#2010-1677 MASTER LOAN AGREEMENT - Californiacdiacdocs.sto.ca.gov/2010-1677.pdf · #2010-1677 MASTER LOAN AGREEMENT among FIRST REPUBLIC BANK, as Lender and CALIFORNIA ENTERPRISE

4826-9157-9912.5

#2010-1677

MASTER LOAN AGREEMENT

among

FIRST REPUBLIC BANK,

as Lender

and

CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY,

as Authority

and

THE SAN FRANCISCO SCHOOL,

as Borrower

Dated as of December 1, 2010

TABLE OF CONTENTS

Page

4826-9157-9912.5

ARTICLE I

DEFINITIONS ............................................................................................................................... 2

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS OF AUTHORITY AND

BORROWER

Section 2.01. Representations, Warranties and Covenants of Authority ............................. 12

Section 2.02. Representations, Warranties and Covenants of Borrower ............................. 13

ARTICLE III

ISSUANCE OF LOAN; APPLICATION OF PROCEEDS

Section 3.01. Design, Construction and Equipping of the Improvements ........................... 17

Section 3.02. Plans and Specifications; Project Budget ...................................................... 18

Section 3.03. Loan to Finance the Project ........................................................................... 18

Section 3.04. Establishment and Application of Project Fund ............................................ 18

Section 3.05. Term ............................................................................................................... 18

Section 3.06. Costs and Expenses of Authority ................................................................... 19

Section 3.07. Limited Obligations of Authority .................................................................. 19

ARTICLE IV

REPAYMENT OF THE LOAN

Section 4.01. Interest............................................................................................................ 20

Section 4.02. Payments ........................................................................................................ 20

Section 4.03. Draws ............................................................................................................. 20

Section 4.04. Security for the Loan ..................................................................................... 21

Section 4.05. Deed of Trust; and Security Agreement ........................................................ 21

Section 4.06. Payment on Non-Business Days .................................................................... 22

Section 4.07. Borrower Payments to Be Unconditional ...................................................... 22

Section 4.08. Prepayments ................................................................................................... 22

Section 4.09. Restrictions on Transfer of Loan ................................................................... 23

Section 4.10. Term Period Repayment ................................................................................ 23

Section 4.11. Original Issue Discount.................................................................................. 24

Section 4.12. Late Charge .................................................................................................... 24

Section 4.13. Default Rate ................................................................................................... 24

ARTICLE V

CONDITIONS PRECEDENT

Section 5.01. Conditions Precedent to Master Loan Agreement ......................................... 24

Section 5.02. Conditions Precedent to Initial Draw Request ............................................... 26

Section 5.03. Post Closing Condition .................................................................................. 26

Section 5.04. Conditions Precedent to Subsequent Draw Requests .................................... 26

4826-9157-9912.5 ii

Section 5.05. Limitations to Disbursement .......................................................................... 28

ARTICLE VI

SECURITY INTEREST

Section 6.01. Change in Name or Corporate Structure of Borrower; Change in

Location of Borrower’s Principal Place of Business ..................................... 29

Section 6.02. Security Interest ............................................................................................. 29

Section 6.03. Assignment of Insurance................................................................................ 29

ARTICLE VII

AFFIRMATIVE COVENANTS OF BORROWER

Section 7.01. Maintenance of Facility ................................................................................. 30

Section 7.02. Compliance with Laws and Obligations ........................................................ 30

Section 7.03. Payment of Taxes and Other Claims ............................................................. 30

Section 7.04. Insurance; Indemnity ..................................................................................... 31

Section 7.05. Reporting Requirements ................................................................................ 33

Section 7.06. Books and Records; Inspection and Examination ......................................... 35

Section 7.07. Performance by Lender .................................................................................. 35

Section 7.08. Preservation of Existence ............................................................................... 36

Section 7.09. No Liability for Consents or Appointments................................................... 36

Section 7.10. Non-Liability of Authority ............................................................................. 36

Section 7.11. Expenses ........................................................................................................ 36

Section 7.12. No Personal Liability ..................................................................................... 36

Section 7.13. Indemnification .............................................................................................. 37

Section 7.14. Covenant to Enter into Agreement or Contract to Provide Ongoing

Disclosure ...................................................................................................... 38

Section 7.15. Financial Covenant ........................................................................................ 38

Section 7.16. Deposit Relationship ...................................................................................... 39

Section 7.17. Budget ............................................................................................................ 39

ARTICLE VIII

NEGATIVE COVENANTS OF BORROWER

Section 8.01. Lien ................................................................................................................ 39

Section 8.02. Disposition of Assets ..................................................................................... 39

Section 8.03. Consolidation and Merger.............................................................................. 40

Section 8.04. Accounting ..................................................................................................... 40

Section 8.05. Transfers ........................................................................................................ 41

Section 8.06. Other Indebtedness......................................................................................... 41

Section 8.07. Other Defaults ................................................................................................ 41

Section 8.08. Prohibited Activities ...................................................................................... 41

Section 8.09. Use of Facility ................................................................................................ 41

Section 8.10. Maintenance of Business ............................................................................... 41

Section 8.11. Restrictive Agreements .................................................................................. 41

Section 8.12. Tax Exempt Status ......................................................................................... 41

4826-9157-9912.5 iii

Section 8.13. Federal Reserve Board Regulations ............................................................... 42

ARTICLE IX

DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS

Section 9.01. Eminent Domain ............................................................................................ 42

Section 9.02. Application of Net Proceeds .......................................................................... 42

ARTICLE X

ASSIGNMENT, PARTICIPATION, MORTGAGING AND SELLING

Section 10.01. Assignment by Lender ................................................................................... 43

Section 10.02. No Sale, Assignment or Leasing by Borrower .............................................. 43

ARTICLE XI

EVENTS OF DEFAULT AND REMEDIES

Section 11.01. Events of Default ........................................................................................... 43

Section 11.02. Remedies on Default ...................................................................................... 45

Section 11.03. Lender’s Right to Perform the Obligations .................................................... 47

Section 11.04. No Remedy Exclusive.................................................................................... 48

ARTICLE XII

MISCELLANEOUS

Section 12.01. Disclaimer of Warranties ............................................................................... 48

Section 12.02. Limitations of Liability .................................................................................. 49

Section 12.03. Additional Payments to Lender ..................................................................... 49

Section 12.04. Notices ........................................................................................................... 49

Section 12.05. Binding Effect; Time of the Essence ............................................................. 50

Section 12.06. Severability .................................................................................................... 50

Section 12.07. Amendments .................................................................................................. 50

Section 12.08. Execution in Counterparts.............................................................................. 50

Section 12.09. Applicable Law .............................................................................................. 50

Section 12.10. Jury Trial Waiver ........................................................................................... 51

Section 12.11. Captions ......................................................................................................... 51

Section 12.12. Entire Agreement ........................................................................................... 51

Section 12.13. Waiver ............................................................................................................ 51

Section 12.14. Survivability ................................................................................................... 51

Section 12.15. Usury .............................................................................................................. 52

Section 12.16. Third Party Beneficiary.................................................................................. 52

Section 12.17. Further Assurance and Corrective Instruments.............................................. 52

Section 12.18. Dispute Resolution; Provisional Remedies .................................................... 52

Section 12.19. Patriot Act ...................................................................................................... 53

EXHIBIT A AGGREGATE PRINCIPAL AMOUNT OF THE LOAN OUTSTANDING

EXHIBIT B FORM OF INITIAL DRAW REQUEST

EXHIBIT C FORM OF DRAW REQUEST

4826-9157-9912.5 iv

EXHIBIT D PROPERTY DESCRIPTION

EXHIBIT E FORM OF CERTIFICATE OF PURCHASER

EXHIBIT F FORM OF CERTIFICATE OF TRANSFEREE OR PARTICIPANT

EXHIBIT G FORM OF OPINION OF COUNSEL TO BORROWER

EXHIBIT H SCHEDULE OF PAYMENTS

4826-9157-9912.5


THIS MASTER LOAN AGREEMENT, dated as of December 1, 2010 (this “Master

Loan Agreement”), among FIRST REPUBLIC BANK, a California corporation (“Lender”),

CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY (“Authority”), a public

entity duly organized and validly existing under the laws of the State of California (the “State”),

as issuer, and THE SAN FRANCISCO SCHOOL, a California nonprofit public benefit

corporation (the “Borrower”).

W I T N E S S E T H :

WHEREAS, Authority was established pursuant to the provisions of the Joint Powers

Act, comprising Articles 1, 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with

Section 6500) of the Government Code of the State of California (the “Act”) and a Joint Exercise

of Powers Agreement, dated June 1, 2006 (the “Agreement”), among the cities of Eureka,

Lancaster and Selma and other public agencies who have and may subsequently become

associate members of Authority; and

WHEREAS, Authority is authorized by the Agreement and the Act to issue bonds, notes

or other evidences of indebtedness, or certificates of participation in leases or other agreements,

or enter into loan agreements to, among other things, finance or refinance facilities owned and/or

leased and operated by organizations described in Section 501(c)(3) of the Internal Revenue

Code of 1986, as amended (the “Code”); and

WHEREAS, pursuant to the provisions of the Act, the public agencies which are

members of Authority are authorized to jointly exercise any power common to such public

agency members, including, without limitation, the power to acquire and dispose of property,

both real and personal; and

WHEREAS, the City and County of San Francisco (the “City”) is an associate member of

Authority and is authorized to acquire and dispose of property, both real and personal; and

WHEREAS, pursuant to the provisions of the Act, Authority may, at its option, issue

bonds, rather than certificates of participation, and enter into a loan agreement for the purposes

of promoting economic development; and

WHEREAS, Borrower is a California nonprofit public benefit corporation and an

organization described in Section 501(c)(3) of the Code (as hereinafter defined); and

WHEREAS, Borrower is located in the City and provides educational services to children

from pre-school through grade 8 located primarily in the City and the surrounding communities;

and

WHEREAS, Borrower desires to finance the Project (defined below) from time to time

on the terms and conditions set forth below, which Project shall be specifically identified in the

Draw Requests (defined below); and

4826-9157-9912.5 2

WHEREAS, in furtherance of the purposes of Authority set forth above, Authority

proposes to finance the Project to be owned and operated by Borrower; and

WHEREAS, in order to finance the costs of the Project, Authority intends to obtain a

loan from Lender (as further defined herein, the “Authority Loan”), the interest with respect to

which shall be excluded from income of Lender for Federal income tax purposes and exempt

from State personal income taxes, and lend the proceeds thereof to Borrower (as further defined

herein, the “Borrower Loan”); and

WHEREAS, for and in consideration of such loan, Borrower agrees, inter alia, to make

loan payments sufficient to pay on the dates specified herein, the principal of, premium, if any,

and interest thereon; and

WHEREAS, Authority will assign the payments due under Borrower Loan pursuant to

this Master Loan Agreement (except Authority Fees (as hereinafter defined)) to Lender to satisfy

Authority’s obligations under Authority Loan; and

WHEREAS, Borrower shall make Payments (as hereinafter defined) directly to Lender as

assignee of Authority; and

WHEREAS, Authority, Lender and Borrower have duly authorized the execution and

delivery of this Master Loan Agreement; and

WHEREAS, this Master Loan Agreement and Authority Loan shall not be deemed to

constitute a debt or liability or obligation of the State or any political subdivision or agency of

the State (except Authority to the extent provided herein) or a pledge of the faith and credit or

taxing power of the State or any political subdivision or agency thereof, but shall be a special

obligation payable solely from the Payments payable by Borrower hereunder;

NOW, THEREFORE, in consideration of the payments to be made hereunder and the

mutual covenants contained herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

The following terms used herein will have the meanings indicated below unless the

context clearly requires otherwise.

“Accredited Investor” has the meaning ascribed thereto in Rule 501 of Regulation D of

the Securities Act of 1933, as amended (“Rule 501”), other than as defined in paragraph (a)(4),

(a)(5) or (a)(6) of Rule 501.

“Act” means Chapter 5 of Division 7 of Title 1 of the California Government Code

(commencing with Section 6500).

“Additional Payments” means the amounts, other than Payments, payable by Borrower

pursuant to the provisions of this Master Loan Agreement, including, without limitation,

4826-9157-9912.5 3

Authority Fees, amounts pursuant to Section 12.03 hereof, indemnity payments and

reimbursement of advances due hereunder.

“Affiliate” means an affiliate of Lender or any related entity, 100% of whose common

stock is directly or indirectly owned by Lender.

“Anti-Terrorism Laws” has the meaning assigned to that term in Section 2.02(y).

“Applicable Loan Rate” means the fixed rate on the Loan of 4.75% per annum.

“Authority” means California Enterprise Development Authority, acting as issuer under

this Master Loan Agreement.

“Authority Documents” means this Master Loan Agreement, the Deed of Trust

Assignment Agreement and the Tax Regulatory Agreement.

“Authority Fees” means, with respect to this Master Loan Agreement, the fee payable to

Authority for Authority’s services in connection with the preparation, review and execution of

this Master Loan Agreement and Authority’s fees, costs and expenses, as further defined in

Section 3.06.

“Authority Loan” means the loan of proceeds to Authority from Lender pursuant to this

Master Loan Agreement and the Draw Requests.

“Authorized Borrower Representative” means the Head of School and any other person

designated from time to time in writing by Borrower’s Board of Trustees.

“Borrower” means (a) The San Francisco School, a California nonprofit public benefit

corporation; (b) any surviving, resulting or transferee entity thereof permitted pursuant to the

terms of this Master Loan Agreement; and (c) except where the context requires otherwise, any

assignee(s) of Borrower permitted pursuant to the terms of this Master Loan Agreement.

“Borrower Documents” has the meaning assigned to that term in Section 2.02(l) hereof.

“Borrower Loan” means the loan of proceeds to Borrower from Authority pursuant to

this Master Loan Agreement and the Draw Requests.

“Business Day” means any day which is not one of the following: (a) a Saturday, Sunday

or legal holiday as set forth by the Federal Reserve Bank of San Francisco; (b) any other day on

which banks in New York, New York or San Francisco, California are authorized or required to

be closed by the appropriate regulatory authorities; or (c) a day on which the New York Stock

Exchange is authorized or required to be closed.

“Change in Unrestricted Net Assets” means the change in unrestricted net assets of

Borrower determined in accordance with generally accepted accounting principles.

“Closing Date” means December 29, 2010.

4826-9157-9912.5 4

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Debt Coverage Ratio” means for each fiscal year, Borrower’s Change in Unrestricted

Net Assets (excluding realized and unrealized gains or losses on investments) plus depreciation,

plus interest expense, plus amortization, plus other non-cash expenses, divided by Debt Service.

“Debt Service” means for each fiscal year, the sum (determined on a consolidated basis

in accordance with generally accepted accounting principles and without duplication) of the

following: (a) all payments of principal of long-term debt (i.e., debt and obligations with

maturities over one year) of Borrower scheduled to be made during such fiscal year, plus (b) all

interest expense (including credit enhancement fees) on such long-term debt scheduled to be

made during such fiscal year.

“Deed of Trust” means the Construction Deed of Trust with Assignment of Rents,

Security Agreement and Financing Statement, dated as of December 1, 2010, by Borrower for

the benefit of Authority and Lender, and any modifications thereto.

“Deed of Trust Assignment Agreement” means the Deed of Trust Assignment Agreement,

dated as of December 1, 2010, between Authority and Lender.

“Default” means an event that, with giving of notice or passage of time or both, would

constitute an Event of Default as provided in Article XI hereof.

“Default Rate” means the Applicable Loan Rate plus 5%.

“Determination of Taxability” means any determination, decision, decree or advisement

by the Commissioner of Internal Revenue, or any District Director of Internal Revenue or any

court of competent jurisdiction, that an Event of Taxability has occurred. A Determination of

Taxability also shall be deemed to have occurred on the first to occur of the following:

(a) the date when Borrower files any statement, supplemental statement, or

other tax schedule, return or document, which discloses that an Event of Taxability has

occurred;

(b) the effective date of any federal legislation enacted or federal rule or

regulation promulgated after the date of this Master Loan Agreement that causes an

Event of Taxability; or

(c) if upon sale, lease or other deliberate action within the meaning of Treas.

Reg. § 1.141-2(d), the failure to receive an unqualified opinion of Special Counsel to the

effect that such action will not cause interest on Authority Loan to become includable in

the gross income of the recipient.

“Draw Period” means the period commencing upon the Closing Date and ending

December 1, 2013.

“Draw Request” means a draw request, substantially in the forms attached hereto as

Exhibit B or Exhibit C, executed by Lender and Borrower from time to time to increase the

4826-9157-9912.5 5

outstanding principal amount of the Borrower Loan and to disburse such Loan Proceeds for

Project Costs.

“Environment Indemnity Agreement” means that certain Environmental Indemnity

Agreement, dated as of December 1, 2010, by and between Borrower and Lender.

“Environmental Laws” means any federal, state or local law (whether imposed by statute,

or administrative or judicial order, or common law), now or hereafter enacted, governing health,

safety, industrial hygiene, the environment or natural resources, or Hazardous Materials,

including, such laws governing or regulating the use, generation, storage, removal, recovery,

treatment, handling, transport, disposal, control, discharge of, or exposure to, Hazardous

Materials.

“Event of Taxability” means: (a) the application of the proceeds of the Loan in such

manner that such Loan becomes an “arbitrage bond” within the meaning of Code

Sections 103(b)(2) and 148, and with the result that interest on such Authority Loan is or

becomes includable in the gross income (as defined in Code Section 61) of the Holder of such

Authority Loan; (b) Section 265 of the Code is amended such that the Authority Loan no longer

constitutes a “qualified tax exempt obligation” entitling a “financial institution” (as that term is

used in Section 265) which is the holder thereof to deduct its interest expense relative to the

Authority Loan; (c) if as the result of any act, failure to act or use of the proceeds of any portion

of the Loan or any misrepresentation or inaccuracy in any of the representations, warranties or

covenants contained in the Loan Agreement by Authority or Borrower or the enactment of any

federal legislation or the promulgation of any federal rule or regulation after the date of this Loan

Agreement, the interest on such Loan is or becomes includable in a Holder’s gross income (as

defined in Code Section 61); or (d) any revocation of the determination letter from the Internal

Revenue Service regarding status of Borrower as a 501(c)(3) corporation.

“Facility” means collectively (a) the Improvements; (b) all other buildings, structures and

other improvements situated, placed or constructed on the Property; (c) all materials, supplies,

equipment, apparatus and other items of personal property owned by Borrower and attached to,

or installed in the Facility, including (without limitation) water, gas, electrical, storm and

sanitary sewer facilities and all other utilities whether or not situated in easements.

“Final Appraisal” means the appraisal conducted by a MAI certified appraiser selected

by Borrower from a list of appraisers pre-approved by Lender and engaged by Lender.

“General Contractor” means the general contractor for the Improvements selected by

Borrower and reasonably approved by Lender, and its successors and assigns.

“Governmental Authority” means (i) any governmental municipality or political

subdivision thereof, (ii) any governmental or quasi-governmental agency, authority, board,

bureau, commission, department instrumentality or public body, or (ii) any court, administrative

tribunal or public utility.

“Gross-Up Rate” means, with respect to the Loan, an interest rate equal to the Applicable

Loan Rate plus a rate sufficient such that the total interest to be paid on any payment date would

after such interest was reduced by the amount of any federal, state and local income tax

4826-9157-9912.5 6

(including any interest or penalties) payable by Lender with respect thereto, if any, and/or if an

Event of Taxability described in clause (b) of the definition of Event of Taxability above occurs,

the after-tax effect of any loss of qualified tax-exempt obligation treatment yields to Lender, the

after tax yield Lender would have received with respect to the Authority Loan if no Event of

Taxability had occurred.

“Hazardous Materials” means any

(a) Substance, product, waste or other material of any nature whatsoever

which is or becomes listed, regulated, or addressed pursuant to any or all of the following

statutes and regulations, as the same may be amended from time to time:

(i) The Comprehensive Environmental Response, Compensation and

Liability Act, 42 U.S.C. Sections 9601, et seq. ("CERCLA");

(ii) The Hazardous Materials Transportation Act, 49 U.S.C.

Sections 1801, et seq.;

(iii) The Resource Conservation and Recovery Act, 42 U.S.C.

Sections 6901, et seq. ("RCRA");

(iv) The Toxic Substances Control Act, 15 U.S.C. Sections 2601, et

seq.;

(v) The Clean Water Act, 33 U.S.C. Sections 1251, et seq.;

(vi) The California Hazardous Waste Control Act, California Health

and Safety Code Sections 25100, et seq.;

(vii) The California Hazardous Substance Account Act, California

Health and Safety Code Sections 25300, et seq.;

(viii) The California Safe Drinking Water and Toxic Enforcement Act,

California Health and Safety Code Sections 25249.5, et seq.;

(ix) California Health and Safety Code Sections 25280, et seq.

(pertaining to underground storage of Hazardous Substances);

(x) The California Hazardous Waste Management Act, California

Health and Safety Code Sections 25179.1, et seq.;

(xi) California Health and Safety Code Sections 25500, et seq.

(pertaining to hazardous materials response plans and inventory);

(xii) The California Porter-Cologne Water Quality Control Act,

California Water Code Sections 13000, et seq.;

4826-9157-9912.5 7

(xiii) California Civil Code Section 2929.5 (pertaining to inspections

relating to hazardous substances); or

(xiv) All other existing and future federal, state and local laws,

ordinances, rules, regulations, orders, requirements, and decrees regulating,

relating to, or imposing liability or standards of conduct concerning any

hazardous, toxic or dangerous waste, substance or material;

(b) Any substance, product, waste or other material of any nature whatsoever

which may give rise to liability (i) under any of the statutes or regulations described in

clauses (i) through (xiv) of Section (a) above; (ii) under any statutory or common law

theory, including negligence, trespass, intentional tort, nuisance or strict liability; or

(iii) under any reported decisions of any state or federal court;

(c) Petroleum, petroleum products and by-products, gasoline or crude oil,

other than petroleum and petroleum products contained within regularly operated motor

vehicles (including without limitation golf carts and lawn maintenance vehicles); and

(d) Asbestos or asbestos containing materials.

“Holder” means either Lender or a Qualified Institutional Buyer or an Accredited

Investor to which the Loan is assigned.

“Improvements” means the capital improvements to be financed from time to time with

proceeds of the Borrower Loan and include construction of a community center, new art rooms,

library, language space and outdoor areas, and other ancillary school facilities located at the

Property and financed with the Loan.

“Indebtedness” means (a) indebtedness for borrowed money and (b) installment sale or

conditional sale agreements for the deferred purchase price of property or services and

obligations as lessee which shall have been or should be, in accordance with generally accepted

accounting principles, recorded as capital leases; provided that the term “Indebtedness” shall

exclude trade payables, operating leases, and other expenses normally incurred in the ordinary

course of business.

“Lender” means (a) First Republic Bank, a California corporation (b) any surviving,

resulting or transferee corporation of First Republic Bank; and (c) if this Master Loan

Agreement, the Draw Requests and Authority Loan have been assigned by Lender pursuant to

Section 10.01 hereof, such assignee shall be considered Lender with respect to this Master Loan

Agreement, Draw Requests and Authority Loan, subject to Section 10.01.

“Lender Fees” means, with respect to the Master Loan Agreement, the fee payable to

Lender for Lender’s services in connection with the preparation, review and execution of this

Master Loan Agreement and each Draw Request, as further defined in Section 12.03; provided,

however, that Lender Fees shall not include any Lender fees or expenses in connection with the

first twelve (12) Draw Requests made by Borrower in any calendar year.

“Lien” shall have the meaning set forth in Section 8.01 hereof.

4826-9157-9912.5 8

“Loan” means the loan from Lender to Authority (evidenced by the related Authority

Loan) and by Authority to Borrower (evidenced by the related Borrower Loan) under this Master

Loan Agreement and the Draw Requests.

“Loan Documents” means, collectively, this Master Loan Agreement, Deed of Trust, the

Deed of Trust Assignment Agreement, the Environmental Indemnity Agreement, the Security

Agreement and the Tax Regulatory Agreement.

“Loan Proceeds” means the amount of up to $4,455,000 to be paid or provided by Lender

for application to Project Costs in accordance with this Master Loan Agreement (representing the

principal amount of the Loan equal to $4,500,000, less original issue discount of $45,000).

“Margin Stock” shall have the meaning assigned to such term in Regulation U

promulgated by the Board of Directors of the Federal Reserve System, as now and hereafter from

time to time in effect.

“Master Loan Agreement” means, collectively, this Master Loan Agreement, including

the Exhibits hereto, as any of the same may be supplemented or amended from time to time in

accordance with the terms hereof. This Master Loan Agreement shall be implemented through

the execution of Draw Requests in the forms of Exhibit B and C hereto, numbered consecutively

commencing with Draw Request No. 1.

“Maturity Date” means December 1, 2038.

“Net Proceeds” means any insurance proceeds or condemnation award paid with respect

to the Facility, to the extent remaining after payment therefrom of all expenses incurred in the

collection thereof.

“Obligation” means Payments and Additional Payments payable by Borrower pursuant to

the provisions of this Master Loan Agreement and of each Draw Request.

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate

Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107-56

(signed into law October 26, 2001).

“Paying Agent Agreement” means the Paying Agent Agreement dated as of

December 29, 2010 by and between Borrower and Deutsche Bank National Trust Company, as

paying agent, together with any supplements or certificates related thereto.

“Payments” means those payments (excluding, Additional Payments, Authority Fees and

Lender Fees payable to Lender and Authority hereunder) payable by Borrower pursuant to the

provisions of this Master Loan Agreement and each Draw Request. Payments shall be payable

by Borrower directly to Lender as assignee of Authority, in the amounts and at the times as set

forth in this Master Loan Agreement.

“Permits” has the meaning set forth in Section 5.03(l)(cc) hereof.

4826-9157-9912.5 9

“Permitted Additional Indebtedness” means (a) Indebtedness to Lender, (b) up to

$150,000 in the aggregate at any given time principal amount incurred in the ordinary course of

business which is secured by purchase money liens or purchase money security interests upon or

in the property acquired with the proceeds of such Indebtedness; provided that upon the transfer,

assignment or reassignment of the Authority Loan by Lender pursuant to Section 4.09 hereof to

any party other than an Affiliate, the amount in this clause (b) shall be increased to $500,000, (c)

up to $250,000 in the aggregate at any given time principal amount of unsecured Indebtedness

incurred for the purposes of financing ordinary course operating expenses of Borrower; provided

that upon the transfer, assignment or reassignment of the Authority Loan by Lender pursuant to

Section 4.09 hereof to any party other than an Affiliate, the amount in this clause (c) shall be

increased to $500,000, and (d) an amount up to $100,000 in capital leases solely for seating,

stage or other furnishings in connection with the Facility.

“Permitted Encumbrances” means (a) liens and security interests securing indebtedness

owed by Borrower to Authority pursuant to this Master Loan Agreement and/or Lender; (b)

Liens arising by reason of good faith deposits in connection with tenders, leases of real estate,

bids or contracts (other than contracts for the payment of borrowed money); (c) 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 Borrower 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; (d) Liens arising by reason of good faith deposits made by or to Borrower

in the ordinary course of business (for other than borrowed money), deposits by Borrower to

secure public or statutory obligations or deposits 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;

(e) attachment or judgment liens not constituting a default hereunder or under the Deed of Trust,

or any attachment or judgment Lien against Borrower so long as such judgment is being

contested in good faith and execution thereon is stayed; (f) rights reserved to or vested in any

municipality or public authority by the terms of any right, power, franchise, grant, license, permit

or provision of law affecting the Property, to: (1) terminate such right, power, franchise, grant,

license, or permit, provided, that the exercise of such right would not materially impair the use of

such Property in the ordinary course by Borrower or materially and adversely affect the value

thereof, or (2) purchase, condemn appropriate or recapture, or designate a purchaser of, the

Property or any portion thereof; (g) liens for taxes, assessments, or similar charges either not yet

due or being contested in good faith; (h) liens of materialmen, mechanics, warehousemen, or

carriers, or other like liens arising in the ordinary course of business or construction and securing

obligations which are not yet delinquent; or which are being contested in good faith for a period

no longer than the ninety (90) days after the due date of such lien; (i) easements, rights-of-way,

servitudes, restrictions, oil, gas, or other mineral reservations and other minor defects,

encumbrances, and irregularities in the title to the Property which do not materially impair the

use of such Property in the ordinary course by Borrower or materially and adversely affect the

value thereof; (j) rights reserved to or vested in any municipality or public authority to control or

regulate the Property or to use such Property in any manner, which rights do not materially

impair the use of such Property or materially and adversely affect the value thereof, to the extent

4826-9157-9912.5 10

that it affects title to the Property; (k) Liens on property received by Borrower through gifts,

grants or bequests, such Liens being due to restrictions on such gifts, grants or bequests or the

income thereon, so long as the fair market value of any such property at the time of receipt by

Borrower is greater than the amount of the indebtedness secured by the lien on such property;

(l) the exceptions to coverage of the Title Policy as approved by Lender; and (m) Liens securing

any Permitted Additional Indebtedness provided such Liens do not encumber either the Property

or the Improvements.

“Permitted Investments” means (a) direct obligations of 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) or obligations with maturities of less than one

year the timely payment of the principal of and interest on which are fully guaranteed

directly or indirectly by the United States of America, (b) money market mutual funds

restricted to the instruments described in clause (a) above and rated in the top rating category

of any rating agency (without regard to any refinement or graduation of such rating

category by a numerical modifier or otherwise), (c) bank deposits in any institution affiliated

with Lender, and (d) any other instrument approved by Lender in writing on a case-by-case

basis.

“Plans and Specifications” means Borrower’s plans and specifications for the

Improvements, as amended from time to time, which include a construction budget for the

Improvements and an allocation of the sources and uses of funds for the Improvements.

“Prepayment Premium” means the following premium, expressed as a percentage of the

amount to be prepaid, which shall apply, without duplication, only to the portion of prepaid

principal of the Loan during any consecutive twelve-month period in excess of 20% of the

principal amount outstanding at the time of the prepayment:

Prepayment Date Prepayment Premium

Before December 1, 2013

December 1, 2013 through

December 1, 2016

0%

1%

After December 1, 2016 0%

“Prior Interest Payment” means a payment of interest on the Borrower Loan made on or

prior to the date of any Determination of Taxability.

“Project” means the financing and refinancing of the acquisition of the Property, the

acquisition, construction, installation, rehabilitation, equipping, capital maintenance and furnishing

of the Facility, including but not limited to the Improvements, and various costs of issuance fees.

“Project Budget” means the cost breakdown/budget of the Improvements and the line by

line cost breakdown of all work performed or to be performed with respect to the Improvements,

as amended from time to time by Borrower.

4826-9157-9912.5 11

“Project Costs” means the amount paid or to be paid for any portion of the Project

incurred by Borrower in connection with the Project and as permitted under the Act.

“Project Fund” means the fund established pursuant to Section 3.04 of this Master Loan

Agreement.

“Property” means the real property located at 300, 307 and 311 Gaven Street, San

Francisco, California 94134, and further described in Exhibit D hereto, together with any greater

estate with respect to such real property as hereafter may be acquired by Borrower.

“Qualified Institutional Buyer” shall have the meaning ascribed thereto in Rule 144A of

the Securities Act of 1933, as amended.

“Reserved Authority Rights” means Authority’s rights to Authority Fees, indemnification,

notices, opinions, certifications, information, inspections and consents pursuant to this Master

Loan Agreement and the Tax Regulatory Agreement.

“Security Agreement” means the Security Agreement of even date herewith executed and

delivered by Borrower.

“Special Counsel” means any firm of nationally recognized municipal bond attorneys,

selected by Authority and acceptable to Lender and Borrower, experienced in the issuance of

municipal bonds and matters relating to the exclusion of the interest thereon from gross income

for federal income tax purposes.

“State” means the State of California.

“Tax Regulatory Agreement” means the Tax Regulatory Agreement dated the Closing

Date executed and delivered by Authority and Borrower, together with any supplements or

certificates related thereto.

“Term Period” means the period commencing on the day following the end of the Draw

Period and ending on the Maturity Date.

“Title Insurer” means Old Republic Title Company.

“Title Policy” means an ALTA (or equivalent) mortgagee policy of title insurance with

coverage in an amount equal to the maximum principal amount of the Loan, with reinsurance

and endorsements as Lender may require, containing no exceptions to title (printed or otherwise)

which are unacceptable to Lender, and insuring that the Deed of Trust is a first-priority lien on

the Property. Without limitation, such policy shall (i) be in the 2006 ALTA form or, if not

available, ALTA 1992 form (deleting arbitration and creditors’ rights, if permissible) or, if not

available, the form commonly used in the State, insuring Lender and its successors and assigns;

and (ii) include the following endorsements and/or affirmative coverages: 100.2, 103.11, 110.9,

116, 116.4, 116.7, 129.1 and such other endorsements as Lender may request.

4826-9157-9912.5 12

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

OF AUTHORITY AND BORROWER

Section 2.01. Representations, Warranties and Covenants of Authority. Authority

represents, warrants and covenants, for the benefit of Lender and Borrower, as follows:

(a) Authority is a public entity duly organized and validly existing under the

laws of the State. Under the provisions of the Act, Authority has the power to enter into

the transactions contemplated by this Master Loan Agreement and to carry out its

obligations hereunder. By proper action, Authority duly authorized the execution,

delivery and performance of its obligations under Authority Documents.

(b) Authority represents, covenants and warrants that all requirements have

been met and procedures have occurred such that Authority Documents are valid and

binding obligations of Authority enforceable in accordance with their respective terms

except as enforcement may be limited by bankruptcy, insolvency, moratorium, or similar

laws affecting the enforcement of creditors rights generally, by equitable principles, by

the exercise of judicial discretion in appropriate cases and by the limitation on legal

remedies against agencies of the State. Authority has taken all necessary action and has

complied with all provisions of the Act, including but not limited to the making of the

findings required by the Act, required to make Authority Documents the valid and

binding obligations of Authority.

(c) Pursuant to this Master Loan Agreement, Authority has assigned to

Lender all of Authority’s rights (except Reserved Authority Rights) in the Project, this

Master Loan Agreement, the Security Agreement, the Payments and any other documents

executed by Borrower except the Tax Regulatory Agreement, including the assignment of

all rights in any security interest granted to Authority by Borrower.

(d) None of the execution and delivery of Authority Documents, the

consummation of the transactions contemplated hereby or thereby or the fulfillment of or

compliance with the terms and conditions of Authority Documents violates any law, rule,

regulation or order, conflicts with or results in a breach of any of the terms, conditions or

provisions of any agreement or instrument to which Authority is now a party or by which

it is bound or constitutes a default under any of the foregoing or results in the creation or

imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon

any of the property or assets of Authority under the terms of any instrument or

agreement.

(e) Authority confirms that there is no action, suit or proceeding pending

before or by any court for which service of process has been duly completed as to

Authority and, to the knowledge of Authority’s officers, nor is there any action, suit or

proceeding before any court threatened against the Authority or any proceeding, inquiry

or investigation threatened by or pending before any public body against Authority,

challenging Authority’s authority to enter into Authority Documents or any other action

4826-9157-9912.5 13

wherein an unfavorable ruling or finding would adversely affect the enforceability of

Authority Documents, or the exclusion of the interest from gross income for federal tax

purposes under the Code, or would materially and adversely affect any of the transactions

contemplated by this Master Loan Agreement.

(f) Authority will submit or cause to be submitted to the Internal Revenue

Service a Form 8038 (or other information reporting statement) at the time and in the

form required by the Code.

(g) To the knowledge of Authority’s officers, no member, officer or other

official of Authority has any financial interest whatsoever in Borrower or in the

transactions contemplated by this Master Loan Agreement.

Section 2.02. Representations, Warranties and Covenants of Borrower. Borrower

represents, warrants and covenants, for the benefit of Lender and Authority as follows:

(a) Borrower is, and so long as any Obligation is outstanding, shall continue

to be, (i) a nonprofit public benefit corporation, duly organized and existing under the

laws of the State; (ii) an organization described in Section 501(c)(3) of the Code that is

not a “private foundation” as defined in Section 509(a) of the Code; (iii) authorized to

lease, sublease, purchase and hold real and personal property and finance or refinance the

same.; and (iv) an entity whose income is exempt from federal taxation under

Section 501(a) of the Code.

(b) Borrower shall do or cause to be done all things necessary to preserve and

keep in full force and effect its existence and status as an organization described in

Section 501(c)(3) of the Code that is not a “private foundation” as defined in

Section 509(a) of the Code.

(c) The purposes, character, activities and methods of operation of Borrower

have not changed materially since the time of its receipt of a determination by the

Internal Revenue Service that it is an organization described in Section 501(c)(3) of the

Code (the “Determination”) and are not materially different from the purposes, character,

activities and methods of operation described in Borrower’s application for such

Determination.

(d) Borrower has not diverted a substantial part of its corpus or income for a

purpose or purposes other than the purpose or purposes for which it is organized or

operated and disclosed to the Internal Revenue Service in connection with the

Determination.

(e) Borrower has not operated in a manner that would result in it being

classified as an “action” organization within the meaning of Section 1.501(c)(3)-1 of the

Code of Federal Regulations including, but not limited to, promoting or attempting to

influence legislation by propaganda or otherwise as a substantial part of its activities.

(f) With the exception of the payment of compensation (and the payment or

reimbursement of expense) which is not excessive and is for personal services which are

4826-9157-9912.5 14

reasonable and necessary to carrying out Borrower’s nonprofit purposes, no person

having a personal or private interest in the activities of Borrower nor any person

controlled by any such individual or individuals has acquired or received, directly or

indirectly, any income or assets, regardless of form, of Borrower, other than as reported

to the Internal Revenue Service by Borrower.

(g) Borrower has not received any indication or notice whatsoever to the

effect that its exemption under Section 501(c)(3) of the Code has been revoked or

modified, or that the Internal Revenue Service is considering revoking or modifying such

exemption, and such exemption is still in full force and effect.

(h) Borrower has filed with the Internal Revenue Service all requests for

determination, reports and returns required to be filed by it and such requests for

determination, reports and returns have not omitted or misstated any material fact and has

notified the Internal Revenue Service of any changes in its organization and operation

since the date of the application for the Determination.

(i) So long as any Obligation is outstanding, except as otherwise permitted by

this Master Loan Agreement or the Tax Regulatory Agreement, the Facility shall be used

by Borrower only for the purpose of performing services related to its status as an

organization described in Section 501(c)(3) of the Code and consistent with the

permissible scope of Borrower’s authority and, except as otherwise permitted by the Tax

Regulatory Agreement and this Master Loan Agreement will not be used in an unrelated

trade or business of Borrower or in the trade or business of any person or entity other

than Borrower.

(j) Borrower has not taken any action, nor does it know of any action that any

other person has taken, nor does it know of the existence of any condition, which would

cause Borrower to lose its exemption from taxation under Section 501(a) of the Code or

cause the interest on the Loan to become taxable to the recipient thereof because such

interest is not excludable from the gross income of such recipient for federal income tax

purposes under Section 103(a) of the Code.

(k) Borrower reasonably expects that it will not take any deliberate action

within the meaning of Treas. Reg. § 1.141-2(d).

(l) Borrower is authorized under the laws of the State and its formation

documents to execute and deliver this Master Loan Agreement, each Draw Request that

has been submitted as of the date this representation is made, the Security Agreement, the

Deed of Trust, the Environmental Indemnity Agreement and the Tax Regulatory

Agreement (together, the “Borrower Documents”), to consummate the transactions

contemplated hereby and thereby and to perform all of its obligations hereunder and

thereunder.

(m) Borrower has duly authorized the execution and delivery of the Borrower

Documents and any related documents; all requirements have been met and all

procedures have taken place in order to ensure the enforceability of Borrower Documents

4826-9157-9912.5 15

against Borrower in accordance with their respective terms and Borrower Documents

constitute, or upon execution and delivery will constitute, valid and legally binding

obligations of Borrower, enforceable against Borrower in accordance with their

respective terms, except to the extent limited by bankruptcy, insolvency, moratorium,

reorganization, or other laws of general application relating to or affecting the

enforcement of creditors’ rights, by equitable principles and by the exercise of judicial

discretion in appropriate cases.

(n) The authorization, execution, delivery and performance of Borrower

Documents by Borrower do not and will not require submission to, approval of, or other

action by any governmental authority or agency, which action has not been taken and

which is final and non-appealable.

(o) The execution and delivery of Borrower Documents and any related

documents, the consummation of the transactions contemplated hereby and thereby and

the fulfillment of the terms and conditions hereof and thereof do not and will not violate

any law, rule, regulation or order, conflict with any corporate restriction or of any

agreement or instrument to which Borrower is now a party and do not and will not

constitute a default under any of the foregoing or result in the creation or imposition of

any liens, charges or encumbrances of any nature upon any of the property or assets of

Borrower except for the security interests granted in connection herewith.

(p) There is no action, suit, proceeding, claim, inquiry or investigation, at law

or in equity, before or by any court, regulatory agency, public board or body pending or,

to the best of Borrower’s knowledge, threatened against or affecting Borrower,

challenging Borrower’s authority to enter into any Borrower Document or any related

documents or any other action wherein an unfavorable ruling or finding would adversely

affect the enforceability of any Borrower Document or any related document or any other

transaction of Borrower which is similar hereto, or the exclusion of the interest on

Authority Loan from gross income for federal tax purposes under the Code, or would

materially and adversely affect any of the transactions contemplated by Borrower

Documents or any related document, or would result in a material adverse affect upon the

revenues, property or financial condition of Borrower.

(q) Subject to Borrower obtaining a conditional use permit for the

Improvements, the Property and the Facility are properly zoned for their current and

anticipated use and the use of the Property and the Facility will not violate any applicable

zoning, land use, environmental or similar law or restriction. Borrower has or will obtain

in due course, and will maintain in full force and effect, all licenses and permits to

construct and use the Facility. Borrower does not have any material contingent liability

in connection with the release of any Hazardous Material into the environment.

Borrower covenants and agrees that (i) no Hazardous Material exists now or, to the best

of Borrower’s knowledge, was formerly used, stored, generated, manufactured, installed,

disposed of or otherwise present at or about the Property or any property adjacent to the

Property (except for cleaning, school art and science lab supplies, and other products

currently used in connection with the routine operation, maintenance or repair of the

Property in compliance with Environmental Laws), (ii) all permits, licenses, approvals

4826-9157-9912.5 16

and filings required by Environmental Laws have been or will be obtained, and the use,

operation and condition of the Property do not, and, to the best of Borrower’s knowledge,

did not previously, violate any Environmental Laws and (iii) no civil, criminal or

administrative action, suit, claim, hearing, investigation or proceeding has been brought

or to the best of Borrower’s knowledge has been threatened, nor have any settlements

been reached by or with any parties or any liens imposed in connection with the operation

of the Property concerning Hazardous Materials or Environmental Laws.

(r) Borrower has heretofore furnished to Lender the audited financial

statements of Borrower for its most recent fiscal year and those statements fairly present

the financial condition of Borrower on the dates thereof and the results of its operations

and cash flows for the periods then ended and were prepared in accordance with

generally accepted accounting principles. Since the date of the most recent financial

statements, there has been no material adverse change in the business, properties or

condition (financial or otherwise) of Borrower.

(s) All financial and other information provided to Lender by or on behalf of

Borrower in connection with this Master Loan Agreement and each Draw Request that

has been submitted as of the date this representation is made is true and correct in all

material respects and, as to projections, valuations or pro forma financial statements,

present a good faith opinion as to such projections, valuations and pro forma condition

and results.

(t) Borrower has paid or caused to be paid to the proper authorities when due

all federal, state and local tax as required to be withheld by it. Borrower has filed all

federal, state and local tax returns which are required to be filed, and Borrower has paid

or caused to be paid to the respective taxing authorities all taxes as shown on said returns

or on any assessment received by it to the extent such taxes have become due.

(u) Borrower has or will have good and absolute title to the Property and all

proceeds thereof, free and clear of all mortgages, security interests, liens and

encumbrances except for Permitted Encumbrances.

(v) To the knowledge of Borrower, Contractors to be engaged to construct the

Improvements will have all applicable licenses to construct the Improvements at the time

the construction is performed.

(w) The Project is consistent with any existing local or regional

comprehensive plans.

(x) The information contained in Borrower’s application for financing to

Authority is true and accurate in all material respects.

(y) Neither Borrower not any affiliate of Borrower is an “investment

company” or a company “controlled” by an “investment company,” as such terms are

defined in the Investment Company Act of 1940, as amended.

4826-9157-9912.5 17

(z) Neither the Borrower nor any of its affiliates is in violation of any laws

relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive

Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive

Order”), and the Patriot Act;

(aa) Neither the Borrower nor any of its affiliates is any of the following:

(i) a person that is listed in the annex to, or is otherwise subject to the

provisions of, the Executive Order;

(ii) a person owned or controlled by, or acting for or on behalf of, any

person that is listed in the annex to, or is otherwise subject to the provisions of,

the Executive Order;

(iii) a person with which Lender is prohibited from dealing or

otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv) a person that commits, threatens or conspires to commit or

supports “terrorism” as defined in the Executive Order; or

(v) a person that is named as a “specially designated national and

blocked person” on the most current list published by the Office of Foreign Asset

Control (“OFAC”) or any list of Persons issued by OFAC pursuant to the

Executive Order at its official website or any replacement website or other

replacement official publication of such list;

(bb) Neither the Borrower nor any of its affiliates (i) conducts any business or

engages in making or receiving any contribution of funds, goods or services to or for the

benefit of any person described in subsection (aa)(ii) above, (ii) deals in, or otherwise

engages in any transaction relating to, any property or interests in property blocked

pursuant to the Executive Order or (iii) engages in or conspires to engage in any

transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts

to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

ARTICLE III

ISSUANCE OF LOAN; APPLICATION OF PROCEEDS

Section 3.01. Design, Construction and Equipping of the Improvements. Borrower

shall design, construct, improve and equip the Improvements with all reasonable dispatch,

substantially in accordance with the Plans and Specifications. Borrower shall (a) pay when due

all fees, costs and expenses incurred in connection with the foregoing from funds made available

therefor in accordance with this Master Loan Agreement, or otherwise, unless any such fees,

costs or expenses are being contested by Borrower in good faith and by appropriate proceedings;

(b) as Borrower deems reasonably appropriate and in its best interests, ask, demand, sue for,

levy, recover and receive all those sums of money, debts and other demands whatsoever which

may be due, owing and payable under the terms of any contract, order, receipt, writing and

instruction in connection with the design, construction and equipping of the Improvements; and

4826-9157-9912.5 18

(c) as Borrower deems reasonably appropriate and in its best interests, enforce the provisions of

any contract, agreement, obligation, bond or other performance security with respect thereto.

Section 3.02. Plans and Specifications; Project Budget. Borrower may revise the

Plans and Specifications and the Project Budget from time to time, provided that no material

increase to the Project Budget may be made and no material change to the purpose of the

Improvements may be made without the prior written consent of Lender, which consent shall not

be unreasonably withheld or delayed.

Section 3.03. Loan to Finance the Project.

(a) Lender hereby agrees, subject to the terms and conditions in Section 4.03

and Article V hereof, to loan an amount up to $4,500,000 to Authority and Authority

hereby agrees, subject to limitations herein to borrow such amount from Lender and to

lend the Loan Proceeds to Borrower for the purposes of financing the Project; and

Borrower hereby agrees to make draws up to such amount from Authority to finance the

Project Costs. The aggregate principal amount of the Loan outstanding under this Master

Loan Agreement is set forth in Exhibit A hereto, as such Exhibit A may be amended from

time to time pursuant to Section 5.02(a) or 5.04(a) hereof.

(b) Upon fulfillment of the conditions precedent set forth in Article V hereof,

Lender shall disburse the Loan Proceeds to Authority and to Borrower by depositing to

the Project Fund the amount set forth in the corresponding Draw Request.

(c) Authority’s obligation to repay Authority Loan and Borrower’s obligation

to repay Borrower Loan shall commence, and interest shall begin to accrue, on the date

that Loan Proceeds are deposited in the Project Fund. The execution and delivery of this

Master Loan Agreement shall not obligate Lender or Authority to execute and deliver any

Draw Request or to provide any funds with respect to any Draw Request, unless and until

such Draw Request and any related documents have been executed and delivered by all

other parties thereto and all conditions set forth in this Master Loan Agreement have been

satisfied.

Section 3.04. Establishment and Application of Project Fund. Borrower shall

establish and maintain an account at First Republic Bank designated as the “Project Fund.”

Borrower shall maintain a separate record of the Project Fund on its books and shall account for

all deposits and withdrawals from the Project Fund in accordance with Borrower’s accounting

procedures. Lender shall deposit the Loan Proceeds pursuant to each Draw Request into the

Project Fund to be used and withdrawn by Borrower to pay Project Costs identified in such Draw

Request. No moneys in the Project Fund shall be used to pay Additional Payments. Amounts in

the Project Fund may be invested in Permitted Investments as directed by Borrower.

Section 3.05. Term. The term of this Master Loan Agreement shall commence on the

Closing Date and shall terminate upon the earliest to occur of any of the following events:

(a) so long as no Event of Default has occurred and is continuing hereunder,

the payment by Borrower of all Payments with respect to the Borrower Loan, any rebate

payments and any other payments required to be paid by Borrower hereunder;

4826-9157-9912.5 19

(b) so long as no Event of Default has occurred and is continuing hereunder,

the prepayment of the entire outstanding principal amount, accrued interest, applicable

Prepayment Premium and the other amounts due hereunder; or

(c) Lender’s election to terminate this Master Loan Agreement under

Article XI due to Borrower’s Default hereunder.

Section 3.06. Costs and Expenses of Authority. Borrower shall pay to Authority the

following “Authority Fees”: (a) all taxes and assessments of any type or character charged to

Authority affecting the amount available to Authority from payments to be received hereunder or

in any way arising due to the transactions contemplated hereby (including taxes and assessments

assessed or levied by any public agency or governmental authority of whatsoever character

having power to levy taxes or assessments) but excluding any taxes based upon the capital and/or

income of any person other than Borrower; provide, however, that Borrower shall have the right

to protest any such taxes or assessments assessed or levied upon it and that Borrower shall have

the right to withhold payment of any such taxes or assessments pending disposition of any such

protest or contest for which Borrower maintains adequate reserves in accordance with GAAP

unless such withholding, protest or contest would materially adversely affect the rights or

interests of Authority; (b) the reasonable fees and expenses of such accountants, consultants,

attorneys and other experts as may be engaged by Authority to prepare audits, financial

statements or opinions or provide such other services as are reasonably required under or in

connection with the Authority Documents; (c) annual fees of Authority in the amount of $500

payable on July 1 of each year in which the Authority Loan is outstanding, commencing July 1,

2011; (d) reasonable expenses of Authority and any consultant, agent or designee selected by

Authority to act on its behalf in connection with Authority Documents or any other document or

certificate contemplated hereby or thereby, including without limitation reasonable expenses

incurred by any attorneys (including attorneys who are employees of Authority) representing

Authority in connection with any questions, claims or controversy arising under the Authority

Documents (including, without limitation, those pertaining to the representation of Authority as a

“taxpayer” before the Internal Revenue Service in any audit or investigation of the Loan); and

(e) such amounts as may be necessary to satisfy the rebate requirements in accordance with the

Tax Regulatory Agreement and to pay the cost of calculation of such rebate requirements and

other amounts payable in accordance with the terms of the Tax Regulatory Agreement.

Such Authority Fees shall be billed to Borrower by Authority from time to time, together

with a statement certifying that the amount so billed has been paid for one or more of the items

described, or that such amount is then payable for such items. Amounts so billed shall be due

and payable by Borrower within 30 days after receipt of the bill by Borrower.

Section 3.07. Limited Obligations of Authority. The Authority Loan, as provided

herein, together with premium, if any, and interest thereon, shall not be deemed to constitute a

debt, liability or general obligation of the State or any political subdivision or agency of the State

(except Authority to the extent provided herein) or the lending of credit of the State or any

political subdivision thereof or a pledge of the faith and credit of the State or any political

subdivision or agency of the State, but shall be payable solely from the funds provided therefor

pursuant to this Master Loan Agreement. The Authority Loan, as provided herein, is only a

special, limited obligation of Authority as provided by the Act and Authority shall under no

4826-9157-9912.5 20

circumstances be obligated to pay the principal of, premium, if any, or interest on Authority

Loan, Project Costs or other costs incident thereto except from Payments under Borrower Loan.

Neither the faith and credit nor the taxing power of the State or any political subdivision or

agency of the State, including Authority, is pledged to the payment of the principal of, premium,

if any, or interest on Authority Loan nor is the State or any political subdivision or agency of the

State, including Authority, in any manner obligated to make any appropriation for such payment.

Authority has no taxing power.

ARTICLE IV

REPAYMENT OF THE LOAN

Section 4.01. Interest.

(a) The principal amount of the Loan hereunder outstanding from time to time

shall bear interest (computed on the basis of a 360-day year and actual number of days

elapsed) at the Applicable Loan Rate. Interest accruing on the aggregate principal

balance of the Loan hereunder outstanding from time to time shall be calculated monthly

by Lender and invoiced to Borrower, and shall be payable monthly by Borrower in

arrears on the 1st day of each month or prior to the date so indicated on the invoice

therefor and upon earlier demand in accordance with the terms hereof or prepayment in

accordance with Section 4.08 hereof.

(b) Upon the occurrence of a Determination of Taxability, Borrower shall pay

to Lender, as assignee of Authority, future interest payments calculated at the Gross-Up

Rate. In addition, Borrower shall make immediately, upon demand of Lender, a payment

to Lender sufficient to reimburse Lender and supplement Prior Interest Payments to equal

the Gross-Up Rate, and such obligation shall survive the termination of this Master Loan

Agreement and the Draw Requests.

Section 4.02. Payments. Authority shall pay the principal of, Prepayment Premium, if

any, and interest on Authority Loan, but only out of Payments made by Borrower therefor.

Borrower shall pay to Lender, as assignee of Authority, Payments in the amounts and at such

times as set forth Section 4.01, Section 4.08 and Section 4.10 hereof. During the Draw Period,

Borrower shall pay interest at the Applicable Loan Rate with respect to all other amounts drawn

pursuant to Draw Requests hereunder in accordance with Section 4.01 hereof. After the Draw

Period, Borrower shall make payments of principal and interest with respect to the outstanding

principal amount of the Loan at the end of the Draw Period such that the outstanding principal

amount is fully paid in monthly installments from the end of the Draw Period to the Maturity

Date. On or prior to the last Business Day of the Draw Period, Lender shall provide Borrower

with a schedule of Payments with respect to the Loan and such schedule of Payments shall be

attached to this Master Loan Agreement as Exhibit H.

Section 4.03. Draws. During the Draw Period, Borrower and Lender, without the

consent of Authority, may from time to time, but no more often than once per calendar month,

increase the amount of the Loan outstanding by executing Draw Requests substantially in the

form set forth in Exhibit C hereto in accordance with Sections 5.02 through 5.05 hereof. Each

4826-9157-9912.5 21

Draw Request shall reasonably identify the Project Costs subject to such Draw Request. Draw

Requests shall be numbered consecutively beginning with “l.” No single Draw Request may

provide for a draw of less than $50,000 (other than the final Draw Request, which may be for a

lesser amount). The maximum aggregate amount of the Loan provided for in all Draw Requests

shall be less than or equal to $4,500,000.

Section 4.04. Security for the Loan. As security for the repayment of Authority Loan,

Authority hereby assigns to Lender all of its right, title and interest in this Master Loan

Agreement except for Reserved Authority Rights, including Authority’s rights to receive

Payments with respect to Borrower Loan (and hereby directs Borrower to make such Payments

directly to, or at the direction of, Lender), to collect the Payments and any other payments due to

Authority hereunder the receipt of which is not part of Reserved Authority Rights, and to sue in

any court for such Payments or other payments, to exercise all rights hereunder with respect to

the Project, and to withdraw or settle any claims, suits or proceedings pertaining to or arising out

of this Master Loan Agreement, any Draw Request and any Borrower Loan upon any terms

(other than any claims related to Reserved Authority Rights). Such Payments and other

payments the receipt of which is not part of Reserved Authority Rights shall be made by

Borrower directly to Lender, as Authority’s assignee, without the requirement of notice or

demand, in accordance with the Master Loan Agreement or such other place as Lender may from

time to time designate in writing, and shall be credited against Authority’s payment obligations

under the related Authority Loan. No provision, covenant or agreement contained in this Master

Loan Agreement or any obligation herein or therein imposed on Authority, or the breach thereof,

shall constitute or give rise to or impose upon Authority a pecuniary liability, a charge upon its

general credit or a pledge of its revenues. In making the agreements, provisions and covenants

set forth in this Master Loan Agreement, Authority has not obligated itself except with respect to

the application of the Payments to be paid by Borrower hereunder and thereunder. All amounts

required to be paid by Borrower hereunder shall be paid in lawful money of the United States of

America in immediately available funds. No recourse shall be had by Lender or Borrower for

any claim based on this Master Loan Agreement or any Draw Request against any director,

officer, employee or agent of Authority alleging personal liability on the part of such person.

To further secure its Obligations and to perform and observe the covenants and

agreements contained herein and in Borrower Documents, Borrower hereby pledges to and

grants to Authority, and Authority hereby assigns to Lender, a first priority lien and security

interest, within the meaning of the California Uniform Commercial Code and to the extent

permitted by law; in all of its right, title and interest, if any, in the Project Fund (the

“Collateral”). Borrower agrees to execute and authorizes Lender to file such notices of

assignment, chattel mortgages, financing statements and other documents, in form satisfactory to

Lender, which Lender deems necessary or appropriate to establish and maintain Lender’s first

priority security interest in the Collateral, including proceeds thereof.

Section 4.05. Deed of Trust; and Security Agreement.

(a) Borrower shall, at its expense, record the Deed of Trust and all

amendments thereto in the Official Records of the Office of the Assessor-Recorder of the

County of San Francisco County, California. Within 10 days after request for any

confirmation of any filing required by this Section (or as soon thereafter after

4826-9157-9912.5 22

confirmation of filing has been made available from the Office of the Assessor-

Recorder), Borrower shall deliver to Lender the signed documents requested or evidence

satisfactory to Lender to the effect that such filing has been duly accomplished. Lender

hereby requests Borrower shall file such financing statements as may be necessary to

perfect Lender’s security in a form satisfactory to Lender and provide to Lender, within

60 days of the date of delivery of this Master Loan Agreement, a UCC-1 search

certificate with respect to Borrower.

(b) To further secure the payment obligations of Borrower hereunder,

Borrower hereby grants to Authority, and Authority hereby assigns to Lender (i) a first

lien and security interest in all personal property of Borrower (as provided in the Security

Agreement), and (ii) a first lien and security interest in and to the Project Fund.

Section 4.06. Payment on Non-Business Days. Whenever any payment to be made

hereunder shall be stated to be due on a day which is not a Business Day, such payment may be

made on the next succeeding Business Day, and such extension of time shall in such case be

included in the computation of interest or fees hereunder, as the case may be.

Section 4.07. Borrower Payments to Be Unconditional. The obligations of Borrower

to make Payments required under this Master Loan Agreement and each Draw Request and to

make other payments hereunder and thereunder and to perform and observe the covenants and

agreements contained herein and therein shall be absolute and unconditional in all events,

without abatement, diminution, deduction, setoff or defense for any reason, including (without

limitation) any failure of any Improvements to be delivered or installed, any defects,

malfunctions, breakdowns or infirmities in the Facility or any accident, condemnation,

destruction or unforeseen circumstances. Notwithstanding any dispute between Borrower and

any of Authority, Lender or any other person, Borrower shall make all Payments when due and

shall not withhold any Payments pending final resolution of such dispute, nor shall Borrower

assert any right of setoff or counterclaim against its obligation to make such payments required

under this Master Loan Agreement or any Draw Request.

Section 4.08. Prepayments.

(a) Authority shall, to the extent funds are received by Lender from Borrower,

prepay Authority Loan and Borrower may prepay Borrower Loan in whole or in part, on

a scheduled payment date, by paying the outstanding principal amount of the Loan (or the

portion thereof being prepaid), any applicable Prepayment Premium, accrued interest to

the prepayment date, and any outstanding and unpaid Additional Payments due under this

Master Loan Agreement and the related Draw Request; provided, however, that after any

partial prepayment, the remaining outstanding principal amount of the Loan shall not be

less than $50,000 and in increments of $50,000 in excess thereof. Borrower shall provide

Lender written notice of any such prepayment at least 30 days in advance thereof. Upon

any prepayment in part of the Loan, the prepayment shall be applied first to interest

accrued thereon, the applicable Prepayment Premium, and any outstanding and unpaid

Additional Payments, and next to the principal component of the Loan in the inverse

order of maturity.

4826-9157-9912.5 23

(b) Authority shall prepay Authority Loan to the extent that Borrower prepays

Borrower Loan in whole or in part at any time pursuant to Article IX hereof by paying

some or all of the outstanding principal amount of the Loan, accrued interest to the

prepayment date, and any outstanding and unpaid Additional Payments due under this

Master Loan Agreement.

(c) Authority shall, to the extent funds are received from Borrower, prepay

Authority Loan and Borrower shall prepay Borrower Loan in full immediately upon

demand therefor of Lender to Authority after the occurrence of an Event of Default by

paying the outstanding principal amount of the Loan, accrued interest to the prepayment

date, and any outstanding and unpaid Additional Payments due under this Master Loan

Agreement.

Section 4.09. Restrictions on Transfer of Loan. Notwithstanding any other provision

hereof, Borrower Loan is nontransferable, except in connection with the transfer of Authority

Loan. The Authority Loan may be transferred, assigned and reassigned in whole by Lender

without the consent of Authority or Borrower to an Affiliate, a Qualified Institutional Buyer or

an Accredited Investor, provided that such transfer, assignment or reassignment does not cause

Borrower to be obligated to commence providing ongoing disclosure under Section 7.14 of this

Master Loan Agreement. For purposes of the foregoing sentence, a change of control of Lender

or a sale of substantially all of Lender’s assets or equity shall not be deemed to be a transfer or

assignment of the Authority Loan. In the event of a sale or transfer to an Affiliate, Lender shall

certify to Authority and Borrower that such transferee is an Affiliate. In the event of a sale,

transfer, assignment or participation by Lender of Authority Loan to a Qualified Institutional

Buyer or an Accredited Investor, Lender shall, prior to any such transfer, provide to Authority

and Borrower a written statement representing that such purchaser, transferee or participant is a

Qualified Institutional Buyer or an Accredited Investor and such purchaser, transferee or

participant shall deliver, prior to any such transfer, to Authority and Borrower a letter of

representations executed by such purchaser, transferee or participant in the form of Exhibit F

hereto which shall contain a certification that the purchaser, transferee or participant is a

Qualified Institutional Buyer or an Accredited Investor as provided in this Master Loan

Agreement. Upon assignment, Borrower will reflect in a book-entry the assignee designated in

the written request of assignment or in a written certification of an Affiliate delivered to

Authority and Borrower pursuant to this Section, and shall agree to make all payments to the

assignee designated in such written request, notwithstanding any claim, defense, setoff or

counterclaim whatsoever (whether arising from a breach of this Master Loan Agreement or

otherwise) that Authority and Borrower may from time to time have against Lender or the

assignee. Authority agrees to execute all documents, including notices of assignment, which

may be reasonably requested by Lender or its assignee to protect their interest in the Project and

in this Master Loan Agreement or any Draw Request. Lender or assignee shall pay all

reasonable expenses of Authority, including reasonable fees and expenses of counsel, in

connection with such transfer and assignment.

Section 4.10. Term Period Repayment. During the Term Period, Borrower shall make

equal monthly payments, on the 1st day of each month, of principal and interest to repay the Loan

in full by the Maturity Date. On the first day of the Term Period, Lender shall provide Borrower

with a repayment schedule for the outstanding principal amount of the Loan (the “Repayment

4826-9157-9912.5 24

Schedule”) based on the Applicable Loan Rate for the Loan and the outstanding principal

amount of the Loan.

Section 4.11. Original Issue Discount. Lender, Authority and Borrower agree that the

Authority Loan is being purchased at a discount to the principal amount of the Authority Loan.

Lender’s purchase price of the Authority Loan, and accordingly, the proceeds of the Borrower

Loan, shall be equal to $4,455,000 (representing the principal amount of the Authority Loan, less

original issue discount of $45,000).

Section 4.12. Late Charge. If Borrower fails to make any Payment and such failure

results in the untimely payment of principal and interest on the Loan, or if Borrower fails to

make any Additional Payment when due, in each case, taking into account any grace period

allowed for such Payment pursuant to Section 11.01 hereof, Borrower shall pay to Lender or

Authority a late charge equal to 10% of the past due payment.

Section 4.13. Default Rate. If (a) Borrower shall fail to pay the principal and accrued

interest on the Borrower Loan on the Maturity Date, or (b) a notice of default is recorded under

the Deed of Trust, then the Applicable Loan Rate hereunder shall increase to the Default Rate.

All amounts not paid when due under this Master Loan Agreement (subject to any applicable

grace periods) shall be added to the unpaid principal amount hereunder and shall bear interest at

the Default Rate until such time as the payment default is cured.

ARTICLE V

CONDITIONS PRECEDENT

Section 5.01. Conditions Precedent to Master Loan Agreement. Lender’s agreement

to enter into this Master Loan Agreement and provide the financing contemplated hereby shall be

subject to the condition precedent that Lender shall have received or waived the requirement for,

all of the following, each in form and substance satisfactory to Lender:

(a) this Master Loan Agreement, properly executed on behalf of Authority,

Borrower and Lender, and, if applicable, each of the Exhibits hereto properly completed;

(b) a Tax Regulatory Agreement, properly executed on behalf of Borrower

and Authority;

(c) the Security Agreement, properly executed on behalf of Borrower and

Lender;

(d) the Deed of Trust;

(e) the Deed of Trust Assignment Agreement;

(f) the Environmental Indemnity Agreement;

(g) the Paying Agent Agreement;

4826-9157-9912.5 25

(h) a certificate of Borrower, certifying as to (i) the resolutions of the Board of

Trustees of Borrower, authorizing the execution, delivery and performance of Borrower

Documents and any related documents, (ii) the Bylaws of Borrower, and (iii) the

signatures of the officers or agents of Borrower authorized to execute and deliver

Borrower Documents and other instruments, agreements and certificates on behalf of

Borrower;

(i) a copy of the Plans and Specifications (in its current draft form),

(j) the Final Appraisal of the Property evidencing that the loan-to-value ratio,

based on the fair market value of the Property that will secure the Loan as set forth in the

Final Appraisal, is no greater than 60%;

(k) currently certified copies of the Articles of Incorporation of Borrower

certified by the California Secretary of State not more than thirty (30) days prior to the

Closing Date;

(l) a certificate of good standing issued as to Borrower by the Secretary of

State of the State dated not more than thirty (30) days prior to the Closing Date;

(m) a certificate of good standing or exemption issued as to Borrower by the

Franchise Tax Board of the State dated not more than thirty (30) days prior to the Closing

Date;

(n) a resolution adopted by Authority authorizing Borrower Loan and

Authority Loan and the transactions contemplated hereunder;

(o) a closing certificate of Authority in a form acceptable to Special Counsel;

(p) evidence that the financing of the Project has been approved by the

“applicable elected representative” of the City and County of San Francisco after a public

hearing held upon reasonable notice;

(q) UCC-1 financing statement(s) as required by Lender to perfect the security

interests of Authority and assignment to Lender;

(r) current searches of appropriate filing offices showing that (i) no state or

federal tax liens have been filed and remain in effect against Borrower and (ii) no

financing statements have been filed and remain in effect against Borrower relating to the

Project except those financing statements filed by Lender and Permitted Encumbrances;

(s) a completed and executed Form 8038 or evidence of filing thereof with the

Secretary of Treasury;

(t) an opinion of counsel to Borrower, addressed to Kutak Rock LLP, as

Special Counsel, Lender and Authority, substantially in the form attached hereto as

Exhibit G or as approved by Lender and Authority;

4826-9157-9912.5 26

(u) an opinion of counsel to Authority, addressed to Authority, Borrower and

Lender, in form and substance acceptable to Lender and Authority;

(v) an opinion of Special Counsel addressed to Authority and Lender, in form

and substance acceptable to Authority and Lender;

(w) certificates of the insurance required under Section 7.04 of this Master

Loan Agreement containing a lender’s loss payable clause or endorsement in favor of

Lender;

(x) evidence of payment of Authority’s closing fees and the fees of

Authority’s Special Counsel and financial advisor;

(y) evidence of payment to Lender of Lender’s costs and expenses in

connection with the execution of the Loan Documents;

(z) an investor letter of representations executed by Lender, in the form

attached hereto as Exhibit E and such other certificates of Lender reasonably requested

by Special Counsel;

(aa) the current version of the Project Budget for the Improvements in form

and substance satisfactory to Lender as required by Section 7.17 of this Master Loan

Agreement;

(bb) the Title Policy; and

(cc) any other documents or items required by Lender or Authority.

Section 5.02. Conditions Precedent to Initial Draw Request. Lender’s agreement to

disburse Loan Proceeds pursuant to the initial Draw Request on the Closing Date shall be subject

to the further conditions precedent that Lender shall have received or waived the requirement for

all of the following, each in form and substance reasonably satisfactory to Lender:

(a) an updated Exhibit A to this Master Loan Agreement;

(b) a fully executed Draw Request substantially in the form attached hereto as

Exhibit B, with all appropriate supporting documents attached thereto; and

(c) payment of Lender Fees and expenses (if any) required by Section 12.03

hereof.

Section 5.03. Post Closing Condition. Subsequent to the disbursement of an aggregate

amount of $1,750,000 of Loan Proceeds, Lender shall not be required to approve any Draw

Request until such time as Borrower can demonstrate, to the reasonable satisfaction of Lender,

that it has cash, cash equivalents and uncollected pledges in an amount sufficient to complete the

Project.

Section 5.04. Conditions Precedent to Subsequent Draw Requests.

4826-9157-9912.5 27

Other than the initial disbursement of Loan Proceeds on the Closing Date,

Lender’s agreement to disburse the Loan Proceeds shall be subject to the further

conditions precedent set forth in Section 5.03 hereof and that Lender shall have received

or waived the requirement for all of the following for each Draw Request, each in form

and substance reasonably satisfactory to Lender:

(a) an updated Exhibit A to this Master Loan Agreement;

(b) a fully executed Draw Request substantially in the form attached hereto as

Exhibit C, with all appropriate supporting documents attached thereto;

(c) payment of Lender Fees and expenses (if any) required by Section 12.03

hereof;

(d) originals of AIA Document G702 and AIA Document G703 (or

equivalents reasonably approved by Lender) executed by General Contractor and

Architect, together with a breakdown by trade and/or other categories reasonably

acceptable to Lender;

(e) paid invoices and unconditional (other than receipt of the payment

requested) lien waivers from the General Contractor, and at Lender's option, from the

"Major Subcontractors" (defined for purposes of this section and elsewhere herein as

subcontractors performing work in excess of $50,000.00), relating to the construction of

the Improvements for all work through the date of and covered by the previous Draw

Request;

(f) evidence that any inspection required by any Governmental Authority as

of such date is in process or has been completed with results satisfactory in all material

respects to that Governmental Authority;

(g) Lender shall have approved the Project Budget as required by Section 7.17

of the Master Loan Agreement;

(h) upon the request of Lender, a current ALTA endorsement No. 122

satisfactory to Lender and such other endorsements to the Title Policy as Lender may

request;

(i) the certification by Borrower and by the General Contractor (to its best

knowledge at the time of the certification), and, at Lender’s option, by an independent

architect or engineer of Lender’s selection, that:

(a) all work performed is in substantial accordance with the

Plans and Specifications;

(b) all licenses and permits required by any “Governmental

Authority” (as hereinafter defined) for the Improvements as then

completed have been obtained and will be exhibited to Lender upon

request; and

4826-9157-9912.5 28

(c) the Improvements as then completed do not violate, and, if

further completed in accordance with the Plans and Specifications, will

not violate, any applicable law, ordinance, rule or regulation.

(j) the certification by Borrower (to its best knowledge at the time of the

certification), and, at Lender’s option, by an independent architect or engineer of

Lender’s selection, that the remaining undisbursed proceeds of the Loan, together with

any Borrower funds collected and expected to be collected, are or will be sufficient to pay

for the completion of the Improvements.

(k) the certification by Borrower that no Event of Default exists, and, to the

best of its knowledge, no event has occurred and no condition exists that, after notice or

lapse of time, or both, would constitute an Event of Default;

(l) at such time as the foundations of any Improvements are completed,

Lender shall have received an ALTA Form 102.7 endorsement, and a certificate from the

Architect certifying that the foundations have been constructed in conformity with all

recommendations of the soils report provided to Lender;

(m) the building permit(s) and any other permits, licenses and approvals

(collectively, the “Permits”) that may be required as of the date of such Draw Request for

the Improvements, in form and substance satisfactory to Lender; and

(n) such other information and documents as Lender may reasonably require

related to such Draw Request.

Section 5.05. Limitations to Disbursement. Notwithstanding anything to the contrary

contained in this Master Loan Agreement, once the first disbursement of Loan Proceeds to the

Project Fund has been made by Lender, Lender need not make any further disbursements at any

time if:

(a) the Improvements are materially damaged by fire or other casualty and not

fully repaired and restored, unless Lender actually receives insurance proceeds or a cash

deposit from Borrower sufficient in Lender’s reasonable judgment to pay for the

complete repair or replacement of the Improvements in a timely manner;

(b) Lender reasonably believes that withholding disbursement in whole or in

part is required by applicable mechanics' lien or stop notice laws (unless Borrower has

obtained a bond reasonably satisfactory to Lender sufficient to allow Lender to make

such disbursement in accordance with California law);

(c) Borrower has not obtained (and is not in the process of obtaining) or is not

in compliance with all required governmental approvals, including without limitation all

necessary building permits, or has not complied with all applicable regulations, laws,

ordinances (including without limitation environmental and subdivision map

requirements and conditions of approval) to permit the construction of the Improvements

according to the Plans and Specifications;

4826-9157-9912.5 29

(d) Borrower fails timely to proceed with completion of construction of the

Improvements substantially in accordance with the Plans and Specifications provided to

Lender; or

(e) an Event of Default has occurred under this Master Loan Agreement, any

of the other Loan Document, any other agreement between Lender and Borrower, or

Borrower is in default under any other material agreement regarding the development of

the Property, including without limitation, any subdivision agreement, improvement

agreement, or development agreement.

ARTICLE VI

SECURITY INTEREST

Section 6.01. Change in Name or Corporate Structure of Borrower; Change in

Location of Borrower’s Principal Place of Business. Borrower’s chief executive office is

located at the address set forth in Section 12.04 hereof, and all of Borrower’s records relating to

its business are kept at such location. Borrower hereby agrees to provide written notice to

Lender and Authority of any change or proposed change in its name, corporate structure, state of

its incorporation or organization, place of business or chief executive office. Such notice shall

be provided 30 days in advance of the date that such change or proposed change is planned to

take effect.

Section 6.02. Security Interest. To the extent permitted by applicable law, a carbon,

photographic or other reproduction of this Master Loan Agreement thereto signed by Borrower is

sufficient as a financing statement in any state to perfect the security interests granted in this

Master Loan Agreement. Pursuant to Section 5451 of the Government Code of the State, the

pledge of the Payments by Authority for the repayment of the principal of, premium, if any, and

interest on Authority Loan constitutes a first lien and security interest which immediately

attaches to such Payments, and is effective and binding against Authority, Borrower, their

successors, creditors and all others asserting rights therein irrespective of whether those parties

have notice of the pledge, irrespective of whether such amounts are or may be deemed to be a

fixture and without the need for physical delivery, recordation, filing or further act.

Section 6.03. Assignment of Insurance. Subject to the provisions of Sections 7.04 and

9.02 hereof, as additional security for the payment and performance of Borrower’s obligations

under this Master Loan Agreement and each Draw Request, Borrower hereby assigns to Lender,

as assignee of Authority, any and all moneys (including, without limitation, proceeds of

insurance) due or to become due under, and all other rights of Borrower with respect to, any and

all policies of insurance now or at any time hereafter covering the Facility or any evidence

thereof or any business records or valuable papers pertaining thereto, and Borrower hereby

directs the issuer of any such policy to pay all such moneys directly to Lender. Borrower hereby

assigns to Lender, as assignee of Authority, any and all moneys due or to become due with

respect to any condemnation proceeding affecting the Facility. At any time, whether before or

after the occurrence of any Event of Default, Lender may (but need not), in Lender’s name or in

Borrower’s name, execute and deliver proof of claim, receive all such moneys, endorse checks

4826-9157-9912.5 30

and other instruments representing payment of such moneys, and adjust, litigate, compromise or

release any claim against the issuer of any such policy or party in any condemnation proceeding.

ARTICLE VII

AFFIRMATIVE COVENANTS OF BORROWER

Section 7.01. Maintenance of Facility.

(a) Borrower shall, at its own expense, maintain, preserve and keep the

Facility in good repair, working order and condition, and shall from time to time make all

repairs and replacements necessary to keep the Facility in such condition, and in

compliance with state and federal laws, ordinary wear and tear excepted. In the event

that any parts or accessories forming part of any item or items of the Facility become

worn out, lost, destroyed, damaged beyond repair or otherwise rendered unfit for use,

Borrower, at its own expense and expeditiously, will replace or cause the replacement of

such parts or accessories by replacement parts or accessories free and clear of all liens

and encumbrances and with a value and utility at least equal to that of the parts or

accessories being replaced (assuming that such replaced parts and accessories were

otherwise in good working order and repair). All such replacement parts and accessories

shall be deemed to be incorporated immediately into and to constitute an integral portion

of the Facility and, as such, shall be subject to the terms of this Master Loan Agreement.

Neither Authority nor Lender shall have any responsibility in any of these matters, or for

the maintenance of the Facility or additions to the Facility.

(b) Borrower shall observe and comply with all legal requirements applicable

to the ownership, use and operation of the Facility, including the terms and conditions set

forth in the Master Loan Agreement and the Tax Regulatory Agreement. Borrower shall

permit Lender and its agents, representatives and employees, upon reasonable prior

notice to Borrower, to inspect the Facility and conduct such environmental and

engineering studies as Lender may reasonably require, provided such inspections and

studies do not materially interfere with the use and operation of the Facility.

(c) Borrower will defend the Facility against all claims or demands of all

persons (other than Lender hereunder) claiming the Facility or any interest therein.

Section 7.02. Compliance with Laws and Obligations. Borrower will comply with the

requirements of applicable laws and regulations and material contractual obligations, the

noncompliance with which would materially and adversely affect its business or its financial

condition; provided, however, nothing herein shall preclude Borrower’s right to contest in good

faith by appropriate proceedings any claim of noncompliance or breach.

Section 7.03. Payment of Taxes and Other Claims. Borrower will pay or discharge,

when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon

its income or profits, upon any properties belonging to it (including, without limitation, the

Facility) or upon or against the creation, perfection or continuance of the security interest created

pursuant to this Master Loan Agreement, prior to the date on which penalties attach thereto;

4826-9157-9912.5 31

(b) all federal, state and local taxes required to be withheld by it; and (c) all lawful claims for

labor, materials and supplies which, if unpaid, might by law become a lien or charge upon any

properties of Borrower; provided, that Borrower shall not be required to pay any such tax,

assessment, charge or claim whose amount, applicability or validity is being contested in good

faith by appropriate proceedings. Borrower will pay, as the same respectively come due, all

taxes and governmental charges of any kind whatsoever that may at any time be lawfully

assessed or levied against or with respect to the Property and the Facility, as well as all gas,

water, steam, electricity, heat, power, telephone, utility and other charges incurred in the

operation, maintenance, use, occupancy and upkeep of the Property and the Facility.

Section 7.04. Insurance; Indemnity.

(a) Borrower shall maintain builder’s risk insurance, including theft, to insure,

without limitation, all buildings, materials, supplies, temporary structures, foundations,

other underground property, tenant improvements, personal property, and all other

property on-site and while in transit which is to be used in fabrication, construction, and

completion of the Improvements being constructed, and to remain in effect until all such

Improvements being constructed have been completed and accepted by Borrower and

Lender (or Lender’s designee) and a certificate of occupancy has been issued. Such

insurance shall be in an amount not less than $4,500,000 and be provided on a

replacement cost value basis and shall (i) be on a non-reporting, completed value, form;

(ii) cover damage to landscaping and debris removal expense (including removal of

pollutants); (iii) provide that Borrower can complete and occupy the premises without

further written consent from the insurer; (iv) not exclude losses due to explosions,

collapses, or underground hazards; (v) cover soft costs and continuing expenses not

directly involved in the direct cost of construction or renovation, including interest on

money borrowed to finance construction or renovation, advertising, promotion, real estate

taxes and other assessments, the cost of renegotiating leases, architectural and

engineering costs, legal and accounting costs, and other expenses incurred as the result of

property loss or destruction by the insured peril; (vi) cover riots, civil commotion,

vandalism, and malicious mischief; (vii) not contain any safeguard warranties; and (viii)

not contain any monthly limitation. Borrower shall provide or cause to be provided to

Lender a copy of the builder’s risk insurance policy prior to the commencement of the

construction of the Improvements.

(b) If requested by Lender with respect to any time any Improvements are

under construction, Borrower shall cause each contractor with whom Borrower has a

direct contractual relationship performing any of such construction work to maintain, and

shall require such contractors to require all of their subcontractors to maintain, worker’s

compensation insurance or other applicable insurance providing coverage for injuries to

such Contractor’s personnel, auto liability insurance, and general liability insurance, all in

the amounts and providing coverage as is reasonably acceptable to Lender.

(c) Borrower shall, at its own expense, maintain and keep in force commercial

comprehensive general liability and automobile liability insurance against claims arising

in, on or about the Facility, including in, on or about the sidewalks or premises adjacent

4826-9157-9912.5 32

to the Facility, providing coverage limits not less than $2,000,000 per occurrence and

$4,500,000 in aggregate.

(d) In addition, Borrower shall, at its own expense, maintain and keep in force

insurance of the types and in amounts customarily carried by educational institutions

similar to Borrower, including but not limited to fire and extended all-risk coverage (in

an amount not less than the full replacement cost of the Facility, without deductions for

depreciation, and including all fixtures and personal property and endorsements for any

non-conforming uses), flood (if Borrower’s property is located in a flood zone), property

damage, workers’ compensation, business interruption, and abuse or molestation liability

coverage, covering, among other items, negligence in employing, investigation, retaining,

and supervising “employees” or volunteer workers (which insurance shall also include

coverage for tangible personal property which constitutes collateral under the Security

Agreement) with all such insurance carried with companies, in amounts and with

deductible amounts reasonably satisfactory to Lender, and deliver to Lender from time to

time at Lender’s request schedules setting forth all insurance then in effect, provided,

however, Lender may not require Borrower to carry earthquake insurance unless such

insurance is available on commercially reasonable terms. Alternatively, upon the written

approval of Lender, Borrower may insure the Facility under a blanket insurance policy or

policies which cover not only the Facility, but also other properties of Borrower or, upon

prior written approval of Lender, may provide self-insurance acceptable to Lender.

(e) All of the insurance policies required hereunder shall be issued by

corporate insurers licensed to do business in the State and rated A or better by A.M. Best

Company, shall contain a waiver of subrogation endorsement, and shall be in form

reasonably acceptable to Lender.

(f) All certificates of insurance and “blanket” insurance policies shall

reference the specific project being covered by name and address and shall name Lender

as loss payee. The insurance shall be evidenced by the original policy or a true and

certified copy of the original policy, or in the case of liability insurance, by certificates of

insurance. The insurance policies (or true and certified copies thereof) or certificates of

all insurance required to be maintained hereunder shall be delivered to Lender

contemporaneously with Borrower’s execution of this Master Loan Agreement.

Borrower shall use its best efforts to deliver originals of all policies and renewals (or

certificates evidencing the same), marked “paid” (or evidence satisfactory to Lender of

the continuing coverage) to Lender at least thirty (30) days before the expiration of

existing policies and, in any event, Borrower shall deliver originals of such policies or

certificates to Lender at least fifteen (15) days before the expiration of existing policies.

If Lender has not received satisfactory evidence of such renewal or substitute insurance

in the time frame herein specified, Lender shall have the right, but not the obligation, to

purchase such insurance for Lender's interest only. Nothing contained in this Section

shall require Lender to incur any expense or take any action hereunder, and inaction by

Lender shall never be considered a waiver of any right accruing to Lender on account of

this Section. If any loss shall occur at any time while an Event of Default shall have

occurred and be continuing, Lender shall be entitled to the benefit of all insurance

policies held or maintained by Borrower, to the same extent as if same had been made

4826-9157-9912.5 33

payable to Lender and upon foreclosure hereunder, Lender shall become the owner

thereof. Lender shall have the right, but not the obligation to make premium payments, at

Borrower’s expense, to prevent any cancellation, endorsement, alteration or reissuance of

any policy of insurance maintained by Borrower, and such payments shall be accepted by

the insurer to prevent same;

(g) Borrower shall give to Lender immediate notice of any loss occurring on

or with respect to the Facility. All insurance proceeds for damage to the Facility shall be

payable to Lender and Authority as hereinafter provided. Borrower shall furnish to

Lender, upon request, certificates of insurance evidencing such coverage while the Loan

is outstanding.

(h) Any insurance policy carried or maintained pursuant to this Section shall

be so written or endorsed as to make losses, if any, payable to Lender and Authority or

Borrower, as their respective interests may appear and naming Lender as additional

insured for liability. The Net Proceeds of the insurance required in this Section shall be

applied as provided in Article IX hereof. Each insurance policy provided for in this

Section shall contain a provision to the effect that the insurance company providing such

policy shall not either cancel the policy or modify the policy materially and adversely to

the interest of Lender without first giving written notice thereof to Lender at least 30 days

in advance of such cancellation or modification (except in the event of cancellations due

to nonpayment of premiums, in which case the insurance company will provide at least

10 days written notice).

(i) As among Lender, Authority and Borrower, Borrower assumes all risks

and liabilities from any cause whatsoever, whether or not covered by insurance, for loss

or damage to the Facility, and for injury to or death of any person or damage to any

property, whether such injury or death be with respect to agents or employees of

Borrower or of third parties, and whether such property damage be to Borrower’s

property or the property of others. This provision shall survive the termination of this

Master Loan Agreement and each Draw Request for any reason.

Section 7.05. Reporting Requirements. Borrower will deliver, or cause to be

delivered, to Lender, and to Authority if requested by Authority, each of the following, which

shall be in form and detail reasonably acceptable to Lender and Authority, as to information

requested by Authority:

(a) not later than 120 days after and as of the end of each fiscal year, financial

statements of Borrower, including therein a balance sheet, income statement, statement of

cash flows and reconciliation of Borrower’s net worth, audited by independent certified

public accountants reasonably acceptable to Lender and certified, without any

qualifications, by such accountants to have been prepared in accordance with GAAP

consistently applied, together with a certificate of such accountants addressed to Lender

stating that such accountants do not have knowledge of the existence of any event or

condition constituting an uncured Default or an Event of Default;

(b) [Reserved];

4826-9157-9912.5 34

(c) contemporaneously with the submittal of the financial statement required

by subsection (a) above, a certificate of the Authorized Borrower Representative stating

all relevant facts in reasonable detail to evidence, and the computations as to, whether

Borrower is in compliance with the requirements set forth in Section 7.15 of this Master

Loan Agreement applicable to the period covered by the accompanying financial

statements.

(d) not later than 60 days after the beginning of each fiscal year, a copy of

the annual budget for such fiscal year, as adopted by the Board of Trustees of

Borrower;

(e) within 30 days of filing, a copy of Borrower’s Form 990 filed with the

Internal Revenue Service;

(f) promptly upon the occurrence and nature of any Reportable Event or

Prohibited Transaction, each as defined in the Employee Retirement Income Security Act

of 1974, as amended or recodified from time to time (“ERISA”), or any funding

deficiency with respect to any defined employee pension benefit plan (as defined in

ERISA) maintained or contributed to by Borrower;

(g) promptly upon knowledge thereof, notice of any loss or destruction of or

damage to any portion of Facility in excess of $100,000 or of any material adverse

change in any portion of the Facility;

(h) promptly after the amending thereof, copies of any and all amendments to

Borrower’s articles of incorporation or bylaws;

(i) promptly upon receipt of knowledge thereof by an Authorized Borrower

Representative, notice of the violation by Borrower of any law, rule or regulation, the

violation of which would have a material adverse effect on the financial or operating

condition of Borrower;

(j) promptly upon notice thereof, any termination or cancellation of any

insurance policy which Borrower is required to maintain hereunder, or any uninsured or

partially uninsured loss through liability or property damage, or through fire, theft or any

other cause affecting Borrower’s property in excess of an aggregate of $100,000;

(k) immediately upon Borrower’s knowledge thereof, notice in writing of all

litigation and of all proceedings before any governmental or regulatory agency affecting

Borrower which seek a monetary recovery against Borrower in excess of $50,000;

(l) as promptly as practicable (but in any event not later than five Business

Days) after an Authorized Borrower Representative obtains knowledge of the occurrence

of any event that constitutes a Default or an Event of Default under the Loan Documents,

notice of such occurrence, together with a detailed statement by an Authorized Borrower

Representative of the steps being taken by Borrower to cure the effect of such Default or

Event of Default;

4826-9157-9912.5 35

(m) within 60 days of receipt of a written request from Authority, a written

report, as of the end of Borrower’s prior fiscal year, stating the status of the Facility and

the unpaid outstanding balance of the Loan; and

(n) from time to time such other information as Lender or Authority may

reasonably request, including, without limitation, other information with respect to any

collateral required hereby.

Section 7.06. Books and Records; Inspection and Examination. Borrower will keep

accurate books of record and account for itself separate and apart from those of its affiliates,

including its officers, pertaining to the Project and the Facility and pertaining to Borrower’s

business and financial condition and such other matters as Lender and/or Authority may from

time to time reasonably request in which true and complete entries will be made in accordance

with GAAP consistently applied. Upon request of Lender not more than once per calendar year

or at any time after the occurrence of an Event of Default, Borrower shall permit any officer,

employee, attorney or accountant for Lender and/or Authority or, at the request of Authority, a

representative of the Internal Revenue Service, to audit, review, make extracts from, or copy any

and all organization and financial books, records and properties of Borrower and to examine and

inspect the Facility, and to discuss the affairs of Borrower with its Head of School or any of its

other officers at all times during ordinary business hours (a) within 72 hours of a request by

Lender and/or Authority or (b) at any time after the occurrence of an Event of Default.

Section 7.07. Performance by Lender. If Borrower at any time fails to perform or

observe any of the covenants or agreements contained in the Loan Documents (except for the

Tax Regulatory Agreement), subject to any applicable notice or cure period expressly provided

in Section 11.01 below, without further notice or lapse of time, Lender may, but need not,

perform or observe such covenant on behalf and in the name, place and stead of Borrower (or, at

Lender’s option, in Lender’s name) and may, but need not, take any and all other actions which

Lender may reasonably deem necessary to cure or correct such failure (including, without

limitation, the payment of taxes, the satisfaction of security interests, liens or encumbrances, the

performance of obligations owed to account debtors or other obligors, the procurement and

maintenance of insurance, the execution of assignments, security agreements and financing

statements, and the endorsement of instruments); and Borrower shall thereupon pay to Lender on

demand the amount of all moneys expended and all costs and expenses (including reasonable

attorneys’ fees and legal expenses) incurred by Lender in connection with or as a result of the

performance or observance of such agreements or the taking of such action by Lender, together

with interest thereon from the date expended or incurred at the highest rate permitted by law;

provided, however, that such rate shall not exceed 12% per annum. To facilitate the performance

or observance by Lender of such covenants of Borrower, subject to any applicable notice or cure

period expressly provided in Section 11.01 below, without further notice or lapse of time,

Borrower hereby irrevocably appoints Lender, or the delegate of Lender, acting alone, as the

attorney in fact of Borrower, with a limited power of attorney, with the right (but not the duty)

from time to time to create, prepare, complete, execute, deliver, endorse or file in the name and

on behalf of Borrower any and all instruments, documents, assignments, security agreements,

financing statements, applications for insurance and other agreements and writings relating to the

Property or the Facility required to be obtained, executed, delivered or endorsed by Borrower

under this Master Loan Agreement.

4826-9157-9912.5 36

Notwithstanding anything herein to the contrary, Authority shall have the right to enforce

Borrower’s covenants, agreements and representations in the Tax Regulatory Agreement against

Borrower pursuant to the terms thereof.

Section 7.08. Preservation of Existence. Borrower will preserve and maintain its

existence, its status as a nonprofit corporation and an organization described in Section 501(c)(3)

of the Code, and all of its rights, privileges and franchises necessary or desirable in the normal

conduct of its business; and shall conduct its business in an orderly, efficient and regular manner.

Borrower shall hold itself out to the public as a legal entity separate and distinct from any other

entity (including any affiliate thereof). So long as Authority Loan remains outstanding,

Borrower will be qualified to transact business in the State and will be engaged in business in the

State.

Section 7.09. No Liability for Consents or Appointments. Whenever any provision

herein provides for the giving of consent or direction by Authority, Authority shall not be liable

to Borrower or to Lender for the giving of such consent or direction or for the withholding of

such consent or direction. Authority shall have no liability for appointments which are required

to be made by it under this Master Loan Agreement or any related documents.

Section 7.10. Non-Liability of Authority. Authority shall not be obligated to pay the

principal of, or premium, if any, or interest on Authority Loan, except from Payments under

Borrower Loan. Borrower and Lender hereby acknowledge that Authority’s sole source of

moneys to repay Authority Loan will be provided by the payments made by Borrower pursuant

to this Master Loan Agreement, and Borrower hereby agrees that if the payments to be made

hereunder shall ever prove insufficient to pay all principal of, and premium, if any, and interest

on Authority Loan and any Additional Payments, as the same shall become due (whether by

maturity, redemption, acceleration or otherwise), then Borrower shall pay such amounts as are

required from time to time to prevent any deficiency or default in the payment of such principal,

premium or interest and any Additional Payments, including, but not limited to, any deficiency

caused by acts, omissions, nonfeasance or malfeasance on the part of Borrower, Lender,

Authority or any third party.

Section 7.11. Expenses. Borrower covenants and agrees to pay, and to indemnify

Authority against, all reasonable costs, charges and expenses, including fees and disbursements

of attorneys, accountants, consultants and other experts, incurred by Authority in good faith in

connection with the Loan Documents.

Section 7.12. No Personal Liability. Notwithstanding anything to the contrary

contained herein or in the Tax Regulatory Agreement or in any other instrument or document

executed by or on behalf of Authority in connection with this Master Loan Agreement, no

stipulation, covenant, agreement or obligation contained herein or therein shall be deemed or

construed to be a stipulation, covenant, agreement or obligation of any present or future officer,

member, employee or agent of Authority, or of any member, officer, employee or agent of any

successor to Authority, in any such person’s individual capacity, and no such person, in an

individual capacity, shall be liable personally for any breach or nonobservance of or for any

failure to perform, fulfill or comply with any such stipulations, covenants, agreements or

obligations, nor shall any recourse be had for the payment of the principal of, premium, if any, or

4826-9157-9912.5 37

interest on Authority Loan or for any claim based thereon or on any such stipulation, covenant,

agreement or obligation, against any such person, in an individual capacity, either directly or

through Authority or any successor to Authority, under any rule of law or equity, statute or

constitution or by the enforcement of any assessment or penalty or otherwise, and all such

liability of any such person, in any individual capacity, is hereby expressly waived and released.

Section 7.13. Indemnification. Borrower covenants and agrees as follows:

(a) to indemnify and hold harmless, to the extent permitted by law, Authority,

Lender and Affiliates, their respective incorporators, members, commissioners, directors,

officers, agents and employees against all liability, losses, damages, all costs and charges

(including reasonable fees and disbursements of attorneys, accountants, consultants and

other experts), taxes, causes of action, suits, claims, demands and judgments of every

conceivable kind, character and nature whatsoever, by or on behalf of any person arising

in any manner from the transaction of which this Master Loan Agreement is a part or

arising in any manner in connection with the Project or the Facility, including, but not

limited to, losses, claims, damages, liabilities or reasonable expenses arising out of,

resulting from or in any way connected with (i) the work done on the Facility or the

ownership or operation of the Facility, including, without limitation, any liability for any

loss or damage to property or any injury to or death of any person that may be occasioned

by any cause whatsoever pertaining to the Facility; (ii) the delivery, lease, possession,

maintenance, use condition, return or operation of components of the Facility; (iii) any

violation of contract, agreement (including this Master Loan Agreement and the Tax

Regulatory Agreement) or restriction relating to the Project or the Facility; (iv) any

violation of law, ordinance or regulation affecting the Project or the Facility or any part

thereof or the ownership or occupancy or use thereof; (v) the carrying out of any of the

transactions contemplated by this Master Loan Agreement and all related documents; or

(vi) the conduct of Borrower, its officers, employees and agents, and (vii) any claim, loss,

cost or expense involving alleged damage to the environment relating to the Property and

the Facility, including, but not limited to investigation, removal, cleanup and remedial

costs;

(b) promptly after receipt by an Indemnified Person (as defined below) of

notice of the commencement of any action in respect of which indemnification may be

sought under Section 7.13, the person in respect of which indemnification may be sought

(the “Indemnified Person”) shall promptly notify Borrower in writing, but the omission to

so notify Borrower will not relieve Borrower from any liability which it may have to any

Indemnified Person under this Section 7.13 other than to the extent of prejudice caused

directly or indirectly by such omission nor affect any rights it may have to participate in

and/or assume the defense of any action brought against any Indemnified Person. In case

such claim or action is brought against Lender or any Affiliate, or their respective

incorporators, members, commissioners, directors, officers, agents or employees, and

such Indemnified Person notifies Borrower of the commencement thereof, Borrower will

be entitled to participate in and, to the extent that it chooses so to do, to assume the

investigation and defense thereof (including the employment of counsel reasonably

satisfactory to Lender), and Borrower shall assume the payment of all fees and expenses

4826-9157-9912.5 38

relating to such investigation and defense and shall have the right to negotiate and

consent to settlement thereof. Lender, Affiliates and their respective incorporators,

members, commissioners, directors, officers, agents or employees shall have the right to

employ separate counsel in any such action and to participate in the defense thereof, and

after notice from Borrower of its election to assume the defense thereof, the fees and

expenses of such separate counsel shall be at the expense of such indemnifying party if

Lender, its Affiliates or their respective incorporators, members, commissioners,

directors, officers, agents or employees reasonably determines that a conflict of interest

exists between such party and Borrower in connection with such action. With respect to

any claim made or action brought against Authority or any officer, agent, employee,

advisor or attorney of Authority, Authority shall be entitled to retain separate counsel in

connection with the defense of any such claim or action and Borrower shall pay the fees

and expenses of such counsel. Borrower shall not be liable for any settlement of any

such action effected without its consent, but, if settled with the consent of Borrower or if

there be a final judgment for the plaintiff in any such action as to which Borrower has

received notice in writing as hereinabove required, Borrower agrees to indemnify and

hold harmless the Indemnified Person from and against any loss or liability by reason of

such settlement or judgment to the extent provided in this Section 7.13; and

(c) notwithstanding the previous provisions of this Section 7.13, Borrower is

not liable for or obligated to indemnify Lender or any its Affiliate (or any of their

respective incorporators, members, commissioners, officers, employees or agents)

harmless against any loss or damage to property or injury or death to any person or any

other loss or liability if and to the extent such loss, damage, liability, injury or death

results from the negligence or willful misconduct of the Indemnified Person seeking such

indemnification.

All indemnifications by Borrower shall survive the termination of this Master Loan

Agreement and payment of the indebtedness hereunder.

Section 7.14. Covenant to Enter into Agreement or Contract to Provide Ongoing

Disclosure. Borrower and Lender hereby agree that this Master Loan Agreement is exempt from

the requirements of Paragraph (b)(5)(i) of the Securities and Exchange Commission

Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (17 CFR Part 240,

§ 240.15c2-12) (the “Rule”). Borrower hereby covenants and agrees that if this Master Loan

Agreement ceases to be exempt under the Rule, Borrower will enter into an agreement or

contract, constituting an undertaking, to provide ongoing disclosure as may be necessary to

comply with the Rule as then in effect.

Section 7.15. Financial Covenant. Borrower shall maintain (using generally accepted

accounting principles consistently applied and used consistently with prior practices except to the

extent modified by the definitions herein) a Debt Coverage Ratio of not less than 1.20 to 1.00,

measured annually based on the financial statements of Borrower as of the end of each fiscal

year, commencing the fiscal year ended June 30, 2010.

4826-9157-9912.5 39

Section 7.16. Deposit Relationship. So long as the Loan is outstanding, Borrower shall

maintain its primary depository relationship, as well as the Project Fund, with Lender. Lender is

hereby authorized to automatically transfer funds from Borrower’s account number 8800151579

at First Republic Bank to make payments of principal of and interest on the Loan when the same

shall be due. Such authorization shall continue in full force and effect until the date which is five

(5) Business Days from the date on which Lender actually receives written notice from Borrower

expressly revoking such authority. If for any reason caused by Borrower any of such accounts

and automatic debit are not established and maintained with Lender, the Applicable Loan Rate

shall be immediately and automatically increased by one percent (1%), and Lender shall provide

to Borrower an updated schedule of Payments with respect to the Loan and such updated

schedule of Payments shall be attached to this Master Loan Agreement as an amended Exhibit H.

Except for Borrower’s obligation to maintain an automatic debit account with Lender,

Borrower’s obligations under this Section 7.16 shall terminate upon the transfer, assignment or

reassignment of the Authority Loan by Lender pursuant to Section 4.09 hereof to any party other

than an Affiliate.

Section 7.17. Budget. Prior to, and as a condition to, the issuance of any disbursements

to the Project Fund (other than the initial disbursement on the Closing Date) for Project Costs,

Lender shall have approved the Project Budget. Borrower shall provide Lender with such

information and documentation as may be reasonably necessary for Lender to perform its review

of the Project Budget, including, without limitation, final plans/specifications and drawings,

proposed budget and cost breakdowns and proposed project schedule/timeline. Borrower shall

immediately notify Lender of any material change orders and any material changes to the Project

Budget. Borrower shall not permit any material change orders without Lender’s prior written

consent. Lender shall have no obligation to fund any disbursements inconsistent with the Project

Budget. Lender shall not unreasonably withhold or delay consent on matters relating to the

Project budget.

ARTICLE VIII

NEGATIVE COVENANTS OF BORROWER

So long as Borrower Loan shall remain unpaid, Borrower agrees that:

Section 8.01. Lien. Borrower shall not, directly or indirectly, create, incur, assume or

suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the

Property, Facility or other assets of Borrower (together, “Liens”) other than the rights of Lender

or Authority as herein provided and the Permitted Encumbrances, unless Borrower obtains the

prior written consent of Lender, which consent shall not be unreasonably withheld or delayed.

Borrower shall promptly, at its own expense, take such action as may be necessary duly to

discharge or remove any such unpermitted Lien. Borrower shall reimburse Lender for any

expenses incurred by Lender to discharge or remove any unpermitted Lien.

Section 8.02. Disposition of Assets. Borrower will not sell, lease, assign, transfer or

otherwise dispose of all or substantially all of its assets (other than in the ordinary course of

business) or of any of the Facility or any interest therein (whether in one transaction or in a series

4826-9157-9912.5 40

of transactions), other than Permitted Encumbrances, without the prior written consent of Lender

(which consent shall not be unreasonably withheld or delayed) and the delivery to Authority and

Lender of an opinion of Special Counsel to the effect that any such sale, lease, assignment,

transfer or other disposition will not cause the interest on Authority Loan to be included in gross

income of the owners thereof. Unless Borrower obtains Lender’s consent and complies with the

opinion requirement set forth in the previous sentence, Authority Loan and Borrower Loan shall

become due and payable upon the sale, assignment, transfer or other disposition of the Facility or

the Property, other than Permitted Encumbrances. Borrower shall provide Authority and Lender

with prior written notice of its intention to sell, lease, assign, transfer or otherwise dispose of the

Facility or the Property or any interest therein and shall agree in writing to remain liable under

the Loan Documents. In the event of a sale, assignment or transfer of the Facility or the Property

to an affiliate of Borrower (which shall also be subject to Lender’s prior written consent), other

than Permitted Encumbrances, such purchaser, assignee or transferee shall assume in writing

Borrower’s obligations under the Loan Documents. Notwithstanding the foregoing, Borrower

shall be permitted to enter into the following types of leases or rental arrangements of the

Facility (or portions thereof) so long as such lease or rental is in compliance with the Tax

Regulatory Agreement without the prior consent of Lender or the opinion of Special Counsel: (i)

lease or other rental arrangement to a summer camp provider, (ii) short-term lease or rental

arrangement (i.e., fewer than 7 days), and (iii) lease or rental arrangement where the annual

payments to Borrower under such lease or rental arrangement do not exceed $50,000.

Section 8.03. Consolidation and Merger. Borrower will not consolidate with or merge

into any person, or permit any other person to merge into it, or acquire (in a transaction

analogous in purpose or effect to a consolidation or merger) all or substantially all of the assets

of any other person without (i) the prior written consent of both Lender and Authority (which

consents shall not be unreasonably withheld or delayed), and (ii) an opinion of Special Counsel

in form and substance reasonably acceptable to Lender and Authority, to the effect that under

then existing laws the consummation of such merger, consolidation, sale or conveyance would

not cause the interest under this Master Loan Agreement to become includable in gross income

under the Code or adversely affect the validity of this Master Loan Agreement; provided,

however, that Borrower may consolidate or merge into any person, or permit any other person to

merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or

merger) all or substantially all of the assets of any other person if (a) Borrower is the surviving

organization; (b) Lender and Authority shall have received prior written notice of any such

merger or consolidation and an opinion of Special Counsel, in form and substance reasonably

acceptable to Lender and Authority, to the effect that under then existing laws the consummation

of such merger, consolidation, sale or conveyance would not cause the interest under this Master

Loan Agreement to become includable in gross income under the Code or adversely affect the

validity of this Master Loan Agreement; (c) such merger or consolidation would not have a

material adverse effect on Borrower’s financial or operating condition; (d) Lender’s security

interests and liens on the collateral for the Borrower Loan (and the priority thereof) will not be

materially prejudiced by such merger or consolidation; and (e) no Default or Event of Default

exists or would result from any such merger or consolidation.

Section 8.04. Accounting. Borrower will not adopt, permit or consent to any material

change in accounting principles other than as required or permitted by GAAP or adopt, permit or

consent to any change in its fiscal year unless Borrower provides Lender restated financial

4826-9157-9912.5 41

statements in comparative form, unless Borrower obtains the prior written consent of Lender,

which shall not be unreasonably withheld or delayed.

Section 8.05. Transfers. Borrower will not in any manner transfer any property, other

than transfers made in the ordinary course of business, without prior or present receipt of full and

adequate consideration, unless Borrower obtains the prior written consent of Lender, which shall

not be unreasonably withheld or delayed; provided, that, the restriction contained in this Section

shall not prohibit Borrower from making transfers in furtherance of its public purposes.

Section 8.06. Other Indebtedness. Borrower shall not, without the prior written

consent of Lender, which consent shall not be unreasonably withheld or delayed, incur any

additional indebtedness secured or unsecured, direct or contingent, other than Permitted

Additional Indebtedness.

Section 8.07. Other Defaults. Borrower will not permit any breach, default or event of

default to occur beyond any applicable cure period under any note, loan agreement, indenture,

lease, mortgage, contract for deed, security agreement or other contractual obligation binding

upon Borrower or any judgment, decree, order or determination applicable to Borrower;

provided, however, nothing herein shall preclude Borrower’s right to contest in good faith by

appropriate proceedings any breach, default or event of default.

Section 8.08. Prohibited Activities. Borrower shall not use any portion of the proceeds

of Borrower Loan to finance any facility, place or building used or to be used primarily for

sectarian instruction or study or as a place for devotional activities or religious worship.

Section 8.09. Use of Facility. Borrower will not install, use, operate or maintain the

Facility improperly, carelessly, in violation of any applicable law or in a manner contrary to that

contemplated by this Master Loan Agreement or the Tax Regulatory Agreement.

Section 8.10. Maintenance of Business. Borrower shall not change its business

activities in any material respect from the business activities conducted by Borrower as of the

date of this Master Loan Agreement.

Section 8.11. Restrictive Agreements. Borrower shall not enter into any agreement

containing any provision which would be violated or breached by the performance by Borrower

of its obligations hereunder or under any other Loan Documents or any instrument or document

delivered or to be delivered by Borrower in connection herewith. In addition, all now existing or

hereafter arising agreements or arrangements entered into by Borrower involving any form of

credit accommodations (other than Permitted Additional Indebtedness) shall not, at any time,

contain any terms, conditions or covenants that are more restrictive than the terms, conditions

and covenants set forth in this Master Loan Agreement, unless Borrower obtains the prior written

consent of Lender, which shall not be unreasonably withheld or delayed.

Section 8.12. Tax Exempt Status. Borrower will not take any action that would cause

the interest on the Loan to become includable in gross income of the recipient for federal income

tax purposes under the Code (including, without limitation, intentional acts under Treas. Reg.

§ 1.148-2(c) or deliberate action within the meaning of Treas. Reg. § 1.141-2(d)), and Borrower

will take and will cause its officers, employees and agents to take all affirmative actions legally

4826-9157-9912.5 42

within its power necessary to ensure that the interest on the Loan does not become includable in

gross income of the recipient for federal income tax purposes under the Code (including, without

limitation, the calculation and payment of any rebate required to preserve such exclusion).

Section 8.13. Federal Reserve Board Regulations. Borrower will not use any part of

the proceeds of the Loan for the purpose of purchasing or carrying any Margin Stock and has not

incurred any indebtedness to be reduced, retired or purchased by Borrower out of such proceeds,

and Borrower does not own and has no intention of acquiring any Margin Stock.

ARTICLE IX

DAMAGE, DESTRUCTION AND CONDEMNATION;

USE OF NET PROCEEDS

Section 9.01. Eminent Domain. If all or any portion of the Property or the Facility

shall be taken permanently under the power of eminent domain or sold to a government

threatening to exercise the power of eminent domain, the Net Proceeds of any eminent domain

award shall be applied to the prepayment of Borrower Loan and Authority Loan in accordance

with Section 4.08 of this Master Loan Agreement.

Section 9.02. Application of Net Proceeds.

(a) The Net Proceeds of any insurance award resulting from any damage to or

destruction of any portion of the Facility by fire or other casualty, as applicable, of any

title insurance award, or of any eminent domain award resulting from any event described

in Section 9.01 hereof shall be deposited with Lender, who shall determine the

application of such proceeds; provided, however, that Lender shall release to Borrower

without further limitations all insurance awards of up to $50,000 received on behalf of

Borrower in the normal course of business. Borrower, except as provided below, shall

cause the proceeds of such insurance to be utilized for the repair, reconstruction, or

replacement of the damaged or destroyed portion of the Facility. Lender shall permit

withdrawals of the proceeds from time to time upon receiving the written request of

Borrower, stating that Borrower has expended moneys or incurred liabilities in an amount

equal to the amount therein requested to be paid over to it for the purpose of repair,

reconstruction or replacement, and specifying the items for which such moneys were

expended or such liabilities were incurred. Any balance of the proceeds not required for

such repair, reconstruction, or replacement shall be applied by Lender as provided in

Section 4.08 hereof.

(b) Alternatively, Borrower, at its option, and if the proceeds of such

insurance together with any other moneys then available for the purpose are at least

sufficient to prepay Borrower Loan in full pursuant to Section 4.08 hereof, may elect not

to repair, reconstruct, or replace the damaged or destroyed portion of the Facility, as

applicable, and thereupon shall cause the proceeds to be used for the prepayment of

Borrower Loan.

4826-9157-9912.5 43

(c) There shall be no abatement of Payments during any period in which, by

reason of damage or destruction, there is substantial interference with the use and

occupancy by Borrower of the Property, the Facility or any portion thereof.

ARTICLE X

ASSIGNMENT, PARTICIPATION, MORTGAGING AND SELLING

Section 10.01. Assignment by Lender. This Master Loan Agreement and all Draw

Requests and related Authority Loan and the right to receive Payments and the Prepayment

Premium from Borrower hereunder, may be assigned and reassigned in whole to one assignee by

Lender, at any time, without the necessity of obtaining the consent of Authority or Borrower;

provided, however, that such assignment or reassignment shall be in accordance with

Section 4.09 of this Master Loan Agreement. Authority and Borrower agree to execute all

documents, including notices of assignment and chattel mortgages or financing statements,

which may be reasonably requested by Lender or its assignee to protect its interest in the

Facility, this Master Loan Agreement and the Draw Requests. Notwithstanding anything above

to the contrary, all Payments and notices shall be delivered to Lender. Lender agrees to hold any

security interests granted hereunder on behalf of any assignee, subassignee or participant

described above.

Section 10.02. No Sale, Assignment or Leasing by Borrower. This Master Loan

Agreement and the Draw Requests and the interest of Borrower in the Facility may not be sold,

assumed, assigned or encumbered by Borrower other than the Permitted Encumbrances and

Liens in favor of Lender and Authority or as permitted under Section 8.02. No agreement or

interest therein and no improvement shall be subject to involuntary assignment, lease, transfer or

sale or to assignment, lease, transfer or sale by operation of law in any manner whatsoever

except as expressly provided in this Master Loan Agreement and except for Permitted

Encumbrances, and any such attempted assignment, lease, transfer or sale shall be void and of no

effect and shall, at the option of Lender, constitute an Event of Default hereunder.

ARTICLE XI

EVENTS OF DEFAULT AND REMEDIES

Section 11.01. Events of Default. The following constitute “Events of Default” under

this Master Loan Agreement and each Draw Request:

(a) failure by Borrower to pay to Lender, as assignee of Authority any

Payment, Additional Payment or any other amount required to be paid hereunder or under

the Security Agreement within ten (10) days of the due date thereof;

(b) failure by Borrower to pay any payment required to be paid under any

other agreement between Lender or any of its affiliates and Borrower, subject to the

applicable cure period set forth in such agreement;

(c) failure by Borrower to maintain insurance in accordance with Section 7.04

hereof;

4826-9157-9912.5 44

(d) failure by Borrower to observe and perform any other covenant, condition

or agreement on its part to be observed or performed hereunder or under any other

agreement between Lender and Borrower for a period of thirty (30) days after written

notice is given to Borrower by Lender, specifying such failure and requesting that it be

remedied; provided that if such failure is susceptible of cure, but longer than thirty (30)

days is required to cure the same, so long as Borrower commences to cure such failure

within such thirty (30) day period, and diligently prosecutes the same to completion,

Borrower shall be entitled to an additional period of sixty (60) days to complete such

cure;

(e) initiation by Borrower or by others of a proceeding under any Federal or

State bankruptcy or insolvency law seeking relief under such laws concerning the

indebtedness of Borrower which proceeding is not dismissed or stayed within thirty (30)

days;

(f) Borrower shall be or become insolvent, or admit in writing its inability to

pay its or his debts as they mature, or make an assignment for the benefit of creditors; or

Borrower shall apply for or consent to the appointment of any receiver, trustee or similar

officer for it or for all or any substantial part of its property; or such receiver, trustee or

similar officer shall be appointed without the application or consent of Borrower or

Borrower shall institute (by petition, application, answer, consent or otherwise) any

bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution,

liquidation or similar proceeding relating to it under the laws of any jurisdiction which

proceeding is not dismissed or stayed within thirty (30) days; or any such proceeding

shall be instituted (by petition, application or otherwise) against Borrower and remains

undismissed or unstayed for thirty (30) days; or any judgment, writ, warrant of

attachment or execution or similar process shall be issued or levied against a substantial

part of the property of Borrower;

(g) The making of any order or the entry of any decree by a court of

competent jurisdiction enjoining construction of the Improvements or enjoining or

prohibiting Borrower and Lender, or either of them, from performing or satisfying their

respective covenants, obligations or conditions contained herein and such proceedings are

not discontinued or such order or decree is not vacated within sixty (60) days after the

making or granting thereof;

(h) the service upon Lender, in accordance with the laws of the jurisdiction in

which the Project is located, of a bonded stop notice from Borrower and within ten (10)

business days after Lender's receipt of such notice either (i) the claim set forth therein is

not discharged by Borrower or (ii) if the amount claimed is disputed in good faith by

Borrower or the General Contractor, Borrower fails to deliver or cause to be delivered to

Lender a stop notice release bond, in form and substance and issued by a surety company

acceptable to Lender, insuring Lender against such claim;

(i) failure in the due, prompt and complete observance or performance of any

material condition, covenant or obligation of Borrower contained in the construction,

architecture or engineering contracts related to the Project either (i) for an initial cure

4826-9157-9912.5 45

period of thirty (30) consecutive days, or (ii) for a total period of sixty (60) days, so long

as Borrower begins within such initial cure period and diligently continues to cure the

default, and Lender, exercising reasonable judgment, determines that the cure cannot

reasonably be completed at or before expiration of such initial cure period;

(j) Borrower is determined by Lender to (i) have made any material false or

misleading statement or representation in connection with this Master Loan Agreement or

a Draw Request; or (ii) Borrower sells, assigns, leases, or otherwise transfers or

encumbers all or any part of its interest in this Master Loan Agreement, a Draw Request

or the Facility or the Property, except as expressly permitted by this Master Loan

Agreement;

(k) an event of default is declared against Borrower which represents a

liability of Borrower in the amount of $250,000 or more under any instrument, agreement

or other document evidencing or relating to any indebtedness or other monetary

obligation of Borrower;

(l) there shall exist or occur any event or condition which Lender or

Authority in good faith believes materially impairs, or is substantially likely to impair,

the financial condition or operations of Borrower, and such event or condition continues

for a period of fifteen (15) days after written notice is given to Borrower by Lender,

specifying such event or condition and requesting that it be remedied;

(m) the sale of Borrower to, or merger of Borrower into, any person, or the

merger of any other person into Borrower, or acquisition (in a transaction analogous in

purpose or effect to a consolidation or merger) of all or substantially all of the assets of

any other person by Borrower without the prior written consent of Lender (except as

expressly permitted in Section 8.03);

(n) an event of default is declared against Borrower under any material lease

or other material agreement relating to, affecting or pertaining to the possession or use of

any of the Property;

(o) this Master Loan Agreement or any Loan Document, including any pledge

or collateral security for the Loan, shall be repudiated or shall become unenforceable or

incapable of performance in accordance with its terms;

(p) Borrower incurring any secured or other material indebtedness without the

prior written consent of Lender, except as expressly permitted by Section 8.06 hereof; or

(q) an event of default is declared against Borrower under any of the other

Borrower Documents.

Section 11.02. Remedies on Default. Whenever any Event of Default shall have

occurred and be continuing, Lender shall have the right, at its sole option without any further

demand or notice, to take any one or any combination of the following remedial actions insofar

as the same are available to secured parties under the laws of the State from time to time and

which are otherwise accorded to Lender:

4826-9157-9912.5 46

(a) by notice to Authority and Borrower, declare the entire unpaid principal

amount of the Loan (and the related Obligations) then outstanding, all interest accrued

and unpaid thereon and all amounts payable under this Master Loan Agreement and the

related Draw Requests to be forthwith due and payable, whereupon such Loan (and the

related Obligations), all such accrued interest and all such amounts shall become and be

forthwith due and payable, without presentment, notice of dishonor, protest or further

notice of any kind, all of which are hereby expressly waived by Borrower and Authority;

(b) the obligation, if any, of Lender to extend any further credit under any of

the Loan Documents shall immediately cease and terminate; and

(c) exercise all rights and remedies legally available to Lender;

(d) proceed by appropriate court action to enforce performance by Authority

or Borrower of the applicable covenants of the Loan documents or to recover for the

breach thereof, including the payment of all amounts due from Borrower, in which event

Borrower shall pay or repay to Lender all costs of such action or court action including

without limitation, reasonable attorneys’ fees; and

(e) take whatever action at law or in equity that may appear necessary or

desirable to enforce its rights, in which event Borrower shall pay or repay to Lender and

Authority all costs of such action or court action, including, without limitation,

reasonable attorneys’ fees.

(f) All proceeds derived from the exercise of any rights and remedies shall be

applied in the following manner:

FIRST, to pay Authority any Authority Fees;

SECOND, to the United States any rebatable arbitrage due or accrued

pursuant to Section 148(f)(4) of the Code;

THIRD, to pay (a) to Lender the amount of all unpaid Payments, if any,

which are then due and owing, together with interest and late charges thereon; and

(b) to Lender any Additional Payments payable to Lender hereunder;

FOURTH, to pay all proper and reasonable costs and expenses associated

with the recovery, repair, storage and sale of the Property, including reasonable

attorneys’ fees and expenses; and

FIFTH, to pay the remainder of any such proceeds, purchase moneys or

other amounts paid by a buyer of the Property or other person, to Borrower.

Notwithstanding any other remedy exercised hereunder, Borrower shall remain obligated

to pay to Lender and Authority, as their interests may appear, any unpaid Payments and

Additional Payments. To the extent permitted by applicable law, Borrower hereby waives any

rights now or hereafter conferred by statute or otherwise which might require Lender to use, sell,

4826-9157-9912.5 47

lease or otherwise dispose of any portion of the Facility in mitigation of Lender’s damages or

which might otherwise limit or modify any of Lender’s rights hereunder.

All of Borrower’s right, title and interest in any Facility the possession of which is taken

by Lender upon the occurrence of an Event of Default (including, without limitation,

construction, contracts, warranties, guarantees or completion assurances applicable to such

Improvement) shall pass to Lender, and Borrower’s rights in such Facility shall terminate

immediately upon such repossession.

All rights, powers and remedies of Lender may be exercised at any time by Lender, as

assignee of Authority, and from time to time after the occurrence and continuance of an Event of

Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or

remedies provided by law or equity.

Borrower shall pay or repay to Lender and Authority all costs of such action or court

action, including, without limitation, reasonable attorneys’ fees. Notwithstanding any other

remedy exercised hereunder, Borrower shall remain obligated to pay to Lender any unpaid

portion of the Obligations.

Notwithstanding the foregoing, any such declaration of an Event of Default under Section

11.01(a) or (b) hereof is subject to the condition that if, at any time after such declaration and

before any judgment or decree for the payment of the moneys due shall have been obtained or

entered, Borrower shall deposit with Lender a sum sufficient to pay all overdue amounts, with

interest on such overdue amounts at the Default Rate, and the charges and expenses of Lender

and the Authority, and any and all other defaults known to Lender shall have been made good or

cured to the satisfaction of Lender or provision deemed by Lender to be adequate shall have been

made therefor, then, and in every such case, Lender shall rescind and annul such declaration and

its consequences and waive such default; but no such rescission and annulment shall extend to or

shall affect any subsequent default, or shall impair or exhaust any right or power consequent

thereon.

Section 11.03. Lender’s Right to Perform the Obligations. If Borrower shall fail,

refuse or neglect to make any payment or perform any act required by the Loan Documents to

which it is a party, then while any Event of Default exists, and without notice to or demand upon

Borrower and without waiving or releasing any other right, remedy or recourse Lender may have

because of such Event of Default, Lender may (but shall not be obligated to) make such payment

or perform such act for the account of and at the expense of Borrower and interest on such

payment shall accumulate from the date of the advance at the Default Rate until such advance is

paid, and shall have the right to enter upon the Facility for such purpose and to take all such

action thereon and with respect to the Facility as it may deem necessary or appropriate. If

Lender shall elect to pay any sum due with reference to the Facility, Lender may do so in

reliance on any bill, statement or assessment procured from the appropriate governmental

authority or other issuer thereof without inquiring into the accuracy or validity thereof.

Similarly, in making any payments to protect the security intended to be created by this Master

Loan Agreement and the Deed of Trust, Lender shall not be bound to inquire into the validity of

any apparent or threatened adverse title, lien, encumbrance, claim or charge before making an

advance for the purpose of preventing or removing the same. Additionally, if any Hazardous

4826-9157-9912.5 48

Materials affect or threaten to affect the Facility or the Property, Lender may (but shall not be

obligated to) give such notices and take such actions as it deems necessary or advisable in order

to abate the discharge of any Hazardous Materials or remove the Hazardous Materials. Borrower

shall indemnify, defend and hold Lender and Authority harmless from and against any and all

losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits,

costs or disbursements of any kind or nature whatsoever, including reasonable attorneys’ fees,

incurred or accruing by reason of any acts performed by Lender pursuant to the provisions of this

Section, except as a result of Lender’s gross negligence or willful misconduct.

Section 11.04. No Remedy Exclusive. No remedy herein conferred upon or reserved to

Lender is intended to be exclusive and every such remedy shall be cumulative and shall be in

addition to every other remedy given under this Master Loan Agreement or now or hereafter

existing at law or in equity. No delay or omission to exercise any right or power accruing upon

any Event of Default shall impair any such right or power or shall be construed to be a waiver

thereof, but any such right or power may be exercised from time to time and as often as may be

deemed expedient. In order to entitle Lender to exercise any remedy reserved to it in this

Article, it shall not be necessary to give any notice other than such notice as may be required by

this Article XI. All remedies hereby conferred upon or reserved to Lender shall survive the

termination of this Master Loan Agreement.

ARTICLE XII

MISCELLANEOUS

Section 12.01. Disclaimer of Warranties. LENDER AND AUTHORITY MAKE NO

WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE

VALUE, DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS

OR WORKMANSHIP, CONDITION, MERCHANTABILITY OR FITNESS FOR A

PARTICULAR PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR

COPYRIGHT INFRINGEMENTS, TITLE OR FITNESS FOR USE OF THE FACILITY, OR

ANY COMPONENT THEREOF OR ANY OTHER WARRANTY OR REPRESENTATION,

EXPRESS OR IMPLIED, WITH RESPECT THERETO AND, AS TO LENDER AND

AUTHORITY. All such risks, as between Lender, Authority and Borrower, are to be borne by

Borrower. Without limiting the foregoing Lender and Authority shall have no responsibility or

liability to Borrower or any other person with respect to any of the following: (a) any liability,

loss or damage caused or alleged to be caused directly or indirectly by the Project, any

inadequacy thereof, any deficiency or defect (latent or otherwise) therein, or any other

circumstances in connection therewith; (b) the use, operation or performance of the Project or

any risks relating thereto; (c) any interruption of service, loss of business or anticipated profits or

consequential damages; or (d) the delivery, operation, servicing, maintenance, repair,

improvement or replacement of the Improvements. If, and so long as, no default exists under a

Draw Request, Borrower shall be, and hereby is, authorized during the term of a Draw Request

to assert and enforce, at Borrower’s sole cost and expense, from time to time, whatever claims

and rights Borrower or Lender may have against any prior title holder or possessor of the

Facility. In no event shall Lender or Authority be liable for any loss or damage in connection

with or arising out of this Master Loan Agreement, any Draw Request or any Improvement.

4826-9157-9912.5 49

Section 12.02. Limitations of Liability. In no event, whether as a result of breach of

contract, warranty, tort (including negligence or strict liability), indemnity or otherwise, shall

Lender, its assignees, if any, or Authority be liable for any special, consequential, incidental or

punitive damages including, but not limited to, a loss of profit or revenue, loss of use of the

Facility or any associated equipment, service materials or software, damage to associated

equipment, service materials or software, cost of capital, cost of substitute equipment, service

materials or software, facilities, services or replacement power, down time costs or claims of

Borrower’s members for such damages and Borrower shall indemnify and hold harmless Lender,

its assignees, if any, and Authority from any such damages.

Section 12.03. Additional Payments to Lender. Borrower shall pay to Lender the

following Additional Payments hereunder, in addition to the Payments payable by Borrower, in

such amounts in each year as shall be required by Lender in payment of any reasonable costs and

expenses, incurred by Lender in connection with the enforcement of this Master Loan Agreement

or the enforcement of any Draw Request, including but not limited to the following in connection

therewith: payment of all reasonable fees, costs and expenses and all reasonable administrative

costs of Lender, reasonable expense (including, without limitation, attorneys’ fees and

disbursements) reasonable fees of auditors, financial consultants, construction consultants or

attorneys, insurance premiums not otherwise paid hereunder and all other reasonable, direct and

necessary administrative costs of Lender or charges required to be paid by it in order to enforce

its rights under, the Loan Documents. In addition, Borrower shall pay to Lender any reasonable

costs and expenses incurred by Lender in connection with the preparation, review and execution

of each Draw Request made in the calendar year after twelve (12) Draw Requests have been

made in that calendar year. Such Additional Payments shall be billed to Borrower by Lender

from time to time, together with a statement certifying that the amount so billed has been paid or

incurred by Lender for one or more of the items described, or that such amount is then payable

by Lender for such items. Amounts so billed shall be due and payable by Borrower within 30

days after receipt of the bill by Borrower.

Section 12.04. Notices. All notices, certificates, requests, demands and other

communications provided for hereunder or under a Draw Request shall be in writing and shall be

(a) personally delivered; (b) sent by registered class United States mail; (c) sent by overnight

courier of national reputation; or (d) transmitted by facsimile, in each case addressed to the party

to whom notice is being given at its address as set forth below and, if by facsimile, transmitted to

that party at its facsimile number set forth below and confirmed by telephone at the telephone

number set forth below or, as to each party, at such other address or facsimile number as may

hereafter be designated by such party in a written notice to the other party complying as to

delivery with the terms of this Section. All such notices, requests, demands and other

communications shall be deemed to have been given on (i) the date received if personally

delivered, (ii) when deposited in the mail if delivered by mail, (iii) the date sent if sent by

overnight courier or (iv) the date of transmission if delivered by facsimile. If notice to Borrower

of any intended disposition of the Property or the Facility or any other intended actions is

required by law in a particular instance, such notice shall be deemed commercially reasonable if

given (in the manner specified in this Section) at least 10 calendar days prior to the date of

intended disposition or other action.

4826-9157-9912.5 50

If to Borrower: The San Francisco School

300 Gaven Street

San Francisco, California 94134

Attention: Head of School

Telephone: (415) 239-5065

Facsimile: (415) 239-4833

If to Authority: California Enterprise Development Authority

550 Bercut Drive, Suite G

Sacramento, California 95814

Attention: Executive Director

Telephone: (916) 448-8252, Ext. 102

Facsimile: (916) 448-3811

If to Lender: First Republic Bank

111 Pine Street


Attention: Commercial Loan Operations

Telephone: (415) 262-4126

Facsimile: (415) 296-5708

Section 12.05. Binding Effect; Time of the Essence. This Master Loan Agreement

shall inure to the benefit of and shall be binding upon Lender, Authority, Borrower and their

respective successors and assigns, if any. Time is of the essence.

Section 12.06. Severability. In the event any provision of this Master Loan Agreement

of any Draw Request shall be held invalid or unenforceable by any court of competent

jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 12.07. Amendments. To the extent permitted by law, the terms of this Master

Loan Agreement shall not be waived, altered, modified, supplemented or amended in any

manner whatsoever except by written instrument signed by the parties hereto, and then such

waiver, consent, modification or change shall be effective only in the specific instance and for

the specific purpose given; provided, however, that the consent of Authority shall not be required

for waivers, alternations, modifications, supplements or amendments of or with respect to

Section 7.15, 7.16, 8.01, 8.02, 8.04 through 8.07, 8.11 or 8.13 of this Master Loan Agreement.

Section 12.08. Execution in Counterparts. This Master Loan Agreement and each

Draw Request may be executed in several counterparts, each of which shall be an original and all

of which shall constitute one and the same instrument and any of the parties hereto may execute

this Master Loan Agreement by signing any such counterpart.

Section 12.09. Applicable Law. This Master Loan Agreement and each Draw Request

shall be governed by and construed in accordance with the laws, excluding the laws relating to

the choice of law, of the State. Any action arising hereunder shall (unless waived by Authority)

be filed and maintained in Sacramento, California.

4826-9157-9912.5 51

Section 12.10. Jury Trial Waiver. TO THE EXTENT PERMITTED BY LAW,

LENDER AND BORROWER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO JURY

TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF,

DIRECTLY OR INDIRECTLY, THIS MASTER LOAN AGREEMENT, ANY DRAW

REQUEST OR ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN

LENDER OR BORROWER RELATING TO THE SUBJECT MATTER OF THE

TRANSACTIONS CONTEMPLATED BY THIS MASTER LOAN AGREEMENT OR ANY

DRAW REQUEST OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP

THAT IS BEING ESTABLISHED BETWEEN LENDER AND BORROWER. THE SCOPE OF

THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL

DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT

LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND

ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS

IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN

WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,

RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS MASTER LOAN

AGREEMENT, THE DRAW REQUESTS, ANY RELATED DOCUMENTS, OR TO ANY

OTHER DOCUMENTS OR SUPPLEMENTS RELATING TO THE TRANSACTIONS

CONTEMPLATED BY THIS MASTER LOAN AGREEMENT OR ANY DRAW REQUEST

OR ANY RELATED TRANSACTIONS. TO THE EXTENT PERMITTED BY APPLICABLE

LAW, IN THE EVENT OF LITIGATION, THIS MASTER LOAN AGREEMENT MAY BE

FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 12.11. Captions. The captions or headings in this Master Loan Agreement are

for convenience only and in no way define, limit or describe the scope or intent of any provisions

or sections of this Master Loan Agreement.

Section 12.12. Entire Agreement. This Master Loan Agreement, together with Draw

Requests and the exhibits and attachments hereto and thereto, together with the other Loan

Documents, constitutes the entire agreement among Lender, Authority and Borrower. There are

no understandings, agreements, representations or warranties, express or implied, not specified

herein or therein regarding this Master Loan Agreement, the Draw Requests or Project financed

or refinanced hereunder and thereunder. Any terms and conditions of any purchase order or

other document submitted by Borrower in connection with this Master Loan Agreement or any

Draw Request which are in addition to or inconsistent with the terms and conditions of this

Master Loan Agreement or such Draw Request will not be binding on Lender and will not apply

to this Master Loan Agreement or such Draw Request.

Section 12.13. Waiver. Lender’s or Authority’s failure to enforce at any time or for any

period of time any provision of this Master Loan Agreement or a Draw Request shall not be

construed to be a waiver of such provision or of the right of Lender or Authority thereafter to

enforce each and every provision. No express or implied waiver by Lender of any default or

remedy of default shall constitute a waiver of any other default or remedy of default or a waiver

of any Lender’s rights.

Section 12.14. Survivability. All of the limitations of liability, indemnities and waivers

contained in this Master Loan Agreement or a Draw Request shall continue in full force and

4826-9157-9912.5 52

effect notwithstanding the expiration or early termination of this Master Loan Agreement or such

Draw Request and are expressly made for the benefit of, and shall be enforceable by, Lender and

Authority, or their successors and assigns.

Section 12.15. Usury. It is the intention of the parties hereto to comply with any

applicable usury laws; accordingly, it is agreed that, notwithstanding any provisions to the

contrary in this Master Loan Agreement or any Draw Request, in no event shall this Master Loan

Agreement require the payment or permit the collection of interest or any amount in the nature of

interest or fees in excess of the maximum permitted by applicable law.

Section 12.16. Third Party Beneficiary. It is the intention of the parties that any lender

hereunder be a third-party beneficiary of the Master Loan Agreement and the applicable Draw

Requests.

Section 12.17. Further Assurance and Corrective Instruments. The parties hereto

hereby agree that they will, from time to time, execute, acknowledge and deliver, or cause to be

executed, acknowledged and delivered, such further acts, instruments, conveyances, transfers

and assurances, as any of them reasonably deems necessary or advisable for the implementation,

correction, confirmation or perfection of this Master Loan Agreement, any Draw Request or the

Tax Regulatory Agreement and any rights of such party hereunder or thereunder.

Section 12.18. Dispute Resolution; Provisional Remedies.

(a) Mandatory Arbitration. At the request of Lender or Borrower, any

dispute, claim or controversy of any kind (whether in contract or tort, statutory or

common law, legal or equitable) now existing or hereafter arising between Lender and

Borrower (so long as Authority is not a party to such dispute) and in any way arising out

of, pertaining to or in connection with: (a) this Master Loan Agreement, and/or any

renewals, extensions, or amendments thereto; (b) any of Borrower Documents; (c) any

violation of any of the foregoing; or (d) any incidents, omissions, acts, practices or

occurrences arising out of or related to this Master Loan Agreement or Borrower

Documents causing injury to either party whereby the other party or its agents, employees

or representatives may be liable, in whole or in part, will be resolved through final and

binding arbitration conducted at a location determined by the arbitrator in San Francisco,

California, and administered by the American Arbitration Association ("AAA") in

accordance with the California Arbitration Act (California Code of Civil Procedure

§1280 et. seq.) and the then existing Commercial Rules of the AAA. Judgment upon any

award rendered by the arbitrator(s) may be entered in any state or federal courts having

jurisdiction thereof.

(b) Powers and Qualifications of Arbitrators. The arbitrator(s) will give

effect to statutes of limitation, waiver and estoppel and other affirmative defenses in

determining any claim. Any controversy concerning whether an issue is arbitratable will

be determined by the arbitrator(s). The laws of the State will govern. The arbitration

award may include equitable and declaratory relief. All arbitrator(s) selected will be

required to be a practicing attorney or retired judge licensed to practice law in the State

4826-9157-9912.5 53

and will be required to be experienced and knowledgeable in the substantive laws

applicable to the subject matter of the controversy or claim at issue.

(c) Discovery. The provisions of California Code of Civil Procedure Section

1283.05 or its successor section(s) are incorporated herein and made a part of this Master

Loan Agreement. Depositions may be taken and discovery may be obtained in any

arbitration under this Master Loan Agreement in accordance with said section(s).

(d) Miscellaneous. The arbitrator(s) will determine which is the prevailing

party and will include in the award that party's reasonable attorneys' fees and costs

(including allocated costs of in-house legal counsel). Each party agrees to keep all

controversies and claims and the arbitration proceedings strictly confidential, except for

disclosures of information required in the ordinary course of business of the parties or by

applicable law or regulation.

(e) Provisional Remedies, Self Help and Foreclosure. No provision of this

Master Loan Agreement will limit the right of any party to: (a) exercise any rights or

remedies as a secured party against any personal property collateral pursuant to the terms

of this Master Loan Agreement, a security agreement or pledge agreement, or applicable

law, (b) exercise self help remedies such as setoff, or (c) obtain provisional or ancillary

remedies such as injunctive relief or the appointment of a receiver from a court having

jurisdiction before, during or after the pendency of any arbitration or referral. The

institution and maintenance of an action for judicial relief or pursuit of provisional or

ancillary remedies, or exercise of self help remedies will not constitute a waiver of the

right of any party, including the plaintiff, to submit any dispute to arbitration.

Section 12.19. Patriot Act. Lender hereby notifies Borrower that pursuant to the

requirements of the Patriot Act it is required to obtain, verify and record information that

identifies Borrower, which information includes the name and address of Borrower and other

information that will allow Lender to identify Borrower in accordance with the Patriot Act.

Borrower hereby agrees that it shall promptly provide such information upon request by Lender.

4826-9157-9912.5

IN WITNESS WHEREOF, the parties hereto have caused this Master Loan Agreement to

be executed in their respective corporate names by their duly authorized officers or officials all

as of the date first written above.

LENDER:

FIRST REPUBLIC BANK

By Sherry Geyer, Vice President

AUTHORITY:

CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY

By

Wayne Schell, Chair

Attest:

By

Gurbax Sahota, Assistant Secretary

BORROWER:

THE SAN FRANCISCO SCHOOL a California nonprofit public benefit corporation

By [Name, Title]

4826-9157-9912.5

EXHIBIT A

AGGREGATE PRINCIPAL AMOUNT OF THE LOAN OUTSTANDING

Date Draw Request

No. __

Amount ($) of Draw

(Request)

Aggregate Amount of

Loan Outstanding

12/29/10 1 $543,141.19 $543,141.19

TOTAL $ $

4826-9157-9912.5

EXHIBIT B

FORM OF INITIAL DRAW REQUEST

DRAW REQUEST NO. 1 PURSUANT TO


by and among


Lender

and


Authority

and


as Borrower

Dated as of __________, 20__

THIS DRAW REQUEST (this “Draw Request”) is made pursuant to the Master Loan

Agreement identified above (the “Master Loan Agreement”). Defined terms used but not

otherwise defined herein shall have the meaning set forth in the Master Loan Agreement.

Section 1. Borrower hereby requests, and Lender hereby approves, a draw of Loan

Proceeds in the amount of $_________, all subject to the provisions of this Master Loan

Agreement for the Project Costs. $[___________] of the Loan Proceeds subject to this Draw

Request (an amount not exceeding 2% of the amount of the Draw Request) will be applied by

Borrower to pay costs of the Loan.

Section 2. The undersigned authorized representative, on behalf of Borrower, hereby

identifies the Project Costs, as set forth in Schedule I hereto, pertaining to this Draw Request.

Attached hereto are invoice(s), contract(s) and, if applicable, evidence of payment relating to

such Project Costs.

Section 3. Borrower hereby certifies that obligations in amounts stated in this Draw

Request are Project Costs.

4826-9157-9912.5 B-2

Submitted on __________, 20__ by:

BORROWER:

THE SAN FRANCISCO SCHOOL

By [Name, Title]

Approved as of ________, 20__ by:

LENDER:

FIRST REPUBLIC BANK

By [Name, Title]

4826-9157-9912.5 B-3

SCHEDULE I

TO DRAW REQUEST NO. ____

PROJECT COSTS

To Amount Purpose

4826-9157-9912.5

EXHIBIT C

FORM OF DRAW REQUEST

DRAW REQUEST NO. ___ PURSUANT TO


by and among


Lender

and


Authority

and


as Borrower

Dated as of __________, 20__

THIS DRAW REQUEST (this “Draw Request”) is made pursuant to the Master Loan

Agreement identified above (the “Master Loan Agreement”). Defined terms used but not

otherwise defined herein shall have the meaning set forth in the Master Loan Agreement.

Section 1. Borrower hereby requests, and Lender hereby approves, a draw of Loan

Proceeds in the amount of $_____, all subject to the provisions of this Master Loan Agreement

for the Project Costs.

Section 2. $[___________] of the Loan Proceeds subject to this Draw Request (an

amount not exceeding 2% of the amount of the Draw Request) will be applied by Borrower to

pay costs of the Loan.

Section 3. Borrower represents, covenants and warrants that (a) there has not been any

material adverse change in its condition, business, operations, performance, properties or

prospects since the date of the Master Loan Agreement, (b) all of its representations and

warranties contained in the Master Loan Agreement or the Tax Regulatory Agreement were true

and accurate as of the date made, remain true and accurate as of the date of this certificate and

are hereby reaffirmed; and (c) no event has occurred and is continuing or would result from the

loan of Loan Proceeds pursuant to this Draw Request which constitutes a Default, an Event of

Default or a Determination of Taxability, and no condition exists which, after notice or lapse of

time, or both, would constitute an Event of Default.

Section 4. The undersigned authorized representative, on behalf of Borrower, hereby

identifies the Project Costs, as set forth in Schedule I hereto, pertaining to this Draw Request.

Such Project Costs are to be paid for with Loan Proceeds to be deposited in the Project Fund

4826-9157-9912.5 C-2

established and maintained under the Master Loan Agreement. Attached hereto are invoice(s)

and or contract(s) relating to such Project Costs, and, if such invoices have been paid by

Borrower, evidence of payment thereof.

Section 5. Borrower hereby certifies that obligations in amounts stated in this Draw

Request are to be incurred by Borrower and each item is a Project Cost and has not been

previously paid from the Project Fund. Borrower hereby certifies that the Loan Proceeds

disbursed pursuant to each prior Draw Request were disbursed in accordance with the terms of

each such prior Draw Request.

Section 6. Attached hereto are all certificates, approvals, documents and other materials

required to be delivered by Borrower and/or General Contractor to Lender with this Draw

Request pursuant to Section 5.04 of the Master Loan Agreement.

Section 7. Borrower (to its best knowledge at the time of this Draw Request) hereby

certifies that:

(a) all work performed is in substantial accordance with the Plans and Specifications;

(b) all licenses and permits required by any “Governmental Authority” (as hereinafter

defined) for the Improvements as then completed have been obtained and will be

exhibited to Lender upon request. "Governmental Authority" shall mean (i) any

governmental municipality or political subdivision thereof, (ii) any governmental or

quasi–governmental agency, authority, board, bureau, commission, department

instrumentality or public body, or (ii) any court, administrative tribunal or public utility;

(c) the Improvements as then completed do not violate, and, if further completed in

accordance with the Plans and Specifications, will not violate, any applicable law,

ordinance, rule or regulation; and

(d) the remaining undisbursed proceeds of the Loan, together with any Borrower

funds collected and expected to be collected, are or will be sufficient to pay for the

completion of the Improvements.

Section 8. Borrower hereby certifies that no Event of Default exists, and, to the best

of its knowledge, no event has occurred and no condition exists that, after notice or lapse of time,

or both, would constitute an Event of Default;

4826-9157-9912.5 C-3

Submitted on __________, 20__ by: BORROWER:

THE SAN FRANCISCO SCHOOL

By [Name, Title]

By [Name, Title]

Approved as of ________, 20__ by:

LENDER:

FIRST REPUBLIC BANK

By [Name, Title]

4826-9157-9912.5 C-4

SCHEDULE I

TO DRAW REQUEST NO. ____

PROJECT COSTS

To Amount Purpose

4826-9157-9912.5

EXHIBIT D

PROPERTY DESCRIPTION

The real property, located at 300, 307 and 311 Gaven Street, San Francisco, California

94134, together with all improvements thereon, referred to in this Master Loan Agreement is

situated in the City and County of San Francisco, State of California and is described as follows:

Parcel One:

Beginning at the point of intersection of the Northerly line of Gaven Street with the Westerly line of

Boylston Street; running thence Westerly along said line of Gaven Street 250 feet to the westerly line of

Lot 10, in Block 4, as said Lot and Block are shown on "Map of Heyman Tract No. 2", filed December 3,

1907, in Book "A" and "B" of Maps, at page 124, in the office of the Recorder of the City and County of

San Francisco, State of California; thence at a right angle northerly along said Westerly Lot line 79.44

feet to the Northwesterly corner of said Lot 10; thence deflecting 0° 07' 16" to the right from the

preceding course and running Northerly 45.730 feet to the Southwesterly corner of the lands described in

the Deed to the State of California, recorded July 21, 1958, in Book 7332 of Official Records, at page

216, (Series 114952), in the Office of said Recorder; thence deflecting 78 40' 18" to the right and running

Northeasterly along the Southeasterly line of last said lands so described 239.476 feet to the Easterly

corner thereof; thence deflecting 11 19' 42" to the right and continuing Easterly 17.440 feet; thence

deflecting 60 42' 30" to the right and running Southeasterly 5.76 feet; thence deflecting 30 58' 30" to the

right and running Southerly 87.78 feet to the Northerly corner of Lot 1, in said Block 4; thence deflecting

0 00' 04" to the left and continuing Southerly along the Westerly line of Boylston Street 78.945 feet to the

point of beginning.

Assessor's Lot 032; Block 5847

Parcel Two:

Lot 44, Block 3, according to Map entitled, "Map of Heyman Tract No. 2," filed in the Office of the

Recorder of the City and County of San Francisco, State of California, December 3, 1907 and recorded in

Map No. 2, "A & B" at Page 124.


Parcel Three:

Lot 45, Block 3, according to Map entitled, "Map of Heyman Tract No. 2", filed in the Office of the

Recorder of the City and County of San Francisco, State of California, December 3, 1907 and recorded in

Book 2 "A" and "B" of Maps at Page 124.


4826-9157-9912.5

EXHIBIT E

FORM OF CERTIFICATE OF PURCHASER

California Enterprise Development Authority



Kutak Rock LLP

515 South Figueroa Street, Suite 1240

Los Angeles, California 90071

Re: Master Loan Agreement, dated as of December 1, 2010, by and among First

Republic Bank, California Enterprise Development Authority and The San

Francisco School

Ladies and Gentlemen:

The undersigned is Lender of the principal amount of up to $4,500,000 (the “Loan”)

issued pursuant to the Master Loan Agreement, dated as of December 1, 2010 and any Draw

Request (collectively, the “Loan Agreement”) by and among the California Enterprise

Development Authority (the “Authority”), The San Francisco School (the “Borrower”) and First

Republic Bank, a California corporation (the “Lender”). The undersigned hereby represents and

warrants to you that:

1. The undersigned is a Qualified Institutional Buyer as defined in Section 144(A) of

the Securities Act of 1933, as amended. The undersigned has duly authorized, by all necessary

action, the making of Authority Loan (capitalized terms used herein and not otherwise defined

shall have the meanings given such terms in the Loan Agreement) contemplated pursuant to the

terms and provisions of the Loan Agreement. The undersigned is authorized to execute and

deliver this letter.

2. We have sufficient knowledge and experience in financial and business matters,

including purchase and ownership of municipal and other tax-exempt obligations, to be able to

evaluate the risks and merits of the investment represented by Authority Loan, Borrower Loan

and the Loan Agreement. We are able to bear the economic risks of such investment.

3. We understand that the obligations of Authority to make payments under the Loan

Agreement are special, limited obligations payable solely from amounts paid to Authority from

Borrower pursuant to the terms of the Loan Agreement and that notwithstanding anything to the

contrary contained in the Loan Agreement, Authority shall not be obligated to make payments

with respect to Authority Loan, or pay any portion of the costs of the Project or make any other

payment or advance any moneys or be liable for any other costs or expenses in connection with

the Project, Authority Loan, Borrower Loan or the Loan Agreement, except from the amounts

paid to Authority from Borrower pursuant to the Loan Agreement, and no such payment shall

constitute a charge against the general credit of Authority. We further understand that Authority

shall not be directly or indirectly or contingently or morally obligated to use any other moneys or

4826-9157-9912.5 E-2

assets of Authority to pay Authority Loan or any portion of the costs of the Project or for all or

any portion of such other costs or expenses.

4. We acknowledge that we have either been supplied with or have been given

access to information, including financial statements and other financial information which we

have requested from Borrower, and we have had the opportunity to ask questions and receive

answers concerning Borrower, Authority Loan, Borrower Loan, the Loan Agreement and the

security therefor, so that we have been able to make Authority Loan on the terms as set forth in

the Loan Agreement. We acknowledge that we have not relied upon Authority for any

information in connection with Borrower Loan, except as set forth in Section 2.01 of the Loan

Agreement.

5. We have made our own inquiry and analysis with respect to the Loan Agreement,

Authority Loan, Borrower Loan and the security therefor, and other material factors affecting the

security and payment of such Loan set forth in the Loan Agreement.

6. We understand that the Loan Agreement (including the right to receive Payments

under the terms of the Loan Agreement) (a) is not being registered or otherwise qualified for sale

under the “Blue Sky” laws and regulations of any state, (b) will not be listed in any stock or other

securities exchange, (c) will not carry a rating from any rating service, and (d) will be delivered

in a form which may not be readily marketable.

7. The undersigned is making the Loan for investment, with no present intention of

reselling the Loan. Notwithstanding such present intention, the undersigned is not prohibited

from reselling Authority Loan in the future. We understand that the Loan Agreement (including

the right to receive Payments under the terms of the Loan Agreement) has not been registered

under the Securities Act of 1933, as amended. Except for a transfer to an Affiliate, a Qualified

Institutional Buyer or an Accredited Investor as provided in the Loan Agreement, we agree not to

sell, transfer or otherwise dispose of or permit an Affiliate to sell, transfer or otherwise dispose

of all or part of our interest in Authority Loan except in accordance with the requirements of the

Loan Agreement.

8. We agree to indemnify and hold harmless Authority and Borrower with respect to

any claim asserted against Authority or Borrower that is based upon our sale, transfer or other

disposition of our interests in the Loan Agreement in violation of the provisions hereof or of the

Loan Agreement, other than any claim that is based upon the gross negligence or willful

misconduct of Authority or Borrower.

4826-9157-9912.5 E-3

9. We have executed and delivered this letter in connection with the execution and

delivery of the Loan Agreement as an inducement to Authority to cause the execution and

delivery of the Loan Agreement to us. Only the addressees hereof may rely upon this letter.

FIRST REPUBLIC BANK

By [Name, Title]

4826-9157-9912.5

EXHIBIT F

FORM OF CERTIFICATE OF TRANSFEREE OR PARTICIPANT

First Republic Bank

111 Pine Street





The San Francisco School

300 Gaven Street


Re: Master Loan Agreement, dated as of December 1, 2010, by and among First

Republic Bank, California Enterprise Development Authority and The San

Francisco School


The undersigned is the purchaser of all, but not less than all, that certain Loan in the

aggregate principal amount of $[__________] (the “Loan”) issued pursuant to the Master Loan

Agreement, dated as of December 1, 2010 and the Draw Requests thereto (collectively, the

“Loan Agreement”) by and among the California Enterprise Development Authority (the

“Authority”), The San Francisco School (the “Borrower”) and First Republic Bank (the

“Lender”). The undersigned, as assignee of Lender under the Loan Agreement, hereby

represents and warrants to you that:

1. [The Undersigned is a Qualified Institutional Buyer as defined in Section 144(A)

of the Securities Act of 1933, as amended (the “Act”).] [The undersigned is an Accredited

Investor as defined n Rule 501 under the Act.]

2. The Undersigned has duly authorized, by all necessary action the execution and

delivery of this letter.

3. The Undersigned has sufficient knowledge and experience in financial and

business matters, including purchase and ownership of municipal and other tax-exempt

obligations, to be able to evaluate the risks and merits of the investment represented by the

participation interest in the Loan. The Undersigned is able to bear the economic risks of such

investment.

4. The Undersigned understands that the obligations of Authority to make payments

under the Loan Agreement are special, limited obligations payable solely from amounts paid to

Authority from Borrower pursuant to the terms of the Loan Agreement (the “Payments”) and that

notwithstanding anything to the contrary contained in the Loan Agreement, Authority shall not

4826-9157-9912.5 F-2

be obligated to make Payments, or pay any portion of the costs of the Project or make any other

payment or advance any moneys or be liable for any other costs or expenses in connection with

the Project, the Payments or Authority Loan and Borrower Loan (collectively, the “Loan”),

except from the amounts paid to Authority from Payments made by Borrower pursuant to the

Loan Agreement, and no such payment shall constitute a charge against the general credit of

Authority. We further understand that Authority shall not be directly or indirectly or

contingently or morally obligated to use any other moneys or assets of Authority to make the

Payments or any portion of the costs of the Project or for all or any portion of such other costs or

expenses.

5. The Undersigned acknowledges that it has either been supplied with or has been

given access to information, including financial statements and other financial information which

were requested from Borrower, and has had the opportunity to ask questions and receive answers

concerning Borrower, the Loan Agreement, the Payments and the security therefor, so that the

Undersigned has been able to make the decision to purchase the Loan or a participation therein.

The Undersigned acknowledges that it has not relied upon Authority for any information in

connection with the Loan.

6. The Undersigned has made its own inquiry and analysis with respect to the Loan

Agreement, the Payments, the Loan and the security therefor, and other material factors affecting

the security and payment of such Loan set forth in the Loan Agreement. The Undersigned is

aware that the activities of Borrower involve certain economic variables and risks that could

adversely affect the security for the Loan. The Undersigned has examined the legal documents

relating to the Loan.

7. The Undersigned understands that the Loan (including the right to receive

Payments from Borrower under the terms of the Loan Agreement) (a) is not being registered or

otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, (b) will not

be listed in any stock or other securities exchange, (c) will not carry a rating from any rating

service, and (d) will be delivered in a form which may not be readily marketable.

8. The Undersigned understands that the Loan has not been registered under the

Securities Act of 1933, as amended. The Undersigned represents to you that we are purchasing

the Loan or a participation therein for investment for our own account and not with a present

view toward resale or the distribution thereof, in that we do not intend to resell or otherwise

dispose of all or any part of the Loan or our participation interest in the Loan, except for sale to

___ an Affiliate, ___ a Qualified Institutional Buyer or ___ an Accredited Investor1 in

accordance with the terms of the Loan Agreement. Except for a transfer to ___ an Affiliate, ___

a Qualified Institutional Buyer or ___ an Accredited Investor,2 as provided in the Loan

Agreement, we agree not to sell, transfer or otherwise dispose of or permit an Affiliate to sell,

transfer or otherwise dispose of all or part of the Loan or our interest in the Loan except in

accordance with the requirements of the Loan Agreement.

1 Please check one category as appropriate.

2 Please check one category as appropriate.

4826-9157-9912.5 F-3

9. The Undersigned agrees to indemnify and hold harmless Authority with respect to

any claim asserted against Authority that is based upon our sale, transfer or other disposition of

the Loan or our participation interests in the Loan in violation of the provisions hereof or of the

Loan Agreement, other than any claim that is based upon the gross negligence or willful

misconduct of Authority.

10. We have executed and delivered this letter in connection with the transfer of the

Loan to us pursuant to the provisions of Section 4.09 of the Master Loan Agreement. Only the

addressees hereof may rely upon this letter.

[NAME OF TRANSFEREE OR PARTICIPANT]

By Authorized Officer

4826-9157-9912.5

EXHIBIT G

FORM OF OPINION OF COUNSEL TO BORROWER

December 29, 2010




First Republic Bank

111 Pine Street


Kutak Rock LLP

515 South Figueroa Street, Suite 1240

Los Angeles, California 90071

Re: Master Loan Agreement, Dated as of December 1, 2010, by and among

First Republic Bank, California Enterprise Development Authority and

The San Francisco School


We have served as special counsel to The San Francisco School, a California nonprofit

public benefit corporation (the “Corporation”), in connection with the Master Loan Agreement,

dated as of December 1, 2010 (the “Loan Agreement”), by and among First Republic Bank (the

“Lender”), California Enterprise Development Authority (the “Authority”) and the Corporation.

This Opinion is delivered to Kutak Rock LLP, as Special Counsel (as that term is defined in the

Loan Agreement), the Lender and the Authority pursuant to Section 5.01(t) of the Loan

Agreement.

Pursuant to the Loan Agreement, the Lender has agreed to lend to the Authority an

amount up to $4,500,000 (the “Authority Loan”), and concurrently therewith, the Authority has

agreed to lend the proceeds of the Authority Loan to the Corporation (the “Borrower Loan”;

collectively with the Authority Loan, the “Loan”). The Authority has agreed to assign the

payments due under the Borrower Loan to the Lender to satisfy the Authority’s payment

obligations under the Authority Loan, and the Corporation has agreed to make such payments

directly to the Lender as assignee of the Authority.

A Construction Deed of Trust with Assignment of Leases and Rents, Security

Agreement, and Financing Statement, dated as of December 1, 2010 (the “Deed of Trust”), from

the Corporation for the benefit of the Authority and the Lender, and a Security Agreement, dated

as of December 1, 2010 (the “Security Agreement”), made by the Corporation in favor of the

Lender as assignee of the Authority, will secure the Corporation’s obligations under the Loan

4826-9157-9912.5 G-2

Agreement. The Corporation and the Lender will also enter into an Environmental Indemnity

Agreement, dated as of December 1, 2010 (the “Environmental Indemnity”).

The Authority and the Corporation are also entering into a Tax Regulatory Agreement,

dated December 1, 2010 (the “Tax Regulatory Agreement”).

The Loan Agreement, the Deed of Trust, the Security Agreement, the Tax Regulatory

Agreement and the Environmental Indemnity are collectively referred to in this Opinion as the

“Transaction Documents.”

In connection with the rendition of this Opinion, we have reviewed and relied upon the

following:

(a) The Transaction Documents;

(b) Forms provided to us of UCC Financing Statements (Form UCC-1)

relating to the collateral pledged under the Transaction Documents (the

“Financing Statements”);

(c) A copy of the Articles of Incorporation of the Corporation, filed on March

28, 1966, as amended by the Certificate of Amendment of Articles of

Incorporation, filed on February 11, 1969, and as further amended by the

Certificate of Amendment of Articles of Incorporation, filed on June 2,

1994 (as amended, the “Articles of Incorporation”), certified by the

California Secretary of State as being the Articles of Incorporation on file

with that office as of December 9, 2010;

(d) A copy of the Bylaws of the Corporation, certified by the Corporation’s

Secretary as being a complete and correct copy of the Bylaws in effect as

of the date of this Opinion;

(e) A Certificate of Status (Domestic Corporation) issued by the California

Secretary of State dated December 9, 2010 certifying the corporate status

and good legal standing of the Corporation as of that date;

(f) A determination letter issued by the Internal Revenue Service dated May

20, 1966 regarding the Corporation (the “IRS Determination Letter”), as

affirmed by a letter issued by the Internal Revenue Service dated March

22, 2000 (the “IRS Affirmation Letter”), and as updated by a letter issued

by the Internal Revenue Service dated December 9, 2010 (the “IRS

Verification Letter”) (collectively, the “IRS Letters”);

(g) A Franchise Tax Board determination letter dated March 23, 1966

regarding the Corporation (the “FTB Determination Letter”), as updated

by an Entity Status letter from the Franchise Tax Board dated December

10, 2010 (the “FTB Verification Letter”);

4826-9157-9912.5 G-3

(h) A certificate signed on behalf of the Corporation as of the date of this

Opinion (the “Factual Certificate”), certifying as to certain factual matters

(a copy of the Factual Certificate is attached to this Opinion);

(i) A copy of corporate resolutions adopted at the December 13, 2010

meeting of the Board of Trustees of the Corporation authorizing, among

other things, the execution of the Transaction Documents and other

documents related to the issuance of the Loan, certified by the Secretary of

the Corporation as of the date of this Opinion; and

(j) A certificate of the Secretary of the Corporation dated as of the date of this

Opinion certifying the signatures of the officers of the Corporation

authorized to execute on behalf of the Corporation the Transaction

Documents and other documents related to the issuance of the Loan.

In giving the opinions expressed below, we have relied on the foregoing documents. We

have also relied on the accuracy of the Factual Certificate as to the factual matters expressed in

the Factual Certificate and, unless otherwise expressly noted, have made no independent

investigation as to such factual matters (although no information has come to our attention that

would give us current actual knowledge of the inaccuracy of the Factual Certificate). Whenever a

statement herein is qualified by “to our current actual knowledge” or any similar phrase, it is

intended to indicate that, during the course of our representation of the Corporation as special

counsel, no information that would give us current actual knowledge of the inaccuracy of such

statement has come to our attention. However, except as otherwise indicated herein, we have not

undertaken any independent investigation to determine the accuracy of such statement, any

limited inquiry undertaken by us during the preparation of this opinion letter should not be

regarded as such an investigation, and no inference as to our knowledge of any matters bearing

on the accuracy of any such statement should be drawn from the fact of our representation of the

Corporation as special counsel. We do not act as general counsel for the Corporation and are

familiar only with the matters for which we specifically have been engaged by the Corporation.

Further, we have assumed that (a) the Transaction Documents and all documents

delivered in connection therewith have been duly executed and delivered by any and all parties

thereto other than the Corporation, and the execution, delivery and performance of the

Transaction Documents and such other documents delivered in connection therewith by all

parties thereto other than the Corporation have been duly authorized by all necessary corporate

and similar action, are within such other parties’ power and are in compliance with all laws,

regulations and agreements to which such other parties are subject; (b) the parties other than the

Corporation to the Transaction Documents and all documents delivered in connection therewith

are duly organized, validly existing and in good standing under the laws of the jurisdiction in

which they are organized and, to the extent required by the laws of the State of California, are

qualified to transact business in the State of California and are in good standing under its laws;

(c) the signatures on all documents that we have examined are genuine; (d) all documents that we

have reviewed and relied upon are genuine and factually accurate (without having undertaken

any investigation, no information has come to our attention that gives us current actual

knowledge of the inaccuracy or lack of genuineness of such documents); (e) the Authority is

authorized to enter into the Loan; (f) the Lender is a bank created and operating under and

4826-9157-9912.5 G-4

according to the laws of the United States of America or the State of California; and (g) no party

(other than the Corporation) to the Transaction Documents, or any document or oral agreement

relating thereto, is subject to any statute, rule, or regulation, or to any impediment to which

contracting parties are generally not subject, which requires any such party to obtain the consent

of or to make a declaration or filing with any governmental authority and in either case, which

consent has not been obtained or which declaration or filing has not been made. We have also

assumed the legal capacity of natural persons, the authenticity of all documents tendered to us as

originals and the conformity to original documents of all documents submitted as photocopies,

or as certified or electronically transmitted copies.

All opinions expressed in this letter are made with reference to, and are to be construed in

accordance with, (a) the 2005 Report of the Committee on Corporations of the Business Law

Section of the State Bar of California Regarding Legal Opinions in Business Transactions

(Excluding the Remedies Opinion) (May 2005), (b) the Report of the Uniform Commercial Code

Committee of the Business Law Section of the State Bar of California on Legal Opinions in

Personal Property Secured Transactions (June 2005), (c) a report of the Joint Committee of the

Real Property Law Section of the State Bar of California and the Real Property Section of the

Los Angeles County Bar Association entitled “Legal Opinions in California Real Estate

Transactions” (August 1987) (the “Real Property Report”), (d) the March 14, 1990 Addendum

to the Real Property Report, and (e) the Report on Third-Party Remedies Opinions of the

Business Law Section of the State Bar of California (2007 Update) as to the meaning of the

terms used, and the scope of the opinions expressed, in this letter.

This letter should not be regarded as expressing an opinion that each and every provision

of the Transaction Documents for which enforceability opinions have been given will be strictly

enforceable in accordance with its terms. We have identified specific exceptions to various

opinions regarding enforceability of certain documents or provisions; the specification of

exceptions is not exhaustive. Except as identified in these specific exceptions, however, it is our

opinion that to the extent the enforceability of some provisions of the Transaction Documents

may be limited by applicable laws, there will still exist, in the Transaction Documents or under

applicable law, legally adequate remedies for the realization by the Lender and the Authority of

the principal benefits intended to be provided to them by the Transaction Documents to which

they are a party.

Based solely on the foregoing and such legal analysis and inquiry as we deemed

appropriate and subject to the assumptions, reliances, qualifications, limitations and exceptions

set forth in this Opinion, we are of the opinion that the following statements are true as of the

date of this Opinion:

1. The Corporation is a nonprofit public benefit corporation duly

incorporated, validly existing and in good standing under the laws of the State of California, and

has the corporate power to enter into and perform the Transaction Documents.

2. The execution and delivery of the Transaction Documents have been duly

authorized by all necessary corporate action on the part of the Corporation and the Transaction

Documents have been duly executed and delivered by the Corporation.

4826-9157-9912.5 G-5

3. The Transaction Documents constitute legal, valid and binding obligations

of the Corporation enforceable against the Corporation in accordance with their terms, except to

the extent that the enforceability thereof may be subject to or limited by the following:

(a) Bankruptcy, reorganization, insolvency, moratorium or other

similar laws relating to or affecting the rights of creditors;

(b) General principles of equity, including, without limitation,

concepts of materiality, reasonableness, unconscionability, good faith and fair dealing, and the

possible unavailability of specific performance or injunctive relief, regardless of whether

considered in a proceeding in equity or at law; moreover, the use of the word “enforceable” shall

not imply any opinion as to the availability of equitable remedies;

(c) Applicable public policy affecting enforcement of indemnification

or contribution provisions, or the enforcement of release provisions to the extent such release

provisions purport to release a contracting party from the consequences of its own acts or

omissions;

(d) We advise you that waivers of the following in provisions of the

Transaction Documents may be limited by statutory or public policy grounds: (1) broadly or

vaguely stated rights, (2) the benefits of statutory, regulatory or constitutional rights, (3)

unknown future defenses, and (4) the right to damages;

(e) Limitations arising from California statutes, and/or from the

holdings of certain decisions of the courts of the State of California (and federal courts applying

the laws of such State) involving such statutes or involving public policy or principles of equity,

providing that (1) certain covenants and provisions of lending and security agreements, including

(but not limited to) those allowing for acceleration of indebtedness upon the occurrence of

certain events, are unenforceable where such covenants or provisions are found to be

unreasonable or to impose restrictions or obligations on a borrower in circumstances where it

cannot be demonstrated that the enforcement of such restrictions or obligations is reasonably

necessary for the protection of the lender, (2) waivers of rights to jury trials may not be

enforceable, (3) certain rights of secured lenders, and the procedures by which they can be

enforced, are limited by common law principles or statutory provisions related to anti-deficiency,

“one form of action,” redemption and/or reinstatement rules, and related procedural rules

(including, but not limited to, California Code of Civil Procedure Sections 580a, 580c, 580d, 726

and 729.010, California Civil Code Section 2924c, Sections 9601 through 9629 of the Uniform

Commercial Code of the State of California, and judicial decisions under any of the foregoing),

and purported waivers of such rights by borrowers may be unenforceable, (4) under certain

circumstances, provisions declaring that the failure to exercise (or a delay in exercising) rights or

remedies will not operate as a waiver of any such right or remedy, and purported waivers of

statutory or common law provisions specifying the order in which a lender is required to pursue

certain remedies, are invalid, (5) attorneys’ fees clauses that purport to benefit fewer than all

parties to an agreement may be interpreted to benefit all parties to the agreement (to the extent

they are “prevailing parties” in any proceeding), (6) attorneys’ fees clauses that purport to apply

to fewer than all the terms of an agreement may be limited, expanded or otherwise reconstrued

for enforcement purposes, (7) a lender’s right or discretion to force application of condemnation

4826-9157-9912.5 G-6

and insurance proceeds to reduce debt rather than to rebuild the insured property may be limited

in circumstances where there would be no material impairment of the lender’s security,

(8) provisions purporting to authorize the use of force or other “self-help” remedies without

following appropriate legal procedures may be unenforceable, and (9) provisions purporting to

require the Corporation to pay certain costs incurred by the Lender, the Authority and the Deed

of Trust trustee, including but not limited to the compensation of personnel of such parties, may

be unenforceable;

(f) Limitations arising under the laws of any state other than the State

of California, or under conflicts of laws principles applicable under the laws of any state

(including the State of California). Our opinion is limited to the effect of the laws of the State of

California (other than conflicts of laws principles) upon the Transaction Documents, and then

only to the extent such laws are subsequently determined to be properly applicable to such

documents;

(g) We express no opinion with respect to provisions of the

Transaction Documents that purport to restrict the right of the Corporation to transfer its property

or interests therein. Without limiting the generality of the preceding sentence, we note (1) that

Federal law (12 U.S.C. Section 1701j-3, a part of the Garn-St. Germain Depository Institutions

Act of 1982) provides for the enforceability of due-on-sale clauses upon a “sale or transfer” of

real property or an interest therein and preempts California law to that extent, and (2) that, to the

extent the Transaction Documents purport to restrict a broader class of transfers or other similar

or related actions by the Corporation, California law generally permits enforcement of restraints

on alienation that are reasonable in nature, duration and extent but may prohibit enforcement of

restraints that are unreasonable in any such respect;

(h) The Transaction Documents contain representations and covenants

of the Corporation regarding Hazardous Substances and Hazardous Materials and compliance

with Environmental Laws and Hazardous Substance Laws (as those terms are defined in the

Transaction Documents), in connection with the existence or discharge of Hazardous Substances

and Hazardous Materials on or from the Property (as that term is defined in the Loan

Agreement). California law generally permits the enforcement of such “environmental

provisions.” California law also imposes certain limitations on a lender’s enforcement of such

environmental provisions, including, by way of illustration, imposing a good faith standard,

excluding the secured obligation (other than amounts advanced by lender to cure or mitigate the

breach of the environmental provision) from the calculation of damages, limiting recovery

against a party who is no longer an owner or operator, granting certain defenses to the trustor and

imposing certain timing restrictions on any action by a lender. We express no opinion as to the

validity or enforceability of those sections in the Transaction Documents to the extent their

provisions differ from the rights or procedures specified or required under California law;

(i) We express no opinion as to the validity or enforceability of the

provisions of the Transaction Documents specifying, among other things, the manner of the

Beneficiaries’ or Trustee’s (both as defined in the Deed of Trust) exercise of their rights to

foreclose on the Property and/or to take possession of and manage the Property, procedures

regarding the appointment of a receiver for the Property, the application of the proceeds from

any such sale of the Property, or other procedural matters regarding the enforcement of such

4826-9157-9912.5 G-7

Beneficiaries’ or such Trustee’s remedies to the extent those provisions differ from the

procedures specified or required under California law;

(j) We express no opinion as to the validity or enforceability of any

provision of the Transaction Documents stating that remedies are cumulative. We note that the

general rule in California is that multiple remedies in a single cause of action are allowed as long

as the remedies are (1) not mutually exclusive and (2) legally consistent;

(k) We express no opinion as to the validity or enforceability of any

provision of the Transaction Documents purporting to assign rents, issues and profits absolutely

and not as security;

(l) We express no opinion as to the validity or enforceability of any

provision of the Loan Agreement that permits the Lender to increase the rate of interest or

impose a default rate of interest or a higher credit fee or to collect a late charge or a prepayment

fee in the event of delinquency or default;

(m) We express no opinion as to the validity or enforceability of

provisions in the Transaction Documents as they relate to issues of proof;

(n) The possible effects of usury laws regulating the maximum legal

rate of interest chargeable by lenders, as to which we express no opinion;

(o) Limitations relating to or arising out of the priority (or lack

thereof) of liens or security interests under the Transaction Documents, since we express no

opinion regarding the priority of any such liens or security interests;

(p) We advise you that the waiver of statute of limitations in the Deed

of Trust will be subject to the limitations of California Code of Civil Procedure Sections 337

(clause 1), 360.5 and 580a; and

(q) We express no opinion as to the validity or enforceability of any

provision of the Transaction Documents that purports to waive objections to venue with respect

to any actions or proceedings, or that purports to effect an agreement to refrain from raising

defenses based on venue or to refrain from attempting to transfer any actions or proceedings.

Without limiting the generality of the foregoing, we note that statutes and rules of court relating

to venue are generally non-waivable, and that the right of a court to transfer a proceeding for

venue or other reasons (including, but not limited to, inconvenient forum or removal of an action

from state to federal court) may exist in the court’s discretion regardless of any purported waiver

or agreement by one or more parties not to seek such a transfer.

4. To our current actual knowledge, there are no pending lawsuits or lawsuits

threatened in writing against the Corporation which, if determined adversely to the Corporation,

would materially adversely affect the business, operations, assets or financial condition of the

Corporation, or the consummation of the transactions contemplated by or the validity or

enforcement of the Transaction Documents.

4826-9157-9912.5 G-8

5. To our current actual knowledge, all consents, approvals, authorizations or

orders of any United States federal or California regulatory authority or governmental body

required in connection with the consummation by the Corporation of the transactions

contemplated by the Transaction Documents have been made or obtained, except (i) those

licenses, certificates, approvals, variances or permits as may be necessary (A) for the

construction or operation of the Facility (as defined in the Loan Agreement), or (B) in order that

interest on the Loan be excluded from gross income for federal or state income tax purposes, and

(ii) filings and recordings required in order to perfect or otherwise protect the security interests

under the Transaction Documents.

6. The execution and delivery of the Transaction Documents and the

performance by the Corporation of its obligations under the Transaction Documents do not

(i) violate the Corporation’s Articles of Incorporation or Bylaws, (ii) constitute a default under or

material breach of any material agreement or instrument to which the Corporation is a party,

(iii) violate any judgment, order or decree of any court or arbitrator in which the Corporation is

named as a party or which is otherwise specifically applicable to the Corporation, or (iv) violate

any federal or California law, rule or regulation, which violation in the case of this clause (iv)

would materially and adversely affect the Corporation. For purposes of clause (ii) of the

preceding sentence, the phrase “material agreement or instrument” refers only to (x) loan

agreements, (y) agreements or instruments pursuant to which the Corporation has granted a

security interest and (z) agreements or instruments pursuant to which the Corporation (A) is

obligated to pay more than $200,000 in a calendar year or (B) is entitled to receive more than

$200,000 in a calendar year.

7. The Deed of Trust is in a form sufficient to create a lien upon the real

property described therein (the “Real Property”) in favor of the Lender and the Authority, as

beneficiaries. In order to provide constructive notice of the lien created upon the Real Property

by the Deed of Trust, it is necessary to record the Deed of Trust in the Official Records of the

City and County of San Francisco, California pursuant to the recording system established by

California law. The Deed of Trust is in the proper form for such recordation.

The Deed of Trust is in a form sufficient to create, and the Deed of Trust and

Financing Statements are in a form sufficient to perfect, a security interest in all fixtures and

certain items of personal property as provided in the Deed of Trust, as to which a security

interest in the fixtures and personal property described therein may be granted in favor of the

Lender and the Authority as secured parties, with respect to those fixtures and items of personal

property in which a security interest may be perfected by filing. We understand that to perfect

the security interest created by the Deed of Trust with respect to those fixtures and items of

personal property in which a security interest may be perfected by filing, the Lender will file the

Financing Statements in the office of the California Secretary of State. We understand that for

reasons other than perfection (including reasons relating to the determination of priority relative

to other interests arising under real estate law), the Lender will record the Deed of Trust and the

Financing Statements, as fixture filings, in the Official Records of the City and County of San

Francisco, California pursuant to the filing and recording systems established pursuant to

applicable California law. Upon the filing of the Financing Statements in the office of the

California Secretary of State pursuant to the filing systems established pursuant to California

4826-9157-9912.5 G-9

law, the Lender will perfect its security interest in those fixtures and items of personal property

in which a security interest may be perfected by filing.

The Security Agreement is in a form sufficient to create a security interest in the

Corporation’s Collateral (as defined in the Security Agreement) in favor of the Lender, as the

secured party. We understand that to perfect the security interest in the Collateral with respect to

those items of Collateral in which a security interest may be perfected by filing, the Lender will

file the Financing Statements in the office of the California Secretary of State. We advise you

that perfection with respect to the Collateral that is held in cash and in deposit accounts shall

exist and continue only to the extent the Lender has possession and control of such cash and

accounts. Upon the filing of the Financing Statements in the office of the California Secretary

of State pursuant to the filing systems established pursuant to California law, the Lender will

perfect its security interest with respect to those items of Collateral in which a security interest

may be perfected by filing.

We express no opinion as to the creation or perfection of any security interest

(other than the security interest with respect to the Real Property) except to the extent that

Division 9 of the California Commercial Code governs either such matter.

In rendering the opinions in this paragraph 7, we have assumed that (a) the

description of the Property contained in the Deed of Trust and the Financing Statements is

legally sufficient to enable a subsequent purchaser or mortgagee to identify the subject property,

and (b) the description of the Collateral contained in the Security Agreement and the Financing

Statements is sufficient to reasonably identify the Collateral. Our opinion with respect to the

perfection of the security interest in the fixtures and personal property that are a part of the

Property and with respect to the perfection of security interests in the Collateral in which a

security interest may be perfected by filing is also limited to items that are or will be owned by

the Corporation during the relevant period. We call to your attention that security interests in

certain items of collateral listed in the Deed of Trust, the Security Agreement and/or the

Financing Statements (including, but not limited to, insurance policies, judgments and fixtures

that constitute ordinary building materials) either cannot be perfected by filing or cannot be

granted under the California Commercial Code; we have no reason to believe that such items

constitute or will constitute a substantial portion, individually or in the aggregate, of the

collateral in which the Lender and the Authority are intended to receive a security interest, with

the possible exception of insurance policies and/or proceeds thereof (as to which we assume that

the Lender and the Authority will make their own determination regarding materiality).

Regarding fixtures in which a security interest has been granted under the Deed of Trust, we

have assumed that such fixtures are or will be located on the Land (as such term is defined in the

Deed of Trust) and that the Corporation will have an interest of record in the Land at the time of

filing and recording of the Deed of Trust and Financing Statements. Regarding fixtures and

personal property not yet owned by the Corporation that upon acquisition constitute Property or

Collateral, a security interest cannot be perfected until the security interest has attached, a

condition which will not be met until the Corporation acquires an interest in such collateral; we

have assumed the occurrence of future events necessary for such attachment, and that no future

events will occur prior to such attachment that would preclude the attachment of the security

interest to any such collateral as a matter of law.

4826-9157-9912.5 G-10

We have not made or undertaken any investigation of the state of title to the

Property described in the Deed of Trust or the Collateral described in the Security Agreement,

and we express no opinion with respect to the title thereto or the priority of any liens thereon or

security interests therein, and the opinions in this paragraph (7) should not be interpreted to

address the priority of security interests created or evidenced by the Deed of Trust, the Security

Agreement and the Financing Statements.

Except for the filing of periodic continuation statements as required by the

California Commercial Code and except for the recording of a Notice of Intent to Preserve

Security Interest pursuant to California Civil Code Sections 880.310-880.370, it is not necessary

to re-record, re-register, or re-file the Deed of Trust or to record, register, or file any other or

additional documents, instruments, or statements in order to maintain the liens and security

interests created thereby; provided, however, that additional financing statements and fixture

filings may be required to be filed if the Corporation changes its name, identity, or corporate

structure, or the jurisdiction in which its place of business is located.

8. The Corporation is an organization described in Section 501(c)(3) of the

Internal Revenue Code of 1986, as amended (the "Code"), and is exempt from federal income

taxes under Section 501(a) of the Code. The foregoing opinion is based on (i) the IRS Letters,

(ii) the Factual Certificate, (iii) a review of the Minutes of Board of Trustees of the Corporation

(which Minutes include actions by written consent of the Board of Trustees) for the period from

September 2007 to November 15, 2010, and draft Minutes from the December 13, 2010 meeting

of the Board of Trustees (collectively, the “Board Minutes”), and (iv) such legal analysis and

inquiry as we deemed appropriate. To our current actual knowledge, the Corporation is in

compliance with the terms, conditions and limitations contained in Section 501(c)(3) of the Code

and in the IRS Letters. To our current actual knowledge, there is no pending or threatened

change in such status, and no information has come to our attention that would indicate that the

Corporation is no longer eligible for such status.

9. The Corporation does not have “unrelated business taxable income” as

defined in Section 512 of the Code in an amount that would have a material adverse effect on its

status as an organization described in Section 501(c)(3) of the Code or that would have a

material adverse effect on its condition, financial or otherwise. The Facility, as defined in the

Loan Agreement, is used in furtherance of the Corporation's “exempt purpose” as defined in

Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The foregoing opinion is

based on (i) a review of the Corporation’s federal tax returns for fiscal years ending in 2007,

2008 and 2009, and (ii) the Factual Certificate, and we have relied on these specified materials in

issuing the foregoing opinion. No facts have come to our attention that would lead us to

conclude that more than three percent of the proceeds of the Loan will be used by the

Corporation in any “unrelated trade or business” within the meaning of Section 513(a) of the

Code.

Except as previously stated in this Opinion, we are not expressing any opinion as to the

effect of compliance or noncompliance by any party other than the Corporation with any state or

federal laws or regulations applicable to the subject transaction because of such other party’s

identity, domicile or organizational status or the nature of its business. In regard to any relevant

characterization of the relationship between the Corporation and the Authority as a lending

4826-9157-9912.5 G-11

relationship, we are not expressing any opinion as to the impact of any action the Authority may

take in the future on that characterization, or on the rights and liabilities associated therewith.

We are licensed to practice law only in the State of California. Accordingly, the

foregoing opinions apply only insofar as the laws of the State of California (or relevant federal

laws) are applicable, and we express no opinion with respect to the laws of any other jurisdiction.

This opinion is furnished to each of you solely for your benefit with respect to this

transaction and may not be used or relied upon by any of you for any other purpose, nor may it

be delivered to or otherwise communicated to, used by or relied upon by any other person for

any purpose, without our prior written consent in each instance.

Very truly yours,

4826-9157-9912.5

EXHIBIT H

SCHEDULE OF PAYMENTS

[TO BE PROVIDED BY LENDER AT END OF DRAW PERIOD]