs (interior and exterior, structural and non-structural, ordinary as well as extraordinary and foreseen as well as unforeseen), renewals and replacements thereof so that its operations and business shall at all times be conducted in an efficient, proper and advantageous manner; provided, however, that nothing in the Master Indenture contained shall be construed (i) to prevent it from ceasing to operate any portion of its Property, if in its reasonable judgment (evidenced, in the case of such a cessation other than in the ordinary course of business, by a determination by its Governing Body) it is advisable not to operate the same, or if it intends to sell or otherwise dispose of the same and within a reasonable time endeavors to effect such sale or other disposition, or (ii) to obligate it to retain, preserve, repair, renew or replace any Property, leases, rights, privileges or licenses no longer used or, in the judgment of its Governing Body, useful in the conduct of its business. (d) Pay or cause to be paid: (i) all taxes, levies, assessments and charges on account of the use, occupancy or operation of its Property, including but not limited to all sales, use, occupation, real and personal property taxes, all permit and inspection fees, occupation and license fees and all water, gas, electric, light, power or other utility charges assessed or charged on or against its Property or on account of its use or occupancy thereof or the activities conducted thereon or therein; and (ii) all taxes, assessments and impositions, general and special, ordinary and extraordinary, of every name and kind, which shall be taxed, levied, imposed or assessed during the term of the Master Indenture upon all or any part of its Property, or its interest or the interest of any Related Issuer or either of them in and to its Property, or upon its interest or the interest of any Related Issuer or the interest of either of them in the Master Indenture or the amounts payable thereunder or under the Obligations. If under applicable law any such tax, levy, charge, fee, rate, imposition or assessment may at the option of the taxpayer be paid in installments, any Member may exercise such option. (e) Not create or permit to be created or remain and, at its cost and expense, promptly discharge or terminate all Liens on its Property or any part thereof which are not Permitted Encumbrances. (f) At its sole cost and expense, promptly comply with all present and future laws, ordinances, orders, decrees, decisions, rules, regulations and requirements of every duly constituted governmental authority, commission and court and the officers thereof which may be applicable to it or any of its affairs, business, operations and Property, any part thereof, any of the streets, alleys, passageways, sidewalks, curbs, gutters, vaults and vault spaces adjoining any of its Property or any part thereof or to the use or manner of use, occupancy or condition of any of its Property or any part thereof. (g) Promptly pay or otherwise satisfy and discharge all of its obligations and Indebtedness and all demands and claims against it as and when the same become due and payable which if not so paid, satisfied or discharged would constitute a default or an event of default under subparagraph (d) of the provisions of the Master Indenture summarized below under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - EVENTS OF DEFAULT. (h) At all times comply with all terms, covenants and provisions of any Liens at such time existing upon its Property or any part thereof or securing any of its Indebtedness. (i) Procure and maintain all necessary licenses and permits and use its best efforts to maintain the status of its health care Facilities (other than those not currently having such status or not having such status on the date a Person becomes a Member under the Master Indenture) as providers of health care services eligible for payment under those third-party payment programs which its Governing Body determines are appropriate. C-29

322 (j) In the case of the Corporation and the Foundation and each Member which is a Tax-Exempt Organization at the time it becomes a Member, so long as the Master Indenture shall remain in force and effect and so long as all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or provision for such payment has not been made, to take no action or suffer any action to be taken by others, including any action which would result in the alteration or loss of its status as a Tax-Exempt Organization, which could result in any such Related Bond being declared invalid or result in the interest on any Related Bond, which is otherwise exempt from federal or state income taxation, becoming subject to such taxation. (k) Operate all of its Facilities so as not to discriminate on a legally impermissible basis. (l) In the case of the Corporation, the Foundation and each Member which is a Tax-Exempt Organization at the time it becomes a Member, not distribute any of its revenues, income or profits, whether realized or unrealized, to any of its members, directors or officers or allow the same to inure to the benefit of any private person, association or corporation, other than for the lawful corporate purposes of such Member, as the case may be; provided, further, that no such distribution shall be made which is not permitted by the legislation pursuant to which such Member is governed or which would result in the loss or alteration of its status as a Tax-Exempt Organization. The foregoing notwithstanding, any Member may (i) cease to be a not for profit corporation, (ii) take actions which could result in the alteration or loss of its status as a Tax-Exempt Organization or (iii) distribute its revenues, income or profits to any of its members, directors or officers or allow the same to inure to the benefit of a private person, association or corporation if (1) prior thereto there is delivered to the Master Trustee an Opinion of Bond Counsel to the effect that such actions would not adversely affect the validity of any Related Bond, the exemption from federal or state income taxation of interest payable on any Related Bond otherwise entitled to such exemption or adversely affect the enforceability in accordance with its terms of the Master Indenture against any Member and (2) after such action the Obligated Group could meet the conditions described in subparagraph (A) summarized below under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS for the incurrence of one dollar of additional Funded Indebtedness. For the purposes of the provisions of the Master Indenture summarized under this caption (other than subparagraph (e) thereof), the terms Property and Facilities shall be deemed to include Excluded Property. No Member shall be required to pay any tax, levy, charge, fee, rate, assessment or imposition referred to above, to remove any Lien required to be removed by the provisions summarized under this caption, pay or otherwise satisfy and discharge its obligations, Indebtedness (other than Indebtedness evidenced by Obligations), demands and claims against it or to comply with any Lien, law, ordinance, rule, order, decree, decision, regulation or requirement referred to in the provisions summarized under this caption, so long as such Member shall contest, in good faith and at its cost and expense, in its own name and behalf, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the tax, levy, charge, fee, rate, assessment, imposition, obligation, Indebtedness, demand, claim or Lien so contested, and the sale, forfeiture, or loss of its Property or any part thereof, provided, that no such contest shall subject any Related Issuer, any Obligation holder or the Master Trustee to the risk of any liability. While any such matters are pending, such Member shall not be required to pay, remove or cause to be discharged the tax, levy, charge, fee, rate, assessment, imposition, obligation, Indebtedness, demand, claim or Lien being contested, unless such Member agrees to settle such contest and payments under such settlement agreement are deemed to be due and payable. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of such Member engaging in such a contest to settle such contest), and in any event the Member will save all Related Issuers, all Related Bond Trustees, all Obligation Holders and the Master Trustee harmless from and against all losses, judgments, decrees and costs (including attorneys fees and expenses in connection therewith) as a result of such contest and will, promptly after the final determination of such contest or settlement thereof, pay and discharge the amounts which shall be levied, assessed or imposed or determined to be payable therein, together with all penalties, fines, interests, costs and expenses thereon or incurred in connection therewith. The Member engaging in such a contest shall give the Master Trustee prompt written notice of any such contest. Each Member waives, to the extent permitted by law, any right which it may have to contest (i) any Obligation issued for the benefit of another Member or (ii) any Obligation issued to secure or in connection with Related Bonds. If the Master Trustee shall notify such Member that, in the opinion of Independent Counsel, by nonpayment of any of the foregoing items the Property of such Member or any substantial part thereof will be C-30

323 subject to imminent loss or forfeiture, then such Member shall promptly pay all such unpaid items and cause them to be satisfied and discharged. INSURANCE Each Member shall maintain, or cause to be maintained at its sole cost and expense, insurance with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks (including but not limited to public liability and employee dishonesty) and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as is adequate to protect its Property and operations. For purposes of the provisions of the Master Indenture summarized under this caption, the term Property shall be deemed to include Excluded Property. The Obligated Group Agent shall annually review the insurance each Member maintains to determine whether such insurance is customary and adequate. In addition, the Obligated Group Agent shall (commencing with its Fiscal Year ending December 31, 2010) cause a certificate of an Insurance Consultant or Insurance Consultants to be delivered to the Master Trustee within 150 days of the end of each Fiscal Year which certificate indicates that the insurance then being maintained by the Members is customary in the case of corporations engaged in the same or similar activities and similarly situated and is adequate to protect the Obligated Group s Property and operations. The Obligated Group Agent shall cause copies of the certificates of the Insurance Consultant or Insurance Consultants, as the case may be, to be delivered promptly to the Master Trustee. The Obligated Group or any Member may self-insure if the Insurance Consultant or Insurance Consultants determine(s) that such self-insurance meets the standards set forth in the first sentence of this paragraph and is prudent under the circumstances; provided, however, that no Member of the Obligated Group shall self-insure any of its Property, Plant and Equipment. RATES AND CHARGES Each Member covenants and agrees to operate all of its Facilities on a revenue-producing basis and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it pursuant to the Master Indenture to the extent permitted by law. Each Member further covenants and agrees that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of the Master Indenture summarized under this caption. The Members covenant and agree that the Obligated Group Agent will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year, commencing with the Fiscal Year ending on the Initial Testing Date, and to deliver a copy of such calculation to the Required Information Recipients in connection with the delivery of the reports required by the provisions of the Master Indenture summarized in subparagraph (d) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS. For the purposes of the provisions of the Master Indenture summarized under this caption, when calculating the Historical Debt Service Coverage Ratio of the Obligated Group, principal and interest payable on the Liquidity Support Repayment Obligations or any Affiliate Related Subordinated Indebtedness shall be excluded from Debt Service Requirements. If the Historical Debt Service Coverage Ratio of the Obligated Group is less than 1.10:1 for the Fiscal Year with respect to which the Initial Testing Date relates, the Master Trustee shall require the Obligated Group, at the Obligated Group s expense, to select a Consultant within 30 days following the calculation described above to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group s methods of operation and other factors affecting its financial condition in order to generate a Historical Debt Service Coverage Ratio of at least 1.20:1 for the following Fiscal Year. The Consultant selected as required by the provisions of the Master Indenture summarized under this caption shall be approved and retained as set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. If the Historical Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Fiscal Year with respect to which the Initial Testing Date relates, and for any Fiscal Year thereafter, is less than 1.20:1, the Master Trustee shall require the Obligated Group, at the Obligated Group s expense, to select a C-31

324 Consultant within 30 days following the calculation described in the second preceding paragraph to make recommendations with respect to the rates, fees and charges of the Obligated Group s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year. The Consultant selected as required by the provisions of the Master Indenture summarized under this caption shall be approved and retained as set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. A copy of the Consultant s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days of retaining the Consultant. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The provisions of the Master Indenture summarized under this caption shall not be construed to prohibit any Member from serving indigent patients or residents to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from serving any other class or classes of patients or residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements described in the provisions summarized under this caption. The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required above, the Master Trustee shall not be obligated to require the Obligated Group to retain a Consultant to make such recommendations if: (a) there is filed with the Master Trustee (who shall provide a copy to each Required Information Recipient) a written report addressed to them of a Consultant (which Consultant and report, including without limitation the scope, form, substance and other aspects of such report, are not objected to by the Master Trustee) which contains an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet the requirements of the provisions of the Master Indenture summarized under this caption, and, if requested by the Master Trustee, such report is accompanied by a concurring opinion of Independent Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not objected to by the Master Trustee) as to any conclusions of law supporting the opinion of such Consultant; (b) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (c) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group provides to the Master Trustee (who shall provide a copy to each Related Bond Trustee) an opinion of Independent Counsel (which Counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not objected to by the Master Trustee) to the effect that the applicable laws and regulations underlying the Consultant s report delivered in respect of the previous Fiscal Year have not changed in any material way. If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of 1.0:1 for any Fiscal Year, such failure shall constitute an event of default under the Master Indenture. Notwithstanding any other provisions of the Master Indenture, in the event that any Member of the Obligated Group incurs any Additional Indebtedness for any acquisition, construction, renovation or replacement project pursuant to any other provisions of the Master Indenture, the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses relating to the project or projects financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated Group for the purposes of complying with the provisions of the Master Indenture summarized under this caption, until the first full Fiscal Year following the later of (i) the estimated completion of the acquisition, construction, renovation or replacement project being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such project set forth in the Consultant s report described in (A) below, or (ii) the first full year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of elderly housing facilities or nursing facilities financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected in the report of the Consultant referred to in paragraph (A) below to occur no later than during the fourth full Fiscal Year C-32

325 following the incurrence of such Additional Indebtedness, or (iii) the end of the fourth full Fiscal Year after the incurrence of such Additional Indebtedness, if the following conditions are met: (A) there is delivered to the Master Trustee a report or opinion of a Consultant to the effect that the Projected Debt Service Coverage Ratio for each of the first two full Fiscal Years following the later of (I) the estimated completion of the acquisition, construction, renovation or replacement being paid for with the proceeds of such Additional Indebtedness, or (II) the first full Fiscal Year following the year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of elderly housing facilities or nursing facilities being financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected to occur no later than during the fourth full Fiscal Year following the incurrence of such Additional Indebtedness, will be not less than 1.20:1 after giving effect to the incurrence of such Additional Indebtedness and the application of the proceeds thereof; provided, however, that in the event that a Consultant shall deliver a report to the Master Trustee to the effect that state or Federal laws or regulations or administrative interpretations of such laws or regulations then in existence do not permit or by their application make it impracticable for Members to produce the required ratio, then such ratio shall be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less than 1.00:1; provided, however, that in the event a Consultant s report is not required to incur such Additional Indebtedness, the Obligated Group may deliver an Officer s Certificate to the Master Trustee in lieu of the Consultant s report described in this subparagraph (A); and (B) there is delivered to the Master Trustee an Officer s Certificate on the date on which financial statements are required to be delivered to the Master Trustee pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS until the first Fiscal Year in which the exclusion from the calculation of the Historical Debt Service Coverage Ratio no longer applies, calculating the Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year, and demonstrating that such Historical Debt Service Coverage Ratio is not less than 1.00:1, such Historical Debt Service Coverage Ratio to be computed without taking into account (I) the Additional Indebtedness to be incurred if (x) the interest on such Additional Indebtedness during such period is funded from proceeds thereof or other funds of the Member then on hand and available therefor and (y) no principal of such Additional Indebtedness is payable during such period, and (II) the Revenues to be derived from the project to be financed from the proceeds of such Additional Indebtedness. DAMAGE OR DESTRUCTION Each Member agrees to notify the Master Trustee immediately in the case of the destruction of its Facilities or any portion thereof as a result of fire or other casualty, or any damage to such Facilities or portion thereof as a result of fire or other casualty, the Net Proceeds of which are estimated to exceed the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000 plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, Each Member irrevocably assigns to the Master Trustee, as its interests may appear, all right, title and interest of such Member in and to any Net Proceeds relating to such damage or destruction, which exceeds the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000 plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, Such Net Proceeds shall be initially paid to the Master Trustee for disbursement or use as provided in the Master Indenture. If such Net Proceeds do not exceed the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000, plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, 2010, such Net Proceeds may be paid directly to the Member suffering such casualty or loss. The Members covenant that they will expend or contract to expend an amount not less than the amount of any such Net Proceeds within 24 months after receipt thereof to (i) repair, replace or restore the damaged or destroyed facilities, (ii) acquire or construct additional capital assets for any one or more Members, or (iii) prepay Obligations or repay the principal portion of any Indebtedness incurred by any one or more Members of the Obligated Group to acquire or construct capital assets or refinance Indebtedness incurred for such purpose. C-33

326 In the event such Net Proceeds exceed the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000 plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, 2010, the Member suffering such casualty or loss shall within 12 months after the date on which the Net Proceeds are finally determined, elect by written notice to the Master Trustee one of the following three options: (a) Option A-Repair and Restoration. Such Member may elect to replace, repair, reconstruct, restore or improve any of the Facilities of the Obligated Group or acquire additional Facilities for the Obligated Group or repay Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event an amount equal to the Net Proceeds of any insurance relating thereto shall be deposited, when received, with the Master Trustee and such Member shall proceed forthwith to replace, repair, reconstruct, restore or improve Facilities of the Obligated Group or to acquire additional Facilities and will apply the Net Proceeds of any insurance relating to such damage or destruction received from the Master Trustee to the payment or reimbursement of the costs of such replacement, repair, reconstruction, restoration, improvement or acquisition or to the repayment of such Indebtedness. So long as the Members are not in default under the Master Indenture, any Net Proceeds of insurance relating to such damage or destruction received by the Master Trustee shall be released from time to time by the Master Trustee to such Member upon the receipt by the Master Trustee of: (1) the Written Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such replacement, repair, reconstruction, restoration, improvement or acquisition and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such replacement, repair, reconstruction, restoration, improvement or acquisition; and (2) if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Written Request (solely as to the sufficiency of the expenditures requested by a Member to complete such replacement, repair, reconstruction, restoration, improvement or acquisition) by an Independent Architect. It is further understood and agreed that in the event such Member shall elect this Option A, such Member shall complete the replacement, repair, reconstruction, restoration, improvement and acquisition of the Facilities, whether or not the Net Proceeds of insurance received for such purposes are sufficient to pay for the same. (b) Option B-Prepayment of Obligations. Subject to the obligations of the Members summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - COVENANTS AS TO CORPORATE EXISTENCE, MAINTENANCE OF PROPERTIES, AND SIMILAR MATTERS; RIGHT OF CONTEST, such Member may elect to have all of the Net Proceeds payable as a result of such damage or destruction applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of Obligations in accordance with the provisions of the Master Indenture. (c) Option C-Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds applied to the replacement, repair, reconstruction, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds with the remainder of such Net Proceeds to be applied to prepay Obligations, in which event such Net Proceeds to be used for replacement, repair, reconstruction, restoration, improvement and acquisition shall be applied as set forth in subparagraph (a) above and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (b) above. The foregoing notwithstanding, no Member will be required to comply with the provisions of the Master Indenture summarized under this caption to the extent that the Facilities damaged or destroyed were pledged as security for Non-Recourse Indebtedness incurred in accordance with the conditions summarized in subparagraph (j) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PERMITTED ADDITIONAL INDEBTEDNESS of or Indebtedness secured by Liens imposed in accordance with paragraph (y) of the definition of C-34

327 Permitted Encumbrances and the documents pursuant to which such Indebtedness was incurred require Net Proceeds to be applied in a manner inconsistent with the terms of the Master Indenture summarized under this caption. CONDEMNATION The Master Trustee shall cooperate fully with the Members in the handling and conduct of any prospective or pending condemnation proceedings with respect to their Facilities or any part thereof. Each Member irrevocably assigns to the Master Trustee, as its interests may appear, all right, title and interest of such Member in and to any Net Proceeds of any award, compensation or damages payable in connection with any such condemnation or taking, or payment received in a sale transaction consummated under threat of condemnation (any such award, compensation, damages or payment being hereinafter referred to as an award ), which exceeds the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000 plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, Such Net Proceeds shall be initially paid to the Master Trustee for disbursement or use as provided in the Master Indenture. If such Net Proceeds do not exceed the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000 plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, 2010, such Net Proceeds may be paid to the Member in question. The Members covenant that they will expend or contract to expend an amount not less than the amount of any such Net Proceeds within 24 months of the receipt thereof to (i) restore, replace or repair the condemned Facilities, (ii) acquire or construct additional capital assets, or (iii) prepay Obligations or repay the principal portion of Indebtedness incurred by one or more Members of the Obligated Group to acquire or construct capital assets or to refinance Indebtedness incurred for such purpose. In the event such Net Proceeds exceed the greater of (i) 3% of the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property, Plant and Equipment of the Obligated Group or (ii) $3,000,000 plus an amount equal to $3,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of May 1, 2010, the Member in question shall within 12 months after the date on which the Net Proceeds are finally determined elect by written notice of such election to the Master Trustee one of the following three options: (a) Option A-Repairs and Improvements. The Member may elect to use the Net Proceeds of the award for restoration or replacement of or repairs and improvements to the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event, so long as the Obligated Group is not in default under the Master Indenture, such Member shall have the right to receive such Net Proceeds from the Master Trustee from time to time upon the receipt by the Master Trustee of: (1) the Written Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such restoration, replacement, repairs, improvements and acquisitions and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such restoration, replacement, repairs, improvements and acquisition; and (2) if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Written Request (solely as to the sufficiency of the expenditures requested by the Member to complete such replacement, repair, reconstruction, restoration, improvement or acquisition) by an Independent Architect. (b) Option B-Prepayment of Obligations. Subject to the obligation of such Member summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - COVENANTS AS TO CORPORATE EXISTENCE, MAINTENANCE OF PROPERTIES, AND SIMILAR MATTERS; RIGHT OF CONTEST, such Member may elect to have such Net Proceeds of the award applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of Obligations in accordance with the provisions of the Master Indenture. C-35

328 (c) Option C-Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds of the award applied to the repair, replacement, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds, with the remainder of such Net Proceeds to be applied to the prepayment of Obligations, in which event such Net Proceeds to be used for repair, replacement, restoration, improvement and acquisition shall be applied as set forth in subparagraph (a) above and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (b) above. The foregoing notwithstanding, no Member will be required to comply with the provisions of the Master Indenture summarized under this caption to the extent that the Facilities damaged or destroyed were pledged as security for Non-Recourse Indebtedness incurred in accordance with the conditions summarized subparagraph (j) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PERMITTED ADDITIONAL INDEBTEDNESS of or Indebtedness secured by Liens imposed in accordance with paragraph (y) of the definition of Permitted Encumbrances and the documents pursuant to which such Indebtedness was incurred require Net Proceeds to be applied in a manner inconsistent with the terms of the Master Indenture summarized under this caption. OTHER PROVISIONS WITH RESPECT TO NET PROCEEDS Amounts received by the Master Trustee in respect of Net Proceeds shall, at the Written Request of the Obligated Group Agent, be deposited with the Master Trustee in a special trust account and be invested or reinvested by the Master Trustee as directed in writing by the Obligated Group Agent in Permitted Investments subject to any Member s right to receive the same pursuant to the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE DAMAGE OR DESTRUCTION and CONDEMNATION. If any Member elects to repair and replace facilities under the Master Indenture, any amounts in respect of such Net Proceeds not so paid to such Member shall be used to prepay Obligations. Notwithstanding anything in the Master Indenture to the contrary, any moneys on deposit with the Master Trustee shall be invested in accordance with, and subject to the terms of, the Tax Exemption Agreement to the extent applicable. FINANCIAL STATEMENTS AND RELATED MATTERS (a) The Members covenant that they will keep or cause to be kept proper books of records and accounts in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Obligated Group in accordance with generally accepted principles of accounting consistently applied except as may be disclosed in the notes to the audited financial statements referred to in subparagraph (b) below. To the extent that generally accepted accounting principles in the Unites States of America would require consolidation of certain financial information of entities which are not Members of the Obligated Group with financial information of one or more Members, or as may otherwise be determined by the Obligated Group Agent, consolidated financial statements prepared in accordance with generally accepted accounting principles which include information with respect to entities which are not Members of the Obligated Group may be delivered in satisfaction of the requirements of the Master Indenture summarized under this caption so long as: (i) supplemental information in sufficient detail to separately identify the information with respect to the Members of the Obligated Group is delivered to the Master Trustee with the audited financial statements; (ii) such supplemental information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements delivered to the Master Trustee and, in the opinion of the accountant, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole; and (iii) such supplemental information is used for the purposes of the Master Indenture or for any agreement, document or certificate executed and delivered in connection or pursuant to the Master Indenture. (b) The Obligated Group Agent will furnish or cause to be furnished to the Master Trustee and the Required Information Recipients, the following: (i) Until the end of the fiscal quarter in which the Obligated Group acchieves Stable Occupancy with respect to the Series 2010 Project, a monthly statement of the Obligated Group as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including: C-36

329 (A) prior to the issuance of the initial Occupancy Certificate for any portion of the Series 2010 Project, (I) a calculation of the marketing/reservation levels for the Series 2010 Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) a summary statement as to the status of construction; (III) unaudited financial reports on the development costs of the Series 2010 Project incurred during that month and on an aggregate basis; and (IV) statements of the balances for each fund and account required to be established under the Master Indenture or under the Liquidity Support Agreement or any Related Bond Indenture as of the end of such month (to the extent available from the applicable trustee), all in reasonable detail, certified by an officer of the Obligated Group Agent, and (B) after the issuance of the initial Occupancy Certificate for any portion of the Series 2010 Project, (I) a calculation of the marketing/reservation levels for the Series 2010 Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) information with respect to the payor mix for the health center portion of the Series 2010 Project; (III) occupancy levels of the Series 2010 Project as of the end of such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; (IV) a summary statement on the status of construction until the issuance of the last Occupancy Certificate for the Series 2010 Project; (V) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last Occupancy Certificate for the Series 2010 Project; (VI) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month with a comparison to the operating budget and an unaudited balance sheet of the Obligated Group as of the end of such month; and (VII) a calculation of the Cumulative Cash Operating Loss as of the end of such month, (VIII) statements of the balances in each fund and account required to be established under the Master Indenture or under the Liquidity Support Agreement or any Related Bond Indenture as of the end of such month (obtained from the applicable trustee) and (IX) a statement showing the amount of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds that have been redeemed in the aggregate and during that calendar month, all in reasonable detail and certified by an officer of the Obligated Group Agent. The Obligated Group Agent does not need to deliver any monthly statement of the Obligated Group described in this subparagraph (i) after the end of the fiscal quarter in which Stable Occupancy with respect to the Series 2010 Project has been achieved and the Obligated Group has commenced delivery of the quarterly reports required by the provisions of the Master Indenture summarized in subparagraph (b)(ii) below. (ii) Beginning with the first full fiscal quarter following the date that Stable Occupancy with respect to the Series 2010 Project is achieved, the following information as soon as practicable after it is available but in no event more than 45 days after the completion of such fiscal quarter: (A) quarterly unaudited financial statements of the Obligated Group (including a report with respect to the fourth quarter of each fiscal year), including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period and a combined or combining balance sheet as of the end of each such fiscal quarter with a comparison to the operating budget, (B) a calculation of Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, as of the last day of such quarter, the Historical Debt Service Coverage Ratio of the Obligated Group for such quarter, the Cumulative Cash Operating Loss, if required to be calculated or submitted for such fiscal quarter, (C) information with respect to the payor mix for the health center portion of the Series 2010 Project, and (D) a calculation of the marketing/reservation levels for the Series 2010 Project as of the end of each month in the quarter, including the number of units that have been reserved or cancelled during that month and on an aggregate basis and occupancy levels of the Series 2010 Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Agent, with a management s discussion and analysis of results. (iii) If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 or the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Test Date as provided in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE LIQUIDITY COVENANT, the Obligated Group will deliver the financial information and the calculations described in paragraph (ii) above on a monthly basis, with the Historical Debt Service C-37

330 Coverage Ratio calculated on a year-to-date basis each month, within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the applicable Liquidity Requirement. (iv) Within 150 days of the end of each Fiscal Year, commencing with the Fiscal Year ending December 31, 2010, an annual financial report of the Obligated Group audited by a firm of certified public accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year and a combined and an unaudited combining statement of changes in fund balances for such Fiscal Year and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the accountants auditing such report containing calculations of the Obligated Group s Historical Debt Service Coverage Ratio for said Fiscal Year and of the Obligated Group s Cash to Indebtedness Ratio or Days Cash on Hand, as applicable (beginning with the Fiscal Year in which such calculations are first required to be made) as of the last day of such Fiscal Year and if such accountants shall have obtained knowledge of any default or defaults, they shall disclose in such statement the default or defaults and the nature thereof. (v) On or before the date of delivery of the financial reports referred to in subparagraph (iv) above, an Officer s Certificate of the Obligated Group Agent (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture or if not, specify all such defaults and the nature thereof, (B) calculating and certifying the marketing and occupancy percentages, Cumulative Cash Operating Loss, Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, and Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such fiscal period or Fiscal Year, as appropriate, (C) commencing with the Fiscal Year ending December 31, 2011, a comparison of the audited financial statements with the operating budget for the preceding Fiscal Year and (D) an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any. (vi) Within 45 days of the end of each Fiscal Year, the Obligated Group Agent shall deliver a summary of the operating and capital budgets for the Fiscal Year then started. (vii) At any time during the Fiscal Year, copies of (A) any board-approved revisions to the annual budget provided pursuant to subparagraph (v) above, or (B) any correspondence to or from the Internal Revenue Service questioning or contesting the status of a Member as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of the Series 2010 Bonds or any Related Bonds the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes, promptly upon receipt. (viii) Within 30 days of receipt of any Occupancy Certificate for any portion of the Series 2010 Project, the Corporation will notify the Master Trustee that such Occupancy Certificate has been received and include a copy of the Occupancy Certificate with such notice. (ix) Within 45 days of achieving Stable Occupancy with respect to the Series 2010 Project, the Corporation will notify the Master Trustee that Stable Occupancy has been achieved. (x) Upon withdrawal of any funds from the Liquidity Support Funds as provided in the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PROVIDENCE LIQUIDITY SUPPORT FUND, SPECIAL LIQUIDITY SUPPORT FUND and SUPPLEMENTAL LIQUIDITY SUPPORT FUND the Corporation shall notify the Master Trustee and each Required Information Recipient submit the information required by such provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENT AND RELATED MATTERS. (c) The Obligated Group Agent shall furnish or cause to be furnished to the Master Trustee or any Related Bond Trustee, such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to C-38

331 determine whether the covenants, terms and provisions of the Master Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records or any other confidential information with respect to residents) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee. (d) The Members also agree that, within 10 days after its receipt thereof, the Obligated Group Agent will file with each Required Information Recipient a copy of each Consultant s report or counsel s opinion required to be prepared under the terms of the Master Indenture. (e) The Obligated Group Agent shall give prompt written notice of a change of accountants by the Obligated Group to the Master Trustee and each Related Bond Trustee. The notice shall state (i) the effective date of such change; (ii) whether there were any unresolved disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which the accountants claimed would have caused them to refer to the disagreement in a report on the disputed matter, if it was not resolved to their satisfaction; and (iii) such additional information relating thereto as such Related Bond Trustee or the Master Trustee may reasonably request. (f) Without limiting the foregoing, each Member will permit, upon reasonable notice, the Master Trustee or any such Related Bond Trustee (or such persons as they may designate) to visit and inspect, at the expense of such Person, its Property and to discuss the affairs, finances and accounts of the Obligated Group with its officers and independent accountants, all at such reasonable times and locations and as often as the Master Trustee or such Related Bond Trustee may reasonably desire. (g) The Obligated Group Agent may designate a different Fiscal Year for the Members of the Obligated Group by delivering a notice to the Master Trustee designating the first and last day of such new Fiscal Year and whether or not there will be any interim fiscal period (the Interim Period ) of a duration of greater than or less than 12 months preceding such new Fiscal Year. The Members covenant that they will furnish to the Master Trustee and each Related Bond Trustee, as soon as practicable after they are available, but in no event more than 150 days after the last day of such Interim Period, a financial report for such Interim Period certified by a firm of independent certified public accountants selected by the Obligated Group Agent covering the operations of the Obligated Group for such Interim Period and containing a combined balance sheet as of the end of such Interim Period and a combined statement of changes in fund balances and changes in financial position for such Interim Period and a combined statement of revenues and expenses for such Interim Period, showing in each case in comparative form the financial figures for the comparable period in the preceding Fiscal Year, together with a separate written statement of the accountants preparing such report containing a calculation of the Obligated Group s Historical Debt Service Coverage Ratio for the Interim Period and a statement that such accountants have obtained no knowledge of any default by any Member in the fulfillment of any of the terms, covenants, provisions or conditions of the Master Indenture, or if such accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such accountants shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default). PERMITTED ADDITIONAL INDEBTEDNESS Subject to the last paragraph summarized under this caption, so long as any Obligations are Outstanding, the Obligated Group will not incur any Additional Indebtedness (whether or not incurred through the issuance of Additional Obligations) other than: (A) Funded Indebtedness, if prior to incurrence thereof or, if such Funded Indebtedness was incurred in accordance with another subparagraph set forth below and any Member wishes to have such Indebtedness classified as having been issued under this subparagraph (A), prior to such classification, there is delivered to the Master Trustee: (i) An Officer s Certificate stating that the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year preceding the date of delivery of the report C-39

332 for which combined financial statements reported upon by independent certified public accountants are available was not less than 1.20:1; or (ii) (a) An Officer s Certificate stating that the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year preceding the date of delivery of the report for which combined financial statements reported upon by independent certified public accountants are available was not less than 1.20:1; and (b) a written Consultant s report prepared in accordance with industry standards (which report is not objected to by the Master Trustee) to the effect that the Projected Debt Service Coverage Ratio of the Obligated Group is not less than 1.25:1 for the next succeeding Fiscal Year following the later of (I) the estimated completion of the acquisition, construction, renovation or replacement being paid for with the proceeds of such Additional Indebtedness, or (II) the first full Fiscal Year following Stable Occupancy in the case of construction, renovation or replacement of elderly housing facilities being financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected to occur no later than during the fourth full Fiscal Year following the incurrence of such Additional Indebtedness or (III) the Fiscal Year in which such Funded Indebtedness for other purposes is being incurred; provided that such report shall include forecast balance sheets, statements of revenues and expenses and statements of changes in financial position for such Fiscal Year and a statement of the relevant assumptions upon which such forecasted statements are based, which financial statements must indicate that sufficient revenues and cash flow could be generated to pay the operating expenses of the Obligated Group s proposed and existing Facilities and the debt service on the Obligated Group s other existing Indebtedness during such Fiscal Year. (B) Completion Funded Indebtedness if there is delivered to the Master Trustee: (i) an Officer s Certificate of the Member for whose benefit such Indebtedness is being issued stating that at the time the original Funded Indebtedness for the Facilities to be completed was incurred, such Member had reason to believe that the proceeds of such Funded Indebtedness together with other moneys then expected to be available would provide sufficient moneys for the completion of such Facilities, (ii) a statement of an Independent Architect or an expert not objected to by the Master Trustee setting forth the amount estimated to be needed to complete the Facilities, and (iii) an Officer s Certificate of such Member stating that the proceeds of such Completion Funded Indebtedness to be applied to the completion of the Facilities, together with a reasonable estimate of investment income to be earned on such proceeds and available to pay such costs, the amount of moneys, if any, committed to such completion from available cash or marketable securities and reasonably estimated earnings thereon, enumerated loans from Affiliates or bank loans (including letters or lines of credit) and federal or state grants reasonably expected to be available, will be in an amount not less than the amount set forth in the statement of an Independent Architect or other expert, as the case may be, referred to in (ii), which amount shall be no more than 10% of Funded Indebtedness originally incurred to finance the construction of such Facilities. (C) Funded Indebtedness for the purpose of refunding (whether in advance or otherwise) any outstanding Funded Indebtedness if prior to the incurrence thereof an Officer s Certificate of a Member is delivered to the Master Trustee stating that, taking into account the issuance of the proposed Funded Indebtedness and the application of the proceeds thereof and any other funds available to be applied to such refunding, the Maximum Annual Debt Service Requirement of the Obligated Group will not be increased by more than 10%. (D) Short-Term Indebtedness (other than accounts payable under subparagraph (I) below), in a total principal amount which at the time incurred does not, together with the principal amount of all other such Short-Term Indebtedness of the Obligated Group then outstanding under the provisions of the Master Indenture summarized in this subparagraph (D) but excluding the principal payable on all Funded Indebtedness during the next succeeding 12 months and also excluding such principal to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increments to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal, exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available; provided, however, that for a period of 20 consecutive calendar days in each Fiscal Year the total amount of such Short-Term Indebtedness of the Obligated Group outstanding under the provisions of the Master Indenture summarized in this subparagraph (D) shall be not more than 5% of the Revenues of the Obligated Group during the preceding C-40

333 Fiscal Year plus such additional amount as the Obligated Group Agent certifies in an Officer s Certificate is (a) attributable to Short-Term Indebtedness incurred to offset a temporary delay in the receipt of funds due from third party payors and (b) in the minimum amount reasonably practicable taking into account such delay. For the purposes of this subparagraph, Short-Term Indebtedness shall not include overdrafts to banks to the extent there are immediately available funds of the Obligated Group sufficient to pay such overdrafts and such overdrafts are incurred and corrected in the normal course of business. (E) Balloon Indebtedness if: (i) (1) there is in effect at the time such Balloon Indebtedness is incurred a binding commitment (including without limitation letters or lines of credit or insurance) which may be subject only to commercially reasonable contingencies by a financial institution or bond insurer or surety generally regarded as responsible, to provide financing sufficient to pay the principal amount of such Balloon Indebtedness coming due in each consecutive 12-month period in which 25% or more of the original principal amount of such Balloon Indebtedness comes due; and (2) the conditions set forth in subparagraph (A) above are met for any Fiscal Year in which 25% or more of the original principal amount of such Balloon Indebtedness comes due when it is assumed that (a) the portion of Balloon Indebtedness coming due in such Fiscal Year matures over 30 years from the date of issuance of the Balloon Indebtedness, bears interest on the unpaid balance at the Projected Rate and is payable on a level annual debt service basis over a period of no more than 30 years or (b) the portion of Balloon Indebtedness coming due in such Fiscal Year matures according to its actual principal amortization schedule, bears interest on the unpaid balance at the Projected Rate, but this subparagraph (b) shall only be used if the amortization of all Indebtedness of the Obligated Group outstanding, when the Balloon Indebtedness debt service being calculated is calculated according to this subparagraph (b) varies no more than 10% per year or (c) the portion of Balloon Indebtedness coming due in such Fiscal Year bears interest at the Projected Rate and matures according to the principal amortization schedule set forth in the binding commitment described in subparagraph (1) above; or (ii) the aggregate principal amount of all Balloon Indebtedness issued pursuant to this subparagraph (E) does not exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available; or (iii) the Balloon Indebtedness to be incurred has a remaining term of five years or greater beginning in such fiscal year, and (1) the Member incurring such Balloon Indebtedness establishes in an Officer s Certificate filed with the Master Trustee an amortization schedule for such Balloon Indebtedness, which amortization schedule shall provide for payments of principal and interest for each Fiscal Year that are not less than the amounts required to make any actual payments required to be made in such Fiscal Year by the terms of such Balloon Indebtedness; (2) such Member agrees in such Officer s Certificate to deposit each Fiscal Year with a bank or trust company (pursuant to an agreement between such Member and such bank or trust company, which agreement shall be satisfactory in form and substance to the Master Trustee) the amount of principal shown on such amortization schedule net of any amount of principal actually paid on such Balloon Indebtedness during such Fiscal Year (other than from amounts on deposit with such bank or trust company) which deposit shall be made prior to any such required actual payment during such Fiscal Year if the amounts so on deposit are intended to be the source of such actual payments; and (3) the conditions described in subparagraph (A) above are met with respect to such Balloon Indebtedness when it is assumed that such Balloon Indebtedness is actually payable in accordance with such amortization schedule. (F) Put Indebtedness if: C-41

334 (i) the amount of such Put Indebtedness does not exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available and the conditions set forth in subparagraph (A) above are met with respect to such Put Indebtedness when it is assumed that (a) such Put Indebtedness bears interest at the Projected Rate and is payable on a level annual debt service basis over a period of no more than 30 years commencing with the next succeeding Put Date, or (b) such Put Indebtedness bears interest at the Projected Rate and is payable according to its actual principal amortization schedule, but this subparagraph (b) shall only be used if the debt service of all Indebtedness of the Obligated Group outstanding, when the Put Indebtedness debt service being calculated is calculated according to this subparagraph (b) varies no more than 10% per year or (c) such Put Indebtedness bears interest at the Projected Rate and is payable according to the principal amortization schedule set forth in a binding commitment of the type described in subparagraph (F)(ii)(1) below; or (ii) (1) there is in effect at any time such Put Indebtedness is incurred a binding commitment (including without limitation letters or lines of credit or insurance) which may be subject only to commercially reasonable contingencies by a financial institution or bond insurer or surety generally regarded as responsible, to provide financing sufficient to pay the principal amount of such Put Indebtedness on any Put Date, and (2) the conditions set forth in subparagraph (A) above are met for any Fiscal Year in which 25% or more of the original principal amount of such Put Indebtedness may come due when it is assumed that (a) the portion of Put Indebtedness which may come due in such Fiscal Year matures over 30 years from the date of issuance of the Put Indebtedness, bears interest on the unpaid balance at the Projected Rate and is payable on a level annual debt service basis over a period of no more than 30 years or (b) the portion of Put Indebtedness which may come due in such Fiscal Year matures according to its actual principal amortization schedule and bears interest on the unpaid balance at the Projected Rate, but this subparagraph (b) shall only be used if the amortization of all Indebtedness of the Obligated Group outstanding, when the Put Indebtedness debt service being calculated is calculated according to this subparagraph (b), varies no more than 10% per year or (c) such Put Indebtedness bears interest at the Projected Rate and is payable according to the principal amortization schedule set forth in a binding commitment of the type described in clause (1) above; or (iii) the aggregate principal amount of all Put Indebtedness issued pursuant to this subparagraph (F) does not exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available. (G) Liabilities for contributions to self-insurance or shared or pooled-risk insurance programs required or permitted to be maintained under the Master Indenture. (H) Indebtedness consisting of accounts payable incurred in the ordinary course of business or other Indebtedness not incurred or assumed primarily to assure the repayment of money borrowed or credit extended which Indebtedness is incurred in the ordinary course of business, including but not limited to deferred obligations for the refund or repayment of Entrance Fees. (I) Indebtedness incurred in connection with a sale or pledge of accounts receivable with or without recourse by any Member consisting of an obligation to repurchase all or a portion of such accounts receivable upon certain conditions, provided that the principal amount of such Indebtedness permitted by the Master Indenture shall not exceed the aggregate sale price of such accounts receivable received by such Member. (J) Non-Recourse Indebtedness, without limit. (K) Extendable Indebtedness if the conditions set forth in subparagraph (A) above are met when it is assumed that (i) such Indebtedness bears interest at the Projected Rate and is amortized on a level debt service basis over a term equal to the remaining term of the Extendable Indebtedness or (ii) such Indebtedness bears interest at the Projected Rate and is payable in accordance with its actual amortization schedule, but only if the debt service on all Indebtedness of the Obligated Group Outstanding when the Extendable Indebtedness debt service being calculated is calculated in accordance with this subparagraph (ii), varies by no more than 10% per year. C-42

335 (L) (M) Subordinated Indebtedness, without limit. Commitment Indebtedness, without limit. (N) Indebtedness the principal amount of which at the time incurred, together with the aggregate principal amount of all other Indebtedness then outstanding which was issued pursuant to the provisions of this subparagraph (N) and which has not been subsequently reclassified as having been issued under subparagraph (A), (D), (E) or (F) above, does not exceed 10% of the Revenues of the Obligated Group for the latest preceding Fiscal Year for which financial statements reported upon by independent certified public accountants are available provided, however, that the total amount of all Indebtedness outstanding which was issued pursuant to the provisions of subparagraphs (D), (E)(ii), (F)(iii) and this subparagraph (N) shall not exceed 15% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available. It is agreed and understood by the parties to the Master Indenture that various types of Indebtedness may be incurred under any of the above-referenced subparagraphs with respect to which the tests set forth in such subparagraph are met and need not be incurred under only a subparagraph specifically referring to such type of Indebtedness (e.g., Balloon Indebtedness and Put Indebtedness may be incurred under subparagraph (A) above if the tests therein are satisfied). Each Member covenants that Indebtedness of the type permitted to be incurred under subparagraph (I) above will not be allowed to become overdue for a period in excess of that which is ordinary for similar institutions without being contested in good faith and by appropriate proceedings. Each Member covenants that prior to, or as soon as reasonably practicable after, the incurrence of Indebtedness by such Member for money borrowed or credit extended, or the equivalent thereof, after the date of issuance of the Series 2010 Obligations, it will deliver to the Master Trustee an Officer s Certificate which identifies the Indebtedness incurred, identifies the subparagraph described under this caption pursuant to which such Indebtedness was incurred, demonstrates compliance with the provisions of such subparagraph and attaches a copy of the instrument evidencing such Indebtedness; provided, however, that this requirement shall not apply to Indebtedness incurred pursuant to subparagraph (G) or (H) above. Each Member agrees that, prior to incurring Additional Indebtedness for money borrowed from or credit extended by entities other than Related Issuers, sellers of real or personal property for purchase money debt, lessors of such property or banks or other institutional lenders, it will provide the Master Trustee with an opinion of Independent Counsel not objected to by the Master Trustee to the effect that, to such Counsel s knowledge, such Member has complied in all material respects with all applicable state and federal laws regarding the sale of securities in connection with the incurrence of such Additional Indebtedness (including the issuance of any securities or other evidences of indebtedness in connection therewith) and such Counsel has no reason to believe that a right of rescission under such laws exists on the part of the entities to which such Additional Indebtedness is to be incurred. The provisions of the Master Indenture notwithstanding, the Members of the Obligated Group may not incur any Additional Indebtedness the proceeds of which will be used for the acquisition of real Property or the construction of any Facilities unless the right, title and interest in any assets to be financed or refinanced with the proceeds of such Additional Indebtedness and the real estate upon which such assets will be located have been mortgaged and assigned to the Master Trustee pursuant to a mortgage or deed of trust in substantially the form of the Mortgage and such assets and real estate are not subject to any other Lien except for Permitted Encumbrances. CALCULATION OF DEBT SERVICE AND DEBT SERVICE COVERAGE The various calculations of the amount of Indebtedness of a Person, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness required under certain provisions of the Master Indenture shall be made in a manner consistent with that described under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS above and under this caption. In the case of Balloon or Put Indebtedness issued pursuant to subparagraph (E) or (F) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS, unless such Indebtedness is reclassified pursuant to the provisions summarized under this caption as having been issued C-43

336 pursuant to another subparagraph under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness for future periods shall be calculated on the assumption that such Indebtedness is being issued simultaneously with such calculation. With respect to Put Indebtedness, if the option of the holder to require that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date, or if the requirement that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date (other than at the option of such holder and other than pursuant to any mandatory sinking fund or any similar fund), has expired or lapsed as of the date of calculation, such Put Indebtedness shall be deemed payable in accordance with its terms. In determining the amount of debt service payable on Indebtedness in the course of the various calculations required under certain provisions of the Master Indenture, if the terms of the Indebtedness being considered are such that interest thereon for any future period of time is expressed to be calculated at a varying rate per annum, a formula rate or a fixed rate per annum based on a varying index, then for the purpose of making such determination of debt service, interest on such Indebtedness for such period (the Determination Period ) shall be computed by assuming that the rate of interest applicable to the Determination Period is equal to the average of the rate of interest (calculated in the manner in which the rate of interest for the Determination Period is expressed to be calculated) which was in effect on the last date of each of the twelve full calendar months immediately preceding the month in which such calculation is made; provided that if the index or other basis for calculating such interest was not in existence for at least twelve full calendar months next preceding the date of calculation, the rate of interest for such period shall be deemed to be the average rate of interest that was in effect on the last day of each full calendar month next preceding the date of calculation; and if the average rate of interest borne by such Indebtedness for such shorter period cannot be calculated, the rate of interest for such period shall be deemed to be the Projected Rate. No debt service shall be deemed payable upon the exercise by a holder of Extendable Indebtedness of the option to tender such Indebtedness for payment. Obligations issued to secure Indebtedness permitted to be incurred under the provisions of the Master Indenture summarized above under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS shall not be treated as Additional Indebtedness in a manner which would require such Indebtedness to be included more than one time in the calculations performed under the Master Indenture. No debt service shall be deemed payable with respect to Commitment Indebtedness until such time as funding occurs under the commitment which gave rise to such Commitment Indebtedness. From and after such funding, the amount of such debt service shall be calculated in accordance with the actual amount required to be repaid on such Commitment Indebtedness and the actual interest rate and amortization schedule applicable thereto. No Additional Indebtedness shall be deemed to arise when any funding occurs under any such commitment or any such commitment is renewed upon terms which provide for substantially the same terms of repayment of amounts disbursed pursuant to such commitment as obtained prior to such renewal. In addition, no Additional Indebtedness shall be deemed to arise when Indebtedness which bears interest at a variable rate of interest is converted to Indebtedness which bears interest at a fixed rate or the method of computing the variable rate on such Indebtedness is changed or the terms upon which Indebtedness, if Put Indebtedness, may be or is required to be tendered for purchase are changed, if such conversion or change is in accordance with the provisions applicable to such variable rate Indebtedness or Put Indebtedness in effect immediately prior to such conversion or change. Balloon Indebtedness incurred as provided under subparagraph (B) or (N) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS, unless reclassified pursuant to the provisions summarized under this caption, shall be deemed to be payable in accordance with the assumptions set forth in subparagraph (E)(i)(2) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS. Put Indebtedness incurred as provided under subparagraph (B) or (N) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS, unless reclassified pursuant to the provisions summarized under this caption, shall be deemed to be payable in accordance with the assumptions set forth in subparagraph (F)(i) of SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS. For the purpose of determining whether any particular Guaranty may be incurred, it shall be assumed that 100% of the Indebtedness guaranteed is Funded Indebtedness of the guarantor under such Guaranty. For the purpose of calculating any historical Debt Service Requirements, the guarantor s Debt Service Requirements under a Guaranty shall be deemed to be the actual amount paid on such Guaranty by the guarantor. For any other purpose, a C-44

337 guarantor shall be considered liable only for 20% of the annual debt service requirement on the Indebtedness guaranteed; provided, however, if the guarantor has been required by reason of its guaranty to make a payment in respect of such Indebtedness within the immediately preceding 24 months, the guarantor shall be considered liable for 100% of the annual debt service requirement on the Indebtedness guaranteed. For purposes of the various calculations required under the Master Indenture for Capitalized Leases, the Capitalized Rentals under a Capitalized Lease at the time of such calculation shall be deemed to be the principal payable thereon. Each Member may elect to have Indebtedness issued pursuant to one provision summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS, including without limitation subparagraph (N), reclassified as having been incurred under another provision under SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS by demonstrating compliance with such other provision on the assumption that such Indebtedness is being reissued on the date of delivery of the materials required to be delivered under such other provision including the certification of any applicable Projected Rate. From and after such demonstration, such Indebtedness shall be deemed to have been incurred under the provision with respect to which such compliance has been demonstrated until any subsequent reclassification of such Indebtedness. Anything in the Master Indenture to the contrary notwithstanding, any portion of any Indebtedness of any Member for which an Interest Rate Agreement has been obtained by such Member shall be deemed to bear interest for the period of time that such Interest Rate Agreement is in effect at a net rate which takes into account the interest payments made by such Member on such Indebtedness and the payments made or received by such Member on such Interest Rate Agreement; provided that the long-term credit rating of the provider of such Interest Rate Agreement (or any guarantor thereof) is in one of the three highest rating categories of any Rating Agency (without regard to any refinements of gradation of rating category by numerical modifier or otherwise) or is at least as high as that of the Obligated Group. For the purposes of determining the Debt Service Requirements for any future period of time with respect to any Indebtedness subject to an Interest Rate Agreement satisfying the requirements of the preceding sentence (i) if the Member is required to pay a fixed rate of interest under the Interest Rate Agreement, such Indebtedness shall be deemed to bear interest at such fixed rates and (ii) if the Member is required to pay interest at a variable rate under the Interest Rate Agreement, Debt Service Requirements on such Indebtedness shall be calculated in accordance with the second paragraph under this caption. In addition, so long as any Indebtedness is deemed to bear interest at a rate taking into account an Interest Rate Agreement, any payments made by a Member on such Interest Rate Agreement shall be excluded from Expenses and any payments received by a Member on such Interest Rate Agreement shall be excluded from Revenues, in each case, for all purposes of the Master Indenture. SALE, LEASE OR OTHER DISPOSITION OF PROPERTY Each Member agrees that it will not, in any consecutive 12-month period, sell, lease or otherwise dispose (including without limitation any involuntary disposition) of Property (either real or personal property, including cash and investments) unless the Obligated Group Agent delivers an Officer s Certificate stating that the Property has been transferred in one or more of the following transfers or other dispositions of Property: (a) (b) In return for other Property of equal or greater value and usefulness; In the ordinary course of business upon fair and reasonable terms; (c) To any Person, if prior to such sale, lease or other disposition there is delivered to the Master Trustee an Officer s Certificate of a Member stating that, in the judgment of the signer, such Property has, or within the next succeeding 24 calendar months is reasonably expected to, become inadequate, obsolete, worn out, unsuitable, unprofitable, undesirable or unnecessary and the sale, lease or other disposition thereof will not impair the structural soundness, efficiency or economic value of the remaining Property; (d) From a Member to another Member; provided, however that none of the Land or any other Property financed with the proceeds of the Series 2010 Bonds shall be transferred by the Corporation to any other Member unless the Bond Trustee has received an Opinion of Bond Counsel to the effect that such transfer shall not adversely affect the validity of the Series 2010 Bonds or any Related Bonds or, with respect to any tax-exempt C-45

338 bonds, any exemption from federal income taxation to which such Series 2010 Bonds or Related Bonds would otherwise be entitled; (e) Upon fair and reasonable terms no less favorable to the Member than would be obtained in a comparable arm s-length transaction; (f) The Property sold, leased or otherwise disposed of does not, for any consecutive 12-month period, exceed 3% of the total assets (based on fair market value) of the Obligated Group (as shown on the most recent audited financial statements of the Obligated Group) and the Historical Debt Service Coverage Ratio was not less than 1.30:1 for the last Fiscal Year for which audited financial statements have been delivered to the Master Trustee, provided that in calculating the Historical Debt Service Coverage Ratio for purposes of this payment, the Income Available for Debt Service will be reduced by one year s estimated interest earnings attributable the moneys to be used for the payment using, at the option of the Obligated Group Agent, either (1) the current budgeted investment rate, as certified in an Officer s Certificate, or (2) the actual average investment rate on the transferred funds, as certified in a report of a Consultant and (ii) as of the end of the last fiscal quarter for which financial statements have been delivered to the Master Trustee as required under to the Master Trustee as required under the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS, the Obligated Group had not less than 180 Days Cash on Hand after giving effect to the transaction. If the Historical Debt Service Coverage Ratio is not less than 1.30:1, the foregoing percentage of the total Book Value or Current Value may be increased as follows under the following conditions: (i) to 5%, if Days Cash on Hand would not be less than 300 after the effect of such sale, lease or disposition of assets; or (ii) to 7.5%, if Days Cash on Hand would not be less than 400 after the effect of such sale, lease or disposition of assets; or (iii) to 10%, if Days Cash on Hand would not be less than 500 after the effect of such sale, lease or disposition of assets; (g) To any Person, if such Property consists solely of assets which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use for payment on the Obligations; (h) If the amount of such Property sold, leased or otherwise disposed of does not, for any consecutive twelve-month period, exceed 1% of the total Book Value (or Current Value if the Obligated Group Agent so elects) of all Property of the Obligated Group; and (i) Accrued and deferred management and development fees due under the Management Agreement and the Development Agreement and payments made under the Liquidity Support Agreement as permitted by the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PAYMENTS ON AFFILIATE RELATED SUBORDINATED INDEBTEDNESS AND THE SERIES 2010 SUBORDINATED DEBT, and PAYMENT OF MANAGEMENT FEES. If the Property to be disposed in accordance with the provisions of the Master Indenture summarized under this caption is Mortgaged Property, the Master Trustee shall, upon the request of the Obligated Group Agent, release such Mortgaged Property from the Mortgage pursuant to the terms of the Mortgage. LIENS ON PROPERTY The limitations in the Master Indenture summarized in subparagraph (e) under the caption Summary of Certain Provisions of the Master Indenture Covenants as to Corporate Existence, Maintenance of Properties, and Similar Matters; Right of Contest notwithstanding, a Lien on Property of any Member securing Indebtedness or an Interest Rate Agreement shall be classified a Permitted Encumbrance (as provided in clause (b) of the definition thereof) and therefore be permitted if: (1) such Lien secures Non-Recourse Indebtedness; or C-46

339 (2) (a) after giving effect to such Lien and all other Liens classified as Permitted Encumbrances under this subparagraph (2)(a) and clause (y) of the definition of Permitted Encumbrances, the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property of the Obligated Group which is Encumbered is not more than 10% of the value of all of the Property of the Obligated Group (calculated on the same basis as the value of the Encumbered Property) and (b) the Obligated Group delivers an Officer s Certificate stating that the conditions described in subparagraph (A) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS are met for allowing the incurrence of one dollar of additional Funded Indebtedness. RIGHT TO CONSENT Each Member shall have the right to agree in any Related Bond Indenture, Related Loan Document or Supplemental Master Indenture pursuant to which an Obligation is issued that, so long as any Related Bonds remain outstanding under such Related Bond Indenture or such Obligation remains outstanding, any or all provisions of the Master Indenture which provide for approval, consent, direction or appointment by the Master Trustee, provide that anything must be satisfactory or not objected to by the Master Trustee, allow the Master Trustee to request anything or contain similar provisions granting discretion to the Master Trustee shall be deemed to also require or allow, as the case may be, the approval, consent, appointment, satisfaction, acceptance, request or like exercise of discretion by the Related Bond Trustee, and that all items required to be delivered or addressed to the Master Trustee under the Master Indenture or under the Mortgage shall also be delivered or addressed to the Related Bond Trustee, unless waived thereby. If a Member enters into any such agreements in a Related Bond Indenture, Related Loan Document or Supplemental Master Indenture, such agreements shall be deemed to be included in the Master Indenture as if set forth in the Master Indenture. LIQUIDITY COVENANT The Obligated Group covenants that it will calculate the Days Cash on Hand or the Cash to Indebtedness Ratio of the Obligated Group as of June 30 and December 31 of each Fiscal Year (each such date being a Testing Date ), commencing with the Initial Testing Date. The Obligated Group shall deliver an Officer s Certificate setting forth such calculation as of June 30 to the Master Trustee no later than August 15, and include such calculation as of December 31 in the Officer s Certificate delivered pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS. Each Obligated Group Member is required to conduct its business so that on each Testing Date the Obligated Group shall have a Cash to Indebtedness Ratio of (a) no less than 0.25 for the first two Testing Dates, starting with the Initial Testing Date, (b) no less than for the next year (the next two Testing Dates), and (c) no less than 0.30 thereafter (the Liquidity Requirement ). At the option of the Obligated Group Agent, the Liquidity Requirement can be converted to a covenant to maintain no less than 180 Days Cash on Hand on each Testing Date if for three consecutive Fiscal Years the Obligated Group has reported (a) an Historical Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30 or more on each Testing Date. The Obligated Group Agent may elect to convert the Liquidity Requirement as of a specified date (the Liquidity Requirement Conversion Date ) in an Officer s Certificate, demonstrating compliance with the test in the preceding sentence. After the Liquidity Requirement Conversion Date, the Liquidity Requirement will be a covenant to maintain no less than 180 Days Cash on Hand on each June 30 and December 31. If the Cash to Indebtedness Ratio or the amount of Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Agent shall, within 30 days after delivery of the Officer s Certificate disclosing such deficiency, deliver an Officer s Certificate approved by a resolution of the Governing Body of the Obligated Group Agent to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of the Cash to Indebtedness Ratio or Days Cash on Hand to the Liquidity Requirement for future periods. If the Obligated Group has not raised the level of the Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, to the Liquidity Requirement by the Testing Date immediately subsequent to the delivery of the Officer s Certificate required in the preceding paragraph, the Obligated Group Agent shall, within 30 days after delivery of the Officer s Certificate disclosing such deficiency, select a Consultant to make recommendations with respect to C-47

340 the rates, fees and charges of the Obligated Group and the Obligated Group s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. Such Consultant shall be approved and retained as set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. A copy of the Consultant s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days after the date such Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Liquidity Requirement for any Testing Date shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan or retaining a Consultant and follows each recommendation contained in such plan or Consultant s report to the extent feasible (as determined by the Governing Body of the Obligated Group Agent) and permitted by law. MARKETING AND OCCUPANCY COVENANTS Marketing Covenant. Beginning with the fiscal quarter ending June 30, 2010 and ending at the end of the first full fiscal quarter following the date on which Stable Occupancy for the Independent Living Units included in the Series 2010 Project has been achieved, the Obligated Group will use its best efforts to maintain the percentage of Independent Living Units which are Reserved (the Percentage of Reserved Independent Living Units ) at or above the applicable levels set forth below, which determinations shall be measured as of the last day of the applicable quarter (the Marketing Requirements ). The applicable Marketing Requirements for the applicable quarter shall be either (i) the Level I Marketing Requirements as long as the Adjusted Level I Occupancy Requirements set forth in the following sub-caption have not been satisfied or (ii) the Adjusted Level I Marketing Requirements if the Adjusted Level I Occupancy Requirements set forth in the following sub-caption have been satisfied. Percentage of Reserved Independent Living Units (%) Quarter Ending Level I Adjusted Level I 6/30/ % 9/30/ % 12/31/ % 3/31/ % 6/30/ % 9/30/ % 12/31/ % 3/31/ % 72.20% 6/30/ % 72.20% 9/30/ % 73.40% 12/31/ % 74.50% 3/31/ % 6/30/ % 9/30/ % 12/31/ % 3/31/ % 6/30/ % 9/30/ % 12/31/ % 3/31/ % 06/30/15 through Stable Occupancy for Independent Living Units 90.00% If the report submitted pursuant to the subparagraph (b)(i) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL C-48

341 STATEMENTS AND RELATED MATTERS states that the Percentage of Reserved Independent Living Units for any fiscal quarter is less than the applicable Marketing Requirement set forth above for that fiscal quarter, the Obligated Group Agent shall submit to the Master Trustee, within 45 days after the end of such fiscal quarter, a marketing corrective action plan (a Marketing Corrective Action Plan ) which includes the following information: (a) the Percentage of Reserved Independent Living Units, including the number of reservations and cancellations during such fiscal quarter and on an aggregate basis, (b) a forecast, prepared by management of the Corporation, of the number of reservations expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Marketing Corrective Action Plan is being prepared; and (c) a detailed description of the reasons for the Obligated Group s failure to satisfy the Marketing Requirements and management s plan to increase the Percentage of Reserved Independent Living Units to at least the level required by the Marketing Requirements set forth in the Master Indenture by the end of the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Officer s Certificate is being submitted. If the report submitted pursuant to the subparagraph (b)(i) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS states that the Obligated Group has failed to meet the Marketing Requirement for any two consecutive fiscal quarters, the Obligated Group Agent shall select a Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to at least the Marketing Requirement set forth in the Master Indenture on the earliest date practicable. Such Consultant shall be approved and retained as set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. Within 60 days of retaining any such Consultant, the Obligated Group Agent shall cause a copy of the Consultant s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant s report more than one time in any six month period. Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Marketing Requirement for any fiscal quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Marketing Corrective Action Plan or obtaining a Consultant s report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Agent) and permitted by law. [Remainder of Page Intentionally Left Blank] C-49

342 Occupancy Covenant. Within 30 days of receipt of the Occupancy Certificate for the Independent Living Units included in the Project, the Corporation shall notify the Master Trustee that such Occupancy Certificate has been received and deliver a copy of the Occupancy Certificate with such notice. The Obligated Group covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of the Occupancy Certificate for the Independent Living Units included in the Series 2010 Project and (b) ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Series 2010 Project has been achieved (an Occupancy Quarter ), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units included in the Series 2010 Project (the Percentage of Units Occupied ) at or above the Level I occupancy requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the Occupancy Requirements ): Occupancy Level I Adjusted Level I Quarter Occupancy Requirements Occupancy Requirement * % 25.4% % 50.3% % 65.3% % 72.3% % % % % % % % % % % % 16 and thereafter 90.0% * Adjusted Level I Occupancy Requirements are used only for purposes of the provisions of the Master Indenture summarized above under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE MARKETING AND OCCUPANCY COVENANTS Marketing Covenant.. If the report submitted pursuant to the subparagraph (b)(i) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS states that the Percentage of Units Occupied for any Occupancy Quarter is less than the Level I Occupancy Requirement set forth above for that Occupancy Quarter, the Obligated Group Agent shall within 45 days after the end of such Occupancy Quarter submit an occupancy corrective action plan prepared by management to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above by the Occupancy Quarter immediately succeeding the Occupancy Quarter with respect to which the corrective action plan is being submitted (a Corrective Occupancy Action Plan ). If the report submitted pursuant to the subparagraph (b)(i) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS states that the Percentage of Units Occupied for any two consecutive Occupancy Quarters is less than the Level I Occupancy Requirement set forth above for those Occupancy Quarters, the Obligated Group Agent shall select a Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above on the earliest date practicable. Such Consultant shall be approved and retained as set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. Within 60 days after retaining any such Consultant, the Obligated Group Agent shall cause a copy of the Consultant s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall C-50

343 follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant s report more than one time in any six month period. Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Occupancy Requirement for any Occupancy Quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Corrective Occupancy Action Plan or obtaining a Consultant s report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Agent) and permitted by law. ENTRANCE FEES FUND The Master Trustee shall establish and maintain a separate account to be known as the Entrance Fees Fund Timothy Place, NFP (the Entrance Fees Fund ). All moneys received by the Master Trustee and held in the Entrance Fees Fund pursuant to the provisions of the Master Indenture summarized under this caption shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding under the Master Indenture (except as otherwise provided). Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. The Members of the Obligated Group agree that all Initial Entrance Fees received by the Members of the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fees Fund. Moneys in the Entrance Fees Fund shall be disbursed by the Master Trustee on the first Business Day of each month (or as otherwise described under FIFTH below) as follows: FIRST: to the Members to pay refunds required by Residency Agreements. Such disbursements shall be made upon receipt by the Master Trustee of a written certificate of an Authorized Officer of a Member certifying that it is required by a Residency Agreement to pay refunds within the next 30 days and the amount of such refunds. SECOND: to the Working Capital Fund established by the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE WORKING CAPITAL FUND, until the total principal amount deposited into the Working Capital Fund equals $16,700,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund or transfer Entrance Fees from the Entrance Fees Fund into the Working Capital Fund once a total of $16,700,000 has been transferred. THIRD: to the Operating Reserve Fund established by the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE OPERATING RESERVE FUND, until the amount on deposit in the Operating Reserve Fund equals $5,000,000 (the Operating Reserve Fund Requirement ). On each Review Date (as defined below), the Master Trustee shall disburse the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to the Operating Reserve Fund Requirement. The Master Trustee shall replenish up to $5,000,000 of any funds withdrawn from the Operating Reserve Fund from funds deposited in the Entrance Fees Fund for a total aggregate deposit of not more than $10,000,000. Notwithstanding the foregoing limitations on the amount of Entrance Fees deposited in the Operating Reserve Fund, if a transfer of moneys from the Liquidity Support Funds to the Operating Reserve Fund has occurred as described in the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PROVIDENCE LIQUIDITY SUPPORT FUND, SPECIAL LIQUIDITY SUPPORT FUND and SUPPLEMENTAL LIQUIDITY SUPPORT FUND or in the Liquidity Support Agreement, the Master Trustee shall deposit to the Operating Reserve Fund the amount, if any, needed to increase the amount on deposit in the Operating Reserve Fund to $1,000,000. FOURTH: to the Providence Liquidity Support Fund and the Special Liquidity Support Fund (on a pro rata basis) and the Supplemental Liquidity Support Fund (in that order), any amount necessary to reimburse any amounts advanced under the Liquidity Support Agreement to pay costs prior to the issuance of the initial Occupancy Certificate for the Series 2010 Project. C-51

344 FIFTH: After the transfers pursuant to the preceding numbered paragraphs have been made, the Master Trustee shall review the amount on deposit in the Entrance Fees Fund on the first day of each January, April, July and October (each such day a Review Date ). Moneys in the Entrance Fees Fund on each Review Date (or, upon the request of the Obligated Group Agent, on any Business Day) shall be disbursed (in the order listed below) by the Master Trustee as follows: (i) to the Series 2010E Bond Trustee for deposit into the Optional Redemption Fund established under the Series 2010E Bond Indenture for redemption of Series 2010E Bonds pursuant to the Series 2010E Bond Indenture and prepayment of the Series 2010E Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000 no such transfer shall be made; or (ii) after making all of the transfers required by (i) above, to the Series 2010 Bond Trustee, for deposit into the Optional Redemption Fund established under the Series 2010 Tax-Exempt Bond Indenture for redemption of Series 2010D-3 Bonds pursuant to the Series 2010 Tax-Exempt Bond Indenture and prepayment of the Series 2010D-3 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000 no such transfer shall be made; or (iii) after making all of the transfers required by (i) and (ii) above, to the Series 2010 Tax Exempt Bond Trustee, for deposit into the Optional Redemption Fund established under the Series 2010 Tax-Exempt Bond Indenture for redemption of Series 2010D-2 Bonds pursuant to the Series 2010 Tax- Exempt Bond Indenture and prepayment of the Series 2010D-2 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000 no such transfer shall be made; or (iv) after making all of the transfers required by (i), (ii) and (iii) above, to the Series 2010 Tax Exempt Bond Trustee, for deposit into the Optional Redemption Fund established under the Series 2010 Tax-Exempt Bond Indenture for redemption of Series 2010D-1 Bonds pursuant to the Series 2010 Tax-Exempt Bond Indenture and prepayment of the Series 2010D-1 Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000 no such transfer shall be made; or (v) after making all of the transfers required by (i) through (iv) above, to the Series 2010 Tax Exempt Bond Trustee, for deposit into the Optional Redemption Fund established under the Series 2010 Tax-Exempt Bond Indenture for redemption of Series 2010C Bonds pursuant to the Series 2010 Tax- Exempt Bond Indenture and prepayment of the Series 2010C Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000 no such transfer shall be made; or (vi) after making all of the transfers required by (i) through (v) above, to the Series 2010 Tax Exempt Bond Trustee, for deposit into the Optional Redemption Fund established under the Series 2010 Tax-Exempt Bond Indenture for redemption of Series 2010B Bonds pursuant to the Series 2010 Tax- Exempt Bond Indenture and prepayment of the Series 2010B Obligation; provided, however, that if the amount on deposit in the Operating Reserve Fund is less than $1,000,000 no such transfer shall be made; or (vii) Funds shall be transferred on each Review Date as described above regardless of the amount to be so transferred. There is no minimum amount that may be transferred on a regularly scheduled quarterly Review Date. However, any funds transferred at the request of the Obligated Group Agent on a Business Day other than a regularly scheduled Review Date may be transferred only if the amount to be so transferred from the Entrance Fees Fund is at least $100,000. SIXTH: When the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee stating that (A) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds have been redeemed, (B) no Event of Default has occurred and is continuing under the Master Indenture, and (C) requesting that any funds on deposit in the Entrance Fees Fund be transferred to the Corporation, the Members of the Obligated Group need not deposit any Entrance Fees into the Entrance Fees Fund, any amounts on deposit in the Entrance Fees Fund shall be remitted to the Corporation by the Master Trustee, and the Entrance Fees Fund shall be closed. C-52

345 WORKING CAPITAL FUND The Master Trustee shall establish and maintain a separate account to be known as the Working Capital Fund Timothy Place, NFP (the Working Capital Fund ). All moneys received by the Master Trustee and held in the Working Capital Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding under the Master Indenture (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. Moneys in the Working Capital Fund shall be disbursed by the Master Trustee to or for the account of the Corporation and the Foundation within seven days after receipt by the Master Trustee of a Written Request to the Master Trustee certifying that the withdrawal is made to pay (A) costs of the initial construction and equipping of the Series 2010 Project, (B) development and marketing fees and expenses related to the Series 2010 Project, (C) operating expenses relating to the Series 2010 Project, (D) the costs of needed repairs to the Series 2010 Project, (E) routine capital expenditures relating to the Series 2010 Project, (F) judgments against any Member of the Obligated Group, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which those Entrance Fees were received, (H) amounts required to restore funds on deposit to the Debt Service Reserve Fund created under the Bond Indentures to their required levels, or (I) amounts due on any Obligations (other than optional prepayment or redemption), but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by an Affiliate. All amounts on deposit in the Working Capital Fund may be released to the Obligated Group Agent, and the Working Capital Fund shall be closed, upon receipt by the Master Trustee of an Officer s Certificate of the Obligated Group Agent requesting such release which Officer s Certificate shall state that (i) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds have been redeemed, (ii) Stable Occupancy with respect to the Series 2010 Project has been achieved and (iii) no Event of Default has occurred and is continuing under the Master Indenture. OPERATING RESERVE FUND The Master Trustee shall establish and maintain a separate account to be known as the Operating Reserve Fund Timothy Place, NFP (the Operating Reserve Fund ). All moneys received by the Master Trustee and held in the Operating Reserve Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Obligations outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture. Moneys in the Operating Reserve Fund shall be disbursed by the Master Trustee to or for the account of the Corporation and the Foundation within seven days after receipt by the Master Trustee of an Officer s Certificate of the Corporation and the Foundation to the Master Trustee certifying that (i) the withdrawal is made to pay (A) costs of the initial construction and equipping of the Series 2010 Project, (B) development and marketing fees and expenses related to the Series 2010 Project, (C) operating expenses relating to the Series 2010 Project, (D) the costs of needed repairs to the Series 2010 Project, (E) routine capital expenditures relating to the Series 2010 Project, (F) judgments against any Member of the Obligated Group, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which those Entrance Fees were received, or (H) amounts due on any Obligations (other than optional prepayment or redemption), but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by an Affiliate, (ii) moneys anticipated to be expended in the calendar month following the month in which the Officer s Certificate is submitted, together with an itemized budget describing the uses for which the moneys are needed and the amount needed for each use, and (iii) no other funds are available or will reasonably be available to make the payments. All amounts on deposit in the Operating Reserve Fund may be released to the Corporation, and the Operating Reserve Fund shall be closed, upon receipt by the Master Trustee of an Officer s Certificate of the Obligated Group Agent requesting such release which Officer s Certificate shall state that (a) all of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds and the Series 2010E Bonds have been redeemed, (b) Stable Occupancy with respect to the Series 2010 Project has been achieved, and (c) no Event of Default has occurred and is continuing under the Master Indenture. C-53

346 INVESTMENT OF ENTRANCE FEES FUND, OPERATING RESERVE FUND AND WORKING CAPITAL FUND Any moneys held by the Master Trustee in the Entrance Fees Fund, the Operating Reserve Fund and the Working Capital Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Agent, in Permitted Investments. Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Agent in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Any investment income or other gain from any investment of moneys on deposit in the Entrance Fees Fund, the Operating Reserve Fund and the Working Capital Fund shall be retained in such funds. Any loss resulting from such investments shall be charged to the Operating Reserve Fund, the Entrance Fees Fund or the Working Capital Fund, as the case may be. The investment of the moneys held in the Entrance Fee Fund, Working Capital Fund and Operating Reserve Fund shall be subject to yield restriction as provided in the Tax Exemption Agreement until the Obligated Group Agent delivers an opinion of nationally recognized municipal bond counsel (which counsel and opinion are in a form acceptable to the Master Trustee) to the Master Trustee to the effect that no such yield restriction is required to maintain any exemption from federal income taxation to which the interest on any Related Bonds would otherwise be entitled. The Master Trustee shall be entitled to assume, absent receipt by the Master Trustee of written notice to the contrary, that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter. All investments shall constitute a part of the fund or account from which the moneys used to acquire such investments have come. The Master Trustee shall sell and reduce to cash a sufficient amounts of investments in a fund or account whenever the cash balance therein is insufficient to pay the amounts required to be paid therefrom. The Master Trustee may transfer investments from any fund or account to any other fund or account in lieu of cash when a transfer is required or permitted by the provisions of the Master Indenture. In computing the amount of any fund or account, Permitted Investments purchased as an investment of moneys therein shall be valued at the then market price of such obligations. If the market price of such obligations is not readily available, the Master Trustee shall determine the value of such obligations in any reasonable manner. [Remainder of Page Intentionally Left Blank] C-54

347 CUMULATIVE CASH OPERATING LOSS COVENANT The Obligated Group has covenanted that commencing with (a) the first fiscal quarter ending after the earliest date a resident has taken physical possession of one of the Independent Living Units included in the Series 2010 Project (the Initial Occupancy Date ) if such date is more than 30 days prior to the end of such fiscal quarter or (b) first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (a Testing Date ). The requirement to test Cumulative Cash Operating Loss shall end on the Initial Testing Date. Each Member is required to conduct its business so that as of each such Testing Date the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount described below. Quarter Cumulative Cash Operating Loss 1 ($1,200,000) 2 (2,500,000) 3 (4,400,000) 4 (8,000,000) 5 (10,600,000) 6 (13,100,000) 7 (14,400,000) 8 (15,100,000) 9 (15,500,000) 10 (15,800,000) 11 (16,200,000) 12 (16,400,000) 13 and thereafter (16,700,000) If the report submitted pursuant to the subparagraph (b)(i) or (ii) of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS states that, as of any Testing Date, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels set forth above, the Obligated Group Agent shall, within 45 days of such Testing Date submit an Officer s Certificate to each Required Information Recipient setting forth in reasonable detail the reasons for such noncompliance and adopting a specific plan setting forth steps to be taken designed to achieve compliance for future periods. If, as of any two consecutive Testing Dates, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels set forth above, the Obligated Group Agent shall select, within 45 days of the second such Testing Date, a Consultant to make recommendations. Such Consultant shall be approved and retained as set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. The Consultant shall make recommendations with respect to the Obligated Group s methods of operation and other factors affecting its financial condition in order to decrease the Cumulative Cash Operating Loss to the required level for future periods. A copy of the Consultant s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days of the date the Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. Notwithstanding any other provision of the Master Indenture, noncompliance with Cumulative Cash Operating Loss covenant summarized above will not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the required procedures for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined by the Governing Body of the Obligated Group Agent) and permitted by law. C-55

348 APPLICATION FOR RATING Not later than 150 days after receipt by the Obligated Group Agent of audited financial statements of the Obligated Group for the first full Fiscal Year following the achievement of Stable Occupancy with respect to the Series 2010 Project, and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains a credit rating of BBB- (or an equivalent rating) or better from any Rating Agency (an Investment Grade Credit Rating ). Notwithstanding the foregoing, the requirement to annually approach a Rating Agency shall terminate when the Obligated Group obtains an Investment Grade Credit Rating. Notwithstanding the foregoing, the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group Agent reasonably believes that the Obligated Group will not meet the criteria of any Rating Agency for an Investment Grade Credit Rating based on the then existing published rating criteria of the Rating Agencies. APPROVAL OF CONSULTANTS (a) If at any time the Members of the Obligated are required to engage a Consultant under the provisions of the Master Indenture (other than with respect to the calculations required by the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PERMITTED ADDITIONAL INDEBTEDNESS and SALE, LEASE OR OTHER DISPOSITION OF PROPERTY and any determination of the Projected Rate under the Master Indenture to which the provisions of the Master Indenture summarized under this caption shall not apply), such Consultant shall be engaged in the manner summarized below under this caption. (b) Upon selecting a Consultant as required under the provisions of the Master Indenture, the Obligated Group Agent will notify the Master Trustee of such selection. The Master Trustee shall, as soon as practicable but in no case longer than five Business Days after receipt of notice, notify the holders of all Obligations outstanding under the Master Indenture of such selection. Such notice shall (i) include the name of the Consultant and a brief description of the Consultant, (ii) state the reason that the Consultant is being engaged including a description of the covenant(s) of the Master Indenture that require the Consultant to be engaged, and (iii) state that the holder of the Obligation will be deemed to have consented to the selection of the Consultant named in such notice unless such Obligation holder submits an objection to the selected Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Obligation holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If more than two-thirds in aggregate principal amount of the holders of the outstanding Obligations have been deemed to have consented to the selection of the Consultant, the Obligated Group Agent may engage the Consultant. If more than one-third in aggregate principal amount of the owners of the Obligations outstanding have objected to the Consultant selected, the Obligated Group Agent shall select another Consultant which may be engaged upon compliance with the procedures of the Master Indenture summarized under this caption. (c) When the Master Trustee notifies the holders of Obligations of such selection, the Master Trustee will also request any Related Bond Trustee send a notice containing the information required by subparagraph (b) above to the owners of all of the Related Bonds outstanding. Such Related Bond Trustee shall, as the owner of an Obligation securing such Related Bonds, consent or object to the selection of the Consultant in accordance with the response of the owners of such Related Bonds. If more than two-thirds in aggregate principal amount of the Related Bonds have been deemed to have consented to the selection of the Consultant, the Bond Trustee shall approve the Consultant. If more than one-third in aggregate principal amount of the owners of the Related Bonds have objected to the Consultant selected, the Bond Trustee shall not approve the Consultant. The 15-day notice period described in (b) above may be extended by the Master Trustee in order to permit each Related Bond Trustee to give the owners of the Related Bonds 15 days to respond to the notice given by the Related Bond Trustee. By acceptance of an Obligation securing any Related Bonds, the Related Bond Trustee agrees to comply with the provisions of the Master Indenture summarized under this caption. (d) All Consultant reports required under the Master Indenture shall be prepared in accordance with the then-effective industry-appropriate standards. C-56

349 (e) If a Consultant is required to be engaged under two or more sections of the Master Indenture, the requirements of those sections may (but need not be) satisfied through the engagement of a single Consultant under a single engagement in lieu of multiple engagements. Any requirement for a Consultant s report under the Master Indenture may be satisfied by an update of a previous Consultant s Report so long as the update when taken together with the previous report satisfies the requirements of the Master Indenture. (f) A Consultant s report under one section of the Master Indenture may satisfy a requirement for a Consultant s report under another section of this Master Indenture but only if the nature of the Consultant and the substance of the report are sufficient to satisfy that requirement. (g) The Obligated Group shall not be required to obtain a Consultant s report that satisfies the requirements of a particular section of the Master Indenture more than one time in any six-month period. PAYMENT OF GREYSTONE DEFERRED DEVELOPMENT FEES. A Member will not make payments to Greystone for any Greystone Deferred Development Fees unless the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee prior to any payment of such Greystone Deferred Development Fee certifying that (i) the conditions set forth in the Liquidity Support Agreement for the reduction of the Support Obligation have been satisfied and (ii) the conditions for payment of such fees under the terms of the Greystone Development Agreement have been satisfied. PAYMENTS ON AFFILIATED RELATED SUBORDINATED DEBT AND MANAGEMENT FEES TO AFFILIATES. A Member will not make payments on Affiliate Related Subordinated Indebtedness or Management Fees to Affiliates (except for replenishment of the Liquidity Support Funds pursuant to the provisions of the Master Indenture summarized under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ENTRANCE FEES FUND ) unless the Obligated Group Agent delivers an Officer s Certificate to the Master Trustee prior to any payment on such Affiliated Related Subordinated Indebtedness or Management Fees to Affiliates certifying that the following conditions are satisfied: Project; (a) There have been two full fiscal quarters of Stable Occupancy with respect to the Series 2010 (b) If the proposed payment on the Affiliated Related Subordinated Indebtedness or Management Fees to Affiliates had occurred as of the last day of the most recent fiscal quarter for which financial statements have been delivered under the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS, the Obligated Group would have had a Cash to Debt Indebtedness ratio of at least 0.30 after that payment; (c) If the proposed payment on the Subordinated Indebtedness had occurred during the most recent Fiscal Year for which audited financial statements of the Obligated Group are available, the Historical Debt Service Coverage Ratio for that Fiscal Year would have been not less than 1.30; (d) No Series 2010B Bonds, Series 2010C Bonds, Series 2010D Bonds and Series 2010E Bonds remain Outstanding; and (e) There is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under the Master Indenture or the Loan Agreements. PROVIDENCE LIQUIDITY SUPPORT FUND. (a) The Master Trustee will establish and maintain a separate fund to be known as the Providence Liquidity Support Fund-Timothy Place, NFP (the Providence Liquidity Support Fund ). The Master Trustee shall deposit the moneys it receives from the Liquidity Provider pursuant to the Liquidity Support Agreement in the Providence Liquidity Support Fund. The Providence Liquidity Support Fund shall be the property of the Liquidity Provider, but shall be pledged to fund and secure the Liquidity Provider s obligations under the Liquidity Support Agreement. The Liquidity Support Account is excluded from the trust estate established under the Master Indenture C-57

350 (b) The Bond Trustee may withdraw moneys from the Providence Liquidity Support Fund to the extent necessary to pay costs of the Series 2010 Project in accordance with the Liquidity Support Agreement. The Corporation may withdraw moneys from the Providence Liquidity Support Fund for other purposes in accordance with the Liquidity Support Agreement. Withdrawals made from the Providence Liquidity Support Fund shall be made only on a pro-rata basis together with withdrawals of funds on deposit in the Special Liquidity Support Fund, with such pro rata amounts based on the amounts originally deposited to such funds; provided, however, that no funds shall be withdrawn from the Providence Liquidity Support Fund if any funds remain on deposit in the Supplemental Liquidity Support Fund. (c) The Master Trustee shall monitor the amount in the Providence Liquidity Support Fund. The Master Trustee shall determine the value of the Permitted Investments on deposit in the Providence Liquidity Support Account as soon as practicable as of each June 30 and December 31, upon any Investment Substitution (as defined in (d) below) and upon any withdrawal from the Liquidity Support Funds (each a Liquidity Support Valuation Date ). If on any Liquidity Support Valuation Date the amount on deposit in the Providence Liquidity Support Fund is less than the Providence Support Obligation (as defined in the Liquidity Support Agreement), the Liquidity Support Agreement requires the Liquidity Provider to replenish the amounts on deposit in the Providence Liquidity Support Fund up to the Providence Support Obligation within 120 days of such Liquidity Support Valuation Date. If at any time, (i) the total amount in the Liquidity Support Funds drops to or below $1,000,000 before the Operating Reserve Fund is closed pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE OPERATING RESERVE FUND, (ii) no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund created under the Master Indenture and (iii) the Providence Support Obligation has not been reduced zero as provided in the Liquidity Support Agreement, then the Master Trustee shall transfer the remaining moneys in the Providence Liquidity Support Fund to the Operating Reserve Fund. (d) Any moneys held by the Master Trustee in the Providence Liquidity Support Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Agent, in Permitted Investments. If the Master Trustee has not received written direction from the Obligated Group Agent regarding the investment of the Providence Liquidity Support Fund, moneys held in the Providence Liquidity Support Fund shall be invested or reinvested by the Master Trustee in Permitted Investments described in paragraph (a) of the definition of Permitted Investments. All investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. As set forth in the Liquidity Support Agreement, the Liquidity Provider may provide cash or substitute a new Permitted Investment for a Permitted Investment currently on deposit in the Providence Liquidity Support Fund (an Investment Substitution ). The Master Trustee, unless specifically prohibited by the Obligated Group Agent in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Investment income on the amounts on deposit in the Providence Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the Providence Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the Providence Liquidity Support Fund in excess of the Providence Support Obligation shall be transferred as provided in the Liquidity Support Agreement. (e) Moneys held in the Providence Liquidity Support Fund shall be invested in accordance with the provisions of the Liquidity Support Agreement. The investment of the moneys held in the Providence Liquidity Support Fund shall also be subject to yield restriction as provided in the Tax Exemption Agreement until the Obligated Group Agent delivers an opinion of nationally recognized municipal bond counsel (which counsel and opinion are in a form acceptable to the Master Trustee) to the Master Trustee to the effect that no such yield restriction is required to maintain any exemption from federal income taxation to which the interest on any Related Bonds would otherwise be entitled. (f) When the Providence Support Obligation is reduced pursuant to the provisions of the Liquidity Support Agreement, the Master Trustee shall release the funds on deposit in the Providence Liquidity Support Fund to the Liquidity Provider and close the Providence Liquidity Support Fund. C-58

351 SPECIAL LIQUIDITY SUPPORT FUND. (a) The Master Trustee will establish and maintain a separate fund to be known as the Special Liquidity Support Fund-Timothy Place, NFP (the Special Liquidity Support Fund ). The Master Trustee shall deposit the moneys it receives from the Series 2010E Bond Trustee pursuant to the Liquidity Support Agreement to the Special Liquidity Support Fund and the Series 2010E Bond Indenture. (b) The Bond Trustee may withdraw moneys from the Special Liquidity Support Fund to the extent necessary to pay costs of the Series 2010 Project in accordance with the Liquidity Support Agreement. The Corporation may withdraw moneys from the Special Liquidity Support Fund for other purposes in accordance with the Liquidity Support Agreement. Withdrawals made from the Special Liquidity Support Fund shall be made only on a pro-rata basis together with withdrawals of funds on deposit in the Providence Liquidity Support Fund, with such pro rata amounts based on the amounts originally deposited to such funds; provided, however, that no funds shall be withdrawn from the Special Liquidity Support Fund if any funds remain on deposit in the Supplemental Liquidity Support Fund. (c) The Master Trustee shall monitor the amount in the Special Liquidity Support Fund. The Master Trustee shall determine the value of the Permitted Investments on deposit in the Special Liquidity Support Fund on each Liquidity Support Valuation Date (as defined in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PROVIDENCE LIQUIDITY SUPPORT FUND ). If on any Liquidity Support Valuation Date the amount on deposit in the Special Liquidity Support Funds is less than the Special Support Obligation (as defined in the Liquidity Support Agreement), the Liquidity Provider is required to replenish the amounts on deposit in the Special Liquidity Support Fund up to the Special Liquidity Support Obligation within 120 days of such Liquidity Support Valuation Date. If at any time, (i) the amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE OPERATING RESERVE FUND, (ii) no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund created under the Master Indenture and (iii) the Special Support Obligation has not been reduced to zero as provided in the Liquidity Support Agreement, then the Master Trustee shall transfer the remaining moneys in the Special Liquidity Support Fund to the Operating Reserve Fund (d) Any moneys held by the Master Trustee in the Special Liquidity Support Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Agent, in Permitted Investments. If the Master Trustee has not received written direction from the Obligated Group Agent regarding the investment of the Special Liquidity Support Fund, moneys held in the Special Liquidity Support Fund shall be invested or reinvested by the Master Trustee in Permitted Investments described in paragraph (a) of the definition of Permitted Investments. All investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Agent in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Investment income on the amounts on deposit in the Special Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the Providence Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the Special Liquidity Support Fund in excess of the Special Support Obligation shall be transferred as provided in the Liquidity Support Agreement. (e) Moneys held in the Special Liquidity Support Fund shall be invested in accordance with the provisions of the Liquidity Support Agreement. The investment of the moneys held in the Special Liquidity Support Fund shall also be subject to yield restriction as provided in the Tax Exemption Agreement until the Obligated Group Agent delivers an opinion of nationally recognized municipal bond counsel (which counsel and opinion are in a form acceptable to the Master Trustee) to the Master Trustee to the effect that no such yield restriction is required to maintain any exemption from federal income taxation to which the interest on any Related Bonds would otherwise be entitled. (f) When the Special Support Obligation is reduced pursuant to the provisions of the Liquidity Support Agreement, the Master Trustee shall transfer the amounts on deposit in the Special Liquidity Support Fund to the Project Fund created under the Series 2010E Bond Indenture. C-59

352 SUPPLEMENTAL LIQUIDITY SUPPORT FUND. (a) The Master Trustee will establish and maintain a separate fund to be known as the Supplemental Liquidity Support Fund-Timothy Place, NFP (the Supplemental Liquidity Support Fund ). The Master Trustee shall deposit the moneys it receives from the Series 2010 Taxable Bond Trustee pursuant to the Liquidity Support Agreement and the Taxable Bond Indenture in the Supplemental Liquidity Support Fund. (b) The Series 2010 Bond Trustee may withdraw moneys from the Supplemental Liquidity Support Fund to the extent necessary to pay costs of the Series 2010 Project in accordance with the Liquidity Support Agreement. The Corporation may withdraw moneys from the Supplemental Liquidity Support Fund for other purposes in accordance with the Liquidity Support Agreement. (c) The Master Trustee shall monitor the amount in the Supplemental Liquidity Support Fund. The Master Trustee shall determine the value of the Permitted Investments on deposit in the Supplemental Liquidity Support Fund as soon as practicable as of each June 30 and December 31, upon any Investment Substitution (as defined in (d) below) and upon any withdrawal from the Liquidity Support Funds (each a Liquidity Support Valuation Date ). If on any Liquidity Support Valuation Date the amount on deposit in the Supplemental Liquidity Support Fund is less than the Supplemental Support Obligation (as defined in the Liquidity Support Agreement), the Liquidity Support Agreement requires the Liquidity Provider to replenish the amounts on deposit in the Supplemental Liquidity Support Fund up to the Supplemental Support Obligation within 120 days of such Liquidity Support Valuation Date. If at any time, (i) the total amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE OPERATING RESERVE FUND, (ii) no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund created under the Master Indenture and (iii) the Supplemental Support Obligation has not been reduced zero as provided in the Liquidity Support Agreement, then the Master Trustee shall transfer the remaining moneys in the Supplemental Liquidity Support Fund to the Operating Reserve Fund. (d) Any moneys held by the Master Trustee in the Supplemental Liquidity Support Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Agent, in Permitted Investments. If the Master Trustee has not received written direction from the Obligated Group Agent regarding the investment of the Supplemental Liquidity Support Fund, moneys held in the Supplemental Liquidity Support Fund shall be invested or reinvested by the Master Trustee in Permitted Investments described in paragraph (a) of the definition of Permitted Investments. All investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Agent in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Investment income on the amounts on deposit in the Supplemental Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the Supplemental Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the Supplemental Liquidity Support Fund in excess of the Supplemental Support Obligation shall be transferred as provided in the Liquidity Support Agreement. (e) Moneys held in the Supplemental Liquidity Support Fund shall be invested in accordance with the provisions of the Liquidity Support Agreement. The investment of the moneys held in the Supplemental Liquidity Support Fund shall also be subject to yield restriction as provided in the Tax Exemption Agreement until the Obligated Group Agent delivers an opinion of nationally recognized municipal bond counsel (which counsel and opinion are in a form acceptable to the Master Trustee) to the Master Trustee to the effect that no such yield restriction is required to maintain any exemption from federal income taxation to which the interest on any Related Bonds would otherwise be entitled. When the Supplemental Support Obligation is reduced to zero pursuant to the provisions of the Liquidity Support Agreement, the Master Trustee shall release the funds on deposit in the Supplemental Liquidity Support Fund to the Liquidity Provider and close the Supplemental Liquidity Support Fund. C-60

353 NOTICES AND REPORTS FOLLOWING DRAWS ON LIQUIDITY SUPPORT FUNDS; CONSULTANT RECOMMENDATIONS. (a) If there is an initial withdrawal from the Liquidity Support Funds, (i) within five days of the initial withdrawal, the Master Trustee shall notify the Required Information Recipient of the withdrawal and (ii) within 30 days of the initial withdrawal, the Obligated Group Agent shall submit an Officer s Certificate to each Required Information Recipient containing a management report setting forth (A) the expected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Series 2010 Project costs and debt service until management expects to achieve a Historical Debt Service Coverage Ratio of 1.0, (B) whether management expects that the Liquidity Support Funds, together with other moneys expected to be available, will be sufficient for that purpose, (C) a revised fill-up schedule for the Series 2010 Project, and (D) the expected schedule for the redemption of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds and the Series 2010E Bonds. (b) If funds in the Liquidity Support Funds are transferred to the Operating Reserve Fund pursuant to subparagraphs (c) under the captions SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE PROVIDENCE LIQUIDITY SUPPORT FUND, SPECIAL LIQUIDITY SUPPORT FUND and SUPPLEMENTAL LIQUIDITY SUPPORT FUND above, (i) within five days of that transfer, the Master Trustee shall notify each Required Information Recipient of the transfer and (ii) the Obligated Group Representative shall engage a Consultant to make recommendations regarding (A) an overall corrective action plan, (B) the projected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Series 2010 Project costs and debt service until the Obligated Group is projected to achieve a Historical Debt Service Coverage Ratio of 1.0, (C) a revised fill-up schedule for the Series 2010 Project, (D) a plan for the payment of the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D-3 Bonds, the Series 2010D-2 Bonds, the Series 2010D-1 Bonds and the Series 2010E Bonds, (E) a plan to improve the profitability of the Obligated Group and (F) a recommendation regarding additional sources of working capital. The Obligated Group Agent shall select a Consultant and notify the Master Trustee of the selection within 30 days after the transfer and shall thereafter engage the Consultant in accordance with the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPROVAL OF CONSULTANTS. The Obligated Group shall not be required to obtain a Consultant s report more than one time in any six-month period. MERGER, CONSOLIDATION, SALE OR CONVEYANCE (a) Each Member agrees that it will not merge into, or consolidate with, one or more corporations which are not Members, or allow one or more of such corporations to merge into it, or sell or convey all or substantially all of its Property to any Person who is not a Member, unless: (i) Any successor corporation to such Member (including without limitation any purchaser of all or substantially all the Property of such Member) is a Person (other than a natural person) organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument, satisfactory to the Master Trustee, containing the agreement of such successor corporation to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on all Obligations according to their tenor and the due and punctual performance and observance of all the covenants and conditions of the Master Indenture and the Mortgage to be kept and performed by such Member; (ii) Immediately after such merger or consolidation, or such sale or conveyance, no Member would be in default in the performance or observance of any covenant or condition of any Related Loan Document or the Master Indenture; (iii) If any Related Bonds were rated by a Rating Agency prior to such merger or consolidation, or such sale or conveyance, evidence from such Rating Agency, satisfactory to the Master Trustee, that the rating(s) on such Related Bonds will not be reduced or withdrawn as a result of such merger or consolidation, or such sale or conveyance; (iv) Assuming that any Indebtedness of any successor or acquiring corporation is Indebtedness of such Member and that the Revenues and Expenses of the Member for such most recent Fiscal Year include the Revenues and Expenses of such other corporation (A) immediately after such C-61

354 merger or consolidation, sale or conveyance, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available would be not less than 1.20:1 or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group is not less than the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year prior to such merger or consolidation, sale or conveyance, and (B) immediately after such merger or consolidation, sale or conveyance, the Obligated Group Agent shall deliver an Officer s Certificate stating that the Obligated Group is in compliance with the following requirements that the Cash to Indebtedness Ratio or the Days Cash on Hand of the Obligated Group as set forth on the most recent quarterly financial statements delivered to the Master Trustee pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE FINANCIAL STATEMENTS AND RELATED MATTERS, would be not less than the Liquidity Requirement set forth in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE LIQUIDITY COVENANT, or that such calculation of the Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, of the Obligated Group is greater than such calculation would be immediately prior to such merger or consolidation, sale or conveyance; and (v) If all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or fully provided for, there shall be delivered to the Master Trustee an Opinion of Bond Counsel to the effect that under then existing law the consummation of such merger, consolidation, sale or conveyance would not adversely affect the validity of such Related Bonds or the exemption otherwise available from federal or state income taxation of interest payable on such Related Bonds. (b) In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named in the Master Indenture as such Member. Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the conditions described in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ENTRANCE INTO THE OBLIGATED GROUP, to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member s corporate status. Any successor corporation to such Member thereupon may cause to be signed and may issue in its own name Obligations under the Master Indenture and the predecessor corporation shall be released from its obligations thereunder and under any Obligations, if such predecessor corporation shall have conveyed all Property owned by it (or all such Property shall be deemed conveyed by operation of law) to such successor corporation. All Obligations so issued by such successor corporation under the Master Indenture shall in all respects have the same legal rank and benefit thereunder as Obligations theretofore or thereafter issued in accordance with the terms of the Master Indenture as though all of such Obligations had been issued thereunder by such prior Member without any such consolidation, merger, sale or conveyance having occurred. (c) In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in Obligations thereafter to be issued as may be appropriate. (d) The Master Trustee may rely upon an opinion of Independent Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of the Master Indenture summarized under this caption and that it is proper for the Master Trustee under the provisions of the Master Indenture to join in the execution of any instrument required to be executed and delivered by the provisions of the Master Indenture summarized under this caption. ENTRANCE INTO THE OBLIGATED GROUP As of the date of execution of the Master Indenture, the Corporation and the Foundation are the only Members of the Obligated Group. Any other Person may become a Member of the Obligated Group if: (a) Such Person shall execute and deliver to the Master Trustee a Supplemental Master Indenture not objected to by the Master Trustee which shall be executed by the Master Trustee and the Obligated Group Agent, containing (i) the agreement of such Person (A) to become a Member of the Obligated Group and thereby to become subject to compliance with all provisions of the Master Indenture and (B) unconditionally and irrevocably (subject C-62

355 to the right of such Person to cease its status as a Member of the Obligated Group pursuant to the terms and conditions summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE CESSATION OF STATUS AS A MEMBER OF THE OBLIGATED GROUP below) to jointly and severally make payments upon each Obligation at the times and in the amounts provided in each such Obligation and (ii) representations and warranties by such Person substantially similar to those set forth in the Master Indenture other than those contained in the Master Indenture relating to tax-exempt status if such Person is not a Tax-Exempt Organization (but with such deviations as are not objected to by the Master Trustee); (b) The Obligated Group Agent, by appropriate action of its Governing Body, shall have approved the admission of such Person to the Obligated Group, and each of the other Members shall have taken such action, if any, required to approve the admission of such Person to the Obligated Group; (c) The Master Trustee shall have received (1) an Officer s Certificate of the Obligated Group Agent which (A) demonstrates that (i) immediately upon such Person becoming a Member of the Obligated Group, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group, taking the Person becoming a Member into account, for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available would be not less than 1.20:1 or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group, taking the Person becoming a Member into account, is not less than the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year without such Person becoming a Member of the Obligated Group and (ii) immediately upon such Person becoming a Member of the Obligated Group, taking the Person becoming a Member into account, the Obligated Group would be in compliance with the Liquidity Requirement of the Master Indenture described under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - LIQUIDITY COVENANT based on the most recent quarterly financial statements delivered to the Master Trustee pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS or that the Cash to Indebtedness Ratio or the number of Days Cash on Hand of the Obligated Group (whichever is applicable under the Master Indenture), taking the Person becoming a Member into account, is greater than the Cash to Indebtedness Ratio or the number of Days Cash on Hand would be without such Person becoming a Member of the Obligated Group; and (B) states that immediately after such Person becoming a Member of the Obligated Group, no event of default exists under the Master Indenture and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an event of default as a result of the addition of such Member; (2) an opinion of Independent Counsel in form and substance not objected to by the Master Trustee to the effect that (x) the instrument described in paragraph (a) above has been duly authorized, executed and delivered and constitutes a legal, valid and binding agreement of such Person, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors rights and application of general principles of equity and to the exceptions set forth in the Master Indenture and (y) the addition of such Person to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status, (3) if all amounts due or to become due on all Related Bonds have not been paid to the holders thereof and provision for such payment has not been made in such manner as to have resulted in the defeasance of all Related Bond Indentures, an Opinion of Bond Counsel to the effect that under then existing law the addition of such Person to the Obligated Group, whether or not contemplated on the date of delivery of any such Related Bond, would not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable on such Bond otherwise entitled to such exemption; provided that in making the calculation called for by the provisions of the Master Indenture summarized in this paragraph, (i) there shall be excluded from Revenues (a) any Revenues generated by Property of such Person transferred or otherwise disposed of by such Person since the beginning of the Fiscal Year during which such Person s entry into the Obligated Group occurs and (b) any Revenues generated by Property of the new Member which at the time of such Member s entry into the Obligated Group will be categorized as Excluded Property and (ii) there shall be excluded from Expenses (a) any Expenses related to Property of such Person transferred or otherwise disposed of by such Person since the beginning of the Fiscal Year during which such Person s entry into the Obligated Group occurs and (b) any Expenses related to Property of the new Member which at the time of such Member s entry into the Obligated Group will be categorized as Excluded Property; and (4) if any Related Bonds were rated by a Rating Agency prior to the Person becoming a member of the Obligated Group, evidence from such Rating Agency, satisfactory to the Master Trustee, that the rating(s) on such Related Bonds will not be reduced or withdrawn as a result of such Person becoming a Member; and C-63

356 (d) (i) The Master Indenture is amended to include a description of the real property of the Person becoming a Member upon which the primary operations of such Person are conducted and a description of any Permitted Encumbrances of the type described in paragraph (w)(ii) of the definition thereof, (ii) the Master Indenture is amended to include a description of the Property of the Person becoming a Member which is to be considered Excluded Property (provided that such Property may be treated as Excluded Property only if such Property is real or tangible personal property and the primary operations of such Person are not conducted upon such real property), and (iii) the Master Indenture is amended to add such Person as a Member; and (e) Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the above-described conditions to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member s corporate status; and (f) If any Related Bonds were rated by a Rating Agency prior to the Person entering the Obligated Group, evidence from such Rating Agency, satisfactory to the Master Trustee, that the rating(s) on such Related Bonds will not be reduced or withdrawn as a result of such Person entering the Obligated Group. CESSATION OF STATUS AS A MEMBER OF THE OBLIGATED GROUP Each Member covenants that it will not take any action, corporate or otherwise, which would cause it or any successor thereto into which it is merged or consolidated under the terms of the Master Indenture to cease to be a Member of the Obligated Group unless: (a) the Member proposing to withdraw from the Obligated Group is not a party to any Related Loan Documents with respect to Related Bonds which remain outstanding; (b) prior to cessation of such status, there is delivered to the Master Trustee an Opinion of Bond Counsel to the effect that, under then existing law, the cessation by the Member of its status as a Member will not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable thereon to which such Bond would otherwise be entitled; (c) prior to the cessation of such status, there is delivered to the Master Trustee an Officer s Certificate of the Obligated Group Agent to the effect that: (A) (i) immediately after such cessation the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group, taking such cessation into account, for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available would be not less than 1.20:1 or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group, taking such cessation into account, is not less than the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year prior to such cessation and (ii) immediately after such cessation, taking such cessation into account, the Obligated Group would be in compliance with the Liquidity Requirement of the Master Indenture described under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - LIQUIDITY COVENANT based on the most recent quarterly financial statements delivered to the Master Trustee pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS or that the Cash to Indebtedness Ratio or the number of Days Cash on Hand of the Obligated Group (whichever is applicable under the Master Indenture), taking such cessation into account, is greater than the Cash to Indebtedness Ratio or the number of Days Cash on Hand would be immediately prior to such cessation; and (B) immediately after such cessation, no event of default exists under the Master Indenture and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an event of default as a result of the addition of such Member; (d) prior to such cessation there is delivered to the Master Trustee an opinion of Independent Counsel (which Counsel and opinion are not objected to by the Master Trustee) to the effect that the cessation by such Member of its status as a Member will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status; (e) If any Related Bonds were rated by a Rating Agency prior to the Person withdrawing from the Obligated Group, evidence from such Rating Agency, satisfactory to the Master Trustee, that the rating(s) on such C-64

357 Related Bonds will not be reduced or withdrawn as a result of such Person withdrawing from the Obligated Group; and (f) prior to cessation of such status, the Obligated Group Agent consents in writing to the withdrawal by such Member. Upon such cessation in accordance with the foregoing provisions, (i) the Master Indenture shall be amended to delete therefrom the description of any real property and of any Permitted Encumbrances of the type described in paragraphs (u) and (v) of the definition of Permitted Encumbrances of the Member which has ceased being a Member of the Obligated Group, (ii) the Master Indenture shall be amended to delete therefrom any Property of the Member which has ceased being a Member, (iii) the Master Indenture shall be amended to delete therefrom the name of such Person and (iv) the Master Trustee shall be authorized to release any mortgage held by the Master Trustee upon the Property of such Member which has ceased being a Member of the Obligated Group. EVENTS OF DEFAULT Each of the following events is declared an event of default under the Master Indenture: (a) failure of the Obligated Group to pay any installment of interest or principal, or any premium, on any Obligation when the same shall become due and payable, whether at maturity, upon any date fixed for prepayment or by acceleration or otherwise; or (b) failure of any Member to comply with, observe or perform any of the covenants, conditions, agreements or provisions of the Master Indenture and to remedy such default within 30 days after written notice thereof to such Member and the Obligated Group Agent from the Master Trustee or the holders of at least 25% in aggregate principal amount of the Outstanding Obligations, provided that, if in the judgment of the Master Trustee, such default cannot with due diligence and dispatch be wholly cured so that such failure no longer constitutes an event of default under the Master Indenture within 30 days but can be wholly cured, the failure of the Member to remedy such default within such 30-day period shall not constitute a default thereunder if the Member shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default shall thereafter prosecute and complete the same with due diligence and dispatch; or (c) any representation or warranty made by any Member in the Master Indenture or in any statement or certificate furnished to the Master Trustee or the purchaser of any Obligation in connection with the sale of any Obligation or furnished by any Member pursuant to the Master Indenture proves untrue in any material respect as of the date of the issuance or making thereof and shall not be corrected or brought into compliance within 30 days after written notice thereof to the Obligated Group Agent by the Master Trustee or the holders of at least 25% in aggregate principal amount of the Outstanding Obligations; provided that, if in the judgment of the Master Trustee, such default cannot with due diligence and dispatch be wholly cured so that such failure no longer constitutes an event of default under the Master Indenture within 30 days but can be wholly cured, the failure of the Member to remedy such default within such 30-day period shall not constitute a default thereunder if the Member shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or (d) default in the payment of the principal of, premium, if any, or interest on any Indebtedness for borrowed money of any Member, including without limitation any Indebtedness created by any Related Loan Document, as and when the same shall become due, or an event of default as defined in any mortgage, indenture, loan agreement or other instrument under or pursuant to which there was issued or incurred, or by which there is secured, any such Indebtedness (including any Obligation) of any Member, and which default in payment or event of default entitles the holder thereof to declare or, in the case of any Obligation, to request that the Master Trustee declare, such Indebtedness due and payable prior to the date on which it would otherwise become due and payable; provided, however, that if such Indebtedness is not evidenced by an Obligation or issued, incurred or secured by or under a Related Loan Document, a default in payment thereunder shall not constitute an event of default under the Master Indenture unless the unpaid principal amount of such Indebtedness, together with the unpaid principal C-65

358 amount of all other Indebtedness so in default, exceeds the greater of $250,000 or 1% of unrestricted net assets of the Obligated Group; (e) any judgment, writ or warrant of attachment or of any similar process shall be entered or filed against any Member or against any Property of any Member and remains unvacated, unpaid, unbonded, unstayed or uncontested in good faith for a period of 90 days; provided, however, that none of the foregoing shall constitute an event of default unless the amount of such judgment, writ, warrant of attachment or similar process, together with the amount of all other such judgments, writs, warrants or similar processes so unvacated, unpaid, unbonded, unstayed or uncontested, exceed $250,000 or 1% of the unrestricted net assets of the Obligated Group; or (f) any Member admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for such Member, or for the major part of its Property; or (g) a trustee, custodian or receiver is appointed for any Member or for the major part of its Property and is not discharged within 90 days after such appointment; or (h) bankruptcy, dissolution, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against any Member (other than bankruptcy proceedings instituted by any Member against third parties), and if instituted against any Member are allowed against such Member or are consented to or are not dismissed, stayed or otherwise nullified within 90 days after such institution; or (i) payment of any installment of interest or principal, or any premium, on any Related Bond shall not be made when the same shall become due and payable under the provisions of any Related Bond Indenture; or (j) any event of default shall occur under the Mortgage or any mortgage executed pursuant to the last paragraph of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - PERMITTED ADDITIONAL INDEBTEDNESS. Upon the occurrence and during the continuance of an event of default described in the provisions of the Master Indenture summarized under this caption, the Master Trustee shall give the Obligated Group Agent the Notice described in the first sentence of the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE LOCK-BOX PROVISIONS. ACCELERATION If an event of default has occurred and is continuing, the Master Trustee may, and if requested by either the holders of not less than 25% in aggregate principal amount of Outstanding Obligations or the holder of any Accelerable Instrument under which Accelerable Instrument an event of default exists (which event of default permits the holder thereof to request that the Master Trustee declare such Indebtedness evidenced by an Obligation due and payable prior to the date on which it would otherwise become due and payable), shall, by notice in writing delivered to the Obligated Group Agent, declare the entire principal amount of all Obligations then Outstanding under the Master Indenture and the interest accrued thereon immediately due and payable, and the entire principal and such interest shall thereupon become immediately due and payable, subject, however, to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE WAIVER OF EVENTS OF DEFAULT with respect to waivers of events of default. REMEDIES; RIGHTS OF OBLIGATION HOLDERS Upon the occurrence of any event of default, the Master Trustee may pursue any available remedy including a suit, action or proceeding at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Obligations outstanding under the Master Indenture and any other sums due thereunder and may collect such sums in the manner provided by law out of the Property or the Excluded Property of any Member wherever situated. C-66

359 If an event of default shall have occurred, and if it shall have been requested so to do by either the holders of 25% or more in aggregate principal amount of Obligations outstanding or the holder of an Accelerable Instrument who requested or was entitled to request pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ACCELERATION that the Master Trustee accelerate the Obligations and if it shall have been indemnified as provided in the Master Indenture, the Master Trustee shall be obligated to exercise such one or more of the rights and powers conferred by the provisions of the Master Indenture summarized under this caption as the Master Trustee shall deem most expedient in the interests of the holders of Obligations; provided, however, that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of Obligations not parties to such request. No remedy by the terms of the Master Indenture conferred upon or reserved to the Master Trustee (or to the holders of Obligations) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Master Trustee or to the holders of Obligations under the Master Indenture now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or event of default shall impair any such right or power or shall be construed to be a waiver of any such default or event of default, or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or event of default under the Master Indenture, whether by the Master Trustee or by the holders of Obligations, shall extend to or shall affect any subsequent default or event of default or shall impair any rights or remedies consequent thereon. DIRECTION OF PROCEEDINGS BY HOLDERS The holders of a majority in aggregate principal amount of the Obligations then outstanding which have become due and payable in accordance with their terms or have been declared due and payable pursuant the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ACCELERATION and have not been paid in full in the case of remedies exercised to enforce such payment, or the holders of not less than a majority in aggregate principal amount of the Obligations then outstanding in the case of any other remedy, shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Master Indenture and the Mortgage, or for the appointment of a receiver or any other proceedings under the Master Indenture; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of the Master Indenture and that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by counsel (who may be its own counsel) that the action so directed may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of the Obligations not parties to such direction. Pending such direction from the holders of not less than a majority in aggregate principal amount of the Obligations outstanding, such direction may be given in the same manner and with the same effect by the holder of an Accelerable Instrument upon whose request pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ACCELERATION the Master Trustee has accelerated the Obligations. The foregoing notwithstanding, the holders of not less than a majority in aggregate principal amount of the Obligations then outstanding which are entitled to the exclusive benefit of certain security in addition to that intended to secure all or other Obligations shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Master Indenture, the Supplemental Master Indenture or Indentures pursuant to which such Obligations were issued or so secured or any separate security document in order to realize on such security; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of the Master Indenture and that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by counsel (who may be its own counsel) that the action so directed may not lawfully be taken. C-67

360 APPOINTMENT OF RECEIVERS Upon the occurrence of an event of default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Master Trustee and the holders of Obligations under the Master Indenture, the Master Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the rights and properties pledged thereunder and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. APPLICATION OF MONEYS All moneys received by the Master Trustee pursuant to any right given or action taken under the provisions of the Master Indenture (except moneys held for the payment of Obligations called for prepayment or redemption which have become due and payable) shall, after payment of the cost and expenses of the proceedings resulting in the collection of such moneys and of the fees of, expenses, liabilities and advances incurred or made by the Master Trustee, any Related Issuers and any Related Bond Trustees, be applied as follows: (a) Unless the principal of all the Obligations shall have become or shall have been declared due and payable, all such moneys shall be applied: First: To the payment to the persons entitled thereto of all installments of interest then due on the Obligations, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or privilege; and Second: To the payment to the persons entitled thereto of the unpaid principal and premium, if any, on the Obligations which shall have become due (other than Obligations called for redemption or payment for payment of which moneys are held pursuant to the provisions of the Master Indenture), in the order of the scheduled dates of their payment, and, if the amount available shall not be sufficient to pay in full the Obligations due on any particular date, then to the payment ratably, according to the amount of principal and premium due on such date, to the persons entitled thereto without any discrimination or privilege; and Third: To the payment to the persons entitled thereto of all unpaid principal and interest on Obligations, payment of which was extended by such persons as described in the Master Indenture. (b) If the principal of all the Obligations shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal, premium, if any, and interest then due and unpaid upon the Obligations without preference or priority of principal, premium or interest over the others, or of any installment of interest over any other installment of interest, or of any Obligation over any other Obligation, ratably, according to the amounts due respectively for principal, premium, if any, and interest to the persons entitled thereto without any discrimination or privilege; provided that no amount shall be paid to any Obligation Holder who has extended the time for payment of either principal or interest as described in the Master Indenture until all other principal, premium, if any, and interest owing on Obligations has been paid; and (c) If the principal of all the Obligations shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of the Master Indenture, then, subject to the provisions of paragraph (b) above in the event that the principal of all the Obligations shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) above. Whenever moneys are to be applied by the Master Trustee pursuant to the provisions of the Master Indenture summarized under this caption, such moneys shall be applied by it at such times, and from time to time, as the Master Trustee shall determine in its sole discretion, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Master Trustee shall apply such moneys, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable) upon which such application is to be made and upon such date C-68

361 interest on the amounts of principal to be paid on such date shall cease to accrue. The Master Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the holder of any unpaid Obligation until such Obligation shall be presented to the Master Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Obligations and interest thereon have been paid under the provisions of the Master Indenture summarized under this caption and all expenses and charges of the Master Trustee have been paid, any balance remaining shall be paid to the person entitled to receive the same; if no other person shall be entitled thereto, then the balance shall be paid to the Obligated Group Agent on behalf of the Members. REMEDIES VESTED IN MASTER TRUSTEE All rights of action including the right to file proof of claims under the Master Indenture or under any of the Obligations may be enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Master Trustee shall be brought in its name as Master Trustee without the necessity of joining as plaintiffs or defendants any holders of the Obligations, and any recovery of judgment shall be for the equal benefit of the holders of the Outstanding Obligations. RIGHTS AND REMEDIES OF OBLIGATION HOLDERS No holder of any Obligation shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Master Indenture or for the execution of any trust thereof or for the appointment of a receiver or any other remedy thereunder, unless a default shall have become an event of default and (a) the holders of 25% or more in aggregate principal amount (i) of the Obligations which have become due and payable in accordance with their terms or have been declared due and payable pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ACCELERATION and have not been paid in full in the case of powers exercised to enforce such payment or (ii) the Obligations then outstanding in the case of any other exercise of power or (b) the holder of an Accelerable Instrument who requested or was entitled to request pursuant to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE ACCELERATION that the Master Trustee accelerate the Obligations, shall have made written request to the Master Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers granted or to institute such action, suit or proceeding in its own name, and unless also, in each case, such holders have offered to the Master Trustee indemnity as provided in the Master Indenture, and unless the Master Trustee shall thereafter fail or refuse to exercise the powers granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are declared in every case at the option of the Master Trustee to be conditions precedent to the execution of the powers and trusts of the Master Indenture and to any action or cause of action for the enforcement of the Master Indenture, or for the appointment of a receiver or for any other remedy thereunder; it being understood and intended that no one or more holders of the Obligations shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Master Indenture by its, his or their action or to enforce any right thereunder except in the manner therein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner therein provided and for the equal benefit of the holders of all Obligations outstanding. Nothing in the Master Indenture contained shall, however, affect or impair the right of any holder to enforce the payment of the principal of, premium, if any, and interest on any Obligation at and after the maturity thereof, or the obligation of the Members to pay the principal, premium, if any, and interest on each of the Obligations issued under the Master Indenture to the respective holders thereof at the time and place, from the source and in the manner in said Obligations expressed. TERMINATION OF PROCEEDINGS In case the Master Trustee shall have proceeded to enforce any right under the Master Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Master Trustee, then and in every case the Members and the Master Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Master Indenture with respect to the Property pledged and assigned thereunder, and all rights, remedies and powers of the Master Trustee shall continue as if no such proceedings had been taken. C-69

362 WAIVER OF EVENTS OF DEFAULT If, at any time after the principal of all Obligations shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as provided in the Master Indenture and before the acceleration of any Related Bond, any Member shall pay or shall deposit with the Master Trustee a sum sufficient to pay all matured installments of interest upon all such Obligations and the principal and premium, if any, of all such Obligations that shall have become due otherwise than by acceleration (with interest on overdue installments of interest and on such principal and premium, if any, at the rate borne by such Obligations to the date of such payment or deposit, to the extent permitted by law) and the expenses of the Master Trustee, and any and all events of default under the Master Indenture, other than the nonpayment of principal of and accrued interest on such Obligations that shall have become due by acceleration, shall have been remedied, then and in every such case the holders of not less than a majority in aggregate principal amount of all Obligations then outstanding and the holder of each Accelerable Instrument who requested or was entitled to request the giving of notice of acceleration, by written notice to the Obligated Group Agent and to the Master Trustee, may waive all events of default and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or affect any subsequent event of default, or shall impair any right consequent thereon. MEMBERS RIGHTS OF POSSESSION AND USE OF PROPERTY So long as each Member is in full compliance with the terms and provisions of the Master Indenture, each Member shall be suffered and permitted to possess, use and enjoy its Property and appurtenances thereto free of claims of the Master Trustee. RELATED BOND TRUSTEE OR BONDHOLDERS DEEMED TO BE OBLIGATION HOLDERS For the purposes of the Master Indenture, unless a Related Bond Trustee elects to the contrary or contrary provision is made in a Related Bond Indenture, each Related Bond Trustee shall be deemed the holder of the Obligation or Obligations pledged to secure the Related Bonds with respect to which such Related Bond Trustee is acting as trustee. If such a Related Bond Trustee so elects or the Related Bond Indenture so provides, the holders of each series of Related Bonds shall be deemed the holders of the Obligations to the extent of the principal amount of the Obligations to which their Bonds relate. LOCK-BOX PROVISIONS Upon the occurrence and during the continuance of an event of default described in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - EVENTS OF DEFAULT, the Master Trustee shall give to the Obligated Group Agent a notice (the Lock-Box Notice ) referring to the provisions of the Master Indenture summarized under this caption. Upon receipt of a Lock-Box Notice, (a) each Obligated Group Member will immediately commence depositing all Gross Revenues with the Master Trustee and will continue to do so on a daily basis as and when it receives or collects any moneys constituting Gross Revenues and (b) within seven days the Obligated Group Agent will (i) engage a Consultant (which Consultant is not objected to by the Master Trustee) to review operating budget of the Obligated Group as required by the provisions of the Master Indenture summarized under this caption and (ii) submit to such Consultant and the Master Trustee a proposed operating budget for the Consultant s approval or modification. The proposed operating budget shall include on a month-by-month basis all operating expenses to be paid by each Obligated Group Member. Upon review of the proposed budget, the Consultant will notify the Obligated Group Agent and the Master Trustee whether such budget is approved as submitted or of any modifications the Consultant will impose. A copy of the budget, as approved or modified (the Lock-Box Budget ), will be sent to the Obligated Group Agent and the Master Trustee. In the event that the Obligated Group Agent fails to submit a proposed operating budget to the Consultant and the Master Trustee, the Consultant will modify the operating budget last submitted to the Consultant as it deems appropriate under the then existing circumstances and such modified operating budget will constitute the Lock-Box Budget. The Lock-Box Budget may be amended and modified by the Consultant at any time and from time to time as the Consultant in its discretion determines is necessary or appropriate under the then existing circumstances. A copy of any amendment or modification to the Lock-Box Budget will be sent by the Consultant to the Obligated Group Agent and the Master Trustee. The Master Trustee agrees that, upon receipt of a Lock-Box Notice, it will make disbursements (from amounts deposited with it by each Obligated Group Member as C-70

363 provided above) in each month to the Obligated Group Agent to pay operating expenses only in accordance with the Lock-Box Budget. If at any time following a Lock-Box Notice all amounts due to the Master Trustee have been paid in full, the Master Trustee will notify the Obligated Group Agent in writing that the lock-box provisions of the Master Indenture summarized under this caption are suspended. Additionally, the Master Trustee may in its discretion at any time agree to suspend such lock-box provisions by so notifying the Obligated Group Agent in writing. Thereafter, unless and until any subsequent Lock-Box Notice is received by the Obligated Group Agent, Gross Revenues need not be deposited with the Master Trustee. RESIGNATION BY THE MASTER TRUSTEE The Master Trustee and any successor Master Trustee may at any time resign from the trusts created by the Master Indenture by giving thirty days written notice to the Obligated Group Agent and by registered or certified mail to each registered owner of Obligations then outstanding and to each holder of Obligations as shown by the list of Obligation Holders required by the Master Indenture to be kept at the office of the Master Trustee. Such resignation shall take effect at the end of such thirty days or when a successor Master Trustee has been appointed and has assumed the trusts created by the Master Indenture, whichever is later, or upon the earlier appointment of a successor Master Trustee by the Obligation Holders or by the Obligated Group. If a successor Master Trustee has not accepted its appointment within such 30-day period, the current Master Trustee may apply to a court of competent jurisdiction to appoint a successor Master Trustee to act until such time, if any, as a successor shall have so accepted its appointment. Such notice to the Obligated Group Agent may be served personally or sent by registered or certified mail. REMOVAL OF THE MASTER TRUSTEE The Master Trustee may be removed at any time, by an instrument or concurrent instruments in writing delivered to the Master Trustee and to the Obligated Group Agent, and signed by the registered owners of not less than a majority in aggregate principal amount of the Obligations then outstanding. So long as no event of default has occurred and is continuing under the Master Indenture, and no event shall have occurred which, with the passage of time or the giving of notice or both would become such an event of default under the Master Indenture, the Master Trustee may be removed at any time by an instrument in writing signed by the Obligated Group Agent and delivered to the Master Trustee. The foregoing notwithstanding, the Master Trustee may not be removed by the Obligated Group Agent unless written notice of the delivery of such instrument or instruments signed by the Obligated Group Agent is mailed to the owners of all Obligations outstanding under the Master Indenture, which notice indicates the Master Trustee will be removed and replaced by the successor trustee named in such notice, such removal and replacement to become effective on the 60th day next succeeding the date of such notice, unless the owners of not less than 10% in aggregate principal amount of such Obligations then outstanding under the Master Indenture shall object in writing to such removal and replacement. APPOINTMENT OF SUCCESSOR MASTER TRUSTEE BY THE OBLIGATION HOLDERS; TEMPORARY MASTER TRUSTEE In case the Master Trustee under the Master Indenture shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting under the Master Indenture, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the Obligated Group, or by the owners of not less than a majority in aggregate principal amount of Obligations then outstanding, by an instrument or concurrent instruments in writing signed by such owners, or by their attorneys in fact, duly authorized, with the approval of the Obligated Group so long as the Obligated Group is not in default, or potentially in default, under the Master Indenture. If a successor trustee shall not have been appointed within 30 days after notice of resignation by or removal of the Master Trustee, the Obligated Group or any holder of an Obligation may apply to any court of competent jurisdiction to appoint a successor to act until such time, if any, as a successor shall have been appointed as above provided. The successor so appointed by such court shall immediately and without further act be superseded by any successor appointed as above provided. Every such successor Master Trustee appointed pursuant to the provisions of the Master Indenture summarized under this caption shall be a trust company or bank in good standing under the law of the jurisdiction in which it was created and by which it exists, having corporate trust powers and subject to examination by federal or state authorities, and having a reported capital and surplus of not less than $50,000,000. C-71

364 SUPPLEMENTAL MASTER INDENTURES AND AMENDMENTS TO THE MORTGAGE NOT REQUIRING CONSENT OF OBLIGATION HOLDERS Subject to the limitations set forth in the provisions of the Master Indenture summarized under the caption Summary of Certain Provisions of the Master Indenture - Supplemental Master Indentures and Amendments of the Mortgage Requiring Consent of Obligation Holders, the Members and the Master Trustee may, but without the consent of, or notice to, any of the Obligation Holders amend or supplement the Master Indenture or the Mortgage for any one or more of the following purposes: (a) To cure any ambiguity or defective provision in or omission from the Master Indenture in such manner as is not inconsistent with and does not impair the security of the Master Indenture or the Mortgage or adversely affect the holder of any Obligation; (b) To grant to or confer upon the Master Trustee for the benefit of the Obligation Holders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Obligation Holders and the Master Trustee, or either of them, to add to the covenants of the Members for the benefit of the Obligation Holders or to surrender any right or power conferred under the Master Indenture or under the Mortgage upon any Member; (c) To assign and pledge under the Master Indenture or the Mortgage any additional revenues, properties or collateral; (d) To evidence the succession of another corporation to the agreements of a Member or the Master Trustee, or the successor of any thereof under the Master Indenture; (e) To permit the qualification of the Master Indenture under the Trust Indenture Act of 1939, as then amended, or under any similar federal statute hereafter in effect or to permit the qualification of any Obligations for sale under the securities laws of any state of the United States; (f) (g) (h) To provide for the refunding or advance refunding of any Obligation; To provide for the issuance of Additional Obligations; To reflect the addition to or withdrawal of a Member from the Obligated Group; (i) To provide for the issuance of Obligations with original issue discount, provided such issuance would not materially adversely affect the holders of Outstanding Obligations; (j) (k) To permit an Obligation to be secured by security which is not extended to all Obligation Holders; To permit the issuance of Obligations which are not in the form of a promissory note; (l) Provide for the release in accordance with the provisions of the Mortgage of any Property subject to the lien of such Mortgage; and (m) To make any other change which, in the opinion of the Master Trustee, does not materially adversely affect the holders of any of the Obligations and, in the opinion of each Related Bond Trustee, does not materially adversely affect the holders of the Related Bonds with respect to which it acts as trustee, including without limitation any modification, amendment or supplement to the Master Indenture or any indenture supplemental to the Master Indenture or the Mortgage or any amendment thereto in such a manner as to establish or maintain exemption of interest on any Related Bonds under a Related Bond Indenture from federal income taxation under applicable provisions of the Code. Any Supplemental Master Indenture providing for the issuance of Additional Obligations shall set forth the date thereof, the date or dates upon which principal of, premium, if any, and interest on such Obligations shall be payable, the other terms and conditions of such Obligations, the form of such Obligations and the conditions precedent to the delivery of such Obligations which shall include, among other things: C-72

365 (n) delivery to the Master Trustee of all materials required to be delivered as a condition precedent to the incurrence of the Additional Indebtedness evidenced by such Obligations; (o) delivery to the Master Trustee of an opinion of Independent Counsel not objected to by the Master Trustee to the effect that all requirements and conditions to the issuance of such Obligations, if any, set forth in the Master Indenture and in the Supplemental Master Indenture have been complied with and satisfied; and (p) delivery to the Master Trustee of an opinion of Independent Counsel not objected to by the Master Trustee to the effect that registration of such Obligations under the Securities Act of 1933, as amended, is not required, or, if such registration is required, that the Obligated Group has complied with all applicable provisions of said Act. If at any time the Obligated Group Agent shall request the Master Trustee to enter into any Supplemental Master Indenture pursuant to subparagraph (l) above, the Master Trustee shall cause notice of the proposed execution of such Supplemental Master Indenture to be given to each Rating Agency then maintaining a rating on any Obligations or Related Bonds, in the manner provided in the Master Indenture at least 15 days prior to the execution of such Supplemental Master Indenture, which notice shall include a copy of the proposed Supplemental Master Indenture. SUPPLEMENTAL MASTER INDENTURES AND AMENDMENT OF THE MORTGAGE REQUIRING CONSENT OF OBLIGATION HOLDERS In addition to Supplemental Master Indentures covered by the provisions of the Master Indenture summarized under the previous caption and subject to the terms and provisions of the Master Indenture summarized under this caption, and not otherwise the holders of not less than a majority in aggregate principal amount of the Obligations which are outstanding under the Master Indenture at the time of the execution of such Supplemental Master Indenture or amendment to the Mortgage or, in case less than all of the several series of Obligations outstanding are affected thereby, the holders of not less than a majority in aggregate principal amount of the Obligations of the series affected thereby which are outstanding under the Master Indenture at the time of the execution of such Supplemental Master Indenture or amendment to the Mortgage, shall have the right, from time to time, anything contained in the Master Indenture or in the Mortgage to the contrary notwithstanding, to consent to and approve the execution by the Members and the Master Trustee of such Supplemental Master Indentures as shall be deemed necessary and desirable by the Members for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Master Indenture or in any Supplemental Master Indenture; provided, however, that nothing contained in the provisions of the Master Indenture summarized under this caption or under the provisions of the Master Indenture summarized under the previous caption shall permit, or be construed as permitting, (a) an extension of the stated maturity or reduction in the principal amount of or reduction in the rate or extension of the time of paying of interest on or reduction of any premium payable on the redemption of, any Obligation, without the consent of the holder of such Obligation, (b) a reduction in the aforesaid aggregate principal amount of Obligations the holders of which are required to consent to any such Supplemental Master Indenture or amendment to the Mortgage or any such amending or supplementing instruments, without the consent of the holders of all the Obligations at the time outstanding which would be affected by the action to be taken, (c) modification of the rights, duties or immunities of the Master Trustee, without the written consent of the Master Trustee or (d) permit the creation of any Lien ranking prior to the lien of the Master Indenture with respect to any of the trust estate or terminate the lien of the Master Indenture or the Mortgage on any Property at any time subject thereto (other than as may otherwise be provided herein or therein;; provided further that no such modification shall be made if it materially adversely affects the provisions of the Master Indenture concerning the conditions precedent to a Person becoming a Member, the conditions precedent to cessation of status as a Member, the maintenance of the Obligated Group s Property free and clear of Liens other than Permitted Encumbrances, the definition of Permitted Encumbrances or transactions with or transfers to Members and other entities without the written approval or consent of the holders of not less than a majority in aggregate principal amount of the Obligations of each series affected thereby. If at any time the Obligated Group Agent shall request the Master Trustee to enter into any such Supplemental Master Indenture for any of the purposes of the Master Indenture summarized under this caption, the Master Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such Supplemental Master Indenture to be mailed by first class mail postage prepaid to each holder of C-73

366 an Obligation or, in case less than all of the series of Obligations are affected thereby, of an Obligation of the series affected thereby. Such notice shall briefly set forth the nature of the proposed Supplemental Master Indenture and shall state that copies thereof are on file at the designated corporate trust office of the Master Trustee for inspection by all Obligation Holders. The Master Trustee shall not, however, be subject to any liability to any Obligation Holder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such Supplemental Master Indenture when consented to and approved as provided in the provisions of the Master Indenture summarized under this caption. If the holders of not less than a majority in aggregate principal amount of the Obligations or the Obligations of each series affected thereby, as the case may be, which are outstanding under the Master Indenture at the time of the execution of any such Supplemental Master Indenture shall have consented to and approved the execution thereof as provided in the Master Indenture, no holder of any Obligation shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Master Trustee or the Members from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any Supplemental Master Indenture as permitted and provided by provisions of the Master Indenture summarized under this caption, the Master Indenture shall be and be deemed to be modified and amended in accordance therewith. For the purpose of obtaining the foregoing consents, the determination of who is deemed the holder of an Obligation held by a Related Bond Trustee shall be made in the manner provided in the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE RELATED BOND TRUSTEE OR BONDHOLDERS DEEMED TO BE OBLIGATION HOLDERS. DEFEASANCE If the Members shall pay or provide for the payment of the entire indebtedness on all Obligations (including, for the purposes of the provisions of the Master Indenture summarized under this caption, any Obligations owned by a Member) outstanding in any one or more of the following ways: (a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Obligations outstanding, as and when the same become due and payable; (b) by depositing with the Master Trustee, in trust, at or before maturity, moneys in an amount as the Master Trustee shall determine sufficient to pay or redeem (when redeemable) all Obligations Outstanding (including the payment of premium, if any, and interest payable on such Obligations to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested at the direction of the Obligated Group Agent in Escrow Obligations, in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used at the direction of the Obligated Group Agent for any other purpose permitted by law; (c) by delivering to the Master Trustee, for cancellation by it, all Obligations outstanding; or (d) by depositing with the Master Trustee, in trust, before maturity, Escrow Obligations in such amount as the Master Trustee shall determine (which determination may be based upon a report of a firm of independent certified public accountants) will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations outstanding at or before their respective maturity dates; and if the Obligated Group shall also pay or cause to be paid all other sums payable under the Master Indenture by the Obligated Group and, if any such Obligations are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given in accordance with the requirements of the Master Indenture or provisions satisfactory to the Master Trustee shall have been made for the giving of such notice, then and in that case (but subject to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - SATISFACTION OF RELATED BONDS ) the Master Indenture and the estate and rights granted thereunder shall cease, determine, and become null and void, and thereupon the Master Trustee shall, upon Written Request of the Obligated Group Agent, and upon receipt by the Master Trustee of an Officer s Certificate from the Obligated Group Agent and an opinion of Independent Counsel not objected to by the Master Trustee, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of the Master C-74

367 Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging the Master Indenture and the lien thereof. The satisfaction and discharge of the Master Indenture shall be without prejudice to the rights of the Master Trustee to charge and be reimbursed by the Obligated Group for any expenditures which it may thereafter incur in connection with the Master Indenture. The foregoing notwithstanding, the liability of the Obligated Group in respect of the Obligations shall continue, but the holders thereof shall thereafter be entitled to payment only out of the moneys or Escrow Obligations deposited with the Master Trustee as aforesaid. Any moneys, funds, securities, or other property remaining on deposit under the Master Indenture (other than said Escrow Obligations or other moneys deposited in trust as above provided) shall, upon the full satisfaction of the Master Indenture, forthwith be transferred, paid over and distributed to the Obligated Group. The Obligated Group may at any time surrender to the Master Trustee for cancellation by it any Obligations previously authenticated and delivered which the Obligated Group may have acquired in any manner whatsoever, and such Obligations, upon such surrender and cancellation, shall be deemed to be paid and retired. PROVISION FOR PAYMENT OF A PARTICULAR SERIES OF OBLIGATIONS OR PORTION THEREOF If the Obligated Group shall pay or provide for the payment of the entire indebtedness on all Obligations of a particular series or a portion of such a series (including, for the purpose of the provisions of the Master Indenture summarized under this caption, any such Obligations owned by a Member) in one of the following ways: (a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Obligations of such series or portion thereof outstanding, as and when the same shall become due and payable; (b) by depositing with the Master Trustee, in trust, at or before maturity, moneys in an amount as the Master Trustee shall determine sufficient to pay or redeem (when redeemable) all Obligations of such series or portion thereof outstanding (including the payment of premium, if any, and interest payable on such Obligations to the maturity or redemption date), provided that such moneys, if invested, shall be invested at the direction of the Obligated Group Agent in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations of such series or portion thereof outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used at the direction of the Obligated Group Agent for any other purpose permitted by law; (c) by delivering to the Master Trustee, for cancellation by it, all Obligations of such series or portion thereof outstanding; or (d) by depositing with the Master Trustee, in trust, Escrow Obligations in such amount as the Master Trustee shall determine (which determination may be based upon a report of a firm of independent certified public accountants) will, together with the income or increment to accrue thereon without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations of such series or portion thereof at or before their respective maturity dates; and if the Obligated Group shall also pay or cause to be paid all other sums payable under the Master Indenture by the Obligated Group with respect to such series of Obligations or portion thereof, and, if any such Obligations of such series or portion thereof are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given in accordance with the requirements of the Master Indenture or provisions satisfactory to the Master Trustee shall have been made for the giving of such notice, then in that case (but subject to the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - SATISFACTION OF RELATED BONDS ) such Obligations shall cease to be entitled to any lien, benefit or security under the Master Indenture. The liability of the Obligated Group in respect of such Obligations shall continue but the holders thereof shall thereafter be entitled to payment (to the exclusion of all other Obligation Holders) only out of the moneys or Escrow Obligations deposited with the Master Trustee as aforesaid. C-75

368 SATISFACTION OF RELATED BONDS The provisions of the Master Indenture summarized under the captions Summary of Certain Provisions of the Master Indenture Defeasance and Provision for Payment of a Particular Series of Obligations or Portion Thereof notwithstanding, any Obligation which secures a Related Bond (i) shall be deemed paid and shall cease to be entitled to the lien, benefit and security under the Master Indenture in the circumstances described in subparagraph (b)(ii) of the definition of Outstanding Obligations ; and (ii) shall not be deemed paid and shall continue to be entitled to the lien, benefit and security under the Master Indenture unless and until such Related Bond shall cease to be entitled to any lien, benefit or security under the Related Bond Indenture pursuant to the provisions thereof. SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE The Series 2010 Tax Exempt Bond Indenture contains various covenants, security provisions, terms and conditions, certain of which are summarized below. Reference is made to the Series 2010 Tax Exempt Bond Indenture for a full and complete statement of its provisions. All references to the Revenue Fund, Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Optional Redemption Fund, Project Fund, Expense Fund and Purchase Fund under this heading shall mean such funds created under and pursuant to the Series 2010 Tax Exempt Bond Indenture. For the purposes of the summary of the provisions of the Series 2010 Tax Exempt Bond Indenture under this heading, Bonds shall refer to the Series 2010A Bonds, Series 2010C Bonds and Series 2010D Bonds, Series 2010 Fixed Rate Bonds shall refer to the Series 2010A Bonds and Series 2010D Bonds, Series 2010 Fixed Rate Obligations shall refer to the Series 2010A Obligation and Series 2010D Obligations, Bond Trustee shall refer to the Series 2010 Tax Exempt Bond Trustee, Bond Indenture shall refer to the Series 2010 Tax Exempt Bond Indenture and Loan Agreement shall refer to the Series 2010 Tax Exempt Loan Agreement. FUNDS; DISPOSITION OF REVENUES 1. Revenue Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Revenue Fund Timothy Place, NFP Series 2010A/B/C/D (the Revenue Fund ). All payments upon the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture, all payments under the Loan Agreement and all transfers from the Rebate Fund, when received by the Bond Trustee, shall be deposited into the Revenue Fund and shall be held therein until disbursed as provided in the Bond Indenture. Amounts on deposit in the Revenue Fund shall be held for the benefit of all the Bonds and disbursed, as provided in the Bond Indenture, pro-rata based on the amount of principal or interest on the Bonds due on the next principal payment date or Interest Payment Date. Pursuant to the assignment and pledge of payments upon the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation set forth in the granting clauses contained in the Bond Indenture, the Authority will direct the Borrowers to make payments upon the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture directly to the Bond Trustee when and as the same become due and payable. 2. Interest Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Interest Fund Timothy Place, NFP Series 2010A/B/C/D (the Interest Fund ). An initial deposit shall be made to the Interest Fund as provided in the Bond Indenture. The Bond Trustee shall also establish and maintain a separate and segregated account in the Interest Fund designated the Special Interest Account Timothy Place, NFP Series 2010A/B/C/D (the Special Interest Account ). An initial deposit shall be made to the Special Interest Account as provided in the Bond Indenture. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Interest Fund from moneys in the Special Interest Account an amount which, together with an equal amount to be deposited in each month preceding the next succeeding semi-annual Interest Payment Date, equals the amount of interest due on the next succeeding semi-annual Interest Payment Date of the Series 2010 Fixed Rate Bonds and the Series 2010C Bonds until no funds remain on deposit in the Special Interest Account; provided, however, that (i) no funds shall be transferred from the Special Interest Account to the Interest Fund representing interest on the Series C-76

369 2010 Fixed Rate Bonds or the Series 2010C Bonds after June 15, 2012 unless the Bond Trustee receives an Opinion of Bond Counsel to the effect that such transfer will not adversely affect the validity of the Series 2010 Bonds or any exemption from federal income taxation to which the Series 2010 Bonds would otherwise be entitled and (ii) amounts on deposit in the Special Interest Account after the date referred to in (i) may be used by the Borrowers to pay the cost of any project as defined in the Act upon receipt of an Opinion of Bond Counsel to the effect that such application of funds will not adversely affect the validity of the Series 2010 Bonds or any exemption from federal income taxation to which the interest on the Series 2010 Bonds would otherwise be entitled. Series 2010A Bonds. Within the Interest Fund, the Bond Trustee shall create and maintain a separate account to be known as the Series 2010A Interest Account. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Series 2010A Interest Account from moneys in the Revenue Fund an amount which, together with an equal amount to be deposited on the tenth day of each month preceding the next semi-annual Interest Payment Date (taking into account any amounts to be transferred from the Special Interest Account), is not less than the interest to become due on the next succeeding semi-annual Interest Payment Date of the Series 2010A Bonds. No monthly deposit pursuant to the provisions of the Bond Indenture summarized in this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Interest Fund and available for such purpose. If the tenth day of any month is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010B Bonds. Within the Interest Fund, the Bond Trustee shall create and maintain a separate account to be known as the Series 2010B Interest Account. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Series 2010B Interest Account from moneys in the Revenue Fund an amount which, together with an equal amount to be deposited on the tenth day of each month preceding the next semi-annual Interest Payment Date (taking into account any amounts to be transferred from the Special Interest Account), is not less than the interest to become due on the next succeeding semi-annual Interest Payment Date of the Series 2010B Bonds. No monthly deposit pursuant to the provisions of the Bond Indenture summarized in this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Interest Fund and available for such purpose. If the tenth day of any month is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010C Bonds. Within the Interest Fund, the Bond Trustee shall create and maintain a separate account to be known as the Series 2010C Interest Account. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Series 2010C Interest Account from moneys in the Revenue Fund an amount which, together with an equal amount to be deposited on the tenth day of each month preceding the next regularly scheduled semi-annual Interest Payment Date (taking into account any amounts to be transferred from the Special Interest Account), is not less than the interest to become due on the next succeeding regularly scheduled semi-annual Interest Payment Date of the Series 2010C Bonds. No monthly deposit pursuant to this paragraph need be made, however, to the extent that there is a sufficient amount already on deposit and available for such purpose in the Interest Fund to be applied to such next interest payment. If the tenth day of any calendar month is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010D Bonds. Within the Interest Fund, the Bond Trustee shall create and maintain a separate account to be known as the Series 2010D Interest Account. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Series 2010D Interest Account from moneys in the Revenue Fund an amount which, together with an equal amount to be deposited on the tenth day of each month preceding the next semi-annual Interest Payment Date (taking into account any amounts to be transferred from the Special Interest Account), is not less than the interest to become due on the next succeeding semi-annual Interest Payment Date of the Series 2010D Bonds. No monthly deposit pursuant to the provisions of the Bond Indenture summarized in this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Interest Fund and available for such purpose. If the tenth day of any month is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Moneys on deposit in the Interest Fund, other than income thereon which is to be transferred to other funds created under the Bond Indenture or the Rebate Fund, must be used to pay interest on the Bonds as it becomes due. C-77

370 In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in any of the accounts of the Interest Fund in excess of the amount needed to pay the interest on the related Bonds remaining outstanding on the first interest payment date occurring on or after the date of such redemption or defeasance to pay the principal of and interest on the Bonds to be redeemed or defeased. 3. Bond Sinking Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Bond Sinking Fund Timothy Place, NFP Series 2010A/B/C/D (the Bond Sinking Fund ). Series 2010A Bonds. Within the Bond Sinking Fund, the Bond Trustee shall create and maintain a separate account designated the Series 2010A Account. On or before the tenth day of each month, commencing June, 2015, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Series 2010A Account of the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than onetwelfth (1/12) of the principal to become due on the Series 2010A Bonds on the next succeeding May 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made to the extent that there is a sufficient amount already on deposit and available for such purpose in the Series 2010A Account of the Bond Sinking Fund. If the tenth day of any month is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010B Bonds. Within the Bond Sinking Fund, the Bond Trustee shall create and maintain a separate account designated the Series 2010B Account. On or before May 10, 2020, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Series 2010B Account of the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than the principal to become due on the Series 2010B Bonds on the next succeeding May 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made to the extent that there is a sufficient amount already on deposit and available for such purpose in the Series 2010B Account of the Bond Sinking Fund. If May 10, 2020 is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010C Bonds. The Bond Trustee shall create and maintain a separate account known as the Series 2010C Account. On or before May 10, 2045 after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Series 2010C Account of the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than the principal of the Bonds to become due on the next May 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made, however, to the extent that there is a sufficient amount already on deposit and available for such purpose in the Series 2010C Account of the Bond Sinking Fund to be applied to such next maturity or mandatory Bond Sinking Fund redemption payment. If May 10, 2045 is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010D-1 Bonds. Within the Bond Sinking Fund, the Bond Trustee shall create and maintain a separate account designated the Series 2010D-1 Account. On or before August 10, 2016, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Series 2010D-1 Account of the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than the principal to become due on the Series 2010D-1 Bonds on the next succeeding August 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made to the extent that there is a sufficient amount already on deposit and available for such purpose in the Series 2010D-1 Account of the Bond Sinking Fund. If August 10, 2016, is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010D-2 Bonds. Within the Bond Sinking Fund, the Bond Trustee shall create and maintain a separate account designated the Series 2010D-2 Account. On or before November 10, 2015, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Series 2010D-2 Account of the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than the principal to become due on the Series 2010D-2 Bonds on the next succeeding November 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made to the extent that there is a sufficient C-78

371 amount already on deposit and available for such purpose in the Series 2010D-2 Account of the Bond Sinking Fund. If November 10, 2015 is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Series 2010D-3 Bonds. Within the Bond Sinking Fund, the Bond Trustee shall create and maintain a separate account designated the Series 2010D-3 Account. On or before August 10, 2015, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Series 2010D-3 Account of the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than the principal to become due on the Series 2010D-3 Bonds on the next succeeding August 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made to the extent that there is a sufficient amount already on deposit and available for such purpose in the Series 2010D-3 Account of the Bond Sinking Fund. If August 10, 2015 is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Moneys on deposit in the Bond Sinking Fund, other than income earned thereon which is to be transferred to other funds created under the Bond Indenture or to the Rebate Fund, shall be applied by the Bond Trustee to pay principal of the Bonds as it becomes due and to redeem the Bonds in accordance with the mandatory Bond Sinking Fund redemption schedule provided in the Bond Indenture. In lieu of such mandatory Bond Sinking Fund redemption, the Bond Trustee may, at the request of the Borrowers, purchase for cancellation an equal principal amount of Bonds of the maturity to be redeemed in the open market at prices not exceeding the principal amount of the Bonds being purchased, with such interest portion of the purchase price to be paid from the Interest Fund and the principal portion of such purchase price to be paid from the Bond Sinking Fund. In addition, the amount of Bonds to be redeemed on any date pursuant to the mandatory Bond Sinking Fund redemption schedule shall be reduced by the principal amount of Bonds of the maturity required to be redeemed which are acquired by the Borrowers or any other Member and delivered to the Bond Trustee for cancellation. In connection with any partial redemption or defeasance prior to maturity of the Bonds of any series, the Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in any of the accounts of the Bond Sinking Fund in excess of the amount needed to pay principal on the related Bonds remaining outstanding on the first principal or mandatory sinking fund payment date occurring on or after the date of such redemption or defeasance to pay the principal of and interest on the Bonds to be redeemed or defeased. 4. Debt Service Reserve Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Debt Service Reserve Fund Timothy Place, NFP Series 2010A/B/C/D (the Debt Service Reserve Fund ). Within the Debt Service Reserve Fund, the Bond Trustee shall create and maintain six separate accounts to be known as the Series 2010A Account, the Series 2010B Account, the Series 2010C Account, the Series 2010D-1 Account, the Series 2010D-2 Account and the Series 2010D- 3 Account (collectively, the Series 2010 Accounts ). A deposit to the credit of the Series 2010 Accounts of the Debt Service Reserve Fund shall be made from the proceeds of the Bonds in accordance with the provisions of the Bond Indenture. Amounts on deposit in the Debt Service Reserve Fund shall be administered by the Bond Trustee as summarized under this subcaption. Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Series 2010A Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2010A Interest Account of the Interest Fund and the Series 2010A Account of the Bond Sinking Fund (in that order). Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Series 2010B Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2010B Interest Account of the Interest Fund and the Series 2010B Account of the Bond Sinking Fund (in that order). Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Series 2010C Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2010C Interest Account of the Interest Fund and the Series 2010C Account of the Bond Sinking Fund (in that order). Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Series 2010D-1 Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2010D Interest Account of the Interest Fund and the Series 2010D Account of the Bond Sinking Fund (in that order) with respect to the Series 2010D-1 Bonds. Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Series 2010D-2 Account of the Debt Service Reserve Fund shall be used C-79

372 only to make up any deficiencies in the Series 2010D Interest Account of the Interest Fund and the Series 2010D Account of the Bond Sinking Fund (in that order) with respect to the Series 2010D-2 Bonds. Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Series 2010D-3 Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2010D Interest Account of the Interest Fund and the Series 2010D Account of the Bond Sinking Fund (in that order) with respect to the Series 2010D-3 Bonds Moneys on deposit in the Debt Service Reserve Fund shall be invested in Qualified Investments. Qualified Investments in each of the Series 2010 Accounts of the Debt Service Reserve Fund shall be valued by the Bond Trustee on each October 15 (the Valuation Date ), on the basis of fair market value (which valuation shall take into account any accrued and unpaid interest). If on any Valuation Date the amount on deposit in a Series 2010 Account of the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement for such Series 2010 Account as a result of a decline in the market value of investments on deposit in such Series 2010 Account of the Debt Service Reserve Fund, the Loan Agreement requires the Borrowers to deposit in such Series 2010 Account of the Debt Service Reserve Fund the amount necessary to restore the amount on deposit in such Series 2010 Account of the Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement within 120 days following the date on which the Borrowers receive notice of such deficiency. If at any time the amount on deposit in any Series 2010 Account of the Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement as a result of the Debt Service Reserve Fund having been drawn upon, the Loan Agreement requires the Borrowers to restore the amount on deposit in such Series 2010 Account of the Debt Service Reserve Fund to an amount equal to the applicable Debt Service Reserve Fund Requirement by the deposit with the Bond Trustee of an amount equal to such deficiency in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred. In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in any Series 2010 Account of the Debt Service Reserve Fund in excess of the Debt Service Reserve Fund Requirement for such Series 2010 Account after such redemption to pay the principal of or the principal portion of the redemption price of said Bonds to be redeemed or defeased. On the final maturity date of a series of the Bonds, any moneys in the applicable Series 2010 Account of the Debt Service Reserve Fund may be used to pay the principal of and interest on the applicable Series 2010 Bonds on such final maturity date. If at any time the amount on deposit in the Debt Service Reserve Fund is less than the maximum amount of principal and interest payable on the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds and the Series 2010D Bonds, as the case may be (assuming an interest rate equal to the then current interest rate on the Series 2010C Bonds) during the next succeeding six-month period, the Bond Trustee shall give notice of such event by first class mail, postage prepaid, to the Director of the Illinois Department of Public Health. The investment earnings on funds on deposit in each Series 2010 Account of the Debt Service Reserve Fund shall be transferred to the Special Interest Account of the Interest Fund on each April 15 and October 15 until June 15, 2012; provided, however, that such investment earnings may be transferred to the Special Interest Account of the Interest Fund more frequently upon the written direction of the Borrowers to the Bond Trustee; provided further, however, that no investment earnings on funds on deposit in any Series 2010 Account of the Debt Service Reserve Fund shall be so transferred to the Special Interest Account of the Interest Fund if on such April 15 or October 15 (or any additional date the Borrowers direct the Bond Trustee to deposit such investment earnings into the Special Interest Account of the Interest Fund) the amount on deposit in such Series 2010 Account of the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement for such Series 2010 Account. 5. Optional Redemption Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Optional Redemption Fund Timothy Place, NFP Series 2010A/B/C/D (the Optional Redemption Fund ). In the event of (i) prepayment by or on behalf of the Borrowers or any other Member of amounts payable on the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture, including prepayment with condemnation, insurance or sale proceeds, or (ii) deposit with the Bond Trustee by the Borrowers or the Authority of moneys from any other source for C-80

373 redeeming Bonds or purchasing Bonds for cancellation, except as otherwise provided in the Bond Indenture, such moneys shall be deposited into the Optional Redemption Fund. Within the Optional Redemption Fund, the Bond Trustee shall create and maintain four accounts designated the Series 2010A Redemption Account, the Series 2010B Redemption Account, the Series 2010C Redemption Account and the Series 2010D Redemption Account. Funds received by the Bond Trustee for the prepayment of the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds and the Series 2010D Bonds shall be deposited in the respective accounts of the Optional Redemption Fund. Moneys on deposit in the Optional Redemption Fund shall be used first to make up any deficiencies existing in the Interest Fund, the Bond Sinking Fund and the Debt Service Reserve Fund (in the order listed) and second for the redemption of Bonds in accordance with the provisions of the Bond Indenture. Funds transferred to the Bond Trustee pursuant to the provisions of the Master Indenture shall be deposited in the Optional Redemption Fund and used to optionally redeem Series 2010B Bonds, Series 2010C Bonds and Series 2010D Bonds on the earliest date practicable in accordance with the provisions of the Bond Indenture without further request or approval from the Borrowers. 6. Purchase Fund The Authority shall establish with the Bond Trustee a trust fund in the name of the Authority to be designated the Purchase Fund, and within the Purchase Fund two accounts, designated the Remarketing Proceeds Account and the Borrower Account. The Purchase Fund shall be held by the Bond Trustee, and upon receipt of the proceeds of a remarketing of Series 2010C Bonds, the Bond Trustee shall deposit such money in the Remarketing Proceeds Account of the Purchase Fund for application to the Purchase Price of the Series 2010C Bonds. Upon receipt of moneys from or on behalf of the Borrowers to be used to purchase Series 2010C Bonds, the Bond Trustee shall deposit such money in the Borrower Account of the Purchase Fund for application to the Purchase Price of the Series 2010C Bonds, to the extent that the conditions set forth in the Bond Indenture are satisfied. On any Optional Tender Date or mandatory tender date pursuant to the Bond Indenture, the Bond Trustee shall transfer the ownership of all of the Series 2010C Bonds tendered or required to be tendered to the name of the purchaser thereof. From and after such dates, interest on such Series 2010C Bonds shall be payable solely to such purchaser, its transferees or the successors thereto. Amounts held by the Bond Trustee to pay the Purchase Price of the Series 2010C Bonds shall be held uninvested or, upon the direction of the Borrowers, shall be invested in Qualified Investments which may be liquidated for not less than the original principal amount thereof on no more than one Business Day s prior notice. Amounts held to pay the Purchase Price for more than four years shall be applied as provided in the Bond Indenture. 7. Project Fund The Authority shall establish with the Bond Trustee a separate account to be known as the Project Fund Timothy Place, NFP Series 2010A/B/C/D (the Project Fund ) to the credit of which a deposit shall be made as required by the provisions of the Bond Indenture. Any moneys received by the Bond Trustee from any source for the Project shall be deposited in the Project Fund as directed by the Corporation unless otherwise specifically excepted under the Bond Indenture. The moneys in the Project Fund shall be held in trust by the Bond Trustee, shall be applied to the payment of the costs of the Project except to the extent required to be transferred to the Rebate Fund in accordance with the Tax Exemption Agreement and, pending such application, shall be held as trust funds under the Bond Indenture in favor of the holders of the outstanding Bonds and for the further security of such holders until paid out or transferred as provided in the Bond Indenture. If after payment by the Bond Trustee of all orders theretofore tendered to the Bond Trustee under the provisions of the Bond Indenture and after receipt by the Bond Trustee of the certificates and other documents mentioned by the Bond Indenture there shall remain any moneys in the Project Fund, the Corporation may (i) elect to retain all or a portion of such moneys in the Project Fund until May 1, 2013 unless the Authority and the Bond Trustee have received an Opinion of Bond Counsel to the effect that a disbursement after such date will not adversely affect the validity of the Bonds or any exemption from federal income taxation to which interest on the Bonds would be otherwise entitled, and withdraw such moneys in accordance with the provisions of the Bond Indenture to pay or reimburse the Borrowers for payment of the cost of an additional project or projects (as such C-81

374 term is defined in the Act) if the Borrowers comply with the provisions of the Loan Agreement or relating to changes in or amendments to the project documents and the Loan Agreement, or (ii) deposit such moneys in the Interest Fund to the extent necessary to make the next interest payment therefrom, then in the Bond Sinking Fund to the extent necessary to make the next payment therefrom so long as the next principal payment is required to be made within one year from the date of deposit therein and then to the Optional Redemption Fund. Subject to the provisions of the Bond Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE INVESTMENT OF FUNDS, moneys at any time on deposit in the Project Fund shall, by Written Request of the Obligated Group Agent, be invested or reinvested by the Bond Trustee in Qualified Investments maturing at such time or times so that the Bond Trustee will be able to pay the costs of the Project from time to time upon the order of the Authority and the Borrowers as provided in the Bond Indenture. The Bond Trustee and the Authority shall be entitled to rely upon a schedule of anticipated payments of construction and equipment costs provided by the Borrowers. Except for transfers of investment income as provided in the provisions of the Bond Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE INVESTMENT OF FUNDS, any interest or profit on such investments shall be credited to and any losses on such investments shall be charged against the Project Fund. The Bond Trustee shall not be obligated to invest any moneys held by it hereunder except as directed by the Borrowers, but shall immediately inform the Authority and the Borrowers of any amounts that remain uninvested but are eligible for investment in Qualified Investments. The Bond Trustee may sell or present for redemption any obligations so purchased whenever it shall be necessary in order to provide moneys to meet any payment pursuant to the provisions of the Bond Indenture summarized under the caption and the Bond Trustee shall not be liable or responsible for any loss resulting from such investments. Notwithstanding any other provisions of the Bond Indenture, all investment earnings shall be subject to the provisions of the Tax Exemption Agreement. 8. Expense Fund. The Authority shall establish with the Bond Trustee a separate account to be known as the Expense Fund Timothy Place, NFP Series 2010A/B/C/D (the Expense Fund ). Moneys in the Expense Fund will be disbursed upon receipt of a Written Request for the payment of expenses for any recording, trustee s and depositary s fees and expenses, accounting and legal fees, financing costs and other fees and expenses incurred or to be incurred by or on behalf of the Authority or the Borrowers in connection with or incident to the issuance and sale of the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds and the Series 2010D Bonds. At such time as the Bond Trustee is furnished with a Written Request stating that all such fees and expenses have been paid, and in no event later than May 1, 2011, the Bond Trustee shall transfer any moneys remaining in the Expense Fund to the Interest Fund. INVESTMENT OF FUNDS Upon verbal direction to be promptly followed by a Written Request of the Borrowers filed with the Bond Trustee, moneys in the Revenue Fund, Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Purchase Fund, Project Fund and Optional Redemption Fund shall be invested only in Qualified Investments. Investment income on such Funds shall be transferred monthly by the Bond Trustee in accordance with the provisions described under this caption. All such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required, and moneys on deposit in the Debt Service Reserve Fund may be invested in investments which mature on or prior to the scheduled maturity of the Bonds. The Bond Trustee, when authorized by the Borrowers, may trade with itself in the purchase and sale of securities for such investment; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained in the Bond Indenture and in the Tax Exemption Agreement. The Bond Trustee shall not be liable or responsible for any loss resulting from any such investments. The investment earnings on funds on deposit in the Project Fund shall be deposited in the Special Interest Account of the Interest Fund, investment earnings on funds on deposit in the Interest Fund (including the Special Interest Account) shall be retained therein and investment earnings on funds on deposit in the Debt Service Reserve Fund in excess of the Debt Service Reserve Fund Requirement shall be transferred to the Special Interest Account of the Interest Fund as provided in the provisions of the Bond Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE FUNDS; DISPOSITION OF REVENUES 4. Debt Service Reserve Fund, in each case until June 15, 2012 (or such later date as the Borrowers may request if the C-82

375 Borrowers deliver to the Bond Trustee an Opinion of Bond Counsel to the effect that such application of investment earnings will not adversely affect the validity of the Bonds or any exemption from federal income taxation to which interest on the Bonds would otherwise be entitled). Except as provided in the preceding paragraph, all income in excess of the requirements (in the case of the Revenue Fund, Interest Fund and Bond Sinking Fund, the amounts expected to be used to make required debt service payments within 13 months of the date of deposit) of the funds specified in the first paragraph under this caption derived from the investment of moneys on deposit in any such funds shall be deposited in the following funds, in the order listed: (a) deposit therein; The Debt Service Reserve Fund, to the extent necessary to maintain the amount required to be on (b) The Bond Sinking Fund to the extent of the amount required to be deposited therein to make the next required principal payment on the Bonds occurring within 13 months of the date of deposit; (c) The Interest Fund to the extent of the estimated amount required to be deposited therein to make any interest payment on the Bonds occurring within 13 months of the date of deposit; and (d) The balance, if any, in the Optional Redemption Fund. Any costs of making any investment of moneys in a fund or account, including investment management fees, shall be charged to that fund or account except that moneys on deposit in the Special Interest Account may be used to pay reasonable investment management fees related to any fund or account under the Bond Indenture. The Rebate Fund and the Purchase Fund shall not be considered a part of the trust estate created by the Bond Indenture. The Bond Trustee is permitted under the Bond Indenture to transfer moneys on deposit in any of the trust funds established under the Bond Indenture to the Rebate Fund in order to comply with the provisions of the Tax Exemption Agreement. ARBITRAGE The Authority, the Borrowers and the Bond Trustee, to the extent of its discretion under the provisions of the Bond Indenture summarized above under the heading SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE - INVESTMENT OF FUNDS, covenant and agree that they will not take any action or fail to take any action with respect to the investment of the proceeds of any Bonds issued under the Bond Indenture or with respect to the payments derived from the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture or from the Loan Agreement or any other moneys regardless of the source or where held, which may, notwithstanding compliance with the other provisions of the Bond Indenture, the Loan Agreement and the Tax Exemption Agreement, result in constituting the Bonds arbitrage bonds within the meaning of such term as used in Section 148 of the Code. The Authority further covenants and agrees that it will comply with and take all actions required by the Tax Exemption Agreement. SUPPLEMENTAL BOND INDENTURES Subject to the limitations set forth in the third paragraph under this caption, the Authority and the Bond Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to the Bond Indenture, as shall not be inconsistent with the terms and provisions of the Bond Indenture, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in the Bond Indenture; (b) to grant to or confer upon the Bond Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders and the Bond Trustee, or either of them; (c) to assign and pledge under or to subject to the Bond Indenture, additional revenues, properties or collateral; (d) to evidence the appointment of a separate trustee or the succession of a new bond trustee under the Bond Indenture; (e) to permit the qualification of the Bond Indenture under the Trust Indenture Act of 1939, as then amended, or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of any state of the United States; (f) to permit the issuance of coupon bonds of any series under the Bond Indenture and to permit the exchange of bonds from C-83

376 registered form to coupon form and vice versa; (g) to provide for the refunding or advance refunding of any Bonds, including to establish and administer an escrow fund and to take related action in connection therewith; (h) to modify, amend or supplement the Bond Indenture or any indenture supplemental to the Bond Indenture in such manner as to permit certificated Bonds; (i) to modify, amend or supplement the Bond Indenture or any indenture supplement thereto in such manner as to permit continued compliance with the Tax Exemption Agreement; and (j) to make any other change that, in the judgment of the Bond Trustee, does not materially adversely affect the rights of any Bondholders. The Authority and the Bond Trustee may not enter into a bond indenture or indentures supplemental to the Bond Indenture pursuant to paragraph (f) of the preceding paragraph unless they shall have received an Opinion of Bond Counsel to the effect that the issuance of coupon Bonds will not adversely affect the validity or enforceability in accordance with their terms of such Bonds or adversely affect any exemption for purposes of federal income taxation to which the interest paid on any Bonds would otherwise be entitled. In addition to supplemental indentures for the purposes set forth in the previous paragraphs of this caption and subject to the terms and provisions contained in this paragraph, and not otherwise, the owners of not less than a majority in aggregate principal amount of the Bonds which are outstanding under the Bond Indenture at the time of the execution of such supplemental indenture, or, in case less than all of the several series of Bonds outstanding are affected thereby, the owners of not less than a majority in aggregate principal amount of the Bonds of each series so affected which are outstanding at the time of such execution, shall have the right, from time to time, anything contained in the Bond Indenture to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Bond Trustee of such indenture or indentures supplemental to the Bond Indenture as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Bond Indenture or in any supplemental indenture; provided, however, that nothing in the Bond Indenture shall permit, or be construed as permitting, a supplemental indenture to effect (1) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying of interest on, or reduction of any premium payable on the redemption of any Bonds without the consent of the owners of such Bonds; (2) a reduction in the amount or extension of the time of any payment required to be made to or from the Bond Sinking Fund or the Interest Fund; (3) the creation of any lien prior to or on parity with the lien of the Bond Indenture, without the consent of the owners of all of the Bonds at the time outstanding; (4) a reduction in the aforesaid aggregate principal amount of Bonds the owners of which are required to consent to any such supplemental indenture, without the consent of the owners of all the Bonds at the time outstanding which would be affected by the action to be taken; or (5) a modification of the rights, duties or immunities of the Bond Trustee, without the written consent of the Bond Trustee. If at any time the Authority shall request the Bond Trustee to enter into any such supplemental indenture for any of the purposes described under this caption, the Bond Trustee shall, upon being satisfactorily indemnified with respect to fees and expenses, cause notice of the proposed execution of such supplemental indenture to be mailed to each owner of Bonds as shown on the Bond Register. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the designated corporate trust office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided under this caption. If the owners of the requisite principal amount of Bonds which are outstanding under the Bond Indenture at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as provided under this caption, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as under this caption permitted and provided, the Bond Indenture shall be and be deemed to be modified and amended in accordance therewith. Anything in the Bond Indenture to the contrary notwithstanding, so long as the Members of the Obligated Group are not in default under the Master Indenture or the Borrowers are not in default under the Loan Agreement, a supplemental indenture which adversely affects the rights of the Borrowers under the Loan Agreement or the Borrowers or any Member under the Master Indenture shall not become effective unless and until the Borrowers shall have consented in writing to the execution and delivery of such supplemental indenture. C-84

377 SATISFACTION OF THE BOND INDENTURE The Authority may pay or provide for the payment of the entire indebtedness on all Bonds (including for these purposes Bonds held by any Member of the Obligated Group) outstanding in any one or more of the following ways: (1) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Bonds outstanding, as and when the same become due and payable; (2) by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Bonds outstanding (including the payment of premium, if any, and interest payable on such Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in noncallable Government Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding at or before their respective maturity dates; it being understood that the investment income on such Government Obligations may be used for any other purpose under the Act; (3) by delivering to the Bond Trustee, for cancellation by it, all Bonds outstanding; or (4) by depositing with the Bond Trustee, in trust, noncallable Government Obligations in such amount as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding at or before their respective maturity dates. and if the Authority shall pay or cause to be paid all other sums payable under the Bond Indenture by the Authority, the Bond Indenture and the estate and rights granted thereunder shall cease, determine, and become null and void, and thereupon the Bond Trustee shall, upon Written Request of the Authority, and upon receipt by the Bond Trustee of an Officer s Certificate and an opinion of Independent Counsel addressed to the Bond Trustee, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of the Bond Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging the Bond Indenture and the lien thereof. The satisfaction and discharge of the Bond Indenture shall be without prejudice to the rights of the Bond Trustee to charge and be reimbursed by the Authority and the Borrowers for any fees and expenditures which it may thereafter incur in connection therewith. Any moneys, funds, securities, or other property remaining on deposit in the Revenue Fund, Interest Fund, Bond Sinking Fund, Optional Redemption Fund, Debt Service Reserve Fund or in any other fund or investment under the Bond Indenture (other than said Government Obligations or other moneys deposited in trust as above provided) shall, upon the full satisfaction of the Bond Indenture, forthwith be transferred, paid over and distributed to the Authority and the Borrowers, as their respective interests may appear. If the Authority shall pay or provide for the payment of the entire indebtedness on all Bonds (including for these purposes Bonds held by any Member of the Obligated Group) of a particular series or any portion of a particular series, in one or more of the ways described in the first paragraph of this caption, such Bonds shall cease to be entitled to any lien, benefit or security under the Bond Indenture. The liability of the Authority in respect of such Bonds shall continue but the owners thereof shall thereafter be entitled to payment (to the exclusion of all other Bondholders) only out of the moneys or Government Obligations deposited with the Bond Trustee as indicated above. None of the Bonds outstanding under the Bond Indenture may be refunded nor may the Bond Indenture be discharged if under any circumstances such refunding or discharge would result in the loss of any exemption for purposes of federal income taxation to which interest on the Bonds would otherwise be entitled. As a condition precedent to the advance refunding of any Bonds outstanding under the Bond Indenture, the Bond Trustee shall receive an (i) Opinion of Bond Counsel to the effect that such refunding will not result in the loss of any exemption for purposes of federal income taxation to which the interest on such Bonds would otherwise be entitled, C-85

378 notwithstanding the satisfaction and discharge of the Bond Indenture and (ii) upon the request of the Authority or the Bond Trustee, a verification report of independent certified public accountants (or another Consultant acceptable to the Bond Trustee) with respect to the sufficiency of the moneys and Government Obligations deposited with the Bond Trustee, upon which the Bond Trustee may rely. Notwithstanding anything to the contrary in the Bond Indenture, upon the provision for payment of the Bonds or a portion thereof as specified in the provisions of the Bond Indenture summarized in subparagraph (2) or (4) above, the optional redemption provisions of the Bond Indenture allowing such Bonds to be called prior to maturity upon proper notice (notwithstanding provision for the payment of such Bonds having been made through a date after the first optional redemption date provided for in the Bond Indenture) shall remain available to the Authority, upon direction of the Borrowers unless, in connection with making the deposits referred to in those provisions, the Authority, at the direction of the Borrowers, shall have irrevocably elected to waive any future right to call the Bonds or portions thereof for redemption prior to maturity. Notwithstanding anything to the contrary in the Bond Indenture, upon provision for payment of the Bonds or any portion thereof prior to the maturity thereof as specified in the provisions of the Bond Indenture summarized in subparagraph (2) or (4) above, the Authority, at the direction of the Borrowers, may elect to restructure any escrow deposit account and to pay such Bonds on the respective maturity dates therefor unless, in connection with making the deposits referred to in such sections, the Authority, at the direction of the Borrowers shall have irrevocably elected to waive the right to provide for the payment of such Bonds on their respective maturity dates. No such redemption or restructuring shall occur, however, unless the Borrowers shall deliver on behalf of the Authority to the Bond Trustee (a) United States Government Obligations and/or cash sufficient to discharge such Bonds (or portion thereof) on the redemption date or dates selected, (b) an opinion of an independent certified public accountant verifying that such United States Government Obligations, together with the expected earnings thereon, and/or cash will be sufficient to provide for the payment of such Bonds to the redemption or maturity dates, and (c) an opinion of Bond Counsel (which opinion may be based upon a ruling or rulings of the Internal Revenue Service) to the effect that such earlier redemption or restructuring, will not result in the loss of any exemption for purposes of federal income taxation to which interest on the Bonds would otherwise be entitled. The Bond Trustee will give written notice of any such redemption or restructuring to the owners of the Bonds affected thereby. BOND TRUSTEE AS HOLDER OF SERIES 2010 FIXED RATE OBLIGATIONS AND SERIES 2010C OBLIGATION. The Authority agrees that the Bond Trustee in its own name or in the name of the Authority may enforce all rights of the Authority (other than Unassigned Rights) and all obligations of the Borrowers under and pursuant to the Loan Agreement and any obligation of any Member under the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture for and on behalf of the Bondholders (other than Unassigned Rights), whether or not the Authority is in default under the Bond Indenture. The Bond Trustee shall be considered the holder of the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation. EVENTS OF DEFAULT An event of default exists under the Bond Indenture in the event that: (a) payment of any installment of interest payable on any of the Bonds shall not be made by the Authority when the same shall become due and payable; or (b) payment of the principal of or the premium, if any, payable on any of the Bonds shall not be made by the Authority when the same shall become due and payable, either at maturity, by proceedings for redemption, upon acceleration, through failure to make any payment to any fund under the Bond Indenture or otherwise; or (c) the Authority shall for any reason be rendered incapable of fulfilling its obligations under the Bond Indenture; or (d) an order or decree shall be entered, appointing a receiver, receivers, custodian or custodians for any of the revenues of the Authority, or approving a petition filed against the Authority seeking reorganization of the Authority under the federal bankruptcy laws or any other similar law or statute of the United States of America or C-86

379 any state thereof, or if any such order or decree, having been entered without the consent or acquiescence of the Authority, shall not be vacated or discharged or stayed on appeal within 60 days after the entry thereof; or (e) any proceeding shall be instituted with the consent or acquiescence of the Authority, or any plan shall be entered into by the Authority, for the purpose of effecting a composition between the Authority and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or state statute now or hereafter enacted, if the claims of such creditors are under any circumstances payable from any part or all of the trust estate, including the revenues and other moneys derived by the Authority under the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture or the Loan Agreement; or (f) the Authority (i) files a petition in bankruptcy or under Title 11 of the United States Code, as amended, (ii) makes an assignment for the benefit of its creditors, or (iii) consents to the appointment of a receiver, custodian or trustee for itself or for the whole or any part of the trust estate, including the revenues and other moneys derived by the Authority under the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture or the Loan Agreement; or (g) (i) the Authority is adjudged insolvent by a court of competent jurisdiction, (ii) on a petition in bankruptcy filed against the Authority, the Authority is adjudged as bankrupt, (iii) an order, judgment or decree is entered by any court of competent jurisdiction appointing, without the consent of the Authority, a receiver, custodian or trustee of the Authority or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within 60 days from the date of entry thereof, or (iv) the Authority is generally not paying its debts as such debts become due; or (h) the Authority shall file a petition or answer seeking reorganization or any arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof; or (i) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property, and such custody or control shall not be terminated within 30 days from the date of assumption of such custody or control; or (j) any event of default as defined in the Loan Agreement or the Master Indenture shall occur and such event of default shall be continuing from and after the date the Authority is entitled under the Loan Agreement to request that the Master Trustee declare the Series 2010 Fixed Rate Obligations and the Series 2010C Obligation pledged under the Bond Indenture to be immediately due and payable, or such event of default shall be continuing from and after the date on which the Master Trustee is entitled under the Master Indenture to declare any Obligation immediately due and payable, or the Master Trustee shall declare any Obligation immediately due and payable; or (k) the Authority shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in the Bond Indenture or any indenture supplemental to the Bond Indenture to be performed on the part of the Authority, and such default shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority and the Borrowers by the Bond Trustee; the Bond Trustee may give such notice in its discretion and shall give such notice at the written request of the owners of not less than 10% in aggregate principal amount of the Bonds then outstanding under the Bond Indenture; provided, that, if in the judgment of the Bond Trustee such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Authority to remedy such default within such 30-day period shall not constitute a default under the Bond Indenture if the Authority shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or (l) the Authority, the Borrowers or the Bond Trustee shall default in the performance of any covenant, condition, agreement or provision of the Tax Exemption Agreement, and such default shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the party in default, the Borrowers and the other party; provided that, if in the judgment of the Bond Trustee such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly C-87

380 cured, the failure of the Authority, the Borrowers or the Bond Trustee to remedy such default within such 30-day period shall not constitute a default under the Bond Indenture if the Borrowers shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or (m) the default by the Borrowers in the performance of its covenants under the Loan Agreement relating to the discharge, vacation, bonding or stay of any order, writ or warrant of attachment, garnishment, execution, replevin or similar process filed against any part of the funds or accounts held by the Bond Trustee under the Bond Indenture, such default being an event of default specified in the Loan Agreement. Upon the happening and continuation of any event of default specified in paragraphs (c) through (m) of this caption and the continuance of the same for the period, if any, specified in said paragraphs, the Bond Trustee may, without any action on the part of the Bondholders, and upon the happening of any event of default specified in subparagraphs (a) or (b) above, or upon the happening and continuance of any other event of default and the written request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding under the Bond Indenture exclusive of Bonds then owned by the Authority or any Member, and upon being indemnified to its satisfaction, the Bond Trustee shall, by notice in writing delivered to the Authority, declare the entire principal amount of the Bonds then outstanding under the Bond Indenture and the interest accrued thereon, immediately due and payable, and the entire principal and interest shall thereupon become and be immediately due and payable, subject, however, to the provisions with respect to waivers of events of default described under the heading SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010 TAX EXEMPT BOND INDENTURE - WAIVER OF EVENTS OF DEFAULT. WAIVER OF EVENTS OF DEFAULT The Bond Trustee may in its discretion waive any event of default under the Bond Indenture and its consequences and rescind any declaration of maturity of principal, and shall do so upon being indemnified to its satisfaction and upon written request of the owners of a series of Bonds of (1) at least a majority in aggregate principal amount of all such Bonds outstanding in respect of which default in the payment of principal and/or interest exists, or (2) at least a majority in aggregate principal amount of all such Bonds outstanding, in the case of any other event of default. The foregoing notwithstanding, in no event shall there be waived (a) any event of default in the payment of the principal of any outstanding Bonds when due whether by mandatory redemption through the Bond Sinking Fund or at the dates of maturity specified therein or (b) any default in the payment, other than by reason of an acceleration of the Bonds, when due of the interest on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such default shall have occurred on overdue installments of interest or all arrears of payments of principal when due, as the case may be, and all fees and expenses of the Bond Trustee and any Paying Agent in connection with such default shall have been paid or provided for, including, but not limited to, the reasonable fees of their counsel. In case of any such waiver or rescission or in case any proceeding taken by the Bond Trustee on account of any such default shall have been discontinued or abandoned or determined adversely, then and in every such case the Authority, the Bond Trustee and the Bondholders shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Bond Indenture respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon. DIRECTION OF PROCEEDINGS The owners of a majority in aggregate principal amount of Bonds then outstanding shall have the right at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Bond Indenture, including the enforcement of the rights of the Authority under the Loan Agreement or the appointment of a receiver or any other proceedings under the Bond Indenture; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of the Bond Indenture. APPLICATION OF MONEYS All moneys received by the Bond Trustee by any receiver or by any Bondholder pursuant to any right given or action taken under the default provisions of the Bond Indenture, after payment of the cost and expenses of the C-88

381 proceedings resulting in the collection of such moneys and of the fees of, and the expenses, liabilities and advances incurred or made by, the Bond Trustee (including, but not limited to, the reasonable fees of its counsel), will be deposited in the Revenue Fund and, together with all moneys in the funds maintained by the Bond Trustee under the Bond Indenture will be applied as follows: (a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: FIRST: to the payment of amounts, if any, payable to the United States Treasury pursuant to the Tax Exemption Agreement; SECOND: to the payment to the Persons entitled thereto of all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto without any discrimination or privilege; THIRD: to the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of the Bond Indenture), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, then to the payment ratably, according to the amount of principal due on such date, to the Persons entitled thereto without any discrimination or privilege; and FOURTH: to the payment to the Persons entitled thereto of unpaid principal and interest due and owing on any Bonds, the payment of principal and interest of which has been extended in the manner described in the Bond Indenture. (b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied: FIRST: to the payment of amounts, if any, payable to the United States Treasury pursuant to the Tax Exemption Agreement; SECOND: to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal or interest over the other, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege; and THIRD: to the payment of the principal and interest then due and unpaid upon Bonds with respect to which the payment of principal and interest has been extended as described in the Bond Indenture. (c) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of the Bond Indenture, then, subject to the provisions of the preceding subparagraph (b), in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of the preceding subparagraph (a). Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions of the Bond Indenture summarized under this caption, such moneys shall be applied by it at such times, and from time to time, as the Bond Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable, or, with respect to payments of Defaulted Interest, shall be such date as is required by the Bond Indenture) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date and of the Special Record Date in accordance with the Bond Indenture. The Bond Trustee shall not be required to make payment to the owner of any Bond until such Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Bonds and interest thereon have been paid under the provisions of the Bond Indenture summarized under this caption and all expenses and charges of the Bond Trustee have been paid, including, but not limited to, the reasonable fees of its counsel, any balance remaining shall be paid to the Persons entitled to receive the same; if no other Person shall be entitled thereto, then the balance shall be paid to the Borrowers. REMOVAL OF THE BOND TRUSTEE The Bond Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Bond Trustee and the Authority and signed by the owners of a majority in aggregate principal amount of Bonds then outstanding. The foregoing notwithstanding the Bond Trustee may be removed at any time by an instrument in writing signed by the Authority; provided, however that the Authority may not remove the Bond C-89

382 Trustee without the consent of the Borrowers so long as no event of default has occurred and is continuing under the Bond Indenture or the Loan Agreement. So long as no default has occurred and is continuing under the Bond Indenture or the Loan Agreement, the Bond Trustee may be removed at any time by an instrument in writing signed by the Authority, upon the written request of the Borrowers, and delivered to the Bond Trustee. The foregoing notwithstanding, the Bond Trustee may not be removed by the Authority unless written notice of the delivery of such instrument or instruments signed by the Authority is mailed to the owners of all Bonds outstanding under the Bond Indenture, which notice indicates the Bond Trustee will be removed and replaced by the successor trustee named in such notice, such removal and replacement to become effective upon the later of the acceptance of the appointment by the successor Bond Trustee, or the 60th day next succeeding the date of such notice, unless the owners of 10% or more in aggregate principal amount of such Bonds then outstanding under the Bond Indenture shall object in writing to such removal and replacement. Such notice shall be mailed by first class mail postage prepaid to the owners of such Bonds then outstanding at the address of such owners then shown on the Bond Register. SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010E BOND INDENTURE The Series 2010E Bond Indenture contains various covenants, security provisions, terms and conditions, certain of which are summarized below. Reference is made to the Series 2010E Bond Indenture for a full and complete statement of its provisions. All references to the Revenue Fund, Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Optional Redemption Fund, Project Fund, Expense Fund and Purchase Fund under this heading shall mean such funds created under and pursuant to the Series 2010E Bond Indenture. For the purposes of the summary of the provisions of the Series 2010E Bond Indenture under this heading, Bonds and Series 2010E Bonds shall refer to the Series 2010E Bonds, Bond Trustee shall refer to the Series 2010E Bond Trustee, Bond Indenture shall refer to the Series 2010E Bond Indenture and Loan Agreement shall refer to the Series 2010E Loan Agreement. FUNDS; DISPOSITION OF REVENUES 1. Revenue Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Revenue Fund Timothy Place, NFP Series 2010E (the Revenue Fund ). All payments upon the Series 2010E Obligation pledged under the Bond Indenture and all payments under the Loan Agreement, when received by the Bond Trustee, shall be deposited into the Revenue Fund and shall be held therein until disbursed as provided in the Bond Indenture. Pursuant to the assignment and pledge of payments upon the Series 2010E Obligation set forth in the granting clauses contained in the Bond Indenture, the Authority will direct the Borrowers to make payments upon the Series 2010E Obligation pledged under the Bond Indenture directly to the Bond Trustee when and as the same become due and payable. 2. Interest Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Interest Fund Timothy Place, NFP Series 2010E (the Interest Fund ). An initial deposit shall be made to the Interest Fund as provided in the Bond Indenture. The Bond Trustee shall also establish and maintain a separate and segregated account in the Interest Fund designated the Special Interest Account Timothy Place, NFP Series 2010E (the Special Interest Account ). An initial deposit shall be made to the Special Interest Account as provided in the Bond Indenture. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Interest Fund from moneys in the Special Interest Account an amount which, together with an equal amount to be deposited in each month preceding the next succeeding semi-annual Interest Payment Date, equals the amount of interest due on the next succeeding semi-annual Interest Payment Date of the Series 2010E Bonds until no funds remain on deposit in the Special Interest Account. On or before the tenth day of each month commencing July, 2010, the Bond Trustee shall deposit in the Interest Fund from moneys in the Revenue Fund an amount which, together with an equal amount to be deposited on the tenth day of each month preceding the next semi-annual Interest Payment Date (taking into account any amounts C-90

383 to be transferred from the Special Interest Account), is not less than the interest to become due on the next succeeding semi-annual Interest Payment Date of the Series 2010E Bonds. No monthly deposit pursuant to the provisions of the Bond Indenture summarized in this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Interest Fund and available for such purpose. If the tenth day of any month is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Moneys on deposit in the Interest Fund, other than income thereon which is to be transferred to other funds created under the Bond Indenture, must be used to pay interest on the Bonds as it becomes due. In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in the Interest Fund in excess of the amount needed to pay the interest on the Bonds remaining outstanding on the first interest payment date occurring on or after the date of such redemption or defeasance to pay the principal of and interest on the Bonds to be redeemed or defeased. 3. Bond Sinking Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Bond Sinking Fund Timothy Place, NFP Series 2010E (the Bond Sinking Fund ). On or before May 10, 2015, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Bond Sinking Fund from moneys in the Revenue Fund an amount which is not less than the principal to become due on the Series 2010E Bonds on the next succeeding May 15 by maturity or mandatory Bond Sinking Fund redemption pursuant to the Bond Indenture. No such deposit need be made to the extent that there is a sufficient amount already on deposit and available for such purpose in the Bond Sinking Fund. If May 10, 2015 is not a Business Day, the deposit required to be made shall be made on the next succeeding Business Day. Moneys on deposit in the Bond Sinking Fund, other than income earned thereon which is to be transferred to other funds created under the Bond Indenture, shall be applied by the Bond Trustee to pay principal of the Bonds as it becomes due and to redeem the Bonds in accordance with the mandatory Bond Sinking Fund redemption schedule provided in the Bond Indenture. In lieu of such mandatory Bond Sinking Fund redemption, the Bond Trustee may, at the request of the Borrowers, purchase for cancellation an equal principal amount of Bonds of the maturity to be redeemed in the open market at prices not exceeding the principal amount of the Bonds being purchased, with such interest portion of the purchase price to be paid from the Interest Fund and the principal portion of such purchase price to be paid from the Bond Sinking Fund. In addition, the amount of Bonds to be redeemed on any date pursuant to the mandatory Bond Sinking Fund redemption schedule shall be reduced by the principal amount of Bonds of the maturity required to be redeemed which are acquired by the Borrowers or any other Member and delivered to the Bond Trustee for cancellation. In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in the Bond Sinking Fund in excess of the amount needed to pay principal on the Bonds remaining outstanding on the first principal or mandatory sinking fund payment date occurring on or after the date of such redemption or defeasance to pay the principal of and interest on the Bonds to be redeemed or defeased. 4. Debt Service Reserve Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Debt Service Reserve Fund Timothy Place, NFP Series 2010E (the Debt Service Reserve Fund ). A deposit to the credit of the Debt Service Reserve Fund shall be made from the proceeds of the Bonds in accordance with the provisions of the Bond Indenture. Amounts on deposit in the Debt Service Reserve Fund shall be administered by the Bond Trustee as summarized under this subcaption. Except as provided in the provisions of the Bond Indenture summarized under this subcaption, moneys on deposit in the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Interest Fund and the Bond Sinking Fund (in that order). C-91

384 Moneys on deposit in the Debt Service Reserve Fund shall be invested in Qualified Investments. Qualified Investments in the Debt Service Reserve Fund shall be valued by the Bond Trustee on each October 15 (the Valuation Date ), on the basis of fair market value (which valuation shall take into account any accrued and unpaid interest). If on any Valuation Date the amount on deposit in the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement as a result of a decline in the market value of investments on deposit in the Debt Service Reserve Fund, the Loan Agreement requires the Borrowers to deposit in the Debt Service Reserve Fund the amount necessary to restore the amount on deposit in the Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement within 120 days following the date on which the Borrowers receive notice of such deficiency. If at any time the amount on deposit in the Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement as a result of the Debt Service Reserve Fund having been drawn upon, the Loan Agreement requires the Borrowers to restore the amount on deposit in the Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement by the deposit with the Bond Trustee of an amount equal to such deficiency in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred. In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the request of the Borrowers, use any amounts on deposit in the Debt Service Reserve Fund in excess of the Debt Service Reserve Fund Requirement after such redemption to pay the principal of or the principal portion of the redemption price of said Bonds to be redeemed or defeased. On the final maturity date of the Bonds, any moneys in the Debt Service Reserve Fund may be used to pay the principal of and interest on the Bonds on such final maturity date. If at any time the amount on deposit in the Debt Service Reserve Fund is less than the maximum amount of principal and interest payable on the Bonds during the next succeeding six-month period, the Bond Trustee shall give notice of such event by first class mail, postage prepaid, to the Director of the Illinois Department of Public Health. The investment earnings on funds on deposit in the Debt Service Reserve Fund shall be transferred to the Special Interest Account of the Interest Fund on each April 15 and October 15 until June 15, 2012; provided, however, that such investment earnings may be transferred to the Special Interest Account of the Interest Fund more frequently upon the written direction of the Borrowers to the Bond Trustee; provided further, however, that no investment earnings on funds on deposit in the Debt Service Reserve Fund shall be so transferred to the Special Interest Account of the Interest Fund if on such April 15 or October 15 (or any additional date the Borrowers direct the Bond Trustee to deposit such investment earnings into the Special Interest Account of the Interest Fund) the amount on deposit in the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement. 5. Optional Redemption Fund The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the Optional Redemption Fund Timothy Place, NFP Series 2010E (the Optional Redemption Fund ). In the event of (i) prepayment by or on behalf of the Borrowers or any other Member of amounts payable on the Series 2010E Obligation pledged under the Bond Indenture, including prepayment with condemnation, insurance or sale proceeds, or (ii) deposit with the Bond Trustee by the Borrowers or the Authority of moneys from any other source for redeeming Bonds or purchasing Bonds for cancellation, except as otherwise provided in the Bond Indenture, such moneys shall be deposited into the Optional Redemption Fund. Moneys on deposit in the Optional Redemption Fund shall be used first to make up any deficiencies existing in the Interest Fund, the Bond Sinking Fund and the Debt Service Reserve Fund (in the order listed) and second for the redemption of Bonds in accordance with the provisions of the Bond Indenture. Funds transferred to the Bond Trustee pursuant to the provisions of the Master Indenture shall be deposited in the Optional Redemption Fund and used to optionally redeem Series 2010E Bonds on the earliest date practicable in accordance with the provisions of the Bond Indenture without further request or approval from the Borrowers. C-92

385 6. Project Fund The Authority shall establish with the Bond Trustee a separate account to be known as the Project Fund Timothy Place, NFP Series 2010E (the Project Fund ) to the credit of which a deposit shall be made as required by the provisions of the Bond Indenture. Any moneys received by the Bond Trustee from any source for the Project shall be deposited in the Project Fund as directed by the Corporation unless otherwise specifically excepted under the Bond Indenture. The moneys in the Project Fund shall be held in trust by the Bond Trustee, shall be applied to the payment of the costs of the Project and, pending such application, shall be held as trust funds under the Bond Indenture in favor of the holders of the outstanding Bonds and for the further security of such holders until paid out or transferred as provided in the Bond Indenture. If after payment by the Bond Trustee of all orders theretofore tendered to the Bond Trustee under the provisions of the Bond Indenture and after receipt by the Bond Trustee of the certificates and other documents mentioned by the Bond Indenture there shall remain any moneys in the Project Fund, the Corporation may (i) elect to retain all or a portion of such moneys in the Project Fund and withdraw such moneys in accordance with the provisions of the Bond Indenture to pay or reimburse the Borrowers for payment of the cost of an additional project or projects (as such term is defined in the Act) if the Borrowers comply with the provisions of the Loan Agreement or relating to changes in or amendments to the project documents and the Loan Agreement, or (ii) deposit such moneys in the Interest Fund to the extent necessary to make the next interest payment therefrom, then in the Bond Sinking Fund to the extent necessary to make the next payment therefrom so long as the next principal payment is required to be made within one year from the date of deposit therein and then to the Optional Redemption Fund. Subject to the provisions of the Bond Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010E BOND INDENTURE INVESTMENT OF FUNDS, moneys at any time on deposit in the Project Fund shall, by Written Request of the Obligated Group Agent, be invested or reinvested by the Bond Trustee in Qualified Investments maturing at such time or times so that the Bond Trustee will be able to pay the costs of the Project from time to time upon the order of the Authority and the Borrowers as provided in the Bond Indenture. The Bond Trustee and the Authority shall be entitled to rely upon a schedule of anticipated payments of construction and equipment costs provided by the Borrowers. Except for transfers of investment income as provided in the provisions of the Bond Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010E BOND INDENTURE INVESTMENT OF FUNDS, any interest or profit on such investments shall be credited to and any losses on such investments shall be charged against the Project Fund. The Bond Trustee shall not be obligated to invest any moneys held by it hereunder except as directed by the Borrowers, but shall immediately inform the Authority and the Borrowers of any amounts that remain uninvested but are eligible for investment in Qualified Investments. The Bond Trustee may sell or present for redemption any obligations so purchased whenever it shall be necessary in order to provide moneys to meet any payment pursuant to the provisions of the Bond Indenture summarized under the caption and the Bond Trustee shall not be liable or responsible for any loss resulting from such investments. 7. Expense Fund. The Authority shall establish with the Bond Trustee a separate account to be known as the Expense Fund Timothy Place, NFP Series 2010E (the Expense Fund ). Moneys in the Expense Fund will be disbursed upon receipt of a Written Request for the payment of expenses for any recording, trustee s and depositary s fees and expenses, accounting and legal fees, financing costs and other fees and expenses incurred or to be incurred by or on behalf of the Authority or the Borrowers in connection with or incident to the issuance and sale of the Series 2010E Bonds. At such time as the Bond Trustee is furnished with a Written Request stating that all such fees and expenses have been paid the Bond Trustee shall transfer any moneys remaining in the Expense Fund to the Interest Fund. INVESTMENT OF FUNDS Upon verbal direction to be promptly followed by a Written Request of the Borrowers filed with the Bond Trustee, moneys in the Revenue Fund, Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Project Fund and Optional Redemption Fund shall be invested only in Qualified Investments. Investment income on such Funds shall be transferred monthly by the Bond Trustee in accordance with the provisions described under this caption. All such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are C-93

386 anticipated to be required, and moneys on deposit in the Debt Service Reserve Fund may be invested in investments which mature on or prior to the scheduled maturity of the Bonds. The Bond Trustee, when authorized by the Borrowers, may trade with itself in the purchase and sale of securities for such investment; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained in the Bond Indenture. The Bond Trustee shall not be liable or responsible for any loss resulting from any such investments. The investment earnings on funds on deposit in the Project Fund shall be deposited in the Special Interest Account of the Interest Fund, investment earnings on funds on deposit in the Interest Fund (including the Special Interest Account) shall be retained therein and investment earnings on funds on deposit in the Debt Service Reserve Fund in excess of the Debt Service Reserve Fund Requirement shall be transferred to the Special Interest Account of the Interest Fund as provided in the provisions of the Bond Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010E BOND INDENTURE FUNDS; DISPOSITION OF REVENUES 4. Debt Service Reserve Fund, in each case until June 15, Except as provided in the preceding paragraph, all income in excess of the requirements (in the case of the Revenue Fund, Interest Fund and Bond Sinking Fund, the amounts expected to be used to make required debt service payments within 13 months of the date of deposit) of the funds specified in the first paragraph under this caption derived from the investment of moneys on deposit in any such funds shall be deposited in the following funds, in the order listed: (a) deposit therein; The Debt Service Reserve Fund, to the extent necessary to maintain the amount required to be on (b) The Bond Sinking Fund to the extent of the amount required to be deposited therein to make the next required principal payment on the Bonds occurring within 13 months of the date of deposit; (c) The Interest Fund to the extent of the estimated amount required to be deposited therein to make any interest payment on the Bonds occurring within 13 months of the date of deposit; and (d) The balance, if any, in the Optional Redemption Fund. Any costs of making any investment of moneys in a fund or account, including investment management fees, shall be charged to that fund or account except that moneys on deposit in the Special Interest Account may be used to pay reasonable investment management fees related to any fund or account under the Bond Indenture. SUPPLEMENTAL BOND INDENTURES Subject to the limitations set forth in the third paragraph under this caption, the Authority and the Bond Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to the Bond Indenture, as shall not be inconsistent with the terms and provisions of the Bond Indenture, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in the Bond Indenture; (b) to grant to or confer upon the Bond Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders and the Bond Trustee, or either of them; (c) to assign and pledge under or to subject to the Bond Indenture, additional revenues, properties or collateral; (d) to evidence the appointment of a separate trustee or the succession of a new bond trustee under the Bond Indenture; (e) to permit the qualification of the Bond Indenture under the Trust Indenture Act of 1939, as then amended, or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of any state of the United States; (f) to permit the issuance of coupon bonds under the Bond Indenture and to permit the exchange of bonds from registered form to coupon form and vice versa; (g) to provide for the refunding or advance refunding of any Bonds, including to establish and administer an escrow fund and to take related action in connection therewith; (h) to modify, amend or supplement the Bond Indenture or any indenture supplemental to the Bond Indenture in such manner as to permit certificated Bonds; and (i) to make any other change that, in the judgment of the Bond Trustee, does not materially adversely affect the rights of any Bondholders. C-94

387 The Authority and the Bond Trustee may not enter into a bond indenture or indentures supplemental to the Bond Indenture pursuant to paragraph (f) of the preceding paragraph unless they shall have received an Opinion of Independent Counsel to the effect that the issuance of coupon Bonds will not adversely affect the validity or enforceability in accordance with their terms of such Bonds. In addition to supplemental indentures for the purposes set forth in the previous paragraphs of this caption and subject to the terms and provisions contained in this paragraph, and not otherwise, the owners of not less than a majority in aggregate principal amount of the Bonds which are outstanding under the Bond Indenture at the time of the execution of such supplemental indenture, or, in case less than all of the several series of Bonds outstanding are affected thereby, the owners of not less than a majority in aggregate principal amount of the Bonds of each series so affected which are outstanding at the time of such execution, shall have the right, from time to time, anything contained in the Bond Indenture to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Bond Trustee of such indenture or indentures supplemental to the Bond Indenture as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Bond Indenture or in any supplemental indenture; provided, however, that nothing in the Bond Indenture shall permit, or be construed as permitting, a supplemental indenture to effect (1) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying of interest on, or reduction of any premium payable on the redemption of any Bonds without the consent of the owners of such Bonds; (2) a reduction in the amount or extension of the time of any payment required to be made to or from the Bond Sinking Fund or the Interest Fund; (3) the creation of any lien prior to or on parity with the lien of the Bond Indenture, without the consent of the owners of all of the Bonds at the time outstanding; (4) a reduction in the aforesaid aggregate principal amount of Bonds the owners of which are required to consent to any such supplemental indenture, without the consent of the owners of all the Bonds at the time outstanding which would be affected by the action to be taken; or (5) a modification of the rights, duties or immunities of the Bond Trustee, without the written consent of the Bond Trustee. If at any time the Authority shall request the Bond Trustee to enter into any such supplemental indenture for any of the purposes described under this caption, the Bond Trustee shall, upon being satisfactorily indemnified with respect to fees and expenses, cause notice of the proposed execution of such supplemental indenture to be mailed to each owner of Bonds as shown on the Bond Register. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the designated corporate trust office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided under this caption. If the owners of the requisite principal amount of Bonds which are outstanding under the Bond Indenture at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as provided under this caption, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as under this caption permitted and provided, the Bond Indenture shall be and be deemed to be modified and amended in accordance therewith. Anything in the Bond Indenture to the contrary notwithstanding, so long as the Members of the Obligated Group are not in default under the Master Indenture or the Borrowers are not in default under the Loan Agreement, a supplemental indenture which adversely affects the rights of the Borrowers under the Loan Agreement or the Borrowers or any Member under the Master Indenture shall not become effective unless and until the Borrowers shall have consented in writing to the execution and delivery of such supplemental indenture. SATISFACTION OF THE BOND INDENTURE The Authority may pay or provide for the payment of the entire indebtedness on all Bonds (including for these purposes Bonds held by any Member of the Obligated Group) outstanding in any one or more of the following ways: (1) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Bonds outstanding, as and when the same become due and payable; C-95

388 (2) by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Bonds outstanding (including the payment of premium, if any, and interest payable on such Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in noncallable Government Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding at or before their respective maturity dates; it being understood that the investment income on such Government Obligations may be used for any other purpose under the Act; (3) by delivering to the Bond Trustee, for cancellation by it, all Bonds outstanding; or (4) by depositing with the Bond Trustee, in trust, noncallable Government Obligations in such amount as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding at or before their respective maturity dates. and if the Authority shall pay or cause to be paid all other sums payable under the Bond Indenture by the Authority, the Bond Indenture and the estate and rights granted thereunder shall cease, determine, and become null and void, and thereupon the Bond Trustee shall, upon Written Request of the Authority, and upon receipt by the Bond Trustee of an Officer s Certificate and an opinion of Independent Counsel addressed to the Bond Trustee, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of the Bond Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging the Bond Indenture and the lien thereof. The satisfaction and discharge of the Bond Indenture shall be without prejudice to the rights of the Bond Trustee to charge and be reimbursed by the Authority and the Borrowers for any fees and expenditures which it may thereafter incur in connection therewith. Any moneys, funds, securities, or other property remaining on deposit in the Revenue Fund, Interest Fund, Bond Sinking Fund, Optional Redemption Fund, Debt Service Reserve Fund or in any other fund or investment under the Bond Indenture (other than said Government Obligations or other moneys deposited in trust as above provided) shall, upon the full satisfaction of the Bond Indenture, forthwith be transferred, paid over and distributed to the Authority and the Borrowers, as their respective interests may appear. If the Authority shall pay or provide for the payment of the entire indebtedness on all Bonds (including for these purposes Bonds held by any Member of the Obligated Group) of a particular series or any portion of a particular series, in one or more of the ways described in the first paragraph of this caption, such Bonds shall cease to be entitled to any lien, benefit or security under the Bond Indenture. The liability of the Authority in respect of such Bonds shall continue but the owners thereof shall thereafter be entitled to payment (to the exclusion of all other Bondholders) only out of the moneys or Government Obligations deposited with the Bond Trustee as indicated above. As a condition precedent to the advance refunding of any Bonds outstanding under the Bond Indenture, the Bond Trustee shall receive an upon the request of the Authority or the Bond Trustee, a verification report of independent certified public accountants (or another Consultant acceptable to the Bond Trustee) with respect to the sufficiency of the moneys and Government Obligations deposited with the Bond Trustee, upon which the Bond Trustee may rely. Notwithstanding anything to the contrary in the Bond Indenture, upon the provision for payment of the Bonds or a portion thereof as specified in the provisions of the Bond Indenture summarized in subparagraph (2) or (4) above, the optional redemption provisions of the Bond Indenture allowing such Bonds to be called prior to maturity upon proper notice (notwithstanding provision for the payment of such Bonds having been made through a date after the first optional redemption date provided for in the Bond Indenture) shall remain available to the Authority, upon direction of the Borrowers unless, in connection with making the deposits referred to in those provisions, the Authority, at the direction of the Borrowers, shall have irrevocably elected to waive any future right to call the Bonds or portions thereof for redemption prior to maturity. Notwithstanding anything to the contrary in the Bond Indenture, upon provision for payment of the Bonds or any portion thereof prior to the maturity thereof as C-96

389 specified in the provisions of the Bond Indenture summarized in subparagraph (2) or (4) above, the Authority, at the direction of the Borrowers, may elect to restructure any escrow deposit account and to pay such Bonds on the respective maturity dates therefor unless, in connection with making the deposits referred to in such sections, the Authority, at the direction of the Borrowers shall have irrevocably elected to waive the right to provide for the payment of such Bonds on their respective maturity dates. No such redemption or restructuring shall occur, however, unless the Borrowers shall deliver on behalf of the Authority to the Bond Trustee (a) United States Government Obligations and/or cash sufficient to discharge such Bonds (or portion thereof) on the redemption date or dates selected, and (b) an opinion of an independent certified public accountant verifying that such United States Government Obligations, together with the expected earnings thereon, and/or cash will be sufficient to provide for the payment of such Bonds to the redemption or maturity dates. BOND TRUSTEE AS HOLDER OF SERIES 2010E OBLIGATION The Authority agrees that the Bond Trustee in its own name or in the name of the Authority may enforce all rights of the Authority (other than Unassigned Rights) and all obligations of the Borrowers under and pursuant to the Loan Agreement and any obligation of any Member under the Series 2010E Obligation pledged under the Bond Indenture for and on behalf of the Bondholders (other than Unassigned Rights), whether or not the Authority is in default under the Bond Indenture. The Bond Trustee shall be considered the holder of the Series 2010E Obligation. EVENTS OF DEFAULT An event of default exists under the Bond Indenture in the event that: (a) payment of any installment of interest payable on any of the Bonds shall not be made by the Authority when the same shall become due and payable; or (b) payment of the principal of or the premium, if any, payable on any of the Bonds shall not be made by the Authority when the same shall become due and payable, either at maturity, by proceedings for redemption, upon acceleration, through failure to make any payment to any fund under the Bond Indenture or otherwise; or (c) the Authority shall for any reason be rendered incapable of fulfilling its obligations under the Bond Indenture; or (d) an order or decree shall be entered, appointing a receiver, receivers, custodian or custodians for any of the revenues of the Authority, or approving a petition filed against the Authority seeking reorganization of the Authority under the federal bankruptcy laws or any other similar law or statute of the United States of America or any state thereof, or if any such order or decree, having been entered without the consent or acquiescence of the Authority, shall not be vacated or discharged or stayed on appeal within 60 days after the entry thereof; or (e) any proceeding shall be instituted with the consent or acquiescence of the Authority, or any plan shall be entered into by the Authority, for the purpose of effecting a composition between the Authority and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or state statute now or hereafter enacted, if the claims of such creditors are under any circumstances payable from any part or all of the trust estate, including the revenues and other moneys derived by the Authority under the Series 2010E Obligation pledged under the Bond Indenture or the Loan Agreement; or (f) the Authority (i) files a petition in bankruptcy or under Title 11 of the United States Code, as amended, (ii) makes an assignment for the benefit of its creditors, or (iii) consents to the appointment of a receiver, custodian or trustee for itself or for the whole or any part of the trust estate, including the revenues and other moneys derived by the Authority under the Series 2010E Obligation pledged under the Bond Indenture or the Loan Agreement; or (g) (i) the Authority is adjudged insolvent by a court of competent jurisdiction, (ii) on a petition in bankruptcy filed against the Authority, the Authority is adjudged as bankrupt, (iii) an order, judgment or decree is entered by any court of competent jurisdiction appointing, without the consent of the Authority, a receiver, custodian C-97

390 or trustee of the Authority or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within 60 days from the date of entry thereof, or (iv) the Authority is generally not paying its debts as such debts become due; or (h) the Authority shall file a petition or answer seeking reorganization or any arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof; or (i) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property, and such custody or control shall not be terminated within 30 days from the date of assumption of such custody or control; or (j) any event of default as defined in the Loan Agreement or the Master Indenture shall occur and such event of default shall be continuing from and after the date the Authority is entitled under the Loan Agreement to request that the Master Trustee declare the Series 2010E Obligation pledged under the Bond Indenture to be immediately due and payable, or such event of default shall be continuing from and after the date on which the Master Trustee is entitled under the Master Indenture to declare any Obligation immediately due and payable, or the Master Trustee shall declare any Obligation immediately due and payable; or (k) the Authority shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in the Bond Indenture or any indenture supplemental to the Bond Indenture to be performed on the part of the Authority, and such default shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority and the Borrowers by the Bond Trustee; the Bond Trustee may give such notice in its discretion and shall give such notice at the written request of the owners of not less than 10% in aggregate principal amount of the Bonds then outstanding under the Bond Indenture; provided, that, if in the judgment of the Bond Trustee such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Authority to remedy such default within such 30-day period shall not constitute a default under the Bond Indenture if the Authority shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or (l) the default by the Borrowers in the performance of its covenants under the Loan Agreement relating to the discharge, vacation, bonding or stay of any order, writ or warrant of attachment, garnishment, execution, replevin or similar process filed against any part of the funds or accounts held by the Bond Trustee under the Bond Indenture, such default being an event of default specified in the Loan Agreement. Upon the happening and continuation of any event of default specified in paragraphs (c) through (l) of this caption and the continuance of the same for the period, if any, specified in said paragraphs, the Bond Trustee may, without any action on the part of the Bondholders, and upon the happening of any event of default specified in subparagraphs (a) or (b) above, or upon the happening and continuance of any other event of default and the written request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding under the Bond Indenture exclusive of Bonds then owned by the Authority or any Member, and upon being indemnified to its satisfaction, the Bond Trustee shall, by notice in writing delivered to the Authority, declare the entire principal amount of the Bonds then outstanding under the Bond Indenture and the interest accrued thereon, immediately due and payable, and the entire principal and interest shall thereupon become and be immediately due and payable, subject, however, to the provisions with respect to waivers of events of default described under the heading SUMMARY OF CERTAIN PROVISIONS OF THE SERIES 2010E BOND INDENTURE - WAIVER OF EVENTS OF DEFAULT. WAIVER OF EVENTS OF DEFAULT The Bond Trustee may in its discretion waive any event of default under the Bond Indenture and its consequences and rescind any declaration of maturity of principal, and shall do so upon being indemnified to its satisfaction and upon written request of the owners of the Bonds of (1) at least a majority in aggregate principal amount of all such Bonds outstanding in respect of which default in the payment of principal and/or interest exists, or (2) at least a majority in aggregate principal amount of all such Bonds outstanding, in the case of any other event C-98

391 of default. The foregoing notwithstanding, in no event shall there be waived (a) any event of default in the payment of the principal of any outstanding Bonds when due whether by mandatory redemption through the Bond Sinking Fund or at the dates of maturity specified therein or (b) any default in the payment, other than by reason of an acceleration of the Bonds, when due of the interest on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such default shall have occurred on overdue installments of interest or all arrears of payments of principal when due, as the case may be, and all fees and expenses of the Bond Trustee and any Paying Agent in connection with such default shall have been paid or provided for, including, but not limited to, the reasonable fees of their counsel. In case of any such waiver or rescission or in case any proceeding taken by the Bond Trustee on account of any such default shall have been discontinued or abandoned or determined adversely, then and in every such case the Authority, the Bond Trustee and the Bondholders shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Bond Indenture respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon. DIRECTION OF PROCEEDINGS The owners of a majority in aggregate principal amount of Bonds then outstanding shall have the right at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Bond Indenture, including the enforcement of the rights of the Authority under the Loan Agreement or the appointment of a receiver or any other proceedings under the Bond Indenture; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of the Bond Indenture. APPLICATION OF MONEYS All moneys received by the Bond Trustee by any receiver or by any Bondholder pursuant to any right given or action taken under the default provisions of the Bond Indenture, after payment of the cost and expenses of the proceedings resulting in the collection of such moneys and of the fees of, and the expenses, liabilities and advances incurred or made by, the Bond Trustee (including, but not limited to, the reasonable fees of its counsel), will be deposited in the Revenue Fund and, together with all moneys in the funds maintained by the Bond Trustee under the Bond Indenture will be applied as follows: (a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: FIRST: to the payment to the Persons entitled thereto of all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto without any discrimination or privilege; SECOND: to the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of the Bond Indenture), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, then to the payment ratably, according to the amount of principal due on such date, to the Persons entitled thereto without any discrimination or privilege; and THIRD: to the payment to the Persons entitled thereto of unpaid principal and interest due and owing on any Bonds, the payment of principal and interest of which has been extended in the manner described in the Bond Indenture. (b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied: FIRST: to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal or interest over the other, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege; and SECOND: to the payment of the principal and interest then due and unpaid upon Bonds with respect to which the payment of principal and interest has been extended as described in the Bond Indenture. (c) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of the Bond Indenture, then, subject to the provisions of the preceding subparagraph (b), in the event that the principal of all the Bonds shall later become due C-99

392 or be declared due and payable, the moneys shall be applied in accordance with the provisions of the preceding subparagraph (a). Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions of the Bond Indenture summarized under this caption, such moneys shall be applied by it at such times, and from time to time, as the Bond Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable, or, with respect to payments of Defaulted Interest, shall be such date as is required by the Bond Indenture) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date and of the Special Record Date in accordance with the Bond Indenture. The Bond Trustee shall not be required to make payment to the owner of any Bond until such Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Bonds and interest thereon have been paid under the provisions of the Bond Indenture summarized under this caption and all expenses and charges of the Bond Trustee have been paid, including, but not limited to, the reasonable fees of its counsel, any balance remaining shall be paid to the Persons entitled to receive the same; if no other Person shall be entitled thereto, then the balance shall be paid to the Borrowers. REMOVAL OF THE BOND TRUSTEE The Bond Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Bond Trustee and the Authority and signed by the owners of a majority in aggregate principal amount of Bonds then outstanding. The foregoing notwithstanding the Bond Trustee may be removed at any time by an instrument in writing signed by the Authority; provided, however that the Authority may not remove the Bond Trustee without the consent of the Borrowers so long as no event of default has occurred and is continuing under the Bond Indenture or the Loan Agreement. So long as no default has occurred and is continuing under the Bond Indenture or the Loan Agreement, the Bond Trustee may be removed at any time by an instrument in writing signed by the Authority, upon the written request of the Borrowers, and delivered to the Bond Trustee. The foregoing notwithstanding, the Bond Trustee may not be removed by the Authority unless written notice of the delivery of such instrument or instruments signed by the Authority is mailed to the owners of all Bonds outstanding under the Bond Indenture, which notice indicates the Bond Trustee will be removed and replaced by the successor trustee named in such notice, such removal and replacement to become effective upon the later of the acceptance of the appointment by the successor Bond Trustee, or the 60th day next succeeding the date of such notice, unless the owners of 10% or more in aggregate principal amount of such Bonds then outstanding under the Bond Indenture shall object in writing to such removal and replacement. Such notice shall be mailed by first class mail postage prepaid to the owners of such Bonds then outstanding at the address of such owners then shown on the Bond Register. SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENTS The following is a summary of certain provisions of the Loan Agreements. Unless the context indicates otherwise, each reference to the Loan Agreements below shall mean the Series 2010 Tax Exempt Loan Agreement and the Series 2010E Loan Agreement. Each of the Loan Agreements contains certain substantially similar provisions and therefore have been summarized together. The Series 2010 Tax Exempt Loan Agreement and the Series 2010E Loan Agreement provide for separate loans of the proceeds of the Series 2010A the Series 2010C Bonds and the Series 2010D Bonds and the Series 2010E Bonds, respectively, and contain separate covenants. The summary below should be interpreted accordingly. Reference is made to the Series 2010 Tax Exempt Loan Agreement and the Series 2010E Loan Agreement for a full and complete statement of their provisions. For the purposes of the summary of the provisions of the Loan Agreements, under this heading, Bond Trustee shall refer to the Series 2010 Tax Exempt Bond Trustee and the Series 2010E Bond Trustee, as applicable, Bond Indentures shall refer to the Series 2010 Tax Exempt Bond Indenture and the Series 2010E Bond Indenture Project shall refer to the Project with respect to the Series 2010 Bonds and Bond Financed Property shall refer to the property financed with the proceeds of the Series 2010 Tax Exempt Bonds and the Series 2010E Bonds, as applicable. C-100

393 The Borrowers agree that the proceeds of the Series 2010 Bonds being loaned to the Borrowers shall be deposited with the Bond Trustee and applied as provided in the Bond Indentures. REPRESENTATIONS Each Borrower is a not for profit corporation duly incorporated under the laws of the State, is in good standing and duly authorized to conduct its business in the State, is duly authorized and has full power under the laws of the State and all other applicable laws and its Articles of Incorporation and By-laws to create, issue, enter into, execute and deliver, the Master Indenture, the Series 2010 Obligations, the Official Statement, the Tax Exemption Agreement, the Mortgage, the Purchase Contract, the Remarketing Agreement, the Loan Agreements and the Continuing Disclosure Agreement (the Borrower Agreements ), as applicable, and all action on its part necessary for the valid execution and delivery of the Borrower Agreements has been duly and effectively taken. Except as described in the Official Statement, no litigation, proceedings or investigations are pending or, to the knowledge of the Borrowers, threatened in writing against the Borrowers except litigation, proceedings or investigations involving claims for which the probable ultimate recoveries and the estimated costs and expenses of defense, in the opinion of management of the Borrowers (i) will be entirely within the applicable insurance policy limits (subject to applicable deductibles) or are not in excess of the total of the available assets held under applicable self-insurance programs or (ii) will not have a material adverse effect on the operations or condition, financial or otherwise, of the Borrowers. CONSENT TO ASSIGNMENT OF RIGHTS UNDER THE LOAN AGREEMENTS AND THE SERIES 2010 OBLIGATIONS The Borrowers agree that the Loan Agreements and the Series 2010 Obligations and payments to be made thereunder and thereon (excluding, with respect to the Loan Agreements, Unassigned Rights), shall be assigned and pledged to secure the payment of the Series 2010 Bonds and all of the rights, interests, powers, privileges and benefits accruing to or vested in the Authority thereunder may be protected and enforced in conformity with the Bond Indentures and may be assigned by the Authority to the Bond Trustee as additional security for the Series 2010 Bonds, other than Unassigned Rights. PAYMENTS IN RESPECT OF THE SERIES 2010 OBLIGATIONS AND THE LOAN AGREEMENTS Under the terms of the Loan Agreements, the Borrowers agree to pay the Bond Trustee such amounts at such times as to provide for payment of the principal of, premium, if any, and interest on the outstanding Series 2010 Bonds under the Bond Indentures when due, whether upon a scheduled Interest Payment Date, at maturity, by mandatory or optional redemption or acceleration or otherwise upon the Series 2010 Bonds. The Loan Agreements also require that the Borrowers pay certain other charges which may be incurred for such items as the Bond Trustee s and the Master Trustee s fees, the Authority s fees and expenses, taxes and assessments, if any, and costs incurred in connection with the Series 2010 Bonds. All payments due on the Series 2010 Obligations, except for certain enumerated payments described in the Loan Agreements, shall be paid directly to the Bond Trustee and applied in the manner provided in the Bond Indentures. THE BORROWERS OBLIGATIONS UNCONDITIONAL The Authority and the Borrowers agree that the Borrowers shall bear all risk of damage or destruction in whole or in part to their Property or any part thereof including without limitation any loss, complete or partial, or interruption in the use, occupancy or operation of such Property, or any manner or thing which for any reason interferes with, prevents or renders burdensome, the use or occupancy of such Property or the compliance by the Borrowers with any of the terms of the Loan Agreements. In furtherance of the foregoing, but without limiting any of the other provisions of the Loan Agreements, the Borrowers agree that their obligations to pay the principal, premium, if any, and interest on the Series 2010 Obligations, to pay the other sums provided for by the Loan Agreements and to perform and observe its other agreements contained in the Loan Agreements shall be absolute and unconditional and that the Borrowers shall not be entitled to any abatement or diminution thereof nor to any termination of the Loan Agreements for any reason whatsoever. C-101

394 CERTAIN COVENANTS OF THE BORROWERS RELATING TO THE USE AND OPERATION OF CERTAIN OF THEIR PROPERTY The Borrowers agree under the Loan Agreements that they will use the Project primarily as and for healthcare facilities and related activities and only in furtherance of the lawful corporate purposes of the Borrowers; will use the Project and the Bond Financed Property as a project within the meaning of the Act; and agree to operate all their Property on a nondiscriminatory basis. With respect to the Series 2010 Tax Exempt Bonds, the Borrowers also agree that they will not permit any of the Bond Financed Property to be used (i) by any Person in an unrelated trade or business (as defined in Section 513(a) of the Code) of the Borrowers (without regard to whether such activity results in unrelated trade or business income subject to taxation under Section 512(a) of the Code), or (ii) by any Person who is not a Tax-Exempt Organization, in either case in such manner or to such extent as would result in the loss of tax exemption of interest on the Series 2010 Tax Exempt Bonds otherwise afforded under Section 103(a) of the Code. The Borrowers further agree that they will not use or permit to be used any of the Bond Financed Property: (i) primarily for sectarian instruction or study or as a place of devotional activities or religious worship or as a facility used primarily in connection with any part of the program of a school or department of divinity for any religious denomination or the training of ministers, priests, rabbis, nuns or other similar persons in the field of religion or (ii) in a manner which is prohibited by the Establishment of Religion Clause of the First Amendment to the Constitution of the United States of America and the decisions of the United States Supreme Court interpreting the same or by any comparable provisions of the Constitution of the State of Illinois and the decisions of the Supreme Court of the State interpreting the same. The Borrowers agree that during the term of the Loan Agreements the Authority, the Bond Trustee, and their duly authorized agents shall have the right, but shall be under no duty or obligation to exercise this right, during regular business hours, with reasonable notice, to enter upon the premises and examine and inspect the Project, subject to such limitations, restrictions and requirements as the Borrowers may reasonably prescribe. TRANSFER OF ASSETS The Borrowers covenant and agree that they will not sell, lease or otherwise dispose of any Property except as permitted by the provisions of the Master Indenture summarized above under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - SALE, LEASE OR OTHER DISPOSITION OF PROPERTY. The provisions of the Master Indenture notwithstanding, with respect to the Series 2010 Tax Exempt Bonds, the Borrowers covenant and agree that they will not sell, lease or otherwise dispose, directly or indirectly, in whole or in part, any portion of the Bond Financed Property unless the conditions of the Tax Exemption Agreement are satisfied. INDEMNIFICATION OF THE AUTHORITY AND THE BOND TRUSTEE The Borrowers will pay, and will protect, indemnify and save the Authority and the Bond Trustee and its respective past, present and future members, officers, directors, employees, agents, successor, assigns and any other person, if any, who controls the Authority or Bond Trustee, as the case may be, as that term is defined in Section 15 of the Securities Act of 1933, as amended (the Authority, the Bond Trustee and the other listed persons, collectively referred to as, the Indemnified Persons ) harmless from and against any and all liabilities, losses, damages, taxes penalties, costs and expenses (including attorneys fees and expenses of the Authority and Bond Trustee), causes of action, suits, proceedings, claims, demands, tax reviews, investigations and judgments of whatsoever kind and nature (including, but not limited to, those arising or resulting from any injury to or death of any person or damage to property) arising from or in any manner directly or indirectly growing out of or connected with the following: (A) the use, financing, non-use, condition or occupancy of the Bond Financed Property, any repairs, construction, alterations, renovation, relocation, remodeling and equipping thereof or thereto or the condition of any such Bond Financed Property including adjoining sidewalks, streets or alleys and any equipment or facilities at any time located on or connected with such Bond Financed Property or used in connection therewith but which are not the result of the gross negligence of the Authority or Bond Trustee; (B) a violation of any agreement, warranty, covenant or condition of the Loan Agreements or any other agreement executed in connection with the Loan Agreements; C-102

395 Project; (C) a violation of any contract, agreement or restriction by the Borrowers relating to the (D) a violation of any law, ordinance, rules, regulation or court order affecting the Project or the ownership, occupancy or use thereof or the Bonds or use of the proceeds thereof; (E) any statement or information concerning the Borrowers, any of their officers and members, their operations or financial condition generally or the Bond Financed Property, contained in any official statement or supplement or amendment thereto furnished to the Authority or the purchaser of any Bonds, that is untrue or incorrect in any material respect, and any omission from such official statement or any statement or information which should be contained therein for the purpose for which the same is to be used or which is necessary to make the statements therein concerning the Borrowers, any of their officers and members and the Bond Financed Property not misleading in any material respect, provided that such official statement or supplement or amendment has been approved by the Borrowers and the Indemnified Persons did not have actual knowledge of the omission or misstatement; and (F) with respect to the Authority only, the acceptance or administration of the Bond Indenture, including without limitation the enforcement of any remedies under the Bond Indenture and related documents. In case any claim shall be made or any action shall be brought against one or more of the Indemnified Persons in respect of which indemnity can be sought against the Borrowers pursuant to any of the paragraphs above, the Indemnified Party seeking indemnity shall promptly notify the Borrowers, in writing, and the Borrowers shall promptly assume the defense thereof, including the employment of counsel chosen by the Borrowers and approved by the Authority or Bond Trustee, or both (provided, that such approval by the Authority or Bond Trustee shall not be unreasonably withheld), the payment of all expenses and the right to negotiate and consent to settlement. If any Indemnified Person is advised in a written opinion of counsel that there may be legal defenses available to such Indemnified Person which are adverse to or in conflict with those available to the Borrowers or that the defense of such Indemnified Person should be handled by separate counsel, the Borrowers shall not have the right to assume the defense of such Indemnified Person, but the Borrowers shall be responsible for the reasonable fees and expenses of counsel retained by such Indemnified Person in assuming its own defense, and provided also that, if the Borrowers shall have failed to assume the defense of such action or to retain counsel reasonably satisfactory to the Authority or Bond Trustee within a reasonable time after notice of the commencement of such action, the reasonable fees and expenses of counsel retained by the Indemnified Person shall be paid by the Borrowers. Notwithstanding the foregoing, any one or more of the Indemnified Persons shall have the right to employ separate counsel with respect to any such claim or in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be paid by such Indemnified Person unless the employment of such counsel has been specifically authorized by the Borrowers or unless the provisions of the immediately preceding sentence are applicable. The Borrowers shall not be liable for any settlement of any such action affected without the consent of the Borrowers, but if settled with the consent of the Borrowers or if there be a final judgment for the plaintiff in any such action with or without consent, the Borrowers agree to indemnify and hold harmless the Indemnified Person from and against any loss, liability or expense by reason of such settlement or judgment. The Borrowers shall also indemnify the Authority, Bond Trustee and such Indemnified Persons for all reasonable costs and expenses, including reasonable counsel fees, incurred in: (i) enforcing any obligation of the Borrowers under the Loan Agreements or any related agreement, (ii) taking any action requested by the Borrowers, (iii) taking any action required by the Loan Agreements or any related agreement, or (iv) taking any action considered necessary by the Authority and which is authorized by the Loan Agreements or any related agreement. If the Authority is to take any action under the Loan Agreements or any other instrument executed in connection with the Loan Agreements for the benefit of the Borrowers, it will do so if and only if (i) the Authority is a necessary party to any such action or proceeding, and (ii) the Authority has received specific written direction from the Borrowers, as required under the Loan Agreements or under any other instrument executed in connection with the Loan Agreements, as to the action to be taken by the Authority. All amounts payable to the Authority under the provisions of the Loan Agreements summarized under this caption shall be deemed to be fees and expenses payable to the Authority for the purposes of the provisions of the Loan Agreements and of the Bond Indentures dealing with assignment of the Authority s rights under the Loan C-103

396 Agreements. The Authority and its members, officers, agents, employees and their successors and assigns shall not be liable to the Borrowers for any reason. Any provision of the Loan Agreements or any other instrument or document executed and delivered in connection therewith to the contrary notwithstanding, the Authority retains the right to (i) enforce any applicable Federal or State law or regulation or resolution of the Authority, and (ii) enforce any rights accorded to the Authority by Federal or State law or regulation of the Authority, and nothing in the Loan Agreements shall be construed as an express or implied waiver thereof. MAINTENANCE OF CORPORATE EXISTENCE AND STATUS Notwithstanding the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - MERGER, CONSOLIDATION, SALE OR CONVEYANCE, unless the Borrowers comply with the following provisions summarized under this caption, the Borrowers agree that as long as any Series 2010 Bonds are outstanding they will maintain their existence, will not dissolve, liquidate or otherwise dispose of all or substantially all of their assets, and will not consolidate with or merge into another corporation or permit one or more other corporations to consolidate with or merge into it. Any dissolution, liquidation, disposition, consolidation or merger shall be subject to the following conditions unless waived by the Authority: (a) the Borrowers provide a certificate to the Authority and the Bond Trustee, in form and substance satisfactory to such parties, to the effect that no event of default exists under the Loan Agreements or under the Bond Indentures and that no event of default will be caused by the dissolution, liquidation, disposition, consolidation or merger; (b) the entity surviving the dissolution, liquidation, disposition, consolidation or merger assumes in writing and without condition or qualification the obligations of the Borrowers under the Loan Agreements, the Master Indenture and, with respect to the Series 2010 Tax Exempt Bonds, the Tax Exemption Agreement; (c) the Borrowers or the entity surviving the dissolution, liquidation, disposition, consolidation or merger, within ten (10) days after execution thereof, furnishes to the Authority and the Bond Trustee a true and complete copy of the instrument of dissolution, liquidation, disposition, consolidation or merger; (d) neither the validity nor the enforceability of the Series 2010 Bonds or the Bond Indentures is adversely affected by the dissolution, liquidation, disposition, consolidation or merger; (e) with respect to the Series 2010 Tax Exempt Bonds, the dissolution, liquidation, disposition, consolidation or merger will not adversely affect any exemption from federal income taxation to which interest on the Series 2010 Tax Exempt Bonds would otherwise be entitled; (f) evidence that no rating on the Series 2010 Bonds, if the Series 2010 Bonds are then rated, is reduced or withdrawn as a result of the dissolution, liquidation, disposition, consolidation or merger; (g) the Project continues to be as described in the Loan Agreements; (h) any successor to the Borrowers shall be qualified to do business in the State and shall continue to be qualified to do business in the State throughout the term of the Loan Agreements; (i) (1) neither the validity nor enforceability of the Borrower Documents will be adversely affected by the dissolution, liquidation, disposition, consolidation or merger and (2) the provisions of the Act, the Bond Indentures and the Borrower Documents are complied with concerning the dissolution, liquidation, disposition, consolidation or merger; and (j) the Authority has executed a certificate acknowledging receipt of all documents, information and materials required by the provisions of the Loan Agreements summarized under this caption. As of the effective date of the dissolution, liquidation, disposition, consolidation or merger, the Borrowers (at their cost) shall furnish to the Authority and Bond Trustee (i) an opinion of Bond Counsel, in form and substance C-104

397 satisfactory to such parties, as to item (d) and, with respect to the Series 2010 Tax Exempt Bonds, item (e) above, and (ii) an opinion of Independent Counsel, in form and substance satisfactory to such parties, as to the legal, valid and binding nature of item (c) and (i) above. The Borrowers further agree that they will not act or fail to act in any other manner which would adversely affect any exemption from federal income taxation of the interest earned by the owners of the Series 2010 Tax Exempt Bonds to which such Series 2010 Tax Exempt Bonds would otherwise be entitled. DISCHARGE OF ORDERS, ETC. The Borrowers covenant to cause any order, writ or warrant of attachment, garnishment, execution, replevin or similar process filed against any part of the funds or accounts held by the Bond Trustee under the Bond Indentures to be discharged, vacated, bonded or stayed within 90 days after such filing (which 90-day period shall be extended for so long as the Borrowers are contesting such process in good faith), but, notwithstanding the foregoing, in any event not later than five days prior to any proposed execution or enforcement with respect to such filing or any transfer of moneys or investments pursuant to such filing. RATES AND CHARGES The Borrowers covenant and agree to operate their existing Facilities primarily as revenue producing healthcare related facilities or as facilities related thereto or for any other lawful purpose or activity and to operate all of their Property on a nondiscriminatory basis, to charge such fees and rates for their Facilities and services and to exercise such skill and diligence as to provide income from such Property together with other available funds sufficient to pay promptly all expenses of operation, maintenance and repair of such Property, all amounts owing on the Series 2010 Obligations and to pay all other payments required to be made by the Borrowers under the Loan Agreements and under the Master Indenture to the extent permitted by law. The Borrowers further covenant and agree that they will from time to time as often as necessary, to the extent permitted by law, revise their rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of the Loan Agreements summarized in this paragraph. The provisions of the Loan Agreements summarized in this paragraph shall not be construed to prohibit the Borrowers from serving indigent patients to the extent required for the Borrowers to continue their qualification as Tax-Exempt Organizations or from serving any other class or classes of patients without charge or at reduced rates so long as such service does not prevent the Borrowers from satisfying the other requirements of the Loan Agreements summarized in this paragraph. LICENSURE The Borrowers warrant that their Facilities have all material state and local licenses required for the operation thereof. The Borrowers will obtain and maintain or cause to be obtained and maintained all such licenses required for the operation of their Facilities and the Project and will use their best efforts to obtain and maintain or cause to be obtained and maintained such licensure, so long as it is in the best interests of the Borrowers and the Series 2010 Bondholders, as determined by the governing body of the Borrowers. FINANCIAL STATEMENTS The Borrowers covenant that they will keep proper books of records and accounts in which full, true and correct entries will be made of all dealings or transactions of, or in relation to, the business and affairs of the Borrowers in accordance with generally accepted principles of accounting consistently applied (except as stated in the notes thereto), and will furnish the materials and notices required to be delivered to the Master Trustee under the provisions of the Master Indenture summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS to the Authority, to the Bond Trustee and to any requesting holder or holders of the Series 2010 Bonds; provided, however, that the Borrowers shall deliver only the items set forth in subparagraphs (b)(iv) and (v) under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE - FINANCIAL STATEMENTS AND RELATED MATTERS to the Authority unless the Authority requests receipt of any other items required to be delivered pursuant to such provisions. C-105

398 SUPPLEMENTS AND AMENDMENTS TO THE LOAN AGREEMENTS Subject to the terms and provisions of the Bond Indentures summarized in the fourth paragraph under this caption, the Authority and the Borrowers may, with the prior written consent of the Bond Trustee, amend or modify the Loan Agreements, or any provision thereof, or may consent to the amendment or modification thereof, in any manner not inconsistent with the terms and provisions of the Bond Indentures, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect in the Loan Agreements; (b) to grant to or confer upon the Authority or Bond Trustee, for the benefit of the Bond Owners, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Authority or the Bond Trustee; (c) to amend or modify the Loan Agreements, or any part thereof, in any manner specifically required or permitted by the terms thereof, including, without limitation with respect to the Series 2010 Tax Exempt Loan Agreement, as may be necessary to maintain the exclusion from gross income for purposes of federal income taxation of the interest on the Series 2010 Tax Exempt Bonds; (d) with respect to the Series 2010 Tax Exempt Loan Agreement, to modify, amend or supplement the Loan Agreements, or any part thereof, or any supplement thereto, in such manner as the Bond Trustee and Borrowers deem necessary in order to comply with any statute, regulation, judicial decision or other law relating to secondary market disclosure requirements with respect to tax-exempt obligations of the type that includes the Series 2010 Tax Exempt Bonds; (e) to provide that the Series 2010 Bonds may be secured by additional security not otherwise provided for in the Bond Indentures or the Loan Agreements; (f) to provide for the appointment of a successor securities depository; (g) to provide for the availability of certificated Series 2010 Bonds; (h) to provide for changes in the components of the Project, to the extent permitted by the Bond Indentures and the Loan Agreements; and (i) to make any other change which does not, in the opinion of the Bond Trustee, have a material adverse effect upon the interests of the Bondholders. In addition, subject to the terms and provisions summarized in the fourth paragraph under this caption, the Bond Trustee may grant such waivers of compliance by the Borrowers with the provisions of the Loan Agreements as to which the Bond Trustee may deem necessary or desirable to effectuate the purposes of the intent of the Loan Agreements and which, in the opinion of the Bond Trustee, do not have a material adverse effect upon the interests of the Series 2010 Bondholders, provided that the Bond Trustee shall file with the Authority any and all such waivers granted by the Bond Trustee within three (3) business days thereof. In the case of the Series 2010 Tax Exempt Bonds, except for the amendments, changes or modifications summarized in the previous paragraph, neither the Authority nor the Series 2010 Tax Exempt Bond Trustee shall consent to any other amendment, change or modification of the Series 2010 Tax Exempt Loan Agreement without the written approval or consent, given and procured as provided in this paragraph, of the owners of not less than a majority in aggregate principal amount of the Series 2010 Tax Exempt Bonds which are outstanding under the Series 2010 Tax Exempt Bond Indenture at the time of execution of any such amendment, change or modification or in case less than all of the several series of Series 2010A Bonds, the Series 2010C Bonds and the Series 2010D Bonds then outstanding are affected thereby, the owners of not less than a majority in aggregate principal amount of the Series 2010A Bonds, the Series 2010C Bonds and the Series 2010D Bonds of each series so affected which are outstanding under the Series 2010 Tax Exempt Bond Indenture at the time of execution of any such amendment, change or modification; provided that if such amendment, change or modification will, by its terms, not take effect so long as any Series 2010A Bonds, Series 2010C Bonds or Series 2010D Bonds of a specified series remain outstanding, the consent of the owners of such Series 2010A Bonds, Series 2010C Bonds and Series 2010D Bonds shall not be required. If at any time the Authority and the Borrowers shall request the consent of the Series 2010 Tax Exempt Bond Trustee to any such proposed amendment, change or modification of the Series 2010 Tax Exempt Loan Agreement, the Series 2010 Tax Exempt Bond Trustee shall, upon being satisfactorily indemnified with respect to fees, expenses and liability, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by the Series 2010 Tax Exempt Bond Indenture with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the designated office of the Series 2010 Tax Exempt Bond Trustee for inspection by all Bondholders. The Series 2010 Tax Exempt Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to give such notice, and any such failure shall not affect the validity of such amendment, change or modification when consented to and approved as provided in this paragraph. If the owners of not less than a majority in aggregate principal amount of the Series 2010A Bonds, the Series 2010C Bonds and the Series 2010D Bonds outstanding under the Series 2010 Tax Exempt Bond Indenture at the time of the execution of any such amendment, change or modification (or the owners of not less than a majority in aggregate principal amount of the Series 2010A Bonds, Series 2010C Bonds and Series 2010D Bonds of each series so affected then outstanding, as the case may be) shall have consented to and approved C-106

399 the execution thereof as provided in the Series 2010 Tax Exempt Bond Indenture, no owner of any Series 2010A Bond, Series 2010C Tax Exempt Bond or Series 2010D Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Series 2010 Tax Exempt Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. In the case of the Series 2010E Bonds, except for the amendments, changes or modifications summarized in the first paragraph under this caption, neither the Authority nor the Series 2010E Bond Trustee shall consent to any other amendment, change or modification of the Series 2010E Loan Agreement without the written approval or consent, given and procured as provided in this paragraph, of the owners of not less than a majority in aggregate principal amount of the Series 2010E Bonds which are outstanding under the Series 2010E Bond Indenture at the time of execution of any such amendment, change or modification or in case less than all of the several series Series 2010E Bonds then outstanding are affected thereby, the owners of not less than a majority in aggregate principal amount of the Series 2010E Bonds of each series so affected which are outstanding under the Series 2010E Bond Indenture at the time of execution of any such amendment, change or modification; provided that if such amendment, change or modification will, by its terms, not take effect so long as any Series 2010E Bonds of a specified series remain outstanding, the consent of the owners of such Series 2010E Bonds shall not be required. If at any time the Authority and the Borrowers shall request the consent of the Series 2010E Bond Trustee to any such proposed amendment, change or modification of the Series 2010E Loan Agreement, the Series 2010E Bond Trustee shall, upon being satisfactorily indemnified with respect to fees, expenses and liability, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by the Series 2010E Bond Indenture with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the designated office of the Series 2010E Bond Trustee for inspection by all Bondholders. The Series 2010E Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to give such notice, and any such failure shall not affect the validity of such amendment, change or modification when consented to and approved as provided in this paragraph. If the owners of not less than a majority in aggregate principal amount of the Series 2010E Bonds outstanding under the Series 2010E Bond Indentures at the time of the execution of any such amendment, change or modification (or the owners of not less than a majority in aggregate principal amount of the Series 2010E Bonds of each series so affected then outstanding, as the case may be) shall have consented to and approved the execution thereof as provided in the Bond Indentures, no owner of any Series 2010E Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Series 2010E Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Under no circumstances shall any amendment to the Loan Agreements alter the Series 2010 Obligations pledged under the Bond Indentures regarding the payments of principal, premium, if any, and interest thereon, without the consent of the owners of all the Series 2010 Bonds outstanding. DEFAULTS AND REMEDIES The occurrence and continuance of any of the following events shall constitute an event of default under the Loan Agreements: (a) failure of the Borrowers to pay any installment of principal, interest or premium on the applicable Series 2010 Obligation or any other payment required by the Loan Agreements when the same shall become due and payable, whether upon a scheduled Interest Payment Date, at maturity, upon any date fixed for prepayment or by acceleration or otherwise, and the continuance of such failure for five days; or (b) failure by the Borrowers to perform or comply with any of the covenants, conditions or provisions of the Loan Agreements or, with respect to the Series 2010 Tax Exempt Bonds, of the Tax Exemption Agreement and failure to remedy such default within 30 days after notice thereof from the Authority to the Borrowers; provided, however, that if failure to comply or perform with such covenants, conditions or provisions cannot be remedied within 30 days, but can be remedied, no event of default shall be deemed to have occurred or to exist if the Authority, in its discretion, shall consent to the Borrowers commencing corrective action and the Borrowers diligently pursue such corrective action until they shall have complied with or performed such covenants, conditions or provisions; or C-107

400 (c) if any representation or warranty made by the Borrowers in the Loan Agreements or in any statement or certificate furnished to the Authority or the Bond Trustee or the purchaser of any Series 2010 Bonds in connection with the sale of Series 2010 Bonds or furnished by the Borrowers pursuant to the Loan Agreements including, without limitation, statements in the Official Statement, proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within 60 days after notice thereof to the Borrowers by the Authority, the Bond Trustee; provided, however, that if such default cannot be remedied within 60 days, but can be remedied, no event of default shall be deemed to have occurred or to exist if the Authority in its sole discretion shall consent to the Borrowers commencing corrective action and the Borrowers diligently pursue such corrective action until such default has been cured; or (d) any event of default shall occur under the Master Indenture which would permit the acceleration of any Obligation; or (e) if the Borrowers admit insolvency or bankruptcy or their inability to pay their debts as they mature, or are generally not paying their debts as such debts become due, or make an assignment for the benefit of creditors or apply for or consent to the appointment of a trustee, custodian or receiver for the Borrowers or for the major part of their Property; or (f) if a trustee, custodian or receiver is appointed for the Borrowers or for the major part of their Property and is not discharged within 60 days after such appointment; or (g) if bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against the Borrowers (other than bankruptcy proceedings instituted by the Borrowers against third parties), and if instituted against the Borrowers are allowed against the Borrowers or are consented to or are not dismissed, stayed or otherwise nullified within 60 days after such institution; or (h) if payment of any installment of interest, principal or premium on any Series 2010 Bond shall not be made when the same shall become due and payable under the provisions of the Bond Indentures; or (i) Agreements. failure of the Borrowers to comply with or perform their obligations pursuant to the Loan Upon the occurrence and during the continuance of any event of default as provided in the Loan Agreements, the Authority shall have the following rights and remedies, in addition to any other remedies in the Loan Agreements or by law provided: (a) Acceleration of Maturity; Waiver of Event of Default and Rescission of Acceleration. The Authority may at its discretion, by written notice to the Borrowers, request that the Master Trustee declare the principal of the Series 2010 Obligations (if not then due and payable) to be due and payable immediately and such principal shall thereupon become immediately due and payable as if all of the sums of money payable thereunder were originally stipulated to be paid on such accelerated payment date, anything in the Series 2010 Obligations or in the Loan Agreements to the contrary notwithstanding. The Authority shall, request that the Master Trustee declare the principal of the Series 2010 Obligations due and payable immediately upon the occurrence of any of the defaults described in subparagraphs (a), (e), (f), (g) or (h) above. This provision, however, is subject to the condition that if, at any time after the principal of any of the Series 2010 Obligations shall have been so declared and become due and payable, all arrears of interest, if any, upon the Series 2010 Obligations and the expenses of the Authority shall be paid by the Borrowers, and every other default in the observance or performance of any covenant, condition or agreement in the Series 2010 Obligations or in the Loan Agreements contained shall be made good, or be secured, to the satisfaction of the Authority, or provision deemed by the Authority to be adequate shall be made therefor, then and in every such case the Authority by written notice to the Borrowers may waive the event of default by reason of which the principal of the Series 2010 Obligations shall have been so declared and become due and payable and may rescind and annul such declaration and its consequences; provided, however, that there shall not be waived any event of default in the payment of the principal payable on the Series 2010 Bonds when due whether by mandatory or optional redemption or at the date of maturity specified therein; and provided further that no such waiver, rescission or annulment shall extend to or affect any subsequent event of default or impair any right consequent C-108

401 thereon. The Authority may by written notice to the Master Trustee request that it declare the principal of the Series 2010 Obligations (if not then due and payable) to be due and payable immediately, subject to the provisions of the Master Indenture regarding waiver of events of default, anything in the Series 2010 Obligations or in the Loan Agreements contained to the contrary notwithstanding. (b) Right to Bring Suit, Etc. The Authority, personally or by attorney, may in its discretion, proceed to protect and enforce its rights by pursuing any available remedy including a suit or suits in equity or at law, whether for damages or for the specific performance of any obligation, covenant or agreement contained in the Series 2010 Obligations, in the Loan Agreements or in the Master Indenture, or in aid of the execution of any power granted in the Loan Agreements, or for the enforcement of any other appropriate legal or equitable remedy, as the Authority shall deem most effectual to collect the payments then due and thereafter to become due on the Series 2010 Obligations, to enforce performance and observance of any obligation, agreement or covenant of the Borrowers under the Loan Agreements, under the Series 2010 Obligations or under the Master Indenture or to protect and enforce any of the Authority s rights or duties thereunder. EXCHANGE OF SERIES 2010 BONDS In the event the Act or the Authority created thereunder is determined to be unconstitutional under the laws of the State or under the laws of the United States of America, and as a result thereof, the Series 2010 Bonds issued by the Authority are declared to be invalid and unenforceable, and if as a result thereof the obligation of the Borrowers to make payments on the Series 2010 Obligations pledged under the Bond Indentures is determined to be unenforceable, then the Borrowers agree that they will issue their own bonds (the interest on which may not be exempt from federal income tax) in exchange for the Series 2010 Bonds, principal amount for principal amount, having the same rate or rates of interest, maturity, redemption provisions, and prepayment provisions as are then applicable to the Series 2010 Bonds being exchanged. The bonds to be issued by the Borrowers will be issued under an indenture having substantially the same terms and provisions as the Bond Indentures, the Loan Agreements and the Master Indenture and such bonds of the Borrowers will be issued thereunder in exchange for the Series 2010 Bonds surrendered by the holders thereof. Notice of any such exchange shall be given as provided for redemption of the Series 2010 Bonds under the Bond Indentures and the expenses of such exchange, including the printing of the bonds and other reasonable expenses in connection therewith, shall be borne by the Borrowers. SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE The following information is a summary of certain provisions of the Mortgage. Reference is made to the Mortgage for a full and complete statement of its provisions. GENERAL The Mortgage will secure the obligation of the Corporation (the Mortgagor ) to pay all Obligations issued under the Master Indenture. REPRESENTATION AND WARRANTIES The Mortgagor represents and warrants in the Mortgage that it has good and marketable fee simple title to the Land and is the lawful owner and is now lawfully seized and possessed of the Mortgaged Property (other than that not presently in existence), free and clear of all Liens whatsoever except Permitted Encumbrances. The Mortgagor further represents and warrants that the Mortgage constitutes (i) a valid first mortgage lien upon the Land, including the fixtures, subject only to Permitted Encumbrances, (ii) a security interest in the Machinery and Equipment, which security interest is (a) perfected to the extent the same may be perfected by filing under the Uniform Commercial Code and (b) prior to any other security interest in such Machinery and Equipment, subject only to Permitted Encumbrances and (iii) a legal, valid and binding obligation of the Mortgagor, enforceable in accordance with its terms. The easements, rights-of-way, liens, encumbrances, covenants, conditions, restrictions, exceptions, minor defects, irregularities of title and encroachments on adjoining real estate which are Permitted Encumbrances, if any, now existing with respect to the Land do not and will not materially adversely affect the value of the Facilities or the Property currently affected thereby, or materially impair or materially interfere with the operation and usefulness thereof for the purpose for which they were acquired or are held by the Mortgagor. C-109

402 AFTER-ACQUIRED PROPERTY All right, title and interest of the Mortgagor in and to all improvements, betterments, renewals, substitutions and replacements of the Mortgaged Property or any part thereof hereafter constructed or acquired by the Mortgagor, immediately upon such construction or acquisition, and without any further mortgaging, conveyance or assignment, shall become and be part of the Mortgaged Property and shall be subject to the lien and security interest of the Mortgage as fully and completely and with the same effect as though now owned by the Mortgagor, but at any and all times the Mortgagor will execute and deliver to the Master Trustee all such further assurances, mortgages, conveyances or assignments therefor and other instruments with respect thereto as the Master Trustee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien and security interest of the Mortgage. MAINTENANCE OF LIEN The Mortgagor will, at its own expense, take all necessary action to maintain and preserve the lien and security interest of the Mortgage as a first priority lien and security interest, subject only to Permitted Encumbrances, so long as the Obligations are outstanding. INSPECTION OF MORTGAGED PROPERTY AND RECORDS The Master Trustee, any Obligation holder and any Bondholder shall have the right to inspect the Mortgaged Property and all books, records and documents relating thereto at all reasonable times, and access thereto shall be permitted for that purpose. EVENT OF DEFAULT DEFINED Each and all of the terms and provisions of the Master Indenture relating to defaults and remedies have been and are incorporated into the Mortgage by reference to the same extent as though fully set out therein. The term Event of Default wherever used in the Mortgage shall mean (i) an Event of Default as defined in the Master Indenture, (ii) the failure of the Mortgagor to comply with any covenant, agreement or warranty contained in the Mortgage within 30 days after the Master Trustee shall have given written notice thereof to the Mortgagor and the Obligated Group Agent, provided that, if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, it shall be cured within the time specified in the Master Indenture or (iii) the abandonment of the Mortgaged Property or any portion thereof by the Mortgagor for three consecutive days. REMEDIES When any Event of Default has occurred and is continuing, the Master Trustee may, in addition to the remedies described in the Mortgage, exercise any one or more or all, and in any order, of the remedies set forth in the Master Indenture, including without limitation the remedies provided therein with respect to real property; it being expressly understood that no remedy in the Mortgage or in the Master Indenture conferred is intended to be exclusive of any other remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given in the Mortgage or now or hereafter existing at law or in equity or by statute. POSSESSION BY THE MASTER TRUSTEE When any Event of Default has occurred and is continuing, the Master Trustee shall, if applicable law permits, have the right to enter into and upon the Mortgaged Property and take possession thereof or to appoint an agent or trustee for the collection of the rents, issues and profits of the Mortgaged Property. FORECLOSURE When any Event of Default has occurred and is continuing, the Master Trustee shall have the right to foreclose the lien of the Mortgage for the indebtedness secured thereby or any part thereof. C-110

403 RECEIVER Upon, or at any time after, the acceleration of any series of Obligations or the filing of a complaint to foreclose the Mortgage, a court of competent jurisdiction may, upon the application of the Master Trustee, appoint a receiver (at the Mortgagor s expense) of the Mortgaged Property. Such appointment may be made either before or after sale, without regard to solvency or insolvency of the Mortgagor at the time of application for such receiver, and without regard to the then value of the Mortgaged Property or whether the same shall be then occupied as a homestead or not; and the Master Trustee or any employee or agent thereof may be appointed as such receiver. SUPPLEMENTS AND AMENDMENTS TO THE MORTGAGE The Mortgagor and the Master Trustee may from time to time enter into such supplements and amendments to the Mortgage as they may deem necessary or desirable to effectuate the purposes or intent thereof; provided, however, that no such amendment shall be effective if not adopted in accordance with the terms of the Master Indenture. CONDITIONS FOR RELEASE So long as no Event of Default shall have occurred and be continuing under the Mortgage or under the Master Indenture, the Master Trustee shall release Machinery and Equipment and Mortgaged Land (i) upon receipt by the Master Trustee of the following: A. A Written Request of the Mortgagor for such release, describing the Mortgaged Land to be released (the Released Property ); B. A certificate of the Mortgagor to the Master Trustee certifying: (i) The fair market value of the Released Property and of the Property (the Substituted Property ) other than cash to be substituted for the Released Property pursuant to the terms of the Mortgage; (ii) The disposition to be made of the Released Property and the consideration (which may include cash) to be received for the Released Property and the fair market value of consideration (other than money); (iii) That the disposition of the Released Property and the substitution therefor of the Substituted Property will not materially adversely affect the operations of the Mortgagor s elderly housing or health care Facilities or any other Property of the Mortgagor; (iv) That the Substituted Property other than cash or investment securities is necessary or useful to the operation of the Mortgagor s elderly housing or health care Facilities; (v) That the cash or the fair market value of the Substituted Property together with cash, if any, to be received is at least equal to the fair market value of the Released Property; (vi) That the execution and delivery of the release of the Released Property by the Master Trustee and the subjection of the Substituted Property to the lien of the Mortgage, and all transactions related to such release and such subjection, will not result in a default under the Mortgage or under the Master Indenture; (vii) That all permits and authorizations of all federal, state and local governmental bodies and agencies have been granted to effect such disposition or that no such permits or authorizations are required; and (viii) No default or Event of Default shall exist and be continuing under the Mortgage and no event shall have occurred which would become an Event of Default upon the giving of notice and/or passage of time. C-111

404 C. An appraisal of the fair market value of the Released Property by a member of the American Institute of Real Estate Appraisers (an MAI Appraiser ) if the Released Property is real property, or by another expert acceptable to the Master Trustee if the Released Property is not real property; provided, however, that no such appraisal shall be required for the release of real or personal Released Property with an aggregate value of $200,000 or less; D. An appraisal of the fair market value of the Substituted Property (other than cash) by an MAI Appraiser if the Substituted Property is real property, or by another expert acceptable to the Master Trustee if the Substituted Property is not real property; provided, however, that no such appraisal shall be required for the substitution of real or personal Substituted Property with an aggregate value of $200,000 or less; E. A supplement to the Mortgage and to the Master Indenture (if necessary) and other documents reasonably requested by, and in form satisfactory to, the Master Trustee necessary to subject the Substituted Property to the lien of the Mortgage and, if the Substituted Property is real property, an endorsement to the existing ALTA mortgage loan policy or an additional mortgagee s loan insurance policy, evidencing that the Substituted Property is subject to the lien of the Mortgage subject only to Permitted Encumbrances; F. If the fair market value of the Released Property when added to the fair market value of other Property released pursuant to the provisions of the Mortgage described under this caption within the same 12-month period is in excess of $500,000, a certificate of a Consultant acceptable to the Master Trustee to the effect set forth in subparagraph B(iii) above; and G. (i) An opinion addressed to the Master Trustee from Independent Counsel satisfactory to the Master Trustee to the effect that: (1) The release of the Property requested by the Mortgagor is authorized under the Mortgage; (2) The Substituted Property is subject to the lien of the Mortgage subject only to Permitted Encumbrances; (3) The execution and delivery of the requested release and the acceptance of the Substituted Property will not violate any provisions of the Mortgage or of the Master Indenture; all necessary action required to be taken by the Mortgagor and the Master Trustee to effect the release of the Released Property and the conveyance of the Substituted Property has been taken; (4) The supplemental amendment to the Mortgage, the supplemental indenture to the Master Indenture, if required, and all other documents required to effect the release of the Released Property and substitution therefor of the Substituted Property have been duly authorized, executed and delivered and are binding upon the parties executing and delivering the same in accordance with their respective terms (subject to customary exceptions for laws affecting creditors rights and the applicability of equitable principles); and (5) To the knowledge of such Independent Counsel, all permits and authorizations of all federal, State and local governmental bodies and agencies have been granted, or that no such permits or authorizations are required; or (ii) Upon receipt by the Master Trustee of a written consent to the release of the Released Land of a majority in aggregate principal amount of the holders of the outstanding Obligations. The Mortgage provides that the foregoing notwithstanding, upon defeasance of the Master Indenture and Obligations thereunder in full, the Mortgage shall be deemed released and the Master Trustee shall cooperate with the Mortgagor to take any and all action appropriate to evidence such release. DISPOSITION OF SUBSTITUTED PROPERTY The Mortgagor agrees that (i) the Master Trustee shall invest any cash delivered to it as Substituted Property in Qualified Investments pursuant to a Written Request of the Mortgagor, and any such cash and Qualified C-112

405 Investments shall be held by the Master Trustee in a separate trust account for the benefit and security of the outstanding Obligations; (ii) all income from Qualified Investments pursuant to the provisions of the Mortgage summarized in this paragraph shall be added to the funds held pursuant to the provisions of the Mortgage summarized in this paragraph; (iii) funds from time to time on deposit with the Master Trustee pursuant to the provisions of the Mortgage summarized in this paragraph shall be used to make up any deficiencies in the amount available to pay when due the principal, interest and redemption premium on any Obligations, and to the extent funds are used to make up such deficiencies, the Mortgagor will make payment directly to the Master Trustee for deposit in such trust account in the amount of any such deficiencies forthwith; (iv) upon compliance with the terms and provisions of the Mortgage summarized under the caption SUMMARY OF CERTAIN PROVISIONS OF THE MORTGAGE - CONDITIONS FOR RELEASE above within three years of the date of initial deposit in such trust account of moneys constituting Substituted Property, such moneys may be released in return for other Substituted Property; and (v) at the end of such three-year period or upon Written Request of the Mortgagor and provided that no Event of Default shall have occurred and be continuing under the Master Indenture or the Mortgage or no event shall have occurred which would become an Event of Default upon the giving of notice and/or the passage of time, any funds held by the Master Trustee pursuant to the provisions of the Mortgage summarized in this paragraph shall be applied by the Master Trustee to redeem or purchase Obligations in accordance with the Master Indenture. Notwithstanding anything to the contrary, any moneys on deposit with the Master Trustee shall be invested in accordance with, and subject to the terms of, the Tax Exemption Agreement to the extent applicable. CONFLICTS WITH MASTER INDENTURE In the event any of the terms or provisions of the Mortgage conflict with the Master Indenture, the Master Indenture shall control. C-113

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407 APPENDIX D FORMS OF OPINIONS OF BOND COUNSEL

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409 FORMS OF OPINIONS OF BOND COUNSEL, 2010 Illinois Finance Authority Chicago, Illinois Wells Fargo Bank, National Association, as Bond Trustee Chicago, Illinois Timothy Place, NFP Elmhurst, Illinois B.C. Ziegler and Company d/b/a Ziegler Capital Markets Chicago, Illinois Christian Healthcare Foundation, NFP Tinley Park, Illinois Re: $109,115,000 Illinois Finance Authority Revenue Bonds, Series 2010A (Park Place of Elmhurst Project) $5,000,000 Illinois Finance Authority Revenue Bonds, Series 2010C (Park Place of Elmhurst Project) (Accelerated Redemption Reset Option Securities (ARROS SM )) $15,350,000 Illinois Finance Authority Revenue Bonds, Series 2010D-2 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-65 SM )) $7,875,000 Illinois Finance Authority Revenue Bonds, Series 2010B (Park Place of Elmhurst Project) $10,275,000 Illinois Finance Authority Revenue Bonds, Series 2010D-1 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-75 SM )) $15,275,000 Illinois Finance Authority Revenue Bonds, Series 2010D-3 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-50 SM )) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Illinois Finance Authority (the Authority ) of (i) $109,115,000 in aggregate principal amount of its Revenue Bonds, Series 2010A (Park Place of Elmhurst Project) (the Series 2010A Bonds ), (ii) $7,875,000 in aggregate principal amount of its Revenue Bonds, Series 2010B (Park Place of Elmhurst Project) (the Series 2010B Bonds ), (iii) $5,000,000 in aggregate principal amount of its Revenue Bonds, Series 2010C (Park Place of Elmhurst Project) (Accelerated Redemption Reset Option Securities (ARROS SM )) (the Series 2010C Bonds ), (iv) $10,275,000 in aggregate principal amount of its Revenue Bonds, Series 2010D-1 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-75 SM )) (the Series 2010D-1 Bonds), (v) $15,350,000 in aggregate principal amount of its Revenue Bonds, Series 2010D-2 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-65 SM )) (the Series 2010D-2 Bonds) and (vi) $15,275,000 in aggregate principal amount of its Revenue Bonds, Series 2010D-3 (Park Place of Elmhurst Project) (Tax Exempt Mandatory Paydown Securities (TEMPS-50 SM )) (the Series 2010D-3 Bonds and, together with the Series 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D-1 Bonds and the Series 2010D-2 Bonds, the Bonds ); each initially dated the date hereof. The Bonds are issued under the provisions of the Illinois Finance D-1

410 Authority Act, as amended (the Act ), and under and pursuant to that certain Bond Trust Indenture dated as of May 1, 2010 (the Bond Indenture ) between the Authority and Wells Fargo Bank, National Association, as bond trustee (the Bond Trustee ). The proceeds from the sale of the Bonds will be loaned by the Authority to Timothy Place, NFP (the Corporation ) and Christian Healthcare Foundation, NFP (the Foundation and, together with the Corporation, the Borrowers ), each an Illinois not for profit corporation, under that certain Loan Agreement dated as of May 1, 2010 (the Loan Agreement ) among the Authority and the Borrowers. The loan of the Bond proceeds will be evidenced by (i) the Borrowers Direct Note Obligation, Series 2010A (Illinois Finance Authority) (the Series 2010A Obligation ) in the principal amount of $109,115,000, (ii) the Borrowers Direct Note Obligation, Series 2010B (Illinois Finance Authority) (the Series 2010B Obligation ) in the principal amount of $7,875,000, (iii) the Borrowers Direct Note Obligation, Series 2010C (Illinois Finance Authority) (the Series 2010C Obligation ) in the principal amount of $5,000,000, (iv) the Borrowers Direct Note Obligation, Series 2010D-1 (Illinois Finance Authority) (the Series 2010D-1 Obligation ) in the principal amount of $10,275,000, (v) the Borrowers Direct Note Obligation, Series 2010D-2 (Illinois Finance Authority) (the Series 2010D-2 Obligation ) in the principal amount of $15,350,000, and (vi) the Borrowers Direct Note Obligation, Series 200D-3 (Illinois Finance Authority) (the Series 2010D-3 Obligation and, together with the Series 2010A Obligation, the Series 2010B Obligation, the Series 2010B Obligation, the Series 2010C Obligation, the Series 2010D-1 Obligation and the Series 2010D-2 Obligation, the Series 2010 Obligations ) in the principal amount of $15,275,000, each dated the date hereof and issued pursuant to the Master Trust Indenture dated as of May 1, 2010 (the Master Indenture ), among the Corporation, the Foundation and Wells Fargo Bank, National Association, as master trustee (the Master Trustee ). Pursuant to the terms of the Loan Agreement and the Series 2010 Obligations, the Borrowers are obligated to make payments sufficient to pay the principal of, premium, if any, and interest on the Bonds. Pursuant to the terms of the Master Indenture, the Corporation, the Foundation and each other Person (as defined in the Master Indenture) which hereafter executes the Master Indenture (individually, a Member and collectively, the Obligated Group ) agree to be jointly and severally liable (subject to the Master Indenture s provisions permitting a Member to leave the Obligated Group) on all Obligations issued under the Master Indenture, including the Series 2010 Obligations. The proceeds from the sale of the Bonds will be used, together with certain other moneys, to (i) pay or reimburse the Borrowers for the payment of certain costs of acquiring, constructing, renovating, remodeling and equipping certain projects (as such term is defined in the Act), including the construction and equipping of a continuing care retirement community known as Park Place of Elmhurst (the Project ); (ii) refinance certain taxable indebtedness of the Borrowers incurred to pay a portion of the costs related to the Project; (iii) fund a debt service reserve fund; (iv) pay a portion of the interest on the Bonds; (v) provide working capital; and (vi) pay certain expenses incurred in connection with the issuance of the Bonds. Each of the Corporation and the Foundation has informed us that it is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), that it is exempt from federal income taxes under Sections 501(a) and 501(c)(3) of the Code, and that it is not a private foundation as defined in Section 509(a) of the Code. We note that the tax-exempt status of the Corporation and the Foundation is addressed in the opinion of Timothy G. Lawler, Ltd., special counsel to the Members of the Obligated Group, dated this date and provided to the addressees hereof and we express no opinion with respect to such status. In our capacity as bond counsel, we have examined, among other things, certified proceedings of the members of the Authority authorizing, among other things, the execution and delivery of the Bond Indenture, the Loan Agreement, the Tax Exemption Agreement dated the date hereof among the D-2

411 Authority, the Borrowers and the Bond Trustee and the issuance of the Bonds; a specimen Bond; a certificate of the Bond Trustee regarding the authentication of the Bonds; a certificate of the Authority; executed counterparts of the above-referenced documents; executed opinions of Schiff Hardin LLP, special counsel to the Authority, Timothy G. Lawler, Ltd., special counsel to the Members of the Obligated Group, and Katten Muchin Rosenman LLP, special counsel to the initial purchaser of the Bonds, each dated this date, and such other documents, showings and related matters as we have deemed necessary in order to render this opinion. Based upon the foregoing and in reliance upon certain documents and showings hereinafter referred to, we are of the opinion that: 1. The Bond Indenture has been duly authorized by the Authority, has been duly executed and delivered by authorized officers of the Authority and, assuming due authorization, execution and delivery thereof by the Bond Trustee, constitutes a valid and binding instrument of the Authority, enforceable against the Authority in accordance with its terms, subject to the qualification that the enforcement thereof may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights and by the availability of equitable remedies. 2. The Bonds and the loan by the Authority to the Borrowers of the proceeds from the sale thereof as evidenced by the Series 2010 Obligations and secured by the Loan Agreement have been duly authorized by the Authority, the Bonds have been duly executed by authorized officers of the Authority, authenticated by the Bond Trustee and validly issued by the Authority and constitute the valid and binding limited obligations of the Authority payable solely from payments and prepayments received by the Authority upon the Series 2010 Obligations and from other amounts payable under the Loan Agreement and pledged under the Bond Indenture and the Bonds are enforceable in accordance with their terms and are entitled to the benefit and security of the Bond Indenture, subject to the qualification that the enforcement thereof may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights and by the availability of equitable remedies. 3. The Loan Agreement has been duly authorized by the Authority, has been duly executed and delivered by authorized officers of the Authority and, assuming due authorization, execution and delivery thereof by the Borrowers, constitutes a valid and binding instrument of the Authority enforceable against the Authority in accordance with its terms, subject to the qualification that the enforcement thereof may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights and by the availability of equitable remedies. In rendering the foregoing opinion, we have not attempted to verify the correctness of the assumptions made therein regarding the due authorization, execution and delivery of the Loan Agreement by the Borrowers, including without limitation whether the Borrowers have the power or authority to take such actions or whether such actions violate existing corporate articles of incorporation or bylaws, agreements or court decisions or are the subject of or may be affected by any litigation. 4. Interest on the Bonds is not, under present law, includible in gross income of the owners thereof for federal income tax purposes and will not be treated as an item of tax preference in computing the alternative minimum tax for individuals and corporations nor as an adjustment in computing a corporation s alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on certain corporations. Interest on the Bonds will be taken into account, however, in computing the branch profits tax imposed on certain foreign corporations. The foregoing opinions assume compliance with certain covenants made by the Authority and the Borrowers to satisfy pertinent requirements of the Code with respect to the Bonds. Failure to comply with certain of these covenants could cause the interest on the Bonds to be included in gross income and be subject to federal income taxation retroactive to the date of issuance of the Bonds. Ownership of the Bonds may result in other D-3

412 federal tax consequences to certain taxpayers, including, without limitation, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. We express no opinion regarding any such collateral consequences arising with respect to the Bonds.. Interest on the Bonds is not exempt from present Illinois income taxes. In rendering this opinion, we have relied upon the certificates of even date herewith of the Borrowers with respect to certain material facts solely within the knowledge of the Borrowers relating to the property financed or refinanced with the proceeds of the Bonds and the application of the proceeds of the Bonds. Respectfully submitted, D-4

413 , 2010 Illinois Finance Authority Chicago, Illinois Wells Fargo Bank, National Association, as Bond Trustee Chicago, Illinois Timothy Place, NFP Elmhurst, Illinois B.C. Ziegler and Company d/b/a Ziegler Capital Markets Chicago, Illinois Christian Healthcare Foundation, NFP Tinley Park, Illinois Re: $12,650,000 Illinois Finance Authority Taxable Revenue Bonds, Series 2010E (Park Place of Elmhurst Project) (Taxable Mandatory Paydown Securities (Taxable MPS)) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Illinois Finance Authority (the Authority ) of $12,650,000 in aggregate principal amount of its Taxable Revenue Refunding Bonds, Series 2010E (Park Place of Elmhurst Project) (Taxable Mandatory Paydown Securities (Taxable MPS)) (the Bonds ) initially dated the date hereof. The Bonds are issued under the provisions of the Illinois Finance Authority Act, as amended (the Act ), and under and pursuant to that certain Bond Trust Indenture dated as of May 1, 2010 (the Bond Indenture ) between the Authority and Wells Fargo Bank, National Association, as bond trustee (the Bond Trustee ). The proceeds from the sale of the Bonds will be loaned by the Authority to Timothy Place, NFP (the Corporation ) and Christian Healthcare Foundation, NFP (the Foundation and, together with the Corporation, the Borrowers ), each an Illinois not for profit corporation, under that certain Loan Agreement dated as of May 1, 2010 (the Loan Agreement ) among the Authority and the Borrowers. The loan of the Bond proceeds will be evidenced by the Borrowers Direct Note Obligation, Series 2010E (Illinois Finance Authority) (the Series 2010E Obligation ) in the principal amount of $12,650,000, dated the date hereof and issued pursuant to the Master Trust Indenture dated as of May 1, 2010 (the Master Indenture ), among the Corporation, the Foundation and Wells Fargo Bank, National Association, as master trustee (the Master Trustee ). Pursuant to the terms of the Loan Agreement and the Series 2010E Obligation, the Borrowers are obligated to make payments sufficient to pay the principal of, premium, if any, and interest on the Bonds. Pursuant to the terms of the Master Indenture, the Corporation, the Foundation and each other Person (as defined in the Master Indenture) which hereafter executes the Master Indenture (individually, a Member and collectively, the Obligated Group ) agree to be jointly and severally liable (subject to the Master Indenture s provisions permitting a Member to leave the Obligated Group) on all Obligations issued under the Master Indenture, including the Series 2010E Obligation. The proceeds from the sale of the Bonds will be used, together with certain other moneys, to pay or reimburse the Borrowers for the payment of certain costs of acquiring, constructing, renovating, remodeling and equipping certain projects (as such term is defined in the Act), including the D-5

414 construction and equipping of a continuing care retirement community known as Park Place of Elmhurst (the Project ); (ii) refinance certain taxable indebtedness of the Borrowers incurred to pay a portion of the costs related to the Project; (iii) fund a debt service reserve fund; (iv) pay a portion of the interest on the Bonds; (v) provide working capital; and (vi) pay certain expenses incurred in connection with the issuance of the Bonds. Each of the Corporation and the Foundation has informed us that it is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), that it is exempt from federal income taxes under Sections 501(a) and 501(c)(3) of the Code, and that it is not a private foundation as defined in Section 509(a) of the Code. We note that the tax-exempt status of the Corporation and the Foundation is addressed in the opinion of Timothy G. Lawler, Ltd., special counsel to the Members of the Obligated Group, dated this date and provided to the addressees hereof and we express no opinion with respect to such status. In our capacity as bond counsel, we have examined, among other things, certified proceedings of the members of the Authority authorizing, among other things, the execution and delivery of the Bond Indenture, the Loan Agreement and the issuance of the Bonds; a specimen Bond; a certificate of the Bond Trustee regarding the authentication of the Bonds; a certificate of the Authority; executed counterparts of the above-referenced documents; executed opinions of Schiff Hardin LLP, special counsel to the Authority, Timothy G. Lawler, Ltd., special counsel to the Members of the Obligated Group, and Katten Muchin Rosenman LLP, special counsel to the initial purchaser of the Bonds, each dated this date, and such other documents, showings and related matters as we have deemed necessary in order to render this opinion. Based upon the foregoing and in reliance upon certain documents and showings hereinafter referred to, we are of the opinion that: 1. The Bond Indenture has been duly authorized by the Authority, has been duly executed and delivered by authorized officers of the Authority and, assuming due authorization, execution and delivery thereof by the Bond Trustee, constitutes a valid and binding instrument of the Authority, enforceable against the Authority in accordance with its terms, subject to the qualification that the enforcement thereof may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights and by the availability of equitable remedies. 2. The Bonds and the loan by the Authority to the Borrowers of the proceeds from the sale thereof as evidenced by the Series 2010E Obligation and secured by the Loan Agreement have been duly authorized by the Authority, the Bonds have been duly executed by authorized officers of the Authority, authenticated by the Bond Trustee and validly issued by the Authority and constitute the valid and binding limited obligations of the Authority payable solely from payments and prepayments received by the Authority upon the Series 2010E Obligation and from other amounts payable under the Loan Agreement and pledged under the Bond Indenture and the Bonds are enforceable in accordance with their terms and are entitled to the benefit and security of the Bond Indenture, subject to the qualification that the enforcement thereof may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights and by the availability of equitable remedies. 3. The Loan Agreement has been duly authorized by the Authority, has been duly executed and delivered by authorized officers of the Authority and, assuming due authorization, execution and delivery thereof by the Borrowers, constitutes a valid and binding instrument of the Authority enforceable against the Authority in accordance with its terms, subject to the qualification that the enforcement thereof may be limited by laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights and by the availability of equitable remedies. In rendering the foregoing opinion, we have not attempted to verify the correctness of the assumptions made therein D-6

415 regarding the due authorization, execution and delivery of the Loan Agreement by the Borrowers, including without limitation whether the Borrowers have the power or authority to take such actions or whether such actions violate existing corporate articles of incorporation or bylaws, agreements or court decisions or are the subject of or may be affected by any litigation. 4. Interest on a Bond held by a U.S. holder generally will be included in the holder s gross income for federal income tax purposes at the time that the interest is received or accrued, in accordance with the holder s method of accounting for federal income tax purposes. Interest on the Bonds is not exempt from present Illinois income taxes. In rendering this opinion, we have relied upon the certificates of even date herewith of the Borrowers with respect to certain material facts solely within the knowledge of the Borrowers relating to the property financed or refinanced with the proceeds of the Bonds and the application of the proceeds of the Bonds. Respectfully submitted, D-7

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420 ILLINOIS FINANCE AUTHORITY REVENUE BONDS (PARK PLACE OF ELMHURST PROJECT)