Collier County Industrial Development Authority · 2013. 12. 24. · for the Authority by its counsel, Donald A. Pickworth, P.A., Naples, Florida, for the Corporation by its counsel,

NEW ISSUE/BOOK-ENTRY RATING: NOT RATED See “No Rating” herein

In the opinion of Nabors, Giblin & Nickerson, P.A., Bond Counsel, assuming continuing compliance with certain tax covenants, the interest on the Series 2013 Bonds is excluded from gross income for federal income tax purposes and is not subject to the federal alternative minimum tax on individuals under existing statutes, regulations, rulings and court decisions. However, see “TAX MATTERS” herein for a description of the alternative minimum tax imposed on corporations and certain other federal tax consequences of ownership of the Series 2013 Bonds. Bond Counsel is of the opinion that the Series 2013 Bonds and the interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, as defined therein. See “TAX MATTERS” herein for a more complete discussion.

$190,295,000COLLIER COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

CONTINUING CARE COMMUNITY REVENUE BONDS(THE ARLINGTON OF NAPLES PROJECT)

consisting of

$128,295,000 Series 2013A

$12,000,000 Series 2013B-1

(Mandatory Paydown Securities (TEMPS-85SM))

$50,000,000 Series 2013B-2

(Mandatory Paydown Securities (TEMPS-70SM))

Dated: Date of Delivery Due: May 15, as shown below

Interest is due and payable semiannually on May 15 and November 15 of each year, commencing May 15, 2014. Principal of, redemption premium, if any, and interest on the Series 2013 Bonds shall be paid by the Bond Trustee to the owners of the Series 2013 Bonds at their addresses as they appear on the registry books of the Bond Trustee as of the close of the Bond Trustee’s business on each Record Date.

The Collier County Industrial Development Authority (the “Authority”) is issuing its $128,295,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013A (the “Series 2013A Bonds”), $12,000,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B-1 (Mandatory Paydown Securities (TEMPS-85SM)) (the “Series 2013B-1 Bonds”), $50,000,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B-2 (Mandatory Paydown Securities (TEMPS-70SM)) (the “Series 2013B-2 Bonds” and, together with the Series 2013B-1 Bonds, the “Series 2013B Bonds” and, together with the Series 2013A Bonds and the Series 2013B-1 Bonds, the “Series 2013 Bonds”). The Series 2013 Bonds will be issued and secured under an Indenture of Trust (the “Bond Indenture”) between the Authority and Wells Fargo Bank, National Association, Chicago, Illinois, as bond trustee (the “Bond Trustee”). The proceeds of the Series 2013 Bonds will be loaned to The Arlington of Naples, an Illinois not for profit corporation qualified to do business in the State of Florida as The Arlington of Naples, Inc. (the “Corporation”) and will be used primarily to (i) currently refund the Authority’s outstanding $10,900,000 Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011 (the “Series 2011 Notes”); (ii) pay off the Corporation’s $19,490,000 Lutheran Church Extension Fund - Missouri Synod Promissory Note (the “LCEF Promissory Note” and, together with the Series 2011 Notes, the “Prior Debt”); and (iii) finance and refinance the cost of (or reimburse itself and/or one or more of its affiliated corporations for prior expenditures for) all or a portion of: (a) the acquisition, construction, equipping and installation (and related development costs) of the capital expenditures related to a campus consisting of an estimated 163 independent living units (of which an estimated 31 will be villas), an estimated 79 assisted living units (of which an estimated 37 will be memory support units), and an estimated 44 skilled nursing beds along with associated common areas (collectively, the “Project”), (b) capitalized interest during the construction period, (c) fund a debt service reserve fund with respect to each series of the Series 2013 Bonds, and (d) costs of issuance related to the Series 2013 Bonds. The sources of payment of, and security for, the Series 2013 Bonds are more fully described in this Limited Offering Statement.

The Series 2013 Bonds, when issued, will be registered initially only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York (“DTC”). See “BOOK-ENTRY SYSTEM.”

An investment in the Series 2013 Bonds involves a certain degree of risk related to the nature of the business of the Corporation, the regulatory environment, and the provisions of the principal documents. A prospective Series 2013 Bondholder is advised to read “SECURITY FOR THE SERIES 2013 BONDS,” “SECURITY FOR THE SERIES 2013 NOTES” and “RISK FACTORS” herein for a description of the security for the Series 2013 Bonds and for a discussion of certain risk factors which should be considered in connection with an investment in the Series 2013 Bonds. Purchasers of the Series 2013 Bonds must be either “qualified institutional buyers” as defined in Rule 144A or “accredited investors” as defined under Rule 501 of Regulation D of the Securities Act of 1933 until the Corporation applies for and receives a rating on the Series 2013 Bonds of at least “BBB/Baa3” or equivalent from any Rating Agency, if ever. See “THE SERIES 2013 BONDS – Limitations on Investors and Restrictions on Transfer” herein.

THE SERIES 2013 BONDS WILL BE SUBJECT TO OPTIONAL, MANDATORY AND EXTRAORDINARY REDEMPTION AND PURCHASE IN LIEU OF REDEMPTION, ALL AS MORE FULLY DESCRIBED HEREIN.

THE SERIES 2013 BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY SECURED BY THE LOAN AGREEMENT AND SHALL ALWAYS BE PAYABLE SOLELY FROM THE REVENUES AND INCOME DERIVED FROM THE LOAN AGREEMENT (EXCEPT TO THE EXTENT PAID OUT OF MONEYS ATTRIBUTABLE TO PROCEEDS OF THE SERIES 2013 BONDS OR THE INCOME FROM THE TEMPORARY INVESTMENT THEREOF) AND SHALL ALWAYS BE A VALID CLAIM OF THE OWNER THEREOF ONLY AGAINST THE REVENUES AND INCOME DERIVED FROM THE LOAN AGREEMENT, WHICH REVENUES AND INCOME SHALL BE USED FOR NO OTHER PURPOSE THAN TO PAY THE PRINCIPAL OF AND INTEREST ON THE SERIES 2013 BONDS, EXCEPT AS MAY BE EXPRESSLY AUTHORIZED OTHERWISE IN THE BOND INDENTURE AND IN THE LOAN AGREEMENT.

THE SERIES 2013 BONDS AND THE OBLIGATION TO PAY THE PRINCIPAL OF AND INTEREST THEREON DO NOT NOW AND SHALL NEVER CONSTITUTE AN INDEBTEDNESS OR AN OBLIGATION OF THE AUTHORITY, THE STATE, COLLIER COUNTY, FLORIDA OR ANY OTHER POLITICAL SUBDIVISION THEREOF, WITHIN THE PURVIEW OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR PROVISION, OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS, IF ANY, OF ANY OF THEM, BUT SHALL BE SECURED AS AFORESAID, AND SHALL BE PAYABLE SOLELY FROM THE REVENUES AND INCOME DERIVED FROM THE LOAN AGREEMENT (EXCEPT AS STATED AFORESAID). NO OWNER OF THE SERIES 2013 BONDS SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF THE TAXING POWER, IF ANY, OF THE AUTHORITY, THE STATE, COLLIER COUNTY, FLORIDA OR ANY OTHER POLITICAL SUBDIVISION THEREOF TO PAY THE PRINCIPAL OF OR INTEREST ON THE SERIES 2013 BONDS. THE AUTHORITY HAS NO TAXING POWER.

The Series 2013 Bonds are being offered when, as and if issued and accepted by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice, and subject to the approving opinion of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel. Certain legal matters will be passed upon for the Authority by its counsel, Donald A. Pickworth, P.A., Naples, Florida, for the Corporation by its counsel, Chuhak & Tecson, P.C., Chicago, Illinois and Holland & Knight LLP, special Florida counsel to the Corporation and for the Underwriter by its counsel, Katten Muchin Rosenman LLP, Chicago, Illinois. It is expected that the Series 2013 Bonds in definitive form will be available for delivery to the Bond Trustee on behalf of DTC by Fast Automated Securities Transfer on or about January 8, 2014.

This cover page contains certain information for ease of reference only. It does not constitute a summary of the Series 2013 Bonds or the security therefor. Potential investors must read this entire Limited Offering Statement, including the APPENDICES, to obtain information essential to the making of an informed investment decision.

Limited Offering Statement dated December 13, 2013

SM TEMPS-70 and TEMPS-85 are each a Service Mark of B.C. Ziegler and Company.

THE SERIES 2013A BONDS Dated: Date of Delivery Due: May 15, as shown below

The Series 2013A Bonds will be issuable in fully registered form without coupons in denominations of $100,000 or any integral multiple of $5,000 in excess thereof. Interest on the Series 2013A Bonds will be payable on each May 15 and November 15, commencing on May 15, 2014.

$6,360,000 7.000% Term Bonds due May 15, 2024, Priced: 100.000% to yield 7.000%, CUSIP† 194638AC6 $3,215,000 7.250% Term Bonds due May 15, 2026, Priced: 100.000% to yield 7.250%, CUSIP 194638AG7 $22,040,000 7.750% Term Bonds due May 15, 2035, Priced: 97.444% to yield 8.00%, CUSIP 194638AE2 $5,000,000 8.000% Term Bonds due May 15, 2037, Priced: 98.684% to yield 8.125%, CUSIP 194638AF9 $38,760,000 8.125% Term Bonds due May 15, 2044, Priced: 98.598% to yield 8.250%, CUSIP 194638AD4 $52,920,000 8.250% Term Bonds due May 15, 2049, Priced: 98.572% to yield 8.375%, CUSIP 194638AB8

THE SERIES 2013B-1 BONDS

Dated: Date of Delivery Due: May 15, 2021

The Series 2013B-1 Bonds will be issuable in fully registered form without coupons in denominations of $100,000 or any integral multiple of $5,000 in excess thereof. Interest on the Series 2013B-1 Bonds will be payable on each May 15 and November 15, commencing on May 15, 2014.

$12,000,000 6.875% Term Bonds due May 15, 2021, Priced: 100% to yield 6.875%, CUSIP 194638AH5

THE SERIES 2013B-2 BONDS

Dated: Date of Delivery Due: May 15, 2020

The Series 2013B-2 Bonds will be issuable in fully registered form without coupons in denominations of $100,000 or any integral multiple of $5,000 in excess thereof. Interest on the Series 2013B-2 Bonds will be payable on each May 15 and November 15, commencing on May 15, 2014.

$50,000,000 6.500% Term Bonds due May 15, 2020, Priced: 100% to yield 6.500%, CUSIP 194638AJ1

† CUSIP is a registered trademark of American Bankers Association. CUSIP data herein is provided by Standard & Poor’s CUSIP Bureau, a division of The McGraw–Hill Companies, Inc. The CUSIP numbers are provided for convenience of reference only.

The Arlington of Naples Site Location

Lely Resort

The A

rlington of Naples Site Plan

The Promenade at The Arlington of Naples

The Arlington of Naples: Renderings

Top: Independent Living Apartments

Middle: Main Entrance

Bottom: Health Center (3D)

The Arlington of Naples: Renderings

Top: Independent Living Apartment

Middle: Grand Hall

Bottom: Bistro Marketplace

Top: Independent Living Villa

Middle: Terrace Lounge

Bottom: Pub Entrance

REGARDING USE OF THIS LIMITED OFFERING STATEMENT

The information contained herein relating to the Authority under the heading “THE AUTHORITY” and “LITIGATION – The Authority” has been obtained from the Authority. The information under the heading “BOOK-ENTRY SYSTEM” has been obtained from The Depository Trust Company. All other information contained herein has been obtained from The Arlington of Naples (the “Corporation”) and other sources (other than the Authority) deemed by B.C. Ziegler and Company (the “Underwriter”) to be reliable. Such other information is not guaranteed as to accuracy or completeness by, and is not to be relied upon as or construed as a promise or representation by, the Authority or the Underwriter. The Underwriter has provided the following sentence for inclusion in the Limited Offering Statement. The Underwriter has reviewed the information in this Limited Offering Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information herein is subject to change without notice, and neither the delivery of this Limited Offering Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority or the Corporation since the date hereof.

No dealer, broker, salesperson or other person has been authorized by the Authority, the Corporation or its affiliated organizations or the Underwriter to give any information or to make any representations other than those contained in this Limited Offering Statement and, if given or made, such information or representations must not be relied upon as having been authorized by any of the foregoing. This Limited Offering Statement shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be a sale of Series 2013 Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Limited Offering Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority or its affiliated organizations since the date hereof.

The Authority has not reviewed or approved any information in this Limited Offering Statement and does not assume any responsibility for the accuracy or completeness of any information contained in this Limited Offering Statement, except such information relating specifically to the Authority under the captions, “THE AUTHORITY” and “LITIGATION – The Authority.”

In making an investment decision, investors must rely upon their own examination of the terms of the offering, including the merits and risks involved.

IN CONNECTION WITH THE OFFERING OF THE SERIES 2013 BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2013 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE SERIES 2013 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR HAVE THE BOND INDENTURE OR THE MASTER INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2013 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THE SERIES 2013 BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS RECOMMENDATIONS THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SERIES 2013 BONDS OR THE ACCURACY OR COMPLETENESS OF THE

LIMITED OFFERING STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS LIMITED OFFERING STATEMENT

Certain statements included or incorporated by reference in this Limited Offering Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “expect,” estimate,” “budget” or similar words.

The Community (as defined herein) is in the development stage. As a result, the description of the Community, and the services expected to be offered by the Community that are described herein and in APPENDIX A and APPENDIX B hereto are based on existing plans and existing contracts. Such plans and contracts are subject to modification and, as a result, upon completion of construction, the actual Community could differ materially from the description of the Community and the services described therein. The description of the Community and the services to be offered is a description of what is currently planned to be developed in accordance with the existing plans and contracts, and should be construed as forward looking statements.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CORPORATION DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.

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TABLE OF CONTENTS

Page

SUMMARY STATEMENT .......................................................................................................................... i INTRODUCTION ........................................................................................................................................ 1

Purpose of this Limited Offering Statement ............................................................................................ 1 The Authority........................................................................................................................................... 1 The Corporation ....................................................................................................................................... 1 Purpose of the Series 2013 Bonds ........................................................................................................... 3 Security for the Series 2013 Bonds .......................................................................................................... 3 Limitations on Investors and Restrictions on Transfer ............................................................................ 4

PLAN OF FINANCE .................................................................................................................................... 4 The Refunding ......................................................................................................................................... 5 The Project ............................................................................................................................................... 5

ESTIMATED SOURCES AND USES OF FUNDS .................................................................................... 6 ANNUAL DEBT SERVICE REQUIREMENTS ......................................................................................... 7 THE SERIES 2013 BONDS ......................................................................................................................... 8

General Description ................................................................................................................................. 8 Optional and Mandatory Redemption of the Series 2013A Bonds .......................................................... 9 Optional and Mandatory Redemption of the Series 2013B Bonds ........................................................ 11 Additional Redemption Provisions ........................................................................................................ 12 Exchange and Transfer .......................................................................................................................... 13 Limitations on Investors and Restrictions on Transfer .......................................................................... 14 Advance Refunding of the Series 2013 Bonds ...................................................................................... 14

SECURITY FOR THE SERIES 2013 BONDS .......................................................................................... 14 BOOK-ENTRY SYSTEM .......................................................................................................................... 16 SECURITY FOR THE SERIES 2013 NOTES .......................................................................................... 18

General ................................................................................................................................................... 18 Additional Indebtedness ........................................................................................................................ 20 Amendments to the Master Indenture .................................................................................................... 20 Certain Master Indenture Covenants of the Obligated Group ............................................................... 20

LIQUIDITY SUPPORT AGREEMENT .................................................................................................... 36 Liquidity Support Fund .......................................................................................................................... 36 Reductions of the Liquidity Support Obligation .................................................................................... 36 Draws on the Liquidity Support Fund ................................................................................................... 38 General ................................................................................................................................................... 40 Investment ............................................................................................................................................. 40 Liquidity Covenant ................................................................................................................................ 40 Subordination Provisions ....................................................................................................................... 41 Amendments and Waivers ..................................................................................................................... 41

PRIORITY OF DRAWINGS FROM VARIOUS FUNDS ........................................................................ 43 THE AUTHORITY .................................................................................................................................... 43 RISK FACTORS ........................................................................................................................................ 45

General ................................................................................................................................................... 45 Impact of Market Turmoil ..................................................................................................................... 45 Additions to the Obligated Group .......................................................................................................... 45 Development of the Community............................................................................................................ 46 Management of the Community ............................................................................................................ 46 Sale, Lease or Other Disposition of Property, Transfers to Affiliates ................................................... 46

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Construction Risks ................................................................................................................................. 46 Construction Consultant Approval of Construction Draws ................................................................... 47 Redemption of the Series 2013B Bonds from Initial Entrance Fees ..................................................... 47 Adequacy of Remedies .......................................................................................................................... 48 Uncertainty of Revenues ........................................................................................................................ 48 Failure to Achieve and Maintain Occupancy ........................................................................................ 49 Sale of Homes ........................................................................................................................................ 49 Utilization Demand ................................................................................................................................ 49 Competition ........................................................................................................................................... 49 Nature of Facilities ................................................................................................................................ 50 Rights of Residents ................................................................................................................................ 50 Present and Prospective Federal and State Regulation .......................................................................... 50 Proposed Regulation .............................................................................................................................. 50 Health Care Reform ............................................................................................................................... 51 Medicare and Medicaid Programs ......................................................................................................... 51 Regulation of Health Care and Long Term Care Industries .................................................................. 53 Privacy and Security Regulations .......................................................................................................... 56 Increases in Medical Costs .................................................................................................................... 58 Malpractice Claims ................................................................................................................................ 58 Potential Employee Shortage ................................................................................................................. 58 Taxpayer Relief Act of 1997 and Unrelated Business Taxation ............................................................ 58 Imputed Interest on Certain Refundable Entrance Fees ........................................................................ 59 Passive Income Received from Health System Subsidiary. .................................................................. 59 Intermediate Sanctions ........................................................................................................................... 60 Possible Changes in Tax Status ............................................................................................................. 61 Amendments to the Documents ............................................................................................................. 62 Additional Debt ..................................................................................................................................... 63 Bankruptcy ............................................................................................................................................. 63 Certain Matters Relating to Enforceability of the Master Indenture ..................................................... 63 Interest Rate Swap and Other Hedge Risk ............................................................................................. 65 Uncertainty of Investment Income ........................................................................................................ 66 Environmental Matters .......................................................................................................................... 66 Flooding and Other Natural Disasters ................................................................................................... 66 Other Possible Risk Factors ................................................................................................................... 67 Lack of Marketability for the Series 2013 Bonds .................................................................................. 68 Absence of a Bond Rating ..................................................................................................................... 68

FLORIDA REGULATION OF CONTINUING CARE FACILITIES ...................................................... 68 Certificate of Authority; Initial Entrance Fees....................................................................................... 68 Required Reserves ................................................................................................................................. 69 Continuing Care Agreements and Residents’ Rights ............................................................................. 70 Examinations and Delinquency Proceedings ......................................................................................... 71

FINANCIAL REPORTING AND CONTINUING DISCLOSURE .......................................................... 72 Financial Reporting ............................................................................................................................... 72 Continuing Disclosure ........................................................................................................................... 74

LITIGATION .............................................................................................................................................. 78 The Authority......................................................................................................................................... 78 The Corporation ..................................................................................................................................... 78

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LEGAL MATTERS .................................................................................................................................... 79 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS ............................................. 79 TAX MATTERS ......................................................................................................................................... 79

Bonds ..................................................................................................................................................... 79 FEASIBILITY STUDY .............................................................................................................................. 81 NO RATING ............................................................................................................................................... 82 UNDERWRITING ..................................................................................................................................... 82 MISCELLANEOUS ................................................................................................................................... 82 APPENDICES

APPENDIX A – THE ARLINGTON OF NAPLES APPENDIX B – FINANCIAL FEASIBILITY STUDY APPENDIX C – DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN

PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS APPENDIX D – FORM OF OPINION OF BOND COUNSEL

[THIS PAGE INTENTIONALLY LEFT BLANK]

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SUMMARY STATEMENT

The information set forth in this Summary Statement is subject in all respects to more complete information set forth elsewhere in this Limited Offering Statement, which should be read in its entirety. The offering of the Series 2013 Bonds to potential investors is made only by means of this entire Limited Offering Statement. No person is authorized to detach this Summary Statement from this Limited Offering Statement or otherwise to use it without this entire Limited Offering Statement.

The Series 2013 Bonds

The Collier County Industrial Development Authority (the “Authority”), a body politic and corporate created and existing under the Collier County Industrial Development Authority Act, as amended (the “Act”), proposes to issue $128,295,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013A (the “Series 2013A Bonds”), $12,000,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B-1 (Mandatory Paydown Securities (TEMPS-85SM)) (the “Series 2013B-1 Bonds”) and $50,000,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B-2 (Mandatory Paydown Securities (TEMPS-70SM)) (the “Series 2013B-2 Bonds” and, together with the Series 2013B-1 Bonds, the “Series 2013B Bonds” and, together with the Series 2013A Bonds, the “Series 2013 Bonds”). The Series 2013 Bonds will be subject to optional, mandatory and extraordinary redemption and purchase in lieu of redemption, as described in this Limited Offering Statement. A description of the Series 2013 Bonds is contained in this Limited Offering Statement under the caption “THE SERIES 2013 BONDS.”

The Series 2013 Bonds will be issued pursuant to an Indenture of Trust, dated as of December 1, 2013 (the “Bond Indenture”), by and between the Authority and Wells Fargo Bank, National Association, Chicago, Illinois, as bond trustee (the “Bond Trustee”). The proceeds of the Series 2013 Bonds will be loaned to The Arlington of Naples registered in the State of Florida as The Arlington of Naples, Inc. (the “Corporation”) pursuant to a Loan Agreement dated as of December 1, 2013 (the “Loan Agreement”), by and between the Corporation and the Authority.

The Corporation will use the proceeds from the sale of the Series 2013 Bonds, together with other available funds, to (i) currently refund the Authority’s outstanding $10,900,000 Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011 (the “Series 2011 Notes”); (ii) pay off the Corporation’s $19,490,000 Lutheran Church Extension Fund - Missouri Synod Promissory Note (the “LCEF Promissory Note” and, together with the Series 2011 Notes, the “Prior Debt”); and (iii) finance and refinance the cost of (or reimburse itself and/or one or more of its affiliated corporations for prior expenditures for) all or a portion of: (a) the acquisition, construction, equipping and installation (and related development costs) of the capital expenditures related to a campus consisting of an estimated 163 independent living units (of which an estimated 31 will be villas), an estimated 79 assisted living units (of which an estimated 37 will be memory support units), and an estimated 44 skilled nursing beds along with associated common areas (collectively, the “Project”), (b) capitalized interest during the construction period, (c) fund a debt service reserve fund with respect to each Series of the Series 2013 Bonds, and (d) costs of issuance related to the Series 2013 Bonds. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS.”

The purchase of the Series 2013 Bonds involves a significant degree of risk. The eligibility to purchase, and the ability to subsequently sell or transfer, the Series 2013 Bonds is limited to “qualified institutional buyers” as defined under Rule 144A or “accredited investors” as defined under Rule 501 of Regulation D of the Securities Act of 1933 until the Corporation applies for and receives a rating on the Series 2013 Bonds of at least “BBB/Baa3” or equivalent from any

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Rating Agency, if ever. See “THE SERIES 2013 BONDS – Limitations on Investors and Restrictions on Transfer” herein.

The Corporation

The Corporation is an Illinois not for profit corporation, qualified to do business in Florida as The Arlington of Naples, Inc., and exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), as an organization described in Section 501(c)(3) of the Code under the group exemption of The Evangelical Lutheran Church in America. The Corporation was created in 2008 with Lutheran Life Ministries, f/k/a Lutheran Life Communities (“LLM”) as its sole member. LLM was organized in 2005 as an Illinois not for profit corporation, building on the 113 year history of the Lutheran Home in Arlington Heights which was incorporated in 1892. LLM has received a determination letter from the Internal Revenue Service that it is exempt from federal income tax under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code. LLM is the parent corporation of a system which is now comprised of five continuing care communities for senior living (including the Lutheran Home) and provides vibrant grace-filled living across all generations through residential and community services. LLM has provided considerable pre-finance development and economic support to the Corporation, discussed in more detail below. LLM AND ITS AFFILIATES ARE NOT MEMBERS OF THE OBLIGATED GROUP AND ARE NOT OBLIGATED TO MAKE ANY PAYMENTS WITH RESPECT TO THE LOAN AGREEMENT OR THE SERIES 2013 NOTES OR WITH RESPECT TO THE SERIES 2013 BONDS. HOWEVER, LLM HAS AGREED UNDER THE HEREINAFTER DESCRIBED LIQUIDITY SUPPORT AGREEMENT TO PROVIDE CERTAIN LIMITED SUPPORT TO THE CORPORATION.

The Corporation has entered into Development Consulting Agreements with CRSA/LCS Management, LLC (“CRSA/LCS”) and Lutheran Life Communities f/k/a VeriSpring, an Illinois not for profit corporation (“LLC”) which has LLM as its sole corporate member (CRSA/LCS and LLC are collectively referred to herein as the “Developer”) (collectively, the “Development Agreements”) pursuant to which the Developer has agreed to carry out development and marketing responsibilities with respect to the Project. For more information please see “DEVELOPMENT OF THE COMMUNITY – CRSA” and “–Development Agreement with Lutheran Life Communities” in APPENDIX A.

The Corporation has entered into a Consulting Services Agreement with LLC (the “Consulting Services Agreement”) pursuant to which LLC will provide certain professional administrative, management and support services including: corporate management, accounting and payroll, human resources, information technology, marketing and risk management. For more information please see “MANAGEMENT” in APPENDIX A. LLC’s fees under the Consulting Services Agreement are subject to certain subordination provisions more fully described in “MANAGEMENT – Consulting Services Agreement” in APPENDIX A.

As of December 13, 2013, the Corporation had received Entrance Fee deposits for 125 Entrance Fee Units, representing approximately 82.8% of the 151 total planned Entrance Fee Units at the Community. Further information regarding the Corporation, its history, organization and future plans is included in APPENDICES A and B hereto.

Pre-finance Capital

Lutheran Church Extension Fund Promissory Note. In July 2008, the Lutheran Church Extension Fund – Missouri Synod (“LCEF”), a Missouri non-profit organization, provided the LCEF Promissory Note, a five year, interest bearing promissory note of $19,490,000. The LCEF

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Promissory Note was used to purchase the land on which the project will be situated. The LCEF Promissory Note will be repaid with a portion of the Series 2013 Bond proceeds.

Series 2011 Notes. In June 2011, the Authority issued the Series 2011 Notes, consisting of $10,900,000 of non-rated, tax-exempt Continuing Care Community Revenue Bond Anticipation Notes. The Series 2011 Notes are going to be repaid with a portion of the Series 2013 Bonds.

Deferred Note Payable. LLM has and continues to provide funds to aid in pre-construction development cost of the Project in amounts anticipated to reach $17.8 Million by the closing of the Series 2013 Bonds. Of these amounts, it is anticipated that $2,424,000 will be treated as an investment of LLM, $6,509,000 will be treated as a loan from LLM to the Corporation and secured by a note (the “Deferred Note Payable”) subject to the repayment limitations described herein under the heading “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness,” and the balance will be repaid to LLM from proceeds of the Series 2013 Bonds.

Security for the Series 2013 Bonds

The Master Indenture and the Series 2013 Notes. The Series 2013A Bonds will be limited obligations of the Authority and will be secured by the Corporation’s Note, Series 2013A (the “Series 2013A Note”) in the aggregate principal amount of the Series 2013A Bonds and the Series 2013B Bonds will be limited obligations of the Authority and will be secured by the Corporation’s Note, Series 2013B (the “Series 2013B Note” and, together with the Series 2013A Note the “Series 2013 Notes”) in the aggregate principal amount of the Series 2013B Bonds. The Series 2013 Notes will be issued pursuant to the Master Trust Indenture dated as of December 1, 2013 (the “Master Indenture”) between the Corporation, as the initial Member of an obligated group (the “Obligated Group”), and Wells Fargo Bank, National Association, as master trustee (the “Master Trustee”). Upon the issuance of the Series 2013 Bonds, the Series 2013 Notes will be the only Notes outstanding under the Master Indenture.

The Authority will pledge and assign the Series 2013 Notes and certain of its rights under the Loan Agreement to the Bond Trustee as security for the Series 2013 Bonds. The terms of the Series 2013 Notes will require payments by the Corporation and any future members of the Obligated Group which, together with other moneys available therefor (and interest earned thereon), will be sufficient to provide for the payment of the principal of and interest on the Series 2013 Bonds.

The Series 2013 Notes will entitle the Bond Trustee, as the holder thereof, to the protection of the covenants, restrictions and other obligations imposed upon the Corporation and any future members of the Obligated Group by the Master Indenture. The Master Indenture permits the Obligated Group to issue Additional Notes that will be secured under the Master Indenture. Each member of the Obligated Group will be jointly and severally obligated on all Notes, including the Series 2013 Notes, which are issued pursuant to the Master Indenture. All Notes issued by the Members of the Obligated Group will be equally and ratably secured by (i) a mortgage on the hereinafter described Mortgaged Property and (ii) a security interest in the Gross Revenues of the Obligated Group, subject in each case only to Permitted Encumbrances. See “SECURITY FOR THE SERIES 2013 NOTES.”

Any Additional Notes issued by the Obligated Group under the Master Indenture: (i) may be equally and ratably secured with the Notes, including the Series 2013 Notes, outstanding under the Master Indenture or (ii) may be entitled to the benefit of security in addition to that securing the Notes outstanding under the Master Indenture, which security need not be extended to any other Notes. See “SECURITY FOR THE SERIES 2013 NOTES – Additional Indebtedness.”

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Debt Service Reserve Fund. Payment of the principal of and interest on each series of the Series 2013 Bonds will be additionally secured by moneys deposited to the credit of a Debt Service Reserve Fund, as established under the Bond Indenture. See “SECURITY FOR THE SERIES 2013 BONDS” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Bond Indenture – Section 3.10 Use of Moneys in the Reserve Fund” in APPENDIX C herein.

The Mortgage. Pursuant to a Mortgage and Security Agreement from the Corporation, as mortgagor, to the Master Trustee, as mortgagee, dated as of December 1, 2013 (the “Mortgage”), the Corporation will grant the Master Trustee: (i) a first mortgage lien on certain real and personal property of the Corporation, (ii) a security interest in the fixtures located thereon and (iii) any and all other property of every kind and nature owned by the Corporation conveyed, pledged, assigned or transferred as additional security to the Master Trustee (collectively, the “Mortgaged Property”), in each case subject to Permitted Encumbrances, as security for the payment of the Series 2013 Notes and all other Notes hereafter issued under the Master Indenture. The Mortgaged Property does not include personal property of the Corporation other than materials incorporated into or to be incorporated into the building and fixtures comprising the Project.

Security Interest in Gross Revenues. Pursuant to the Master Indenture, each Member of the Obligated Group has granted a security interest in its Gross Revenues (subject to Permitted Encumbrances) as security for the payment of the Series 2013 Notes and all other Notes hereafter issued under the Master Indenture. See “SECURITY FOR THE SERIES 2013 BONDS” and “RISK FACTORS – Certain Matters Relating to Enforceability of the Master Indenture” herein.

“Gross Revenues” means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third party payments), condemnation awards, Entrance Fees, Federal Subsidy Payments and other moneys received by or on behalf of any Obligated Group Member, including (without limitation) revenues derived from (a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, (b) proceeds received from (i) accounts, (ii) securities and other investments, (iii) inventory and other tangible and intangible property, and (iv) accounts receivable, general intangibles, contract rights, chattel paper, instruments and other rights and assets now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, and (c) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities; provided, however, that there shall be excluded from Gross Revenues (i) all such items, whether now owned or hereafter acquired by the Obligated Group Members, which by their terms or by reason of applicable law cannot be granted, assigned or pledged under the Master Indenture or which would become void or voidable if granted, assigned or pledged under the Master Indenture by the Obligated Group Members, or which cannot be granted, pledged or assigned under the Master Indenture without the consent of other parties whose consent is not secured, or without subjecting the Master Trustee to a liability not otherwise contemplated by the provisions of the Master Indenture, or which otherwise may not be, or are not, hereby lawfully and effectively granted, pledged and assigned by the Obligated Group Members, (ii) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent, (iii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use of payments

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required under the Master Trust Indenture, (iv) any moneys received by any Obligated Group Member from prospective residents or commercial tenants in order to pay for customized improvements to those Independent Living Units or other areas of the Facilities to be occupied or leased to such residents or tenants, (v) all deposits made pursuant to Residency Agreements to be held in escrow pursuant to Chapter 651, Florida Statutes, until construction of the Facilities is completed, a certificate of occupancy has been issued and appropriate licenses, if required, have been issued, and (vi) all deposits and/or advance payments made in connection with any leases of the Independent Living Units and received prior to receipt of such certificate and licenses.

Liquidity Support Agreement. The Corporation, LLM, the Master Trustee and the Bond Trustee will enter into a liquidity support agreement (the “Liquidity Support Agreement”) upon closing of the Series 2013 Bonds. At closing LLM will transfer to the Master Trustee $7,000,000 for deposit into the Liquidity Support Fund (the “Liquidity Support Fund”). Additionally, upon the occurrence of a Funding Event, as defined in the Liquidity Support Agreement, LLM is obligated to deposit up to an additional $3,000,000 therein. The Liquidity Support Fund may be drawn by the Bond Trustee, the Master Trustee or the Corporation for certain purposes including paying Project construction costs, principal of, premium, if any, and interest on the Series 2013 Bonds, or any operating expenses in conjunction with the Project, if no other funds are available for those purposes in any trustee-held fund held by the Bond Trustee (other than the Debt Service Reserve Fund) or the Master Trustee subject to the provisions of the Liquidity Support Agreement. Such draws cannot be made for costs that would result in a betterment of the Project or the services offered by the Project without approval of the Construction Consultant. See “LIQUIDITY SUPPORT AGREEMENT” herein. Repayment of draws under the Liquidity Support Agreement shall constitute Affiliate Subordinated Indebtedness as defined in the Master Indenture and are subject to certain repayment restrictions described herein. No payment of Affiliate Subordinated Indebtedness may be made except as described in “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness” herein.

Certain Master Indenture Covenants of the Obligated Group

For the definitions of certain words and terms used in this section, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Definitions of Certain Terms” in APPENDIX C.

Rate Covenant. The Corporation and each future Member of the Obligated Group covenant and agree in the Master Indenture to operate all of their Facilities on a revenue-producing basis and to charge such fees and rates for their Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it under the Master Indenture to the extent permitted by law. Each Member further covenants and agrees that they will from time to time as often as necessary and to the extent permitted by law, revise their rates, fees and charges in such manner as may be necessary or proper to comply with the covenant described under this heading.

In accordance with the Master Indenture, the Obligated Group Representative will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year commencing with the earlier of (a) Stable Occupancy or (b) the Fiscal Year ending June 30, 2020 (the “Initial Testing Period”) and will deliver a copy of such calculation to the persons to whom such report is required to be delivered under the Master Indenture. If the Historical Debt Service Coverage Ratio of the Obligated Group is less than (i) for the Initial Testing Period, a Historical Debt Service Coverage Ratio of

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1.10:1 or (ii) for each Fiscal Year thereafter, a Historical Debt Service Coverage Ratio of 1.20:1 (the “Annual Debt Service Coverage Requirement”), the Master Trustee shall require the Obligated Group Representative, at the Obligated Group’s expense, to select a Consultant within 30 days following such calculation to make recommendations with respect to the rates, fees and charges of the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the Annual Debt Service Coverage Requirement for such Fiscal Year, the Master Trustee shall not be obligated to require the Obligated Group to select a Consultant to make such recommendations if: (a) there is filed with the Master Trustee (who shall provide a copy to each Required Information Recipient) a written report addressed to them of a Consultant containing an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet such requirement, and, such report is accompanied by a concurring opinion of Independent Counsel as to any conclusions of law supporting the opinion of such Consultant; (b) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (c) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant’s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if, at the end of the first of such two Fiscal Years, the Obligated Group provides to the Master Trustee, who shall provide a copy to each Related Bond Trustee, an opinion of Independent Counsel to the effect that the applicable laws and regulations underlying the Consultant’s report delivered in respect of the previous Fiscal Year have not changed in any material way.

If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio equal to the Annual Debt Service Coverage Requirement for any Fiscal Year, such failure shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

Commencing with the Initial Testing Period, if the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year, such failure shall constitute an event of default under the Master Indenture.

The Consultants selected as described in this heading shall be approved and selected as summarized below and in APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.27 Approval of Consultants.”

A copy of the Consultant’s report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days of the actual engagement of any such Consultant. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law. This covenant shall not be construed to prohibit any Member from serving indigent patients or residents to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from serving any other class or classes of patients or residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements summarized in this section.

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See “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Rate Covenant” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.11 Rates and Charges” in APPENDIX C for more detail.

Liquidity Covenant. The Obligated Group covenants that it will calculate the Days Cash on Hand and/or Cash to Indebtedness Ratio of the Obligated Group as of June 30 and December 31 of each Fiscal Year, commencing June 30 of the Initial Testing Period (each such date being a “Testing Date”). The Obligated Group shall deliver an Officer’s Certificate setting forth such calculation as of December 31 to the Master Trustee no later than 45 days after such December 31 and include such calculation as of June 30 in the Officer’s Certificate delivered pursuant to the Master Indenture and described under the heading “FINANCIAL REPORTING AND CONTINUING DISCLOSURE – Financial Reporting” herein.

The Corporation and each future Member of the Obligated Group are required to conduct their business so that on each Testing Date the Obligated Group shall have (a) a Cash to Indebtedness Ratio of (i) no less than 0.25:1 on each of the first two Testing Dates, (ii) no less than 0.275:1 for the next two following Testing Dates, and (iii) no less than 0.30:1 on each Testing Date thereafter; and (b) 180 Days Cash on Hand on each Testing Date (collectively, the “Liquidity Requirement”). At the option of the Obligated Group Representative, the Liquidity Requirement can be changed to eliminate the Cash to Indebtedness Ratio if for three consecutive Fiscal Years the Obligated Group has reported (a) a Historical Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30:1 or more on each Testing Date by making an election to do so in an Officer’s Certificate.

If the Cash to Indebtedness Ratio and/or the amount of the Days Cash on Hand, as applicable, as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of the Cash to Indebtedness Ratio and/or Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods.

If the Obligated Group has not raised the level of the Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, to the Liquidity Requirement by the next Testing Date immediately subsequent to the delivery of the Officer’s Certificate required in the preceding paragraph, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, select a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio and/or the number of Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. A copy of the Consultant’s report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days of actual engagement of any such Consultant. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Obligated Group Member) and permitted by law.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Liquidity Requirement for any Testing Date shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan or retaining a Consultant and follows each recommendation contained in such plan or Consultant’s report to the extent feasible (as determined in the

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reasonable judgment of the Governing Body of such Obligated Group Member) and permitted by law; provided, that failure to maintain at least 30 Days Cash on Hand for two consecutive Testing Dates shall constitute an Event of Default under the Master Trust Indenture.

See “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Liquidity Covenant” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.20 Liquidity Covenant” in APPENDIX C for more detail.

Marketing Covenant. Beginning with the fiscal quarter ending December 31, 2013 and ending with the first full fiscal quarter following the fiscal quarter in which the Stabilization Date occurs, the Obligated Group will use its best efforts to maintain the percentage of Entrance Fee Units which are Reserved (the “Percentage of Reserved Entrance Fee Units”) at or above the applicable levels set forth in the tables below, which determinations shall be measured as of the last day of the applicable quarter (the “Marketing Requirements”). The Marketing Requirements for the applicable quarter shall be either (i) the Level I Marketing Requirements as long as the Adjusted Level I Occupancy Requirements set forth under “Occupancy Covenant” below have not been satisfied or (ii) the Adjusted Level I Marketing Requirements if the Adjusted Level I Occupancy Requirements set forth under “Occupancy Covenant” below have been satisfied.

Quarter Ending

Percentage of Reserved Entrance Fee Units (%)

Level I

December 31, 2013 72.8% March 31, 2014 74.8 June 30, 2014 76.1 September 30, 2014 77.4 December 31, 2014 78.8 March 31, 2015 80.1 June 30, 2015 76.8 September 30, 2015 73.5 December 31, 2015 74.8 March 31, 2016 76.1 June 30, 2016 77.4 September 30, 2016 78.8 December 31, 2016 80.1 March 31, 2017 81.4 June 30, 2017 82.7 September 30, 2017 84.1 December 31, 2017 85.4 March 31, 2018 86.7 June 30, 2018 88.0 September 30, 2018 89.4 December 31, 2018 90.0

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Occupancy Quarter


Adjusted Level I

1 70.8% 2 72.1 3 73.5 4 74.8 5 76.8

For information regarding the marketing covenant and remedies, see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Marketing Covenant” and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.21 Marketing Covenant” in APPENDIX C.

Occupancy Covenant. The Obligated Group covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of the first certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), and (b) ending with the first full fiscal quarter following the fiscal quarter in which the Stabilization Date occurs (each an “Occupancy Quarter”), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Entrance Fee Units (the “Percentage of Units Occupied”) at or above the Level I Occupancy Requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

Occupancy Quarter Level I Occupancy Requirements (%)

Adjusted Level I Occupancy

Requirements (%) 1 15.8% 29.8% 2 29.1 50.3 3 39.7 64.9 4 49.0 70.2 5 57.6 76.2 6 64.2 7 69.5 8 74.8 9 78.1

10 80.1 11 82.1 12 84.4 13 86.0 14 87.4 15 88.7

16 and thereafter 90.0

For information regarding the occupancy covenant and remedies, see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Occupancy Covenant” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF

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CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.22 Occupancy Covenant” in APPENDIX C.

Cumulative Cash Operating Loss Covenant. The Obligated Group covenants that during the period (a) commencing with (i) the first fiscal quarter ending after the Initial Occupancy Date if such date is more than 30 days prior to the end of such fiscal quarter or (ii) the first full fiscal quarter ending after the Initial Occupancy Date if such date is less than 30 days prior to the end of a fiscal quarter and (b) ending with the fiscal quarter immediately preceding the Initial Testing Period (Cumulative Cash Operating Loss is not required to be calculated for the Initial Testing Period), it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (a “CCOL Testing Date”). Each Member is required to conduct its business so that as of each CCOL Testing Date, the Obligated Group will have Cumulative Cash Operating Loss no greater than the amount set forth below:

Quarter Cumulative

Cash Operating Loss Forecasted Cumulative Cash Operating Loss(1)

1 ($4,000,000) ($3,200,000) 2 (6,000,000) (4,500,000) 3 (7,000,000) (4,900,000) 4 (7,500,000) (5,000,000) 5 (9,000,000) (6,100,000) 6 (10,000,000) (7,000,000) 7 (11,000,000) (7,800,000)

8 and thereafter (12,250,000) (8,200,000) _____________________ (1) This information is based on management’s forecast as contained in the Feasibility Study which should be read

in its entirety, including management’s notes and assumptions set forth therein. See APPENDIX B – “FINANCIAL FEASIBILITY STUDY.” This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will not exceed the operating losses forecasted. Excludes net turn over Entrance Fees.

For information regarding the cumulative cash operating loss covenant and remedies, see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Cumulative Cash Operating Loss Covenant” and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.23 Cumulative Cash Operating Loss Covenant” in APPENDIX C.

Incurrence of Additional Indebtedness. The Obligated Group agrees in the Master Indenture to restrictions on the incurrence of additional indebtedness, as more fully described under the captions “SECURITY FOR THE SERIES 2013 NOTES – Additional Indebtedness” herein and APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.16 Permitted Additional Indebtedness.” To the extent that the conditions provided in the Master Indenture are met, such indebtedness may be secured on a parity basis with the Series 2013 Notes.

Disposition of Property. The Corporation and each future Member of the Obligated Group agrees in the Master Indenture and in the Mortgage to restrictions on the disposition of its Property, as more fully described under the captions “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Disposition of Property” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF

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CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.18 Sale or Lease of Property” in APPENDIX C hereto.

Application for Rating. The Master Indenture provides that not later than 150 days after receipt by the Obligated Group Representative of the audited financial report of the Obligated Group for the first full Fiscal Year following the achievement of Stable Occupancy and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains an investment grade credit rating from any Rating Agency (an “Investment Grade Credit Rating”). Notwithstanding the foregoing, (a) the requirement to annually approach a Rating Agency shall be suspended for such time as the Obligated Group maintains an Investment Grade Credit Rating; and (b) the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group Representative reasonably believes that the Obligated Group will not meet the criteria of any Rating Agency for an Investment Grade Credit Rating based on the then-existing published rating criteria of the Rating Agencies. Also see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Application for Rating” herein and APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.26 Rating Application.”

Payments on Affiliate Subordinated Indebtedness. Except with respect to the reimbursement of costs related to the Project advanced by LLM paid from proceeds of the Series 2013 Bonds, a Member of the Obligated Group will not make payments on Affiliate Subordinated Indebtedness (except for repayment to the Liquidity Support Fund pursuant to the Master Indenture), unless the Obligated Group Representative delivers an Officer’s Certificate to the Master Trustee prior to any payment on such Affiliate Subordinated Indebtedness certifying that the following conditions are satisfied:

(a) at any point prior to such date, there have been two full consecutive fiscal quarters in which the total percentage occupancy of all units and beds in the Project is equal to or greater than 90%;

(b) if the proposed payment on the Affiliate Subordinated Indebtedness had occurred as of the last day of the most recent Testing Date, the Obligated Group would have met the Liquidity Requirement after making such payment;

(c) if the proposed payment on the Affiliate Subordinated Indebtedness had occurred during the most recent Fiscal Year for which audited financial statements of the Obligated Group are available, the Historical Debt Service Coverage Ratio for that Fiscal Year would have been not less than 1.30:1;

(d) no Series 2013B Bonds are Outstanding; and

(e) there is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under the Master Trust Indenture.

Payments on Affiliate Management Fees and Deferred Affiliate Development Fees. (a) For each Fiscal Year commencing with Stable Occupancy, any Affiliate Management Fees, Deferred Affiliate Development Fees plus any Deferred Affiliate Management Fees then payable, may be paid by the Obligated Group Representative if the conditions set forth under the heading “Payments on Affiliate Subordinated Indebtedness” above have been satisfied.

(b) Amounts due to an Affiliate with respect to any portion of Affiliate Management Fees not paid under clause (a) under this heading because certain other conditions under the Master Indenture

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cannot be satisfied shall be deferred in accordance with the provisions of the Master Indenture and the Consulting Services Agreement.

(c) Amounts due with respect to any Deferred Affiliate Development Fee not paid under clause (a) of this subheading because of the conditions set forth therein cannot be satisfied shall continue to accrue in accordance with the Master Indenture.

(d) All Affiliate Management Fees and Deferred Affiliate Development Fees payable shall be subordinated to all payments due on any Notes Outstanding and shall constitute Affiliate Subordinated Indebtedness under the Master Indenture.

Approval of Consultants. Pursuant to the Master Indenture, the Bondholders have certain approval rights as to Consultants selected by the Corporation. See “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Approval of Consultants,” and APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.27 Approval of Consultants.”

Entrance Fees Fund. The members of the Obligated Group have agreed that each portion of an Initial Entrance Fee received by the Members of the Obligated Group will be transferred to the Master Trustee within five Business Days of the receipt thereof as follows: (i) prior to the release described in (b) below, each transfer shall also be accompanied by a copy of the related entrance fee receipt (an “Entrance Fee Receipt”) forwarded to the escrow agent, initially SunTrust Bank, for the Entrance Fee Escrow Account required to be maintained pursuant to Chapter 651, Florida Statutes (the “Chapter 651 Escrow Agent”) and written directions from the Obligated Group Representative to the Master Trustee indicating the amount of such Initial Entrance Fee that is to be deposited to the Entrance Fee Fund (the “Discretionary Amount”) and the amount of such Initial Entrance Fee that is to be transferred to the Chapter 651 Escrow Agent for deposit to the Entrance Fee Escrow Account (the “Escrowed Amount”), such Discretionary Amount shall be deposited and applied by the Master Trustee in accordance with paragraph (a) below; (ii) upon the release described in paragraph (b) below, the Initial Entrance Fees so released and received by the Master Trustee shall be deposited and applied in accordance with paragraph (b) below; and (iii) after the release described in paragraph (b) below, the Initial Entrance Fees received by the Master Trustee shall be deposited and applied in accordance with paragraph (c) below.

(a) Application of Discretionary Amount. The Discretionary Amount shall be deposited to the Entrance Fee Fund and will be applied by the Master Trustee within two Business Days of receipt, as follows:

FIRST, to the Corporation to pay refunds required by Residency Agreements for which the Corporation has not received a corresponding replacement Entrance Fee with respect to the applicable Entrance Fee Unit. Such disbursements will be made upon receipt by the Master Trustee and Chapter 651 Escrow Agent of an Officer’s Certificate of the Corporation certifying that the Corporation is required by a Residency Agreement to pay refunds within the next 30 days, and the amount of such refunds to be funded from the Entrance Fee Fund and Entrance Fee Escrow Account.

SECOND, to the Working Capital Fund established by the Master Indenture, until the total Discretionary Amount of Entrance Fees deposited into the Working Capital Fund equals $10,250,000. The Master Trustee will not replenish funds withdrawn from the Working Capital Fund or transfer moneys from the Entrance Fee Fund once a total Discretionary Amount of $10,250,000 from Entrance Fees has been deposited.

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THIRD, to the Operating Reserve Fund established by the Master Indenture, until the total Discretionary Amount deposited in the Operating Reserve Fund equals $5,000,000.

After the transfers described above have been made, thereafter the Master Trustee will retain any Discretionary Amount in the Entrance Fee fund to engage in the periodic review and application of funds described in subsection (c) below.

(b) Application upon Release of Escrowed Amount. Once the Escrowed Amount, together with any other amount on deposit in the Entrance Fee Escrow Account, is released pursuant to the terms of the Entrance Fee Escrow Agreement, the Obligated Group Representative shall direct the Chapter 651 Escrow Agent to use such released moneys to fund the Minimum Liquid Reserve Accounts to their required level and then direct the Chapter 651 Escrow Agent to transfer the remaining amount to the Master Trustee for deposit to the Entrance Fee Fund (such direction to be provided in writing to the Chapter 651 Escrow Agent with a copy to the Master Trustee) and shall be applied by the Master Trustee within two Business Days of receipt, as follows:

FIRST, to the Corporation to pay refunds required by Residency Agreements for which the Corporation has not received a corresponding replacement Entrance Fee with respect to the applicable Entrance Fee Unit. Such disbursements shall be made upon receipt by the Master Trustee of an Officer’s Certificate of the Corporation certifying that the Corporation is required by a Residency Agreement to pay refunds within the next 30 days, and the amount of such refunds to be funded from the Entrance Fee Fund. Such Officer’s Certificate shall be furnished to the Master Trustee at least one Business Day before the Master Trustee is required to apply the funds.

SECOND, to the Operating Reserve Fund established by the Master Indenture until the initial amount on deposit in the Operating Reserve Fund equals $5,000,000.

THIRD, to the Liquidity Support Fund, any amount necessary to reimburse any amounts advanced for Costs of the Project (but not for operating expenses) under the Liquidity Support Agreement.

After the transfers described above have been made, thereafter the Master Trustee will review the amount on deposit in the Entrance Fee Fund in accordance with paragraph (c) below.

(c) Periodic Review. After the release described in paragraph (b) above, all Initial Entrance Fees received by the Master Trustee will be deposited to the Entrance Fee Fund and on the first Business Day of each month thereafter (each, a “Review Date”) the Master Trustee shall review the amount on deposit in the Entrance Fee Fund and shall apply moneys on deposit therein as follows:


SECOND, to the Operating Reserve Fund the following:

(i) until the initial amount deposited into the Operating Reserve Fund equals $5,000,000; and

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(ii) thereafter, the amount needed, if any, to replenish any funds withdrawn from the Operating Reserve Fund until the amount on deposit in the Operating Reserve Fund equals $5,000,000, provided that the aggregate amount transferred from the Entrance Fee Fund to the Operating Reserve Fund shall not exceed $10,000,000; and

(iii) if a transfer of moneys from the Liquidity Support Fund to the Operating Reserve Fund (as described under “LIQUIDITY SUPPORT AGREEMENT – Draws on the Liquidity Support Fund” herein) has occurred, the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $2,000,000 (without regard to the replenishment limit described in clause (ii) above).

THIRD, into the Entrance Fee Redemption Account established pursuant to the Bond Indenture.

(d) Closure of Entrance Fee Fund. After all of the Series 2013B Bonds have been redeemed or otherwise paid in full (as established by an Officer’s Certificate of the Corporation delivered to the Master Trustee) and no Event of Default has occurred and is continuing, the Members of the Obligated Group need not deposit any Initial Entrance Fees into the Entrance Fee Fund. Upon the satisfaction of such conditions, any amounts on deposit in the Entrance Fee Fund will be remitted to the Corporation and the Entrance Fee Fund will be closed.

For information regarding the Entrance Fees Fund, see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Entrance Fees Fund” and APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 3.01 Entrance Fees Fund.”

Working Capital Fund. The Master Trustee shall establish and maintain a separate account to be known as the “Working Capital Fund” (the “Working Capital Fund”). All moneys received by the Master Trustee and held in the Working Capital Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Notes outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture.

Moneys in the Working Capital Fund shall be disbursed by the Master Trustee to or for the account of the Corporation within seven days after receipt by the Master Trustee of an Officer’s Certificate of the Corporation to the effect that such moneys will be used to pay (A) costs of the Project, (B) lease up and operating expenses of the Project, including any development and marketing fees, (C) the costs of needed repairs to the Project, (D) the costs of capital improvements to the Project, (E) judgments against any Member of the Obligated Group, (F) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (G) amounts required to restore funds on deposit in any Related Bonds Debt Service Reserve Fund if such amount is less than the applicable requirement due to a valuation deficiency on any valuation date, or (H) amounts due on any Indebtedness of any Member of the Obligated Group, but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by any Affiliate.

All amounts on deposit in the Working Capital Fund may be released to the Corporation and the Working Capital Fund will be closed upon receipt by the Master Trustee of an Officer’s Certificate of the Corporation requesting such release which Officer’s Certificate shall state that (i) all Series 2013B Bonds have been redeemed or otherwise paid in full and (ii) no Event of Default has occurred and is continuing under the Master Indenture.

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Operating Reserve Fund. The Master Trustee shall establish and maintain a separate account to be known as the “Operating Reserve Fund” (the “Operating Reserve Fund”). All moneys received by the Master Trustee and held in the Operating Reserve Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Notes outstanding thereunder (except as otherwise provided in the Master Indenture) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture.

Moneys in the Operating Reserve Fund shall be disbursed by the Master Trustee to or for the account of the Corporation within seven Business Days of receipt by the Master Trustee of an Officer’s Certificate of the Corporation to the effect that (A) such moneys will be used to pay (i) costs of the Project, (ii) lease up and operating expenses of the Project, including any development and marketing fees, (iii) the costs of needed repairs to the Project, (iv) the costs of capital improvements to the Facilities, (v) judgments against any Member of the Obligated Group, (vi) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (vii) amounts required to restore funds on deposit in any Related Bonds Debt Service Reserve Fund if such amount is less than the applicable requirement due to a valuation deficiency on any valuation date, or (viii) amounts due on any Indebtedness any Member of the Obligated Group, but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by any Affiliate, (B) such moneys are anticipated to be expended in the calendar month following the month in which such Officer’s Certificate is submitted, together with an itemized budget describing the uses for which such moneys are needed and the amount needed for each such use, (C) no moneys are on deposit in the Working Capital Fund or are otherwise available to the Corporation for such purpose, and (D) if such moneys are to be used to pay costs of the Project, the aggregate amount on deposit in the Operating Reserve Fund immediately after such draw will be at least $2,000,000.

All amounts on deposit in the Operating Reserve Fund may be released to the Corporation, and the Operating Reserve Fund shall be closed, upon receipt by the Master Trustee of an Officer’s Certificate of the Corporation requesting such release which Officer’s Certificate shall state that (i) all Series 2013B Bonds have been redeemed or otherwise paid in full and (ii) no Event of Default has occurred and is continuing under the Master Indenture.

Investment of Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund. Any moneys held by the Master Trustee under the Master Indenture shall be invested or reinvested by the Master Trustee in Permitted Investments upon the receipt of an Obligated Group Representative Request (upon which the Master Trustee is entitled to rely). Any such investments shall be held by or under the control of the Master Trustee and shall mature, or be redeemable at the option of the Master Trustee at such times as it is anticipated by the Obligated Group Representative that moneys from the particular fund will be required for the purposes of the Master Indenture. For the purpose of any such investment or reinvestment, investments shall be deemed to mature at the earliest date on which the obligor under such investment is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligation. Any Permitted Investments may be purchased from or sold to the Master Trustee or any of its respective affiliates.

For more information, see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Entrance Fees Fund,” “– Working Capital Fund,” “– Operating Reserve Fund,” and “– Investment of Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund” as well as “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 3.01 Entrance Fees Fund,” “– Section 3.02 Working Capital

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Fund,” “– Section 3.04 Operating Reserve Fund” and “– Section 3.06 Investment of Funds” in APPENDIX C.

Feasibility Study

Dixon Hughes Goodman LLP, independent certified public accountants, have prepared a financial feasibility study dated December 13, 2013 (the “Feasibility Study”), which is included as APPENDIX B hereto. The Feasibility Study was originally prepared on October 18, 2013 and has been updated to reflect changes in the financial structure and terms of the Series 2013 Bonds and other items discussed therein. The Feasibility Study includes management’s financial forecast of the Corporation for the six years ending June 30, 2019. As stated in the Feasibility Study, there will usually be differences between the forecasted data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. THE FEASIBILITY STUDY SHOULD BE READ IN ITS ENTIRETY, INCLUDING MANAGEMENT’S NOTES AND ASSUMPTIONS SET FORTH THEREIN. See APPENDIX B hereto.

Forecasted Financial Information of the Corporation

The following table reflects the forecasted funds available for debt service and other financial ratios as of the fiscal year ending June 30, 2019 and has been extracted from management’s financial forecast included in the Feasibility Study. For purposes of calculating debt service requirements in the table below, the Underwriter has provided to Dixon Hughes Goodman LLP the following assumptions:

The Series 2013A Bonds are assumed to consist of $128,295,000 non-rated tax-exempt fixed rate bonds, to be issued at a discount, consisting of term maturities to May 15, 2049 with average interest rates ranges from 7.00 to 8.25 percent per annum and average yields ranging from 7.00 to 8.375 percent per annum.

The Series 2013B-1 Bonds consist of $12,000,000 non-rated tax-exempt fixed rate bonds with an assumed interest rates of 6.875% and are anticipated to be redeemed in full by approximately 82% initial occupancy of the Independent Living Units by approximately August 2017.

The Series 2013B-2 Bonds consist of $50,000,000 non-rated tax-exempt fixed rate bonds with an assumed interest rate of 6.50% per annum and are anticipated to be redeemed in full by 70% initial occupancy of the Independent Living Units by approximately February 2017.

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Long-Term Debt Service Coverage Ratio 2019

Increase in net assets (deficit) 401$ Deduct:

Entrance fee amortization (2,661)

Add:Depreciation 3,668Amortization 988Interest expense 10,428Accrued LLC Consulting Fees (a) 420 Entrance fees received - attrition (non-refundable) 1,456Entrance fees received - attrition (refundable) 3,191Entrance fees refunded (2,167)

Income Available for Debt Service 15,724$

Maximum Annual Debt Service 11,410$ Maximum Annual Debt Service Coverage Ratio (b) 1.38x

Annual Debt Service 10,302$ Annual Debt Service Coverage Ratio 1.53x

Days Cash on Hand 2019Cash and cash equivalents 1,207$ Investments 25,779Statutory Debt Service Reserve Fund 916Statutory Operating Reserve Fund 1,788Statutory Renewal and Replacement Fund 1,788

Cash and Investments 31,478$

Total expenses 29,772 Less:

Accrued LLC Consulting Fees (a) (420)$ Depreciation (3,668) Amortization (988)

Total expenses less depreciation and amortization 24,696 Daily operating expenses (c) 68 Days Cash on Hand 463

Cash to Debt Ratio 2019Cash and cash equivalents 1,207$ Investments 25,779Statutory Debt Service Reserve Fund 916Statutory Operating Reserve Fund 1,788Statutory Renewal and Replacement Fund 1,788Series 2013A Reserve Account 11,410

Funds Available for Debt Service 42,888$ Long-Term Indebtedness Outstanding 127,506$ Cash to Debt Ratio 0.34x

(a) Consulting fees payable to Lutheran Life Communities are to be deferred during the forecast period as further described in the "Management of the Community" section of the Summary of Significant Forecast Assumptions and Accounting Policies.(b) Ratio was requested by the Underwriter and is not required by the Master Trust Indenture.(c) Daily operating expenses are equal to total operating expenses less depreciation, amortization and accrued LLC Consulting Fees divided by 365 days.

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The prior table should be considered in conjunction with the entire Feasibility Study to understand management’s assumptions upon which the Feasibility Study is based. There will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as

expected, and those differences may be material. Financial Reporting and Disclosure

Financial Reporting. The Obligated Group Representative will furnish or cause to be furnished to the Master Trustee and the Required Information Recipients, the following:

(i) Until the achievement of Stable Occupancy, as soon as practicable after the information is available but in no event more than 45 days after the completion of each month, a monthly statement including (A) prior to the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) a summary statement as to the status of construction including the report of any construction monitor; (3) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (4) statements of the balances for each fund and account required to be established pursuant to the Master Indenture or the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative, and (B) after the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) occupancy levels of the Project as of the end of such month including the number of Entrance Fee Units that were Occupied and vacated during that month and on an aggregate basis; (3) a summary statement on the status of construction until the issuance of the last certificate of occupancy for the Project; (4) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last certificate of occupancy for the Project; (5) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month compared to the approved budget for that month and an unaudited balance sheet of the Obligated Group as of the end of such month; and (6) statements of the balances for each fund and account required to be established pursuant to the Master Indenture or under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative.

(ii) Beginning with the first full fiscal quarter following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, and a calculation of the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, and Historical Debt Service Coverage Ratio, for such fiscal quarter if required to be calculated by the Master Indenture, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative. Such financial statements and calculations shall be accompanied by a comparison to the annual budget provided pursuant to subsection (iv) below, together with a report describing the refund liabilities coming due resulting from residents vacating Independent Living Units and move through levels of care, refunds coming due for Independent

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Living Units not yet reoccupied, refunds now due after units are reoccupied and the age of the refunds now due.

If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 and the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Testing Date as provided in the Master Indenture, the Obligated Group will deliver the financial information and the calculations described in the above paragraph on a monthly basis within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the applicable Liquidity Requirement.

(iii) Within 150 days of the end of each Fiscal Year, an annual audited financial report of the Obligated Group prepared by a firm of Accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of cash flows for such Fiscal Year, and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the accountants preparing such report (or another firm of certified public accountants) containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio for said Fiscal Year (beginning with the Fiscal Year following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas)) and a statement that such Accountants have no knowledge of any default under the Master Indenture insofar as it relates to accounting matters or to the Obligated Group’s financial covenants, or if such Accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof.

(iv) On or before the date of delivery of the financial reports referred to in subsection (iii) above, an Officer’s Certificate of the Obligated Group Representative (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture, any Related Loan Agreement, and any Related Bond Indenture or, if not, specifying all such defaults and the nature thereof, (B) calculating and certifying the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, and the Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such month or Fiscal Year, as appropriate, (C) attaching a summary of the Obligated Group’s annual operating and capital budget for the coming Fiscal Year, (D) showing a comparison of the audited financial reports with the operating budget for the preceding Fiscal Year and (E) including an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any.

(v) On or before the date of delivery of the financial reports referred to in subsections (ii) and (iii) above, a management’s discussion and analysis of results for the applicable fiscal period.

(vi) Copies of (A) any board approved revisions to the summary of the annual budget, or (B) any correspondence to or from the Internal Revenue Service questioning or contesting the status of any Member of the Obligated Group as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of the any Related Bonds the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes, promptly upon receipt.

(vii) Within 30 days of (a) receipt of any Occupancy Certificate for any portion of the Project, (b) completing the Project or (c) achieving Stable Occupancy, the Obligated Group Representative will notify the Master Trustee of such event.

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(viii) Such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of the Master Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such Accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee.

The Obligated Group has also covenanted that, within 10 days after its receipt thereof, the Obligated Group Representative shall file with the Required Information Recipients a copy of each Consultant’s report or Opinion of Counsel required to be prepared under the terms of the Master Indenture.

For more information see “FINANCIAL REPORTING AND CONTINUING DISCLOSURE – Financial Reporting” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.15 Financial Statements, Etc.” in APPENDIX C hereto.

Continuing Disclosure. Given the sources of repayment for the Series 2013 Bonds and the Authority’s limited obligation in respect thereof, the Authority has determined that its financial and operating data is not material to a decision to purchase, hold or sell the Series 2013 Bonds. Consequently, the Authority will not provide any such information. However, the Corporation has agreed pursuant to a Continuing Disclosure Agreement to make certain financial information and certain operating data available to holders of the Series 2013 Bonds through EMMA (http://emma.msrb.org), the information repository of the Municipal Securities Rulemaking Board, to comply with the Rule 15c2-12 of the Securities and Exchange Commission (as amended from time to time, the “Rule”). The Corporation is solely responsible for providing such continuing disclosure, and the Authority will not provide any such information. In addition, the Corporation will provide a copy of the information described under the heading “FINANCIAL REPORTING AND CONTINUING DISCLOSURE – Financial Reporting” to EMMA.

See “FINANCIAL REPORTING AND CONTINUING DISCLOSURE” herein.

Risk Factors

AN INVESTMENT IN THE SERIES 2013 BONDS INVOLVES A CERTAIN DEGREE OF RISK INCLUDING THOSE SET FORTH UNDER THE HEADING “RISK FACTORS” HEREIN. A PROSPECTIVE SERIES 2013 BONDHOLDER IS ADVISED TO READ “SECURITY FOR THE SERIES 2013 BONDS,” “SECURITY FOR THE SERIES 2013 NOTES” and “RISK FACTORS” FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SERIES 2013 BONDS. CAREFUL CONSIDERATION SHOULD BE GIVEN TO THESE RISKS AND OTHER RISKS DESCRIBED ELSEWHERE IN THIS LIMITED OFFERING STATEMENT.

The Principal Documents

The descriptions and summaries of various documents set forth in this Limited Offering Statement, including APPENDIX C, do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions. All statements herein are qualified in their entirety by the terms of each such document. During the period of the offering, copies of drafts of the Series 2013 Bonds, the Bond Indenture, the Loan Agreement, the Series 2013 Notes, the

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Master Indenture, the Mortgage and the Continuing Disclosure Agreement are available from the Underwriter, and following delivery of the Series 2013 Bonds, copies of the executed originals thereof may be examined at the principal corporate trust office of the Bond Trustee.


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LIMITED OFFERING STATEMENT $190,295,000

COLLIER COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY CONTINUING CARE COMMUNITY REVENUE BONDS

(THE ARLINGTON OF NAPLES PROJECT) consisting of

$128,295,000 Series 2013A

$12,000,000Series 2013B-1 (Mandatory

Paydown Securities (TEMPS-85SM))

$50,000,000 Series 2013B-2 (Mandatory

Paydown Securities (TEMPS-70SM))

CUSIP: See front cover

INTRODUCTION

Purpose of this Limited Offering Statement

The purpose of this Limited Offering Statement, including the cover page, the summary statement and the appendices, is to set forth certain information in connection with the offering by the Collier County Industrial Development Authority (the “Authority”) of $128,295,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013A (the “Series 2013A Bonds”), $12,000,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B-1 (Mandatory Paydown Securities (TEMPS-85SM)) (the “Series 2013B-1 Bonds”) and $50,000,000 Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B-2 (Mandatory Paydown Securities (TEMPS-70SM)) (the “Series 2013B-2 Bonds” and, together with the Series 2013B-1 Bonds, the “Series 2013B Bonds” and, together with the Series 2013A Bonds, the “Series 2013 Bonds”). Certain capitalized terms used in this Limited Offering Statement and not otherwise defined herein are defined in APPENDIX C. The Limited Offering Statement speaks only as of its date, and the information contained herein is subject to change.

The Authority

The Authority is a body politic and corporate of the State of Florida. The Authority was created pursuant to and is operating under Parts II and III of Chapter 159, Florida Statutes, and other applicable provisions of law (the “Act”). For further information concerning the Authority, see the information under the caption “THE AUTHORITY.”

The Corporation

The Arlington of Naples, an Illinois not for profit corporation, qualified to do business in Florida as The Arlington of Naples, Inc. (the “Corporation”), is exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), as an organization described in Section 501(c)(3) of the Code under the group exemption of The Evangelical Lutheran Church in America. The Corporation was created in 2008 with Lutheran Life Ministries, f/k/a Lutheran Life Communities (“LLM”) as its sole member. LLM was organized in 2005 as an Illinois not for profit corporation, building on the 113 year history of the Lutheran Home in Arlington Heights which was incorporated in 1892. LLM has received a determination letter from the Internal Revenue Service that it is exempt from federal income tax under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code. LLM is the parent corporation of a system which is now comprised of five

SM TEMPS-70 and TEMPS-85 are each a Service Mark of B.C. Ziegler and Company.

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continuing care communities for senior living (including the Lutheran Home) and provides vibrant grace-filled living across all generations through residential and community services. LLM has provided considerable pre-finance development and economic support to the Corporation, discussed in more detail below. LLM AND ITS AFFILIATES ARE NOT MEMBERS OF THE OBLIGATED GROUP AND ARE NOT OBLIGATED TO MAKE ANY PAYMENTS WITH RESPECT TO THE LOAN AGREEMENT OR THE SERIES 2013 NOTES OR WITH RESPECT TO THE SERIES 2013 BONDS. HOWEVER, LLM HAS AGREED UNDER THE HEREINAFTER DESCRIBED LIQUIDITY SUPPORT AGREEMENT TO PROVIDE CERTAIN LIMITED SUPPORT TO THE CORPORATION.

The Corporation has entered into Development Consulting Agreements with CRSA/LCS Management, LLC (“CRSA/LCS”) and Lutheran Life Communities f/k/a VeriSpring, an Illinois not for profit corporation (“LLC”) which has LLM as its sole corporate member (CRSA/LCS and LLC are collectively referred to herein as the “Developer”) (collectively, the “Development Agreements”) pursuant to which the Developer has agreed to carry out development and marketing responsibilities with respect to the Project. For more information please see “DEVELOPMENT OF THE COMMUNITY – CRSA” and “–Development Agreement with Lutheran Life Communities” in APPENDIX A.

The Corporation has entered into a Consulting Services Agreement with LLC (the “Consulting Services Agreement”) pursuant to which LLC will provide certain professional administrative, management and support services including: corporate management, accounting and payroll, human resources, information technology, marketing and risk management. For more information please see “MANAGEMENT” in APPENDIX A. LLC’s fees under the Consulting Services Agreement are subject to certain subordination provisions more fully described in “MANAGEMENT – Consulting Services Agreement” in APPENDIX A.

As of December 13, 2013, the Corporation had received Entrance Fee deposits for 125 Entrance Fee Units, representing approximately 82.8% of the 151 total planned Entrance Fee Units at the Community. See APPENDIX A and B for a more detailed description of the Corporation, its history, organization, operations, future plans and financial performance. Also see “PLAN OF FINANCE” herein.

Pre-finance Capital

Lutheran Church Extension Fund Promissory Note. In July 2008, the Lutheran Church Extension Fund – Missouri Synod (“LCEF”), a Missouri non-profit organization, provided the LCEF Promissory Note, a five year, interest bearing promissory note of $19,490,000. The LCEF Promissory Note was used to purchase the land on which the project will be situated. The LCEF Promissory Note will be repaid with a portion of the Series 2013 Bond proceeds.

Series 2011 Notes. In June 2011, the Authority issued the Series 2011 Notes, consisting of $10,900,000 of non-rated, tax-exempt Continuing Care Community Revenue Bond Anticipation Notes. The Series 2011 Notes are going to be repaid with a portion of the Series 2013 Bonds.

Deferred Note Payable. LLM has and continues to provide funds to aid in pre-construction development cost of the Project in amounts anticipated to reach $17.8 Million by the closing of the Series 2013 Bonds. Of these amounts, it is anticipated that $2,424,000 will be treated as an investment of LLM, $6,509,000 will be treated as a loan from LLM to the Corporation and secured by a note (the “Deferred Note Payable”) subject to the repayment limitations described herein under the heading “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness,” and the balance will be repaid to LLM from proceeds of the Series 2013 Bonds.

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Purpose of the Series 2013 Bonds

The Corporation will use the proceeds from the sale of the Series 2013 Bonds, together with other available funds, to (i) currently refund the Authority’s outstanding $10,900,000 Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011 (the “Series 2011 Notes”); (ii) pay off the Corporation’s $19,490,000 Lutheran Church Extension Fund - Missouri Synod Promissory Note (the “LCEF Promissory Note” and, together with the Series 2011 Notes, the “Prior Debt”); and (iii) finance and refinance the cost of (or reimburse itself and/or one or more of its affiliated corporations for prior expenditures for) all or a portion of: (a) the acquisition, construction, equipping and installation (and related development costs) of the capital expenditures related to a campus consisting of an estimated 163 independent living units (of which an estimated 31 will be villas), an estimated 79 assisted living units (of which an estimated 37 will be memory support units), and an estimated 44 skilled nursing beds along with associated common areas (collectively, the “Project”), (b) capitalized interest during the construction period, (c) fund a debt service reserve fund with respect to each Series of the Series 2013 Bonds, and (d) costs of issuance related to the Series 2013 Bonds, all as permitted by the Act. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS.”

Security for the Series 2013 Bonds

The Series 2013 Bonds will be issued pursuant to a resolution adopted on August 26, 2013 (the “Resolution”) and pursuant to an Indenture of Trust dated as December 1, 2013 (the “Bond Indenture”), by and between the Authority and Wells Fargo Bank, National Association, Chicago, Illinois, as bond trustee (the “Bond Trustee”). The proceeds of the Series 2013 Bonds will be loaned to the Corporation pursuant to a Loan Agreement dated as of December 1, 2013 (the “Loan Agreement”), by and between the Corporation and the Authority.

The Series 2013A Bonds will be limited obligations of the Authority and will be secured by the Corporation’s Note, Series 2013A (the “Series 2013A Note”) in the aggregate principal amount of the Series 2013A Bonds and the Series 2013B Bonds will be limited obligations of the Authority and will be secured by the Corporation’s Note, Series 2013B (the “Series 2013B Note” and, together with the Series 2013A Note the “Series 2013 Notes”) in the aggregate principal amount of the Series 2013B Bonds. The Series 2013 Notes will be issued pursuant to the Master Trust Indenture dated as of December 1, 2013 (the “Master Indenture”) between the Corporation, as the initial Member of an obligated group (the “Obligated Group”), and Wells Fargo Bank, National Association, as master trustee (the “Master Trustee”). Upon the issuance of the Series 2013 Bonds, the Series 2013 Notes will be the only Notes outstanding under the Master Indenture.

Payment of the principal of and interest on the Series 2013 Bonds will be additionally secured by moneys deposited to the credit of the Debt Service Reserve Fund created under the Bond Indenture. See “SECURITY FOR THE SERIES 2013 BONDS” herein and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Bond Indenture – Section 3.10 Use of Moneys in the Reserve Fund” in APPENDIX C.

Security for the Notes. Pursuant to a Mortgage and Security Agreement from the Corporation, as mortgagor, to the Master Trustee, as mortgagee, dated as of December 1, 2013 (the “Mortgage”), the Corporation will grant the Master Trustee: (i) a first mortgage lien on certain real and personal property of the Corporation, (ii) a security interest in the fixtures located thereon and (iii) any and all other property of every kind and nature owned by the Corporation conveyed, pledged, assigned or transferred as additional security to the Master Trustee (collectively, the “Mortgaged Property”), in each case subject to Permitted Encumbrances, as security for the payment of the Series 2013 Notes and all

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other Notes hereafter issued under the Master Indenture. The Mortgaged Property does not include personal property of the Corporation other than materials incorporated into or to be incorporated into the building and fixtures comprising the Project.

The Authority will pledge and assign the Series 2013 Notes and certain of its rights under the Loan Agreement to the Bond Trustee as security for the Series 2013 Bonds. The terms of the Series 2013 Notes will require payments by the Corporation and any future Member of the Obligated Group which will be sufficient to provide for the payment of the principal of and interest on the Series 2013 Bonds.

The Series 2013 Notes will entitle the Bond Trustee, as the holder thereof, to the protection of the covenants, restrictions and other obligations imposed upon the Corporation and any future Member of the Obligated Group by the Master Indenture. The Master Indenture permits the Obligated Group to issue Additional Notes that will be secured under the Master Indenture. Each member of the Obligated Group will be jointly and severally obligated on all Notes (as defined below), including the Series 2013 Notes, which are issued pursuant to the Master Indenture. All Notes issued by the Members of the Obligated Group will be equally and ratably secured by (i) the Mortgage and (ii) a security interest in the Gross Revenues of the Obligated Group, subject in each case only to Permitted Encumbrances. See “SECURITY FOR THE SERIES 2013 NOTES.”

Additional Notes and Additional Indebtedness. As of the date of issuance the Series 2013 Notes will be the only Notes Outstanding under the Master Indenture. The Master Indenture permits the Obligated Group to issue Additional Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by an Additional Note issued under the Master Indenture. In certain circumstances, the Obligated Group may issue Additional Notes under the Master Indenture to the Authority or to persons other than the Authority that will not be pledged under the Bond Indenture but will be equally and ratably (except as described therein) secured with the Series 2013 Notes. Under the terms of the Master Indenture, Additional Notes may also be entitled to the benefit of security in addition to that securing the Notes outstanding under the Master Indenture (including the Series 2013 Notes). See “SECURITY FOR THE SERIES 2013 NOTES – Additional Indebtedness.” The Series 2013 Notes and any Additional Notes to be issued by the Obligated Group under the Master Indenture (whether or not pledged under the Bond Indenture or any Related Bond Indenture) are collectively referred to herein as the “Notes.”

Limitations on Investors and Restrictions on Transfer

The purchase of the Series 2013 Bonds involves a significant degree of risk. The eligibility to purchase, and the ability to subsequently sell or transfer, the Series 2013 Bonds is limited to “qualified institutional buyers” as defined under Rule 144A or “accredited investors” as defined under Rule 501 of Regulation D of the Securities Act of 1933 until the Corporation applies for and receives a rating on the Series 2013 Bonds of at least “BBB/Baa3” or equivalent from any Rating Agency, if ever. See “THE SERIES 2013 BONDS – Limitations on Investors and Restrictions on Transfer” herein.

PLAN OF FINANCE

The Corporation will use the proceeds from the sale of the Series 2013 Bonds, together with other available funds, to (i) currently refund the Series 2011 Notes; (ii) pay off the LCEF Promissory Note; and (iii) finance and refinance the cost of (or reimburse itself and/or one or more of its affiliated corporations for prior expenditures for) all or a portion of: (a) the acquisition, construction, equipping and installation (and related development costs) of the capital expenditures related to the Project, (b)

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capitalized interest during the construction period, (c) fund a debt service reserve fund with respect to each series of the Series 2013 Bonds, and (d) costs of issuance related to the Series 2013 Bonds, all as permitted by the Act. See “ESTIMATED SOURCES AND USES OF FUNDS.”

The Refunding

The Series 2011 Notes were issued and remain outstanding in an aggregate principal amount of $10,900,000 pursuant to a Trust Indenture dated as of June 1, 2011 between the Authority and Wells Fargo Bank, National Association, as bond trustee. The proceeds of the Series 2011 Notes were loaned to the Corporation to finance a portion of the pre-construction development costs of the Project. The Series 2011 Notes will be repaid upon the closing of the Series 2013 Bonds, in an amount equal to the accreted value thereof as of such date.

The LCEF Promissory Note is outstanding in the amount of $19,490,000. The LCEF Promissory Note secures a loan made to the Corporation by the Lutheran Church Extension Fund - Missouri Synod, the proceeds of which were used to purchase and develop the land on which the Project will be located.

LLM has and continues to provide funds to aid in pre-construction development cost of the Project in amounts anticipated to reach $17.8 Million by the closing of the Series 2013 Bonds. Of these amounts, it is anticipated that $2,424,000 will be treated as an investment of LLM, $6,509,000 will be treated as a loan from LLM to the Corporation and secured by a note (the “Deferred Note Payable”) subject to the repayment limitations described herein under the heading “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness,” and the balance will be repaid to LLM from proceeds of the Series 2013 Bonds.

At closing, a portion of the proceeds of the Series 2013 Bonds will be used to currently repay all of the Prior Debt outstanding at a redemption price of par plus accrued interest.

The Project

The Project is a senior living continuing care retirement community (the “Community”) planned to be developed on 39 acres in the Lely Resort Community in Naples, Florida. Management of the Corporation anticipates that the Project, once constructed, will consist of approximately 132 independent living apartments, 31 independent living villas (the “Villas”), 42 assisted living units, 37 memory support units, and 44 skilled nursing beds. The Project will include a number of common areas including a small theater, a game room, a fitness center, an aquatic center, a woodworking shop, and multiple dining facilities. The Project’s main structure is anticipated to be a one and three story commons and healthcare facility and a six story independent living apartment building. The commons and independent living apartment facilities are built above structured parking. The construction is anticipated to be concrete slab, metal frame and stud construction with stucco, stone/brick, and composite siding exterior finishes. For a more complete description of the Project see “THE PROJECT” in APPENDIX A.

The Authority makes no warranty or representation, whether express or implied, with respect to the Project or the location, use, operation, design, workmanship, merchantability, fitness, suitability or use for particular purpose, condition or durability thereof or title thereto.

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ESTIMATED SOURCES AND USES OF FUNDS

The estimated sources and uses of funds are as follows:

SOURCES OF FUNDS Series 2013A Bonds $128,295,000 Series 2013B-1 Bonds 12,000,000 Series 2013B-2 Bonds 50,000,000 Deferred Note Payable 6,509,000 Equity Contribution 2,424,000 Sales Office Property Mortgage 970,000 Entrance Fees (1) 19,750,000 Original Issue Discount (1,928,255)

Total Sources of Funds $218,019,745

USES OF FUNDS

Project Fund Deposit $111,962,664 Pay off LCEF Promissory Note 21,137,749 Redeem Series 2011 Notes 15,394,347 Funded Interest(2) 27,698,866 Debt Service Reserve Fund - Series 2013A 11,409,525 Debt Service Reserve Fund - Series 2013B-1 825,000 Debt Service Reserve Fund - Series 2013B-2 3,250,000 Working Capital Fund(3) 12,250,000 Operating Reserve Fund 5,000,000 Statutory Reserve Account(4) 4,500,000 Costs of Issuance(5) 4,591,594

Total Uses of Funds $218,019,745 _________________________ Totals may not foot due to rounding

(1) To be received after the completion of the Project throughout the fill-up period as residents move into the community. These entrance fees will be deposited into the Working Capital Fund, Operating Reserve Fund, and Statutory Reserve Accounts. See “PRIORITY OF DRAWINGS FROM VARIOUS FUNDS—Expected Priority of Draws Upon Various Reserves and Funds (In the Event of a Funding Shortfall)” herein.

(2) Represents interest on the portion of the Series 2013 Bonds related to the Project for approximately 24 months. (3) Upon the issuance of the Series 2013 Bonds, funded with $2,000,000 from funds provided by LLM.

Subsequently will be funded from Entrance Fees to be received after the completion of the Project.

(4) The Statutory Reserve Requirements are estimated to be met by the following of: $920,000 in the Debt Reserve Escrow Account, $1,790,000 in the Operating Reserve Escrow Account, and $1,790,000 in the Renewal and Replacement Escrow Account.

(5) Includes Underwriter's discount, legal, accounting, administrative, and miscellaneous fees and expenses. No more than 2% of the proceeds of the Series 2013 Bonds will be used to pay costs of issuance.

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ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth the amounts required for the payment of principal of the Series 2013 Bonds. Upon issuance, the debt related to the Series 2013 Bonds constitute the Obligated Group’s only Outstanding Notes.

Bond Year Ending May 15

The Series 2013A Bonds The Series 2013B-1

Bonds(1) The Series 2013B-2

Bonds(1) Total

Long-Term Debt Service Principal Interest Principal Interest Principal Interest

2014 $3,634,154 $291,042 $1,146,528 $5,071,723 2015 10,301,538 825,000 3,250,000 14,376,538 2016 10,301,538 825,000 3,250,000 14,376,538 2017 10,301,538 $9,375,000 773,523 $50,000,000 2,437,500 72,887,561 2018 10,301,538 2,625,000 45,117 12,971,655 2019 10,301,538 10,301,538 2020 $1,105,000 10,301,538 11,406,538 2021 1,185,000 10,224,188 11,409,188 2022 1,265,000 10,141,238 11,406,238 2023 1,355,000 10,052,688 11,407,688 2024 1,450,000 9,957,838 11,407,838 2025 1,550,000 9,856,338 11,406,338 2026 1,665,000 9,743,963 11,408,963 2027 1,785,000 9,623,250 11,408,250 2028 1,920,000 9,484,913 11,404,913 2029 2,070,000 9,336,113 11,406,113 2030 2,230,000 9,175,688 11,405,688 2031 2,405,000 9,002,863 11,407,863 2032 2,590,000 8,816,475 11,406,475 2033 2,790,000 8,615,750 11,405,750 2034 3,010,000 8,399,525 11,409,525 2035 3,240,000 8,166,250 11,406,250 2036 3,490,000 7,915,150 11,405,150 2037 3,770,000 7,634,700 11,404,700 2038 4,075,000 7,331,525 11,406,525 2039 4,405,000 7,000,431 11,405,431 2040 4,765,000 6,642,525 11,407,525 2041 5,150,000 6,255,369 11,405,369 2042 5,570,000 5,836,931 11,406,931 2043 6,025,000 5,384,369 11,409,369 2044 6,510,000 4,894,838 11,404,838 2045 7,040,000 4,365,900 11,405,900 2046 7,620,000 3,785,100 11,405,100 2047 8,250,000 3,156,450 11,406,450 2048 8,930,000 2,475,825 11,405,825 2049 21,080,000 1,739,100 22,819,100 Total $128,295,000 $280,458,666 $12,000,000 $2,759,682 $50,000,000 $10,084,028 $483,597,376

_________________________ Totals may not foot due to rounding. (1) The Series 2013B-2 and Series 2013B-1 Bonds mature on May 15, 2020 and May 15, 2021, respectively, and are not subject

to mandatory bond sinking fund redemption. The Corporation anticipates redeeming the Series 2013B-2 and Series 2013B-1 Bonds in full from entrance fees by February 15, 2017 and August 15, 2017, respectively. See “THE SERIES 2013 BONDS – Mandatory Redemption of the Series 2013B Bonds from Entrance Fees.” The actual timing of the prepayment of the Series 2013B Bonds may differ from the assumed timing because of timing differences in the receipt of entrance fees. For further information about expected presales and fill-up of the Project, see APPENDIX A – “MARKETING – Reservation of Independent Living Units” and APPENDIX B – “FINANCIAL FEASIBILITY STUDY – Summary of Revenue and Entrance Fee Assumptions—Table 39.” Also see “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Entrance Fees Fund” below.

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THE SERIES 2013 BONDS

The Series 2013 Bonds will be issued pursuant to the Bond Indenture and the proceeds of the Series 2013 Bonds will be loaned to the Corporation pursuant to the Loan Agreement. Contemporaneously with the issuance of the Series 2013 Bonds and to secure repayment of the loan made by the Authority to the Corporation under the Loan Agreement, the Corporation will issue and deliver to the Authority the Series 2013 Notes.

General Description

The Series 2013 Bonds will be issued only in fully registered form in denominations of $100,000 or any integral multiple of $5,000 in excess thereof (“Authorized Denominations”). The Series 2013 Bonds will bear interest (based on a 360-day year of twelve 30-day months) at the respective rates per annum and will mature, subject to earlier redemption, in the amounts and on the dates set forth on the cover page of this Limited Offering Statement. The Series 2013 Bonds will bear interest from their dated date, payable on May 15 and November 15 (the “Series 2013 Interest Payment Dates”) of each year, commencing May 15, 2014. The Series 2013 Bonds, as initially issued, will be dated their date of issuance. Except as described in the next sentence, subsequently issued Series 2013 Bonds will be dated as of the later of their date of issuance or the most recent preceding Series 2013 Interest Payment Date to which interest has been paid thereon. Series 2013 Bonds issued on a Series 2013 Interest Payment Date to which interest has been paid will be dated as of such date.

The Series 2013 Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository (the “Securities Depository”) for the Series 2013 Bonds. So long as Cede & Co. is the registered owner, the Bond Trustee will pay such principal of and redemption price, if any, and interest on the Series 2013 Bonds to DTC, which will remit such principal, redemption price, if any, and interest to the Beneficial Owners (as hereinafter defined) of the Series 2013 Bonds, as described under the heading “BOOK-ENTRY SYSTEM” herein. Individual purchases of interests in the Series 2013 Bonds will be made in book-entry form only, in Authorized Denominations. Purchasers of such interests will not receive certificates representing their interest in the Series 2013 Bonds. For a description of the method of payment of principal, premium, if any, redemption price, if any, and interest on the Series 2013 Bonds and matters pertaining to transfers and exchanges while in the book-entry only system, see the information herein under the heading “BOOK-ENTRY SYSTEM.”

In the event the book-entry only system is discontinued, the following provisions would apply. The principal of, premium, if any, and interest on the Series 2013 Bonds shall be payable in any currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal and premium, if any, and interest on the Series 2013 Bonds at maturity or upon redemption shall be payable upon surrender of such Series 2013 Bonds (i) at the designated corporate trust office of the Bond Trustee, initially in Chicago, Illinois, or its agent or successor as Bond Trustee, or at the office of any alternate Paying Agent, if any, named in any such Series 2013 Bond or (ii) as to any registered owner of $1,000,000 or more in aggregate principal amount of Series 2013 Bonds who so elects by wire transfer of funds to such wire transfer address within the continental United States as such registered owner shall have furnished to the Bond Trustee in writing on or prior to the Record Date and upon compliance with the reasonable requirements of the Bond Trustee. Except as provided below with respect to Defaulted Interest, payment of the interest on the Series 2013 Bonds shall be made to the person appearing on the Bond Register as the registered owner at the close of business of the Bond Trustee on the Record Date for such interest payment and shall be paid (i) by check or draft mailed to such registered owner on the applicable Interest Payment Date at such owner’s address as it appears on the Bond Register or at such other address as is furnished to the Bond Trustee in writing

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by the applicable Record Date by such owner, or (ii) as to any registered owner of $1,000,000 or more in aggregate principal amount of Series 2013 Bonds who so elects, by wire transfer of funds to such wire transfer address within the continental United States as such registered owner shall have furnished to the Bond Trustee in writing by the Record Date and upon compliance with the reasonable requirements of the Bond Trustee. The “Record Date” means the May 1 or November 1 (whether or not a Business Day) next preceding an Interest Payment Date. In the event of default in the payment of interest due on such Interest Payment Date, defaulted interest will be payable to the person in whose name such Series 2013 Bond is registered at the close of business on a special record date established by the Bond Trustee which special record date must not be more than 15 days nor less than 10 days preceding the date of the proposed payment and not less than 10 days after the receipt by the Bond Trustee of the notice of the proposed payment (the “Special Record Date”). The Bond Trustee is required to cause notice of the proposed payment to be delivered to each registered owner of Series 2013 Bonds, as of the Special Record Date, not less than 10 days prior to such Special Record Date.

Optional and Mandatory Redemption of the Series 2013A Bonds

The Series 2013A Bonds will be subject to optional and mandatory redemption, all as described below.

Optional Redemption. The Series 2013A Bonds maturing on May 15, 2026, 2035, 2037, 2044 and 2049 are subject to optional redemption prior to maturity on or after May 15, 2024. Each such redemption shall be at the option of the Authority upon direction of the Corporation out of amounts prepaid on the Series 2013A Obligation and deposited in the Optional Redemption Fund established under the Bond Indenture, in whole or in part at any time, and if in part by maturities or portions thereof designated by the Corporation (less than all of a maturity to be randomly selected utilizing such method as may be designated by the Bond Trustee), at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of redemption, without premium.

Mandatory Sinking Fund Redemption. The Series 2013A Bonds maturing on May 15, 2024 are subject to mandatory bond sinking fund redemption at a redemption price equal to 100% of the principal amount thereof and accrued interest to the redemption date, without premium, as follows:

Series 2013 Bonds Maturing on May 15, 2024

Redemption Date (May 15 of the year) Principal Amount

2020 $1,105,000 2021 1,185,000 2022 1,265,000 2023 1,355,000 2024† 1,450,000

_________________ †Maturity.

The Series 2013A Bonds maturing on May 15, 2026 are subject to mandatory bond sinking fund redemption at a redemption price equal to 100% of the principal amount thereof and accrued interest to the redemption date, without premium, as follows:

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2025 $1,550,000 2026† 1,665,000

_________________ †Maturity.

The Series 2013A Bonds maturing on May 15, 2035 are subject to mandatory bond

sinking fund redemption at a redemption price equal to 100% of the principal amount thereof and accrued interest to the redemption date, without premium, as follows:



2027 $1,785,000 2028 1,920,000 2029 2,070,000 2030 2,230,000 2031 2,405,000 2032 2,590,000 2033 2,790,000 2034 3,010,000 2035† 3,240,000

_________________ †Maturity.





2036 $2,490,000 2037† 2,510,000

_________________ †Maturity.



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2036 $1,000,000 2037 1,260,000 2038 4,075,000 2039 4,405,000 2040 4,765,000 2041 5,150,000 2042 5,570,000 2043 6,025,000 2044† 6,510,000

_________________ †Maturity.





2045 $7,040,000 2046 7,620,000 2047 8,250,000 2048 8,930,000 2049† 21,080,000

_________________ †Maturity.

At the option of the Corporation to be exercised by delivery of a written certificate to the Bond Trustee on or before the forty-fifth day next preceding any sinking fund redemption date, it may (i) deliver to the Bond Trustee for cancellation Series 2013A Bonds or portions thereof of the same maturity, in an aggregate principal amount desired by the Corporation, or (ii) specify a principal amount of Series 2013A Bonds or portions thereof of the same maturity, which prior to said date have been redeemed (otherwise than through the operation of the sinking fund) and canceled by the Bond Trustee at the request of the Corporation and not theretofore applied as a credit against any sinking fund redemption obligation.

Optional and Mandatory Redemption of the Series 2013B Bonds

Optional Redemption. The Series 2013B-1 Bonds are subject to optional redemption prior to maturity by the Issuer at the direction of the Corporation in whole or in part on November 15, 2015 or on any date thereafter, at the redemption price equal to the principal amount of such Series 2013B-1 Bonds to be redeemed, together with accrued interest to the redemption date. The Series 2013B-2 Bonds are subject to optional redemption prior to maturity by the Issuer at the direction of the Corporation in whole or in part on May 15, 2015 or on any date thereafter, at the redemption price equal

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to the principal amount of such Series 2013B-2 Bonds to be redeemed, together with accrued interest to the redemption date.

Mandatory Redemption of the Series 2013B Bonds from Entrance Fees. On or after May 15, 2015, and to the extent that moneys are on deposit in the Entrance Fee Redemption Account on the day following any Entrance Fee Transfer Date, the Series 2013B Bonds are subject to mandatory redemption on the next following Entrance Fee Redemption Date at a redemption price equal to the principal amount thereof plus accrued interest to such redemption date.

The principal amount of the Series 2013B-2 Bonds and the Series 2013B-1 Bonds to be redeemed on an Entrance Fee Redemption Date shall be equal to the largest Authorized Denomination of Bonds of the applicable series for which the redemption price thereof is on deposit in the Entrance Fee Redemption Account on the day following the immediately preceding Entrance Fee Transfer Date.

As soon as practicable after each Entrance Fee Redemption Date, the Bond Trustee shall give notice to the Master Trustee of the principal amount of the Series 2013B-2 Bonds and the 2013B-1 Bonds redeemed on such date, together with the principal amount of the Series 2013B-2 Bonds and the Series 2013B-1 Bonds that remains Outstanding after such redemption.

Notwithstanding the foregoing, the Series 2013B-2 Bonds shall be redeemed first and then the Series 2013B-1 Bonds shall be redeemed.

Additional Redemption Provisions

Extraordinary Optional Redemption. The Series 2013 Bonds are subject to optional redemption by the Authority at the written direction of the Corporation prior to their scheduled maturities in whole or in part (proportionally among each series) at a redemption price equal to the principal amount thereof plus accrued interest thereon to the redemption date (i) in case of damage or destruction to, or condemnation of, any property, plant, and equipment of any Obligated Group Member, to the extent that the net proceeds of insurance or condemnation award exceed the Threshold Amount and the Corporation has determined not to use such net proceeds or award to repair, rebuild or replace such property, plant, and equipment, or (ii) as a result of any changes in the Constitution or laws of the State of Florida or of the United States of America or of any legislative, executive, or administrative action (whether state or federal) or of any final decree, judgment, or order of any court or administrative body (whether state or federal), the obligations of the Corporation under the Loan Agreement have become, as established by an Opinion of Counsel, void or unenforceable in each case in any material respect in accordance with the intent and purpose of the parties as expressed in the Loan Agreement.

Selection for Redemption. In the event that less than all of the Outstanding Series 2013 Bonds or portions thereof are to be optionally redeemed, the Series 2013 Bonds to be redeemed shall be selected first, from any Outstanding Series 2013B-2 Bonds, then from any Outstanding Series 2013B-1 Bonds and then from any Outstanding Series 2013A Bonds. In the event that less than all of the Outstanding Series 2013 Bonds or portions thereof of a particular series are to be optionally redeemed, the Corporation may select the particular maturities of such series to be redeemed. If less than all Series 2013 Bonds or portions thereof of a single maturity are to be redeemed, they shall be selected by the Securities Depository or by lot in such manner as the Bond Trustee may determine. If a Series 2013 Bond is of a denomination larger than the minimum Authorized Denomination, a portion of such Series 2013 Bond may be redeemed, but Series 2013 Bonds shall be redeemed only in the principal amount of an Authorized Denomination and no Series 2013 Bond may be redeemed in part if the principal amount to be Outstanding following such partial redemption is not an Authorized Denomination.

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Notice of Redemption; Effect. In case of every redemption, the Bond Trustee will cause notice of such redemption to be given by mailing by first class mail, postage prepaid, a copy of the redemption notice to the owners of the Series 2013 Bonds designated for redemption in whole or in part, at their addresses as the same will last appear upon the registration books, in each case not more than 60 nor less than 30 days prior to the redemption date. In addition, notice of redemption will be sent by first class or registered mail, return receipt requested, or by overnight delivery service (1) contemporaneously with such mailing: (A) to any owner of $1,000,000 or more in principal amount of the Series 2013 Bonds, and (B) to at least two or more information services of national recognition that disseminate redemption information with respect to municipal bonds; and (2) to any securities depository registered as such pursuant to the Securities Exchange Act of 1934, as amended, that is an owner of the Series 2013 Bonds to be redeemed so that such notice is received at least two days prior to such mailing date. An additional notice of redemption will be given by certified mail, postage prepaid, mailed not less than 60 nor more than 90 days after the redemption date to any owner of the Series 2013 Bonds selected for redemption that has not surrendered the Series 2013 Bonds called for redemption, at the address as the same will last appear upon the registration books.

Failure to give any such notice, or any defect therein, will not affect the validity of any proceedings for the redemption of such Series 2013 Bonds.

Purchase In Lieu of Redemption. In lieu of an optional redemption and cancellation of Series 2013 Bonds, Series 2013 Bonds may be purchased by the Bond Trustee on behalf of the Authority at the written direction of the Corporation and cancelled. The written direction of the Corporation shall be accompanied by an Opinion of Bond Counsel to the effect that such purchase will not adversely affect the exclusion from gross income for federal income tax purposes of interest on such Series 2013 Bonds or any other Outstanding Series 2013 Bonds. Selection of the Series 2013 Bonds being purchased shall be by lot in such manner as the Bond Trustee may determine. Notice of Series 2013 Bonds being purchased shall be given in the same manner as the notice of Series 2013 Bonds called for optional redemption; provided, that the notice shall be modified as necessary to reflect a purchase in lieu of redemption.

Exchange and Transfer

The Authority shall cause books for the registration and for the transfer of the Series 2013 Bonds as provided in the Bond Indenture to be kept by the Bond Trustee which was appointed as bond registrar of the Authority for the Series 2013 Bonds. Upon surrender for transfer of any fully registered Series 2013 Bond at the Payment Office of the Bond Trustee, duly endorsed for transfer or accomplished by an assignment duly executed by the Registered Owner or his attorney duly authorized in writing, the Authority shall execute and the Bond Trustee shall authenticate and deliver in the name of the transferee or transferees a new fully registered Series 2013 Bond or Bonds of a like Aggregate Principal Amount for a like principal amount and maturity.

The Authority shall execute and the Bond Trustee shall authenticate and deliver Series 2013 Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously Outstanding. The execution by the Authority of any fully registered Series 2013 Bond of any denomination shall constitute full and due authorization of such denomination and the Bond Trustee shall thereby be authorized to authenticate and deliver such Series 2013 Bond.

The Bond Trustee shall not be required to transfer or exchange any Series 2013 Bond after the mailing of notice calling such Series 2013 Bond or any portion thereof for redemption has been given as provided in the Bond Indenture, nor during the period beginning at the opening of business fifteen days before the day of mailing by the Bond Trustee of a notice of prior redemption and ending at

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the close of business on the day of such mailing except for Bondholders of $1,000,000 or more in aggregate principal amount of the Series 2013 Bonds.

As to any Series 2013 Bond, the Person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal of or interest on any Series 2013 Bond shall be made only to or upon the written order of the Registered Owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2013 Bond to the extent of the sum or sums paid. The Bond Trustee shall require the payment by any Bondholder requesting exchange or transfer of any tax or other governmental charge required to be paid with respect to such exchange or transfer.

Limitations on Investors and Restrictions on Transfer

Although the Series 2013 Bonds are not being issued under, and shall not be deemed to be issued under, Rule 144A of the Securities Act of 1933, as amended, the Authority requires that the initial investors in the Series 2013 Bonds, and any subsequent purchasers be either “qualified institutional buyers” as defined in Rule 144A or “accredited investors” as defined under Rule 501 of Regulation D of the Securities Act of 1933 until the Corporation applies for and receives a rating on the Series 2013 Bonds of at least “BBB/Baa3” or equivalent from any Rating Agency, if ever. The Authority may remove such limitation without prior notice to or consent of any owner of a Series 2013 Bond.

Advance Refunding of the Series 2013 Bonds

All or any portion of the Series 2013 Bonds may be advance refunded through the deposit in escrow of cash or Government Obligations for the benefit of the owners of such refunded Series 2013 Bonds. See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Bond Indenture – Defeasance” in APPENDIX C.

SECURITY FOR THE SERIES 2013 BONDS

The Series 2013 Bonds will be limited obligations of the Authority and will be payable solely from (i) payments or prepayments on the Series 2013 Notes, as applicable; (ii) payments or prepayments made under the Loan Agreement (other than payments with respect to Unassigned Rights); (iii) monies held by the Bond Trustee under, and to the extent provided in, the Bond Indenture; (iv) in certain circumstances, proceeds from insurance and condemnation awards or proceeds of sales made under the threat of condemnation; and (v) income from the temporary investment of any of the foregoing. Certain investment earnings on monies held by the Bond Trustee may be transferred to a Rebate Fund established pursuant to a Tax Exemption Agreement. Amounts held in such Rebate Fund will not be part of the “trust estate” pledged to secure the Series 2013 Bonds, and consequently will not be available to make payments on the Series 2013 Bonds.

The Loan Agreement will provide that the Corporation shall make designated payments to the Bond Trustee in amounts sufficient to pay the principal of, premium, if any, and interest on the Series 2013 Bonds when due. The Corporation’s obligation to make payments on the Series 2013 Notes shall be satisfied to the extent payments are made by the Corporation under the Loan Agreement. The Loan Agreement will also impose certain restrictions on the actions of the Corporation for the benefit of the Authority and the owners of the Series 2013 Bonds. See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Loan Agreement” in APPENDIX C.

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The rights of the Authority in and to the Series 2013 Notes and the amounts payable thereon and the amounts payable to the Authority under the Loan Agreement (other than payments with respect to Unassigned Rights) will be assigned to the Bond Trustee under the Bond Indenture to provide for and to secure the payment of principal of, premium, if any, and interest on the Series 2013 Bonds. The Corporation agrees under the Loan Agreement to make payments on the Series 2013 Notes pledged under the Bond Indenture directly to the Bond Trustee. See “SECURITY FOR THE SERIES 2013 NOTES – General” below.

Pursuant to the Bond Indenture, a Debt Service Reserve Fund (the “Debt Service Reserve Fund”) will be established and held by the Bond Trustee with subaccounts for the benefit of each series of the Series 2013 Bonds (each, a “Reserve Account”). At the time of issuance of the Series 2013 Bonds, $11,409,525 will be deposited into the Reserve Account for the Series 2013A Bonds and $4,075,000 will be deposited into the Reserve Account for the Series 2013B Bonds. Monies in each Reserve Account will be maintained in an amount equal to the related Reserve Fund Requirement, as defined in “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Definitions of Certain Terms” in APPENDIX C hereto. Monies on deposit in the Debt Service Reserve Fund will be used by the Bond Trustee whenever, and to the extent that, monies on deposit in the Funded Interest Account and the Bond Fund are insufficient for the purpose of paying interest on or principal of the related Series 2013 Bonds as the same becomes due whether on an interest payment date, redemption date, maturity date, acceleration date or otherwise. Money on deposit in the Debt Service Reserve Fund shall be invested in Permitted Investments. Permitted Investments deposited in the Debt Service Reserve Fund shall be valued on April 30 (the “Valuation Date”) of each year on the basis of fair market value.

If on any Valuation Date, the amount on deposit in any Reserve Account of the Debt Service Reserve Fund is less than 90% of the related Reserve Fund Requirement as a result of a decline in the market value of investments on deposit in the Reserve Account, the Corporation shall deposit with the Bond Trustee an amount necessary to restore such Reserve Account to the related Reserve Fund Requirement within 120 days following the date on which the Corporation receives notice of such deficiency.

If at any time, the amount on deposit in any Reserve Account is less than 100% of the related Reserve Fund Requirement as a result of a draw on such Reserve Account, the Corporation shall deposit with the Bond Trustee an amount necessary to restore such Reserve Account to the related Reserve Fund Requirement in not more than 12 substantially equal monthly installments beginning on the first day of the seventh month after the month in which such draw occurred.

For more information concerning the Debt Service Reserve Fund, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Bond Indenture – Section 3.10 Use of Moneys in the Reserve Fund” in APPENDIX C.

THE SERIES 2013 BONDS AND THE OBLIGATION TO PAY THE PRINCIPAL THEREOF AND INTEREST THEREON DO NOT NOW AND SHALL NEVER CONSTITUTE AN INDEBTEDNESS OR AN OBLIGATION OF THE AUTHORITY, THE STATE, COLLIER COUNTY, FLORIDA OR ANY OTHER POLITICAL SUBDIVISION THEREOF, WITHIN THE PURVIEW OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR PROVISION, OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS, IF ANY, OF ANY OF THEM, BUT SHALL BE SECURED AS AFORESAID, AND SHALL BE PAYABLE SOLELY FROM THE REVENUES AND INCOME DERIVED FROM THE LOAN AGREEMENT (EXCEPT AS STATED AFORESAID). NO OWNER OF THE SERIES 2013 BONDS SHALL HAVE THE RIGHT TO

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COMPEL THE EXERCISE OF THE TAXING POWER, IF ANY, OF THE AUTHORITY, THE STATE, COLLIER COUNTY, FLORIDA OR ANY OTHER POLITICAL SUBDIVISION THEREOF TO PAY THE PRINCIPAL OF OR INTEREST ON THE SERIES 2013 BONDS. THE AUTHORITY HAS NO TAXING POWER.

See also “SECURITY FOR THE SERIES 2013 NOTES” for information about additional security for the Series 2013 Bonds.

BOOK-ENTRY SYSTEM

The Depository Trust Company (“DTC”), New York, New York, will act as the depository for the Series 2013 Bonds. The Series 2013 Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. The ownership of one fully-registered Series 2013 Bond for each maturity, each in the aggregate principal amount of such maturity, will be registered in the name of Cede & Co.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has received a Standard and Poor’s rating of “AA+”. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of the Series 2013 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2013 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2013 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2013 Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will

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not receive certificates representing their ownership interests in the Series 2013 Bonds, except in the event that use of the book-entry system for the Series 2013 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2013 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2013 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2013 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2013 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2013 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2013 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2013 bond documents. For example, Beneficial Owners of Series 2013 Bonds may wish to ascertain that the nominee holding the Series 2013 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2013 Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2013 Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an “Omnibus Proxy” to the Authority as soon as possible after the Record Date. The “Omnibus Proxy” assigns Cede & Co.’s consenting or voting rights to those DTC Participants to whose accounts the Series 2013 Bonds are credited on the Record Date (identified in a listing attached to the “Omnibus Proxy”).

Principal and interest payments on the Series 2013 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Bond Trustee or the Authority, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by DTC Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Bond Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Bond Trustee or the Authority. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

THE INFORMATION PROVIDED ABOVE HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE AUTHORITY, THE CORPORATION OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY OF SUCH INFORMATION

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PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.

For so long as the Series 2013 Bonds are registered in the name of DTC or its nominee, Cede & Co., the Authority and the Bond Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the Series 2013 Bonds for all purposes, including payments, notices and voting.

Under the Bond Indenture, payments made by the Bond Trustee to DTC or its nominee will satisfy the Authority’s obligations under the Bond Indenture and the Corporation’s obligations under the Loan Agreement and on the Series 2013 Notes, to the extent of the payments so made.

None of the Authority, the Underwriter, the Corporation nor the Bond Trustee will have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, its nominee or any DTC Participant or Indirect Participant with respect to any beneficial ownership interest in any Series 2013 Bond, (ii) the delivery to any DTC Participant or Indirect Participant or any other Person, other than an owner, as shown in the Bond Register, of any notice with respect to any Series 2013 Bond including, without limitation, any notice of redemption, tender, purchase or any event which would or could give rise to a tender or purchase right or option with respect to any Series 2013 Bond, (iii) the payment of any DTC Participant or Indirect Participant or any other Person, other than an owner, as shown in the Bond Register, of any amount with respect to the principal of, premium, if any, or interest on, or the purchase price of, any Series 2013 Bond or (iv) any consent given by DTC as registered owner.

Prior to any discontinuation of the book-entry only system described above, the Authority and the Bond Trustee may treat DTC as, and deem DTC to be, the absolute owner of the Series 2013 Bonds for all purposes whatsoever, including, without limitation, (i) the payment of principal of, premium, if any, and interest on the Series 2013 Bonds, (ii) giving notices of redemption and other matters with respect to the Series 2013 Bonds, (iii) registering transfers with respect to the Series 2013 Bonds and (iv) the selection of Series 2013 Bonds for redemption.

SECURITY FOR THE SERIES 2013 NOTES

General

The Corporation’s obligations under the Loan Agreement will be secured by the Series 2013 Notes which will be issued and secured under the Master Indenture. The Series 2013 Notes will entitle the Bond Trustee, as the holder of the Series 2013 Notes, to the protection and benefit of the covenants, restrictions and other obligations imposed on the Obligated Group by the Master Indenture.

The Master Indenture provides that payments on the Series 2013 Notes and any Additional Notes issued under the Master Indenture will be the joint and several obligations of the Corporation and any future Members of the Obligated Group. The accounts of the Corporation and any future Members of the Obligated Group will be combined for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the issuance of Additional Indebtedness) are satisfied. See “RISK FACTORS – Certain Matters Relating to Enforceability of the Master Indenture.”

All Notes issued under the Master Indenture, including the Series 2013 Notes, will be secured by the Mortgage. The Mortgage grants a security interest in the Mortgaged Property, subject only to Permitted Encumbrances. The Mortgaged Property includes all of the Facilities in which the principal operations of the Corporation are located, including the Community. See “DEFINITIONS OF

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CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Mortgage” in APPENDIX C.

The Corporation has previously delivered or will deliver a mortgagee title insurance policy or policies for the Mortgaged Property, with the Master Trustee being the named insured. The title policies will provide title insurance in an aggregate amount at least equal to the initial aggregate principal amount of the Series 2013 Bonds.

The Notes, including the Series 2013 Notes, will also be secured by a security interest in the Gross Revenues of the Corporation, subject only to Permitted Encumbrances. See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Definitions of Certain Terms – Gross Revenues” in APPENDIX C.

“Gross Revenues” means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third party payments), condemnation awards, Entrance Fees, Federal Subsidy Payments and other moneys received by or on behalf of any Obligated Group Member, including (without limitation) revenues derived from (a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, (b) proceeds received from (i) accounts, (ii) securities and other investments, (iii) inventory and other tangible and intangible property, and (iv) accounts receivable, general intangibles, contract rights, chattel paper, instruments and other rights and assets now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, and (c) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities; provided, however, that there shall be excluded from Gross Revenues (i) all such items, whether now owned or hereafter acquired by the Obligated Group Members, which by their terms or by reason of applicable law cannot be granted, assigned or pledged under the Master Indenture or which would become void or voidable if granted, assigned or pledged under the Master Indenture by the Obligated Group Members, or which cannot be granted, pledged or assigned under the Master Indenture without the consent of other parties whose consent is not secured, or without subjecting the Master Trustee to a liability not otherwise contemplated by the provisions of the Master Indenture, or which otherwise may not be, or are not, hereby lawfully and effectively granted, pledged and assigned by the Obligated Group Members, (ii) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent, (iii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use of payments required under the Master Trust Indenture, (iv) any moneys received by any Obligated Group Member from prospective residents or commercial tenants in order to pay for customized improvements to those Independent Living Units or other areas of the Facilities to be occupied or leased to such residents or tenants, (v) all deposits made pursuant to Residency Agreements to be held in escrow pursuant to Chapter 651, Florida Statutes, until construction of the Facilities is completed, a certificate of occupancy has been issued and appropriate licenses, if required, have been issued, and (vi) all deposits and/or advance payments made in connection with any leases of the Independent Living Units and received prior to receipt of such certificate and licenses.

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Additional Indebtedness

As of the date of issuance of the Series 2013 Bonds, the Series 2013 Notes will be the only Notes Outstanding under the Master Indenture. The Master Indenture permits the Obligated Group to issue Additional Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by an Additional Note issued under the Master Indenture. The Master Indenture permits the Obligated Group to incur Additional Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by an Additional Note issued under the Master Indenture. Under certain conditions specified therein, the Master Indenture will permit the Members of the Obligated Group to issue Additional Notes that will not be pledged under the Bond Indenture, but will be equally and ratably secured by the Master Indenture with the Series 2013 Notes. In addition, the Master Indenture will permit such Additional Notes to be secured by security (including Liens on the Property, including life care facilities, of the Members of the Obligated Group and letters and lines of credit and insurance), which additional security or Liens need not be extended to secure any other Notes (including the Series 2013 Notes). See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.19 Liens on Property” and “– Section 4.16 Permitted Additional Indebtedness” in APPENDIX C.

In determining compliance with a number of provisions of the Master Indenture, including the provisions governing the incurrence of Additional Indebtedness, the Obligated Group may assume that certain types of Indebtedness which bear interest at varying rates and which may not be payable over an extended term will bear interest over time at interest rates approximating current or recent long term fixed rates, will remain outstanding for a term longer than the actual term of such Indebtedness and will be amortized on a level debt service basis. The actual interest rates and payments on such Indebtedness may vary from such assumptions, and such variance may be material. See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.17 Calculation of Debt Service and Debt Service Coverage” in APPENDIX C.

Amendments to the Master Indenture

The Master Indenture provides that certain amendments may be made to the Master Indenture with the consent of the holders of not less than a majority in aggregate principal amount of the Notes which are Outstanding under the Master Indenture. Such amendments may be material and the Note holders providing the requisite consents to such amendments may be comprised entirely of the owners of Additional Notes. See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 9.02 Supplements with Consent of Holders of Obligations” in APPENDIX C.

Certain Master Indenture Covenants of the Obligated Group

For the definitions of certain words and terms used in this section, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Definitions of Certain Terms” in APPENDIX C.

Rate Covenant. The Corporation and each future Member of the Obligated Group covenant and agree in the Master Indenture to operate all of their Facilities on a revenue-producing basis and to charge such fees and rates for their Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be

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made by it under the Master Indenture to the extent permitted by law. Each Member further covenants and agrees that they will from time to time as often as necessary and to the extent permitted by law, revise their rates, fees and charges in such manner as may be necessary or proper to comply with the covenant described under this heading.

In accordance with the Master Indenture, the Obligated Group Representative will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year commencing with the earlier of (a) Stable Occupancy or (b) the Fiscal Year ending June 30, 2020 (the “Initial Testing Period”) and will deliver a copy of such calculation to the persons to whom such report is required to be delivered under the Master Indenture. If the Historical Debt Service Coverage Ratio of the Obligated Group is less than (i) for the Initial Testing Period, a Historical Debt Service Coverage Ratio of 1.10:1 or (ii) for each Fiscal Year thereafter, a Historical Debt Service Coverage Ratio of 1.20:1 (the “Annual Debt Service Coverage Requirement”), the Master Trustee shall require the Obligated Group Representative, at the Obligated Group’s expense, to select a Consultant within 30 days following such calculation to make recommendations with respect to the rates, fees and charges of the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the Annual Debt Service Coverage Requirement for such Fiscal Year, the Master Trustee shall not be obligated to require the Obligated Group to select a Consultant to make such recommendations if: (a) there is filed with the Master Trustee (who shall provide a copy to each Required Information Recipient) a written report addressed to them of a Consultant containing an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet such requirement, and, such report is accompanied by a concurring opinion of Independent Counsel as to any conclusions of law supporting the opinion of such Consultant; (b) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (c) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant’s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if, at the end of the first of such two Fiscal Years, the Obligated Group provides to the Master Trustee, who shall provide a copy to each Related Bond Trustee, an opinion of Independent Counsel to the effect that the applicable laws and regulations underlying the Consultant’s report delivered in respect of the previous Fiscal Year have not changed in any material way.

If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio equal to the Annual Debt Service Coverage Requirement for any Fiscal Year, such failure shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

Commencing with the Initial Testing Period, if the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year, such failure shall constitute an event of default under the Master Indenture.

The Consultants selected as described in this heading shall be approved and selected as summarized below and in APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND

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EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.27 Approval of Consultants.”

A copy of the Consultant’s report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days of actual engagement of any such Consultant. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law. This covenant shall not be construed to prohibit any Member from serving indigent patients or residents to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from serving any other class or classes of patients or residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements summarized in this section.

See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.11 Rates and Charges” in APPENDIX C for more detail.

Liquidity Covenant. The Obligated Group covenants that it will calculate the Days Cash on Hand and/or Cash to Indebtedness Ratio of the Obligated Group as of June 30 and December 31 of each Fiscal Year, commencing June 30 of the Initial Testing Period (each such date being a “Testing Date”). The Obligated Group shall deliver an Officer’s Certificate setting forth such calculation as of December 31 to the Master Trustee no later than 45 days after such December 31 and include such calculation as of June 30 in the Officer’s Certificate delivered pursuant to the Master Indenture and described under the heading “FINANCIAL REPORTING AND CONTINUING DISCLOSURE – Financial Reporting” herein.

The Corporation and each future Member of the Obligated Group are required to conduct their business so that on each Testing Date the Obligated Group shall have (a) a Cash to Indebtedness Ratio of (i) no less than 0.25:1 on each of the first two Testing Dates, (ii) no less than 0.275:1 for the next two following Testing Dates, and (iii) no less than 0.30:1 on each Testing Date thereafter; and (b) 180 Days Cash on Hand on each Testing Date (collectively, the “Liquidity Requirement”). At the option of the Obligated Group Representative, the Liquidity Requirement can be changed to eliminate the Cash to Indebtedness Ratio if for three consecutive Fiscal Years the Obligated Group has reported (a) a Historical Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30:1 or more on each Testing Date by making an election to do so in an Officer’s Certificate.

If the Cash to Indebtedness Ratio and/or the amount of the Days Cash on Hand, as applicable, as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of the Cash to Indebtedness Ratio and/or Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods.

If the Obligated Group has not raised the level of the Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, to the Liquidity Requirement by the next Testing Date immediately subsequent to the delivery of the Officer’s Certificate required in the preceding paragraph, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, select a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio and/or the number of Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. A copy of the Consultant’s report and

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recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days of actual engagement of any such Consultant. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Obligated Group Member) and permitted by law.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Liquidity Requirement for any Testing Date shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan or retaining a Consultant and follows each recommendation contained in such plan or Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Obligated Group Member) and permitted by law; provided, that failure to maintain at least 30 Days Cash on Hand for two consecutive Testing Dates shall constitute an Event of Default under the Master Trust Indenture.

See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.20 Liquidity Covenant” in APPENDIX C for more detail.

Marketing Covenant. Beginning with the fiscal quarter ending December 31, 2013 and ending with the first full fiscal quarter following the fiscal quarter in which the Stabilization Date occurs, the Obligated Group will use its best efforts to maintain the percentage of Entrance Fee Units which are Reserved (the “Percentage of Reserved Entrance Fee Units”) at or above the applicable levels set forth in the tables below, which determinations shall be measured as of the last day of the applicable quarter (the “Marketing Requirements”). The Marketing Requirements for the applicable quarter shall be either (i) the Level I Marketing Requirements as long as the Adjusted Level I Occupancy Requirements set forth under “Occupancy Covenant” below have not been satisfied or (ii) the Adjusted Level I Marketing Requirements if the Adjusted Level I Occupancy Requirements set forth under “Occupancy Covenant” below have been satisfied.

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Quarter Ending


Level I


Occupancy Quarter


Adjusted Level I

1 70.8% 2 72.1 3 73.5 4 74.8 5 76.8

If the Percentage of Reserved Entrance Fee Units for any fiscal quarter is less than the applicable Marketing Requirement set forth above for that fiscal quarter the Obligated Group Representative shall submit to the Master Trustee, within 30 days of the end of such fiscal quarter, a marketing report (a “Management Marketing Report”) which includes the following information: (a) the Percentage of Reserved Entrance Fee Units, including the number of reservations and cancellations of Entrance Fee Units during the immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared by management of the Obligated Group Representative, of the number of reservations of Entrance Fee Units expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Management Marketing Report is being prepared; and (c) a description of the sales and marketing plan of the Obligated Group Representative.

If the Obligated Group fails to meet the Marketing Requirement for any two consecutive fiscal quarters, the Obligated Group Representative shall select a Consultant within 30 days thereafter to prepare a report which addresses the information identified in the Management Marketing Report described above and to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Entrance Fee Units to at least the Marketing Requirements set forth herein for

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future periods. Within 60 days of actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant’s report for failing to meet a Marketing Requirement if such failure occurs within three (3) fiscal quarters of the failure that triggered the delivery of a prior Consultant’s report addressing the information identified in the Management Marketing Report described above.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Marketing Requirements for any fiscal quarter shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Management Marketing Report or obtaining a Consultant’s report and adopting a plan and follows each recommendation contained in such Management Marketing Report or Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

For information regarding the marketing covenant and remedies, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Marketing Covenants – Section 4.21 Marketing Covenant” in APPENDIX C.

Occupancy Covenant. The Obligated Group covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of the first certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), and (b) ending with the first full fiscal quarter following the fiscal quarter in which the Stabilization Date occurs (each an “Occupancy Quarter”), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Entrance Fee Units (the “Percentage of Units Occupied”) at or above the Level I Occupancy Requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

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Adjusted Level I Occupancy

Requirements (%) 1 15.8% 29.8% 2 29.1 50.3 3 39.7 64.9 4 49.0 70.2 5 57.6 76.2 6 64.2 7 69.5 8 74.8 9 78.1

10 80.1 11 82.1 12 84.4 13 86.0 14 87.4 15 88.7


If the Percentage of Units Occupied for any Occupancy Quarter is less than the Level I Occupancy Requirement set forth above for that Occupancy Quarter, the Obligated Group Representative shall within 30 days thereafter submit an Officer’s Certificate to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above for future periods (a “Corrective Occupancy Action Plan”).

If the Percentage of Units Occupied for any two consecutive fiscal quarters is less than the Level I Occupancy Requirement set forth above for those fiscal quarters, the Obligated Group Representative shall select a Consultant within 30 days thereafter to prepare a report which addresses the information identified in the Corrective Occupancy Action Plan described above and to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above for future periods. Within 60 days of actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant’s report for failing to meet an Occupancy Requirement if such failure occurs within three (3) fiscal quarters of the failure that triggered the delivery of a prior Consultant’s report addressing the information identified in the Corrective Occupancy Action Plan described above.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Occupancy Requirement for any Occupancy Quarter shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Corrective Occupancy Action Plan and for obtaining a Consultant’s report and adopting a plan and follows each recommendation contained in such Corrective Occupancy Action Plan or Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

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For information regarding the occupancy covenant and remedies, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.22 Occupancy Covenant” in APPENDIX C.

Cumulative Cash Operating Loss Covenant. The Obligated Group covenants that during the period (a) commencing with (i) the first fiscal quarter ending after the Initial Occupancy Date if such date is more than 30 days prior to the end of such fiscal quarter or (ii) the first full fiscal quarter ending after the Initial Occupancy Date if such date is less than 30 days prior to the end of a fiscal quarter and (b) ending with the fiscal quarter immediately preceding the Initial Testing Period (Cumulative Cash Operating Loss is not required to be calculated for the Initial Testing Period), it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (a “CCOL Testing Date”). Each Member is required to conduct its business so that as of each CCOL Testing Date, the Obligated Group will have Cumulative Cash Operating Loss no greater than the amount set forth below:

Quarter Cumulative

Cash Operating Loss Forecasted Cumulative Cash Operating Loss(1)

1 ($4,000,000) ($3,200,000) 2 (6,000,000) (4,500,000) 3 (7,000,000) (4,900,000) 4 (7,500,000) (5,000,000) 5 (9,000,000) (6,100,000) 6 (10,000,000) (7,000,000) 7 (11,000,000) (7,800,000)

8 and thereafter (12,250,000) (8,200,000) (1) This information is based on management’s forecast as contained in the Feasibility Study, which should be read

in its entirety, including management’s notes and assumptions set forth therein. See APPENDIX B – “FINANCIAL FEASIBILITY STUDY.” This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will not exceed the occupancy levels forecasted. Excludes net turn over Entrance Fees.

If, as of any testing date, the Cumulative Cash Operating Loss of the Obligated Group is

greater than the amounts required above, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to achieve compliance for future periods.

If, as of any two consecutive testing dates, the Cumulative Cash Operating Loss is greater than the levels set forth above required, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, select a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to decrease Cumulative Cash Operating Loss to the required level for future periods. A copy of the Consultant’s report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days of actual engagement of any such Consultant. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant’s report for exceeding the permitted Cumulative Cash Operating Loss if such failure occurs within three (3) fiscal quarters of the failure that triggered the delivery of a prior Consultant’s report addressing the information described above

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Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the required Cumulative Cash Operating Loss level will not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the required procedures for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined by the Governing Body of the Obligated Group Representative) and permitted by law.

For more information regarding the cumulative cash operating loss covenant, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.23 Cumulative Cash Operating Loss Covenant” in APPENDIX C.

Incurrence of Additional Indebtedness. The Obligated Group agrees in the Master Indenture to restrictions on the incurrence of additional indebtedness, as more fully described under the captions “SECURITY FOR THE SERIES 2013 NOTES – Additional Indebtedness” herein and APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.16 Permitted Additional Indebtedness.” To the extent that the conditions provided in the Master Indenture are met, such indebtedness may be secured on a parity basis with the Series 2013 Notes.

Disposition of Property. The Corporation and each future Member of the Obligated Group agree in the Master Indenture and in the Mortgage to restrictions on the disposition of its Property, as more fully described under the caption “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.18 Sale or Lease of Property” in APPENDIX C hereto.

Actuarial Study. During the Fiscal Year following the first full Fiscal Year of operations and at least once every three Fiscal Years thereafter, the Obligated Group Representative, at the Obligated Group’s expense, shall provide the actuarial study described below to each Member and each Required Information Recipient. The actuarial study shall be prepared by a Consultant and include (i) the amount, if any, of the Obligated Group’s obligations to provide services under the Residency Agreements anticipated to be in excess of those that could be satisfied using the rates, fees and charges for the Project then in effect, and (ii) recommendations, if any, with respect to the rates, fees and charges of the Members and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to enable the Obligated Group to satisfy such obligations. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

Application for Rating. The Master Indenture provides that not later than 150 days after receipt by the Obligated Group Representative of the audited financial report of the Obligated Group for the first full Fiscal Year following the achievement of Stable Occupancy and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains an investment grade credit rating (an “Investment Grade Credit Rating”). Notwithstanding the foregoing, (a) the requirement to annually approach a Rating Agency shall be suspended for such time as the Obligated Group maintains an Investment Grade Credit Rating; and (b) the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group Representative reasonably believes that the Obligated Group will not meet the criteria of any Rating Agency for an Investment Grade Credit Rating based on the then-existing published rating criteria of the Rating Agencies. Also see APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF

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CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.26 Rating Application.”

Payments on Affiliate Subordinated Indebtedness. Except with respect to the reimbursement of costs related to the Project advanced by LLM paid from proceeds of the Series 2013 Bonds, a Member of the Obligated Group will not make payments on Affiliate Subordinated Indebtedness (except for repayment to the Liquidity Support Fund pursuant to the Master Indenture), unless the Obligated Group Representative delivers an Officer’s Certificate to the Master Trustee prior to any payment on such Affiliate Subordinated Indebtedness certifying that the following conditions are satisfied:


(b) if the proposed payment on the Affiliate Subordinated Indebtedness had occurred as of the last day of the most recent Testing Date, the Obligated Group would have met the Liquidity Requirement after making such payment;



(e) there is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under the Master Trust Indenture.

Payments on Affiliate Management Fees and Deferred Affiliate Development Fees. (a) For each Fiscal Year commencing with Stable Occupancy, any Affiliate Management Fees, Deferred Affiliate Development Fees plus any Deferred Affiliate Management Fees then payable, may be paid by the Obligated Group Representative if the conditions set forth under the heading “Payments on Affiliate Subordinated Indebtedness” above have been satisfied.

(b) Amounts due to an Affiliate with respect to any portion of Affiliate Management Fees not paid under clause (a) under this heading because certain other conditions under the Master Indenture cannot be satisfied shall be deferred in accordance with the provisions of the Master Indenture and the Consulting Services Agreement.

(c) Amounts due with respect to any Deferred Affiliate Development Fee not paid under clause (a) of this subheading because of the conditions set forth therein cannot be satisfied shall continue to accrue in accordance with the Master Indenture.

(d) All Affiliate Management Fees and Deferred Affiliate Development Fees payable shall be subordinated to all payments due on any Notes Outstanding and shall constitute Affiliate Subordinated Indebtedness under the Master Indenture.

Approval of Consultants. Upon selecting a Consultant as required under the provisions of the Master Indenture summarized herein, the Obligated Group Representative will notify the Master Trustee of such selection. The Master Trustee shall, as soon as practicable but in no case longer than five Business Days after receipt of notice, notify the Holders of all Notes Outstanding under the Master Indenture of such selection. Such notice (which shall be provided by the Obligated Group

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Representative) shall (i) include the name of the Consultant and a brief description of the Consultant, (ii) state the reason that the Consultant is being engaged including a description of the covenant(s) of the Master Indenture that require the Consultant to be engaged, and (iii) state that the Holder of the Notes will be deemed to have consented to the selection of the Consultant named in such notice unless such Holder submits an objection to the selected Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If 66.6% or more in aggregate principal amount of the Holders of the Outstanding Notes have been deemed to have consented to the selection of the Consultant or have not responded to the request for consent, the Obligated Group Representative shall engage the Consultant within three Business Days. If 33.4% or more in aggregate principal amount of the Holders of the Notes Outstanding have objected to the Consultant selected, the Obligated Group Representative shall select another Consultant which may be engaged upon compliance with the procedures described above.

When the Master Trustee notifies the Holders of Notes of such selection, the Master Trustee will also request any Related Bond Trustee to send a notice containing the information required by the paragraph above to the owners of all of the Related Bonds outstanding. Such Related Bond Trustee shall, as the owner of a Note securing such Related Bonds, consent or object to the selection of the Consultant in accordance with the response of the owners of such Related Bonds.

The 15 day notice period described above may be extended by the Master Trustee in order to permit each Related Bond Trustee to give the owners of the Related Bonds 15 days to respond to the notice given by the Related Bond Trustee.

See APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.27 Approval of Consultants.”

Transfer of Assets. The Master Indenture allows certain transfers of assets by the Corporation including transfers to affiliated corporations. For more information, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.18 Sale or Lease of Property” in APPENDIX C.

Entrance Fees Fund. The Members of the Obligated Group have agreed that each portion of an Initial Entrance Fee received by the members of the Obligated Group will be transferred to the Master Trustee within five Business Days of the receipt thereof as follows: (i) prior to the release described in (b) below, each transfer shall also be accompanied by a copy of the related entrance fee receipt (an “Entrance Fee Receipt”) forwarded to the escrow agent, initially SunTrust Bank, for the Entrance Fee Escrow Account required to be maintained pursuant to Chapter 651, Florida Statutes (the “Chapter 651 Escrow Agent”) and written directions from the Obligated Group Representative to the Master Trustee indicating the amount of such Initial Entrance Fee that is to be deposited to the Entrance Fee Fund (the “Discretionary Amount”) and the amount of such Initial Entrance Fee that is to be transferred to the Chapter 651 Escrow Agent for deposit to the Entrance Fee Escrow Account (the “Escrowed Amount”), such Discretionary Amount shall be deposited and applied by the Master Trustee in accordance with paragraph (a) below; (ii) upon the release described in paragraph (b) below, the Initial Entrance Fees so released and received by the Master Trustee shall be deposited and applied in accordance with paragraph (b) below; and (iii) after the release described in paragraph (b) below, the Initial Entrance Fees received by the Master Trustee shall be deposited and applied in accordance with paragraph (c) below.

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(a) Application of Discretionary Amount. The Discretionary Amount shall be deposited to the Entrance Fee Fund and will be applied by the Master Trustee within two Business Days of receipt, as follows:

FIRST, to the Corporation to pay refunds required by Residency Agreements for which the Corporation has not received a corresponding replacement Entrance Fee with respect to the applicable Entrance Fee Unit. Such disbursements will be made upon receipt by the Master Trustee and Chapter 651 Escrow Agent of an Officer’s Certificate of the Corporation certifying that the Corporation is required by a Residency Agreement to pay refunds within the next 30 days, and the amount of such refunds to be funded from the Entrance Fee Fund and Entrance Fee Escrow Account.

SECOND, to the Working Capital Fund established by the Master Indenture, until the total Discretionary Amount of Entrance Fees deposited into the Working Capital Fund equals $10,250,000. The Master Trustee will not replenish funds withdrawn from the Working Capital Fund or transfer moneys from the Entrance Fee Fund once a total Discretionary Amount of $10,250,000 from Entrance Fees has been deposited.

THIRD, to the Operating Reserve Fund established by the Master Indenture, until the total Discretionary Amount deposited in the Operating Reserve Fund equals $5,000,000.

After the transfers described above have been made, thereafter the Master Trustee will retain any Discretionary Amount in the Entrance Fee fund to engage in the periodic review and application of funds described in subsection (c) below.

(b) Application upon Release of Escrowed Amount. Once the Escrowed Amount, together with any other amount on deposit in the Entrance Fee Escrow Account, is released pursuant to the terms of the Entrance Fee Escrow Agreement, the Obligated Group Representative shall direct the Chapter 651 Escrow Agent to use such released moneys to fund the Minimum Liquid Reserve Accounts to their required level and then direct the Chapter 651 Escrow Agent to transfer the remaining amount to the Master Trustee for deposit to the Entrance Fee Fund (such direction to be provided in writing to the Chapter 651 Escrow Agent with a copy to the Master Trustee) and shall be applied by the Master Trustee within two Business Days of receipt, as follows:


SECOND, to the Operating Reserve Fund established by the Master Indenture until the initial amount on deposit in the Operating Reserve Fund equals $5,000,000.

THIRD, to the Liquidity Support Fund, any amount necessary to reimburse any amounts advanced for Costs of the Project (but not for operating expenses) under the Liquidity Support Agreement.

After the transfers described above have been made, thereafter the Master Trustee will review the amount on deposit in the Entrance Fee Fund in accordance with paragraph (c) below.

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(c) Periodic Review. After the release described in paragraph (b) above, all Initial Entrance Fees received by the Master Trustee will be deposited to the Entrance Fee Fund and on the first Business Day of each month thereafter (each, a “Review Date”) the Master Trustee shall review the amount on deposit in the Entrance Fee Fund and shall apply moneys on deposit therein as follows:


SECOND, to the Operating Reserve Fund the following:

(i) until the initial amount deposited into the Operating Reserve Fund equals $5,000,000; and

(ii) thereafter, the amount needed, if any, to replenish any funds withdrawn from the Operating Reserve Fund until the amount on deposit in the Operating Reserve Fund equals $5,000,000, provided that the aggregate amount transferred from the Entrance Fee Fund to the Operating Reserve Fund shall not exceed $10,000,000; and

(iii) if a transfer of moneys from the Liquidity Support Fund to the Operating Reserve Fund (as described under “LIQUIDITY SUPPORT AGREEMENT – Draws on the Liquidity Support Fund” herein) has occurred, the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $2,000,000 (without regard to the replenishment limit described in clause (ii) above).

THIRD, into the Entrance Fee Redemption Account established pursuant to the Bond Indenture.

(d) Closure of Entrance Fee Fund. After all of the Series 2013B Bonds have been redeemed or otherwise paid in full (as established by an Officer’s Certificate of the Corporation delivered to the Master Trustee) and no Event of Default has occurred and is continuing, the Members of the Obligated Group need not deposit any Initial Entrance Fees into the Entrance Fee Fund. Upon the satisfaction of such conditions, any amounts on deposit in the Entrance Fee Fund will be remitted to the Corporation and the Entrance Fee Fund will be closed.

For information regarding the Entrance Fees Fund, see APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 3.01 Entrance Fees Fund.”

Working Capital Fund. The Master Trustee shall establish and maintain a separate account to be known as the “Working Capital Fund” (the “Working Capital Fund”). All moneys received by the Master Trustee and held in the Working Capital Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Notes outstanding thereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture.

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Moneys in the Working Capital Fund shall be disbursed by the Master Trustee to or for the account of the Corporation within seven days after receipt by the Master Trustee of an Officer’s Certificate of the Corporation to the effect that such moneys will be used to pay (A) costs of the Project, (B) lease up and operating expenses of the Project, including any development and marketing fees, (C) the costs of needed repairs to the Project, (D) the costs of capital improvements to the Project, (E) judgments against any Member of the Obligated Group, (F) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (G) amounts required to restore funds on deposit in any Related Bonds Debt Service Reserve Fund if such amount is less than the applicable requirement due to a valuation deficiency on any valuation date, or (H) amounts due on any Indebtedness of any Member of the Obligated Group, but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by any Affiliate.

All amounts on deposit in the Working Capital Fund may be released to the Corporation and the Working Capital Fund will be closed upon receipt by the Master Trustee of an Officer’s Certificate of the Corporation requesting such release which Officer’s Certificate shall state that (i) all Series 2013B Bonds have been redeemed or otherwise paid in full and (ii) no Event of Default has occurred and is continuing under the Master Indenture.

Operating Reserve Fund. The Master Trustee shall establish and maintain a separate account to be known as the “Operating Reserve Fund” (the “Operating Reserve Fund”). All moneys received by the Master Trustee and held in the Operating Reserve Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Notes outstanding thereunder (except as otherwise provided in the Master Indenture) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture.

Moneys in the Operating Reserve Fund shall be disbursed by the Master Trustee to or for the account of the Corporation within seven Business Days of receipt by the Master Trustee of an Officer’s Certificate of the Corporation to the effect that (A) such moneys will be used to pay (i) costs of the Project, (ii) lease up and operating expenses of the Project, including any development and marketing fees, (iii) the costs of needed repairs to the Project, (iv) the costs of capital improvements to the Facilities, (v) judgments against any Member of the Obligated Group, (vi) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (vii) amounts required to restore funds on deposit in any Related Bonds Debt Service Reserve Fund if such amount is less than the applicable requirement due to a valuation deficiency on any valuation date, or (viii) amounts due on any Indebtedness any Member of the Obligated Group, but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by any Affiliate, (B) such moneys are anticipated to be expended in the calendar month following the month in which such Officer’s Certificate is submitted, together with an itemized budget describing the uses for which such moneys are needed and the amount needed for each such use, (C) no moneys are on deposit in the Working Capital Fund or are otherwise available to the Corporation for such purpose, and (D) if such moneys are to be used to pay costs of the Project, the aggregate amount on deposit in the Operating Reserve Fund immediately after such draw will be at least $2,000,000.

All amounts on deposit in the Operating Reserve Fund may be released to the Corporation, and the Operating Reserve Fund shall be closed, upon receipt by the Master Trustee of an Officer’s Certificate of the Corporation requesting such release which Officer’s Certificate shall state that (i) all Series 2013B Bonds have been redeemed or otherwise paid in full and (ii) no Event of Default has occurred and is continuing under the Master Indenture.

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Investment of Entrance Fees Fund, Working Capital Fund and Operating Reserve Fund. Any moneys held by the Master Trustee under the Master Indenture shall be invested or reinvested by the Master Trustee in Permitted Investments upon the receipt of an Obligated Group Representative Request (upon which the Master Trustee is entitled to rely). Any such investments shall be held by or under the control of the Master Trustee and shall mature, or be redeemable at the option of the Master Trustee at such times as it is anticipated by the Obligated Group Representative that moneys from the particular fund will be required for the purposes of the Master Indenture. For the purpose of any such investment or reinvestment, investments shall be deemed to mature at the earliest date on which the obligor under such investment is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligation. Any Permitted Investments may be purchased from or sold to the Master Trustee or any of its respective affiliates.

For more information, see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 3.01 Entrance Fees Fund,” “– Section 3.02 Working Capital Fund,” “– Section 3.04 Operating Reserve Fund” and “– Section 3.06 Investment of Funds” in APPENDIX C.

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LIQUIDITY SUPPORT AGREEMENT

Liquidity Support Fund

Liquidity Support Fund. Under the Liquidity Support Agreement, LLM has agreed to deposit with the Master Trustee $7,000,000 (the “Funded Portion”) upon the issuance of the Series 2013 Bonds and, up to an additional $3,000,000 (the “Unfunded Portion”) upon the occurrence of a Funding Event (collectively, the “Liquidity Support Obligation”). The Corporation will establish the Liquidity Support Fund with the Master Trustee pursuant to the Liquidity Support Agreement and LLM will provide such funds concurrently with the delivery of the Series 2013 Bonds. The Liquidity Support Fund shall be the property of the Corporation, but shall be pledged to fund and secure the Corporation’s obligations under the Liquidity Support Agreement.

"Funding Event" means either: (i) the amount on deposit in the Liquidity Support Fund is less than $4,000,000 as a result of one or more draws upon such Fund, or (ii) the Foundation is in violation of the Liquidity Covenant established by the Liquidity Support Agreement.

Reductions of the Liquidity Support Obligation

The aggregate amount available for payment under the Liquidity Support Obligation shall be reduced by the amount of each payment made pursuant to the Liquidity Support Agreement and to each of the amounts described below in the next three paragraphs if the conditions described therein have been met.

Anticipated Reductions. (A) Unfunded Portion Reduction. The Unfunded Portion shall be reduced to $1,500,000 when the Corporation delivers to the Master Trustee, the Bond Trustee and LLM an Officer's Certificate certifying that (i) the Series 2013B-2 Bonds are no longer Outstanding, (ii) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreement and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreement, and (iii) the Corporation is in compliance with the applicable Marketing Requirements, Occupancy Requirements, Cumulative Cash Operating Loss requirements summarized under the sub-headings “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Marketing Covenant,” “Occupancy Covenant” and “Cumulative Cash Operating Loss Covenant” above.

(B) Initial Regular Reduction. The Support Obligation shall be reduced to either (A) if no Funding Event shall have occurred, $3,500,000 plus 50% of the then current Unfunded Portion, which shall remain subject to deposit pursuant to the Liquidity Support Agreement upon the occurrence of a Funding Event, or (B) if a Funding Event as described in clause (ii) of the definition thereof has occurred, to either (i) $4,250,000 if the reduction described in (A) above has occurred, or (ii) $5,000,000 if such reduction shall not have occurred, in each case, when the Corporation delivers to the Master Trustee, the Bond Trustee and LLM an Officer's Certificate certifying that:

(i) the Series 2013B Bonds are no longer Outstanding;

(ii) for the most recent six-month period, the average overall occupancy of the independent living units, the assisted living units, the memory support units and the skilled nursing beds included in the Project in the aggregate, had reached at least 90% and the average overall occupancy of the Independent units included in the Project had reached 88%;

(iii) the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year for which audited financial statements are available was not less than the higher

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of: (A) 1.10:1; or (B) the then applicable Historical Debt Service Coverage Ratio required under the Master Indenture;

(iv) the Cash to Indebtedness Ratio of the Obligated Group as of the most recent June 30 or December 31 was no less than the higher of: (A) 0.20:1; or (B) the then applicable Liquidity Requirement required under the Master Indenture; and

(v) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreement and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreement.

Notwithstanding the above, the Support Obligation shall not be reduced as described above if there shall have occurred an event described in clause (i) of the definition of Funding Event.

After any such reduction, the Master Trustee shall transfer the funds released for disbursement from the Liquidity Support Fund to LLM. See APPENDIX A – “THE PROJECT – Liquidity Support Agreement” hereto.

(C) Final Regular Reduction. The Liquidity Support Obligation shall be reduced to zero and the Liquidity Support Agreement shall cease to be of any further force and effect, when the Corporation delivers to the Master Trustee, the Bond Trustee and LLM an Officer’s Certificate certifying that:

(i) at least 12 months have lapsed since the last day of the fiscal year of the audited financial statements described in (A)(iii) above;

(ii) the then applicable Liquidity Requirement required under the Master Indenture has been met;

(iii) the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year for which audited financial statements are available was not less than 1.20:1 and the Historical Debt Service Coverage Ratio of the Obligated Group for the prior fiscal year which audited financial statements are available was not less than 1:10:1;

(iv) for the most recent six-month period, (A) the average overall occupancy of the independent living units, the assisted living units, the memory support units and the skilled nursing beds included in the Project in the aggregate, had reached at least 90%, and (B) the average overall occupancy of the independent living units included in the Project has reached at least 88%; and

(v) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreement and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreement.


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(D) High Performance Reduction. The Liquidity Support Obligation shall be reduced to zero and the Liquidity Support Agreement shall cease to be of any further force and effect, when the Corporation delivers to the Master Trustee, the Bond Trustee and LLM an Officer’s Certificate certifying that:

(i) the Series 2013B Bonds are no longer Outstanding;

(ii) for the most recent six month period, (A) the average overall occupancy of the independent living units, the assisted living units, the memory support units and the skilled nursing beds included in the Project, in the aggregate, had reached at least 90%, and (B) the average overall occupancy of the independent living units included in the Project has reached at least 88%;

(iii) the Cash to Indebtedness Ratio of the Obligated Group as of the most recent June 30 or December 31 was no less than 0.35:1;

(iv) the Historical Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year for which audited financial statements are available was not less than 1.40:1;

(v) the Historical Debt Service Coverage Ratio of the Obligated Group (calculated by excluding Entrance Fees from the definition of "Revenues" utilized in such calculation) for the last fiscal year was not less than 1.00:1; and

(vi) no event of default has occurred and is continuing under the Master Indenture or the Loan Agreement and no event has occurred or is continuing which, with the passage of time or giving of notice, would cause an event of default to occur under the Master Indenture or the Loan Agreement.


Draws on the Liquidity Support Fund

Moneys deposited in the Liquidity Support Fund shall be paid out from time to time by the Master Trustee as follows:

(a) Costs of the Project. If moneys on deposit in the Project Account of the Construction Fund under the Bond Indenture and all other available funds (including project contingency funds and immediately available insurance proceeds, if any) are insufficient to pay Costs of the Project, which can include an Approved Change in Services or Facilities or additional construction costs and expenses arising from unanticipated events or problems including without limitation changes required pursuant to applicable law or requirements of governmental authorities (and not arising from a Discretionary Change), the Corporation will deliver to the Master Trustee a written request for payment of funds required to pay those Costs of the Project.

Upon receipt of the Written Request, the Master Trustee shall transfer moneys requested thereby, to the Bond Trustee for deposit in the Project Account of the Construction Fund under the Bond Indenture but only if they are to pay for items described in the above paragraph. Notwithstanding the foregoing, no moneys in the Liquidity Support Fund shall be used to pay interest on the Series 2013 Bonds until all moneys in the Funded Interest Account of the Construction Fund under the Bond Indenture are exhausted.

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(b) Operating Expenses. If at any time:

(i) The Corporation needs money for payment of any expenses that:

(A) otherwise could be paid from the Working Capital Fund or the Operating Reserve Fund under the Master Indenture; and

(B) are either: (I) consistent with the level of services described in the form of Residency Agreement as of the date of issuance of the Series 2013 Bonds; (II) the result of an Approved Change in Services or Facilities; or (III) required pursuant to applicable law or requirements of governmental authorities (which expenses may include, without limitation, interest payments on the Series 2013 Notes); and

(ii) no moneys are on deposit in the Working Capital Fund and the Operating Reserve Fund held under the Master Indenture (other than amounts on deposit therein previously committed to pay such costs and expenses) or such funds and the Entrance Fee Fund have been closed in accordance with the Master Indenture, then the Corporation will deliver a Written Request to the Master Trustee to transfer moneys to the Corporation for the payment of any such expenses (other than Affiliate Management Fees) to the extent of any funds therein.

Upon receipt of any such Written Request and subject to the immediately following subsection (c)(i), the Master Trustee shall make such transfer. Notwithstanding the foregoing, no moneys in the Liquidity Support Fund shall be used to pay interest on the Series 2013 Notes until all moneys in the Funded Interest Account of the Construction Fund under the Bond Indenture are exhausted.

(c) Transfer to Operating Reserve Fund. If at any time: (i) the total amount in the Liquidity Support Fund drops to or below $1,000,000 and (ii) no moneys are on deposit in the Working Capital Fund and the Operating Reserve Fund held under the Master Indenture, then the Master Trustee shall promptly, without further authorization or direction, transfer all remaining moneys in the Liquidity Support Fund to the Operating Reserve Fund under the Master Indenture (unless the Operating Reserve Fund has been closed in accordance with the Master Indenture, in which case no such transfer shall be made).

(d) Payment of Principal and Interest on Series 2013 Bonds. If funds held in the Bond Fund under the Bond Indenture are insufficient to pay the principal of or interest on a related series of Series 2013 Bonds as the same come due, then moneys in the Working Capital Fund, the Operating Reserve Fund and the Liquidity Support Fund (in that order) shall be used for that purpose before any moneys in the related account of the Reserve Fund held under the Bond Indenture are used. The Master Trustee shall transfer such funds to the Bond Trustee in accordance with the preceding sentence as needed for that purpose without further instructions from the Corporation.

(e) Transfer to Debt Service Reserve Fund. If moneys held in either Reserve Account of the Debt Service Reserve Fund under the Bond Indenture are less than the applicable Reserve Account Requirement due to a valuation deficiency on any valuation date, the Corporation will deliver to the Master Trustee a Written Request for replenishment of the Reserve Account of the Debt Service Reserve Fund to the applicable Reserve Account Requirement. Upon receipt of the Written Request, the Master Trustee shall transfer moneys requested thereby, to the Bond Trustee for deposit into the applicable Reserve Account of the Debt Service Reserve Fund under the Bond Indenture.

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General

If there is an initial withdrawal from the Liquidity Support Fund, (i) within five days of the initial withdrawal, the Master Trustee shall notify each Required Information Recipient of the withdrawal and (ii) within 30 days of the initial withdrawal, the Obligated Group Representative shall submit an Officer’s Certificate to each Required Information Recipient containing a management report setting forth (A) the expected amount of working capital needed to be sufficient, along with revenues and other available moneys, to pay expenses and debt service until management expects to achieve an Historical Debt Service Coverage Ratio of 1.0:1, (B) whether management expects that the Liquidity Support Fund, together with other moneys expected to be available, will be sufficient for that purpose, (C) a revised fill-up schedule for the Project, and (D) the expected schedule for the redemption of the Series 2013B Bonds.

If funds in the Liquidity Support Fund are transferred to the Operating Reserve Fund pursuant to the terms of the Master Indenture, (i) within five days of that transfer, the Master Trustee shall notify each Required Information Recipient of the transfer and (ii) the Obligated Group Representative shall engage a Consultant to make recommendations regarding (A) an overall corrective action plan, (B) the projected amount of working capital needed to be sufficient, along with revenues and other available moneys, to pay expenses and debt service until the Obligated Group is projected to achieve an Historical Debt Service Coverage Ratio of 1.0:1, (C) a revised fill-up schedule for the Project, (D) a plan for the payment of the Series 2013B Bonds, (E) a plan to improve the profitability of the Obligated Group and (F) a recommendation regarding additional sources of working capital. The Obligated Group Representative shall select a Consultant and notify the Master Trustee of the selection within 30 days after the transfer and shall thereafter engage the Consultant in accordance with the terms of the Master Indenture described above under “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Approval of Consultants.”

Investment

Moneys held in the Liquidity Support Fund shall, pursuant to written direction of LLM, be invested and reinvested by the Master Trustee in Permitted Investments (as defined in the Master Indenture) other than Permitted Investments listed in paragraphs (g) and (h) of such definition, in each case which mature or are subject to redemption by the owner thereof prior to the date such funds are expected to be needed. If the Master Trustee fails to receive written directions of LLM regarding investment of funds pursuant to this paragraph, moneys held in the Liquidity Support Fund shall be invested or reinvested in Permitted Investments described in paragraph (a) of the definition of Permitted Investments in the Master Indenture and in making such investment the Master Trustee is entitled to hold funds on deposit therein uninvested. The Master Trustee may make such investments through its own bond department or short-term investment department and may pool moneys for investment purposes. Any such Permitted Investments shall be held by or under the control of the Master Trustee and shall be deemed at all times a part of the Liquidity Support Fund. The interest earned on and any profit realized from Permitted Investments held in the Liquidity Support Fund shall be deposited into the Liquidity Support Fund. Any loss resulting from such Permitted Investments shall be charged to such account. The Master Trustee shall sell and reduce to cash a sufficient amount of such Permitted Investments whenever the cash balance in such account is insufficient for the purposes of such account.

Liquidity Covenant

Until such time as a Funding Event shall occur and the Unfunded Portion shall be deposited with the Master Trustee, on each June 30 and December 31, LLM will cause Lutheran Life Communities Foundation (the “Foundation”) to maintain an amount equal to $3,500,000 in unrestricted cash and marketable securities, net of any unfunded guarantees and support agreements to which the

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Foundation is a party, in accordance with Foundation’s investment policy (the “Foundation Liquidity Covenant”). LLM shall deliver to the Corporation, the Master Trustee and the Bond Trustee a certificate signed by the chief financial officers of LLM and the Foundation not later than 45 days after each June 30 and December 31 (based on unaudited financial statements) stating that LLM and the Foundation are compliance with such requirements. The Corporation may submit a copy of any such certification received from LLM to the Municipal Securities Rulemaking Board, via the Electronic Municipal Market Access system, or to any Required Information Recipient. If on any June 30 (based on unaudited financial statements) or December 31 (based on unaudited or audited financial statements) the Foundation Liquidity Covenant is not met, a Funding Event shall occur and LLM shall pay or otherwise direct the transfer of moneys in accordance with the Liquidity Support Agreement.

EXCEPT AS OTHERWISE DESCRIBED HEREIN UNDER THIS CAPTION AND UNDER “SECURITY FOR THE SERIES 2013 NOTES – CERTAIN MASTER INDENTURE COVENANTS OF THE OBLIGATED GROUP – ENTRANCE FEES FUND” AND UPON THE OCCURRENCE OF A VALUATION DEFICIENCY AS DESCRIBED THERIN, THERE IS NO REPLENISHMENT REQUIREMENT FOR THE LIQUIDITY SUPPORT OBLIGATION.

Subordination Provisions

The Corporation’s obligation to repay certain payments made under and in accordance with the Liquidity Support Agreement constitute Affiliate Subordinated Indebtedness and are restricted as defined in “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness” herein.

Amendments and Waivers

(a) Except as described subparagraph (b) below, the Master Trustee, the Bond Trustee, LLM and the Corporation may amend or modify the Liquidity Support Agreement, or any provision thereof, or may consent to the amendment or modification thereof, in any manner not inconsistent with the terms and provisions of the Liquidity Support Agreement, for any one or more of the following purposes: (i) to cure any ambiguity or formal defect in the Liquidity Support Agreement; (ii) to grant to or confer upon the Master Trustee or the Bond Trustee, for the benefit of the Holders of the Series 2013 Notes and the Series 2013 Bonds, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Bond Trustee or the Master Trustee; (iii) to amend or modify the Liquidity Support Agreement, or any part thereof, in any manner specifically required or permitted by the terms thereof, including, without limitation, as may be necessary to maintain the exclusion from gross income for purposes of federal income taxation of the interest on the Series 2013 Bonds; (iv) to modify, amend or supplement the Liquidity Support Agreement, or any part thereof, or any supplement thereto, in such manner as the Master Trustee, the Bond Trustee, LLM and the Corporation deem necessary in order to comply with any statute, regulation, judicial decision or other law; (v) to provide for the appointment of a successor Bond Trustee as provided in the Bond Indenture or a successor Master Trustee as provided in the Master Indenture; and (vi) to make any other change which, in an opinion of the Bond Trustee, does not have a material adverse effect upon the interests of the Holders of the Series 2013 Bonds.

In addition, subject to the terms and provisions contained in the Liquidity Support Agreement, the Master Trustee and Bond Trustee may grant such waivers of compliance by LLM with the provisions of the Liquidity Support Agreement as to which the Master Trustee and Bond Trustee may deem necessary or desirable to effectuate the purposes of the intent of the Liquidity Support Agreement if: (A) that waiver, in the judgment of the Master Trustee and the Bond Trustee, does not have a material adverse effect upon the interests of the Holders of the Series 2013 Notes or the owners of the Series 2013 Bonds; or (B) the holders of two-thirds or more of the aggregate principal amount of the Series 2013 Bonds Outstanding have consented or are deemed to have consented to that waiver (as described below).

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(b) Other than the amendments described in subparagraph (a) above, LLM shall submit a copy of any proposed amendment to the Corporation, the Development Consultant, the Construction Consultant, the Master Trustee and the Bond Trustee. As soon as practicable but in no case longer than five Business Days after receipt of such proposed amendment, the Master Trustee or the Bond Trustee, as applicable, shall send notice of such proposed amendments to the Required Information Recipients and the owners of all of the Series 2013 Bonds Outstanding. Such notice shall (i) include a summary of the proposed amendments and information describing how the Required Information Recipients and bondholders may obtain a copy of the proposed amendment and the Liquidity Support Agreement and (ii) state that each owner of the Series 2013 Bonds will be deemed to have consented to the proposed amendment unless such owner submits an objection to the proposed amendment in writing to the Bond Trustee within 15 days of the date that the notice is sent to the owners of the Series 2013 Bonds. No later than two Business Days after the end of the 15-day objection period, the Bond Trustee shall notify LLM, the Development Consultant, the Construction Consultant, the Master Trustee and the Corporation of the number of the bondholders objecting as well as the aggregate principal amount represented by such objections. If the owners of two-thirds or more in aggregate principal amount of the Series 2013 Bonds have been deemed to have consented to the proposed amendment or have not responded to the request for consent, the amendment shall become effective. If the owners of more than one-third in aggregate principal amount of the outstanding Series 2013 Bonds have objected to the proposed amendment, the amendment shall not become effective.

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PRIORITY OF DRAWINGS FROM VARIOUS FUNDS

The following diagrams illustrate the priorities of drawings from the Working Capital Fund, Operating Reserve Fund, Debt Service Reserve Fund and under the Liquidity Support Agreement.

Expected Priority of Draws Upon Various Reserves and Funds (In the Event of a Funding Shortfall)

Priority of Draws on These Funds: Comments

1st Working Capital Fund Draw down until the balance is fully depleted, no replenishment permitted ↓

2nd Operating Reserve Fund Draw down the initial $5 million, plus $5 million

replenishment, if necessary. Additional replenishment will begin only when the balance of the Liquidity

Support Funds reaches $1 million (see below)

↓

3rd Liquidity Support Fund Once the balance in the Liquidity Support Fund is equal to $1 million or less, and no

moneys are on deposit in the Working Capital Fund or the Operating Reserve

Fund, the remaining funds in the Liquidity Support Fund are transferred to

the Operating Reserve Fund.

Draw down funds in the Liquidity Support Fund

↓

4th Operating Reserve Fund Draw on the Operating Reserve Fund as necessary to the extent funds are

available. Maintained at a minimum $2 million balance on a

monthly basis (replenished with Entrance Fees)

↓

5th Debt Service Reserve Fund To be drawn upon only if the funds above

are fully depleted, and only to pay debt service

______________________________ Note: The chart above relates to the period after the Project has opened. Prior to opening of the Project, funds in the Liquidity Support Fund are available but only after all other funding sources have been depleted, including the Project Fund and all contingency funds (but not the Debt Service Reserve Fund). If the Liquidity Support Fund is drawn upon prior to opening of the Project for construction costs, Entrance Fees can be used to replenish the Liquidity Support Fund after opening, as shown in the diagram on page 31 hereof. Such replenishment would occur after the Working Capital Fund is funded and the Operating Reserve Fund is funded but before any of the redemptions of the Series 2013B Bonds.

THE AUTHORITY

The Authority is a public body corporate and politic organized, existing and operating under the powers granted through and by the provisions of the Florida Industrial Development Act, Parts II and III of Chapter 159, Florida Statutes, as amended (the “Act”), with the powers set forth in the Act. Pursuant to the Act, the Authority has the power to issue its

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revenue bonds and revenue refunding bonds to finance and refinance the acquisition, construction, renovation and equipping of projects, within the meaning of the Act, within Collier County.

At the time of delivery of the Series 2013 Bonds, the Authority will, among other things, assign all of its rights (except for certain rights of the Authority relating to indemnity, the right to receive notices and the right to be reimbursed by the Corporation for certain of the Authority’s costs and expenses) under the Loan Agreement to the Bond Trustee which, on behalf of the holders of the Series 2013 Bonds, may exercise all of the Authority’s rights so assigned.

THE SERIES 2013 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY. THE AUTHORITY IS NOT OBLIGATED TO PAY THE SERIES 2013 BONDS OR THE PREMIUM, IF ANY, OR THE INTEREST THEREON EXCEPT FROM THE REVENUES AND FUNDS ASSIGNED TO THE BOND TRUSTEE OR OTHERWISE PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF FLORIDA OR OF ANY MUNICIPALITY, PUBLIC AGENCY, OR POLITICAL SUBDIVISION OF THE STATE OF FLORIDA IS PLEDGED AS SECURITY FOR THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR PREMIUM, IF ANY, ON THE SERIES 2013 BONDS. NEITHER THE MEMBERS OR OFFICERS OF THE AUTHORITY, NOR ANY PERSON EXECUTING THE SERIES 2013 BONDS, IS LIABLE PERSONALLY THEREON OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THE ISSUANCE THEREOF. THE AUTHORITY HAS NO TAXING POWER.

ACCORDINGLY, NO FINANCIAL INFORMATION WITH RESPECT TO THE AUTHORITY OR ITS MEMBERS OR OFFICERS HAS BEEN INCLUDED IN THIS LIMITED OFFERING STATEMENT.

NO RECOURSE WILL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON, ANY OF THE SERIES 2013 BONDS OR FOR ANY CLAIM BASED THEREON OR UPON ANY OBLIGATION, PROVISION, COVENANT OR AGREEMENT CONTAINED IN THE BOND INDENTURE OR ANY OTHER AUTHORITY DOCUMENT, AGAINST ANY PAST, PRESENT OR FUTURE OFFICER, OFFICIAL, EMPLOYEE OR AGENT OF THE AUTHORITY, OR ANY OFFICER, OFFICIAL, EMPLOYEE OR AGENT OF ANY SUCCESSOR TO THE AUTHORITY, AS SUCH, EITHER DIRECTLY OR THROUGH THE AUTHORITY OR ANY SUCCESSOR TO THE 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 OFFICER, OFFICIAL, EMPLOYEE OR AGENT AS SUCH IS EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF AND IN CONSIDERATION FOR THE EXECUTION OF THE BOND INDENTURE AND THE ISSUANCE OF ANY OF THE SERIES 2013 BONDS. THE AUTHORITY HAS NOT PREPARED OR ASSISTED IN THE PREPARATION OF THIS LIMITED OFFERING STATEMENT, EXCEPT THE STATEMENTS UNDER THIS HEADING AND UNDER THE HEADING “LITIGATION – THE AUTHORITY” IN RESPECT OF THE AUTHORITY, AND EXCEPT AS AFORESAID, THE AUTHORITY IS NOT RESPONSIBLE FOR ANY STATEMENTS MADE HEREIN. ACCORDINGLY,

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EXCEPT AS AFORESAID, THE AUTHORITY DISCLAIMS RESPONSIBILITY FOR THE DISCLOSURE SET FORTH HEREIN MADE IN CONNECTION WITH THE OFFER, SALE, AND DISTRIBUTION OF THE SERIES 2013 BONDS.

RISK FACTORS

Set forth below are certain risk factors which should be considered before any investment in the Series 2013 Bonds is made. Certain risks are inherent in the successful operation of facilities such as the Community. This section discusses some of these risks but is not intended to be a comprehensive listing of all risks associated with the operation of the Community or the payment of the Series 2013 Bonds.

General

As described herein under the caption, “INTRODUCTION – Security for the Series 2013 Bonds,” the principal of, premium, if any, purchase price of, and interest on the Series 2013 Bonds, except to the extent that the Series 2013 Bonds will be payable from the proceeds thereof or investment income thereon or, under certain circumstances, proceeds of insurance, sale or condemnation awards or net amounts by recourse to the Mortgage, are payable solely from amounts payable by the Obligated Group Members under the Loan Agreement or the Master Indenture. No representation or assurance is given or can be made that revenues will be realized by the Obligated Group Members in amounts sufficient to pay debt service on the Series 2013 Bonds when due and other payments necessary to meet the obligations of the Obligated Group Members. The bondholders’ risks discussed below should be considered in evaluating the ability of the Corporation and any future Member of the Obligated Group, to make payments in amounts sufficient to provide for the payment of the principal of, the premium and purchase price, if any, and interest on the Series 2013 Bonds.

The receipt of future revenues by the Corporation and any future Member of the Obligated Group will be subject to, among other factors, federal and state policies affecting the senior housing and health care industries (including changes in reimbursement rates and policies), increased competition from other senior housing and health care providers, the capability of the management of the Corporation and any future Member of the Obligated Group and future economic and other conditions that are impossible to predict.

Impact of Market Turmoil

The economic turmoil of the past few years had severe negative repercussions upon the United States and global economies. This impact was particularly severe in the financial sector, prompting a number of banks and other financial institutions to seek additional capital, to merge, and, in some cases, to cease operating. The effects of this turmoil can still be seen in the scarcity of credit, lack of confidence in the financial sector, volatility in the financial markets, fluctuations in interest rates, reduced economic activity, increased business failures, high unemployment and increased consumer and business bankruptcies. The recent turmoil and any similar future market turmoil could affect the market and demand for the Series 2013 Bonds in addition to adversely affecting the value of any investments of the Corporation or any future Member of the Obligated Group.

Additions to the Obligated Group

The Corporation is currently the sole Member of the Obligated Group. Upon satisfaction of certain conditions in the Master Indenture, other entities can become members of the Obligated Group. See APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN

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PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 6.01 Admission of the Obligated Group Members.” Management currently has no plans to add additional members to the Obligated Group. However, if and when new members are added, the Obligated Group’s financial condition and operations will likely be altered from that of the Corporation alone.

Development of the Community

The Corporation and LLC have entered into a development agreement whereby LLC serves as marketing consultant and co-development consultant for the Community along with CRSA/LCS Management LLC (“CRSA/LCS”), a wholly owned subsidiary of Life Care Companies, LLC (“LCS”). The successful development of the Community will be heavily dependent upon the efforts of CRSA/LCS and LLC. On March 2, 2009, the Corporation entered into a Development Consulting Agreement (the “CRSA/LCS Development Agreement”) with CRSA Management, LLC (“CRSA”) for the development of the Community. Subsequently, in 2010, CRSA affiliated with LCS and they formed CRSA/LCS, which assumed CRSA’s responsibilities under the CRSA/LCS Development Agreement. Prior to such affiliation, LCS undertook efforts to develop a continuing care retirement community less than fifteen miles from the site of the Project for which no application for a Provisional Certificate of Authority from the Florida Department of Financial Services, Office of Insurance Regulation has yet been submitted. The Development Agreement contains a restrictive covenant which prohibits CRSA/LCS from engaging in certain development activities with respect to any senior housing, continuing care retirement community or other similar project located or proposed to be located within fifteen miles of the Project during the term of the Development Agreement and for a period ending twelve months after the termination of such agreement under certain circumstances in accordance with the terms thereof. For more information regarding the Development Agreements see APPENDIX A – “DEVELOPMENT OF THE COMMUNITY – CRSA Development Consulting Agreement.”

Management of the Community

The successful operation of the Community is heavily dependent upon the efforts of LLC. Key management of LLC provide services for all of its affiliated entities, including the Corporation and, in addition, the Corporation entered into a management agreement with LLC effective July 1, 2015 pursuant to which LLC will provide certain professional administrative, management and support services including: corporate management, accounting and payroll, human resources, information technology, marketing and risk management. For more information, see APPENDIX A – “MANAGEMENT.”

Sale, Lease or Other Disposition of Property, Transfers to Affiliates

The Master Indenture affords the Obligated Group Members the option to sell, lease or otherwise dispose of their property so long as they comply with certain requirements or meet certain financial tests. For more information on the Obligated Group Members’ restrictions on the sale, lease or disposition of property see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.18 Sale or Lease of Property” in APPENDIX C.

Construction Risks

There can be no assurances given that the Project will be completed, or that it can be completed for the cost and within the time as set forth in this Official Statement. Failure to complete the Project, or to complete it in a timely fashion at the estimated cost could adversely affect the ability of the Corporation to generate sufficient revenues to continue its planned operations and to make payments with respect to the Series 2013 Bonds. For example, the plan of finance assumes that Entrance Fees payable

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on or before initial occupancy of the Project by individual residents will be used to fund the Operating Reserve Fund and the Working Capital Fund and to redeem the Series 2013B Bonds. If the completion of the Project is delayed, the receipt of Entrance Fees necessary for such purposes, as well as the receipt of monthly service fees necessary to fund operations, may be adversely impacted.

Whether or not the Project will be completed on schedule depends upon a large number of factors, many of which may be beyond the control of the Corporation. These include, but are not limited to, adverse weather, strikes, delays in the delivery of or shortages of materials, delays in the issuance of required building permits, environmental restrictions or similar unknown or unforeseeable contingencies. Further, although construction work will be inspected periodically by the Construction Consultant, there can be no assurance that the Project will conform to construction specifications or state or local regulations. The occurrence of any of the foregoing could result in increases in construction costs or considerable delays in, or complete impossibility of, completion of the Project, resulting in a failure to achieve anticipated operating results. Construction costs could exceed the amounts originally forecast due to a number of factors. See “LIQUIDITY SUPPORT AGREEMENT” above with respect to certain situations where the Corporation can access certain funds to cover any increased construction costs.

Construction of the Project is subject to the usual risks associated with construction projects, including, but not limited to, delays in issuance of required building permits or other necessary approvals or permits, strikes, shortages of materials and adverse weather conditions. Such events could result in delaying occupancy of the Project and thus the Entrance Fees and other revenue flow therefrom. Management of the Corporation anticipates that the building permits will be obtained in due course. See APPENDIX A – “REGULATIONS, PERMITS AND APPROVALS.” It is anticipated that the proceeds from the sale of the Series 2013 Bonds, together with anticipated investment earnings thereon and certain funds of the Corporation, will be sufficient to complete the construction and equipping of the Project based upon the fixed price obtained from the construction manager for the Project. However, cost overruns for projects of this magnitude may occur due to change orders and other factors. In addition, the date of substantial completion may be extended by reason of changes authorized by the Corporation, delays due to acts or neglect of the Corporation or by independent contractors employed by the Corporation or by labor disputes, fire, unusual delay in transportation, adverse conditions not reasonably anticipated, unavoidable casualties or any causes beyond the control of the contractors. Cost overruns could also result in the Corporation not having sufficient moneys to complete construction of the Project, thereby materially affecting the receipt of revenues needed to pay debt service on the Series 2013 Bonds.

Construction Consultant Approval of Construction Draws

The ability of the Corporation to receive disbursements from the Project Funds held under the Bond Indenture is subject to compliance by the Corporation with various requirements of the Construction Disbursement and Monitoring Agreement by and among the Corporation, zumBrunnen, Inc., (the “Construction Consultant”) and the Master Trustee. If the conditions to receipt of disbursements are not met, the Construction Consultant may temporarily suspend certain items within a construction draw or the entire construction draw. A temporary suspension of funding might cause delay in completion and related cost overruns. Proceeds remaining in the Project Funds together with other funds held under the Bond Indenture may not be sufficient to pay the principal of the Series 2013 Bonds upon acceleration.

Redemption of the Series 2013B Bonds from Initial Entrance Fees

Management’s financial forecast contained in the Financial Feasibility Study included in APPENDIX B hereto anticipates that the Series 2013B-2 Bonds and the Series 2013B-1 Bonds will be subject to mandatory redemption from funds held in the Entrance Fee Redemption Account established

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under the Bond Indenture upon achieving occupancy of 70% and 85%, respectively, of the Entrance Fee Units in the Community. There can be no guarantee, however, that there will be sufficient funds in the Entrance Fee Redemption Account in order to so redeem any such Series 2013B Bonds. In the event that the Corporation is required to use moneys held under the Operating Reserve Fund or Liquidity Support Agreement, the Corporation will be required to use Entrance Fees to replenish such moneys. See “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Entrance Fees Fund” herein. Such replenishment may delay the Corporation’s ability to redeem the Series 2013B Bonds in accordance with its anticipated schedule. The Entrance Fee Redemption Account will be funded from the Initial Entrance Fees in accordance with the Master Indenture, as described herein.

Adequacy of Remedies

The Bond Trustee and the Authority must look solely to the Project, the Gross Revenues and any funds held under the Bond Indenture and the Master Indenture to pay and satisfy the Series 2013 Bonds in accordance with their terms. The Bondholders are dependent upon the success of the Corporation’s facilities and the value of the assets of the Obligated Group for the payment of the principal of, redemption price, if any and interest on, the Series 2013 Bonds. The Corporation has not made any representations to Bondholders regarding the current market value of its facilities. In the event of a default, the value of the Project may be less than the amount of the outstanding Series 2013 Bonds, since the Obligated Group’s facilities exist for the narrow use as retirement, assisted care and nursing home facilities. In addition, even without consideration of the special purpose nature of the facilities, the sale of property at a foreclosure sale may not result in the full value of such property being obtained. The special design features of a continuing care facility and the continuing rights of residents under continuing care and lease agreements may make it difficult to convert the facilities to other uses, which may have the effect of reducing their attractiveness to potential purchasers. There can be no assurance that upon an acceleration the amount of money or foreclosure receipts available will be adequate to repay the Obligated Group’s Indebtedness. Furthermore, whatever is realized will be distributed pro rata to all holders of Indebtedness under the Master Indenture. Accordingly, in the event of foreclosure and sale of the Project, Bondholders may not receive all principal and interest due under the terms of the Series 2013 Bonds.

Uncertainty of Revenues

The Corporation is a development stage company and has not previously built or operated a project. Facilities of the nature of those of the Obligated Group are subject to variability in demand and, in the event that there is insufficient demand for the services of the Obligated Group at the existing pricing structure, the Obligated Group may need to discount the pricing structure for its services which could negatively impact revenues. Additionally, the Corporation has no assets other than the Project and is not expected to have any revenues except those derived from operations of the Project.

As noted elsewhere, except to the extent that the Series 2013 Bonds will be payable from the proceeds thereof or investment income thereon or, under certain circumstances, proceeds of insurance, sale or condemnation awards, the Series 2013 Bonds will be payable solely from payments or prepayments to be made by the Obligated Group Members under the Loan Agreement and on the Series 2013 Notes. The ability of the Obligated Group Members to make payments under the Loan Agreement and the Series 2013 Notes is dependent upon the generation by the Corporation and any future Members of the Obligated Group of revenues in the amounts necessary for the Obligated Group Members to pay the principal, premium or purchase price, if any, and interest on the Series 2013 Bonds, as well as other operating and capital expenses. The realization of future revenues and expenses are subject to, among other things, the capabilities of the management of the Obligated Group Members, government regulation

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and future economic and other conditions that are unpredictable and that may affect revenues and payment of principal of and interest on the Series 2013 Bonds. No representation or assurance can be made that revenues will be realized by the Obligated Group Members in amounts sufficient to make the required payments with respect to debt service on the Series 2013 Bonds.

Failure to Achieve and Maintain Occupancy

The economic feasibility of the Project depends in large part upon the ability of the Corporation to initially attract sufficient numbers of residents to the Project and to achieve and maintain substantial occupancy throughout the term of the Series 2013 Bonds. This depends to some extent on factors outside management’s control, such as the residents’ right to terminate their residency agreements, subject to the conditions provided in the residency agreements. Moreover, if a substantial number of residents live beyond the anticipated life expectancies assumed by the Corporation or if the permanent transfers to the assisted living, memory support and nursing beds of the Community are substantially less than assumed by the Corporation, or if market changes require a reduction in the amount of the Entrance Fees payable by new residents, the receipt of additional Entrance Fees would be curtailed, with a consequent impairment of the revenues of the Project. Such impairment would also result if the Corporation is unable to remarket units becoming available when residents die, withdraw, or are permanently transferred to a health care facility or any other facility. If the Project fails to maintain occupancy levels as management forecasted in the Feasibility Study, there may be insufficient funds to pay the debt service on the Series 2013 Bonds. The Feasibility Study should be read in its entirety, including management’s notes and assumptions set forth therein. See APPENDIX B – “FINANCIAL FEASIBILITY STUDY” hereto.

Sale of Homes

It is anticipated that many future residents of the Obligated Group Facilities will come from a personal residence. Many of these individuals may sell their current homes prior to occupancy to meet financial obligations under their residency agreement. If prospective residents encounter difficulties in selling their homes due to local or national economic conditions affecting the sale of residential real estate, such prospective residents may not have sufficient funds to pay fees or other obligations, thereby causing a delay in marketing vacated units. Any such delay could have an adverse impact of the revenues of the Obligated Group.

Utilization Demand

Several factors could, if implemented, affect demand for services of the Community including: (i) efforts by insurers and governmental agencies to reduce utilization of nursing home and long-term care facilities by such means as preventive medicine and home health care programs; (ii) advances in scientific and medical technology; (iii) a decline in the population, a change in the age composition of the population or a decline in the economic conditions of the service area of the Project; and (iv) increased or more effective competition from nursing home, assisted living facilities and long-term care facilities now or hereafter located in the service area of the Community. See “Comparable Retirement Communities,” “Comparable Assisted Living Facilities” and “Description of Nursing Care” in APPENDIX B hereto. The Feasibility Study should be read in its entirety, including management’s notes and assumptions set forth therein.

Competition

The Corporation provides services in areas where other competitive facilities exist and may face additional competition in the future as a result of the construction or renovation of competitive facilities in the primary or secondary market area of the Corporation. There may also arise in the future

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competition from other continuing care facilities, some of which may offer similar facilities, but not necessarily similar services, at lower prices. See APPENDIX B.

Nature of Facilities

The Community is not comprised of general purpose buildings and generally would not be suitable for industrial or commercial use. Consequently, it could be difficult to find a buyer or lessee for such facilities and, upon any default, the Master Trustee may not realize the amount of the outstanding Series 2013 Bonds or any other Additional Indebtedness outstanding from the sale or lease of such facilities if it were necessary to proceed against such facilities, whether pursuant to a judgment, if any, against the Corporation including in the event of foreclosure under the Mortgage.

Rights of Residents

The Corporation enters into residency agreements with its residents. For more information about the residency agreements, see APPENDIX A – “RESIDENT CONTRACT.” Although these agreements give to each resident a contractual right to use space and not any ownership rights in the Community, in the event that a Bond Trustee or the holders of the Series 2013 Bonds seek to enforce any of the remedies provided by the related Bond Indenture upon the occurrence of a default or the Master Trustee seeks to enforce remedies under the Mortgage or the Master Indenture, it is impossible to predict the resolution that a court might make of competing claims among the Master Trustee, the Bond Trustee, the Authority or the holders of the Series 2013 Bonds and a resident of the Community who has fully complied with all the terms and conditions of his or her residency agreement.

Present and Prospective Federal and State Regulation

The operations of the Community, like other health care facilities throughout the country, will be affected on a day-to-day basis by numerous legislative, regulatory and industry-imposed operations and financial requirements which are administered by a variety of federal and state governmental agencies as well as by self-regulatory associations and commercial medical insurance reimbursement programs. It is impossible, however, to predict the effect of any such legislation and regulation on the operations or financial condition of the Corporation’s Facilities.

Nursing care facilities and assisted living facilities, including the Community, are subject to numerous licensing, certification, accreditation, and other governmental requirements. These include, but are not limited to, requirements relating to Medicare participation and payment, requirements relating to state licensing agencies, private payors and accreditation organizations and certificate of need approval by state agencies of certain capital expenditures. Renewal and continuance of certain of these licenses, certifications, approvals and accreditations are based upon inspections, surveys, audits, investigations or other review, some of which may require or include affirmative action or response by the Corporation. An adverse determination could result in a loss, fine or reduction in the Corporation’s scope of licensure, certification or accreditation, could affect the ability to undertake certain expenditures or could reduce the payment received or require the repayment of the amounts previously remitted. The Corporation currently anticipates no difficulty in renewing or continuing currently held licenses, certifications and accreditations.

Proposed Regulation

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2013 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. As one

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example, on September 12, 2011, the Obama Administration announced a legislative proposal entitled the American Jobs Act of 2011 which would have limited the exclusion from gross income of interest on obligations like the Series 2013 Bonds to some extent for certain individual taxpayers. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Series 2013 Bonds. Prospective purchasers of the Series 2013 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation.

Health Care Reform

The Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively referred to herein as the “Affordable Care Act”) are designed to overhaul the United States health care system and regulate many aspects of health care delivery and financing. The key provisions of the Affordable Care Act include: (1) dramatically increasing health care coverage of individuals through expansion of Medicaid eligibility and the creation of cooperative insurance purchasing pools; (2) modifying payment methodology and practice for health care providers; (3) evaluating health care providers on a variety of quality and efficacy standards to support pay-for-performance systems; (4) increasing regulations to address fraud and abuse; and (5) exploring and evaluating innovative practices in an attempt to reduce health care related costs. The Supreme Court’s decision in National Federation of Independent Business v. Sebelius declared unconstitutional the portion of the law that sanctioned states with the loss of their existing federal Medicaid matching funds if they failed to comply with the Medicaid expansion. Although there remains uncertainty surrounding the effects of this decision, Florida has not opted in to the Medicaid expansion.

Medicare and Medicaid Programs

Medicare and Medicaid are the commonly used names for reimbursement or payment programs governed by certain provisions of the federal Social Security Act. Medicare is an exclusively federal program and Medicaid is a combined federal and state program. Medicare provides certain health care benefits to beneficiaries who are 65 years of age or older, disabled or qualify for the End Stage Renal Disease Program. Medicare Part A covers inpatient hospital services and certain other services, and Medicare Part B covers outpatient services, physician services, medical supplies and durable medical equipment. Medicare Part D provides a prescription drug benefit. Medicaid is designed to pay providers for care given to the medically indigent and others who receive federal aid. Medicaid is funded by federal and state appropriations and administered by the applicable state. The Centers for Medicare & Medicaid Services (“CMS”), an agency of the United States Department of Health & Human Services (“HHS”), administers the Medicare Program and works with the states to administer the Medicaid Program, as well as other health care programs. The Corporation anticipates that it will participate in the Medicare and Medicaid programs in the future. Under such programs the Corporation would be subject to various regulatory requirements relating thereto, including, without limitation, limits on reimbursement, anti-fraud and abuse provisions, restrictions on referrals, and various reporting requirements. The participation in any such programs could affect the Corporation’s operation and performance.

Medicare.

Medicare Audits. The Corporation and any future Members of the Obligated Group may receive payments for various services provided to Medicare beneficiaries based upon charges or other reimbursement methodologies, including prospective payment systems, which would then be reconciled annually based upon the annual cost reports prepared by the Corporation and any future Members of the Obligated Group and submitted to Medicare. Estimates for the annual cost reports are reflected as amounts due to/from third-party payors and represent several years of open cost reports due to time delays in the fiscal intermediaries audits and the basic complexity of billing and reimbursement regulations.

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These estimates are adjusted periodically based upon correspondence received from the Medicare fiscal intermediary. Medicare regulations also provide for withholding Medicare payments in certain circumstances if it is determined that an overpayment of Medicare funds has been made. In addition, under certain circumstances, payments may be determined to have been made as a consequence of improper claims subject to the Federal False Claims Act or other federal statutes, potentially subjecting the Corporation or any future Members of the Obligated Group to civil or criminal penalties or administrative sanctions.

Skilled Nursing Care. Health care providers, including the Corporation and any future Member of the Obligated Group, may participate in the Medicare program subject to certain conditions of participation and acceptance of a provider agreement from the Secretary of the HHS. Only covered services, upon the satisfaction of certain criteria, are eligible for Medicare reimbursement. Medicare Part A reimburses for certain post-hospital inpatient skilled nursing and rehabilitation care for up to 100 days during the same spell of illness. For skilled nursing facilities (“SNFs”), the federal government has implemented a Prospective Payment System (“PPS”) for Medicare reimbursement, which utilizes prospective, case-mix adjusted per diem rates applicable to all covered SNF services. Reimbursement under PPS also incorporates adjustments to account for resident specific case-mix using the Resource Utilization Groups (“RUGs”) system. SNF PPS payment rates are adjusted annually based on the skilled nursing facility “market basket” index, or the cost of providing SNF services. Future actions by the federal government relative to limiting or reducing the total amount of funds available under Medicare, or otherwise restructuring Medicare, may decrease or eliminate the amount of reimbursement available to the Corporation. No assurance can be given as to the timing, nature or extent of any further changes.

Medicaid. Medicaid (Title XIX of the federal Social Security Act) is a health insurance program for certain low-income and needy individuals that is jointly funded by the federal government and the states.

Nursing Facility Services. The reimbursement system used is a prospective payments system that sets rates for each facility for future periods with no retroactive reconciliation of rates paid to actual expenditures. Components of a facility’s rate include: (a) support costs – laundry, food, housekeeping, utility, and administrative expenses – limited to actual allowable costs, of that facility, up to specified ceilings and allowing a profit for facilities that operate below the ceilings; (b) nursing and program costs – a case mix reimbursement system is used to reimburse nursing and program costs based on the use of minimum data set assessments on each resident; (c) capital costs – depreciation, rent, interest and property taxes – per diem rates are determined through a blending of the uniform building value and the building specific historical cost per bed, subject to certain limitations. Property taxes are reimbursed as part of the capital costs but are determined separately and are not included in the uniform building value.

As a result of budget constraints, Medicaid funding has been limited to levels below the funding that would have otherwise been calculated.

Medicare Certification. The Corporation anticipates receiving certification to provide services that are reimbursed by Medicare in the Community’s Health Center. Any delay in receipt of or failure to receive Medicare certification may negatively impact revenues of the Corporation. The Corporation has made certain assumptions upon receipt of Medicare certification regarding reimbursement rates and the timeframe to receive reimbursement. A delay in receipt of reimbursement or a lower than anticipated reimbursement rate may negatively impact revenues of the Corporation.

Third-Party Payment Programs. A portion of the net resident service revenues of the Corporation will be from third party payors that reimburse or pay for the services and items provided to residents covered by such third parties for such services, including the federal Medicare program, state

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Medicaid program and private health plans and insurers. In addition or alternative to the provisions relating to Medicare and Medicaid described above, these third-party payors may make payments to the Corporation at rates other than the direct charges of the Corporation, which rates may be determined other than on the basis of the actual costs incurred in providing services and items to residents and may even be able to restrict or refuse participation by the Corporation. Accordingly, there can be no assurance that payments made under these programs will be adequate to cover the actual costs incurred by the Corporation in furnishing health care services and items or that such payment programs will even be available. In addition, the financial performance of the Corporation could be adversely affected by the insolvency of, or other delay in receipt of payments from, third-party payors, which provide coverage for services to their residents. Changes to reimbursement rates or reimbursement methodologies in the future are likely to directly affect the Corporation and those effects could be material and adverse.

Regulation of Health Care and Long Term Care Industries

General. The health care industry is highly dependent on a number of factors which may limit the ability of the Corporation and any future Member of the Obligated Group to meet their respective obligations under the Loan Agreement, the Master Indenture and the Series 2013 Notes. Among other things, participants in the health care industry (such as the Corporation) are subject to significant regulatory requirements of federal, state and local governmental agencies and independent professional organizations and accrediting bodies, technological advances and changes in treatment modes, various competitive factors and changes in third party reimbursement programs. Discussed below are certain of these factors which could have a significant effect on the future operations and financial condition of the Corporation. The Corporation is and will continue to be subject to certain governmental regulation. Florida has enacted comprehensive legislation which regulates the Corporation.

State Licensure. The health care components of the Corporation’s facilities are licensed by the State of Florida Agency for Health Care Administration (“AHCA”). The health facilities are required to undergo at least one annual unannounced inspection by AHCA to determine compliance with applicable statutes and rules promulgated thereunder which govern minimum standards of construction, quality, adequacy of care and rights of residents. In addition, AHCA will at least annually evaluate the health facilities to determine compliance with applicable licensure requirements and standards as a basis for assigning a rating to such facilities. The Corporation is also required to submit an annual financial statement and statement of ownership to AHCA, as well as maintain a license from AHCA. AHCA may revoke or suspend an assisted living facility’s or skilled nursing facility’s license for a number of reasons, including: (a) an intentional or negligent act seriously affecting a facility resident’s health, safety or welfare; (b) misappropriation or conversion of resident property; (c) a determination by AHCA that the facility owner lacks the financial ability to provide continuing adequate care to residents; or (d) a licensee’s failure during relicensure to meet minimum licensing standards or applicable rules. Furthermore, AHCA may seek an injunction in various circumstances, including to enforce applicable requirements against an assisted living facility or skilled nursing facility when a violation has not been corrected by the imposition of administrative fines or when the violation materially affects resident health, safety or welfare. Any delay in the licensing and full operation of the Health Center, memory support units or assisted living units would result in losses in excess of those projected in the Financial Feasibility Study in APPENDIX B. The Financial Feasibility Study should be read in its entirety, including management’s notes and assumptions set forth therein.

Licensing Delay. The timeline to achieve licensure for the Community’s assisted living, memory support and nursing beds may be longer than expected and negatively impact occupancy levels and revenues of the Corporation. In certain other similar projects, the timing associated with opening the assisted living, memory support or nursing beds exceeded the number of months assumed in the facility’s financial forecast causing greater operating losses than had been forecast for such facility. Any delay in

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the licensing and full operation of the assisted living, memory support or nursing beds would result in losses in excess of those projected in the Feasibility Study in APPENDIX B. The Feasibility Study should be read in its entirety, including management’s notes and assumptions set forth therein.

Regulation of Residency Agreements. As described herein under “FLORIDA REGULATION OF CONTINUING CARE FACILITIES,” Chapter 651, Florida Statutes, as amended (“Chapter 651”) requires every continuing care facility to maintain a certificate of authority from the Office of Insurance Regulation (the “OIR”) in order to operate. The Corporation has received a provisional certificate of authority for the Community, and anticipates the receipt of the final certificate of authority following the closing of the Bonds. If the Corporation fails to comply with the requirements of Chapter 651, it would be subject to sanctions including the possible revocation of the certificate of authority for the Community. The certificate of authority may be revoked if certain grounds exist including, among others, failure by the provider to continue to meet the requirements for the certificate of authority as originally granted, on account of deficiency of assets, failure of the provider to maintain escrow accounts or funds required by Chapter 651 and failure by the provider to honor its Residency Agreements with residents. Under certain circumstances the OIR may petition for an appropriate court order for rehabilitation, liquidation, conservation, reorganization, seizure or summary proceedings. If the OIR has been appointed a receiver of a continuing care facility, it may petition a court to enjoin a secured creditor of a facility from seeking to dispose of the collateral securing its debt for a period of up to 12 months.

Certain State Regulations. On August 1, 2010, Florida’s nursing home staffing requirements changed, the new provisions require 1.0 hours per resident per day for nurses and 2.7 hours per day for certified nursing assistants (“CNAs”), with a weekly combined nurse and CNA average of 3.9 hours per day. In addition, effective August 1, 2011, an assisted living facility (“ALF”) with 17 or more beds is required to have a functioning automated defibrillator (“AED”) on its premises.

Further, effective August 1, 2010, Florida’s CCRC Bill HB 1253 became law. HB 1253 clarifies and updates several provisions in Chapter 651, Florida Statutes, many of which are consistent with current practices in Florida retirement communities. Chapter 651, Florida Statutes, Chapters 4 through 194 of the Florida Administrative Code, and all rules and regulations promulgated thereunder are hereinafter referred to as the “CCRC Law.” Most of the changes to the CCRC Law address issues of financial transparency and the disclosure of information as monitored by the OIR. Among the key provisions of the HB 1253 relating to the CCRC Law are: (a) the addition of new content requirements for annual reports; (b) the clarification that a provider may assess a non-refundable application processing fee; (c) the imposition of new requirements for a residents’ council regarding providing notice to residents; (d) the change of OIR inspection from at least once every 3 years to at least every 5 years to conform to requirements for other entities regulated by the OIR; and (e) effective August 1, 2010, imposes new background screening and hiring requirements for health care providers licensed under Chapter 400, Part II, Florida Statutes.

Medicare and Medicaid Anti-Fraud and Abuse Provisions. The Medicare and Medicaid anti-fraud and abuse provisions of the Social Security Act (the “Anti-Kickback Law”) make it a felony, subject to certain exceptions, to engage in illegal remuneration arrangements with physicians and other health care providers for the referral of Medicare beneficiaries or Medicaid recipients. Violation of these provisions constitutes a felony and may result in imprisonment for up to five years and fines of up to $25,000 for each incident or offense, although under 18 U.S.C. §3521, this fine may be increased to $250,000 for individuals and $500,000 for organizations. In addition, HHS has the authority to impose civil assessments and fines, and may exclude providers engaged in prohibited activities from participation in the Medicare and Medicaid programs, as well as certain other state and federal health care programs. The Secretary of HHS is required to exclude from such programs any providers convicted of a criminal

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offense relating to the delivery of Medicare or Medicaid services, for not less than five years. Exclusion from these programs would have a material adverse effect on the operations and financial condition of the Corporation and any future Member of the Obligated Group. The scope of prohibited payments in the Anti-Kickback Law is broad. Generally, courts have taken a broad interpretation of the scope of the Anti-Kickback Law. Courts have held that the Anti-Kickback Law may be violated if merely one purpose of a financial arrangement is to induce future referrals of federal or state health care program covered items or services. HHS has published regulations which describe certain arrangements that will not be deemed to constitute violations of the Anti-Kickback Law. The safe harbors described in the regulations are narrow and do not cover a wide range of economic relationships which many hospitals, physicians and other health care providers consider to be legitimate business arrangements not prohibited by the statute. Because the regulations describe safe harbors and do not purport to describe comprehensively all lawful or unlawful economic arrangements or other relationships between health care providers and referral sources, health care providers having these arrangements or relationships may be required to alter them in order to ensure compliance with the Anti-Kickback Law.

Health care providers have exposure under the Anti-Kickback Law. Because of the government’s vigorous enforcement efforts, many health care providers may be subject to some type of government investigation for alleged Anti-Kickback Law violations involving relationships such as those between healthcare providers and physicians, as well as the operations of any nursing homes, home health agencies, hospices and ancillary service providers owned or operated by a healthcare provider. The outcome of any government efforts to enforce the Anti-Kickback Law against health care providers is difficult to predict and defense efforts can be costly. Management of the Corporation anticipates that the Corporation will have a compliance program to ensure material compliance with the Anti-Kickback Law. In light of the narrowness of the safe harbor regulations and the scarcity of case law interpreting the Anti-Kickback Law, there can be no assurances that the Corporation and any future Member of the Obligated Group will not be found to have violated the Anti-Kickback Law, and, if so, whether any sanction imposed would have a material adverse effect on the operations of facilities owned by the Corporation and any future Member of the Obligated Group.

Restrictions on Referrals. Current federal law (known as the “Stark” law provisions) prohibits providers of “designated health services” from billing Medicare or Medicaid when the patient is referred by a physician or an immediate family member with a financial relationship with the provider, with limited exceptions. “Designated health services” include the following: clinical laboratory services; physical therapy services; occupational therapy services; radiology services, including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services; radiation therapy services and supplies; durable medical equipment and services; parenteral and enteral nutrients, equipment and supplies; prosthetics, orthotics, and prosthetic devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services. The sanctions under the Stark law include denial and refund of payments, civil monetary penalties and exclusions from the Medicare and Medicaid programs.

Management of the Corporation believes that they are currently in material compliance with the Stark provisions. However, in light of the scarcity of case law interpreting the Stark provisions, there can be no assurances that the Corporation will not be found to have violated the Stark provisions, and if so, whether any sanction imposed would have a material adverse effect on the operations or the financial condition of the Corporation.

Criminal False Claims Act. The criminal False Claims Act (“Criminal FCA”) prohibits anyone from knowingly and willfully making a false statement or misrepresentation of a material fact in submitting a claim to a government health care program (defined as “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in

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part, by the United States Government” other than the Federal Employees Health Benefit Program). There are numerous specific rules that a health care provider must follow with respect to the submission of claims. Violation of the Criminal FCA can result in imprisonment of five years and a fine of up to $25,000. Violation of the Criminal FCA also results in mandatory exclusion from participation in the government health care programs.

Civil False Claims Act/Qui Tam Actions. Medicare requires that extensive financial information be reported on a periodic basis and in a specific format or content. These requirements are numerous, technical and complex and may not be fully understood or implemented by billing or reporting personnel. Unlike criminal statutes, which require the government to prove that the health care provider intended to violate, or recklessly disregarded, the law, civil statutes may be violated simply by the provider’s participation in a prohibited financial arrangement or actual or assumed knowledge that its claims procedures are not in full compliance with the law. With respect to certain types of required information, the civil False Claims Act and the Social Security Act may be violated by mere negligence or recklessness in the submission of information to the government even without any specific intent to defraud. New billing systems, new medical procedures and procedures for which there is not clear guidance may all result in liability. If a health care provider is found to have violated the civil False Claims Act, the potential liability is substantial. The violator can be held liable for up to triple the actual damages incurred by the government and a fine of $5,500 to $11,000 for each violation of the civil False Claims Act. The penalties for violation also may include, for serious or repeated violations, exclusion from participation in the Medicare program. On May 20, 2009, Secretary of HHS Kathleen Sebelius and Attorney General Eric Holder announced the creation of the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”), an interagency effort focused specifically on combating health care fraud. HEAT includes senior officials from the Department of Justice (“DOJ”) and HHS who are strengthening existing programs, as well as investing in new resources and technologies, to prevent and combat fraud, waste, and abuse. As a key component of its efforts, the HEAT taskforce utilizes and supports the joint HHS-DOJ Medicare Fraud Strike Force team in select locations across the country. The Strike Force teams coordinate law enforcement operations with other Federal, State and local law enforcement entities.

The False Claims Act provides that an individual may bring a civil action for a violation of the Act. These actions are referred to as Qui Tam actions. In this way, an individual would be able to sue on behalf of the U.S. government if he/she believes that the healthcare entity has violated the False Claims Act. If the government proceeds with an action brought by this individual, then he/she could receive as much as 25 percent of any money recovered. The potential exists that a Qui Tam action could be brought against the Corporation or any future Members of the Obligated Group.

Privacy and Security Regulations

The confidentiality and security of patient medical records and other health information is subject to considerable regulation by state and federal governments. The administrative simplification provisions of HIPAA mandated that standards and requirements be adopted for the electronic transmission of certain health information. DHHS has issued a series of regulations to comport with this mandate, including regulations governing the privacy and security of protected health information.

In addition, DHHS published final regulations: (a) adopting standards for specific types of electronic administrative and financial health care transactions; and for the code sets used in conjunction with those transactions; and (b) creating a unique health identifier for health care providers. Physicians and other persons exchanging patient information with the Corporation are required to comply with these laws and regulations.

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In December 2000, DHHS issued a final rule regarding privacy standards covering health plans, health care clearinghouses, and health care providers. Most covered entities had to be in compliance with the rule by April 14, 2003. The Corporation is considered a covered entity. DHHS also published a final rule regarding the security of electronic health information. Most covered entities had to comply with the rule by April 20, 2005. The Corporation intends to operate in material compliance with HIPAA.

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “Recovery Act”). Title XIII of the Recovery Act, otherwise known as the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), provides for an investment of almost $20 billion in public monies for the development of a nationwide health information technology (“HIT”) infrastructure. The HIT infrastructure is intended to improve health care quality, reduce health care costs and facilitate access to necessary information. Among other things, the HITECH Act provides financial incentives, through the Medicaid and Medicare programs, loans and grants to encourage practitioners and providers to adopt and use qualified electronic health records. Eventually, Medicare payments are reduced for providers and practitioners who do not use electronic health records.

In addition to the HITECH Act, President Obama’s federal fiscal year 2010 budget (“Budget”) establishes a reserve fund of more than $630 billion over ten years to finance fundamental reform of America’s healthcare system in an effort to reduce costs and expand healthcare coverage. The fund will be paid for by a combination of tax revenue and reductions in Medicare and Medicaid spending.

The HITECH Act also expands the scope and application of the administrative simplification provisions of HIPAA, and its implementing regulations. Among other things, the HITECH Act imposes a written notice obligation upon covered entities for security breaches involving “unsecured” protected health information, expands the scope of an electronic health record provider’s disclosure tracking obligations, and substantially limits the ability of health care providers to sell protected health information without patient authorization. The HITECH Act also increases penalties for violations of HIPAA, and provides for enforcement of HIPAA violations by State attorneys general.

While the effect of the HITECH Act and the Budget cannot be predicted at this time, the obligations imposed by the HITECH Act and the Budget could have a material adverse effect on the financial condition of the Corporation. In addition, there is no guarantee that the financial incentives for adopting the qualified electronic health records system will be sufficient to offset the Corporation’s costs for development and implementation of such a system.

If the Corporation is found to have violated any state or federal statute or regulation with regard to the security, confidentiality, dissemination or use of patient medical information, the violator could be liable for damages, or civil or criminal penalties. Under HIPAA, the penalty for failure to comply with the standards is a fine of up to $100 for each violation, with a maximum penalty of $25,000 imposed for all violations of an identical requirement during a calendar year. Congress also established criminal penalties for knowingly violating patient privacy. Criminal penalties include up to $50,000 and one year in prison for obtaining or disclosing protected health information; up to $100,000 and up to five years in prison for obtaining protected health information under “false pretenses”; and up to $250,000 and up to ten years in prison for obtaining or disclosing protected health information with the intent to sell, transfer or use it for commercial advantage, personal gain or malicious harm. In addition, the HITECH Act authorizes state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations that threaten state residents.

These standards impose very complex procedures and operational requirements with which the Corporation is required to comply. There can be no assurance that differing interpretations of

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existing laws and regulations or the adoption of new laws and regulations would not have a material adverse effect on the ability of the Corporation to obtain or use health information which, in turn, could have a material adverse effect on the business of the Corporation. Similarly, because of the complexity of these regulations, there can be no assurances that the Corporation would not be reviewed, found to violate these standards and assessed penalties for such violations.

Increases in Medical Costs

Because the Corporation is obligated to provide a majority of their residents with certain medical care, a deviation from the anticipated mortality rate or medical care requirements of the resident population or substantial unanticipated increases in the cost of medical care could have a negative impact on the operations of the Community. The undertaking to provide such medical care is a contractual obligation of the Corporation, and no assurance can be given that the Corporation will have sufficient funds to meet their anticipated obligations. Residents are required to obtain Medicare Part A, Medicare Part B and supplemental insurance satisfactory to the Corporation; however, Medicare does not cover the cost of nursing home care except under certain limited circumstances (including up to 100 days of skilled nursing care following a 3-day hospital stay). In addition, the cost of providing healthcare services may increase due to increases in salaries paid to nurses and other healthcare personnel and due to shortages in such personnel which may require use of employment agencies.

Malpractice Claims

The operations of the Community may also be affected by increases in the incidence of malpractice lawsuits against physicians, nursing homes and life care facilities in general and increases in the dollar amount of patient damage recoveries, resulting in increased insurance premiums and an increased difficulty in obtaining or maintaining malpractice insurance. It is not possible at this time to determine either the extent to which malpractice coverage will continue to be available to the Corporation or the premiums at which such coverage can be obtained. The Corporation is not aware of any potential or threatened malpractice suit.

Potential Employee Shortage

Recently, the healthcare industry has experienced a shortage of nursing and other technical staff, which has resulted in increased costs due to the need to hire agency nursing personnel at higher rates and increased compensation levels. The Corporation’s ability to find qualified personnel within normal compensations levels could have a material impact on the Corporation’s operations or financial condition.

Taxpayer Relief Act of 1997 and Unrelated Business Taxation

The Taxpayer Relief Act of 1997 that includes the following provision which could have an impact on the Corporation.

Passive Income Received from Health System Subsidiary. This tax law tightens the ownership rules for determining whether certain types of income received from subsidiaries are subject to the unrelated business income tax (“UBIT”). Under prior law, tax-exempt organizations were required to pay tax on rents, royalties, annuities, and interest income only if such income was received from a taxable or tax-exempt subsidiary that was at least 80 percent controlled by the tax-exempt organization. Nevertheless, UBIT did not apply if the income came from a “second-tier” subsidiary (i.e., a subsidiary owned by a subsidiary).

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Under this tax law, such income is subject to UBIT if the parent organization owns more than 50 percent of the subsidiary, based on voting power or value. In addition, a parent exempt organization will be deemed to control any subsidiary which it controls either directly or indirectly (e.g., as a second-tier subsidiary). The new 50 percent control test is effective for taxable years beginning after December 31, 1998. This provision may force some multi-member health care systems to choose between maintaining control and incurring UBIT liability where business considerations dictate the use of intra-system loans, leases, and licensing arrangements.

Changes in tax laws regarding not for profit organizations could adversely affect certain of the Corporation’s revenues. Recently Congress and the Internal Revenue Service have focused more closely on issues of tax-exemption, such as the scope of activities constituting unrelated business income. Management of the Corporation believes the effect on the Corporation is likely to be de minimis because management believes their activities that may give rise to such income are insignificant.

Imputed Interest on Certain Refundable Entrance Fees

Section 7872 of the Code (Treatment of Loans with Below-Market Interest Rates), provides for, in certain circumstances, the imputation of interest income to a lender when the rate of interest charged by the lender is below prevailing market rates (as determined under a formula) or, even if the below market interest rate loan would otherwise be exempt from the provisions of Section 7872, when one of the principal purposes for such below-market rate loan is the avoidance of federal income taxation.

A refundable entrance fee payment made by a resident to certain continuing care facilities has been determined under Section 7872 to constitute a below market interest rate loan by the resident to the facility to the extent that the resident is not receiving a market rate of interest on the refundable portion of the entrance fee. Section 7872(h) provides a “safe harbor” exemption for certain types of refundable entrance fees. The statutory language of Section 7872 does not permit a conclusive determination as to whether the Residency Agreements come within the scope of the continuing care facility safe harbor or within the statute itself. Provided the Residency Agreement falls within the scope of Section 7872, the safe harbor exemption under Section 7872(h) is applicable (i) if such loan was made pursuant to a continuing care contract, (ii) if the resident (or the resident’s spouse) has attained age 62 before the close of the year and (iii) irrespective of the amount of the “loan” by the resident (or the resident’s spouse) to the continuing care facility. Section 425 of the Tax Relief and Health Care Act of 2006 amended Section 7872(h) to make the exemption for loans to qualifying care facilities permanent. Any determination of applicability of Section 7872 could have the effect of discouraging potential residents from becoming or remaining residents of the Community.

Passive Income Received from Health System Subsidiary.

Section 512(b)(13) of the Code provides that rents, royalties, annuities and interest income received from controlled subsidiaries are subject to the unrelated business income tax (“UBIT”) by the tax-exempt parent to the extent the payment reduces the net unrelated income (or increases any unrelated loss) of the controlled entity. Under this tax law, such income is subject to UBIT if the parent organization owns more than 50 percent of the subsidiary, based on voting power or value. In addition, a parent exempt organization will be deemed to control any subsidiary which it controls either directly or indirectly (e.g., as a second-tier subsidiary). This provision may force some multi-member health care systems to choose between maintaining control and incurring UBIT liability where business considerations dictate the use of intra-system loans, leases, and licensing arrangements. It is not clear at this time how this provision will affect the Corporation.

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Intermediate Sanctions

On July 31, 1996, the Taxpayers Bill of Rights 2 (the “Taxpayers Act”) was signed into law. The Taxpayers Act provides the IRS with an “intermediate” tax enforcement tool to combat violations by tax-exempt organizations of the private inurement prohibition of the Code. Previous to the “intermediate sanctions law,” the IRS could punish such violations only through revocation of an entity’s tax-exempt status.

Intermediate sanctions may be imposed where there is an “excess benefit transaction,” defined to include a disqualified person (i.e., an insider) (1) engaging in a non-fair market value transaction with the tax-exempt organization; (2) receiving unreasonable compensation from the tax-exempt organization; or (3) receiving payment in an arrangement that violates the private inurement proscription.

A disqualified person who benefits from an excess benefit transaction will be subject to a “first tier” penalty excise tax equal to 25% of the amount of the excess benefit. Organizational managers who participate in an excess benefit transaction knowing it to be improper are subject to a first-tier penalty excise tax of 10% of the amount of the excess benefit, subject to a maximum penalty of $10,000. A “second tier” penalty excise tax of 200% of the amount of the excess benefit may be imposed on the disqualified person (but not the organizational manager) if the excess benefit transaction is not corrected in a specified time period.

The IRS has issued revenue rulings dealing specifically with the manner in which a facility providing residential services to the elderly must operate in order to maintain its exemption as an organization described in Section 501 (c)(3). Revenue Ruling 61-72 holds that an organization providing residential services to the elderly qualified for exemption under Section 501(c)(3) where the organization: (1) was dedicated to providing care and housing to aged individuals who otherwise would be unable to provide for themselves without hardship; (2) rendered, to the extent of its financial ability, services to all or a reasonable proportion of its residents at substantially below actual cost; and (3) rendered services that ministered to the needs and the relief of hardship or distress among the elderly. Revenue Ruling 72-124 holds that an organization will qualify for exemption under Section 501(c)(3) if it meets the elderly’s special needs for housing, healthcare, and financial security. The need for housing will be met if the facility is specifically designed to meet some combination of the physical, emotional, social, religious, and recreational needs of the elderly. The need for healthcare will be met if the organization provides or arranges for some form of healthcare. The need for financial security will be met if the organization is committed to an established policy of maintaining in residence any persons who become unable to pay their charges, and the organization provides its services at the lowest feasible cost. Revenue Ruling 79-18 holds that a facility providing residential services to the elderly may admit only those tenants who are able to pay full rental charges, provided that those charges are set at a level that is within the financial reach of a significant segment of the community’s elderly persons and that the organization maintains in residence those tenants who become unable to pay their monthly charges.

The IRS has audit guidelines which implement a policy to scrutinize more closely the activities of health care providers to ensure that they satisfy the requirements for tax-exempt status. Given these audit guidelines and other related pronouncements by the IRS, it may be more difficult for health care providers to maintain their tax-exempt status. Health-care providers, such as the Corporation, may be forced to forego otherwise favorable opportunities for certain joint ventures, recruitment and other arrangements to maintain their tax-exempt status or to avoid other sanctions.

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Possible Changes in Tax Status

The possible modification or repeal of certain existing federal income or state tax laws or other loss by the Corporation of the present advantages of certain provisions of the federal income or state tax laws could materially and adversely affect the status of the Corporation and thereby the revenues of the Corporation. Failure of the Corporation or the Authority to comply with certain requirements of the Code, or adoption of amendments to the Code to restrict the use of tax-exempt bonds for facilities such as those being financed with Series 2013 Bond proceeds, could cause interest on the Series 2013 Bonds to be included in the gross income of Bondholders or former Bondholders for federal income tax purposes. In such event, the Bond Indenture does not contain any specific provision for acceleration of the Series 2013 Bonds nor provide that any additional interest will be paid to the owners of the Series 2013 Bonds. See APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Bond Indenture – Section 8.02 Remedies on Events of Default.”

The Corporation is a not for profit corporation, exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (referred to as the Code). As not for profit tax-exempt organization, the Corporation is subject to federal, state and local laws, regulations, rulings and court decisions relating to its organization and operation, including its operation for charitable purposes. At the same time, the Corporation conducts large-scale complex business transactions and will be a major employer in its geographic area. There can often be a tension between the rules designed to regulate a wide range of charitable organizations and the day-to-day operations of a complex healthcare organization.

Over the past several years, an increasing number of the operations or practices of healthcare providers have been challenged or questioned to determine if they are consistent with the regulatory requirements for nonprofit tax-exempt organizations. These challenges are broader than concerns about compliance with federal and state statutes and regulations, such as Medicare and Medicaid compliance, and in many cases are examinations of core business practices of the healthcare organizations. Areas which have come under examination have included pricing practices, billing and collection practices, charitable care, executive compensation, exemption from real property taxation, and others. These challenges and questions have come from a variety of sources, including state Attorneys General, the Internal Revenue Service (referred to as the IRS), labor unions, Congress, state legislatures, and patients, and in a variety of forums, including hearings, audits and litigation. These challenges or examinations include the following, among others:

Federal Congressional Hearings. The Senate Finance Committee has conducted hearings on required reforms to the nonprofit sector and released staff discussion drafts on proposals for reform in the area of tax-exempt organizations, including a proposal for a five-year review of tax-exempt status by the IRS. The House Committee on Ways and Means has held several hearings to examine the tax-exempt sector, hospital tax exemptions and the use of tax-preferred bond financings. It is uncertain if any of these Committees will pursue further investigations or will recommend legislative changes as a result of these inquiries.

IRS Examination of Compensation Practices. In August 2004, the IRS announced a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders. The IRS announced that it would contact nearly 2,000 charities and foundations to seek more information about their compensation practices and procedures. In February 2009, the IRS issued its Hospital Compliance Project Final Report (the “IRS Final Report”) based on its examination of such tax-exempt organizations. The IRS Final Report indicates that the IRS (i) will continue to heavily scrutinize executive compensation arrangements,

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practices and procedures and (ii) in certain circumstances, may conduct further investigations or impose fines on tax-exempt organizations.

In February 2009, Senator Kohl, of the Senate’s Special Committee on Aging, requested that the U.S. Government Accountability Office (GAO) study the finances, operations and governance of Continuing Care Retirement Communities (CCRCs). The GAO has not yet delivered its report and it is uncertain whether the report will lead the Special Committee on Aging to pursue further investigation into CCRCs or legislative changes that could affect CCRCs.

Revision of IRS Form 990 for Tax-Exempt Organization. The IRS Form 990 is used by most 501(c)(3) not-for-profit organizations exempt from federal income taxation to submit information required by the federal government. On December 20, 2007, the IRS released a revised Form 990 that requires detailed public disclosure of compensation practices, corporate governance, loans to management and others, joint ventures and other types of transactions, political campaign activities, and other areas the IRS deems to be compliance risk areas. The revised form also requires the disclosure of a significantly greater amount of information on community benefit and establishes uniform standards for reporting of information relating to tax-exempt bonds, including compliance with the arbitrage rules and rules limiting private use of bond-financed facilities, including compliance with the safe harbor guidance in connection with management contracts and research contracts. The redesigned Form 990 is intended to result in enhanced transparency as to the operations of exempt organizations. It is also likely to result in enhanced enforcement, as the redesigned Form 990 will make detailed information on compliance risk areas available to the IRS and other stakeholders.

Factors Affecting Taxes on Real Property. The Corporation is pursuing exemption from State of Florida taxes on real property for certain portions of the Community. There is no guarantee that such exemption will be achieved or, if achieved, that such exemption will remain in place. In recent years various State of Florida and local legislative, regulatory and judicial bodies have reviewed the exemption of non-profit corporations from taxes on real property. Various State of Florida and local government bodies have challenged with increasing frequency and success the tax-exempt status of such institutions and have sought to remove the exemption of certain real property from the taxes of various non-profit institutions on the grounds that a portion of such property was not being used to further the charitable purposes of the institution. Several of these disputes have been determined in favor of the taxing authorities or have resulted in settlements.

Amendments to the Documents

Certain amendments to the Bond Indenture and Loan Agreement may be made with the consent of the owners of a majority of the principal amount of the outstanding Series 2013 Bonds and certain amendments to the Master Indenture and the Mortgage may be made with the consent of the holders of a majority of the principal amount of outstanding Notes. Such amendments may adversely affect the security of the Bondholders and, with respect to the Master Indenture and the Mortgage, such percentage may be composed wholly or partially of the holders of Additional Notes. See “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Supplements Without Consent of Holders of Obligation,” and “– Section 9.02 Supplements With Consent of Holders of Obligation” in APPENDIX C and “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Bond Indenture – Section 4.03 Supplemental Indentures; Recordation of Bond Indenture and Supplemental Indentures,” and “Excerpts From The Loan Agreement – Supplements and Amendments to the Loan Agreement” in APPENDIX C.

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Additional Debt

The Master Indenture permits the Corporation and any future Member of the Obligated Group to incur Additional Indebtedness which may be equally and ratably secured with the Series 2013 Notes. Any such additional parity indebtedness would be entitled to share ratably in security interest with the owners of the Series 2013 Notes. Any moneys realized from the exercise of remedies in the event of a default by the Obligated Group could reduce the Historical Debt Service Coverage Ratio and could impair the ability of the Obligated Group to maintain its compliance with certain covenants described in APPENDIX C under the caption “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.11 Rates and Charges.” There is no assurance that, despite compliance with the conditions upon which Additional Indebtedness may be incurred at the time such debt is created, the ability of the Obligated Group to make the necessary payments to repay the Series 2013 Notes may not be materially, adversely affected upon the incurrence of Additional Indebtedness.

Bankruptcy

If the Corporation was to file a petition for relief under Chapter 11 of the Federal Bankruptcy Code, its revenues and certain of its accounts receivable and other property acquired after the filing (and under certain conditions some or all thereof acquired within 120 days prior to the filing) would not be subject to the security interests created under the Master Indenture. The filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Corporation and its property and as an automatic stay of any act or proceeding to enforce a lien upon its property. If the bankruptcy court so ordered, the Corporation’s property, including their accounts receivable and proceeds thereof, could be used for the benefit of the Corporation despite the security interest of the Master Trustee therein, provided that “adequate protection” is given to the lienholder.

In a bankruptcy proceeding, the petitioner could file a plan for the adjustment of its debts which modifies the rights of creditors generally, or any class of creditors, secured or unsecured. The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interests of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly in favor of junior creditors.

Certain Matters Relating to Enforceability of the Master Indenture

The obligations of the Corporation and any future members of the Obligated Group under the Series 2013 Notes will be limited to the same extent as the obligations of debtors typically are affected by bankruptcy, insolvency and the application of general principles of creditors’ rights and as additionally described below.

The accounts of the Corporation and any future members of the Obligated Group will be combined for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the incurrence of Additional Indebtedness) are met, notwithstanding the uncertainties as to the enforceability of certain obligations of the Obligated Group contained in the Master Indenture which bear on the availability of the assets and revenues of the Obligated Group to pay debt service on Notes, including the Series 2013 Notes pledged under the Bond Indenture as security for the Series 2013 Bonds. The obligations described herein of the

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Obligated Group to make payments of debt service on Notes issued under the Master Indenture (including transfers in connection with voluntary dissolution or liquidation) may not be enforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights and by general equitable principles and (2) such payments (i) are requested with respect to payments on any Notes issued by a Member other than the Member from which such payment is requested, issued for a purpose which is not consistent with the charitable purposes of the Member of the Obligated Group from which such payment is requested or issued for the benefit of a Member of the Obligated Group which is not a Tax-Exempt Organization; (ii) are requested to be made from any moneys or assets which are donor-restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (iii) would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by the Member of the Obligated Group from which such payment is requested; or (iv) are requested to be made pursuant to any loan violating applicable usury laws. The extent to which the assets of any future Member of the Obligated Group may fall within the categories (ii) and (iii) above with respect to the Series 2013 Notes cannot now be determined. The amount of such assets which could fall within such categories could be substantial.

A Member of the Obligated Group may not be required to make any payment on any Note, or portion thereof, the proceeds of which were not loaned or otherwise disbursed to such Member of the Obligated Group to the extent that such payment would render such Member of the Obligated Group insolvent or which would conflict with or not be permitted by or which is subject to recovery for the benefit of other creditors of such Member of the Obligated Group under applicable laws. There is no clear precedent in the law as to whether such payments from a Member of the Obligated Group in order to pay debt service on the Series 2013 Notes may be voided by a trustee in bankruptcy in the event of bankruptcy of a Member of the Obligated Group, or by third-party creditors in an action brought pursuant to Florida fraudulent conveyance statutes. Under the United States Bankruptcy Code, a trustee in bankruptcy and, under Florida fraudulent conveyance statutes and common law, a creditor of a related guarantor, may avoid any obligation incurred by a related guarantor if, among other bases therefor, (1) the guarantor has not received fair consideration or reasonably equivalent value in exchange for the guaranty and (2) the guaranty renders the guarantor insolvent, as defined in the United States Bankruptcy Code or Florida fraudulent conveyance statutes, or the guarantor is undercapitalized.

Application by courts of the tests of “insolvency,” “reasonably equivalent value” and “fair consideration” has resulted in a conflicting body of case law. It is possible that, in an action to force a Member of the Obligated Group to pay debt service on a Note for which it was not the direct beneficiary, a court might not enforce such a payment in the event it is determined that the Member of the Obligated Group is analogous to a guarantor of the debt of the Member of the Obligated Group who directly benefited from the borrowing and that sufficient consideration for the Member of the Obligated Group’s guaranty was not received and that the incurrence of such Note has rendered or will render the Member of the Obligated Group insolvent.

The effectiveness of the security interest in the Obligated Group’s Gross Revenues granted in the Master Indenture may be limited by a number of factors, including: (i) present or future prohibitions against assignment contained in any applicable statutes or regulations; (ii) certain judicial decisions which cast doubt upon the right of the Master Trustee, in the event of the bankruptcy of any member of the Obligated Group, to collect and retain accounts receivable from Medicare, Medicaid, General Assistance and other governmental programs; (iii) commingling of the proceeds of Gross Revenues with other moneys of a member of the Obligated Group not subject to the security interest in Gross Revenues; (iv) statutory liens; (v) rights arising in favor of the United States of America or any agency thereof; (vi) constructive trusts, equitable or other rights impressed or conferred by a federal or state court in the exercise of its equitable jurisdiction; (vii) federal bankruptcy laws which may affect the

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enforceability of the Mortgage or the security interest in the Gross Revenues of the Obligated Group which are earned by the Obligated Group within 90 days preceding or, in certain circumstances with respect to related corporations, within one year preceding and after any effectual institution of bankruptcy proceedings by or against a member of the Obligated Group; (viii) rights of third parties in Gross Revenues converted to cash and not in the possession of the Master Trustee; and (ix) claims that might arise if appropriate financing or continuation statements are not filed in accordance with the Florida Uniform Commercial Code as from time to time in effect.

Pursuant to the Master Indenture, each member of the Obligated Group who pledges its Gross Revenues under the Master Indenture covenants and agrees that, if an event of default involving a failure to pay any installment of interest or principal on a Note should occur and be continuing, it will deposit daily the proceeds of its Gross Revenues. Such deposits will continue daily until such default is cured.

It is unclear whether the covenant to deposit the proceeds of Gross Revenues with the Master Trustee is enforceable. In light of the foregoing and of questions as to limitations on the effectiveness of the security interest granted in such Gross Revenues, as described above, no opinion will be expressed by counsel to the Corporation as to enforceability of such covenant with respect to the required deposits.

There exists, in addition to the foregoing, common law authority and authority under Florida statutes pursuant to which the Florida courts may terminate the existence of a not for profit corporation or undertake supervision of its affairs on various grounds, including a finding that such corporation has insufficient assets to carry out its stated charitable purposes or has taken some action which renders it unable to carry out such purposes. Such court action may arise on the court’s own motion pursuant to a petition of the Florida Attorney General or such other persons who have interests different from those of the general public, pursuant to the common law and statutory power to enforce charitable trusts and to see to the application of their funds to their intended charitable uses.

Interest Rate Swap and Other Hedge Risk

Currently, the Corporation is not party to an interest rate swap or other hedge agreement. However, the Corporation or any future Members of the Obligated Group may enter into such an agreement in the future. Any interest rate swap or other hedge agreement to which the Corporation or any future Members of the Obligated Group is a party may, at any time, have a negative value to the Obligated Group. If either a swap or other hedge counterparty or the Corporation or any future Members of the Obligated Group terminates such an agreement when the agreement has a negative value to the Obligated Group, the Obligated Group would be obligated to make a termination payment to the counterparty in the amount of such negative value, and such payment could be substantial and potentially materially adverse to the financial condition of the Obligated Group. A counterparty generally may only terminate such an agreement upon the occurrence of defined termination events such as nonpayment by the Obligated Group, a bankruptcy type event, cross default to specified indebtedness or other swaps, other breaches of covenants in such agreements or the withdrawal of the ratings assigned to the Obligated Group’s indebtedness, if applicable, or a downgrade of such ratings below specified levels.

Many swap agreements require each party to provide additional security for its obligations in certain circumstances including without limitation a downgrade of the rating assigned to the long-term Indebtedness issued on its behalf and the occurrence of certain other events. The Master Indenture permits the Obligated Group to grant a security interest and lien on collateral for this purpose.

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Uncertainty of Investment Income

The investment earnings of, and accumulations in, certain funds established pursuant to the Bond Indenture have been estimated and are based on assumed interest rates as indicated. While these assumptions are believed to be reasonable in view of the rates of return presently and previously available on the types of securities in which the Bond Trustee is permitted to invest under the Bond Indenture, there can be no assurance that similar interest rates will be available on such securities in the future, nor can there be any assurance that the estimated funds will actually be realized. Guaranteed investment contracts may be entered into with respect to certain of the funds held under the Bond Indenture. See “ESTIMATED SOURCES AND USES OF FUNDS” above.

Environmental Matters

Health care facilities, such as the Community, are subject to a wide variety of federal, state and local environmental and occupational health and safety laws and regulations that address, among other things, operations of facilities and properties owned or operated by such facilities. Among the types of regulatory requirements faced by such facilities are: air and water quality control requirements; waste management requirements; specific regulatory requirements applicable to asbestos; polychlorinated biphenyls, and radioactive substances; requirements for providing notice to employees and members of the public about hazardous materials handled by or located at the such facility or hospital; requirements for training employees in the proper handling and management of hazardous materials and wastes; and other requirements. In their role as owners and operators of properties or facilities, such facilities may be subject to liability for investigating and remedying any hazardous substances that have come to be located on the property, including any such substances that may have migrated off of the property. Typical operations of such facilities, include to some extent in various combinations, the handling, use, storage, transportation, disposal and discharge of hazardous, infectious, toxic, radioactive, flammable and other hazardous materials, wastes, pollutants or contaminants. For this reason, operations of such facilities are susceptible to the practical, financial and legal risks associated with compliance with such laws and regulations. Such risks may result in damage to individuals, property or the environment; may interrupt operations or increase their cost or both; may result in legal liability, damages, injunctions or fines, or may trigger investigations, administrative proceedings, penalties or other government agency actions. There can be no assurance that the Corporation will not encounter such risks in the future, and such risks may result in material adverse consequences to the operations or financial condition of the Corporation.

The Master Trustee may decline to enforce the Mortgage if the Master Trustee has not been indemnified to its satisfaction in accordance with the Master Indenture for all liabilities it may incur as a consequence thereof. Such liabilities may include costs associated with complying with environmental laws and regulations.

Flooding and Other Natural Disasters

The Project is located in a flood zone. The Project has been designed to account for that risk and the Corporation is required to purchase and maintain customary insurance for similarly situated corporations pursuant to the terms of the Master Indenture as described more fully in “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – SECTION 4.10. Insurance” in APPENDIX C hereto. Management of the Corporation intends to purchase flood insurance for the Project when it is completed. There can be no assurance that the Project or other facilities of the Obligated Group will not be damaged by floods or other natural disasters in the future or that any such damage would be fully within the applicable limits of the insurance policies maintained by the Obligated Group, if any. The occurrence of any such natural disaster may damage and interrupt the operation of the facilities of the Corporation and any future members of the Obligated Group, interrupt utility services, or

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otherwise impair the operation and generation of revenues from said facilities which could have a material financial impact on the Obligated Group.

Other Possible Risk Factors

The occurrence of any of the following events, or other unanticipated events, could adversely affect the operations of the Corporation and any future member of the Obligated Group:

(1) Inability to control increases in operating costs, including salaries, wages and fringe benefits, supplies and other expenses, given an inability to obtain corresponding increases in revenues from residents whose incomes will largely be fixed;

(2) Unionization, employee strikes and other adverse labor actions which could result in a substantial increase in expenditures without a corresponding increase in revenues;

(3) Adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Corporation and any future member of the Obligated Group;

(4) A decline in the population, a change in the age composition of the population or a decline in the economic conditions of the Community’s market area;

(5) The cost and availability of energy;

(6) Increased unemployment or other adverse economic conditions in the service areas of the Corporation and any future member of the Obligated Group which would increase the proportion of patients who are unable to pay fully for the cost of their care;

(7) Any increase in the quantity of indigent care provided which is mandated by law or required due to increased needs of the community in order to maintain the charitable status of the Corporation and any future member of the Obligated Group;

(8) Inflation or other adverse economic conditions;

(9) Reinstatement or establishment of mandatory governmental wage, rent or price controls;

(10) Changes in tax, pension, social security or other laws and regulations affecting the provisions of health care and other services to the elderly;

(11) Changes in the tax laws and regulations eliminating or adversely impairing the value of the tax exemption afforded the Series 2013 Bonds;

(12) Inability to control the diminution of patients’ assets or insurance coverage with the result that the patients’ charges are reimbursed from government reimbursement programs rather than private payments or funded from assets of the Corporation or any future Members of the Obligated Group;

(13) Scientific and technological advances that could reduce demand for services offered by the Corporation and any future members of the Obligated Group; or

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(14) Cost and availability of any insurance, such as malpractice, fire, automobile and general comprehensive liability, that organizations such as the Corporation and any future members of the Obligated Group generally carry.

Lack of Marketability for the Series 2013 Bonds

Although the Underwriter intends, but is not obligated, to make a market for the Series 2013 Bonds, there can be no assurance that there will be a secondary market for the Series 2013 Bonds, and the absence of such a market for such bonds could result in investors not being able to resell the Series 2013 Bonds should they need to or wish to do so.

Additionally, the ability to sell or transfer the Series 2013 Bonds is limited to “qualified institutional buyers” as defined under Rule 144A or “accredited investors” as defined under Rule 501 of Regulation D of the Securities Act of 1933 until such time as the Corporation applies for and receives a rating on the Series 2013 Bonds of at least “BBB/Baa3” or equivalent from any Rating Agency, a restriction on the ability of investors to resell the Series 2013 Bonds. See “THE SERIES 2013 BONDS – Limitations on Investors and Restrictions on Transfer” herein.

Absence of a Bond Rating

The Series 2013 Bonds are unrated. When any Bondholder attempts to sell his or her Series 2013 Bonds, this absence of a rating could adversely affect the market price and marketability thereof.

FLORIDA REGULATION OF CONTINUING CARE FACILITIES

Continuing care facilities in Florida are regulated by the Department of Financial Services, Office of Insurance Regulation (“OIR”) under the provisions of Chapter 651, Florida Statutes, as amended (“Chapter 651”). Under Chapter 651, “continuing care” means furnishing pursuant to an agreement shelter, food and either nursing care or certain personal services, whether such nursing care or personal services are provided in the facility or in another setting designated by the agreement for continuing care, to an individual not related by consanguinity or affinity to the provider furnishing such care, upon payment of an entrance fee. Agreements to provide continuing care include agreements to provide care for any duration, including agreements that are terminable by either party. “Personal services” include, but are not limited to, such services as individual assistance with or supervision of essential activities of daily living. “Entrance fee” means an initial or deferred payment of a sum of money or property made as full or partial payment to assure the resident a place in a facility. An accommodation fee, admission fee or other fee of similar form and application is considered to be an entrance fee. “Initial entrance fee” means the total entrance fee charged by a facility to the first occupant of a unit.

Certificate of Authority; Initial Entrance Fees

Chapter 651 provides that no person may engage in the business of providing continuing care or enter into continuing care agreements or construct a facility for the purpose of providing continuing care without a certificate of authority issued by the OIR. A final certificate of authority may be issued after the applicant has provided the OIR with the information and documents required by Chapter 651. The Corporation received a provisional certificate of authority for the Community, which remains in full force and effect and anticipates receipt of the final certificate of authority following the closing of the Series 2013 Bonds.

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Prior to the release of initial entrance fees held in escrow as described herein, Chapter 651 requires that a minimum of 75 percent of the moneys paid for all or any part of an initial entrance fee collected be placed in an escrow account or on deposit with the OIR. Initial entrance fees held in escrow or on deposit with OIR in accordance with the requirements of Chapter 651 may not be released to the Corporation until (i) a certificate of occupancy has been issued, (ii) the Corporation has received payment in full for no less than 70 percent of the total Independent Living Units of the Project, (iii) Dixon Hughes Goodman LLP, or a substitute feasibility consultant approved by OIR, has certified that there has been no material adverse change in status with regard to the Financial Feasibility Study, which certificate shall be dated not more than 12 months from the date of filing for OIR approval, or if a material adverse change should exist at the time of submission, then sufficient information acceptable to OIR and the feasibility consultant shall be submitted which remedies the adverse condition, (iv) proof that the Corporation has sufficient funds to fund the required minimum liquid reserve requirements, as set forth in Section 651.035, Florida Statutes, which may be include funds deposited in the initial entrance fee escrow account, and (v) the other conditions set forth in Section 651.023(4), Florida Statutes have been satisfied.

Chapter 651 allows both the moneys paid for all or any part of an initial entrance fee collected which are not required to be placed in escrow or on deposit with OIR and the moneys that are released to the Corporation from escrow or from deposit with the OIR as described in the preceding paragraph, to be used by the Corporation for working capital or other purposes.

Once issued, a certificate of authority is renewable annually as of each September 30 upon a determination by the OIR that the provider continues to meet the requirements of Chapter 651. Annual reports containing financial and other information about the provider and the facility are required to be filed with the OIR annually on or before each June 1. If a provider fails to correct deficiencies within 20 days of notice from the OIR, and if the time for correction is not extended, the OIR may institute delinquency proceedings against the provider, as described below. See “Examinations and Delinquency Proceedings.”

Required Reserves

Chapter 651 requires that each continuing care provider maintain: (a) a debt service reserve in an amount equal to the principal and interest payments becoming due during the current fiscal year (18 months’ interest on the financing if no principal payments are currently due) on any mortgage loan or other long term financing, including taxes and insurance; (b) an operating reserve in an amount equal to 15% of the facility’s average total annual operating expenses set forth in the annual reports filed pursuant to Chapter 651 for the immediate preceding 3-year period, subject to adjustment in the event there is a change in the number of facilities owned; and (c) a renewal and replacement reserve in an amount equal to 15% of the total accumulated depreciation based on the audited financial statements included in the facility’s annual report filed pursuant to Chapter 651, not to exceed 15% of the facility’s average operating expenses for the past 3 fiscal years based on the audited financial statements for each of such years. These reserves are required to be held in a segregated escrow account maintained with a Florida bank, savings and loan association or trust company acceptable to the OIR and, in the case of the operating reserve, must be in an unencumbered account held in escrow for the benefit of the residents. The Reserve Accounts within the Debt Service Reserve Fund, each established with the Bond Trustee pursuant to the Bond Indenture, and the escrow accounts (the “Minimum Liquid Reserve Accounts”) established with the Chapter 651 Escrow Agent, currently SunTrust Bank, as escrow agent under the Agreement for The Arlington of Naples Debt Service Reserve Escrow Account, Operating Reserve Escrow Account and Renewal and Replacement Reserve Escrow Account dated as of November 30, 2009, are intended to meet the requirements of Chapter 651 for those reserves (the “Required Reserves”).

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Chapter 651 requires the escrow agent holding the Required Reserves to deliver to the OIR quarterly reports on the status of the escrow funds, including balances, deposits and disbursements. Chapter 651 provides that withdrawals can be made from the Required Reserves only after ten days’ prior written notice to the OIR, except that in an emergency the provider may petition for a waiver of such ten-day notice requirement (a waiver being deemed granted if not denied by the OIR within three working days). Fines may be imposed for failure to deliver the quarterly reports or notices of withdrawal within the required time periods.

The Obligated Group shall not draw upon the Minimum Liquid Reserve Accounts until the Liquidity Support Fund, Working Capital Fund and Operating Reserve Fund are depleted.

Continuing Care Agreements and Residents’ Rights

Chapter 651 prescribes certain requirements for continuing care agreements and requires OIR approval of the form of an agreement before it is used and of any changes to the terms of an agreement once it has been approved. In addition to requiring that the agreement state the amounts payable by the resident, the services to be provided and the health and financial conditions for acceptance of a resident, Chapter 651 requires that the agreement may be canceled by either party upon at least 30 days’ notice. A provider that does not give its residents a transferable membership right or ownership interest in the facility may retain 2% of the entrance fee per month of occupancy prior to cancellation, plus a processing fee not exceeding 5% of the entrance fee, and must pay the refund within 120 days of notice of cancellation. The Resident Agreements for the Community meet the requirements of this provision.

Chapter 651 requires that a prospective resident have the right to cancel, without penalty, a continuing care agreement within seven days of signing the continuing care agreement. During this seven-day period, any entrance fee or deposit must be held in escrow or, at the request of the prospective resident, held by the provider. If the prospective resident rescinds the continuing care contract during the seven-day rescission period, the entrance fee or deposit must be refunded to the prospective resident without deduction. If cancellation occurs after seven days, but prior to occupancy, the entire entrance fee must be refunded, less a processing fee not exceeding 5%, within 60 days of notice of cancellation. However, if cancellation occurs prior to occupancy due to death, illness, injury or incapacity of the prospective resident, the entire entrance fee must be refunded, less any costs specifically incurred by the provider at the written request of the resident.

Chapter 651 further requires that a resident may not be dismissed or discharged without just cause. Failure to pay monthly maintenance fees will not be considered just cause until such time as the amounts paid by the resident, plus any benefits under Medicare or third party insurance, exceed the cost of caring for the resident, based on the per capita cost to the facility (which cost may be adjusted proportionately for amounts paid above the minimum charge for above-standard accommodations).

Chapter 651 also contains provisions giving residents the right: to form residents’ organizations and choose representatives; to attend quarterly meetings with the provider; and to inspect the provider’s annual reports to the OIR and any examination reports prepared by the OIR or any other governmental agencies (except those which are required by law to be kept confidential). Prior to the implementation of any increase in the monthly maintenance fee, the provider must provide, at a quarterly meeting of the residents, the reasons, by department cost centers, for any increase in the fee that exceeds the most recently published Consumer Price Index for all Urban Consumers, all items, Class A Areas of the Southern Region. Residents must also be notified of any plans filed with the OIR relating to expansion of the facility or any additional financing or refinancing.

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Examinations and Delinquency Proceedings

The OIR is required to examine the business of each continuing care provider at least once every three years, in the same manner as provided under Florida law for examination of insurance companies. Inspections may also be requested by any interested party. The OIR is required to notify the provider of any discrepancies and to set a reasonable time for corrective action and compliance by the provider.

The OIR may deny, suspend, revoke or refuse to renew a certificate of authority for various grounds relating to: the insolvent condition of the provider or the provider’s being in a condition which renders its conduct of further business hazardous or injurious to the public; lack of one or more of the qualifications for a certificate of authority; material misstatements, misrepresentation, fraud, misappropriation of moneys or demonstrated lack of fitness or untrustworthiness; violations of Chapter 651 or any regulation or order of the OIR; or refusal to permit examination or to furnish required information.

Suspension of a certificate of authority may not exceed one year, during which period the provider may continue to operate and must file annual reports, but may not issue new continuing care agreements. At the end of the suspension period, the certificate of authority is to be reinstated, unless the OIR finds that the causes for suspension have not been removed or that the provider is otherwise not in compliance with Chapter 651 (in which event the certificate of authority is deemed to have been revoked as of the end of the suspension period). In lieu of suspension, administrative fines may be levied, not exceeding $1,000 per violation, or $10,000 for knowing and willful violations.

If the OIR finds that sufficient grounds exist as to a continuing care provider for the rehabilitation (i.e., receivership), liquidation, conservation, reorganization, seizure or summary proceedings of an insurer as provided under Florida law pertaining to insurance companies, the OIR may petition for an appropriate court order or pursue such other relief as is afforded under Part I of Chapter 631, Florida Statutes, as amended (the “Insurers Rehabilitation and Liquidation Act”), for insurance companies generally. Such grounds include, but are not limited to, insolvency or failure or refusal to comply with Insurance Department requirements.

Chapter 651 provides that the rights of the OIR are subordinate to the rights of a trustee or lender pursuant to an indenture, loan agreement or mortgage securing bonds issued to finance or refinance the facility. However, if the OIR has been appointed as receiver of the facility, the court having jurisdiction over the receivership proceeding is authorized to enjoin a secured creditor from seeking to dispose of the collateral securing its mortgage for up to 12 months, upon a showing of good cause, such as a showing that the collateral should be retained in order to protect the life, health, safety or welfare of the residents or to provide sufficient time for relocation of the residents.

If a trustee or lender becomes the mortgagee under the Mortgage pursuant to a foreclosure sale or otherwise through the exercise of remedies upon the default of the mortgagor, the rights of a resident of any portion of the applicable Mortgaged Property governed by Chapter 651, Florida Statutes, under a continuing care agreement, shall be honored and shall not be disturbed or affected (except as described below) as long as the resident continues to comply with all provisions of the continuing care agreement and has asserted no claim inconsistent with the rights of the trustee or lender. In such event, the OIR shall not exercise its remedial rights provided under Chapter 651 with respect to the facility, including its right to enjoin disposal of the facility as described in the preceding paragraph. Upon acquisition of a facility by a trustee or lender pursuant to remedies under the Mortgage, the OIR shall issue a 90-day temporary certificate of authority to operate the facility, provided that the trustee or lender will not be required to continue to engage in the marketing or resale of new continuing care agreements, pay any refunds of entrance fees otherwise required to be paid under a resident’s continuing

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care agreement until expiration of such 90-day period, be responsible for acts or omissions of the operator of the facility arising prior to the acquisition of the facility by the trustee or lender, or provide services to the residents to the extent that the trustee or lender would be required to advance funds that have not been designated or set aside for such purposes.

FINANCIAL REPORTING AND CONTINUING DISCLOSURE

Financial Reporting

The Master Indenture requires that the Obligated Group Representative furnish or cause to be furnished to the Master Trustee, the Initial Purchaser, all nationally recognized municipal securities information repositories identified by the Securities and Exchange Commission, and all Bondholders owning $500,000 or more of any Related Bonds who request in writing (the “Required Information Recipients”):

(i) Until the achievement of Stable Occupancy, as soon as practicable after the information is available but in no event more than 45 days after the completion of each month, a monthly statement including (A) prior to the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) a summary statement as to the status of construction including the report of any construction monitor; (3) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (4) statements of the balances for each fund and account required to be established pursuant to the Master Indenture or the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative, and (B) after the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) occupancy levels of the Project as of the end of such month including the number of Entrance Fee Units that were Occupied and vacated during that month and on an aggregate basis; (3) a summary statement on the status of construction until the issuance of the last certificate of occupancy for the Project; (4) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last certificate of occupancy for the Project; (5) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month compared to the approved budget for that month and an unaudited balance sheet of the Obligated Group as of the end of such month; and (6) statements of the balances for each fund and account required to be established pursuant to the Master Indenture or under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative.

(ii) Beginning with the first full fiscal quarter following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, and a calculation of the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, and Historical Debt Service Coverage Ratio, for such fiscal quarter if required to

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be calculated by the Master Indenture, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative. Such financial statements and calculations shall be accompanied by a comparison to the annual budget provided pursuant to subsection (iv) below, together with a report describing the refund liabilities coming due resulting from residents vacating Independent Living Units and move through levels of care, refunds coming due for Independent Living Units not yet reoccupied, refunds now due after units are reoccupied and the age of the refunds now due.

If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 and the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Testing Date as provided in the Master Indenture, the Obligated Group will deliver the financial information and the calculations described in the above paragraph on a monthly basis within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the applicable Liquidity Requirement.

(iii) Within 150 days of the end of each Fiscal Year, an annual audited financial report of the Obligated Group prepared by a firm of Accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of cash flows for such Fiscal Year, and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the accountants preparing such report (or another firm of certified public accountants) containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio for said Fiscal Year (beginning with the Fiscal Year following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas)) and a statement that such Accountants have no knowledge of any default under the Master Indenture insofar as it relates to accounting matters or to the Obligated Group’s financial covenants, or if such Accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof.

(iv) On or before the date of delivery of the financial reports referred to in subsection (iii) above, an Officer’s Certificate of the Obligated Group Representative (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture, any Related Loan Agreement, and any Related Bond Indenture or, if not, specifying all such defaults and the nature thereof, (B) calculating and certifying the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, and the Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such month or Fiscal Year, as appropriate, (C) attaching a summary of the Obligated Group’s annual operating and capital budget for the coming Fiscal Year, (D) showing a comparison of the audited financial reports with the operating budget for the preceding Fiscal Year and (E) including an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any.

(v) On or before the date of delivery of the financial reports referred to in subsections (ii) and (iii) above, a management’s discussion and analysis of results for the applicable fiscal period.

(vi) Copies of (A) any board approved revisions to the summary of the annual budget, or (B) any correspondence to or from the Internal Revenue Service questioning or contesting the status of any Member of the Obligated Group as an organization described in Section 501(c)(3) of the Code or

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with respect to the tax-exempt status of the any Related Bonds the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes, promptly upon receipt.

(vii) Within 30 days of (a) receipt of any Occupancy Certificate for any portion of the Project, (b) completing the Project or (c) achieving Stable Occupancy, the Obligated Group Representative will notify the Master Trustee of such event.

(viii) Such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of the Master Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such Accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee.

The Obligated Group has also covenanted that, within 10 days after its receipt thereof, the Obligated Group Representative shall file with the Required Information Recipients a copy of each Consultant’s report or Opinion of Counsel required to be prepared under the terms of the Master Indenture.

For more information see “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.15 Financial Statements, Etc.” in APPENDIX C hereto.

Continuing Disclosure

Offerings of municipal securities must comply with the provisions of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended from time to time (the “Rule”). Inasmuch as the Series 2013 Bonds are limited obligations of the Authority, the Authority has determined that no financial or operating data concerning it is material to any decision to purchase, hold or sell the Series 2013 Bonds, and the Authority will not provide any such information. The Corporation has undertaken all responsibilities for any continuing disclosure to holders of the Series 2013 Bonds as described below, and the Authority shall have no liability to the holders or any other person with respect to such disclosures.

General. The Corporation has covenanted for the benefit of the Series 2013 Bondholders and the Beneficial Owners (as hereinafter defined under this caption), pursuant to a Continuing Disclosure Agreement (the “Disclosure Agreement”) to be executed and delivered by the Corporation, to provide or cause to be provided (i) until the achievement of Stable Occupancy, on a monthly basis, certain financial information of the Corporation described above under the heading “Financial Reporting” in paragraph (i) and, if required, (ii) above as well as under the heading “Monthly Reports” below (the “Monthly Report”) by not later than 45 days after the completion of such month; (ii) on a quarterly basis, certain financial information for the Corporation described in paragraph (ii) of “Financial Reporting” above as well as under the heading “Quarterly Reports” below (the “Quarterly Report”) by not later than the date 45 days after the last day of such fiscal quarter of the Corporation, commencing with the Quarterly Report for the first full fiscal quarter following the issuance of a certificate of occupancy for the first building (excluding the Entrance Fee Units considered to be Villas) containing Entrance Fee Units; (iii) each year, certain financial information for the Corporation and operating data relating to the Corporation described in paragraphs (iii) and (iv) under the heading “Financial Reporting” above as well as under the heading “Annual Report” below (the “Annual Report”) by not later than the date 150 days after the last day of the fiscal year of the Corporation, commencing with the Annual Report for the fiscal year ended June 30, 2014; provided, however, that if the audited financial statements of the

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Corporation are not available by such date, unaudited financial statements will be included in the Annual Report and audited financial statements will be provided when and if available; and (iv) timely notices of the occurrence of certain enumerated events. Currently the fiscal year of the Corporation commences on July 1. “Beneficial Owners” means, under this caption only, any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2013 Bonds (including persons holding Series 2013 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2013 Bonds for federal income tax purposes.

If not otherwise provided previously, the Obligated Group will also provide, as soon as practicable after the information described in APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Section 4.15 Financial Statements” is requested by and actually provided to the Required Information Recipients, but in any case not later than 45 days after such information is provided to Required Information Recipients and to EMMA (as defined below), the information described in APPENDIX C – “DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS – Excerpts From The Master Indenture – Financial Statements, Etc.”

The information will be made available to holders of the Series 2013 Bonds through Electronic Municipal Markets Access (http://emma.msrb.org) (“EMMA”), the information repository of the Municipal Securities Rulemaking Board, to comply with the Rule. The monthly, quarterly and annual reports described above under “Financial Reporting” will be filed by or on behalf of the Corporation with EMMA or with such other information repository designated from time to time by the SEC for so long as such monthly, quarterly and annual reports are required to be delivered under the Disclosure Agreement. In addition, any notice of the following Listed Events will be filed with EMMA within 10 days of the occurrence thereof:

(1) Any delinquency in payment when due of any principal of, or interest on the Series 2013 Bonds.

(2) Occurrence of any Event of Default under and defined in the Bond Indenture (other than as described in clause 1 above), if material.

(3) Any unscheduled draw on debt service reserves reflecting financial difficulties.

(4) Any unscheduled draw on credit enhancements, if any, reflecting financial difficulties.

(5) Substitution of credit or liquidity providers, if any, or their failure to perform.

(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2013 Bonds.

(7) Modification to rights of Bondholders, if material.

(8) Bond calls, if material, and tender offers.

(9) Defeasance of the Series 2013 Bonds or any portion thereof.

(10) Release, substitution, or sale of property securing repayment of the Series 2013 Bonds, if material.

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(11) Any change in the rating on the Series 2013 Bonds.

(12) Any other material events that are added to the Rule after the date of the Disclosure Agreement.

(13) Bankruptcy, insolvency, receivership or similar event of an Obligated Person.

(14) The consummation of a merger, consolidation, acquisition or sale of all or substantially all of the assets of an Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such action, other than pursuant to its terms, if material.

(15) Appointment of a successor or additional Bond Trustee or the change of name of the Bond Trustee, if material.

Annual Report. The Annual Report shall be submitted in no event more than 150 days after the end of the Fiscal Year and shall contain or incorporate by reference at least the following items:

(a) An annual audited financial report of the Obligated Group prepared by a firm of certified public accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of cash flows for such Fiscal Year, and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the accountants preparing such report (or another firm of certified public accountants) containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio for said Fiscal Year (beginning with the Fiscal Year following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units) and a statement that such accountants have no knowledge of any default under the Master Indenture insofar as it relates to accounting matters or to the Obligated Group’s financial covenants, or if such accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof.

(b) an Officer’s Certificate of the Obligated Group Representative (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture, any Related Loan Agreement, and any Related Bond Indenture or, if not, specifying all such defaults and the nature thereof, (B) calculating and certifying the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, and the Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such month or Fiscal Year, as appropriate, (C) attaching a summary of the Obligated Group’s annual operating and capital budget for the coming Fiscal Year, (D) showing a comparison of the audited Financial Statements with the operating budget for the preceding Fiscal Year, (E) including an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any, and (F) including a management’s discussion and analysis of results.

Quarterly Reports. The Quarterly Reports will be submitted in no event more than 45 days after the end of each quarterly fiscal period of each Fiscal Year, beginning with the first full fiscal quarter following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), and will contain quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period, a combined or combining balance

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sheet as of the end of each such fiscal quarter, and a calculation of the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, and Historical Debt Service Coverage Ratio, for such fiscal quarter if required to be calculated by the Master Indenture, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative. Such financial statements and calculations shall be accompanied by a comparison to the annual budget and shall include a management’s discussion and analysis of results together with a report describing the refund liabilities coming due resulting from residents vacating Independent Living Units and move through levels of care, refunds coming due for Independent Living Units not yet reoccupied, refunds now due after units are reoccupied and the age of the refunds now due.

Monthly Reports. Until the achievement of Stable Occupancy, Monthly Reports will be submitted in no event more than 45 days after the end of each month, and will contain, in reasonable detail, certified by an officer of the Obligated Group Representative:

(A) prior to the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) a summary statement as to the status of construction including the report of any construction monitor; (3) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (4) statements of the balances for each fund and account required to be established under the Disclosure Agreement or the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative, or

(B) after the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) occupancy levels of the Project as of the end of such month including the number of Entrance Fee Units that were occupied and vacated during that month and on an aggregate basis; (3) a summary statement on the status of construction until the issuance of the last certificate of occupancy for the Project; (4) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last certificate of occupancy for the Project; (5) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month compared to the approved budget for that month and an unaudited balance sheet of the Obligated Group as of the end of such month; and (6) statements of the balances for each fund and account required to be established under the Disclosure Agreement or under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee).

Additionally, If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than the Annual Debt Service Coverage Requirement and/or the Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Testing Date as provided in the Master Indenture, the Obligated Group will deliver the financial information and the calculations described under the subheading Quarterly Reports above on a monthly basis, with the Historical Debt Service Coverage Ratio calculated on a year-to-date basis each month, within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least equal to the Annual Debt Service Coverage Requirement and the Cash to Indebtedness Ratio and/or Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the Liquidity Requirement.

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Any or all of the items listed above may be included by specific reference to other documents which previously have been provided to EMMA or the SEC. If the document included by reference is a final Limited Offering Statement, it must be available from the Municipal Securities Rulemaking Board. The Corporation shall clearly identify each such other document as included by reference.

Failure to Comply. In the event of a failure of the Corporation to comply with any provision of the Disclosure Agreement, any Series 2013 Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Corporation to comply with the obligations under the Disclosure Agreement. A failure to comply with the Disclosure Agreement shall not be deemed an Event of Default under the Bond Indenture, the Mortgage, the Master Indenture or Loan Agreement. The sole remedy under the Disclosure Agreement in the event of any failure of the Corporation to comply with the Disclosure Agreement shall be an action to compel specific performance, and no person or entity shall be entitled to recover monetary damage thereunder under any circumstances.

Amendment of the Disclosure Agreement. The provisions of the Disclosure Agreement, including but not limited to the provisions relating to the accounting principles pursuant to which the financial statements are prepared, may be amended as deemed appropriate by an authorized officer of the Corporation but any such amendment must be adopted procedurally and substantively in a manner consistent with the Rule, including any interpretation thereof made from time to time by the SEC. Such interpretations currently include the requirements that (a) the amendment may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Corporation or the type of activities conducted thereby, (b) the undertaking, as amended, would have complied with the requirements of the Rule at the time of the primary offering of the Series 2013 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (c) the amendment does not materially impair the interests of Series 2013 Bondholders, as determined by parties unaffiliated with the Corporation (such as independent legal counsel). The foregoing interpretations may be changed in the future.

LITIGATION

The Authority

There is not now pending (as to which the Authority has received service of process) or, to the actual knowledge of the Authority, threatened any litigation against the Authority restraining or enjoining the issuance or delivery of the Series 2013 Bonds or questioning or affecting the validity of the Series 2013 Bonds or the proceedings or authority under which the Series 2013 Bonds are to be issued. Neither the creation, organization or existence of the Authority nor the title of any of the present members or other officials of the Authority to their respective offices is being contested. There is no litigation against the Authority pending (as to which the Authority has received service of process) or, to the Authority’s actual knowledge, threatened, which in any manner questions the right of the Authority to enter into the Bond Indenture, the Bond Purchase Contract or the Loan Agreement or to secure the Series 2013 Bonds in the manner provided in the Bond Indenture, the Resolution and the Act.

The Corporation

The Corporation has advised that no litigation, proceedings or investigations are pending or, to its knowledge, threatened against it except (i) litigation, proceedings or investigations in which the probable ultimate recoveries and the estimated costs and expenses of defense, in the opinion of

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management, will be entirely within the applicable insurance policy limits (subject to applicable deductibles) or are not in excess of the total reserves held under the applicable self-insurance program, or (ii) litigation, proceedings or investigations which if adversely determined will not, in the opinion of management, have a material adverse effect on the operations or condition, financial or otherwise, of the Corporation. The Corporation also has advised that there is no litigation pending or, to the knowledge of the Corporation, threatened, which in any manner questions the right of the Corporation to enter into the financing described herein.

LEGAL MATTERS

All legal matters incidental to the authorization and issuance of the Series 2013 Bonds by the Authority are subject to the approval of Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel. Certain legal matters will be passed upon for the Authority by its counsel, Donald A. Pickworth, P.A., Naples, Florida, for the Corporation by its counsel, Chuhak & Tecson, P.C., Chicago, Illinois and Holland & Knight LLP, special Florida counsel to the Corporation and for the Underwriter by its counsel, Katten Muchin Rosenman LLP, Chicago, Illinois.

DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS

Section 517.051 Florida Statutes and Rule 69W-400.003, Florida Administrative Code, provide for the exemption from registration of certain governmental securities and require that, if an Authority or guarantor of governmental securities has been in default at any time after December 31, 1975 as to principal and interest on any obligation issued or guaranteed by it, its securities may not be offered or sold in Florida except by means of an offering circular containing full and fair disclosure, as prescribed by rules of the Florida Department of Financial Services (the “Department of Financial Services”). Under the rules of the Department of Financial Services, the prescribed disclosure is not required if the information is not an appropriate disclosure in that the information would not be considered material by a reasonable investor.

As described above, the Authority has the power to issue bonds for the purpose of financing projects for other borrowers, which bonds are payable from the revenues of the particular project or borrower. Revenue bonds issued by the Authority for other projects may be in default as to principal and interest. The source of payment, however, for any such defaulted bond is separate and distinct from the source of payment for the Series 2013 Bonds and, therefore, any default on such bonds would not, in the judgment of the Authority, be considered material by a potential purchaser of the Series 2013 Bonds.

The Corporation has not defaulted in any payment of principal or interest after December 31, 1975.

TAX MATTERS

Bonds

Opinion. On the date of initial delivery of the Series 2013 Bonds, Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel, will render its opinion in the form attached hereto as APPENDIX D to the effect that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof (“Existing Law”), (1) interest on the Series 2013 Bonds for federal income tax purposes will be excludable from the “gross income” of the holders thereof, and (2) such

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interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that such interest is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on “corporations” as defined in the Code. Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax consequences of the purchases, ownership or disposition of the Series 2013 Bonds. See “FORM OF OPINION OF BOND COUNSEL” in APPENDIX D hereto.

In rendering its opinion, Bond Counsel will rely upon (a) the opinion of Chuhak & Tecson, P.C., counsel to the Corporation, relating to the qualification of the Corporation as an organization described in Section 501(c)(3) of the Code, (b) information furnished by the Corporation, and particularly written representations of officers and agents of the Corporation with respect to certain material facts that are solely within their knowledge relating to the use of the proceeds of the Series 2013 Bonds, and (c) covenants of the Authority and the Corporation with respect to arbitrage, the application of the proceeds to be received from the issuance and sale of the Series 2013 Bonds and certain other matters. Failure of the Authority or the Corporation to comply with these representations or covenants could cause the interest on the Series 2013 Bonds to become includable in gross income retroactively to the date of issuance of the Series 2013 Bonds.

The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Series 2013 Bonds in order for interest on the Series 2013 Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Series 2013 Bonds to be included in gross income retroactively to the date of issuance of the Series 2013 Bonds. The opinion of Bond Counsel is conditioned on compliance by the Authority and the Corporation with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Series 2013 Bonds.

Bond Counsel’s opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel’s opinion is not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Series 2013 Bonds.

A ruling was not sought from the Internal Revenue Service by the either the Corporation or the Authority with respect to the Series 2013 Bonds or the property financed or refinanced with proceeds of the Series 2013 Bonds. No assurances can be given as to whether or not the Internal Revenue Service will commence an audit of the Series 2013 Bonds, or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an audit is commenced, under current procedures the Internal Revenue Service is likely to treat the Authority as the taxpayer and the Bondholders may have no right to participate in such procedure.

Other Tax Matters. During recent years, legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Series 2013 Bonds. In some cases these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the market value of obligations similar to the Series 2013 Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the Series 2013 Bonds and their market value. No assurance

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can be given that legislative proposals will not be enacted that would apply to, or have an adverse effect upon, the Series 2013 Bonds.

Tax Treatment of Original Issue Discount. Bond Counsel is further of the opinion that the difference between the principal amount of the Series 2013 Bonds maturing in the years 2035, 2037, 2044 and 2049 (the “Discount Bonds”) and the initial offering price to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount which is excluded from gross income for federal income tax purposes to the same extent as interest on the Series 2013 Bonds. Further, such original issue discount accrues actuarially on a constant interest rate basis over the term of each Discount Bond and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. The accrual of original issue discount may be taken into account as an increase in the amount of tax-exempt income for purposes of determining various other tax consequences of owning the Discount Bonds, even though there will not be a corresponding cash payment. Owners of the Discount Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Discount Bonds.

Collateral Federal Income Tax Consequences. The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Series 2013 Bonds. This discussion is based on Existing Law, which is subject to change or modification, retroactively.

The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations.

INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE SERIES 2013 BONDS.

Interest on the Series 2013 Bonds may be subject to state or local income taxation under applicable state or local laws. Purchasers of the Series 2013 Bonds should consult their tax advisors as to the income tax status of interest on the Series 2013 Bonds in their particular state or local jurisdictions.

FEASIBILITY STUDY

Management’s financial forecast, included as part of the Feasibility Study included in APPENDIX B hereto, has been examined by Dixon Hughes Goodman LLP, independent certified public accountants, as stated in their report appearing in APPENDIX B. As stated in the Feasibility Study, there will usually be differences between the forecasted data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The Feasibility Study should be read in its entirety, including management’s notes and assumptions set forth therein.

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NO RATING

THE SERIES 2013 BONDS ARE NOT RATED; NEITHER THE AUTHORITY NOR THE CORPORATION HAS APPLIED TO ANY RATING SERVICE FOR A RATING OF THE SERIES 2013 BONDS.

UNDERWRITING

Pursuant to a purchase contract by and between the Authority, the Corporation, and the Underwriter, the Underwriter will purchase (i) the Series 2013A Bonds at a purchase price of $124,231,634.30 which purchase price reflects $2,135,110.50 of underwriter’s discount and $1,928,255.20 of original issue discount, (ii) the Series 2013B-1 Bonds at a purchase price of $11,775,950 which purchase price reflects $224,050 of underwriter’s discount, and (ii) the Series 2013B-2 Bonds at a purchase price of $48,995,050 which purchase price reflects $1,004,950 of underwriter’s discount. The purchase contract will provide that the Underwriter will purchase all of the Series 2013 Bonds if any are purchased. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2013 Bonds to the public. The purchase contract will provide for the Corporation to indemnify the Underwriter and the Authority against certain liabilities. The obligation of the Underwriter to accept delivery of the Series 2013 Bonds will be subject to various conditions of the purchase contract.

MISCELLANEOUS

The references herein to the Act, the Master Indenture, the Series 2013 Notes, the Bond Indenture, the Loan Agreement, the Mortgage and the Disclosure Agreement are brief summaries of certain provisions thereof. Such summaries do not purport to be complete, and for full and complete statements of the provisions thereof reference is made to the Act, the Master Indenture, the Series 2013 Notes, the Bond Indenture, the Loan Agreement, the Mortgage and the Disclosure Agreement. Copies of such documents are on file at the office of the Authority and following the delivery of the Series 2013 Bonds will be on file at the office of the Bond Trustee. All estimates and other statements in this Limited Offering Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.

It is anticipated that CUSIP identification numbers will be printed on the Series 2013 Bonds, but neither the failure to print such numbers on any Series 2013 Bond nor any error in the printing of such numbers shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for any Series 2013 Bonds.

The attached APPENDICES are integral parts of this Limited Offering Statement and must be read together with all of the foregoing statements.

The Corporation has reviewed the information contained herein which relates to the Corporation, its property and operations, and has approved all such information for use within this Limited Offering Statement.

The delivery of this Limited Offering Statement has been duly authorized by the Authority.

This Limited Offering Statement is approved on behalf of: THE ARLINGTON OF NAPLES

By: /s/ Roger W. Paulsberg Chairman


APPENDIX A

THE ARLINGTON OF NAPLES

The information in this Appendix has been provided by The Arlington of Naples and Lutheran Life Ministries


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TABLE OF CONTENTS Page

THE CORPORATION ............................................................................................................................A-1 History and Background .....................................................................................................................A-1 LLM and Related Entities ...................................................................................................................A-1 Directors and Officers .........................................................................................................................A-3 Board Composition .............................................................................................................................A-4 Conflict of Interest Policy ...................................................................................................................A-4

MANAGEMENT .....................................................................................................................................A-4 LLM ....................................................................................................................................................A-4 The Corporation ..................................................................................................................................A-6 Consulting Services Agreement .........................................................................................................A-6

THE PROJECT ........................................................................................................................................A-7 General Description ............................................................................................................................A-7 Land Acquisition ................................................................................................................................A-8 Development History ..........................................................................................................................A-8 Support of LLM ..................................................................................................................................A-8 Bond Anticipation Notes ....................................................................................................................A-8 Liquidity Support Agreement .............................................................................................................A-9 Subordinated Note to LLM .................................................................................................................A-9 Independent Living Units ...................................................................................................................A-9 Assisted Living Center and Memory Support Units .........................................................................A-10 Health Center ....................................................................................................................................A-12 Project Timeline ................................................................................................................................A-12 Future Plans ......................................................................................................................................A-12

REGULATIONS, PERMITS AND APPROVALS ...............................................................................A-13 Zoning ...............................................................................................................................................A-13 Certificate of Authority Requirement ...............................................................................................A-13 Certificate of Need ............................................................................................................................A-14 Healthcare Licensure ........................................................................................................................A-14 Permits ..............................................................................................................................................A-14 Environmental Study/Geotechnical Testing .....................................................................................A-15

COMPETITION AND SERVICE AREA .............................................................................................A-15 RESERVATION AGREEMENT ..........................................................................................................A-15

Rental Agreement .............................................................................................................................A-16 RESIDENT CONTRACT ......................................................................................................................A-16

Entrance Fee Independent Living Unit Resident Fee Structure ........................................................A-17 Founder’s Program Benefits .............................................................................................................A-18 Financial Assistance .........................................................................................................................A-19 Nondiscrimination ............................................................................................................................A-19 Services to Residents ........................................................................................................................A-19 Health Care Benefit ..........................................................................................................................A-20 Fees for Additional Services .............................................................................................................A-20 Termination and Refunds .................................................................................................................A-20

MARKETING ........................................................................................................................................A-22 Marketing Program ...........................................................................................................................A-22 Reservation of Independent Living Units .........................................................................................A-22 SB&A ...............................................................................................................................................A-24

DEVELOPMENT OF THE COMMUNITY .........................................................................................A-27 CRSA. ...............................................................................................................................................A-27 CRSA Professional Staff ..................................................................................................................A-28

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CRSA Development Consulting Agreement ....................................................................................A-29 Development Agreement with Lutheran Life Communities ............................................................A-30

CONSTRUCTION OF THE PROJECT ................................................................................................A-30 Community Construction ..................................................................................................................A-30 General Contractor’s Agreement – Community Construction .........................................................A-35 Villa Construction .............................................................................................................................A-36 Villa Contractor’s Agreement – Villa Construction .........................................................................A-37

OTHER PROFESSIONAL SERVICES ................................................................................................A-38 The Architect ....................................................................................................................................A-38 The Construction Consultant for Pre-Construction Services ............................................................A-40 The Construction Monitor ................................................................................................................A-40

THE CORPORATION

History and Background The Arlington of Naples, an Illinois not-for-profit corporation, registered to do business in the State of Florida as The Arlington of Naples, Inc. (the “Corporation”), was incorporated in 2008. The Corporation is exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”) as an organization described in Section 501(c)(3) of the Code under the group exemption of The Evangelical Lutheran Church in America. Lutheran Life Ministries, f/k/a Lutheran Life Communities (“LLM”) was formed in 2005 as an Illinois not-for-profit corporation and is the sole corporate member of the Corporation. LLM is also exempt from federal income tax under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code. The mission of both LLM and the Corporation is to provide vibrant, grace-filled living across all generations. LLM and the Corporation welcome and serve people of all faiths, beliefs and traditions. The Corporation was formed for the purpose of developing, owning and operating a senior living continuing care community (“CCRC”) known as the Arlington of Naples (the “Community”) to be developed on thirty-nine (39) acres in the Lely Resort Community in Naples, Florida. The Community, once constructed, will consist of one hundred thirty-two (132) independent living apartments (the “Independent Living Apartments”), thirty-one (31) independent living villas (the “Villas” and collectively with the Independent Living Apartments, the “Independent Living Units”), forty-two (42) assisted living units (the “Assisted Living Units”), thirty-seven (37) memory support units (the “Memory Support Units”), and forty-four (44) private skilled nursing beds (the “Health Center”) and will include a number of common areas, including a small theater, a game room, a fitness center, an aquatic center, a woodworking shop, and multiple dining facilities. The Assisted Living Units and the Memory Support Units may be referred to herein collectively as the “Assisted Living Center.” The CCRC, which includes the Independent Living Units, the Assisted Living Units, the Memory Support Units, the Health Center and the common areas, is sometimes referred to herein as the “Project.” See “THE PROJECT” herein for a more detailed description of the proposed CCRC development. See “PLAN OF FINANCE” in the front part of this Limited Offering Statement for more information about uses of the proceeds of the Series 2013 Bonds, in addition to financing the costs of acquisition, development, construction and equipping the Project. LLM began to develop the Community after being approached by three (3) local Lutheran Churches in Naples and Marco Island. The church membership expressed that there was a need to develop a faith based senior living community in the Naples area to serve its growing senior population. The two largest Lutheran churches, Emmanuel Lutheran Church in Naples and Marco Lutheran Church in Marco Island, were strong supporters along with Grace Lutheran Church and Shepherd of the Glades Lutheran Church in Naples. Each of the pastors of these churches has held events and other informational sessions to introduce their parishioners and residents of the area in general to the Community and to educate them about CCRCs. These pastors continue to work with LLM and the Corporation to encourage the senior community to take part in learning about the array of services and arrangements that are being planned. LLM and Related Entities LLM is the sole corporate member of the Corporation and a number of other entities, including the Lutheran Home, located in Arlington Heights, Illinois. The senior living system consisting of LLM, the Corporation and their affiliated entities shall be referred to herein as “Lutheran Life.” The Lutheran

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Home dates back to the 1890s when it was founded by a Lutheran pastor who wanted to create a home-like setting to care for older adults. The Lutheran Home operates a full service long-term care facility currently licensed for three hundred ninety-two (392) nursing beds and a 100 unit assisting living facility. The Lutheran Home is currently undergoing a major modernization project. Over the years, the Lutheran Life organization has grown to include the following other organizations in addition to the Lutheran Home: Wittenberg Lutheran Village, Inc., an Indiana nonprofit corporation, which operates a one hundred fifty-fifty (155) bed skilled nursing facility in Crown Point, Indiana; Wittenberg Lutheran Village Endowment Corporation, an Indiana nonprofit corporation, which operates a thirty-two (32) unit assisted living facility, fifty-two (52) independent living villas, and fifty-seven (57) independent living apartments and common spaces in Crown Point, Indiana; Luther Oaks, Inc., an Illinois not-for-profit corporation, that operates a senior living community consisting of ninety (90) independent living units and fifty-eight (58) assisted living units in Bloomington, Illinois; St. Pauls House and Health Care Center, an Illinois not-for-profit corporation, that operates a senior care facility consisting of sixty-eight (68) assisted living beds and one hundred ten (110) skilled care beds located in Chicago, Illinois; Lutheran Life Communities Foundation, an Illinois not-for-profit corporation; Lutheran Foundation for the Aged, Inc., an Illinois not-for-profit corporation; Lutheran Community Services for the Aged, Inc., an Illinois not-for-profit corporation, which offers community services, information referrals and family support services to older adults and their families in the community, Lutheran Life Communities f/k/a Verispring, an Illinois not-for-profit corporation, which provides consulting services to the affiliates of LLM, and Pleasant View Luther Home, Inc., an Illinois not-for-profit corporation, which operates a ninety (90) bed skilled nursing facility, twenty-four (24) assisting living units and thirty-four (34) independent living villas. The following map depicts the locations of Lutheran Life’s various senior living campuses:

Each of the Lutheran Life entities is a not-for-profit corporation exempt from federal income tax under Section 501(a) of the Code as an organization as described in Section 501(c)(3) of the Code and are collectively referred to herein as the “Affiliated Entities.” Certain of the Affiliated Entities derive their

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federal tax-exempt status from the group exemption of The Evangelical Lutheran Church in America and others have received a determination letter from the Internal Revenue Service recognizing that status. Each of these entities is governed by a separate Board of Directors. The Corporation is the newest community to be developed by LLM. An affiliate of LLM, Lutheran Life Communities, provides consulting services to the Corporation under a consulting services agreement described in more detail below under “MANAGEMENT – Consulting Services Agreement.” The following diagram depicts the current organizational structure:

Neither LLM nor any of its Affiliated Entities (other than the Corporation) has any obligation or liability with respect to the Master Indenture, the Series 2013 Bonds or the Series 2013 Obligations. LLM’s sole obligation with respect to the Project is pursuant to the terms of a Liquidity Support Agreement executed connection with the Series 2013 Bond issuance. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Limited Offering Statement.

Directors and Officers

The business affairs of the Corporation are governed by its board of directors and the officers of the board of directors. The Corporation does not provide compensation to its directors or board officers for their service in such capacity. The Bylaws provide that the board shall number between three (3) to five (5) directors. The directors of the Corporation are appointed by LLM for a three-year term of office; provided that the initial terms are established such that terms of office are staggered. Any director may resign at any time with written notice and may be removed with or without cause by LLM. Any vacancy on the board may be filled by LLM for the remainder of the unexpired term. Officers of the Corporation are elected annually by the board of directors and hold office for a term of one (1) year and until a successor is elected, unless the officer resigns sooner or is removed by LLM. The Bylaws of the Corporation provide that LLM has the right to approve the following: (a) adopt and amend statements of mission, philosophy or purpose; (b) adopt, amend and repeal the Articles of Incorporation, the Bylaws and any plan of merger, consolidation or dissolution; (c) the annual budget of the Corporation; (d) any unbudgeted expenditure in excess of $100,000; (e) any sale, lease or mortgage of the Corporation’s real property or substantially all of its personal property, except as such actions relate to

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assets transferred from residents or donors, including without limitation, residential real estate; (f) any formal affiliation with another entity; and (g) any borrowing of money. Pursuant to the Bylaws, the following actions require approval of the Chief Executive Officer of LLM and the Chair of LLM, or the Chief Executive Officer of LLM and the Vice Chair of LLM, evidenced by a signed certificate: (a) any major change in programs and services, including any creation of new programs or the discontinuation of existing programs; (b) the acceptance of any charitable contribution which imposes a material obligation; and (c) any sale, lease or mortgage of assets transferred from residents or donors, including without limitation, residential real estate. Board Composition

The following table identifies each director of the Corporation and provides a brief description of title, occupation and the year the individual’s term expires:

Name Age Title Occupation Term Expires Roger W. Paulsberg 60 Chair,

Director President and CEO, Lutheran Life Communities

2014

James A. Holbrook 54 Vice-Chair, Secretary, Director

Senior Vice President, Corporate Operations, Lutheran Life Communities

2014

Carl W. Moellenkamp 47 Treasurer, Director

Senior Vice President, Corporate Finance and CFO, Lutheran Life Communities

2014

Conflict of Interest Policy

In the event that the Corporation conducts business transactions with companies with which a member of the Board may be affiliated, the Corporation has a conflict of interest policy that requires that any duality of interest or possible conflict of interest be disclosed in writing and be made a matter of record. In addition to disclosure, the policy requires that additional specified steps be taken, as appropriate, to assure that the transaction is fair, reasonable and in the best interest of the Corporation.

MANAGEMENT

Both LLM and the Corporation are managed by professionals with significant expertise in the healthcare and the senior living industry, as illustrated below.

LLM

Reverend David G. Abrahamson, Chairman of the Board. Reverend Abrahamson is Pastor of Saint Luke Church in Chicago, having served first as Associate Pastor (beginning in 1974) and as Pastor (since 1982). He also serves as President of Saint Luke Ministries, which includes a church, school, cemetery and senior housing. His outside activities include serving on the Board of Directors for the LakeView Chamber of Commerce, the LakeView YMCA and Ravenswood/LakeView Historical Society. Pastor Abrahamson is also a member of the LakeView Lions Club, the LakeView Citizen’s Council, LakeView Action Coalition, and chairs both the 44th Ward Community Directed Development Council for

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Alderman Thomas Tunney, and the 19th Police District Advisory Council. He has served as chair of the Advocate Illinois Masonic Hospital Governing Council, its Local Oversight Committee and Charity Care Committee, and is on the board of Central Federal Savings. He is president of the Alumni Board of the Lutheran School of Theology at Chicago and is president of Renaissance Social Services of Illinois. Pastor Abrahamson was also appointed by Mayor Richard Daley of Chicago to serve as a commissioner for Special Service Area #27 in LakeView. He also coordinates the LakeView Clergy Association. Past service includes: the Board Strategic Planning Committee, Catholic Health Partners, the Luther High School North Board of Trustees and seventeen (17) years as President of the Chicago Bible Society. He received a Bachelor of Arts from Valparaiso University, Valparaiso, Indiana. He attended Concordia Seminary, St. Louis, Missouri and received his M.Div. from Christ Seminary Seminex.

Roger W. Paulsberg, President and CEO. Mr. Paulsberg has worked in executive positions in the senior healthcare field since 1980. He began his career with Beverly Enterprises, Inc., formerly one of the largest for profit senior healthcare organizations, holding several Administrator and Executive positions throughout North Dakota, Minnesota and Wisconsin. He became Administrator of the Lutheran Home in Arlington Heights, Illinois in 1989. In 1991, he became President and CEO of Lutheran Home & Services. During the period between 1991 and 2000, under Mr. Paulsberg’s leadership, (i) Luther Village, a 684-unit senior independent living cooperative and unrelated entity was constructed on fifty-two (52) leased acres of previously undeveloped land on the Lutheran Home campus, (ii) a one hundred (100) unit congregate assisted living building was constructed and connected to Lutheran Home, and (iii) approximately one hundred twenty (120) skilled nursing units were fully renovated and were converted to a neighborhood care concept model. Since 2000, four (4) more residential and care communities have been adopted into the Lutheran Life system of which Lutheran Life Ministries became the parent corporation in 2006. The Lutheran Life system includes over one thousand (1,000) units of Independent Living and Healthcare as well as a green field project, Luther Oaks, in Bloomington, Illinois, which was the first new senior living development in that community in many years. Awarded LeadingAge’s Excellence in Leadership Award in 2007 and Wheat Ridge Ministries’ Seeds of Hope Award in 2008, Mr. Paulsberg’s dedication to serving seniors in ministries of health, hope and healing is nationally recognized. Mr. Paulsberg has a Bachelor of Arts in Counseling and Social Services from North Dakota State University and has done post-graduate work in Public Health Administration and Finances at the University of Minnesota and Concordia College. He is a licensed Nursing Home Administrator in the State of Illinois. Mr. Paulsberg is a member of both LeadingAge and the Life Services Network. James A. Holbrook, Senior Vice President, Corporate Operations. Mr. Holbrook oversees all aspects of operations and clinical and residential service delivery. He served as the Administrator of Lutheran Home from 2002 to 2006. Prior to this, he served as Administrator of Community Services since 2000. Prior to joining Community Services, Mr. Holbrook served as Statewide Director of Family Services for Lutheran Child and Family Services, Lutheran Social Services of Illinois, and as a program supervisor with Proviso Family Services. His responsibilities have included program supervision and administration, budget management, and strategic planning. Mr. Holbrook received his Bachelor of Arts in Social Services and Master of Arts in Human Services from Concordia University, River Forest, Illinois. He holds a membership in the National Board of Certified Counselors. He is also a licensed Nursing Home Administrator and a licensed clinical professional counselor in the State of Illinois. Mr. Holbrook is a member of both LeadingAge and the Life Services Network. Carl W. Moellenkamp, Chief Financial Officer and Senior Vice President of Corporate Finance. Mr. Moellenkamp oversees all financial aspects of the Lutheran Life system, consisting of fourteen Affiliated Entities, including treasury management, financial reporting and analysis, insurance, budgeting, and future development planning. He joined Lutheran Life in 2005 as Chief Financial Officer and currently serves as a board member/treasurer on several of the Affiliated Entities. He has managed the financing of over $250 million of tax-exempt bonds and other loans at Lutheran Life over his tenure.

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Prior to joining Lutheran Life, he was the controller at Lutheran Social Services of Illinois for 3 years and a senior manager at Arthur Andersen for fifteen (15) years. Mr. Moellenkamp began his career at Andersen as an auditor and went on to help develop the Business Process Outsourcing division in Chicago. He has served many clients for over twenty-five (25) years in both the non-profit and for-profit sectors where he gained experience in all aspects of financial management, financial planning and business process improvement. In 2013, Mr. Moellenkamp was honored as a CFO of the Year in the Chicago-land area by the Daily Herald Business Ledger. Mr. Moellenkamp currently serves on the Finance Committee of Life Services Network and is an officer of the Arlington Heights Noon Rotary Club, among several other volunteer and philanthropic endeavors for which he serves. Mr. Moellenkamp holds a Bachelor of Science Degree in Accountancy from the University of Illinois at Urbana-Champaign and is a Registered CPA and Licensed Nursing Home Administrator in the state of Illinois. Mr. Moellenkamp is a member of both LeadingAge and the Life Services Network. Marie Carlson, Senior Vice President, Corporate Strategic Development. Ms. Carlson oversees strategic development of new facilities and programs for the Lutheran Life system and oversees the fundraising efforts of the Lutheran Life Communities Foundation. Prior to joining the Lutheran Life in 2007, she served clients in the senior living industry for more than twenty (20) years, most recently in new project development and as financial advisor, assisting clients across the country in obtaining approximately $600 million in capital for new construction and expansion projects, primarily through the tax-exempt bond market. She was corporate controller for a multi-facility long-term care provider for five (5) years and worked at KPMG for eight (8) years, exclusively in its senior living practice, performing financial feasibility studies, market demand analyses, financial projections, and troubled debt restructurings. Ms. Carlson has been a surveyor for the Commission on Accreditation of Rehabilitation Facilities/Continuing Care Accreditation Commission. She holds a Bachelor of Science Degree in Accountancy from the University of Illinois-Chicago and is a registered CPA. Ms. Carlson is a member of both LeadingAge and the Life Services Network. The Corporation Roger W. Paulsberg, President and CEO. Please see biography described above. James A. Holbrook, Senior Vice President, Corporate Operations. Please see biography described above. Carl W. Moellenkamp, Chief Financial Officer and Senior Vice President of Corporate Finance. Please see biography described above. Marie Carlson, Senior Vice President, Corporate Strategic Development. Please see biography described above. Consulting Services Agreement

The Corporation and Lutheran Life Communities, an affiliate of LLM, have entered into a Consulting Services Agreement effective as of July 1, 2015 (“Consulting Services Agreement”), pursuant to which the Corporation appointed Lutheran Life Communities to provide consulting services for the Community. Under the terms of the Consulting Services Agreement, Lutheran Life Communities will provide the Corporation with services related to professional administrative, management and support services including: corporate management, accounting and payroll, human resources, information technology, marketing and risk management. As compensation for such services, the Corporation shall pay Lutheran Life Communities an annual base management fee of the lower of two percent (2%) of revenue or $420,000. Once the management fee has reached the annual rate of $420,000, it will be increased by

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multiplying the base management fee for the month immediately preceding the applicable anniversary date by a fraction, the numerator of which is the index figure for “all items” as shown in the United States Consumer Price Index for All Urban Consumers (“CPI-U”) published by the U.S. Bureau of Labor Statistics for the month immediately preceding the applicable anniversary date and the denominator of which is the CPI-U for the month one year prior to the month immediately preceding the applicable anniversary date. Notwithstanding anything to the contrary contained herein, there will be no downward adjustments in the base management fee. Late fees apply at an annual interest rate up to 18%, but no late fees will accrue during the period of time that management fees are being deferred pursuant to the terms of the Master Indenture.

Such compensation is subordinated to all and any existing debt of the Corporation in accordance with the terms of the Consulting Services Agreement and repayable pursuant to the terms of the Master Indenture. For more information, see “SECURITY FOR THE SERIES 2013 OBLIGATIONS – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness” contained in the Limited Offering Statement.

Neither LLM nor any of its Affiliated Entities (other than the Corporation) has any obligation or liability with respect to the Master Indenture, the Series 2013 Bonds or the Series 2013 Obligations. LLM’s sole obligation with respect to the Project is pursuant to the terms of a Liquidity Support Agreement executed connection with the Series 2013 Bonds.

THE PROJECT

General Description

The Community is a planned senior living CCRC to be developed on thirty-nine (39) acres in the Lely Resort Community in Naples, Florida. The Lely Resort is a luxury real estate community with eight (8) unique neighborhoods and three (3) championship golf courses. Management of the Corporation anticipates that the Community, once constructed, will consist of one hundred thirty-two (132) Independent Living Apartments, thirty-one (31) Villas, forty-two (42) Assisted Living Units, thirty-seven (37) Memory Support Units, and forty-four (44) private skilled nursing beds. The Community is currently planned to include a number of common areas, including a small movie theater, a game room, a fitness center, an aquatic center, a woodworking shop, a business center and multiple dining venues. See the inside front cover of this Limited Offering Statement for a location map and site plan of the Community.

The Community’s main structure is anticipated to be a one (1) and three (3) story commons and healthcare facility and a six (6) story independent living apartment building. The commons and independent living apartment facilities are built above a parking structure. The construction is anticipated to be concrete slab, metal frame and stud construction with stucco, stone/brick, and composite siding exterior finishes. The Community will include sloped and flat roofs with composite concrete tile and membrane roofing. Exterior accents include vinyl clad windows and metal clad doors with prefinished metal railed balconies.

The thirty-one (31) Villas are residential construction typical for the Florida area utilizing concrete slabs, wood framing, and plywood roof decking with composite concrete tile roofs. The exterior finishes include stucco with stone/brick and composite siding accents. Windows are vinyl or aluminum clad and entry doors are wood. The Villa designs include three (3) floor plans, each with a second story option. Each villa floor plan also includes three (3) elevation/exterior material choices for up to eighteen (18)

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distinct choices. The site plan provides for two separate villa neighborhoods that can accommodate up to forty-seven (47) villas. However, only thirty-one (31) villas will be constructed at this time.

The Community will be attractively landscaped featuring hardscape and water feature amenities supported by an underground irrigation system.

Land Acquisition

In late 2007, LLM’s management was introduced to Brian Stock of Stock Development, LLC by a member of Emmanuel Lutheran Church. Mr. Stock and LLM discussed a parcel of land totaling approximately thirty-nine (39) acres in the Lely Resort Community (the “Project Site”), being developed by Mr. Stock, which is zoned for senior living development and is in close proximity to the new Physicians Regional Medical Center and the new local library, as well as numerous golf courses and shopping areas. LLM worked with the Lutheran Church Extension Fund-Missouri Synod (the “Lutheran Extension Fund”) to purchase the land for the Community from Stock Development, LLC in 2008 for a total cost of $17,450,000, borrowing the purchase price plus $2,050,000 of additional funds to be used for site development (the “Extension Fund Loan”). The Extension Fund Loan is secured by a first mortgage lien on the Project Site. The Extension Fund Loan will be repaid with the proceeds of the Series 2013 Bonds and the related mortgage lien will be released.

Development History

On March 2, 2009, the Corporation entered into a Development Consulting Agreement (the “Development Agreement”) with CRSA Management, LLC (“CRSA”) for the development of the Community. In 2010, CRSA affiliated with Life Care Services, LLC and they formed an affiliate, CRSA/LCS Management LLC (“CRSA/LCS”). CRSA’s responsibilities under the Development Agreement have been assigned to CRSA/LCS. The Corporation and Lutheran Life Communities, an affiliate of LLM, have entered into a development agreement whereby Lutheran Life Communities serves as co-development consultant and co-marketing consultant for the Community along with CRSA/LCS. See “DEVELOPMENT OF THE COMMUNITY” herein for more information including a description of each of these agreements.

Support of LLM

LLM has provided continuous support to the Corporation since the initial stages of development of the Community. As of September 30, 2013, LLM has contributed $16,918,000 to the pre-construction development cost of the Community. LLM continues to provide funds to aid in pre-construction development cost of the Project in amounts anticipated to reach $17.8 Million by the closing of the Series 2013 Bonds. Of these amounts, it is anticipated that $2,424,000 will be treated as an investment of LLM, $6,509,000 will be treated as a loan from LLM to the Corporation and secured by a note (the “Deferred Note Payable”) subject to the repayment limitations described herein under the heading “SECURITY FOR THE SERIES 2013 NOTES – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness,” and the balance will be repaid to LLM from proceeds of the Series 2013 Bonds. In addition, LLM is supporting the Project by entering in the Liquidity Support Agreement, as described below.

Bond Anticipation Notes

In June 2011, the Authority issued $10,900,000 of Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011 (the “Notes”), the proceeds of which were loaned to the Corporation pursuant to a Loan Agreement dated June 1, 2011 by and among the

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Authority, the Corporation and LLM. The proceeds of the Notes were used by the Corporation for the following: (i) to pay preconstruction development costs of the Project; and (ii) to pay a portion of the costs of issuing the Notes. As security for the Notes, the Corporation granted a second mortgage lien on the Project Site pursuant to a Second Mortgage and Security Agreement dated June 1, 2011. The Notes will be paid with the proceeds of the Series 2013 Bonds and the mortgage lien will be released.

Liquidity Support Agreement

The Corporation, LLM, the Master Trustee and the Bond Trustee will enter into a liquidity support agreement (the “Liquidity Support Agreement”) upon closing of the Series 2013 Bonds. At closing, LLM will transfer to the Master Trustee $7,000,000 for deposit into the liquidity support fund (the “Liquidity Support Fund”). The Liquidity Support Fund may be drawn upon if moneys on deposit in the Project Account of the Construction Fund under the Bond Indenture and all other available funds (including project contingency funds and immediately available insurance proceeds, if any) are insufficient to pay Costs of the Project, an Approved Change in Services or Facilities or additional construction costs and expenses arising from unanticipated events or problems including without limitation changes required pursuant to applicable law or requirements of governmental authorities (and not arising from a Discretionary Change). Upon the occurrence of a Funding Event, LLM is required to deposit up to an additional $3,000,000 in the Liquidity Support Fund. Capitalized terms used in this section shall have the meaning ascribed to such terms in the Liquidity Support Agreement. For more information, see “LIQUIDITY SUPPORT AGREEMENT” contained in the Limited Offering Statement.

Subordinated Note to LLM

The Corporation has executed a subordinated promissory note in favor of LLM (“Subordinated Note”) in the amount of $6,509,000. The terms of the Subordinated Note provide that there will be no interest accrued or paid under the Subordinated Note. To the extent permitted by the Master Indenture, all principal which is outstanding under the Subordinated Note shall be paid on July 1, 2021. The terms of the Master Indenture with respect to the repayment of the subordinated Affiliated Indebtedness are described in more detail in the Limited Offering Statement, contained in “SUMMARY STATEMENT – Security for the Series 2013 Bonds – The Master Indenture and the Series 2013 Obligations” and “SECURITY FOR THE SERIES 2013 OBLIGATIONS – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliated Subordinated Indebtedness.”

Independent Living Units

The one hundred thirty-two (132) Independent Living Apartments in the Community will be available in one, two, and three bedroom configurations. The common areas, located on the first floor over the grade level parking garage, will include a small movie theater, a game room, a fitness center, an aquatic center, a woodworking shop, a business center, multiple dining venues and administrative offices. The thirty-one (31) Villas will feature two bedroom and three bedroom single family residences with two-car garages and a golf cart garage. The following table summarizes the unit types and approximate square footage of the Independent Living Units:

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Independent Living Unit Style

Number of Units

Approximate Square Footage

One Bedroom Units Goldcrest 15 854 Brambling 45 973

Two Bedroom Units Linnet 18 1,366 Vireo - Penthouse 1 1,509 Flamingo - Penthouse 2 1,807

Two Bedroom Units w/Study

Sandpiper 25 1,466 Nighthawk - Penthouse 2 1,877 Kingfisher - Penthouse 1 2,082 Cormorant 3 1,555

Three Bedroom Units Osprey 10 1,888 Heron 10 2,015

Villas Redwing 13 1,806 Fieldfare 13 2,445 Stonechat 5 3,031 Overall Total 163

Each of the Independent Living Apartments will be furnished with ceramic tile flooring in the foyer, living room, dining room, kitchen, den (if applicable) and all bathrooms, a full kitchen with self-defrosting refrigerator and freezer with icemaker, range with oven, microwave oven, dishwasher, garbage disposal, washer/dryer, fire and smoke alarms, fire sprinkler system, emergency call system and individually controlled heating and air conditioning units. All Independent Living Apartments will also include a balcony. Telephone and cable television jacks will also be installed. All utilities (including telephone, internet service and premium cable television services) and one (1) parking space in the garage are included in the monthly service fee (the “Monthly Service Fee”). The Villas will have the same amenities and finishes, but will also have a two-car garage and golf cart garage.

By entering into a Resident Contract (as hereinafter defined), a resident (the “Resident”) is entitled to discounted healthcare services provided by the Corporation at the Community based on the residency plan selected by such Resident. See “RESIDENT CONTRACT – Services to Residents” herein for a further description of the services provided to Residents of the Community and “RESIDENT CONTRACT – Resident Fee Structure” for a description of the types of fees paid by Residents.

Assisted Living Center and Memory Support Units

The Assisted Living Center will consist of forty-two (42) Assisted Living Units and thirty-seven (37) secured Memory Support Units. There is a common entrance to the Assisted Living Center, with a

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separate entrance to the Assisted Living Units, as well as access from the Independent Living Units and commons areas through building connections. There is also a separate entrance to the Memory Support Units. The Assisted Living Units have been designed to foster the continued independence of Residents who require varying amounts of assistance with activities of daily living, including three (3) meals each day. The Assisted Living Units will be private apartments with kitchenettes and full baths and will be furnished with amenities similar to the Independent Living Units, but will not include kitchen ranges with oven, dishwashers, or washers and dryers. The Assisted Living Units’ common areas will include a lobby, lounge, multi-purpose room, library, dining room and administrative and support areas.

The Memory Support Units will be private suites with full baths that will be furnished with amenities similar to the Assisted Living Units, but will not include the kitchenettes. The Memory Support Units will have secured access and separate common areas which include amenities similar to those of the Assisted Living Units.

Admission to the Assisted Living Center will be provided for Residents of the Community in accordance with the terms of the Resident Contract. The Assisted Living Center will also be available for occupancy by persons other than Residents of the Community (“Direct Admit Residents”). Direct Admit Residents will be admitted, pursuant to the terms of a separate admissions agreement, on an as-available basis to the extent the Assisted Living Units or Memory Support Units are not required to accommodate Residents of the Community. Direct Admit Residents will pay a monthly service fee (the “Direct Admit Monthly Service Fee”) to have access to the Assisted Living Center.

Summarized below are the Direct Admit Monthly Service Fees planned to be effective upon opening, for Direct Admit Residents and the types of Assisted Living Units and Memory Support Units for the Assisted Living Center and approximate square footage of each unit type.

Assisted Living Number of Units, Square Feet and Fees

Unit Type

Number of Units

Number of Beds Square Feet

Monthly Service Fee(1)

One Bedroom Standard 21 21 460 $6,995 One Bedroom Deluxe 18 18 480 $7,295 Two Bedroom 3 6 737 $8,950 Total/Average 42 45 488 $7,263

1. The Monthly Service Fees shown reflect anticipated rates effective July 1, 2015 (fiscal year 2016).

Memory Support Number of Units, Square Feet and Fees

Unit Type

Number of Units Square Feet

Monthly Service Fee(1)

Memory Support 37 297 $10,184 1. The Monthly Service Fees shown reflect anticipated rates effective July 1, 2015 (fiscal year 2016).

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Health Center

The Health Center will consist of forty-four (44) private skilled nursing beds. The Health Center common areas will include administrative, service and support areas, resident dining, activity, lounge, therapy and bathing areas. There will be a separate entrance as well as access to and from the Independent Living Apartments and commons areas through building connections.

The Health Center will be available for occupancy by Residents who transfer from another level of care when their physical condition so requires. Direct admissions into the Health Center will be restricted under the Certificate of Need rules and regulations of the state of Florida (“Skilled Nursing Direct Admit Residents”). Florida law allows access by individuals from the general community for a period of five (5) years from opening (as hereinafter described). See below under “REGULATIONS, PERMITS AND APPROVALS – Certificate of Need” for a discussion of limitations on direct admission to the Health Center. The private room private pay per diem rate for Skilled Nursing Direct Admit Residents (“Direct Admit Per Diem Fee”) is summarized in the chart below.

Management of the Community intends to obtain Medicare certification for the Health Center. Summarized below are the Direct Admit Per Diem Fees planned to be effective upon opening, for the Skilled Nursing Direct Admit Residents and the types of Health Center beds and approximate square footage of each unit type.

Skilled Nursing Number of Units, Square Feet and Per Diem Charge

Unit Type

Number of Units Square Feet

Daily Service Fee(1)

Private Room 44 303 $383 1. The Daily Service Fees shown reflect anticipated rates effective July 1, 2015 (fiscal year 2016). Project Timeline The following table illustrates the anticipated timeline for the Community:

Permanent financing January 2014 Construction commences on the Community January 2014 Construction of Independent Living Apartments

Memory Support Units, Assisted Living Units and Health Center complete June 2015

Construction of Villas complete June 2015 The Community is available for occupancy July 2015

Future Plans

The master plan for the Community includes a second phase development of independent living villas. Development of the expansion will depend, in part, on the market demand for additional independent living villas as well as the financial success of the first phase of the Project and the general financial climate of the Community’s service area at the time. There is no assurance that any of the additional improvements will be built.

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REGULATIONS, PERMITS AND APPROVALS

The various approvals and permits necessary for the Corporation to begin construction and commence operations are outlined below.

Zoning

The site is zoned to permit development of the Community as planned.

Certificate of Authority Requirement

Under Chapter 651, Florida Statutes (the “Act”), a continuing care provider is required to obtain a Certificate of Authority (“COA”) from the Florida Office of Insurance Regulation (“OIR”). Continuing care is defined, generally, as the furnishing of shelter and either nursing care or personal services to an individual pursuant to a contract, upon payment of an entrance fee. Prior to entering into Reservation Agreements with prospective Residents and collecting entrance fees or deposits, the Corporation was required to apply for and receive a Provisional Certificate of Authority (“PCOA”). The Corporation received its PCOA in March 2009.

The Act allows the Corporation to apply for a COA once Reservation Agreements are executed, Entrance Fee deposits are deposited into an escrow fund with respect to at least thirty percent (30%) of the Independent Living Units of the Community and certain other information is provided to the OIR. Entrance Fee deposits are defined as an amount equal to at least ten percent (10%) of the final Entrance Fee to be collected and must be deposited into an escrow account at a Florida bank, savings and loan association, or trust company. The Corporation entered into an escrow agreement for this purpose with SunTrust in December 2009. OIR will not issue a COA for a continuing care provider until Reservation Agreements are executed and Entrance Fee deposits are collected for at least fifty percent (50%) of the Independent Living Units of the Community, all of such deposits are deposited in an escrow account satisfying the thirty percent (30%) requirement described above. The Corporation is in the process of applying for its COA and anticipates that it will be received in due course.

The Act requires that each continuing care contract and addendum be approved by OIR prior to being offered to a prospective Resident. The Act also requires that a prospective Resident must have the right to rescind his or her continuing care contract without penalty or forfeiture within seven (7) days after signing the continuing care contract.

Once a continuing care community is open, the Act requires a number of actions from the continuing care provider, including the maintenance in escrow of a minimum liquid reserve consisting of an operating reserve, a debt service reserve and a renewal and replacement reserve. The Act requires that the provider initially maintain an operating reserve in the amount of thirty percent (30%) of the provider’s operating expenses for the first twelve (12) months of operation, as projected in the feasibility study submitted with the provider’s application for its COA. Thereafter, the Act requires the provider to maintain an operating reserve generally equal to fifteen percent (15%) of the total operating expenses reported in the provider’s annual reports filed pursuant to the Act. Once permanent financing for the construction of the buildings of the provider is obtained, the Act requires the provider to maintain a debt service reserve equal to the aggregate amount of all principal and interest payments (including property taxes) due during the current fiscal year on any mortgage loan or other long-term financing of the community. The Act requires the provider to maintain a renewal and replacement reserve in an amount equal to fifteen percent (15%) of the total accumulated depreciation reported in the provider’s audited financial statements. The Act requires a continuing care provider to file annual reports with OIR, containing audited financial statements and other information required by the Act, and under certain circumstances OIR may require quarterly reports.

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OIR may conduct an examination or inspection of the Corporation and the Community as often as is deemed necessary and at least once every three (3) years. OIR shall have access to the books, records, financial data and other documents maintained by the Corporation.

The Act imposes a variety of other requirements on the Corporation, including providing an annual disclosure statement to each Resident.

Certificate of Need

The Corporation must obtain a Certificate of Need (“CON”) from the Florida Agency for Health Care Administration (“AHCA”) and a COA from OIR prior to the commencement of construction of the Health Center. The Health Facilities and Services Development Act provides that AHCA shall issue a CON to any holder of a PCOA to construct nursing home beds for the exclusive use of the prospective residents of the proposed CCRC if the holder of the PCOA meets the applicable review criteria.

Such nursing home beds located within a CCRC are known as “sheltered” nursing home beds. The Act permits a CCRC to obtain up to one (1) sheltered nursing home bed for every four (4) residential units constructed, including independent living units and assisted living units. The Act permits a continuing care provider to use sheltered nursing home beds for persons who are not residents of the CCRC and who are not parties to a continuing care contract for up to five (5) years after the date of issuance of the initial nursing home license. A provider whose five (5) year period has expired or is expiring may request AHCA for an extension, not to exceed thirty percent (30%) of the total sheltered nursing home beds, if the utilization by residents of the nursing home facility in the sheltered beds will not generate sufficient income to cover nursing home facility expenses.

The Corporation submitted its CON application for approval of the Health Center to AHCA on January 23, 2013. On February 13, 2013, AHCA approved the application.

Healthcare Licensure

The Corporation will be required to obtain licensure of the Assisted Living Center and the Health Center from AHCA upon completion of construction. Standard licenses are subject to renewal every two (2) years. AHCA has the right to enter and inspect nursing homes and assisted living facilities to determine compliance by the license holder with statutes and rules governing minimum standards of construction quality, adequacy of care, and rights of residents. For purposes of licensure, the Memory Support Unit is considered “assisted living.” Management of the Corporation anticipates that all of the nursing beds in the Health Center will be certified for Medicare.

Permits

The Corporation received its Site Development Permit from Collier County on November 22, 2010. This permit allows for commencement of all site development including roads, bridges and site infrastructure. A water management and natural resource permit has also been issued by the Southwest Florida Water Management District on April 7, 2010.

The Corporation will apply for a building permit from Collier County when construction is ready to begin. At this time, nothing has come to the attention of the Corporation which would lead it to believe that the permits will not be received in due course.

As with all major construction projects, the Corporation must obtain numerous licenses, permits, or approvals from various governmental agencies, both for construction work and to operate various portions

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of the Community after completion. Applications for certain approvals may not be made until certain site work and detailed plans have been prepared or construction is completed. In some cases, approvals may only involve an administrative review to ensure compliance with approvals already obtained or payment of a fee and in other cases approvals may involve the exercise of discretion by governmental authorities.

Environmental Study/Geotechnical Testing

An Environmental Site Assessment was completed on June 9, 2008, and revealed no adverse environmental conditions requiring any further investigation or mitigation. A comprehensive geotechnical investigation revealed no unexpected site conditions which would adversely affect the development of the Community. No further investigations were recommended at that time.

In February 2010, YPC Consulting Group PL prepared a Geotechnical Exploration and Engineering Services Report for the Property Site. The report was based on field investigation and laboratory examination of twelve (12) soil borings that were taken across the Project site based on the anticipated location of the building footprint and paved areas. The findings indicate that there is a mix of soil types across the site and the structural and foundation systems for the Project have been designed to accommodate the findings.

COMPETITION AND SERVICE AREA

Information with respect to the service area and competition of the Community can be found under the caption “Summary of Significant Forecast Assumptions and Accounting Policies – Market Assessment” in the Feasibility Study, which is attached as APPENDIX B to this Limited Offering Statement. THE FEASIBILITY STUDY SHOULD BE READ IN ITS ENTIRETY, INCLUDING MANAGEMENT’S NOTES AND ASSUMPTIONS SET FORTH THEREIN.

RESERVATION AGREEMENT

Management of the Corporation plans to make twelve (12) Brambling Independent Living Apartments available under a non-entrance fee option (“Rental Apartments”) upon signing a non-entrance fee residence and care agreement (“Rental Agreement”). The remaining one hundred fifty-one (151) Independent Living Units are available under an entrance fee option (“Entrance Fee Independent Living Units”). In order to reserve an Entrance Fee Independent Living Unit at the Community, a prospective resident must execute a Reservation Agreement (“Reservation Agreement”), provide a self-disclosure of his or her health and finances and place a deposit equal to at least ten percent (10%) of the Entrance Fee for the selected Entrance Fee Independent Living Unit. To qualify for residency at the Community, one of the prospective Residents in Entrance Fee Independent Living Unit must be at least sixty-two (62) years old and all Residents must meet the health and financial parameters as established by the Corporation. To qualify based on health parameters a prospective Resident must be free of dangerous or contagious diseases and physically and mentally capable of safely vacating the Resident’s Entrance Fee Independent Living Unit and the building in which it is located, without assistance from the Community’s staff, in the event of an emergency. See “MARKETING – Reservations of Independent Living Units.” The Reservation Agreement reserves the right of the prospective Resident to choose his or her specific Entrance Fee Independent Living Unit and to indicate his or her intent to execute a Resident Contract. The Reservation Agreement also provides each prospective Resident guaranteed direct admission, upon payment of the full Entrance Fee due, to an Assisted Living Unit, Memory Support Unit or the Health Center under the Health Care Benefit should his or her health needs change prior to the opening of the Community.

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Rental Agreement

Twelve (12) of the Independent Living Apartments are available pursuant to a Rental Agreement. Under the Rental Agreement, a Resident does not pay an Entrance Fee and instead pays a higher Monthly Service Fee. Under the Rental Agreements, an additional $1,500 per month is added to the corresponding Monthly Service Fees under the Entrance Fee plan. Residents under the Rental Agreement do not receive a Health Care Benefit. Upon ongoing payment of the Monthly Service Fee, each Resident under the Rental Agreement will be provided a Rental Apartment and will receive certain basic services. The Corporation anticipates that the services provided will include: (i) a $400 dollar per month dining allowance, which may be applied for the Resident and the Resident’s guests for breakfast, lunch, dinner and beverages in the Community’s dining venues; (ii) all utilities, including telephone, internet services and premium cable television services; (iii) weekly housekeeping of the Rental Apartment; (iv) weekly cleaning and changing of personal bed linens; (v) maintenance of all common areas and equipment; (vi) repair, maintenance or replacement of furnishings provided in the Rental Apartment; (vii) mailboxes for U.S. mail and internal mail; (viii) regularly scheduled local transportation; (ix) 24-hour monitoring of the emergency alert system; (x) a variety of social, recreational, educational, cultural, and health wellness programs; (xi) an individual storage area; (xii) property and casualty insurance coverage on the buildings and grounds obtained by the Corporation; and (xiii) use of dining rooms, lounges, surface parking, social and recreational rooms and other common activity facilities.

RESIDENT CONTRACT

The Residence and Care Contract (“Resident Contract”) is a contract under which the Corporation is obligated, if a prospective Resident establishes occupancy in an Entrance Fee Independent Living Unit, to provide certain services to that prospective Resident. See “Services to Residents” below.

The Corporation considers applications for residence at the Community based upon the guidelines for the acceptance of Residents described below and maintains sole discretion on the decision to accept a Resident. An application for residence at the Community will be accepted only if the applicant demonstrates the ability to live independently (based on the criteria described below) and meets the financial obligations as a Resident of the selected Entrance Fee Independent Living Unit. In the event of single occupancy, a Resident must be sixty-two (62) years of age or older at the time of establishing occupancy. In the event of two (2) Residents, only one (1) must be sixty-two (62) years of age or older. No dependent children may reside in the Community unless otherwise agreed by the Corporation. To demonstrate the ability to live independently, a prospective Resident: must be free of dangerous or contagious diseases; must be physically and mentally capable of safely vacating the Resident’s Entrance Fee Independent Living Unit and the building in which it is located, without assistance from the Community’s staff, in the event of an emergency; must not require a level of treatment, care, or supervision exceeding that which the Corporation is licensed to provide at the Community or that which the Corporation provides at the Community in the ordinary course of its business; and must not present a threat to the Resident’s health or safety or to the health, safety, or well-being of other residents or staff of the Community.

Persons who have not executed a Resident Contract or a Rental Agreement may be admitted to the Assisted Living Center as Direct Admit Residents if beds are available in excess of those needed to satisfy the needs of Residents. Residents requiring care in the Health Center or Assisted Living Center will have priority utilization of the Health Center and Assisted Living Center over Direct Admit Residents and Skilled Nursing Direct Admit Residents.

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Entrance Fee Independent Living Unit Resident Fee Structure

There are two types of residency fees required of all residents in an Entrance Fee Independent Living Unit: an entrance fee (“Entrance Fee”) and ongoing monthly service fees (“Monthly Service Fees”). The Entrance Fee is a lump sum, one-time payment based on the type of Entrance Fee Independent Living Unit to be occupied by the Resident and the type of Entrance Fee plan selected. To reserve an Entrance Fee Independent Living Unit, a prospective Resident must make an initial payment equal to at least ten percent (10%) of the Entrance Fee (“Reservation Deposit”) prior to or upon execution of the Resident Contract and pay the remaining balance of the Entrance Fee on or before the date of occupancy. There is an additional Entrance Fee of $15,000 required for a second Resident living in an Entrance Fee Independent Living Unit.

The Monthly Service Fees are based on the type of Entrance Fee Independent Living Unit selected by the Resident. In addition to the first Resident Monthly Service Fee, an additional Monthly Service Fee of $1,040 is payable for a second Resident living in an Entrance Fee Independent Living Unit. The Corporation is required to give at least sixty (60) days’ advance notice of any increase in the Monthly Service Fee or any change in the services that the fee covers.

The Corporation offers three (3) residency plans to Residents of the Community for the Entrance Fee Independent Living Units: a ninety-five percent (95%) refundable Entrance Fee contract; a fifty percent (50%) refundable Entrance Fee contract; and a zero percent (0%) refundable Entrance Fee contract, also known as a traditional contract. The Corporation has capped the combined total of fifty percent (50%) refundable Entrance Fee contracts and zero percent (0%) refundable Entrance Fee contracts at fifty (50) total contracts. Currently, all fifty (50) of such contracts have been accounted for, so the Corporation is currently only offering the ninety-five percent (95%) refundable Entrance Fee contract. However, if a Resident cancels or terminates their fifty percent (50%) refundable Entrance Fee contract or zero percent (0%) refundable Entrance Fee contract, then such contract would be available for a future resident. The following table illustrates the planned Monthly Service Fees (expressed in 2015 dollars) and Entrance Fees (expressed in 2013 dollars) under each contract type, including the Rental Agreements:

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Unit Pricing

(1) Reflects the Entrance Fees, effective May 1, 2013, for the three entrance fees plans (“Entrance Fee Plans”) available for the Entrance Fee Independent Living Units. Management has limited the number of 50% Refund and Traditional Refund Entrance Fee Plans to a combined total of 50 contracts. (2) Monthly Service Fees shown are to be effective through December 31, 2015. (3) Entrance Fees refunds under the Traditional Entrance Fee Plan decrease over time until the refund is zero. (4) Twelve Independent Living Units are to be available under the Rental Agreements. Under the Rental Agreements, an additional $1,500 per month is added to the corresponding Monthly Service Fees under the Entrance Fee plan. (5) Depositors have the option to purchase two adjacent Brambling units. The combined unit is to known as an Egret unit, which is to contain 1,985 total square feet. Entrance Fees for an Egret unit are as follows: $993,000 for the 95% Refund Plan, $912,500 for the 50% Refund Plan and $755,000 for the Traditional Entrance Fee Plan. Monthly Service Fees associated with an Egret unit is $6,807 per month under an Entrance Fee plan and $8,045 per month under a Rental Plan. As of July 31, 2013, two Depositors (hereinafter defined) have selected an Egret unit. (6) Villas are not available under a 50% or Traditional Entrance Fee Plan.

Founders Program Benefits

To encourage early commitments to residency at the Community, the Corporation has offered various incentives to prospective Residents of the Independent Living Units. All prospective Residents that have reserved an Independent Living Unit prior to October 15, 2013 are referred to as “Founders”. These various incentives, collectively defined as the Founders Program (the “Founders Program”), have included among the following benefits at certain points in the presales process: (i) 100% Refund Entrance Fee Plan; (ii) 5% discount on Entrance Fees, the benefit of which approximates savings that range from

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$14,000 to $65,000; (iii) discounts on Entrance Fees which range from $10,000 to $20,000; (iv) $5,000 moving expense credit with a third party senior move management company. In addition, the second person Entrance Fee of $15,000 was waived for Residents reserving an Independent Living Unit through October 31, 2012. All prospective Residents that reserved an Independent Living Unit prior to May 1, 2013 received the Health Care Benefit for the term of their Resident Contract. In addition, all Founders are eligible to receive interest paid on the Reservation Deposit equal to four percent (4%) annually until the occupancy date (if the Resident occupies the unit), issued as a credit against the Entrance Fee due.

Financial Assistance

If a Resident of an Entrance Fee Independent Living Unit can no longer pay the Monthly Service Fee in full due to lack of funds for reasons beyond the control of the Resident, the Corporation may subsidize, in whole or in part, the Monthly Service Fees and other charges, provided the ability of the Community to operate on a sound financial basis for all Residents is not materially impaired. In the event that financial assistance is provided by the Corporation, such amounts, plus interest, may be charged against the refund of the Entrance Fee owed to a Resident upon termination of the Resident Contract. The Corporation may also require a Resident receiving financial assistance to move to a smaller or less expensive Independent Living Unit.

Generally, the Act prohibits a continuing care provider from discharging or dismissing a resident from a CCRC based on nonpayment of the resident’s monthly service fees until the portion of the resident’s entrance fee that is otherwise refundable to the resident upon termination of the resident’s continuing care contract (plus, if applicable, any available Medicare benefits and third party insurance benefits) has been applied toward the payment of the resident’s unpaid monthly service fees. Also, a provider may not require a resident to leave the CCRC before ninety (90) days from the date of the resident’s failure to pay.

If a Resident of a Rental Apartment (“Rental Apartment Resident”) can no longer pay the Monthly Service Fee in full due to lack of funds for reasons beyond the control of the Rental Apartment Resident, then under certain circumstances and at the Corporation’s sole discretion, the Corporation may subsidize, in whole or in part, the Monthly Service Fees. Under no circumstance is the Corporation obligated to offer financial assistance to Rental Apartment Residents.

Nondiscrimination

The Community will be operated on a non-discriminatory basis, and will provide the facilities and services described in the Resident Contract and Rental Agreement to individuals without unlawful discrimination due to race, color, religion, national origin, ancestry, sex, marital status, handicap, disability, unfavorable discharge from military service, sexual orientation or any other unlawful reason.

Services to Residents

Upon payment in full of the Entrance Fee and ongoing payment of the Monthly Service Fee, each Resident will be provided an Entrance Fee Independent Living Unit and receive certain basic services. Services provided include: (i) a $400 dollar per month dining allowance, which may be applied for the Resident and the Resident’s guests for breakfast, lunch, dinner and beverages in the Community’s dining venues; (ii) all utilities, including telephone, internet services and premium cable television services; (iii) weekly housekeeping of the Entrance Fee Independent Living Unit; (iv) weekly cleaning and changing of personal bed linens; (v) maintenance of all common areas and equipment; (vi) repair, maintenance or replacement of furnishings provided in the Entrance Fee Independent Living Units; (vii) mailboxes for U.S. mail and internal mail; (viii) regularly scheduled local transportation; (ix) 24-hour monitoring of the emergency alert system; (x) a variety of social, recreational, educational, cultural, and health wellness

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programs; (xi) an individual storage area; (xii) property and casualty insurance coverage on the buildings and grounds obtained by the Corporation; and (xiii) use of dining rooms, lounges, surface parking, social and recreational rooms and other common activity facilities.

Health Care Benefit

The Corporation will provide Residents of Entrance Fee Independent Living Units with nursing services that are available in the Health Center or assisted living/memory support services that are available in the Assisted Living Center when a determination is made by the Resident’s physician, in consultation with the Resident’s family, and approved by the Community’s medical director, that the Resident needs nursing care or assisted living care (the “Health Care Benefit”). Upon transfer to the Assisted Living Center or the Health Center, the Resident will receive a fifty percent (50%) discount off of the direct admit daily rates for the specific bed or unit that the Resident will occupy, for a total of one thousand four hundred sixty (1,460) days of care (four (4) years), except for certain Founders, who will receive the Founder’s Benefits described above. Assisted living services will be provided in an Assisted Living Unit or Memory Support Unit and are designed to assist Residents with the activities of daily living, such as dressing, eating, bathing, toileting, and ambulating, which are approved by the Community’s medical director and delivered in accordance with the routine care included in the applicable Monthly Service Fee then in effect. Nursing services will be provided in a private nursing room and delivered in accordance with the routine care included in the traditional nursing room rate then in effect.

For single occupancy, upon permanent transfer to the Health Center or Assisted Living Center and release of the Independent Living Unit, the Resident’s Monthly Service Fee applicable to the Independent Living Unit will be eliminated. In the case of double occupancy of an Independent Living Unit, in the event of a permanent transfer of both Residents and release of the Independent Living Unit, the Monthly Service Fee for the Independent Living Unit will be eliminated. If space is not available in the Health Center or Assisted Living Center, the Corporation will arrange for a Resident’s temporary care, by a home health care agency of the Corporation’s choice. If home health care is not medically appropriate or available at a reasonable cost, the Corporation will arrange for the Resident’s care in another facility of comparable quality to the same extent as if it were provided by the Corporation. The Health Care Benefit will apply in these cases, until a space is available in the Health Care or Assisted Living Center, at which time the Resident must transfer back to the Community or forfeit the Health Care Benefit payment.

Residents transferred to the Assisted Living Center or Health Center will be billed for non-routine care and ancillary services at the then-current rates for such items.

Fees for Additional Services

Additional services may be available to all Residents of the Community on a fee-for-service basis including, but not limited to, additional housekeeping, additional laundry services for personal items, catering for special occasions, delivered meal service and take-out, additional Resident and guest meals, additional parking, personalized transportation services, special events and programs, personal fitness trainer, barber and beauty services and guest overnight accommodations.

Termination and Refunds

Termination Prior to Occupancy. Prior to occupancy, prospective Residents will be entitled to reimbursement of their Reservation Deposit in full with interest at the prevailing rate on the escrow account within thirty (30) days after notice of termination of the Reservation Agreement under any one of the following conditions: (i) if a Resident dies, or if, because of illness, injury or incapacity, the Resident would be precluded from occupying the Entrance Fee Independent Living Unit; (ii) if a Resident

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terminates the Resident Contract within seven (7) days after the Resident Contract was signed; or (iii) if the Corporation terminates its intention to fully construct the Community. If the prospective Resident terminates the Resident Contract prior to occupancy for any other reason, they will be entitled to reimbursement of their Reservation Deposit, including any interest earned (at the prevailing investment rate) to the date of termination less an amount equal to two percent (2%) of the total Entrance Fee required for the Entrance Fee Independent Living Unit and Resident Contract selected. This amount will be paid within sixty (60) days after notice of termination of the Resident Contract.

Termination After Occupancy. After occupancy, the Resident Contract may be terminated: (i) upon the death of the Resident; (ii) by the Resident at any time by providing thirty (30) days’ written notice of termination to the Corporation; or (iii) by the Corporation for just cause, based on certain medical and non-medical reasons as described below. The refund of the Entrance Fee is dependent on the residency plan selected by the Resident. For Residents that selected the fifty percent (50%) refundable Entrance Fee contract or the zero percent (0%) refundable Entrance Fee contract, upon termination of the Resident Contract and release of the Entrance Fee Independent Living Unit, the Corporation will refund the appropriate percentage of the Entrance Fee to the departing Resident without interest within one hundred twenty (120) days. For Residents that selected the ninety-five percent (95%) refundable Entrance Fee contract, upon termination of the Resident Contract and release of the Entrance Fee Independent Living Unit, the Corporation will refund the appropriate percentage of the Entrance Fee from the proceeds of the next Entrance Fees that the Corporation receives for which there are no prior claims by another individual until paid in full; provided that if the Corporation has discontinued marketing continuing care contracts, the refund shall be paid within two hundred (200) days after the notice of termination; provided that the Resident is only entitled to a refund once they are no longer receiving any level of care at the Community and they have vacated the Community.

The Corporation may terminate the Resident Contract for just cause, based on medical reasons: (i) if the Resident has developed a condition the treatment for which the Community is not licensed for or for which care cannot be provided for by the Corporation without a significant and unique expenditure; (ii) the Resident is in need of drug or alcohol rehabilitation, or has a condition the treatment for which the Community is not licensed or for which care cannot be provided by the Corporation without a significant and unique expenditure; or (iii) the Resident has become mentally or emotionally disturbed to a degree that the Resident’s continued presence at the Community is considered by the Corporation to be detrimental to the health, safety, or welfare of other residents or individuals or staff of the Community or to the property of other residents or individuals or staff of the Community.

The Corporation may terminate the Resident Contract for just cause, based on non-medical reasons: (i) if a misrepresentation or omission in the confidential data profile, confidential medical profile, or related materials submitted as part of the Residents process of application for residency, which, if such information had been accurately provided, would have been material to the Corporation’s decision to accept the Resident for residency; (ii) there is a failure to comply with the policies, or a creation of a situation detrimental to the health, safety, or the quiet enjoyment of a Resident, any other Resident or individual, or any staff member of the Community or the property of other residents or individuals or staff of the Community; (iii) subject to the limitations described above under “Financial Assistance,” failure to pay the Monthly Service Fee, fees for additional services, or other amounts owed when due; or (iv) a material breach by the Resident of any of the terms or conditions of the Resident Contract.

If the Corporation seeks to terminate the Resident Contract and occupancy for non-medical reasons, not including any emergency situations, the Corporation shall give thirty (30) days’ prior written notice of termination.

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If two (2) Residents occupy an Entrance Fee Independent Living Unit and one (1) dies, the Resident Contract will continue in full force and effect for the surviving Resident, except the Monthly Service Fee will be reduced by the then current charge for a second Resident for the residence occupied by the surviving Resident. No refund of the Entrance Fee will occur until the surviving Resident vacates the Community.

MARKETING

Marketing Program

Marketing efforts for the Community began in April 2009 with a priority sign up program. CRSA conducted a direct mail campaign, on behalf of the Corporation, including a business reply card, to age and income qualified seniors in the Naples area. Prospective Residents (the “Priority Members”) were placed on a priority list and given a priority number. Approximately one hundred ten (110) Priority Members signed up under a $1,000 refundable deposit program prior to the start of conversions in January 2010.

Reservation of Entrance Fee Independent Living Units

A prospective Resident may reserve an Entrance Fee Independent Living Unit at the Community by submitting a confidential data profile, including health and financial disclosure, executing a Reservation Agreement and submitting a Reservation Deposit for the Entrance Fee Independent Living Unit selected. The execution of a Reservation Agreement does not constitute a binding commitment to establish occupancy at the Community on the part of any prospective Resident. Prospective Residents may terminate their Reservation Agreements and receive refunds of all amounts paid to the Corporation, less a processing fee under certain circumstances. See “RESIDENT CONTRACT – Termination and Refunds” herein.

Priority Members were offered the opportunity to enter into a Reservation Agreement beginning in January 2010. As part of the reservation process, a prospective Resident is provided a financial disclosure statement and a draft Resident Contract. Through October 18, 2013, one hundred twenty-one (121) of the one hundred fifty-one (151) Entrance Fee Independent Living Units (representing approximately 80.1%) of the total available Entrance Fee Independent Living Units of the Community) are reserved by prospective Residents who have paid a Reservation Deposit and executed a Reservation Agreement.

The following table depicts the net and cumulative deposits:

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Marketing of the Community

Calendar Year

Number of Units Reserved by Depositors

Number of Cancellations/

Refunds

Net Reservations

Cumulative Units

Reserved

Cumulative Percentage of Total Units(1)

2010(2) 29 1 28 28 18.5% 2011 33 8 25 53 35.1% 2012

January 1 – 1 54 35.8% February 3 2 1 55 36.4% March 3 – 3 58 38.4% April 10 – 10 68 45.0% May 4 1 3 71 47.0% June 2 2 0 71 47.0% July 6 1 5 76 50.3% August 6 1 5 81 53.6% September 2 1 1 82 54.3% October 2 – 2 84 55.6% November 2 1 1 85 56.3% December 1 – 1 86 57.0%

2013 January 7 – 7 93 61.6% February 2 1 1 94 62.3% March 10 1 9 103 68.2% April 5 1 4 107 70.9% May 4 – 4 111 73.5% June 2 – 2 113 74.8% July 1 1 0 113 74.8% August 4 2 2 115 76.2% September 3 – 3 118 78.1% October(3) 3 – 3 121 80.1%

Total 145 24 121 121 80.1% (1) Cumulative percentage is based on the 151 Independent Living Units available on an Entrance Fee basis. (2) Conversion of priority deposits to Depositors began in January 2010. (3) Information through October 18, 2013. The data submitted by applicants for residency is evaluated and reviewed by the Corporation to determine the suitability of such applicant for residency at the Community. A description of the criteria used to evaluate prospective Residents’ applications is described under the caption “RESIDENT CONTRACTS” herein. Each applicant is subsequently notified of the Corporation’s decision to accept or reject his or her application. In the case of applicants accepted for residency, a Reservation Agreement is executed by the prospective Resident and the Corporation. In the case of applicants rejected for residency, their initial ten percent (10%) Entrance Fee deposit is refunded within thirty (30) days.

The Corporation has not yet initiated marketing for services contemplated for the Health Center or the Assisted Living Center. Management of the Corporation anticipates that it will initiate a comprehensive health care oriented training of marketing personnel, direct marketing and presentations to the network of

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senior caregivers in the greater Naples area and personal contact with hospital discharge planners and physicians shortly before completion of construction and licensing of those portions of the Community.

SB&A

Sharon Brooks & Associates, Incorporated, a Virginia Corporation d/b/a SB&A Integrated Marketing (“SB&A”), began working with the Corporation in November of 2011 and has been responsible for marketing strategy, branding, advertising and sales oversight. SB&A is being compensated for services provided on a monthly basis. Additionally, since the spring of 2013, SB&A has provided the Corporation with a consulting sales manager. The Corporation pays a $9,600 monthly flat fee for such consulting sales manager, half of which has been deferred pending the close of the financing.

Founded in 1981 and privately held, SB&A has been in business for over 30 years during which time SB&A has worked with hundreds of continuing care retirement communities (“CCRCs”) nationwide. Projects have included blue-sky developments, expansions, repositionings and turnarounds. SB&A has conducted more than 40 marketing audits for operators and investors. The firm has many established, long-term client relationships in which its services have supported the ongoing growth and success of client organizations.

SB&A’s core services span the sales, consulting, marketing, brand development, advertising, public relations, and web-based/interactive disciplines. Its affiliate, Brooks Adams Research (“BAR”) offers market and consumer research services.

SB&A maintains memberships in senior living associations and attends and presents at national and international conferences. Each year BAR independently conducts research on senior values, attitudes and preferences to better understand the changing senior consumer and to better market to seniors throughout the United States. BAR has developed an online research panel of more than 130,000 seniors, enabling it to conduct rapid-response surveys with a national scope. This study continually adds to its database of information on senior consumers.

During 2012, SB&A and BAR served 72 clients with work ranging from single projects to turnkey marketing relationships. At this time about 80 percent of SB&A’s work is in the field of senior living. Other clients include planned communities, active adult real estate, toll roads, health care and economic development entities.

SB&A’s staff of 48 is headquartered in Richmond, Virginia with team members located in Aspen, Colorado; Boise, Idaho; St. Louis, Missouri; Chicago, Illinois; Scarborough, Maine; Ocala, Florida and Charlottesville, Virginia. SB&A’s headquarters in historic downtown Richmond is near the rapidly developing Virginia Commonwealth University (“VCU”) campus and steps away from the VCU Brand Center, recently ranked as the number one advertising program in the united States.

Officers:

Sharon A. Brooks, CEO, SB&A, Partner, BAR. Ms. Brooks graduated from the University of Virginia with a double major in Communications and Psychology. She was awarded an assistantship from ABC Television to do graduate study in Advertising and Public Relations at the Grady School of Journalism at the University of Georgia. In 1981, Ms. Brooks founded Sharon Brooks & Associates Inc. Today, as it celebrates more than 30 years in business, SB&A is a 48-person, full-service integrated marketing, advertising and public relations company handling a variety of accounts nationwide. Categories include retirement housing and senior products, consumer and commercial products, business-to-business, economic development, commercial and residential real estate, travel and tourism, and hospitals.

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Robert T. Adams, Vice President, SB&A, Partner, BAR. Mr. Adams combines his extensive knowledge of the senior living industry with an expertise in the very latest consumer research techniques. He has overseen the completion of hundreds of projects, not only for senior housing communities, but also for clients in residential real estate, economic development and financial sectors. Mr. Adams graduated magna cum laude from VCU in Richmond after serving in the United States Air Force.

Fay Marston Brodell, CFO, SB&A. Ms. Brodell began with SB&A as a freelance consultant in 1997 and became Director of Finance in 1998. Ms. Brodell graduated from Lynchburg College with Bachelor of Science Degrees in Education and, later, Accounting. In addition to teaching for 10 years in the Lynchburg Public School system, she was Senior Accountant at Cherry, Bekaert & Holland in Lynchburg, Virginia prior to owning her own small-business consulting firm in Richmond. In November of 2005 Ms. Brodell was promoted to the position of CFO.

Wayne Hicks, Vice President, SB&A. Mr. Hicks’ specialties include marketing strategy, branding, account planning and benchmarking. Mr. Hicks has nearly 20 years of experience in marketing, sales and advertising, with an emphasis in real estate, active adult, business to business, economic development and transportation. Prior to joining SB&A, Mr. Hicks worked on several national consumer and packaged goods accounts for McCabe & Company in New York City. His education includes a Master of Business Administration Degree from the E. Claiborne Robins School of Business, University of Richmond, Virginia, and a Bachelor of Science Degree in Business Management from Binghamton University, State University of New York.

Beth Simos, Vice President, SB&A. Having served as Director of Marketing and Communications for the Virginia Health Quality Center and the Richmond Chamber of Commerce, and Director of Marketing and Public Relations with Columbia/HCACJW, as well as Account Director at Response Marketing Group and The Martin Agency, Ms. Simos offers expertise in a wide variety of disciplines, including advertising, branding, communications, direct marketing, strategic market planning and public relations. In addition to her more than 16 years of experience in both agency and client corporate environments, Ms. Simos is a Certified Direct Marketer and holds both Bachelor of Business Administration and an Associate of Applied Science Degrees from Marshall University.

Connie Mattox, CEO, BAR. Ms. Mattox has more than 10 years of experience as a market researcher, with an expertise in consumer behavior research. Ms. Mattox’s research experience and training includes the employment of qualitative techniques aimed at uncovering emotional tensions, nontraditional focus group design, consumer profiling, observational research, concept testing, product testing, shopping studies, pricing studies, Net Promoter testing and satisfaction studies, as well as an array of other quantitative analysis methods. Along with a wealth of experience creating and managing virtual consumer research communities and brand advocate groups, as well as employing social media platforms to conduct consumer research, Ms. Mattox has conducted regional, national and international studies in the 50+ shopper and senior living industry, as well as the hygiene, household care, beauty care and food/food service industries. Ms. Mattox is a graduate of the University of Richmond and also a graduate of the E. Claiborne Robins School of Business Master of Business Administration program at the University of Richmond.

SB&A has served on numerous project teams adding marketing insight to the expertise of architects, contractors, financial consultants and developers in the successful development of senior living communities.

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Recent start-up and expansion projects accomplished by SB&A have included:

Sponsor Project Status Covenant Woods Richmond, Virginia

Phase III 106 IL Residences Renovation of existing amenities and construction of The Lodge town center. SB&A marketed the Phase I start-up which opened in 2000

Financed 2012 Under construction

Poydras Home New Orleans, Louisiana

Expansion of Assisted Living and Memory Care and addition of new dining and community amenities

Opened September 2013

Whitney Center New Haven, Connecticut

84 IL Residences Addition of new amenities including café, library, spa, gallery and renovated kitchen, lobby, pub, dining

Financed 2009 Opened 2011

The Willows at Brooking Park St. Louis, Missouri St. Andrews Resources for Seniors

Phase II and III Expansions IL Apartments, Centerstage Amenities, Villa residences

Phase II Opened 2008 Villas Opened 2012 At Target Occupancy Phase IV Planned

Newbridge on The Charles Hebrew Senior Life Dedham, Massachusetts

256 IL Cottage Homes, Villas, Apartments. Start-Up. Planning Priorities and Presales Launch

Financed 2007 Opened 2009 Sustaining occupancy

Jenner’s Pond West Grove, Pennsylvania Simpson Senior Living

Three IL Expansions since 2000 At sustaining occupancy

Westminster Canterbury Blue Ridge Charlottesville, Virginia

Blue Ridge Expansion 2000 Albemarle Cottage Expansion 2009

At sustaining occupancy

Montgomery Place Hyde Park, Illinois

Transition from rental to entry fee and major amenities and assisted living expansion

Transition completed 2008

Friendship Village of Schaumburg Schaumburg, Illinois

170 Cottages and Apartments Bridgewater Place Expansion

Opened 2008

Additionally, SB&A and BAR are working with over 40 CCRCs that are building and maintaining occupancy, planning future expansions and expanding their array of programs and services to include specialized health care and home and community based services. These clients include Beth Sholom Village, Bethesda Health Group, BHI Senior Living, Christian Care Communities, Christian Health Care Center, Erickson Living, Goodwin House, HH Hunt, Immanuel Communities, Isakson Living, Kendal at Hanover, Lutheran Life Communities (Pleasant View, St. Pauls House, Luther Oaks, Wittenberg Village, Lutheran Home), Miami Jewish Health System, Mount Sinai Medical Center, National Lutheran Communities And Services, North Oaks, Oakwood Lutheran Senior Ministries (Oakwood Village Prairie Ridge, Oakwood Village University Woods) Pacific Retirement Services, Inc. (Rogue Valley Manor, University Retirement Community Davis, Trinity Terrace, Holladay Park Plaza, Mirabella Portland, Mirabella Seattle, Cascade Manor, Capitol Lakes, The Meadows of Napa, Saratoga), Senior Living

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Residences, Schonberg & Associates, Simpson Meadows, Smith Senior Living, The Glebe, The Hill At Whitemarsh, The Village At Woods Edge, Virginia Baptist Homes, Inc., and Woods Edge Blacksburg.

DEVELOPMENT OF THE COMMUNITY

CRSA CRSA/LCS Management, LLC and its affiliates, headquartered in Memphis, Tennessee, and its predecessor company CRSA Management, LLC, serve as co-development consultant for the Community along with LLM. In April 2010, CRSA Management, LLC, which was established in 1989, and its affiliates sold certain of their assets to CRSA/LCS Management LLC, a wholly-owned subsidiary of CRSA Acquisition LLC, which is a wholly owned subsidiary of Life Care Companies LLC (“LCS”). In connection with that transaction, the development agreement between the Corporation and CRSA Management, LLC was assigned to CRSA/LCS Management LLC. CRSA/LCS Management LLC, CRSA Management, LLC and their applicable affiliates are hereinafter referred to as “CRSA.” See “CRSA Development Consulting Agreement” for information regarding the development consulting agreement between the Corporation and CRSA. CRSA and LCS specialize in developing and operating multi-level CCRCs similar to the Community. Together, CRSA and LCS currently provide services to more than one hundred (100) senior living communities in twenty-nine (29) states and serve more than thirty thousand (30,000) residents across the country. Sample communities served by CRSA include the following: Community

Location

Residential

Units

Assisted Living or Personal

Care Units

Nursing

Beds

CRSA Services

BayWoods of Annapolis

Annapolis, MS 147 15 30 Marketing and management

Danberry at Inverness

Vestavia, AL 160 72 0 Management and marketing

Galloway Ridge Pittsboro, NC 301 51 40 Development, marketing and management

Longhorn Village Austin, TX 214 60 36 Development, marketing and management

Mercy Ridge Towson, MD 408 35 12 Development, marketing and management

Mary’s Woods Lake Oswego, OR

266 40 22 Management consulting

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Pennybyrn at Maryfield

Highpoint, NC 180 24 125 Development and marketing

Riddle Village Media, PA 365 38 60 Consulting

Rolling Meadows Wichita Falls, TX

163 84 Management

Spring Harbor Columbus, GA 196 60 40 Management and Marketing

Westminster Village

West Lafayette, IN

191 40 57 Management

CRSA Professional Staff

The CRSA Senior Staff providing primary services to the Community under their respective agreements include the following:

Earl Wade, Chief Operating Officer. Mr. Wade serves as Chief Operating Officer. In this role Mr. Wade is responsible for overseeing and coordinating all CRSA’s various services. Mr. Wade previously served as President and Chief Executive Officer of CRSA’s predecessor company as well as served as a member of the predecessor Company’s Board of Directors. Mr. Wade has more than thirty-five (35) years of retirement living and senior housing experience. Mr. Wade has been involved in the preparation of numerous financial feasibility studies and planning analysis for senior living communities, including entrance fee, rental, assisted living, skilled nursing and healthcare related facilities. In this capacity, he has been involved with the issuance of more than $2 billion of retirement living and long-term care financings. Prior to forming CRSA in 1989, Mr. Wade served as a Partner with the accounting firm of Ernst & Whinney (now Ernst & Young) where he directed the firm’s senior living consulting practice. He has served as a member of the Advisory Committee to the National Continuing Care Data Base developed by the American Association of Homes and Services for the Aging and as a member of the NIC Owner Operator Advisory Council. Mr. Wade is a graduate of The University of Alabama with a degree in Accounting. Mr. Wade is a member of the American Institute of Certified Public Accountants and the American Association of Homes and Services for the Aging. He is a former member of the Board of Directors of Trezevant Manor, a continuing care retirement community located in Memphis, Tennessee and BayWoods, a cooperative retirement community located in Annapolis, Maryland.

Bruce Cannon, Vice President, Director of Finance and Consulting. Mr. Cannon is responsible for overseeing all of CRSA’s financial consulting responsibilities, including those related to new project developments. He previously served as Executive Vice President and Chief Financial Officer of the predecessor company to CRSA, as well as served as a member of the predecessor Company’s Board of Directors. Mr. Cannon has more than twenty-five (25) years of retirement living and senior housing experience and has been involved in the preparation of numerous financial feasibility studies and planning analysis for retirement communities involved with entrance fee, rental, assisted living, skilled nursing and healthcare related facilities. In this capacity, he has been involved with the issuance of more than $1.5 billion of retirement living and long-term care financings. Prior to joining CRSA in 1989, Mr. Cannon served as a member of Ernst & Whinney’s (now Ernst & Young) National Retirement Center Consulting Group, where he was responsible for the preparation of financial and economic feasibilities studies for senior housing projects. In addition, Mr. Cannon has also served as a member of the Advisory Committee to the National Continuing Care Data Base developed by Leading Age and has served as a faculty instructor of Leading Age’s Retirement Housing Professionals certification program as well as has

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given numerous speeches and presentations on retirement community financings and overall trends in senior housing.

Lee Lyles, Vice President, Director of Project Development. Mr. Lyles is responsible for overseeing all of CRSA’s project design and development responsibilities, including those related to new project developments. He previously served as Executive Vice President and Chief Development Officer of CRSA’s predecessor company. Prior to joining CRSA in 2007, Mr. Lyles was a Partner with Webb + Partners, a full service Project/Construction Management firm. He brings over thirty (30) years of experience in development and construction management. His forte is in the development and construction of senior housing, commercial, hospitality, medical office buildings, retail and mixed-use projects. Mr. Lyles also previously co-founded and served as the Executive Vice President of Resources for Senior Living, LLC. The company specialized in the development and management of senior housing.

CRSA Development Consulting Agreement

Development of the Community began with CRSA on September 10, 2008. The Corporation entered into a Development Consulting Agreement on March 2, 2009, as amended, (the “Development Consulting Agreement”) with CRSA, to provide development consulting services for the Community through the earlier of the date on which ninety-five (95%) of the Independent Living Units of the Community are occupied or December 31, 2015.

The Development Consulting Agreement calls for CRSA to provide the following services: (a) all necessary planning to implement the business plan approved by the Corporation, including any revisions thereto; (b) assistance in obtaining all necessary governmental approvals required for the development and construction of the Community; (c) assist Corporation with selection of design consultants and a pre-construction consultant, and coordinate submission of plans and specifications to the Corporation for the Corporation’s approval; (d) development of a Resident services program; (e) development and implementation of the marketing plan for the Community to initial Residents; (f) assistance in securing permanent financing for the Community; (g) assistance in negotiating and awarding a construction contract for the Community, and thereafter monitoring the progress of construction; (h) preparation of monthly cost reports; (i) providing filing and disclosure requirements imposed by applicable law in connection with the offering of interests in the Community; and (j) assistance related to entitlement processing.

The Corporation entered into Amendment #1 to the Development Consulting Agreement on June 13, 2011 (“Amendment #1”). Amendment #1 engages CRSA to provide sales and marketing consulting services and requires CRSA to appoint a sales and marketing professional to serve as a member of the Corporation’s development team. Amendment #1 provides the Corporation with the opportunity to disengage CRSA from its sales and marketing duties and responsibilities in the event that CRSA fails to meet any of the marketing goals.

The Corporation entered into Amendment #2 to the Development Consulting Agreement effective as of January 1, 2013 (“Amendment #2”). Amendment #2 disengages CRSA from its sales and marketing duties and responsibilities. In addition, Amendment #2 fixes the Development Consulting Fee payable to CRSA at $3,500,000 to be paid in accordance with the terms of Amendment #2. Any portion of the Development Consulting Fee earned between January 1, 2013 and the closing date of financing is deferred until the date upon which financing is closed.

At the close of financing, sixty percent (60%) of the balance of the Development Consulting Fee, less any amounts paid prior to the close of financing, will be paid to CRSA. Twenty percent (20%) of the

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Development Consulting Fee ($700,000) will be payable to CRSA in eighteen (18) equally monthly installments of $38,888.89 beginning on the date construction commences. The final twenty percent (20%) of the Development Consulting Fee ($700,000) will be payable to CRSA upon achievement of ninety percent (90%) occupancy of the Independent Living Units. The Corporation is to pay CRSA the final twenty percent (20%) of the Development Consulting Fee in installment amounts of $4,762 for each Independent Living Unit that is occupied in the month immediately following the date of occupancy for such unit.

Prior to the affiliation between LCS and CRSA Management, LLC, LCS undertook efforts to develop a continuing care retirement community less than fifteen miles from the site of the Project for which no application for a Provisional Certificate of Authority from the Florida Department of Financial Services, Office of Insurance Regulation has yet been submitted. The Development Consulting Agreement contains a restrictive covenant which prohibits CRSA from engaging in certain development activities with respect to any senior housing, continuing care retirement community or other similar project located or proposed to be located within fifteen miles of the Project during the term of the Development Consulting Agreement and for a period ending twelve months after the termination of such agreement under certain circumstances in accordance with the terms thereof. Development Agreement with Lutheran Life Communities

The Corporation and Lutheran Life Communities, an affiliate of LLM, have entered into a development agreement whereby Lutheran Life Communities serves as co-development consultant and co-marketing consultant for the Community along with CRSA/LCS. As compensation for services rendered pursuant to the development agreement with Lutheran Life Communities, the Corporation will pay Lutheran Life Communities a fee of one percent (1%) of Project costs, which will be paid on July 1st of the second full fiscal year after the Project reaches stabilized occupancy. This fee will be subordinated to all of the Corporation’s existing debt obligations, including the Master Indenture and will be deferred in accordance with the terms of the Master Indenture. For more information, please see the Limited Offering Statement, “SECURITY FOR THE SERIES 2013 OBLIGATIONS – Certain Master Indenture Covenants of the Obligated Group – Payments on Affiliate Subordinated Indebtedness.”

CONSTRUCTION OF THE PROJECT

The construction of the Community has been divided into two (2) components, each of which will be performed by a different construction contractor: construction of the thirty-one (31) Villas (“Villa Construction”) and construction of other all other elements of the Community, including the Assisted Living Center and Health Center (“Community Construction”). The Corporation has engaged Stock Construction, LLC as the contractor to construct the Villas. The Corporation has engaged AWC/DD JV to perform the Community Construction (“General Contractor”).

Community Construction

The General Contractor is a joint venture consisting of Archer Western Construction, LLC, an Illinois limited liability company, and DeAngelis Diamond Construction, Inc., a Florida corporation. The joint venture has been memorialized pursuant to a Joint Venture Agreement dated June 30, 2013. Archer Western Construction, LLC was established in 1983 and is headquartered in Atlanta, Georgia. Archer Western Construction, LLC is a subsidiary of The Walsh Group, a general contracting, construction management, and design-build firm. With annual revenues in excess of $3.5 billion, The Walsh Group is ranked by Engineering New-Record as the fifteenth (15th) largest contractor in the United States.

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A sample list of senior living communities and other relevant projects, both completed and in-process, for which the Walsh companies have provided similar services, are set forth below:

Organization Olson Pavilion at Lutheran Home Arlington Heights, Illinois Springfield Short Stay Rehab Facility Springfield, Illinois Summit Housing Summit, Illinois Senior Suites of Norwood Park Chicago, Illinois Blue Island SLF at Fay’s Point Blue Island, Illinois Senior Suites of Blue Island Blue Island, Illinois Senior Suites of Kelvyn Chicago, Illinois Providence Point Pittsburgh, Pennsylvania

Project Renovation and New Construction. Project will be a mix of renovation and new construction of the existing Lutheran Life CCRC. Approximately 126,000 square feet of complete gut and renovation of the existing Olson Pavilion and 101,000 square feet of a new 3-story facility. A new 94 stall on-site parking lot will be created to support the new facility. New Construction. VA type construction with wood trusses and wall panels, masonry, asphalt shingle roof, 1-2 occupancy for 64 units, kitchen, cafeteria, rehab and administration. New Construction. New Construction of a 4-story, 60 unit building and a 1-story, 9 unit building. Construction is precast hollow core planks on load bearing Cold-Formed framing, steel and CMU for the 4-story building and wood framed construction for the 1-story building. Both buildings have a masonry exterior. Renovation. Renovation of historic 3-story building and new 3-story addition totaling 85 independent living senior apartments and associated site development. New Construction. 4-story, 120 unit supportive living facility (SLF). New Construction. 6- story cast-in-place concrete structure Senior Housing Facility. Independent living with 90 dwelling units utilizing a geothermal heat pump HVAC. New Construction. 6-story cast-in-place concrete Senior Housing Facility. Independent Living. 85 dwelling units, City of Chicago Senior Center. New Construction. This project includes 222 new apartment residences, as well as 35 single family residences. The new community center will include: Wellness Center, Indoor swimming pool and whirlpool, Exercise facilities and Multi-purpose community room. The apartments will

Status

To be completed April 2016

Completed

January 2013

Completed

October 2010

To be

completed October

2014

To be completed July 2014

Completed

January 2010

Completed July 2009

Completed April 2009

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Holmstad Batavia Batavia, Illinois Wilson Yard - Senior Building Chicago, Illinois Chicago Housing Authority - Group Senior Housing Chicago, Illinois Chicago Housing Authority - Group Senior Housing Chicago, Illinois Senior Housing Rehabilitation Chicago, Illinois The Meadows of Glen Ellyn Glen Ellyn, Illinois Brookdale Living Communities Southfield, Michigan

be two 7-story mid-rise buildings. The apartments will range in size from 761 to 2106 square feet. The 35 single family homes will range in size from 1,589 to 2,000 square feet. New Construction. 141,000 gross square feet, 3-story wood frame senior living apartment building with 1 level of underground parking, 48 apartment units and first floor “town center” functions for larger senior living campus including full service kitchen. New Construction. 7-story senior building with a cast-in-place concrete frame, brick veneer and commercial retail on the first floor on the City of Chicago’s north side. Above grade parking is also included on the 2nd floor. Renovation. This contract calls for the renovation of Senior Housing Locations at 2640 N. Sheffield, 2720 N. Sheffield, and 2140 N. Clark. Renovation. This contract involves the renovation of three Senior Housing community locations: 344 W. 28th Place, 1531 N. Clybourn, and 655 W.65th Street. Rehabilitation. This contract calls for the interior and exterior rehabilitation of 7 senior housing buildings with 900 dwelling units; the project calls for a total of 750,000 square feet of new construction. New Construction. The new construction of a 248,800 square foot, 237 unit assisted living senior housing facility for Brookdale Homes featured a cast-in-place concrete framed building with a library, reception area, office space, a commercial kitchen, and a swimming pool facility. New Construction. 220 unit, 5-story living facility for the elderly which covers 220,000 square feet.

Completed September

2008

Completed January

2009

Completed May 2003

Completed June 2003

Completed September

2002

Completed January

2000

CompletedAugust 1999

DeAngelis Diamond Construction, Inc. was founded in 1996 and is located in Naples, Florida. DeAngelis Diamond Construction, Inc.’s mission is based on the following seven (7) core values: Faith in God, Honor to Build, Lasting Relationships, Excellence & Quality, Leadership, Healthy Environment & Culture and Integrity.

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A sample list of health care industry projects, both completed and in-process, for which DeAngelis Diamond Construction, Inc. has provided similar services, are set forth below:

Organization Project Status

HMA Spring Hill Regional Medical Center Spring Hill, Florida

Design/Build project. Demolition and renovation of existing CT Scan Room.

Completed June 2011

Naples Community Hospital Naples, Florida

Renovation of the downtown Heart Institute, consisting of 22,500 square feet. Renovation of the Briggs Wellness Center, which includes state of the art comprehensive diagnostic outpatient center, with 28 exam rooms, nuclear testing, and ECHO cardiography. The center included high end millwork, stone tile, acrylic glazing and specialty interior storefront.

Completed October 2011


45,700 square foot infill of two floors of existing patient tower shell space to add 64 medical-surgical private patient rooms and support spaces. Included were 16 rooms with ceiling mounted patient lifts, telemetry capabilities on both floors, Cerner Smart Room infrastructure construction with high-end finishes and casework details.

Completed November 2011


NCH Brookdale Rehab.



22,180 square foot renovation of 31 medical-surgical patient rooms and support space. Work included 90% removal of existing construction with new layout providing larger, more modern patient rooms and required support space. Included were 4 rooms with ceiling mounted patient lifts, telemetry and Cerner Smart Room infrastructure.

Completed January 2012

Highlands Regional Medical Center Sebring, Florida

Hospice gazebo.

Completed December 2011

Health Management Associates, Inc. Naples, Florida

First floor renovation and expansion adding one (1) MRI and all required support space.

Completed March 2012

HCA Largo Medical Center Largo, Florida

Renovation to Largo Medical Center administration and class rooms.


UHS Sandy Pines Tequesta, Florida

Addition of 40,000 square foot children’s behavioral health center consisting of two buildings containing a patient/sleep wing and an education wing.

To be completed December 2013

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Renovation of the Telford Building.

Completed March 2013

Health Management Associates, Inc. Naples, Florida

Improvements to an airplane hangar at Naples Airport.



Demolition and construction of a 26,000 square foot 32-bed medical-surgical patient wing.


Lafayette Regional Rehab Hospital Lafayette, Indiana

Construction of free standing 40-bed post-acute healthcare facility that provides rehabilitation services for patients with functional deficits as a result of debilitating illness or injuries.


HCA Medical Center of Trinity New Port Richey, Florida

Construction of new Class III 36-bed psychiatric hospital.

To be completed October 2013


9,000 square foot renovation of main hospital lobby in multiple phases. Constructed new café, gift shop, terrazzo floors, wall paneling, storefront glass, and auto entrances.


Narayana University Medical Center Grand Cayman, Cayman Islands

Phase 1 of the facility includes a new ground-up 140-bed acute care hospital. This is an international project located in the Cayman Islands and consists of an ICU ward, semi-private and private patient rooms, 3 operating rooms, 1 hybrid operating room, MRI, gamma camera, nuclear medicine, full kitchen, CT room, central energy plant and all required support space. This project was designed in accordance with the International Building Code and Joint Commission International Standards. Project was fast track and completed in 15 months.

Completed February 2013

Ten Broeck Wesley Chapel Psych Tampa, Florida

New construction of a brand new 45,000 square foot behavioral health facility consisting of 26 psychiatric patient rooms for a 50-bed facility with support space, gymnasium, outdoor basketball court, and full kitchen.

Completed August 2013

HCA Central Florida Regional Sanford, Florida

Complete demolition and renovation of second floor rehab space.

Completed May 2013

HMA Venice Regional Medical Center Venice, Florida

Multi-phase project. Changing out the entire nurse call system throughout the hospital 4 patient rooms at a time.

To be completed December 2013

HMA Wuesthoff Medical Center Rockledge, Florida

Renovation and refurbishment of fourth acute care patient wing.

Completed June 2013

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HMA Shands Lakes Medical Center Lake City, Florida

Design/Build project, class IV ICRA, multi-phase construction. Project consists of a 9,000 square foot interior renovation, replacing 2 air handling units along with all new controls. New bathrooms constructed in patient rooms and new nurse stations and corridor upgrades.


HMA Highlands Regional Medical Center Sebring, Florida

Cath-lab equipment.


Lee Memorial Health System Fort Myers, Florida

Addition of a Women’s and Children’s Medical Plaza. Facility is 13,450 square feet and includes 24 exam rooms, 6 vitals rooms, an audiology booth, 18 offices, and several other support staff spaces. Facility is a single-story building with structural steel columns and wood truss construction.


HMA Highlands Regional Medical Center Sebring, Florida

Renovation of medical office building.

Completed April 2013

Discovery Village ALF Fort Myers, Florida

Construction of 126-bed, 115,000 square foot, multi-story assisted living facility located in the Forum Community in Fort Myers. Project includes 3 buildings for Memory Care Units, Assisted Living Units, and Independent Living Units and was constructed on a 6.5 acre site.

Completed August 2013

General Contractor’s Agreement – Community Construction The Corporation has entered into a construction contract with the General Contractor for the Community Construction (“General Contractor Agreement”). Due to a delay in the General Contractor being issued a Florida general contractor’s license, the General Contractor Agreement was assigned to Archer Western Construction, LLC, one of the joint venture partners of the General Contractor, which already holds a Florida general contractor’s license. At such time as the General Contractor receives its Florida general contractor’s license, the General Contractor Agreement will be assigned back to the General Contractor. Pursuant to the General Contractor Agreement, the General Contractor will complete the Community Construction for a stipulated sum of $69,550,000, which will be paid in monthly progress payments based on the amount of work completed in such month, less retainage of ten percent (10%). The General Contractor is required under the General Contractor Agreement to furnish the Corporation with a payment and performance bond in the amount of the stipulated sum.

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General Contractor Construction Schedule The General Contractor Agreement requires the General Contractor to substantially complete the Community Construction within five hundred forty-eight (548) days (approximately eighteen (18) months) of the commencement date. In the event the General Contractor does not substantially complete the Community Construction within the specified time period, the General Contractor will be liable for damages for each day of delay past the required date of substantial completion in accordance with the following schedule of liquidated damages:

As part of the Community Construction, the General Contractor is responsible for performing certain site preparation work which relates to the Villas and which must be completed before the Villa Contractor can begin the Villa Construction (“Villa Site Prep Work”). Such Villa Site Prep Work includes installation of utility facilities and rough grading. The General Contractor Agreement requires the General Contractor to complete the Villa Site Prep Work within two hundred and seventy (270) days of the commencement date. In the event the General Contractor does not complete the Villa Site Prep Work within the specified time period, the General Contractor will be liable for damages for each day of delay past the required date of substantial completion in accordance with the following schedule of liquidated damages:

The Corporation is currently in discussion with the General Contractor to amend the General Contractor Agreement to modify the completion date of the Villa Site Prep Work. Delivery of the Villa Site Prep Work in the Lakeside Villa Neighborhood, which consists of twenty-five (25) Villas, would be on or before July 1, 2014 and delivery of the Villa Site Prep Work in the Woodland Villa Neighborhood, which consists of twenty-two (22) Villas would be on or before August 1, 2014. Under the terms of the proposed amendment, the stipulated sum payable to the General Contractor would be increased by $137,000. Discussions are ongoing and there is no guarantee that such an amendment will be executed. Villa Construction Stock Construction, LLC (the “Villa Contractor”) is a homebuilder in Southwest Florida and has built more than three thousand (3,000) new homes throughout Southwest Florida and currently has more than three hundred thirty (330) homes under construction. The Villa Contractor was named by Builder 100 as one of the top builders nationwide. The Villa Contractor’s CEO, Brian Stock, was named Entrepreneur of

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the Year by the Tampa-based Business Observer. In the past eight (8) years, communities built by the Villa Contractor have won fourteen Community of the Year honors.

A sample list of communities and other relevant projects for which the Villa Contractor has provided similar services, are set forth below:

Community

Project Description

Consists of 149 homes across 4 series of floor plans ranging from 2,273 to more than 3,400 square feet. Consists of 61 homes with 12 floor plans ranging from 2,062 to 3,172 square feet. A private, gated 444 acre community offering 14 floor plans ranging from 1,227 to 2,084 square feet.

Phase I of Lakoya Lely Resort, Naples, Florida Black Bear Ridge Naples, Florida Paseo Ft. Meyers, Florida

Villa Contractor’s Agreement – Villa Construction The Corporation has entered into a construction contract with the Villa Contractor for the Villa Construction (“Villa Contractor Agreement”). Pursuant to the Villa Contractor Agreement, the Villa Contractor is responsible for constructing the thirty-one (31) Villas based on three (3) different model villas as described in the Project specifications. The Corporation has the right to change by change order the mix of the models of Villas to be built by the Villa Contractor. The Villa Contractor will construct the Villas for a stipulated sum of $9,993,944 which shall be adjusted based on any changes made to the mix of the models of Villas to be built by the Villa Contractor and finalization of the architectural drawings. The stipulated sum shall be paid in monthly progress payments based on the amount of work completed in such month. If the sites where the Villas will be built are not delivered to the Villa Contractor by July 1, 2014, then the Villa Contractor has the option to rebid the project and the contract sum shall be increased by an amount equal to the increase in subcontractor costs, subject to a maximum increase of $275,000. In the event Owner does not deliver the sites where the Villas will be built by October 1, 2014, then Contractor shall have the option to rebid the project, which shall include obtaining three (3) competitive bids for each major cost item. After receipt of notice of such competitive bids, Contractor shall provide a revised contract sum and the Corporation shall have ten (10) days to review the new contract sum and either accept the same or terminate the Villa Contractor Agreement. The Villa Contractor is required under the Villa Contractor Agreement to furnish the Corporation with a payment and performance bond in the amount of the stipulated sum. Villa Contractor Construction Schedule The Villa Contractor is required to start construction within seven (7) days of the date the Corporation provides the Villa Contractor with notice to start construction. The Villa Contractor must complete the Villa Construction within two hundred and seventy (270) days of the date Villa Contractor commences construction. In the event the Villa Contractor does not substantially complete the Villa Construction within the specified time period, the Villa Contractor will be liable for damages for each day of delay past

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the required date of substantial completion in accordance with the following schedule of liquidated damages calculated based on the actual number of Villas that have not received a Certificate of Occupancy:

The amount of liquidated damages payable by the Villa Contractor to the Corporation shall be capped at $300,000. The Corporation is currently in discussion with the Villa Contractor to amend the Villa Contractor Agreement to permit the Villa Contractor to commence the Villa Construction at such time as the Villa Site Prep Work for the Lakeside Villa Neighborhood, which consists of twenty-five (25) Villas, is complete. Discussions are ongoing and there is no guarantee that such an amendment will be executed.

OTHER PROFESSIONAL SERVICES The Architect

SFCS, Inc. (the “Architect”) has been engaged to provide architectural, engineering and related design services to the Corporation. The Architect is a full-service architecture and planning firm which has earned a national reputation in senior living for creating quality projects demanding creative site analysis, master planning and design excellence. The firm was founded in 1920 and maintains offices in Roanoke, Virginia, and Charlotte, North Carolina.

A representative list of the Architect’s projects includes the following:

Sponsor Project Size in Square Feet

Construction Cost Completion Date

Maryfield, Inc. 1315 Greensboro Road High Point, NC 27260

Nursing Renovation: 64,075 square feet CCRC Reposition: 68, 220 square feet (new); 23,478 square feet (upfit)

$58M Overall Project Cost

$8.4M Nursing Renovation

Completed January

2009

California Veterans’ Home

New CCRC (with Household Nursing): 163,280 square feet

$43M Completed January

2012

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Presbyterian Homes 6351 West Lake Road Erie, PA 16505

New Nursing: 62,000 square feet Assisted Living: 60,000 square feet Rehabilitation Household Unit: 9,000 square feet

Phase I: $8M

Phase II: $8M

Phase I: 2012

Phase II:

2013

ACTS Retirement – Life Communities, Inc. 375 Morris Road West Point, PA 19486

St. Andrew Estates North, Boca Raton, Florida: 79, 602 square feet

$10.9M (estimated) EstimatedAugust 2013

ACTS Retirement – Life Communities, Inc. 375 Morris Road West Point, PA 19486

Indian River Estates, Vero Beach, Florida Culture Change Nursing: 95,000 square feet

$24M Completed March 2012

Armed Forces Retirement Home 1800 Beach Drive Gulfport, MS 39507

New CCRC: 842,514 square feet $204.9M CompletedJuly 2010

Liberty Lutheran 250 N. Bethlehem Pike Ambler, PA

Nursing Renovation (Culture Change): 28,070 square feet 15 Resident Memory Support Household: 9,702 square feet Assisted Living: 27,600 square feet Rehabilitation Household: 28,109 square feet

$7.5M Estimated 2012

Rockhill Mennonite Community 3250 State Road Sellersville, PA 18960

Assisted Living: 29,631 square feet Wellness: 2,623 square feet

Assisted Living: $6M

Wellness: $250,000

CompletedJune 2012

The Deupree Community 3939 Erie Avenue Cincinnati, Ohio 45208

Cottages: 104,544 square feet New Independent Living Community Center: 483,952 square feet

Cottages: $5M

New Independent Living Community Center:

$23.3M

Cottages: March 2009

New

Independent Living

Community Center:

March 2008

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The Kendal Corporation 1107 E. Baltimore Pike Kennett Square, PA 19348

Nursing Renovation: 3,350 square feet Assisted Living Renovation: 35,400 square feet Wellness: 29,200 square feet

$14.4M Completed December

2012

Riverside Health System 1010 Old Denbign Blvd. Newport News, VA 23602

Nursing Renovation: 25,700 square feet

$6M Completed May 2012

The Construction Consultant for Pre-Construction Services

A preliminary joint venture was arranged between W.G. Yates and Sons Construction Company and Gates Construction Company to act as the construction consultant (“Construction Consultant”) for pre-construction services. The Construction Consultant provided pre-construction services for the Community including, but not limited to, coordination with the Architect and the other design consultants, construction sequencing and scheduling, value engineering and estimating the cost of work and general conditions. The joint venture also provided the services related to clearing, grading, and back filling of the land in Naples on which the Community will be constructed (completed in December 2010.)

The Construction Monitor

The construction consulting firm of zumBrunnen, Inc. (“zumBrunnen”), a full-service national construction consulting company founded in 1989 that specializes in the senior living industry, has been selected to review construction progress, quality, and contractor application for payment requests on a monthly basis for the Community during the construction period. zumBrunnen has developed unique, industry-specific due-diligence, construction consulting and facility assessment services to fulfill financial institutions’ requirements for start-up, expansion and renovation projects.

During the construction process, zumBrunnen will be responsible for: (i) reviewing and certifying all disbursement requests for the payment of expenses incurred by the Corporation for work, labor, materials and equipment furnished in connection with the construction of the Community; (ii) monitoring such items as change orders, budget amendments and updates to the construction schedule; and (iii) reporting to the holders of the Series 2013 Bonds, no less than monthly, the status of the Community including (a) whether the total project account balance (including estimated investment income) is sufficient to pay the expected remaining costs of completing the Community in accordance with the project budget and that there is no project deficit; (b) the current timing of the construction of the Community; and (c) the amount of remaining contingency funds.

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APPENDIX B

FINANCIAL FEASIBILITY STUDY


The Arlington of Naples

Financial Feasibility Study

Six Years Ending June 30, 2019

The Arlington of Naples Financial Feasibility Study Six Years Ending June 30, 2019

TABLE OF CONTENTS Independent Accountants’ Examination Report ....................................................................................... B-1

Forecasted Financial Statements: Forecasted Statements of Operations and Changes in Net Assets (Deficit) .................................. B-5 Forecasted Statements of Cash Flows ........................................................................................... B-6 Forecasted Balance Sheets............................................................................................................. B-7 Forecasted Balance Sheets (continued) ......................................................................................... B-8 Forecasted Financial Ratios ........................................................................................................... B-9

Summary of Significant Forecast Assumptions and Accounting Policies

Basis of Presentation ................................................................................................................... B-10

Background .................................................................................................................................. B-10

Development of the Community ................................................................................................. B-14

Management of the Community .................................................................................................. B-16

Summary of Financing ................................................................................................................ B-17

Reservation Agreement and the Residence and Care Contract ................................................... B-20

Characteristics of the Market Area .............................................................................................. B-25

Primary Market Area of the Independent Living Units ............................................................... B-27

Independent Living Penetration Analysis .................................................................................... B-48

Marketing of the Community ...................................................................................................... B-52

Description of Assisted Living .................................................................................................... B-58

Assisted Living Penetration Analysis .......................................................................................... B-63

Description of Nursing Care ........................................................................................................ B-68

Summary of Significant Accounting Policies.............................................................................. B-71

Summary of Revenue and Entrance Fee Assumptions ................................................................ B-73

Summary of Expense Assumptions ............................................................................................. B-78

Assets Limited as to Use ............................................................................................................. B-79

Property and Equipment and Depreciation Expense ................................................................... B-81

Long-Term Debt and Interest Expense ........................................................................................ B-81

Current Assets and Current Liabilities ........................................................................................ B-84

Independent Accountants’ Report on Supplemental Information ........................................................... B-85

B-1

INDEPENDENT ACCOUNTANTS’ EXAMINATION REPORT

Board of Directors The Arlington of Naples Naples, Florida We have prepared a financial feasibility study of the plans of The Arlington of Naples, an Illinois not-for-profit corporation, registered to do business in Florida as the Arlington of Naples, Inc. (the “Corporation”) to develop, construct and own a continuing care retirement community to be known as “The Arlington of Naples” (the “Community”) in Naples, Florida. The Community is planned to consist of 132 independent living apartment units and 31 independent living villa units, totaling 163 independent living units which are collectively defined as the “Independent Living Units”; 42 assisted living units; 37 memory support units; 44 skilled nursing beds and related common areas.

Lutheran Life Ministries (“LLM”), an Illinois not-for-profit corporation, is the parent of both the Corporation and Lutheran Life Communities (“LLC”). LLM is an Illinois not-for-profit corporation formed in 2005 for the purpose of developing services for seniors, establishing a senior living system, and providing supervision and management of senior living facilities. LLC is providing certain development services and is to provide management consulting services for the Community. Management of the Corporation, LLM, and LLC are collectively referred to as “Management.”

This financial feasibility study was undertaken to evaluate the Corporation’s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed $190,295,000 Collier County Industrial Development Authority Continuing Care Community Revenue Bonds, Series 2013 (The Arlington of Naples Project) (the “Series 2013 Bonds”).

The Corporation’s underwriter, B.C. Ziegler and Company (the “Underwriter”), has provided the assumed structure and terms of the Series 2013 Bonds as follows:

� $128,295,000 of non-rated tax-exempt fixed rate bonds (the “Series 2013A Bonds”), to be issued at a discount, consisting of term maturities to May 15, 2049, with average interest rates ranges from 7.00 to 8.25 percent per annum and average yields ranging from 7.00 to 8.375 percent per annum; and

� $62,000,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities (TEMPSSM) (the “Series 2013B Bonds”) with assumed interest rates ranging from 6.50 to 6.875 percent per annum. The Series 2013B Bonds consist of $12,000,000 of Series 2013B-1 Bonds (TEMPS-85SM) anticipated to be redeemed in full by approximately 82 percent initial occupancy of the Independent Living Units by approximately August 2017; and $50,000,000 of Series 2013B-2 Bonds (TEMPS-70SM) anticipated to be redeemed in full by approximately 70 percent initial occupancy of the Independent Living Units by approximately February 2017.

B-2

Principal on the Series 2013B Bonds is anticipated to be repaid from a portion of the entrance fees assumed to be available from initial residents moving into the Independent Living Units. The Corporation is solely responsible for the payment of debt service on the Series 2013 Bonds. Neither LLC, LLM, nor any of LLM affiliated organizations other than the Corporation, is liable for payment of interest, principal and premium, if any, on the Series 2013 Bonds. LLM is only obligated with respect to its commitment provided for under a Liquidity Support Agreement. The proceeds from the sale of the Series 2013 Bonds, entrance fees, a contribution from LLM, a subordinate note from LLM, and interest earnings on trustee-held funds are to be used as follows:

� To pay all costs for the Community, including reimbursement of a portion of pre-finance costs, development, construction, land acquisition and architectural costs;

� To fund debt service reserve accounts for the Series 2013 Bonds;

� To fund a Working Capital Fund and an Operating Reserve Fund;

� To fund statutory required reserves;

� To fund interest for the portion of the Series 2013 Bonds related to the Community for a period of 24 months; and

� To pay costs associated with the issuance of the Series 2013 Bonds.

Our procedures included analysis of:

� The Corporation’s history, objectives, timing and financing;

� Future demand for the Corporation’s services, including consideration of:

� Socioeconomic and demographic characteristics of the two defined primary market areas (“PMAs”) for the Community;

� Locations, capacities and competitive information pertaining to other existing and planned facilities in the PMAs; and

� Forecasted occupancy and utilization levels;

� Project-related costs, debt service requirements and estimated financing costs;

� Staffing requirements, salaries and wages, related fringe benefits, and other operating expenses;

� Anticipated entrance fees, monthly fees, and per diem charges for the Community’s residents;

� Sources of other operating and non-operating revenues;

� Revenue/expense/volume relationships; and,

� Depositor files.

Management has set forth its significant forecast assumptions upon which the accompanying forecasted financial statements are based in the feasibility study in the section entitled “Summary of Significant Forecast Assumptions and Accounting Policies.” These assumptions are integral and essential to an understanding of Management’s forecasted financial statements.

B-3

The accompanying financial forecast for each of the years in the six year period ending June 30, 2019, is based on assumptions that were provided by Management. The financial forecast includes the following financial statements and the related summary of significant forecast assumptions and accounting policies:

� Forecasted Statements of Operations and Changes in Net Assets (Deficit);

� Forecasted Statements of Cash Flows;

� Forecasted Balance Sheets; and,

� Forecasted Financial Ratios.

We have examined the financial forecast. Management is responsible for the forecast. Our responsibility is to express an opinion on the forecast based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (“AICPA”) and, accordingly, included such procedures as we considered necessary to evaluate both the assumptions used by Management and the preparation and presentation of the forecast. We believe that our examination provides a reasonable basis for our opinion. Legislation and regulations at all levels of government have affected and may continue to affect the operations of retirement communities. The financial forecast is based upon legislation and regulations currently in effect. If future legislation or regulations related to the Corporation’s operations are subsequently enacted, such legislation or regulations could have a material effect on future operations. Management’s financial forecast is based on the achievement of occupancy levels as determined by Management. We have not been engaged to evaluate the effectiveness of Management and we are not responsible for future marketing efforts and other Management actions upon which actual results will depend. The assumed interest rates, principal payments, and other financing assumptions are described in the section entitled “Summary of Significant Forecast Assumptions and Accounting Policies.” If actual interest rates, principal payments, or funding requirements are different from those assumed in this study, the amount of the Series 2013 Bonds, and associated debt service requirements will need to be adjusted accordingly from those indicated in the forecast. If such interest rates, principal payments, and funding requirements are lower than those assumed, such adjustments will not adversely affect Management’s forecast.

B-4

Management’s forecast was originally prepared October 18, 2013. Management’s forecast and this feasibility study report were updated on December 13, 2013 to reflect changes in the financing structure for the Series 2013 Bonds, including the amount of and interest rates on the Series 2013 Bonds. Our conclusions are presented below:

� In our opinion, the accompanying financial forecast is presented in conformity with guidelines for presentation of a financial forecast established by the AICPA.

� In our opinion, the underlying assumptions provide a reasonable basis for Management’s forecast. However, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material.

� The accompanying financial forecast indicates that sufficient funds could be generated to meet the Corporation’s operating expenses, working capital needs, and other financial requirements, including the debt service requirements associated with the proposed Series 2013 Bonds, during the forecast period. However, the achievement of any financial forecast is dependent upon future events, the occurrence of which cannot be assured.

We have no responsibility to update this report for events and circumstances occurring after the date of this report.

Atlanta, Georgia December 13, 2013


See accompanying Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants’ Examination Report

B-5

Forecasted Statements of Operations and Changes in Net Assets (Deficit) For the Years Ending June 30,

(In thousands)

2014 2015 2016 2017 2018 2019Revenue:

Independent living service fees -$ -$ 3,602$ 8,202$ 10,495$ 11,325$

Assisted living service fees - - 4,406 7,726 8,192 8,331

Nursing service fees - - 3,116 5,911 6,099 6,179

Other revenue - - 123 242 275 287

Entrance fee amortization - - 737 1,875 2,436 2,661

Investment income - - 892 1,232 1,007 1,390

Total revenue - - 12,876 25,188 28,504 30,173

Expenses:Administrative - 352 3,960 4,243 4,283 4,388

Activities - 21 618 681 708 736

Assisted living & memory care - 31 1,093 1,624 1,723 1,792

Nursing - 113 1,503 1,938 2,015 2,096

Facility Costs - 30 1,531 1,928 2,069 2,165

Dining services - 120 1,389 2,220 2,428 2,538

Housekeeping and laundry services - 18 578 848 928 973

Interest expense - - 14,515 13,160 10,455 10,428

Depreciation - - 3,661 3,667 3,668 3,668

Amortization - - 1,396 1,396 1,396 988

Total expenses - 685 30,244 31,705 29,673 29,772

Gain (loss) from operations - (685) (17,368) (6,517) (1,169) 401

Contribution 2,424 - - - - -

Loss on extinguishment of debt (484) - - - - -

Increase (decrease) in net assets (deficit) 1,940 (685) (17,368) (6,517) (1,169) 401

Net assets (deficit), beginning of year - 1,940 1,255 (16,113) (22,630) (23,799)

Net assets (deficit), ending of year 1,940$ 1,255$ (16,113)$ (22,630)$ (23,799)$ (23,398)$



B-6

Forecasted Statements of Cash Flows For the Years Ending June 30,

(In thousands)

2014 2015 2016 2017 2018 2019

Cash flows from operating activities:Change in net assets (deficit) 1,940$ (685)$ (17,368)$ (6,517)$ (1,169)$ 401$

Adjustments to reconcile change in net assets (deficit)

to net cash provided by (used in) operating activities:

Depreciation - - 3,661 3,667 3,668 3,668

Amortization - - 1,396 1,396 1,396 988

Amortization of earned entrance fees - - (737) (1,875) (2,436) (2,661)

Loss on extinguishment of debt 484 - - - - -

(Decrease) increase in accrued interest (6,765) 93 - (487) (23) -

Net change in other current assets and liabilities - - (1,192) (221) (70) (2)

Entrance fees received - attrition (non-refundable) - - 243 660 1,131 1,456

Net cash provided by (used in) operating activities (4,341) (592) (13,997) (3,377) 2,497 3,850

Cash flows from investing activities:Purchase of property and equipment (25,456) (63,137) (6,555) (474) (363) (400)

Interest cost capitalized during construction period (6,644) (13,878) - - - -

(Increase) decrease in assets limited as to use (112,493) 79,255 (27,592) 44,778 7,812 (275)

(Increase) decrease in assets limited as to use, current - - (845) (448) 5 (691)

(Increase) decrease in investments - - - (6,215) (15,748) (3,816)

Deferred marketing costs (6,104) (1,980) (165) - - -

Net cash provided by (used in) investing activities (150,697) 260 (35,157) 37,641 (8,294) (5,182)

Cash flows from financing activities:Initial entrance fees received - - 54,318 27,749 8,474 -

Entrance fees received - attrition (refundable) - - 531 1,444 2,478 3,191

Entrance fees refunded - - (624) (1,455) (1,990) (2,167)

Issuance of long-term debt 190,295 - - - - -

Deferred financing costs (4,591) - - - - -

Original issue discount (1,928) - - - - -

Principal payments on the Series 2013 Bonds - - - (59,375) (2,625) -

Principal payments on the Mortgage Loan (50) (53) (56) (60) (64) (68)

Increase in Pre-Finance Note Payable 4,702 - - - - -

Repayment of Pre-Finance Note Payable (11,340) - - - - -

Increase in LLM Note Payable 6,509 - - - - -

Repayment of Pre-Finance Capital (30,390) - - - - -

(Decrease) increase in Accrued LLC Development Fee 996 - - - - -

(Decrease) increase in Accrued LLC Consulting Fees - - 225 420 420 420

(Decrease) increase in resident deposits 837 384 (5,011) (2,756) (841) -

Net cash provided by (used in) financing activities 155,040 331 49,383 (34,033) 5,852 1,376

Net increase in cash and cash equivalents 2$ (1)$ 229$ 231$ 55$ 44$

Beginning balance of cash and cash equivalents 647 649 648 877 1,108 1,163

Ending balance of cash and cash equivalents 649$ 648$ 877$ 1,108$ 1,163$ 1,207$



B-7

Forecasted Balance Sheets As of June 30, (In thousands)

2014 2015 2016 2017 2018 2019Assets

Current assets:

Cash and cash equivalents 649$ 648$ 877$ 1,108$ 1,163$ 1,207$

Principal Account and Interest Account - - 845 1,293 1,288 1,979

Accounts receivable, net - - 462 907 1,030 1,074

Prepaid expenses and other assets - - 439 554 582 604

Total current assets 649 648 2,623 3,862 4,063 4,864

Investments - - - 6,215 21,963 25,779

Assets limited as to use:

Project Account 71,275 6,157 - - - -

Funded Interest Account 22,896 9,060 - - - -

Series 2013A Reserve Account 11,410 11,410 11,410 11,410 11,410 11,410

Series 2013B-1 Reserve Account 825 825 825 825 - -

Series 2013B-2 Reserve Account 3,250 3,250 3,250 - - -

Entrance Fee Fund - - - 1,730 - -

Operating Reserve Fund - - 5,000 5,000 - -

Working Capital Fund 2,000 1,315 3,396 - - -

Statutory Entrance Fee Escrow Fund - - 40,739 - - -

Statutory Debt Service Reserve Fund - - - 847 881 916

Statutory Operating Reserve Fund - - - 1,687 1,687 1,788

Statutory Renewal and Replacement Fund - - - 1,099 1,649 1,788

Resident deposits 8,224 8,608 3,597 841 - -

Total assets limited as to use 119,880 40,625 68,217 23,439 15,627 15,902

Property and equipment 72,963 149,978 156,533 157,007 157,370 157,770

less accumulated depreciation - - (3,661) (7,328) (10,996) (14,664)

Net property and equipment 72,963 149,978 152,872 149,679 146,374 143,106

Other assets

Deferred marketing costs, net 11,897 13,877 13,337 12,632 11,927 11,222

Deferred financing costs, net 4,591 4,591 4,000 3,409 2,818 2,635

Total assets 209,980$ 209,719$ 241,049$ 199,236$ 202,772$ 203,508$



B-8

Forecasted Balance Sheets (continued) As of June 30, (In thousands)

2014 2015 2016 2017 2018 2019

Liabilities and Net Assets (Deficit)

Current liabilities:

Accounts payable 1,490$ 1,490$ 877$ 1,108$ 1,163$ 1,207$

Accrued expenses 87 87 409 517 543 563

Accrued interest 1,678 1,771 1,771 1,284 1,261 1,261

Current maturities of long-term debt 53 56 60 64 68 1,177

Resident deposits 8,224 8,608 3,597 841 - -

Total current liabilities 11,532 12,012 6,714 3,814 3,035 4,208

Long-term debt, less current maturities 190,931 190,875 190,815 131,376 128,683 127,506

Original issue discount (1,928) (1,928) (1,828) (1,728) (1,628) (1,528)

Accrued LLC Consulting Fees - - 225 645 1,065 1,485

LLM Note Payable 6,509 6,509 6,509 6,509 6,509 6,509

Accrued LLC Development Fees 996 996 996 996 996 996

Refundable entrance fees - - 37,205 56,249 62,556 63,580

Deferred revenue from entrance fees, net of amortization - - 16,526 24,005 25,355 24,150

Total liabilities 208,040 208,464 257,162 221,866 226,571 226,906

Net assets (deficit) 1,940 1,255 (16,113) (22,630) (23,799) (23,398)

Total liabilities and net assets (deficit) 209,980$ 209,719$ 241,049$ 199,236$ 202,772$ 203,508$



B-9

Forecasted Financial Ratios For the Year Ending June 30,

(In Thousands, Except for Ratios)

Long-Term Debt Service Coverage Ratio 2019

Increase in net assets (deficit) 401$

Deduct:

Entrance fee amortization (2,661)

Add:

Depreciation 3,668

Amortization 988

Interest expense 10,428

Accrued LLC Consulting Fees (a)

420

Entrance fees received - attrition (non-refundable) 1,456

Entrance fees received - attrition (refundable) 3,191

Entrance fees refunded (2,167)

Income Available for Debt Service 15,724$

Maximum Annual Debt Service 11,410$

Maximum Annual Debt Service Coverage Ratio (b)

1.38x

Annual Debt Service 10,302$

Annual Debt Service Coverage Ratio 1.53x

Days Cash on Hand 2019Cash and cash equivalents 1,207$

Investments 25,779

Statutory Debt Service Reserve Fund 916

Statutory Operating Reserve Fund 1,788

Statutory Renewal and Replacement Fund 1,788

Cash and Investments 31,478$

Total expenses 29,772

Less:

Accrued LLC Consulting Fees (a)

(420)$

Depreciation (3,668)

Amortization (988)

Total expenses less depreciation and amortization 24,696

Daily operating expenses (c)

68

Days Cash on Hand 463

Cash to Debt Ratio 2019Cash and cash equivalents 1,207$

Investments 25,779

Statutory Debt Service Reserve Fund 916

Statutory Operating Reserve Fund 1,788

Statutory Renewal and Replacement Fund 1,788

Series 2013A Reserve Account 11,410

Funds Available for Debt Service 42,888$

Long-Term Indebtedness Outstanding 127,506$

Cash to Debt Ratio 0.34x

(a) Consulting fees payable to Lutheran Life Communities are to be deferred during the forecast period as further described

in the "Management of the Community" section of the Summary of Significant Forecast Assumptions and Accounting

Policies.

(b) Ratio was requested by the Underwriter and is not required by the Master Trust Indenture.

(c) Daily operating expenses are equal to total operating expenses less depreciation, amortization and accrued LLC

Consulting Fees divided by 365 days.


Summary of Significant Forecast Assumptions and Accounting Policies

See Independent Accountants’ Examination Report B-10

Basis of Presentation The accompanying financial forecast presents, to the best knowledge and belief of management of The Arlington of Naples, an Illinois not-for-profit corporation, registered to do business in Florida as the Arlington of Naples, Inc. (the “Corporation”), Lutheran Life Ministries, and Lutheran Life Communities (collectively referred to as “Management”), the expected financial position, results of operations and cash flows of the Corporation as of and for each of the six years ending June 30, 2019. Accordingly, the accompanying financial forecast reflects Management’s judgment as of December 13, 2013, the date of this forecast, based on present circumstances and the expected course of action during the forecast period. The assumptions disclosed herein are those that Management believes are significant to the forecast. There will usually be differences between the prospective and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Management’s forecast was originally prepared October 18, 2013. Management’s forecast and this feasibility study report were updated on December 13, 2013 to reflect changes in the financing structure for the Series 2013 Bonds, including the amount of and interest rates on the Series 2013 Bonds. Background The Corporation The Corporation is a not-for-profit corporation organized under the laws of the state of Illinois and registered to do business in Florida. The Corporation was formed in 2008 for the purpose of developing, owning and operating a continuing care retirement community in Naples, Florida to be known as “The Arlington of Naples” (the “Community”).

The Corporation is affiliated with The Evangelical Lutheran Church of America (“ELCA”) and is exempt from federal income tax under Section 501(a) of the Internal Revenue of 1986 (the “Code”) as an organization described in Section 501(c)(3) under the ELCA group exemption. The business affairs of the Corporation are governed by its officers and directors (the “Board”). The Corporation does not provide compensation to the Board in such capacity. Members of the Board are appointed by Lutheran Life Ministries for a three-year term of office, provided that the initial terms are established such that terms of office are staggered. Officers of the Board are elected annually by the Board and hold office for a term of three years. Lutheran Life Ministries and Lutheran Life Communities Lutheran Life Ministries (“LLM”), an Illinois not-for-profit corporation, is the sole corporate member of the Corporation and Lutheran Life Communities (“LLC”). LLM is also exempt from federal income tax under Section 501(a) of the Code.

Summary of Significant Forecast Assumptions The Arlington of Naples and Accounting Policies, Continued


LLM, formed in 2005, is the parent corporation of a system of senior living communities which provides community services, residential options and care to the senior population. Beginning with its inception in 1892, the Lutheran Home in Arlington Heights, Illinois served residents from one location. LLM currently provides senior care and residential options through five continuing care retirement communities located in Arlington Heights, Illinois; Chicago, Illinois; Ottawa, Illinois; Bloomington, Illinois; and Crown Point, Indiana.

LLC, an affiliate of LLM, is the co-developer and is to provide management consulting services to the Corporation. LLC is exempt from federal income tax under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code.

CRSA/LCS Management, LLC CRSA/LCS Management, LLC (“CRSA/LCS”), headquartered in Memphis, Tennessee, specializes in operating multi-level and continuing care retirement communities similar to the Community. CRSA/LCS is a wholly-owned subsidiary of Life Care Services LLC (“LCS”). CRSA/LCS is providing certain development consulting services for the Community.

The Community The Community is to be a continuing care retirement community (“CCRC”) located on

approximately 39 acres of land in the master-planned community of the Lely Resort Community in Naples, Collier County, Florida. The Community is proposed to consist of the following:

� 163 independent living units consisting of 120 entrance fee apartments (the “Entrance Fee Independent Living Apartments”), 12 rental apartments (the “Rental Independent Living Apartments”) and 31 entrance fee villas (the “Villa Units”). The Entrance Fee Independent Living Apartments, Rental Independent Living Apartments and the 31 Villa Units are collectively as the “Independent Living Units”;

� 42 assisted living units (the “Assisted Living Units”) and 37 memory support assisted living units (the “Memory Support Units”);

� 44 skilled nursing beds (the “Skilled Nursing Beds”); and,

� Associated common areas.

The Community’s commons area is assumed to include a central lobby, private dining room and bistro-style café and general store, a small theater, salon/spa, billiards and game room, multi-purpose assembly hall, arts and crafts studio, library and business center, media

room/auditorium, pub and lounge areas, aquatic center, a woodworking shop and a fitness and wellness center.

The gross square footage of the Community upon completion is anticipated to approximate 582,000 square feet, including the common areas and structured parking.



The following table summarizes the types of Independent Living Units, approximate square footage, monthly service fees (“Monthly Service Fee”) and entrance fees (“Entrance Fee”) at the Community.

Table 1 Proposed Independent Living Unit Configuration

Entrance Fees (1) Monthly

Independent Living Unit Type Number of Units

Square Footage

95% Refund Entrance Fee

50% Refund Entrance Fee

Traditional Entrance Fee

Service Fee (2)

Apartments Units: One Bedroom

Goldcrest 15 854 $410,000 $388,000 $315,000 $3,084

Brambling (3) 33 973 $478,000 $444,000 $366,000 $3,535

Brambling - Rental (3)(4) 12 973 N/A N/A N/A $5,035

Two Bedroom

Linnet 18 1,366 $684,000 $630,000 $521,000 $4,862

Sandpiper 25 1,466 $733,000 $673,000 $558,000 $5,200

Vireo 1 1,509 $760,000 $661,000 $548,000 $5,555

Cormorant 3 1,555 $783,000 $721,000 $598,000 $6,184

Flamingo 2 1,807 $910,000 $865,000 $717,000 $6,937

Nighthawk 2 1,877 $975,000 $898,000 $744,000 $5,493

Kingfisher 1 2,082 $1,042,000 $957,000 $794,000 $6,578

Three Bedroom

Osprey 10 1,888 $921,000 $842,000 $698,000 $6,830

Heron 10 2,015 $1,028,000 $944,000 $782,000 $7,140

Villa Units (5)

Two Bedroom

Redwing 13 1,806 $918,000 N/A N/A $6,223

Fieldfare 13 2,445 $1,098,000 N/A N/A $7,191

Three Bedroom

Stonechat 5 3,031 $1,427,000 N/A N/A $7,344

Total / Weighted Averages (6) 163 1,490 $750,430 $615,033 $508,242 $5,198 Second Person Fees $15,000 $15,000 $15,000 $1,040

Source: Management N/A = Not applicable (1) Reflects the Entrance Fees, effective May 1, 2013, for the three entrance fees plans (“Entrance Fee Plans”) available for the

Independent Living Units. Management has limited the number of 50% Refund and Traditional Refund Entrance Fee Plans to a combined total of 50 contracts. Entrance Fees refunds under the Traditional Entrance Fee Plan decrease over time until the refund is zero.

(2) Monthly Service Fees shown are to be effective July 1, 2015 (fiscal year 2016). (3) Twelve Brambling Independent Living Units are to be available under a rental residency agreement (the “Rental Plan”).

Under a Rental Plan, an additional $1,500 per month is added to the corresponding Monthly Service Fees under the Entrance Fee Plan.

(4) Depositors have the option to purchase two adjacent Brambling units. The combined unit is to known as an Egret unit, which is to contain 1,985 total square feet. Entrance Fees for an Egret unit are as follows: $993,000 for the 95% Refund Plan, $912,500 for the 50% Refund Plan and $755,000 for the Traditional Entrance Fee Plan. Monthly Service Fees associated with an Egret unit is $6,807 per month under an Entrance Fee plan and $8,045 per month under a Rental Plan. As of July 31, 2013, two Depositors (hereinafter defined) have selected an Egret unit.

(5) Villa Units are not available under a 50% or Traditional Entrance Fee Plans. (6) Weighted average Entrance Fees do not include the twelve Brambling units available under the Rental Plan. Weighted

average Entrance Fees for the 50% Entrance Fee Plan and Traditional Entrance Fee Plan do not include the Villa units.



The following table summarizes the unit types, approximate square footages, Monthly Service

Fees, and daily service fees (“Daily Service Fees”) for the Assisted Living Units, Memory Support Units, and the Skilled Nursing Beds (collectively, the “Health Center”), respectively.

Table 2 Health Center Configuration

Health Center Number of Units

Square Footage

Monthly Service Fee(1)(2)(3)

Daily Service Fee(1)(3)

Assisted Living:

One Bedroom Standard 21 460 $6,995 N/A

One Bedroom Deluxe 18 480 $7,295 N/A

Two Bedroom (4) 3 737 $8,950 N/A

Total/Weighted Average – Assisted Living 42 488 $7,263 N/A

Memory Support:

Memory Support Units 37 297 $10,184 $335

Total/Weighted Average - Memory Support 37 297 $10,184 $335

Skilled Nursing:

Private Room (Traditional) 40 297 N/A $383

Private Room (Bariatric Room) 4 320 N/A $383

Total/Weighted Average – Skilled Nursing 44 299 $383

Total 123

Source: Management

N/A – Not applicable (1) The Monthly Service Fees and Daily Service Fees shown reflect anticipated rates effective July 1, 2015 (fiscal year 2016). (2) The Monthly Service Fees shown for assisted living services are all-inclusive. (3) Monthly Service Fee and Daily Service Fee reflect pricing for direct admissions into the Health Center. Under the Entrance

Fee Plans, residents who transfer from an Independent Living Unit to the Health Center pay a discounted rate equal to 50 percent of the direct admission rate. The discount is effective for the first four years of occupancy within the Health Center for Residents (hereinafter defined) who signed a Reservation Agreement (hereinafter defined) on or after May 1, 2013. The discount for Residents who signed a Reservation Agreement prior to May 1, 2013 is effective for the term of the Resident and Care Agreement ((hereinafter defined)

(4) Two bedroom Assisted Living Units are also available for double occupancy for a rate of $4,475 per person effective July 1, 2015 (fiscal year 2016).



Project Timeline The following table illustrates the anticipated timeline for the Community is shown below:

Table 3 Development Timeline

Permanent financing January 2014

Construction commences on the Community January 2014

The Community is available for occupancy July 2015

Memory Support Units achieves stabilized occupancy of 92% August 2016

Nursing Beds achieve stabilized occupancy of 94% September 2016

Assisted Living Units achieves stabilized occupancy of 93% February 2017

Independent Living Units achieve stabilized occupancy of 95% June 2018

Source: Management

Development of the Community CRSA/LCS Development Consulting Agreement The Corporation and CRSA/LCS entered into a Development Consulting Agreement in March 2009, as amended (the “Development Consulting Agreement”) to provide development services related to the Community. The term of the Development Consulting Agreement is from September 10, 2008, and continues until the earlier of the date when the proposed Independent Living Units are 95 percent occupied or December 31, 2015. As compensation for services rendered, the Corporation will pay a “CRSA/LCS Development Consulting Fee” equal to $3,500,000 and to be paid as follows: (i) a “Development Retainer” equal to $25,000 per month from the period beginning September 10, 2008 until December 2012; (ii) upon the closing of permanent financing, $2,100,000 of the CRSA/LCS Development Consulting Fee, less the total Development Retainer fees paid to date; (iii) $700,000 to be payable on a pro-rata basis during the construction period in equal monthly payments; and (iii) $700,000 to be payable on a pro-rata basis as the Independent Living Units achieve initial occupancy levels up to and including 90 percent (147 units).



The following table summarizes the assumed payment schedule related to CRSA/LCS Development Consulting Fee.

Table 4 Schedule of CRSA/LCS Development Consulting Fees

The Development Retainer and upon closing of permanent financing $2,100,000

Monthly over the construction period 700,000

Total Fees Paid from the Series 2013 Bonds $2,800,000

Pro-rata over fill-up to 90% occupancy of the Independent Living Units 700,000(1)

Total Fees Paid Based on Achieving Occupancy $700,000

Total CRSA/LCS Development Consulting Fees $3,500,000

Source: Management (1) Paid from the Working Capital Fund, as defined hereinafter, from initial Entrance Fees received.

In addition, upon closing of the Series 2013 Bonds, the Corporation is to pay CRSA/LCS a sales and marketing consulting fee of $354,712 for services previously rendered. The Corporation is also expected to reimburse CRSA/LCS for all reasonable out-of-pocket expenses for personnel employed by CRSA/LCS to such extent such expenses are included in the Community’s project -related budget. Out-of-pocket expenses could include, but not limited to, travel, lodging, rental car, meals, telephone, postage, and overnight courier expenses, etc. but not including any overhead or administrative expense. LLC Development Agreement The Corporation and LLC entered into a development agreement on March 28, 2011 (the “LLC Development Agreement”) whereby LLC is to provide co-development consulting and marketing services associated with the Community. The term of the LLC Development Agreement is from September 1, 2008, and continues until the earlier of (i) such time as the Independent Living Units are 95 percent occupied or (ii) June 30, 2019. As compensation for services rendered, the Corporation is to pay a development fee (the “LLC Development Fee”) equal to 1.0 percent of the Community’s project-related costs, including the total cost of all site improvements, direct construction costs, renovation costs, architectural and engineering costs, cost of furnishings and equipment, all costs and fees for permits and approvals, and construction contingency reserves incurred by the Corporation, estimated to be approximately $995,500, earned upon the closing of the Series 2013 Bonds. The LLC Development Fees shall be deferred on the same terms as the LLC Consulting Fees (hereinafter defined) and for purposes of the forecast, the LLC Development Fee is assumed to be paid after the forecast period.



Management of the Community The Corporation and LLC entered into a consulting services agreement (the “Consulting Services Agreement”), effective July 1, 2015, whereby LLC is required to provide the Corporation with services related to professional administrative and support services including: corporate management, future development, accounting and payroll, human resources, information technology, marketing and risk management services.

As compensation for services rendered, the Corporation is to pay LLC a monthly consulting fee (the “Consulting Fee”), in amounts as follows: for the fiscal years ending June 30, 2016 through June 30, 2020, a monthly fee equal to the lower of two percent of operating revenue, defined as resident service fee revenue and other revenue, or $35,000 per month. The term of the Consulting Services Agreement shall commence on July 1, 2015 (the “Commencement Date”) and will terminate sixty months after the Commencement Date. The Consulting Services Agreement will automatically renew for an additional 60 months after the initial term unless (a) either party provides written notice of the intent to terminate the Consulting Services Agreement or (b) the Consulting Services Agreement has been terminated in accordance to the terms and conditions contained within the Consulting Services Agreement. Based on provisions in the Consulting Services Agreement and the Master Indenture, payment of Consulting Fees is deferred until the following conditions are met with respect to the proposed payments: (a) two full consecutive fiscal quarters in which total occupancy of the Community is equal or greater than 90%; (b) after giving effect to the proposed payment, the Debt Service Coverage Ratio and Cash to Indebtedness Ratio would not have been less than 1.30x and 0.30x respectively, (c) no Series 2013B Bonds are outstanding and (d) no events of default have occurred. For purposes of the forecast, payment of the Consulting Fee is deferred and are assumed to be paid after the forecast period. Liquidity Support Agreement LLM, the Corporation, and Wells Fargo Bank. N.A. (the “Trustee”) will enter into a liquidity support agreement (the “Liquidity Support Agreement”), expected to be executed upon closing of the Series 2013 Bonds, to provide liquidity support to the Corporation. Under the Liquidity Support Agreement, LLM will agree to provide liquidity support for the Corporation in an amount not less than $7,000,000. Under certain circumstances, LLM may be required to deposit up to an additional $3,000,000 in the Liquid Support Fund. The moneys available under the Liquidity Support Agreement may be drawn upon by the Trustee or the Corporation to pay for certain project costs, interest on the Series 2013 Bonds, or certain operating expenses in conjunction with the Community, if no other funds are available for those purposes in any trustee-held fund (other than the Debt Service Reserve Fund) subject to provisions in the Liquidity Support Agreement. The Liquidity Support Agreement will also contain provisions which reduce the obligation once certain conditions and covenants have been met by the Corporation for a specified time period. For purposes of the forecast, Management has not forecasted draws on the Liquidity Support Agreement.



Summary of Financing

Pre-Finance Loans Pre-finance development capital costs and expenses, including the cost of the Community site, is assumed to approximate $42,566,000. These costs have been and are anticipated to continue to be funded until permanent financing occurs by the following sources.

� Lutheran Church Extension Fund Promissory Note - In July 2008, the Lutheran Church Extension Fund – Missouri Synod (“LCEF”), a Missouri non-profit organization, provided a five year, interest bearing promissory note of up to $19,490,000 (the “LCEF Land Loan”), at a current interest rate of 4.25 percent per annum. LCEF has the right to review and adjust the interest rate monthly and over the life of the LCEF Land Loan, the interest rate has fluctuated from 4.25 percent to 6.375 percent. Principal and interest on the LCEF Land Loan is payable in a single payment including (i) the full balance of the LCEF Loan and (ii) all accrued and unpaid interest, and (iii) any penalties payable under the terms of the LCEF Loan. The LCEF Land Loan is assumed to be repaid with a portion of the Series 2013 Bond proceeds.

� The Series 2011 Notes – In June 2011, the Collier County Industrial Development Authority

Florida issued $10,900,000 of non-rated, tax-exempt Collier County Industrial Development Authority Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011A, and the Collier County Industrial Development Authority Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011B, collectively, the “Series 2011 Notes.” The Series 2011 Notes were issued with an interest rate of 14.00 percent per annum. Interest payments on the Series 2011 Notes are assumed to accrue and compound semi-annually and are to be payable at the time the Series 2011 Notes are repaid. Principal and accrued interest on the Series 2011 Notes is assumed to be repaid upon permanent financing of the Series 2013 Bonds.

� Pre-Finance Deferred Note Payable - LLM has and is anticipated to continue to provide

approximately $11,340,000 to the pre-construction development cost of the Community as part of the Pre-Finance Capital (“Pre-Finance Deferred Note Payable”). The Pre-Finance Deferred Note Payable is assumed to be repaid with a portion of the Series 2013 Bonds. Upon permanent financing of the Series 2013 Bonds, LLM anticipates providing an additional deferred note payable (the “Deferred Note Payable”).

The Pre-Finance LLM Deferred Note Payable, the Series 2011 Notes and the LCEF Land Loan are collectively defined as the “Pre-Finance Loans.” Summary of Financing Total financial requirements for the Community are assumed to approximate $219,074,000. The Corporation proposes to fund these financial requirements primarily through the issuance of Collier County Industrial Development Authority Continuing Care Community Revenue Bonds, Series 2013 (The Arlington of Naples Project) (the “Series 2013 Bonds”) in the amount of $188,367,000, net of an original issue discount.



Management has assumed the following sources and uses of funds in preparing the financial forecast based upon information provided by the Corporation’s underwriter, B.C. Ziegler and Company (the “Underwriter”).

Table 5 Sources and Uses of Funds

(In Thousands)

Sources of Funds: Series 2013A Bonds (1) $128,295

Series 2013B Bonds (1) 62,000

Total Series 2013 Bonds (1) $190,295

Original Issue Discount - Series 2013 A Bonds (1) (1,928)

Total Series 2013 Bonds, net proceeds (1) 188,367

Deferred Note Payable (2) 6,509

Property mortgage (3) 970

Cash contribution (4) 2,424

Initial entrance fees (5) 19,750

Interest earning on trustee held funds (6) 1,054

Total Sources of Funds $219,074 Uses of Funds:

Project costs

Construction costs (7) $79,545

Land costs (8) 17,838

Site development (9) 950

Marketing costs (10) 14,042

Design and engineering fees (11) 5,990

Development fees and expenses (12) 4,432

Furniture and equipment (13) 4,723

Contingency (14) 3,736

Other costs (15) 3,030

Zoning, permit fees and regulatory filings (16) 2,441

Property taxes (17) 617

Interest and costs of issuance on Pre-finance Loans (18) 11,151

Total project related costs $148,495

Funded Interest (19) 28,753

Debt Service Reserve Accounts (20) 15,485

Working Capital Fund (21) 12,250

Operating Reserve Fund (22) 5,000

Statutory Reserve Requirements (22) 4,500

Cost of issuance and other costs (23) 4,591

Total Uses of Funds $219,074 Sources: Management, CRSA/LCS and Underwriter



(1) According to the Underwriter, the following series of bonds are assumed to be issued:

� $128,295,000 of non-rated tax-exempt fixed rate term bonds (the “Series 2013A Bonds”);

� $62,000,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities (TEMPSSM

) (the “Series 2013B Bonds”).

� The Series 2013A Bonds are assumed to be issued at a discount of approximately $1,928,000.

(2) A Deferred Note Payable of approximately $6,509,000 is assumed to be provided by LLM to pay for a portion of the costs of issuance, construction costs and other Project related costs.

(3) A mortgage loan on the marketing office property, of approximately $970,000, has been incurred by the Corporation.

(4) A cash contribution of approximately $2,424,000 is assumed to be provided by LLM.

(5) Management assumes that approximately $19,750,000 of Entrance Fees are to be used to fund start-up losses, operating and statutory minimum liquid reserves.

(6) Interest in the amount of approximately $1,054,000 is assumed to be earned as follows: on the Project Account at 0.50 percent, on the Funded Interest Account at 0.41 percent, on the Series 2013A Bonds Debt Service Reserve Account at 1.66 percent, on the Series 2013B-1 Bonds Debt Service Reserve Account at 0.82 percent, and on the Series 2013B-2 Bonds Debt Service Reserve Account at 0.56 percent.

(7) Construction costs related to the construction of the Community are estimated to approximate $79,545,000, based on two fixed price contracts provided by the Corporation’s general contractors: Archer Western Construction, LLC and Stock Construction LLC of $69,550,000 and $9,993,944 respectively, totaling $79,543,944.

(8) Land costs, including the purchase price of the land, approximate $17,838,000.

(9) Site development costs approximate $950,000.

(10) Marketing costs related to the Community are estimated to approximate $14,042,000 and include direct marketing and advertising costs, salaries and benefits, CRSA/LCS marketing fees and other promotional material.

(11) Design and engineering costs approximate $5,990,000, based upon contractual agreements with the Corporation’s architects, Kipp Flores Architects LLC, and SFCS, Inc.

(12) Development fees and reimbursable expenses paid from the Series 2013 Bonds approximate $4,432,000 and include $2,800,000 of CRSA/LCS Development Consulting Fees, $768,000 for owner’s representative fees to Hoffman Development and approximately $864,000 of development related expenses. Additional development fees of $1,695,500 are incurred after issuance of the Series 2013 Bonds as described in the “Development of the Community” section of this report.

(13) Interior design fees, furniture and equipment costs are estimated to approximate $4,723,000 based on the Management’s estimates and comparable projects.

(14) Management has included a project contingency of $3,736,000 as part of overall Project related costs.

(15) Other project costs include expenses related to legal, construction management, accounting and other professional fees, bank construction review, marketing office building purchase, surveying, insurance, signage, and administrative and other costs of approximately $3,030,000.

(16) Costs associated with zoning, permit fees and regulatory filings approximates $2,441,000.

(17) Property taxes are assumed to approximate $617,000.

(18) Interest and cost of issuance costs related to the Pre-Finance Loans are assumed to approximate $11,151,000.

(19) The Underwriter has estimated $28,753,000 to be used to fund interest for approximately 24 months from the date of issuance of the Series 2013 Bonds.

(20) Deposits into the Debt Service Reserve Accounts for the Series 2013 Bonds are assumed to approximate $15,485,000.

(21) Working Capital Funds of $12,250,000 are to be funded as follows: $2,000,000 upon closing of the Series 2013 Bonds and $10,250,000 from initial Entrance Fees after completion of the Community.

(22) Subsequent to the issuance of the Series 2013 Bonds and after completion of the Community, initial Entrance Fees of $9,500,000 are assumed to be available to fund approximately $5,000,000 into the Operating Reserve Fund (prior to any replenishment), and $4,500,000 for statutory minimum liquid reserves.

(23) Costs of issuance related to the issuance of the Series 2013 Bonds are assumed to approximate $4,591,000 including the Underwriter’s discount, accounting fees, legal fees, the feasibility consulting fee, the bond issuance fees, the cost for the printing of the preliminary official statement and official statement and other miscellaneous financing costs.



Reservation Agreement and Residence and Care Contract To be accepted for residency at the Community, a person must be at least 62 years of age prior to the occupancy date and exhibit an ability to live independently and meet their financial obligation as residents of the selected Independent Living Unit. Reservation Agreement To reserve an Independent Living Unit, a prospective resident must execute a reservation agreement (the “Reservation Agreement”), provide a self-disclosure of his or her health and finances (“Confidential Data Profile”) and place a deposit equal to 10 percent of the Entrance Fee (the “Reservation Deposit”) on the selected Independent Living Unit (the “Depositor”). The remaining 90 percent of the Entrance Fee is due on or before the occupancy date (the “Occupancy Date”) of the Independent Living Unit. The Reservation Agreement reserves the right of the prospective resident to choose the selected Independent Living Unit and indicate his or her intent to execute a residence and care contract (the “Residence and Care Contract”).

The Reservation Deposit is placed and maintained in an escrow account with SunTrust Bank. The Reservation Deposit will accrue interest from the date of deposit until the Occupancy Date and such interest will be credited to the Depositor in the form of a discount on the Monthly Service Fees or Entrance Fee payable after the Occupancy Date.

Residence and Care Contract Pursuant to the Residence and Care Contract, the resident (“Resident”) may reside in the Independent Living Unit for as long as he or she is capable of meeting the requirements of occupancy in the opinion of the Corporation after consultation with the Resident, the Resident’s attending physician and/or the Corporation’s appointed Medical Director. If the Resident is no longer able to meet the requirements of residing in the Independent Living Unit, the Residence and Care Contract also provides for higher levels of health care in the Assisted Living Units, Memory Support Units or Nursing Beds. In addition, prior to the Occupancy Date the Depositor must submit an update of the Confidential Data Profile and their personal financial information to be approved by Management.

Payment of the Entrance Fee and a Monthly Service Fee entitles the Resident to occupy the selected Independent Living Unit and to receive the following services and amenities:

� A $400 monthly dining allowance;

� Tray service to the residence if Resident or spouse is receiving care for a minor illness or if tray service is ordered by the Resident’s personal physician or the Wellness Center Nurse;

� Weekly housekeeping service;

� Weekly flat linen service;

� Sewer, water, waste disposal, electricity, heat/air conditioning and basic cable television service;

� Security and emergency alert system;

� General maintenance of the Community’s building and common grounds;



� Repair, maintenance and replacement of furnishings provided by the Corporation in the Resident’s Independent Living Unit;

� Scheduled local transportation;

� Individual storage area;

� Coordinated wellness programming and services;

� Planned social, cultural and recreation activities;

� Emergency call system with 24-hour monitoring; and

� Priority access to assisted living, memory support services and skilled nursing care services.

In addition to the items included in the Monthly Service Fee, certain services are available to Residents at an additional cost. These services may include, but not limited to, additional housekeeping, personal laundry service, catering for special occasions, delivered meals service and take-out, additional meals, additional parking, personalized transportation services, special events and programs, personal fitness trainer, beauty/barber shop, and guest overnight accommodations.

Health Care Benefit The Residence and Care Contract provides Residents with priority access to the Health Center at a discount of 50 percent off the then current market monthly or per diem rate (the “Health Care Benefit”). For Residents who signed a Reservation Agreement prior to May 1, 2013, the Health Care Benefit is effective for the term of the Resident and Care Agreement. For Residents who sign a Reservation Agreement on or after May 1, 2013, the Health Care Benefit is for a period up to four years.

Services Provided for the Assisted Living Units and the Memory Care Units

Residents of the Assisted Living Units and the Memory Care Units receive three meals per day and between-meal snacks and nourishment; assisted living and extended congregate care services in accordance with the Resident’s written plan of care; laundering of linens and bedding, housekeeping and maintenance, utilities, emergency call service, daily observation of Resident’s general health, safety, physical and emotional well-being; scheduled transportation; social services; and planned recreational activities. The Resident is required to pay any additional charges for additional services and supplies that are not covered in the applicable base fees.

Services Provided for the Nursing Beds Residents of the Nursing Beds receive room and board; nursing care, personal care or custodial care services in accordance with the Resident’s written plan of care; laundered linens and bedding; housekeeping and maintenance; social services; and planned recreational activities. The Resident is required to pay any additional charges for services that are not covered in the applicable base fees for the Nursing Beds.



Entrance Fee Options The Corporation has offered four Entrance Fee plans for the first generation Depositors of the Independent Living Units. The Entrance Fee options, related amortization schedules and refunds upon termination of the Residence and Care Contract are as follows:

Entrance Fee Option Amortization Schedule

100% Refundable Plan (1) Upon termination of the Residence and Care Contract, 100 percent of the total Entrance Fee paid is to be refunded to the Resident.

95% Refundable Plan Upon termination of the Residence and Care Contract, 95 percent of the total Entrance Fee paid is to be refunded to the Resident.

50% Refundable Plan (2)

The 50 percent Refundable Plan, which after a four percent administrative fee, amortizes at two percent per month for each month of occupancy for the first 23 months. After the 23rd month, the refund is fixed at 50 percent.

Traditional Refundable Plan(2)

The Traditional Amortizing Plan decreases four percent upon occupancy and two percent per month, thereafter, until the refund is zero.

(1) The 100% Refundable Plan was offered to prospective residents only through March 2011 and is no longer available for prospective residents.

(2) Management has limited the number of 50% Refund and Traditional Refund Entrance Fee Plans to a combined total of 50 contracts.

Termination by the Resident Prior to Occupancy Date If a Depositor terminates the Residence and Care Contract prior to establishing occupancy (i) within 7 days after execution (the “Rescission Period”) or (ii) due to inability to occupy the residence due to death, illness, injury or other incapacity, the Depositor is to receive a 100 percent refund of all monies paid, including any interest earned (at the prevailing investment rate) to the date of termination. If a Depositor terminates the Residency and Care Contract prior to occupancy for any other reason, the Depositor is to receive a 100 percent refund of all monies paid, including any interest earned (at the prevailing investment rate) to the date of termination less a processing fee of two percent of the entire Entrance Fee. In no event shall the processing fee exceed the amount of the Reservation Deposit paid by the Resident. Termination by the Resident after Occupancy Date

If the Residence and Care Contract is terminated after occupancy for any reason, other than the Resident’s death, within 12 months of occupancy, a refund of a 100 percent of the Entrance Fee, without interest, is refunded by the Corporation based on a 100 percent satisfaction guarantee. If the Residence and Care Contract after 12 months of occupancy, a portion of the Entrance Fee is refunded by the Corporation as determined by the Entrance Fee plan selected by the Resident. In cases of double occupancy, if one Resident dies or terminates the agreement, the Residence and Care Contract would continue in effect for the surviving or the remaining Resident and no refund of any portion of the Entrance Fee is to be due at that time. The Monthly Service Fee would be adjusted to reflect the then applicable single occupancy Monthly Service Fee.



Rental Agreement The Corporation is also planned to have a residency agreement for residents seeking to live in the 12 Brambling Independent Living Units under a rental agreement (the “Rental Agreement”). Under the Rental Agreement, for the payment of a rental monthly service fee, Residents would receive the same services as Residents under the Entrance Fee Plans. However, Rental Agreement Residents would not receive the Health Care Benefit. Founders Program The Corporation has offered various incentives to prospective Residents of the Independent Living Units. All prospective Residents that have reserved an Independent Living Unit prior to October 18, 2013 are referred to as Founders. These various incentives, collectively defined as the Founders Program (the “Founders Program”), have included among the following benefits at certain points in the presales process:

� 100% Refund Entrance Fee Plan

� 5% discount on entrance fees, the benefit of which approximates savings that range from $14,000 to $65,000

� Discounts on entrance fees which range from $10,000 to $20,000

� $5,000 moving expense credit with a third party senior move management company The second person entrance fee of $15,000 was waived through October 31, 2012. In total, the second person entrance fee was waived for 67 Founders. All prospective Residents that reserved an Independent Living Unit prior to May 1, 2013 received the Health Care Benefit for the term of the Resident and Care Agreement. In addition, all Founders are eligible to receive interest paid on the Reservation Deposit equal to four percent annually until the Occupancy Date (if the Resident occupies the unit), issued as a credit against the Entrance Fee due upon move-in. In total, incentives offered in the Founders Program approximate $3,292,000.



The following table summarizes the number of Depositors on each Entrance Fee Plan as of October 18, 2013 and Management’s assumed number of Entrance Plans for the first generation of Residents.

Table 6 The Community

Utilization of Resident Agreement Types

Depositors(1) Residents

Entrance Fee Plan Number of Residents

Percentage of Depositors

Number of Residents

Percentage of Residents

100% Refundable Plan(2) 10 8.4% 11 7.1%

95% Refundable Plan 60 50.4% 83 53.5%

50% Refundable Plan (3) 14 11.8% 12 7.7%

Non-Refundable Plan (3) 35 29.4% 38 24.6%

Rental Plan - 0.0% 11 7.1%

Total 119 100.0% 155 100% Source: Management (1) Represents the total number of Depositors (121 Independent Living Units) as of October 18, 2013. (2) The 100% Refundable Plan is no longer offered.

(3) Management has limited the number of 50% Refund and Traditional Refund Entrance Fee Plans to a combined total of 50 contracts.



Characteristics of the Market Area

Assumptions for the future utilization of the Community were developed by Management based on analysis of the following factors that may affect the demand for the Community’s accommodations and services:

� Site description and general area analysis;

� Defined market areas for the Community;

� Demographic and socioeconomic characteristics of the defined primary market areas;

� Estimated age- and income-qualified households within the defined primary market areas;

� Description and utilization of existing and proposed comparable retirement communities, assisted living and nursing care facilities within and near the defined primary market areas;

� Management’s ability to market the Independent Living Units and Health Center; and

� Penetration rates for independent living and assisted living services. Each of the above factors and the resulting assumed utilization of the Community are described in the following sections. Site Description The Community is planned to be situated on a 39-acre plot of land in the Lely Resort Community development (“Lely Resort”) on the western coast of South Florida in Naples (the “Site”). The Site, located in Collier County, is approximately eight miles southwest of downtown Naples and approximately 10 miles north of Marco Island.

Lely Resort is a master planned community that once was the location of a large equestrian center. Lely Resort houses upscale neighborhoods of private, freestanding residences, condominium and apartment housing along with country club amenities featuring a variety of recreation including championship golf, resort-style pools, tennis courts, and spa and fitness center. Residents are anticipated to have access to many of the amenities found within the Lely Resort including a public golf course, shopping, restaurants and the local library. General Area Analysis

Highways

The Site is located in the South Naples section of the Lely Resort just west of the southwest corner of Lely Cultural Parkway and County Road 951 (Collier Boulevard), which provides access to Interstate 75 (“I-75”). I-75 is less than four miles north of the Site, which provides access to Fort Myers, Sarasota and Tampa to the north and Fort Lauderdale to the east. The Site is approximately three miles north of U.S. Highway 41, which provides access north through Bradenton and Sarasota and southeast to Miami.

Public Transportation

The Collier Area Transit System (“CAT”) offers 10 bus routes throughout Collier County to the cities of Naples, Immokalee and Marco Island. The Site is served by the Green Route 4 bus route, with bus stops located at the Physicians Regional Medical Center on Collier Boulevard



less than one mile east of the Site and at Edison State College – Collier campus, less than one mile west of the Site.

Airports

Southwest Florida International Airport (“RSW”) is located approximately 37 miles north of the Site in Fort Myers. There are 18 airlines that serve RSW and provide nonstop domestic and international flights to most major airports.

Hospitals

The following table shows the hospitals and medical centers located near the Community.

Table 7 Hospitals and Medical Centers Near the Community

Hospital Name (1) Location

Driving Miles from the

Community Type Number of

BedsPhysicians Regional Medical Center – Collier Boulevard and Pine Ridge

Naples 34114/34119

0.7/10.5 Short Term Acute Care 201

North Collier Hospital – Downtown Naples and North Naples

Naples 34102/34110

9.1/17.7 Short Term Acute Care 684

Source: American Hospital Directory, August 2013 (1) Data for hospitals that belong to the same medical system are currently reported in an aggregate fashion.

Shopping/Cultural

Prime Outlets of Naples is located approximately five miles south of the Site and has approximately 30 stores. Coastland Center Mall is located approximately 14 miles northwest of the Site and includes four department stores, over 150 specialty shops, and 14 restaurants. Waterside Shops at Pelican Bay is located approximately 15 miles northwest of the Community and is an upscale, open-air shopping district with over 60 stores. The City of Naples has over 80 championship golf courses including three championship golf courses at Lely Resort and Country Club; the Naples Lakes Country Club, within two miles of the Site; Fala Bella Resort and Golf Club, approximately four miles south of the Site; and Royal Wood Golf and Country Club, approximately four miles west of the Site. The City of Naples is also home to several land reserves and wildlife parks including the Florida Panther National Wildlife Refuge. Other area attractions include the Naples Botanical Gardens, the Naples Players at Sugden Community Theatre, the Naples Zoo at Caribbean Gardens, and the Philharmonic Center for the Arts. Colleges and universities near the Site include Edison State College – Collier Campus (formerly Edison Community College), Florida Gulf Coast University, Hodges University (formerly International College) and Ave Maria University.



Primary Market Area of the Independent Living Units The primary market area for providers of senior living services is typically defined as the geographic area from which a majority of prospective residents reside prior to assuming occupancy at the Community. Twelve of the Independent Living Units are to be available under a rental agreement. Of the remaining 151 Independent Living Units available, 121 Independent Living Units were reserved by 119 Depositors as of October 18, 2013, representing approximately 80 percent of the Independent Living Units available for an Entrance Fee Plan at the Community. Based on the zip code origin of the Depositors, discussions with existing senior living providers in the area and experience with similar communities, the primary market area has been defined as a 14-zip code area surrounding the Community which spans approximately 34 miles from north (just south of Bonita Springs) to south (Marco Island) and eight miles from east (Collier Boulevard) to west (coastal areas along the Gulf of Mexico). Based on the zip codes of origin, 82 percent of the 119 Depositors originate from the primary market area (the “IL PMA”). The IL PMA includes the cities of Naples, Lely and Marco Island in Collier County.

The following table illustrates the zip code origin of Depositors as of October 18, 2013 in the defined IL PMA.

Table 8 Independent Living Depositor Origin Data

IL PMA Zip Codes: City Number of Depositors(1) Percentage of Total

34113(2) Naples 26 21.8% 34145 Marco Island 14 11.8% 34105 Naples 14 11.8% 34112 Naples 9 7.6% 34110 Bonita Springs 7 5.9% 34114 Everglades 6 5.0% 34119 Naples 6 5.0% 34103 Naples 4 3.4% 34109 Naples 4 3.4% 34108 Naples 3 2.5% 34102 Naples 3 2.5% 34140 Marco Island 1 0.8% 34104 (3) Naples 0 0.0% 34116 (3) Naples 0 0.0%

Total from IL PMA Zip Codes 97 81.5% Other areas in Florida 12 10.1%

Out of state 10 8.4%

Total 119 100.0% Source: Management (1) Depositor information as of October 18, 2013. According to Management, two Depositors have reserved two

Independent Living Units at the Community, for a total of 121 Independent Living Units reserved. (2) The Community is located in zip code 34113. (3) Included for purposes of contiguity.



The following map depicts the location of the Community, the IL PMA and the comparable existing and planned retirement communities within and near the IL PMA.

Legend

The Community The IL PMA Existing Entrance Fee/Equity Communities within the IL PMA 1 – Moorings Park

2 – Glenview at Pelican Bay

3 – The Marbella at Pelican Bay

4 – Vi at Bentley Village

5 – Arbor Trace

Existing Rental Communities with the IL PMA 6 – Lely Palms

7 – Terracina Grand

8 – The Carlisle

9 – Ashton Gardens at Pelican Marsh

Planned Entrance Fee Communities within the IL PMA 10 – Siena Lakes

Existing Entrance Fee Communities near the IL PMA 11 – Terraces at Bonita Springs

Florida

IL PMA

15-Mile Radius



Population The age distribution of the population in a geographic area is a key factor in the determination of an area’s retirement housing needs. The U.S. Census Bureau has compiled demographic data based on the 2010 census figures. Nielsen Claritas has extrapolated the 2010 census information to derive the estimated 2013 figures and projected statistics for 2018. The following table presents population data by age cohort and the anticipated average annual percentage change between 2000 and 2013 and 2013 and 2018 in the IL PMA, the State of Florida (“Florida”) and the United States.

Table 9 Historical, Estimated and Projected Populations

2000 (Census)

Population

2013 (Estimated) Population

2018 (Projected) Population

Compounded Annual

Percentage Change

2000 – 2013

Compounded Annual

Percentage Change

2013 – 2018 IL PMA

Total Population 204,168 261,976 277,187 1.9% 1.1%

Age 65 to 74 Population 32,849 46,464 54,046 2.7% 3.1%

Age 75 to 84 Population 20,195 28,555 31,392 2.7% 1.9%

Age 85 plus Population 5,105 9,856 10,781 5.2% 1.8%

Total 65 plus 58,149 84,875 96,219 3.0% 2.5%

Total 75 plus 25,300 38,411 42,173 3.3% 1.9%

Florida

Total Population 15,982,377 19,356,053 20,322,385 1.5% 1.0%

Age 65 to 74 Population 1,452,079 1,939,068 2,316,732 2.2% 3.6%


Age 85 Plus Population 331,357 470,480 516,471 2.7% 1.9%

Total 65 Plus 2,807,576 3,544,045 4,093,840 1.8% 2.9%

Total 75 Plus 1,355,497 1,604,977 1,777,108 1.3% 2.1%

United States

Total Population 281,421,942 314,861,807 325,322,277 0.9% 0.7%



Age 85 Plus Population 4,239,540 5,876,669 6,278,130 2.5% 1.3%

Total 65 Plus 34,991,852 43,861,920 50,997,686 1.8% 3.1%

Total 75 Plus 16,600,982 19,158,070 20,873,124 1.1% 1.7%

Source: Nielsen Claritas



The following table presents the percentage of total population by age group for the targeted age population in the IL PMA, Florida and the United States.

Table 10 Percentage of Total Population by Age Cohort

2000 (Census) IL PMA Florida United States Age Cohort

65 plus 28.5% 17.6% 12.4%

75 plus 12.4% 8.5% 5.9%

85 plus 2.5% 2.1% 1.5%

2013 (Estimated) IL PMA Florida United States Age Cohort

65 plus 32.4% 18.3% 13.9%

75 plus 14.7% 8.3% 6.1%

85 plus 3.8% 2.4% 1.9%

2018 (Projected) IL PMA Florida United States Age Cohort

65 plus 34.7% 20.1% 15.7%

75 plus 15.2% 8.7% 6.4%

85 plus 3.9% 2.5% 1.9%




Estimated Eligible Households within the IL PMA In order to qualify for residency at the Community, a prospective resident must be at least 62 years of age and demonstrate sufficient financial resources to pay the initial Entrance Fee, required Monthly Service Fee and other expenses related to independent living services not provided for in the Residence and Care Contract. Accordingly, Management has established certain criteria to identify potential Residents who would be eligible to reside in an Independent Living Unit. Management estimates that prospective independent living residents should have a minimum monthly income of approximately 1.5 times the Monthly Service Fee (including second person fees when applicable) and an asset level of approximately 2.0 times the Entrance Fee (prior to payment of the Entrance Fee).

As of October 18, 2013, the average age of the independent living Depositors was 79 years. For purposes of quantifying the number of income-qualified households in the PMA, households age 75 or older are considered to be the most likely to establish residency in an Independent Living Unit at the Community.

The age composition of Depositors as estimated upon opening of the Community in 2015 is described in the table below.

Table 11 Depositor Composition

Age Group of Primary Depostiors - 2015 Number of Depositors(1) Percentage of Total Under 75 18 15.3%

75 and older 100 84.7%

Total 118(2)

100.0%

Source: Management (1) Represents the age of primary Depositors upon entry into the Community in 2015. (2) Age data was not available for one Depositor.

Management has considered the following two income qualification scenarios for estimating the number of income eligible households in the IL PMA:

� Annual household income approximately $50,000 or more based on the Monthly Service Fee of the Goldcrest one bedroom apartment, which is the smallest and least expensive one bedroom Independent Living Unit ($3,084 per month in 2015 dollars); and

� Annual household income approximately $75,000 or more based on the weighted average Monthly Service Fee of all of the Independent Living Units ($5,087 per month in 2015 dollars).

Of the Depositors, the median annual income is approximately $142,300 and the median net worth is approximately $3,035,000, based on self-reported Depositor information provided by Management as of October 18, 2013. The average age of Depositors (first persons) upon entry to the Community approximates 81 years of age when the Community opens in 2015.



The following table illustrates the 2013 estimated and the 2018 projected household income distribution for householders age 75 or older in the IL PMA.

Table 12 Income Qualified Households for Independent Living Services – IL PMA

2013 (Estimated) 65 – 74 75+ Total Total Households: 27,522 26,090 53,612

Household Income

Under $50,000 11,647 16,434 28,081

$50,000 and over

$50,000 – 74,999 5,127 3,560 8,687

$75,000 – 99,999 3,318 2,298 5,616

$100,000 – 149,999 3,391 1,893 5,284

$150,000 plus 4,039 1,905 5,944

Total $50,000 and over 15,875 9,656 25,531 Percentage of Total Households - $50,000 + 57.7% 37.0% 47.6% Total $75,000 and over 10,748 6,096 16,844 Percentage of Total Households - $75,000 + 39.1% 23.4% 31.4% 2018 (Projected) 65 – 74 75+ Total Total Households: 32,225 28,860 61,085

Household Income

Under $50,000 14,899 19,089 33,988

$50,000 and over

$50,000 – 74,999 5,838 3,812 9,650

$75,000 – 99,999 3,763 2,322 6,085

$100,000 – 149,999 3,462 1,793 5,255

$150,000 plus 4,263 1,844 6,107

Total $50,000 and over 17,326 9,771 27,097 Percentage of Total Households - $50,000 + 53.8% 33.9% 44.4% Total $75,000 and over 11,488 5,959 17,447 Percentage of Total Households - $75,000 + 35.6% 20.6% 28.6%




The following table compares the percentage of age- and income-qualified households to total households for the $50,000 and $75,000 income qualification levels for age 75 and above households within the IL PMA, Florida and the United States.

Table 13 Comparison of Income-Qualified Households – 2018

Age 75 and Above IL PMA Florida United States

Percentage of Income-Qualified Households to Total Households – $50,000

33.9% 21.1% 25.2%

Percentage of Income-Qualified Households to Total Households – $75,000

20.6% 10.9% 13.7%

Source: Nielsen Claritas The following table estimates the number of age- and income-qualified households in the IL PMA as estimated in 2013, interpolated in 2015, the year the Community is assumed to open, and projected in 2018, based on the 2010 Census.

Table 14 Age- and Income-Qualified Households for Independent Living Services

in the IL PMA– Years 2013, 2015 and 2018

Age 75 and Above 2013 2015 2018 Total $50,000 and over 9,656 9,702 9,771

Percentage of Income-Qualified Households

to Total Households - $50,000 and over 37.0% 35.7% 33.9%

Total $75,000 and over 6,096 6,041 5,959

Percentage of Income-Qualified Households

to Total Households - $75,000 and over 23.4% 22.2% 20.6%




Market Area Real Estate The ability of potential residents to sell their home prior to assuming occupancy at the Community may have an impact on the ability of residents to pay the required Entrance Fee. Often, Entrance Fees are paid with funds received through the sale of a prospective resident’s home. Thus, average entrance fees at the Community should be generally consistent with the home values in the market area. Home values fluctuate over time and vary regionally based upon economic conditions. The following table depicts the number of homes sold, average and median sales prices of homes by zip code for the IL PMA.

Table 15 Market Area Real Estate Trends for PMA Zip Codes(1)

2011 2012 2013(2)

Zip Code(3)

Number of Homes

Sold

Average Sales Price

Average Days on Market

Number of Homes

Sold

Average Sales Price


Number of Homes

Sold

Average Sales Price


34113 – Naples(4) 131 $391,609 192 143 $391,674 253 81 $435,449 179

34112 – Naples 177 $173,077 156 133 $208,790 184 82 $226,865 167

34105 – Naples 206 $553,144 217 217 $488,602 162 94 $743,726 156

34119 – Naples 248 $341,039 161 222 $311,360 155 124 $427,297 140

34103 – Naples 52 $1,095,409 275 38 $1,257,705 238 13 $1,385,753 156

34108 – Naples 81 $1,250,291 275 53 $1,580,919 242 39 $1,977,663 206

34109 – Naples 177 $332,110 184 163 $387,175 177 94 $517,996 176

34102 – Naples 75 $1,197,104 260 73 $1,210,958 397 54 $1,822,352 241

34104 – Naples 202 $136,050 144 160 $156,239 141 79 $207,974 119

34116 – Naples 22 $130,744 109 22 $161,940 157 5 $201,120 62

34114 - Naples 304 $259,890 215 298 $242,027 195 195 $263,640 217

34110 - Naples 275 $650,357 218 255 $673,832 220 113 $823,501 188

Total/Weighted Avg. 1,950 $448,962 196 1,777 $458,374 197 973 $597,032 178 Source: Sunshine MLS, June 2013. (1) Information includes single-family homes and condominiums sold through the MLS. (2) Reflects data through June 30, 2013. (3) Real estate data was not available for the Marco Island zip codes (34140 and 34145). (4) The Community is to be located in zip code 34113.



The following table summarizes the number of homes sold and the respective percentages over the past three years for the IL PMA zip codes categorized by the following price ranges:

� $300,000 – $499,999, based on the approximate weighted average entrance fee of the one bedroom Independent Living Units at the Community;

� $500,000 – $799,999, based on the approximate weighted average entrance fee of the two bedroom Independent Living Units at the Community; and

� $800,000 and above, to capture the highest entrance fees at the Community.

Table 16 Homes Sold Within Selected IL PMA Zip Codes(1)

Sale Price(2) $300,000 - $499,999 $500,000 - $799,999 $800,000 and Above Total

Zip Code / Town(3) 2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013 34113 – Naples(4) 31 29 29 18 31 11 8 14 10 57 74 50 34112 – Naples 18 17 69 5 3 11 1 4 4 24 24 84 34105 – Naples 56 49 23 7 22 6 27 28 16 90 99 45 34119 – Naples 29 23 18 16 14 7 20 19 16 65 56 41 34103 – Naples 4 0 2 15 9 4 17 20 6 36 29 12 34108 – Naples 12 8 1 20 11 10 32 26 26 64 45 37 34109 – Naples 33 32 25 5 14 22 14 17 12 52 63 59 34102 – Naples 8 13 3 43 17 5 28 35 39 79 65 47 34104 – Naples 11 15 12 1 3 3 0 0 1 12 18 16 34116 – Naples 1 4 0 0 0 0 0 0 0 1 4 0 34114 – Naples 56 77 53 11 6 6 5 4 3 72 87 62 34110 – Naples 43 36 20 33 52 27 65 71 0 141 159 47 Total 302 303 255 174 182 112 217 238 133 693 723 500

Percent of Total Home Sales in PMA Zip Codes

43.6% 41.9% 51.0% 25.1% 25.2% 22.4% 31.3% 32.9% 26.6% 100.0% 100.0% 100.0%

Source: Sunshine MLS, June 2013. (1) Information includes single-family homes and condominiums sold through the MLS. (2) Reflects data through June 30, 2013 (3) Real estate data was not available for the Marco Island zip codes (34140 and 34145). (4) The Community is to be located in zip code 34113.



Unemployment Trends

The unemployment trends for the Naples Metropolitan Statistical Area (“MSA”), Collier County, Florida and the United States are shown in the following table.

Table 17 Unemployment Trends

2010 2011 2012 2013(1)

Naples MSA 11.6% 10.2% 8.5% 6.6%

Collier County 11.6% 10.2% 8.5% 6.6%

Florida 11.3% 10.3% 8.6% 7.3%

United States 9.6% 9.0% 8.1% 7.7%

Source: U.S. Department of Labor, Bureau of Labor Statistics Data (1) Unemployment data for the Naples MSA and Collier County is through May 2013. Unemployment data for Florida

and the United States is through June 2013.

Collier County is supported by major employers including Naples Community Hospital, Inc., Wal-Mart, Marriott, Publix Supermarkets, and the Naples Grande Resort.

Continuing Care Regulatory Requirements In Florida, continuing care retirement communities are licensed and regulated by the Florida Department of Financial Services, Office of Insurance Regulation (the “Department”) under Title XXXVII, Chapter 651 of the Florida Statutes. The Florida Statutes define “continuing care” as: “furnishing pursuant to a contract shelter and either nursing care or personal services as defined in Section 400.402, whether such nursing care or personal services are provided in the facility or in another setting designated by the contract for continuing care, to an individual not related by consanguinity or affinity to the provider furnishing such care upon payment of an entrance fee.”

A CCRC must be licensed with the Department prior to entering into continuing care contracts. Licensing must include providing audited financial statements and other information required by the Department. Annually, audited financial statements and an annual report are required subsequent to initial licensure. The provider is also required to issue a disclosure statement to prospective residents prior to closure of their continuing care contract.



Comparable Retirement Communities Comparable retirement communities typically include independent living providers with similar services and amenities offering health care services, such as assisted living and/or nursing care, in a multi-level setting for age restricted seniors. Independent living units may be apartments, cottages, and/or free-standing homes where residents have access to on-site amenities, which typically include a choice of dining venues, library, lounge areas, fitness facilities, banking, game room, multi-purpose room, arts and crafts area, hair salon, a chapel, and more. Services typically include a dining program or allowance, housekeeping services, most utilities except telephone, scheduled transportation, activities program, emergency call system in each residence, 24-hour security, interior and exterior maintenance, maintenance of grounds, and discounted health care services in on-site assisted living and nursing care facilities.

Management has defined comparable facilities as those facilities that: (i) include independent living services; (ii) provide one or more other levels of care such as assisted living, memory support care and/or nursing care services; (iii) offer similar services and amenities; and/or (iv) compete for similar age-and income-qualified residents. CCRCs may provide a variety of contracts to residents. Generally, the major distinction in contract types relates to the health care benefit. The most common contract types are as follows: Extensive or Life Care Contract (“Type A”) - Under a Type A contract, a resident typically pays an upfront entrance fee and an ongoing monthly service fee in exchange for the right to lifetime occupancy of an independent living unit with certain services and amenities. Residents of independent living who require assisted living or nursing care may transfer to the appropriate level of care and continue to pay essentially the same monthly service fee they had been paying for their residence, or upon permanent transfer, the fee may be adjusted to the weighted average of all monthly service fees. Modified Contract (“Type B”) - Under a Type B contract, the resident also generally pays an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under a Type B contract, the CCRC typically provides assisted living or skilled nursing care to residents either (a) at a discounted rate on the per diem, e.g., 20 percent discount; (b) a certain number of days per year or per lifetime, e.g., 60 to 90 days; or, (c) a combination of the two. The Community is offering a Type B contract. Fee-for-Service Contract (“Type C”) - A Type C contract also generally requires an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under the Type C contract, residents who require assisted living or nursing care do not receive any discount on assisted living or skilled nursing services.



In addition to the three contract types described above, comparable retirement communities may also include rental communities that offer independent living housing and may also include health care services, such as assisted living or nursing care. The resident is not required to pay an entrance fee, but rather signs a lease for the independent living unit selected and pays for various additional services utilized on a monthly or per diem basis at prevailing market rates.

The following tables profile the Community, five existing comparable entrance fee/equity retirement communities in the IL PMA, four existing comparable rental retirement communities in the IL PMA and one comparable retirement community near the IL PMA.



Table 18 Comparable Entrance Fee/Equity Retirement Communities within the IL PMA

The Community Moorings Park The Glenview at

Pelican Bay Location Naples – 34113 Naples – 34105 Naples – 34108

Driving Miles from the Community – 14.0 15.5

Sponsor/Developer Lutheran Life Communities The Moorings, Inc. Brookdale Senior Living

Year Opened 2015 1981 1992

Type of Contract Modified Lifecare Lifecare Fee-For-Service

Not-For-Profit/For-Profit Not-For-Profit Not-For-Profit Equity Ownership

Unit Configuration

Independent Living Units (ILUs:)

One-bedroom apartments 60 73 18

Two-bedroom apartments 52 218 93

Three-bedroom apartments 20 69 7

Condos/Villas 31 32 –

Total ILUs 163 392 118

Assisted Living/Memory Support Units 42 AL/37 MS 73 AL –

Nursing Care Beds 44 106 35

Independent Living

Square Footage

One-bedroom apartments 854 – 973 882 – 1,338 891

Two-bedroom apartments 1,366 – 2,082 1,304 – 5,050 1,178 – 1,779

Three-bedroom apartments 1,888 – 2,015 1,720 – 6,950 2,060 – 3,189

Homes/Cottages/Villas 1,806 – 3,031 1,345 – 4,240 –

Entrance Fees/Purchase Prices

One-bedroom apartments $379,068 – 441,938 $453,872 – 2,524,589 $420,000 – 460,000

Two-bedroom apartments $632,396 – 963,388 $663,456 – 4,192,458 $590,000 – 975,000

Three-bedroom apartments $851,516 – 950,444 $942,004 – 4,301,826 $940,000 – 1,500,000

Homes/Cottages/Villas $848,743 – 1,319,342 $1,149,348 – 3,310,127 –

2nd Person Entrance Fee $13,868 $17,012 –

Monthly Fees

One-bedroom apartments $2,851 – 3,268 $3,103 – 4,086 $2,285

Two-bedroom apartments $4,495 – 6,082 $3,664 – 6,827 $2,844 – 4,086

Three-bedroom apartments $6,315 – 6,601 $4,900 – 7,318 $4,919 – 4,889

Homes/Cottages/Villas $5,754 – 6,790 $4,170 – 7,711 –

2nd Person Monthly Fee $1,040 $1,438 $1,000

Refund Options 0%, 50%, 95% (shown) 0%, 50%, 90% (shown) Re-sale value

Assisted Living

Entrance Fee – – –

Monthly Fee $6,467 – 8,275 $5,140 – 6,854 –

Nursing Care

Daily Rate $354 $297 – 421 $338

Occupancy Rate

Independent Living – 96% 95%

Assisted Living – 99% –

Nursing Care – 95% 100%

Source: Management, surveys and site visits conducted by Dixon Hughes Goodman LLP through August 2013.



Table 18 (continued) Comparable Entrance Fee/Equity Retirement Communities Within the IL PMA

The Marbella at Pelican Bay Vi at Bentley Village Arbor Trace

Location Naples – 34108 Naples – 34110 Naples – 34110

Miles from the Community 17.2 20.3 21.2

Sponsor/Developer The Pelican Bay Foundation Classic Residence by Hyatt Arbor Trace

Year Opened 1999 1985 1991/2001

Type of Contract Fee-For-Service Lifecare Fee-For-Service For Profit/Not-for-profit Equity Ownership For-profit Equity Ownership

Unit Configuration Independent Living Units (ILUs)

One-bedroom apartments – 99 30

Two-bedroom apartments 118 413 108

Three-bedroom apartments – 39 38

Homes/Cottages/Villas – 12 31

Total ILUs 118 563 207

Assisted Living/Memory Support Units 12 AL 74 AL/15 MS 32 AL

Nursing Care Beds – 100 –

Independent Living Square Footage

One-bedroom apartments 1,725 – 2,575 921 – 1,180 788 – 1,004

Two-bedroom apartments – 1,366 – 1,923 1,350 – 1,790

Three-bedroom apartments – 1,908 – 2,525 1,804 – 2,030

Homes/Cottages/Villas _ 3,625 1,250 – 1,952

Entrance Fees

One-bedroom apartments – $345,000 $70,000 – 230,000

Two-bedroom apartments $549,000 – 1,699,000 $526,400 – 871,600 $335,000 – 659,000

Three-bedroom apartments – $872,900 $335,000 – 750,000

Homes/Cottages/Villas – $1,107,900 $200,000 – 300,000

2nd Person Entrance Fee – $18,300 –

Monthly Fees

One-bedroom apartments – $2,360 $1,749 – 1,889

Two-bedroom apartments $2,833 $3,320 – 4,360 $1,796 – 2,105

Three-bedroom apartments – $5,360 $2,010 – 2,282

Homes/Cottages/Villas – $4,700 $2,037– 2,429

2nd Person Monthly Fee – $1,120 $417

Refund Options Re-sale value 0%, 50%, 90% (shown) Re-sale value

Assisted Living

Entrance Fee – – –

Monthly Fee $6,083 – $3,600 – 7,200

Nursing Care

Daily Rate – $250 – 310 –

Occupancy Rate

Independent Living 97% 90% 90%

Assisted Living 100% 99% 90%

Nursing Care – 100% –




Notes to the Table: The Community

(a) The independent living Entrance Fees Monthly Service Fees have been deflated four percent per year from the published rates (which are effective July 1, 2015 (fiscal year 2016)) to reflect 2013 dollars.

(b) The Community also offers a 50 percent refund and a traditional refund entrance fee plan in which entrance fees are approximately eight percent and 23 percent lower, respectively, than the 95 percent refund entrance fees shown. Monthly Service Fees are the same under all three plans.

(c) The rates shown for the Assisted Living Units, Memory Support Units and Skilled Nursing Beds have been deflated four percent per year from the published rates (which are effective July 1, 2015 (fiscal year 2016)) to reflect 2013 dollars.

(d) The Monthly Service Fees presented in the table are for traditional assisted living services. The Monthly Service Fee for the Memory Support Units is $9,599 in 2013 dollars.

Moorings Park (a) Twenty-nine new independent living apartments called the “Waterside Apartments” opened at Moorings Park

in October 2012. A majority of these apartments are two-bedroom units. The Waterside Apartments range from 1,800 to 5,050 square feet with 90 percent refundable entrance fees ranging between $1,330,649 and $4,192,458. Premium entrance fees on the Waterside Apartments are charged due to water views.

(b) In addition to the 90 percent refund plan shown, Moorings Park also offers entrance fees under a 50 percent refundable plan and a non-refundable plan that are 24 percent lower and 43 percent lower, respectively, than the 90 percent refund plan entrance fees shown.

(c) Thirty-four of the 106 nursing beds at Moorings Park are in a secured area designated for memory care. (d) Assisted living rates are all-inclusive and reflect private pay rates for direct admissions. (e) The nursing rates shown reflect private pay rates for direct admissions for semi-private and private rooms at

Moorings Park.

The Glenview at Pelican Bay (“The Glenview”) (a) The Glenview is a co-op owned by the residents. Brookdale Senior Living manages the community. (b) The monthly service fee includes 365 meals annually per resident. Six alternative meal plans are offered as

follows: 330 meals – $20 monthly credit per person; 300 meals - $40 monthly credit per person; 270 meals - $60 monthly credit per person; 240 meals - $80 monthly credit per person; 210 meals - $100 monthly credit per person; and 180 meals - $120 monthly credit per person.

(c) When a unit is sold at The Glenview, the community keeps the greater of 50 percent of the appreciation or 15 percent of the sale price.

(d) Daily nursing rate reflects the non-resident rate. Residents transferring from independent living for nursing care are charged $111 per day.

The Marbella (a) Square footage and purchase prices for the independent living units at The Marbella reflect the sizes and prices

of the four currently available apartments, which reflect the full range of units offered at The Marbella. The condominiums offered at The Marbella are all two-bedroom or two-bedroom with den units.

(b) Monthly fees for residents of The Marbella reflect property assessment and association fees based on size of the condominium, which is estimated to average $34,000 annually. All other services are available on a fee-for-service basis and therefore, there is no monthly service fee. Residents of The Marbella receive meals at a 60 percent discount.

(c) Assisted living rate reflects the monthly fee for direct admissions from outside The Marbella. At this time, The Marbella is restricting outside assisted living admission stays to two weeks with a daily rate of $240. Residents of The Marbella receive a 20 percent discount or pay $4,866 per month for assisted living services.



Notes to the Table (continued): Vi at Bentley Village (“Bentley Village”) (1) Included with the 39 three-bedroom apartments shown are 3 four-bedroom apartments. The entrance fee and

monthly fee for the four-bedroom apartment are $1,587,200 and $8,450, respectively.

(2) Entrance fees reflect base fees and may have premiums applied according to floor level in building, views, glassed-in lanais, etc.

(3) Bentley Village does not accept direct admits into assisted living and memory support, and therefore does not have published rates for assisted living or memory support.

(4) The nursing beds at Bentley Village are held primarily for life care residents transferring through the continuum of care at the community. Nursing rates shown reflect the semi-private rate of $250 per day and the private daily rate of $310 for direct admit temporary stays.

Arbor Trace (1) The mid-rise apartment building and villa units at Arbor Trace opened in 1991. The Tower Pointe

condominiums opened in 2001.

(2) Square footages, entrance fees and monthly fees reflect the ranges of units available as of July 2013. The monthly fees represent the condominium monthly assessment plus the monthly club membership rates. Club membership includes 120 meals per person annually, one hour of housekeeping per month, emergency call system, scheduled transportation and access to the clubhouse amenities. Additional dining, maintenance, housekeeping and condominium fees are assessed quarterly, but are shown monthly for comparison purposes.

(3) The second person monthly fee at Arbor Trace reflects the second person monthly club membership rate which includes 120 meals per person annually.

(4) When a unit is sold at Arbor Trace, residents have the option of listing with Arbor Trace Realty (on-site), the realtor of their choice, or they may sell by owner. The seller would pay a six percent commission to Arbor Trace Realty or a negotiated commission with a real estate agent. Management of Arbor Trace indicated that the units typically sell at about 80 to 90 percent of the asking price. Once the unit is vacated, the resident/owner must continue to pay the condominium assessment and monthly club membership fees until closing, at which point the new owner assumes those payments.

(5) In addition to the base rates shown, three higher levels of care are offered in assisted living offered for monthly fees of $400, $800 and $1,200, respectively.

(6) The second person monthly fee in assisted living is $1,000 plus additional levels of care (if applicable).



Table 19 Comparable Rental Retirement Communities within the IL PMA

Lely Palms Terracina Grand The Carlisle Aston Gardens at

Pelican Marsh Location Naples – 34113 Naples – 34104 Naples – 34109 Naples – 34109

Driving Miles from the Community 2.9 7.0 14.9 15.9

Sponsor/Developer HCR ManorCare The Goodman Group Senior Resource

Group, LLC Discovery

Management Group

Year Opened 1984 2001 1998 1999

Not-For-Profit/For-Profit For-Profit For-Profit For-Profit For-Profit

Unit Configuration

Independent Living Units (ILUs:) Studios 25 13 – –

One-bedroom apartments 90 66 125 150

Two-bedroom apartments 33 42 125 126

Homes/Cottages/Villas 52 – – 16

Total ILUs 200 121 250 292 Assisted Living/Memory Support Units 12 AL/56 MS 33 AL 100 AL 63 AL/21 MS

Nursing Care Beds 117 – – –

Independent Living

Square Footage

Studios 300-350 390 – –

One-bedroom apartments 550 500 – 750 637 – 905 710 – 856

Two-bedroom apartments 770 800 – 1,100 950 – 1,221 1,010 – 1,546

Homes/Cottages/Villas 750 – 950 – – 2,207 – 2,632

Monthly Fees

Studios $1,950 – 2,350 $2,795 – 2,995 – –

One-bedroom apartments $2,600 – 2,750 $3,400 – 4,295 $2,835 – 3,280 $2,420 – 2,860

Two-bedroom apartments $3,050 – 3,200 $4,395 – 4,955 $3,485 – 4,320 $2,50 – 3,220

Homes/Cottages/Villas $3,150 – 3,300 – – $2,970-3,320

2nd Person Monthly Fee $300 $750 $750 $750

Assisted Living

Monthly Fee $2,850 – 3,450 $4,070 – 5,570 $4,040 $3,095 – 3,725

Nursing Care

Daily Rate $255(b) – – –

Occupancy Rate

Independent Living 88% 97% 100% 94%

Assisted Living 90% 97% 100% 98%

Nursing Care 97% – – –




Notes to Table: Lely Palms (a) The 68 assisted living units at Lely Palms include 12 traditional assisted living units at Lely Palms and 56

assisted living-based memory care units available to residents at HCR ManorCare’s Arden Courts Alzheimer’s care facility offered at $4,500 per month for semi-private accommodations and $5,400 per month for private accommodations. The 56 Alzheimer’s care units at Arden Courts are 90 percent occupied with a small waiting list.

(b) Nursing care and rehabilitative services are located on the campus at ManorCare Health Services. The 117 nursing care beds include 30 beds designated for memory care offered at daily rates of $265 for a semi-private room and $275 for a private room.

(c) Independent living monthly fees reflect the “full service plan” which includes two meals per day, weekly housekeeping and linen service and other standard services. Lely Palms also offers a “general plan” in the one- and two-bedroom apartments and villas for approximately $550 to $650 less that does not include meals or services. The second person fee of $300 applies to the full service plan residents only. There is a one-time, non-refundable community fee of $1,500 for the independent living units at Lely Palms.

Terracina Grand (a) Terracina Grand offers 154 apartments which are all licensed as assisted living in order to provide assistance to

residents in their home. Thirty-three of the apartments are designated assisted living units in a separate area of the building called “The Palazzo” for residents requiring more than one hour of assisted care per day. For purposes of this analysis, 33 units are considered assisted living while the remaining 121 units are considered independent living.

(b) Independent living monthly fees include two meals per day and reflects the base rate for the unit type selected and do not include any services. Assisted living monthly fees shown include the first level of assistance ($1,275 in addition to the base rate for the apartment). Terracina Grand also offers three higher levels of assisted care for additional monthly fees of $1,550, $1,775 and $2,050, respectively. The second person fee in assisted living is $750.

(c) Terracina Grand requires a one-time non-refundable community fee of $2,000. The Carlisle (a) A one-time, non-refundable community fee of $1,750 is required for the independent living and assisted living

units at The Carlisle. (b) The Carlisle offers two additional levels of care in addition to the basic assisted living rate shown with monthly

fees of $600 and $900, respectively. The second person monthly fee in assisted living is $750 plus additional levels of care (if applicable).

Aston Gardens at Pelican Marsh (“Aston Gardens”) (a) Aston Gardens was purchased by Discovery Management Group in 2009 from Sunrise Senior Living. (b) The 16 villas at Aston Gardens are available for 100 percent equity purchase. One 2,632 square foot villa is

currently on the market with a sales price of $469,000. Residents fully realize the appreciation or depreciation of the villa upon re-sale.

(c) The range of rates for basic assisted living services shown reflects all inclusive rates. Memory care is offered for all-inclusive monthly fees of $3,195 (semi-private) and $4,195 (private).

(d) Independent living residents (including villa residents) pay the monthly fees shown for amenities and services at the community including continental breakfast plus the lunch or dinner meal. Monthly fees shown for the apartments reflect the base rates and may increase up to an additional $300 based on apartment view and location.



Notes to the Table: (a) Entrance fees shown are for the 92 percent refundable plan. The Terraces at Bonita Springs also offers a tradition entrance

fee plan as follows: one bedroom apartments range from $299,597 to $521,637, two bedroom apartments range from $497,487 to $734,017 and three bedroom apartments range from $865,197 to $990,175.

(b) Rates shown are for direct admits to assisted living, memory care and nursing care. Three levels of care will be offered in the traditional assisted living as follows: Level I is $459 per month, Level II is $860 per month and Level III is $1,376 per month. The second person fee for traditional assisted living is $2,060 per month.

(c) Rates shown for assisted living reflect the monthly fee for traditional assisted living care. Memory support assisted living is $5,462 per month.

(d) The health care center at the Terraces at Bonita Springs is scheduled to open on August 15, 2013.

Table 20 Comparable Retirement Communities near the IL PMA

Terraces at Bonita Springs Location Bonita Springs – 34135

Miles from the Community 24.0 Sponsor/Developer Bonita Springs Retirement Village, Inc.

Year Opened July 2013 Type of Contract Type A

For Profit/Not-for-profit Not-for-profit

Unit Configuration Independent Living Units (ILUs) One-bedroom apartments 88 Two-bedroom apartments 49 Three-bedroom apartments 7 Homes/Cottages/Villas –

Total ILUs 144

Assisted Living/Memory Support Units 49 AL/18 MS

Nursing Care Beds 40

Independent Living Square Footage One-bedroom apartments 850 – 1,207 Two-bedroom apartments 1,207 – 1,816 Three-bedroom apartments 1,656 – 1,890 Entrance Fees One-bedroom apartments $427,995 – 745,195 Two-bedroom apartments $710,695 – 1,048,595 Three-bedroom apartments $1,235,995 – 1,414,535 2nd Person Entrance Fee – Monthly Fees One-bedroom apartments $2,995 – 3,895 Two-bedroom apartments $3,895 – 4,945 Three-bedroom apartments $4,795 – 4,995 2nd Person Monthly Fee $795 Refund Options 0% & 92% (shown) Assisted Living Entrance Fee – Monthly Fee $4,425

Nursing Care Daily Rate $328

Occupancy Rate Independent Living 35% Assisted Living – Nursing Care –




Retirement Communities Planned or Under Development in the IL PMA Based on discussions with representatives of the local planning and permitting agencies and interviews with management at existing and planned retirement communities, in addition to the Community, there is one existing CCRC planning an additional campus within the IL PMA. Additionally, there is one proposed CCRC in the planning process within the IL PMA.

Moorings Park, which is located 13 driving miles northwest of the Site, is planning to develop another campus approximately three miles southeast of its current campus at the intersection of Airport Pulling Road and Golden Gate Parkway. This satellite campus, known as “Moorings Park at Grey Oaks”, is expected to consist of 96 garden homes upon completion. The project will be constructed in three phases (32 garden homes per phase) and is expected to include a clubhouse and two swimming pools. Upon completion of the 96 garden homes, management of Moorings Park will consider adding an assisted living facility with 16 traditional assisted living units and 48 memory care units. Residents of Moorings Park at Grey Oaks will receive priority access to the skilled nursing facility on the Moorings Park main campus. Moorings Park at Grey Oaks will be funded by CC Devo, a Coral Gable-based real estate investment and development firm, with Moorings Park assuming the cost of marketing the garden homes. After each phase is completed, Moorings Park will assume ownership of the garden homes with no associated debt. Once 80 percent of the garden homes in phase I are sold (26 units), construction will begin. The marketing and construction of the three phases is expected to take approximately three years. Siena Lakes is a planned CCRC within the IL PMA to be developed by Life Care Services (“LCS”) headquartered in Des Moines, Iowa. Siena Lakes is proposed to be located on a 29-acre parcel of land on Orange Blossom Drive in Naples, approximately 14 driving miles northwest of the Site. The first phase of Siena Lakes is expected to include 221 independent living residences, 10 assisted living units, 30 private-room skilled nursing beds and 15 skilled nursing-based memory care beds. Siena Lakes proposes to offer a life care contract with an 80 percent refundable entrance fee plan. Siena Lakes has not yet submitted an application for a Provisional Certificate of Authority (“PCOA”) to the Department. Due to the preliminary status of the project, Siena Lakes is not included in the penetration rate analysis that follows and is mentioned for informational purposes only.



Summary of Independent Living Units The following table summarizes the independent living units at the comparable and planned retirement communities within the IL PMA. These communities are considered comparable to the Community in that they compete for similar age- and income-qualified households earning annual incomes of $50,000 and over. Including the 163 planned units at the Community, the total number of existing and planned independent living units within the IL PMA is 2,520.

Source: Management and competitor surveys conducted through August 2013.

(1) Moorings Park is planning to build 96 independent living apartments on a satellite campus to be known as “Moorings Park at Grey Oaks” approximately three miles from Moorings Park.

Table 21 Summary of Existing and Planned Comparable Independent Living Units

Comparable Retirement Communities Existing Planned Total Entrance Fee Communities

Moorings Park(1) 392 96 488

The Glenview 118 – 118

The Marbella 118 – 118

Aston Gardens 16 – 16

Bentley Village 563 – 563

Arbor Trace 207 – 207

Total Entrance Fee Units 1,414 96 1,510 Rental Communities

Lely Palms 200 – 200

Terracina Grand 121 – 121

Aston Gardens 276 – 276

The Carlisle 250 – 250

Total Rental Units 847 – 847 The Community – 163 163

Total Existing and Planned Comparable Independent Living Units 2,261 259 2,520



Independent Living Penetration Analysis Penetration rates are one measure of the degree to which the IL PMA is either under-served or saturated. As penetration rates increase, units may become more difficult to fill. However, higher penetration rates may not necessarily be an indication of the difficulty in achieving expected occupancy levels. Some markets may have a higher acceptance level for senior living housing options and may support higher penetration rates. Three penetration rate calculations are shown in the following tables:

Project Penetration Rate – The Project Penetration Rate is the percentage of age- and income-qualified households in the IL PMA that the Community is expected to capture in order to achieve stabilized occupancy in the year of opening. The Project Penetration Rate is calculated by dividing the number of independent living units at the Project by the number of age- and income-qualified households in the IL PMA. Seniors currently living in comparable independent living units in the IL PMA are subtracted from the pool of age- and income-qualified households. Calculations are based on demographics projected/interpolated for the year the Community is expected to be available for occupancy (2015).

Net Market Penetration Rate (Absorption Rate) – The Net Market Penetration Rate is the percentage of age- and income-qualified households the available units in the market are expected to capture in order for the entire market to achieve stabilized occupancy in the year of opening. The Net Market Penetration Rate is calculated by dividing the number of available independent living units in the IL PMA by the number of age- and income-qualified households in the IL PMA, respectively. Available units would include planned units of the Community, proposed units at other communities and units becoming available due to attrition. This calculation is of particular significance when more than one project is entering the market during the same timeframe. Calculations are based on demographics interpolated for the year the Community is expected to be available for occupancy (2015).

Gross Market Penetration Rate – The Gross Market Penetration Rate is the percentage of age- and income-qualified households that the total market must absorb for the entire market to achieve stabilized occupancy. Market penetration is calculated by dividing the total number of existing and planned independent living units in the IL PMA by the number of age- and income-qualified households in the IL PMA. Calculations are based on demographics for the current year (2013) and projected year (2018).

In all three calculations, the total independent living units are adjusted to reflect assumptions about the percentage of units expected to be filled from qualified households in the IL PMA and expected occupancy.

These rates should be considered in conjunction with one another and with other market factors, such as occupancy levels at existing comparable communities within and near the IL PMA, the number of proposed facilities in the IL PMA, the design of the units and community spaces at the Community, alternatives for potential residents, and the marketing plans and efforts of Management.



The following table presents the Project Penetration Rates which represent the percentage of age- and income-qualified households in the IL PMA the Community is expected to capture in the year of opening in order to achieve stabilized occupancy, assuming annual household incomes of $50,000 and over and $75,000 and over, based on demographic projections for 2015.

Table 22 Project Penetration Rates – 2015

Age 75 and Above

Income $50,000 and

above

Income $75,000 and

above

Planned units at the Community 163 163

Percentage of units to be occupied from the IL PMA(1)

80% 80%

Planned units to be occupied from the IL PMA 130 130

Percentage of units to be occupied from the PMA by age 75 and older(2)

85% 85%

Planned units to be occupied from the PMA by age 75 and older 111 111

Total units at the Community to be occupied at 95% (a) 105 105

Number of age- and income-qualified households(3)

9,702 6,041

Less: Existing inventory of available comparable units(4)

2,103 2,103

Net number of age and income qualified households (b) 7,599 3,938

Project Penetration Rates (a/b) 1.4% 2.7% Source: Management and Nielson Claritas

(1) Based on the origin data of Depositors as of October 18, 2103. (2) Based on the age of Depositors as of October 18, 2013. (3) Interpolated using 2013 estimated and 2018 projected population statistics as provided by Nielsen Claritas. (4) Reflects the 2,261 existing comparable units in the IL PMA, based on a 93 percent occupancy assumption (2,103 units).



The following table presents the Net Market Penetration Rates for the year the Community is expected to open (2015) and indicates the percentage of the age- and income-qualified households in the IL PMA that must be absorbed in order to fill the available units during that year, based upon demographic projections for 2015.

Table 23 Net Market Penetration Rates – 2015

Age 75 and Above Income

$50,000 and above

Income $75,000 and

above Planned units in the IL PMA:

The Community 163 163

Other planned units(1)

32 32

Total planned units 195 195

Percent of units to be occupied by age 75 and older(2)

85% 85%

Total planned units to be occupied by age 75 and older 166 166

Total planned units to be occupied at 95% occupancy 158 158

Total existing units available due to attrition(3)

360 360

Unoccupied existing units to be filled from the IL PMA(4)

30 30

Total units to be occupied 548 548

Percent of units to be occupied from the IL PMA(2)

80% 80%

Total units to be occupied from the IL PMA (a) 438 438 Estimated number of age- and income-qualified households

(5) 9,702 6,041

Less: Existing inventory of available comparable units(6)

2,103 2,103

Estimated number of age- and income-qualified households (b) 7,599 3,938 Net Market Penetration Rates (a/b) 5.8% 11.1%

Source: Management and Nielsen Claritas (1) Reflects the 32 planned comparable units at Moorings Park at Grey Oaks that are expected to open in 2015. (2) Based upon Depositor information provided by Management as of October 18, 2013. (3) Reflects the 1,414 existing entrance fee units in the PMA at 95 percent occupancy, assuming 13.1 percent attrition (176 units)

and the 847 existing rental units in the IL PMA at 95 percent occupancy, assuming 22.9 percent attrition (184 units) for a total of 360 units available due to attrition. (Source: AAHSA State of Seniors Housing, 2011)

(4) Based on the weighted average occupancy of approximately 93 percent in the IL PMA, approximately 30 additional existing units would need to be filled to achieve 95 percent occupancy at comparable existing communities in the IL PMA.

(5) Interpolated using 2013 estimated and 2018 projected population statistics as provided by Nielsen Claritas. (6) Reflects the 2,261 existing comparable units in the IL PMA, based on a 93 percent occupancy assumption (2,103 units).



The following table presents the Gross Market Penetration Rates for independent living services, which represents the percentage of age- and income-qualified households in the IL PMA that the entire market is anticipated to have captured when the entire market has reached stabilized occupancy, based upon demographic projections for 2013 and 2018.

Table 24 Independent Living Gross Market Penetration Rates

Age 75 and Above Income $50,000 and Above

Income $75,000 and Above

2013 2018 2013 2018

Market inventory of retirement communities:

The Community – 163 – 163

Comparable retirement communities

Existing units within the IL PMA 2,261 2,261 2,261 2,261

Proposed units(1)

– 96 – 96

Total units in the IL PMA 2,261 2,520 2,261 2,520

Percent to be filled from the IL PMA(2)

80% 80% 80% 80%

Total units to be occupied from the IL PMA 1,809 2,016 1,809 2,016

Total units to be filled at 95% occupancy (a) 1,719 1,915 1,719 1,915

Number of age- and income-qualified households (b) 9,656 9,771 6,096 5,959

Gross Market Penetration Rates (a/b) 17.8% 19.6% 28.2% 32.1% Source: Management and Nielsen Claritas

(1) Reflects the 96 planned comparable units at Moorings Park at Grey Oaks that are expected to be completed by 2018. (2) Based on the origin of Depositors as of October 18, 2013.



Marketing the Community The success of the Community is dependent, in part, on the ability of Management to achieve specified pre-sales, fill-up rates and turnover rates for the Independent Living Units. Management began accepting non-binding priority deposit agreements for the Independent Living Units in April 2009 and began converting priority deposits to Reservation Deposits in January 2010. To assist in the marketing of the Community and to encourage early commitments to residency, the Corporation has offered a Founders Program to offer certain benefits to prospective Residents for the Independent Living Units.

Twelve of the Independent Living Units are to be available under a rental agreement. Of the remaining 151 Independent Living Units available, 121 Independent Living Units were reserved by 119 Depositors (net of cancellations) as of October 18, 2013, representing approximately 80 percent of the Independent Living Units available for an Entrance Fee Plan at the Community. All Reservation Deposits are being held in an interest-bearing escrow account. The following table presents, by month and/or year, the number of Independent Living Units reserved by Depositors, as reported by Management as of October 18, 2013.



Table 25Marketing of the Community

Calendar Year

Number of Units Reserved by Depositors

Number of Cancellations/

Refunds

Net Reservations

Cumulative Units

Reserved

Cumulative Percentage of Total Units(1)

2010(2) 29 1 28 28 18.5%

2011 33 8 25 53 35.1%

2012

January 1 – 1 54 35.8%

February 3 2 1 55 36.4%

March 3 – 3 58 38.4%

April 10 – 10 68 45.0%

May 4 1 3 71 47.0%

June 2 2 0 71 47.0%

July 6 1 5 76 50.3%

August 6 1 5 81 53.6%

September 2 1 1 82 54.3%

October 2 – 2 84 55.6%

November 2 1 1 85 56.3%

December 1 – 1 86 57.0%

2013

January 7 – 7 93 61.6%

February 2 1 1 94 62.3%

March 10 1 9 103 68.2%

April 5 1 4 107 70.9%

May 4 – 4 111 73.5%

June 2 – 2 113 74.8%

July 1 1 0 113 74.8%

August 4 2 2 115 76.2%

September 3 – 3 118 78.1%

October(3)

3 – 3 121 80.1%

Total 145 24 121 121 80.1% Source: Management (1) Cumulative percentage is based on the 151 Independent Living Units available on an Entrance Fee basis. (2) Conversion of priority deposits to Depositors began in January 2010. (3) Information through October 18, 2013.



The following table presents the total number and type of Independent Living Units available in relation to Independent Living Units reserved with a 10 percent deposit as of October 18, 2013.

Table 26 Inventory of the Project Independent Living Units

Independent Living Units Total Number

of Units

Number of Units

Reserved

Percentage of Available Units

Reserved Apartments: One-bedrooms

Goldcrest 15 15 100.0%

Brambling 33 20 60.6%

Two-bedrooms

Linnet 18 14 77.8%

Sandpiper 25 17 68.0%

Vireo 1 1 100.0%

Cormorant 3 3 100.0%

Flamingo 2 2 100.0%

Nighthawk 2 2 100.0%

Kingfisher 1 1 100.0%

Three-bedrooms

Osprey 10 9 90.0%

Heron 10 10 100.0%

Total Apartments (Entrance Fee Units) 120 94 78.3%

Villas:

Redwing 13 11 84.6%

Fieldfare 13 12 92.3%

Stonechat 5 4 80.0%

Total Villas 31 27 87.1%

Total Independent Living Units (Entrance Fee Units) 151 121 80.1% Brambling – Rental (one-bedroom apt) 12 – 0.0%

Total Independent Living Units 163 121 74.2% Source: Management



Independent Depositor Confirmation Arlington of Naples An independent confirmation process was performed by Dixon Hughes Goodman LLP through the mailing of a questionnaire to the 119 Depositors (121 Independent Living Units) as of October 18, 2013. As of October 18, 2013, 114 of the 119 Depositors (96 percent) had completed the questionnaire. The following information was compiled for the 114 completed questionnaires.

� 114 (100 percent) of the respondents indicated that they had paid a deposit for their Independent Living Unit.

� 109 (96 percent) indicated that they intend to reside at the Community, four (three percent) indicated they were uncertain as to whether they would reside in their chosen unit, and one (one percent) did not respond to the question.

� 26 (23 percent) indicated that they expect to reside alone, and 87 (76 percent) indicated that they expect to reside with a spouse, relative or friend, and one (one percent) did not respond to the question.

� 109 (96 percent) indicated that they currently own their home.

� 74 of the 109 respondents who own their home (68 percent) indicated that they expect to use the proceeds from the sale of their home to pay the balance of their entrance fee upon moving into the Community.

� Three (three percent) of the respondents indicated they had reserved an independent living unit or were on a waiting list of a competitive community; two of these respondents indicated that they intend to reside in an Independent Living Unit at the Community, and the remaining respondent indicated that they were unsure where they would reside.

The following table illustrates which communities the respondents have placed a deposit as well as the amount of the deposit:

Table 27 Deposits at Other Communities

Amount of Deposit

Community

Number of

Respondents

Less than $5,000

$5,000 to

$25,000

$25,000 to $50,000

Greater than

$50,000

Amount not

specified

Moorings Park 2 – 2 – – –

The Moorings of

Arlington Heights (1) 1 – 1 – – –

Total 3 – 3 – – –

Source: Questionnaire responses (1) The Moorings of Arlington Heights is located in Chicagoland, Illinois



Respondents indicated the following as to how soon they intended to move into their Independent Living Unit after it becomes available:

Table 28 Move-ins After Unit Becomes Available

Number of

Respondents Percentage of Respondents

1 – 30 days 26 22.8%

31 – 60 days 18 15.8%

61 – 90 days 5 4.4%

Upon the sale of home 43 37.7%

Other 17 14.9%

Did not respond 5 4.4%

Total 114 100.0%

Source: Questionnaire responses

Respondents indicated their primary reason(s) for choosing the Community were as follows:

Table 29 Community Suitability

Number of

Respondents(1) Percentage of Respondents

Access to health care 98 86.0%

Geographic location 80 70.2%

Reputation of Lutheran Life Communities 77 67.5%

Social activities and fellowship 67 58.8%

Proximity to friends and relatives 55 48.2%

Other 20 17.5%

Source: Questionnaire responses (1) Respondents were given the option of choosing more than one reason for choosing the Community. (2) One respondent did not answer this question.



Depositor File Vouching Dixon Hughes Goodman LLP read Management’s policies and procedures for accepting Depositors and confirmed that each Depositor met Management’s criteria. Dixon Hughes Goodman performed the following procedures regarding the 119 Depositors (121 Independent Living Units) for the Community:

� Confirmed 100 percent to have a Reservation Agreement executed by both the Depositor(s) and the Corporation;

� Confirmed 100 percent to include copies of a deposit check equal to the Entrance Fee Deposit for the selected Independent Living Unit and plan;

� Confirmed 100 percent that the amount of the Entrance Fee and the Monthly Service Fee matched the Independent Living Unit and plan selected; and

� Based on reported income and asset levels, confirmed that 100 percent of the Depositors either met Management’s asset and income qualification test, or displayed sufficient financial resources as approved by Management.

In addition to the above, Dixon Hughes Goodman reconciled the Entrance Fee Deposits to an escrow account statement through August 31, 2013.

The following table presents information regarding the self-reported net worth (including home values before payment of the Entrance Fee) and estimated annual income of the Depositors who have reserved an Independent Living Unit at the Community.

Table 30 Reported Annual Income and Net Worth of Depositors

Annual Income

Net Worth

No Net Worth Noted

Less than

$1,000,000

$1,000,000 to

$1,999,999

$2,000,000

to $3,99,999

$4,000,000 and

greater Total

Percent of Total

No Income Noted 4 1 2 2 6 15 12.8%

Less than $49,999 2 2 4 2 2 12 10.3%

$50,000 to $74,999 1 2 5 2 – 10 8.5%

$75,000 to $99,999 – 4 8 3 – 15 12.8%

$100,000 to $149,999 1 1 2 10 6 20 17.1%

$150,000 or Greater 1 1 5 9 29 45 38.5%

Total 9 11 26 28 43 117(1)

Percent of Total 7.7% 9.4% 22.2% 23.9% 36.8% 100.0%Source: Depositor confidential data profiles

(1) Of the 119 Depositors, 113 (95 percent) have provided financial information to Management. Four (three percent) of the Depositors have not provided self-disclosure of his or her finances. Two of the Depositors (two percent) provided letters from their financial advisors indicating that they have adequate income and assets to qualify for the unit they have selected at the Project.

(2) The median net asset amount of the 113 Depositors who reported their financial information is approximately $3,035,000 and the median annual income amount is approximately $142,300.



Description of Assisted Living Assisted Living Facilities are licensed under Chapter 429 of the Florida Statutes and Florida Administrative Code Chapter 58A–5, Department of Elder Affairs. The Florida Agency for Health Care Administration (the “Agency”) regulates assisted living facilities and a facility must have a minimum of four beds to be eligible for licensure. A Certificate of Need is not required to in order to license and operate assisted living facilities in Florida. Assisted living facility licenses are not transferable. The Agency must be notified 60 days prior to an ownership change and follow the established procedures during the transition period in order to be eligible for a new license. Assisted living facilities must be initially licensed as a standard “Assisted Living Facility” and may further obtain a specialty license to provide Limited Nursing Services (“LNS”) or Extended Congregate Care (“ECC”). The Agency licenses and regulates facilities which provide assisted living services. LNS providers are able to provide routine nursing services, such as the care of dressings, casts, braces and splints, as long as such services are not complex enough to require 24-hour nursing supervision. Facilities licensed as ECC providers can provide residents with personal care, administration of medications, assistance with activities of daily living and limited nursing care. ECC providers may provide total assistance with up to three activities of daily living. ECC providers enable residents to age in place in a residential environment despite mental or physical limitations, which creates a higher level of care, and therefore, requires an additional license for these services. For the purposes of this report, the general industry term “assisted living” includes Assisted Living Facilities, LNS and ECC providers. The Corporation will be required to obtain licensure of the Assisted Living Units and the Memory Support Units from the Agency upon completion of construction. For purposes of licensure, the Memory Support Units are considered “assisted living.”

The Assisted Living Facilities with a majority of residents receiving subsidies and facilities with a capacity of less than 20 units are not considered to be comparable with the Community due to the small size of these facilities and their typically low fee structure.



Primary Market Area for Health Care Services Seniors requiring health care such as assisted living and nursing care services generally originate from within a smaller geographic area because of the more immediate, need-driven nature of the services. Therefore, a 10-zip code area surrounding the Site has been defined as the primary area of origin for health care, including both assisted living and nursing care services (the “HC PMA”).

Table 31 The Health Care Primary Market Area

Zip Code City Zip Code City

34102 Naples 34113(1) Naples

34103 Naples 34114 Naples

34104 Naples 34116 Naples

34105 Naples 34140 Goodland

34112 Naples 34145 Marco Island

(1) The Community is located in zip code 34113.



Legend

The HC PMA

The Community Existing Assisted Living Communities within the HC PMA

1 – Tuscany Villa of Naples 2 – Barrington Terrace of Naples 3 – Arden Courts of Lely Palms and ManorCare at Lely Palms 4 – Homewood Residence of Naples 5 – Terracina Grand 6 – Windsor Place 7 – Orchid Terrace at Moorings Park

Planned Assisted Living Communities within the HC PMA

8 – Discovery Village at Naples

The following map depicts the Community and the existing and planned assisted living facilities located within the HC PMA.

Florida

Source: Microsoft MapPoint

HC PMA



Assisted Living Competitive Analysis The following table identifies the eight comparable existing assisted living facilities located within the HC PMA and summarizes the number of units, occupancy rates and current monthly fees of the comparable facilities based on surveys conducted through August 2013.

Notes to the Table (1) The Community

(a) The Monthly Service Fees shown for the Community have been deflated four percent annually from 2015 rates to reflect 2013 dollars for purposes of comparison.

(2) Tuscany Villa of Naples (a) Tuscany Villa of Naples requires a one-time non-refundable community fee of $1,000. (b) The second person fee at Tuscany Villa is $500 per month.

(3) Barrington Terrace of Naples (a) Barrington Terrace of Naples requires a one-time non-refundable community fee of $1,500. (b) The monthly fees shown for the memory support units are all-inclusive. (c) The second person fee at Barrington Terrace of Naples is $800 per month. (d) Companion suites are available in traditional assisted living for $2,475 per month.

(4) Arden Courts of Lely Palms (a) Arden Courts at Lely Palms consists of 52 private rooms and 4 semi-private rooms that are in a locked unit (b) Arden Courts at Lely Palms requires a one-time non-refundable community fee of $2,500. (c) The rates at Arden Courts are all-inclusive and include resident checks every 15 minutes.

(5) ManorCare at Lely Palms (a) ManorCare at Lely Palms is the assisted living component at Lely Palms that provides basic assisted living care.

Table 32 Comparable Assisted Living Facilities

Facility Name Driving Miles

Year Opened

Number of Beds Square Footage

Current Occupancy

Monthly Fees for Basic Care Assisted Living

Levels of Care

Assisted Living

Memory Care

Assisted Living

Memory Support

The Community(1) – 2015 42 37 297 – 737 – $6,530 – 8,355 $9,599 –

Tuscany Villa of Naples(2)

3.9 2005 134 – 286 – 1,130 95% $2,205 – 3,500 – $250 – 1,250

Barrington Terrace of Naples (3)

4.7 2003 105 30 320 – 350 93% $2,875 – $3,975 $4,375 – 5,375 $450 – 1,600

Arden Courts of Lely Palms*(4)

5.7 1999 – 56 200 – 400 90% – $4,500 – 5,400 –

ManorCare at Lely Palms* (5)

6.1 1984 12 – 250 – 500 100% $2,850 – 3,450 – –

Homewood Residence of Naples(6)

9.9 1999 88 24 272 – 1,251 86% $2,880 – 4,730 $3,650 – 5,385 –

Terracina Grand (7) 10.3 2001 33 – 390 – 750 97% $4,070 – 5,570 – $1,275 – 2,050

Windsor Place (8) 11.0 2000 54 – 300 – 450 90% $4,500 – –

Orchid Terrace at Moorings Park* (9)

14.0 1981 73 – 554 99% $5,140 – 6,854 – –

Total Number of Units (excluding the Community)/Weighted Average 499 110 94%

Source: Site visits and surveys conducted through August 2013 * Denotes an association with a retirement community.



Notes to the Table (continued)

(6) Homewood Residences of Naples (a) Homewood Residences of Naples requires a one-time non-refundable community fee of $2,500. (b) The second person monthly fee at Homewood Residences is $650 per month. (c) The rates at Homewood Residences for traditional assisted living and memory care are all-inclusive and are based on the floor

plan selected.

(7) Terracina Grand (a) Terracina Grand offers 154 apartments which are all licensed as assisted living in order to provide assistance to residents in

their home. Thirty-three of the apartments are designated assisted living units in a separate area of the building called “The Palazzo” for residents requiring more than one hour of assisted care per day. For purposes of this analysis, 33 units are considered assisted living while the remaining 121 units are considered independent living.

(b) Terracina Grand requires a one-time non-refundable community fee of $2,000. (c) The second person fee at Terracina Grand is $750 per month plus level of care fees (if applicable).

(8) Windsor Place (a) Windsor Place has an extended care license allowing them to provide skilled nursing care in an assisted living environment. (b) Windsor Place does not require a community fee or second person fee.

(9) Orchid Terrace at Moorings Park

(a) Assisted living rates are all-inclusive and reflect the private pay rates for direct admissions.

Planned Assisted Living Development Based on discussions with representatives from local planning and permitting agencies and interviews with management at existing retirement communities, in addition to the Community, there is one planned assisted living community under development in the HC PMA. Discovery Village at Naples Discovery Village at Naples (“Discovery Village”), which is located approximately one mile northeast of the Community, is a planned assisted living community that is expected to consist of 30 supervised living units, 60 assisted living units and 30 memory care units. For the purposes of this analysis, the 30 supervised living units would be considered comparable to a traditional assisted living service level. The Discovery Village site is located on Sierra Meadows Boulevard near the intersection of Collier Boulevard and Rattlesnake Hammock Road. Discovery Village is owned and will be operated by Discovery Village Investors, LLC which is based in Bonita Springs. All residents of Discovery Village are to receive the following services: three meals daily, housekeeping, transportation, 24-hour security, on-site therapy and social and recreational activities. Construction of Discovery Village began in October 2013 and is expected to be complete by March 2015. Pricing for Discovery Village has not yet been determined.



Assisted Living Penetration Analysis The increased size of the private paying, frail, elderly market has in recent years attracted providers to develop new and creative options for caring for this population. There have been few barriers to entering this market, since existing regulations generally do not restrict or limit supply. Methodologies for projecting bed need or demand for assisted living vary. The Agency does not have a methodology for determining the need for assisted living units. Research studies have identified impairment levels in activities of daily living (“ADL”) such as dressing, bathing, eating, toileting, mobility and taking medications, and instrumental activities of daily living (“IADL”) such as meal preparation, home maintenance, shopping and personal finance, all of which generally are used to measure levels of functioning and estimate the care needs of a specific population. The decision by elderly persons to enter an assisted living facility to meet their need for assistance often depends on alternatives available and is somewhat more discretionary than the decision to enter a nursing care facility, according to industry research studies.

Population data and income statistics may be utilized to some extent to estimate the number of qualified households (75+) for assisted living services, yet should not be relied upon entirely as a measure of success for a facility. The amount of cross subsidization that occurs between adult caregivers (assumed to be those households aged 45 to 64 earning in excess of $75,000 annually) and their relatives may provide the financial means for a non-income-qualified senior to afford this level of care. Additionally, non-income-qualified seniors may have an asset base that would provide the financial means to afford this level of care.

Management anticipates that the prospective residents of the Assisted Living Units and Memory Support Units are expected to generally meet the following profile prior to occupancy:

� 75 years of age or older;

� Living alone; and

� Requiring some assistance with activities of daily living.

Income characteristics have been applied to determine a range of market penetration rates for age qualified and age and income qualified individuals. The income assumption is that a prospective assisted living resident is to have either (i) annual income of at least $35,000 or (ii) have an annual income between $25,000 and $34,999 and own their home.



The following table presents the income eligible households for assisted living services within the HC PMA.

Table 33 Income Eligible Households for Assisted Living Services within the HC PMA

75+ 2013 (Estimated) 2018 (Projected) Total Households: 16,244 17,790

Household Income

Under $25,000 5,749 6,976

Renters $25,000 – $34,999 619 697

Homeowners $25,000 – $34,999 1,541 1,723

Total Under $35,000 7,909 9,396

$35,000 – $49,999 2,517 2,604

$50,000 – $74,999 2,300 2,411

$75,000 – $99,999 1,397 1,375

$100,000+ 2,121 2,004

Total $35,000+ 8,335 8,394

Total Assisted Living Income Eligible Households(1)

9,876 10,117

Percentage of Assisted Living Income Eligible Households 60.8% 56.9%

Source: Nielsen Claritas (1) Age and income eligible households include households (age 75 and over) with income over $35,000 and homeowners

(age 75 and over) with income between $25,000 and $34,999 annually.



The following table estimates the number of age- and income-qualified individuals living alone and requiring assistance with activities of daily living in the HC PMA as estimated in 2013, interpolated in 2015 and projected in 2018. Estimates of the percentage of households requiring assistance and the percentage living alone are based on the 2010 Census.

Table 34 Estimated Number of Assisted Living Qualified Individuals in the HC PMA

Years 2013, 2015 and 2018

Estimated Households(1)

Percentage Requiring

Assistance(2)

Percentage Living Alone(3)

Estimated Number of Individuals

2013Age-Qualified(4) 16,244 19.1% 34.0% 1,055

Age- and Income-Qualified(5) 9,876 19.1% 34.0% 641

2015 Age-Qualified(4) 16,863 19.1% 34.0% 1,095


2018 Age-Qualified(4) 17,790 19.1% 34.0% 1,155


Source: Nielsen Claritas (1) Based on 2013 estimated and 2018 projected population statistics as provided by Nielsen Claritas. (2) Percentage requiring assistance is a weighted average of the percentage of the population requiring assistance with activities

of daily living as determined by the U.S. Census Bureau (Source: U.S. Census Bureau, Americans with Disabilities: 2010. p.5, Washington, DC, July 2012) and the age- and income-qualified households within the HC PMA.

(3) Based on Nielsen Claritas demographic estimates. (4) Age-qualified households are those households with residents age 75 and over. (5) Age- and income-qualified households include households with residents age 75 and over with annual incomes of at least

$35,000 and homeowners age 75 and over with income between $25,000 and $34,999.



Assisted Living Project Penetration Rate

The Project Penetration Rate is the percentage of estimated age- and income-qualified households within the HC PMA that need to move into an Assisted Living Unit in order for the Community to achieve expected occupancy levels. The following table presents Project Penetration Rates for assisted living services in 2015, the year the Assisted Living Units and Memory Support Units are expected to open for occupancy.

Table 35 Assisted Living Project Penetration Rate – 2015

Age-Qualified Individuals

Age- and Income- Qualified Individuals

Number of Qualified Individuals 1,095 648

Number of Individuals in Existing Comparable Units (1) 482 482

Total Qualified Individuals (b) 1,577 1,130

Number of Planned Units at the Community(2) (a) 62 62

Project Penetration Rate for the HC PMA (a/b) 3.9% 5.5% Source: Management and Nielsen Claritas

(1) Reflects the 609 existing assisted living units within the HC PMA assuming that approximately 85 percent (518 units) have originated from the HC PMA and a stabilized occupancy rate of 93 percent (482 units).

(2) Reflects the 42 Assisted Living Units and 37 Memory Support Units at the Community, assuming 85 percent (67 units) originate from the HC PMA and assuming a stabilized occupancy rate of 93 percent (62 units).

Assisted Living Market Penetration Rate The assisted living market penetration rate is presented as the percentage of age- and income- qualified individuals that the total market has absorbed (in current year 2013) or must absorb (over a five-year period to 2018) for the entire market to achieve stabilized occupancy. The assisted living market penetration rate is calculated by dividing the total number of assisted living units within the HC PMA by the total number of age- and income-qualified individuals residing within the HC PMA. Calculations are based on the demographics projected for the current year and the final year of the forecast to demonstrate the change in the market penetration rate based on market absorption.



The following table presents market penetration rates for assisted living services.

Table 36 Assisted Living Market Penetration Rates

Age-Qualified Individuals

Age- and Income- Qualified Individuals

2013 2018 2013 2018

Number of Qualified Individuals 1,055 1,155 641 657

Number of Individuals in Existing Comparable Units(1) 482 482 482 482

Total Qualified Individuals (b) 1,537 1,637 1,123 1,139 Number of Individuals in Existing Comparable Units(1) 482 482 482 482

Number of Planned Units at the Project(2) – 62 – 62

Number of Planned/Construction Units in the HC PMA(3) – 95 – 95

Total Units, Including the Community (a) 482 639 482 639

Market Penetration Rate for the HC PMA (a/b) 31.4% 39.0% 42.9% 56.1% Source: Management and Nielsen Claritas

(1) Reflects the 609 existing assisted living units within the HC PMA assuming approximately 85 percent (518 units) have originated from the HC PMA and a stabilized occupancy rate of 93 percent (482 units).

(2) Reflects the 42 Assisted Living Units and 37 Memory Support Units at the Community, assuming 85 percent (67 units) originate from the HC PMA and a stabilized occupancy rate of 93 percent (62 units).

(3) Reflects the 120 planned units (90 assisted living units and 30 memory support units) at Discovery Village assuming 85 percent (102 units) have originated from the HC PMA and a stabilized occupancy rate of 93 percent (95 units).



Description of Nursing Care The Agency administers the certificate of need (“CON”) process for community nursing home beds, which was established to regulate the construction of new community nursing homes, the addition of new community nursing beds and the conversion of other health care facility bed types to community nursing home beds. For the purposes of determining bed need projections, Florida is divided into 11 districts statewide. Each area district is then divided into sub districts, which represent the individual counties or groups of counties within each area district. The Agency determines the nursing bed need for each district within the state twice a year by using a methodology based on a planning horizon of three years, current and projected population estimates, a sub district need determination, and a need formula. In 2001, the Florida legislature placed a moratorium on the issuance of CONs for additional community nursing home beds until July 1, 2006. In 2006, the legislature extended the moratorium until July 1, 2011. As of July 2011, the moratorium was extended to July 1, 2016. Nursing beds affiliated with new CCRCs under the sheltered bed waiver regulations also require a CON for closed beds or limited to residents of the CCRC. Closed skilled nursing beds obtained under the sheltered bed waiver regulations may admit residents from outside the CCRC for the first five years after opening. In January 2013, the Corporation submitted to the Agency its CON application for approval. The Corporation received the CON approval in February 2013.



The following map depicts the Community and the five existing skilled nursing facilities located within the HC PMA.

Legend The HC PMA

The Community

Existing Skilled Nursing Facilities within the HC PMA 1 – Manorcare at Lely Palms 2 – Manorcare Nursing and Rehabilitation Center 3 – Heritage Healthcare and Rehabilitation

Center 4 – Lakeside Pavilion 5 – The Chateau at Moorings Park

Florida

Source: Microsoft MapPoint

HC PMA



The following table summarizes the number of nursing beds, daily charges and occupancy rates of the nursing care providers located within the HC PMA. Management has identified five comparable existing nursing facilities located within the HC PMA consisting of a total of 560 beds. Including the 44 Nursing Beds, there are 604 existing and planned nursing beds in the HC PMA.

* Denotes an association with a retirement community Notes to the Table: (1) The rates shown for Skilled Nursing Beds have been deflated 4 percent per year from the published rates (which are

effective July 1, 2015 (fiscal year 2016)) to reflect 2013 dollars.

(2) Nursing care and rehabilitative services are located on the campus of Lely Palms at ManorCare Health Services. The 117 nursing care beds include 30 beds designated for memory care offered at daily rates of $265 for a semi-private room and $275 for a private room.

(3) ManorCare Nursing and Rehabilitation Center also offers a 3-bed semi-private room for a daily rate of $243.

(4) One of the private rooms at Lakeside Pavilion is used for infection control and is not available for use by residents.

(5) Thirty-four of the 106 nursing beds at Moorings Park are in a secured area designated for memory care.

Planned Nursing Beds Based on discussions with representatives of the local planning and permitting agencies and interviews with management at existing retirement communities, other than the Community, there are no planned skilled nursing beds under development within the HC PMA.

Table 37 Skilled Nursing Facilities Located Within the HC PMA

Facility Name Driving Miles

Year Opened Total Beds

Beds Current

Occupancy

Daily Rates

Private Semi-Private Private Semi-

Private

The Community(1) – – 44 44 – – $361 –

ManorCare at Lely Palms* (2) 2.9 1984 117 25 92 92% $306 $250

ManorCare Nursing and Rehabilitation Center(3) 3.1 1982 120 30 90 87% $290 $303

Heritage Healthcare and Rehabilitation Center

10.5 2004 97 3 94 90% $230 $215

Lakeside Pavilion(4) 11.7 1965 120 2 118 94% $260 $240

The Chateau at Moorings Park* (5)

14.0 1981 106 74 32 95% $421 $297

Totals/ Weighted Average (excluding the Community) 560 134 426 92%

Source: Site visits and surveys conducted through August 2013.



Summary of Significant Accounting Policies (a) Basis of Accounting

The Corporation maintains its accounting and financial records according to the accrual basis of accounting.

(b) Deferred Costs

The marketing costs incurred by the Corporation in connection with acquiring initial Resident contracts of the Independent Living Units are capitalized and amortized on a straight-line basis over a period approximating the average life expectancy of the initial Residents occupying the Independent Living Units.

Financing costs associated with the issuance of existing debt and the proposed Series 2013 Bonds are assumed to be capitalized and amortized using the straight-line method over the term of the related debt.

(c) Property, Equipment and Depreciation Expense

Property and equipment are recorded at cost. Depreciation expense is calculated on the straight-line method over the estimated useful lives of depreciable assets. The cost of maintenance and repairs is charged to operations as incurred, whereas significant renewals and betterments are capitalized.

(d) Assets Limited as to Use

Assets limited as to use are assumed to be carried at fair value, which, based on the nature of the underlying securities, is assumed to approximate historical cost. Management assumes no material changes in fair values that result in material net realized or unrealized gains or losses during the forecast period.

(e) Cash and Cash Equivalents

Cash and cash equivalents include investments in highly liquid securities with an original maturity of three months or less when purchased.

(f) Investment Income

Investment income, other than that capitalized as part of Project related costs, is reported as operating revenue unless restricted by donor or law. Management has not forecasted any unrealized gains or losses on investments.

(g) Costs of Borrowing

Net interest cost incurred on borrowed funds related to the Project during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets.

(h) Taxes Management has included a provision for property taxes or payment in lieu of property taxes.

(i) Deferred Revenue from Entrance Fees

The non-refundable portion of Entrance Fees received are recorded as deferred revenue and are recognized as operating income using the straight-line method over the estimated remaining life expectancy of the Residents, adjusted annually as determined by actuarial life expectancy tables.



(j) Refundable Entrance Fees

The refundable portion of the Entrance Fee is maintained as a liability, reflecting the Corporation’s future obligation for payment.

(k) Obligation to Provide Future Service

Management calculates the present value of the net cost of future services and the use of facilities to be provided to current residents and compares that amount with the balance of deferred revenue from Entrance Fees. The obligation to provide future services to residents represents the estimated net future costs to serve residents, net of revenue from those Residents, who were parties to a Residence and Care Contract on the Corporation’s fiscal year end. If the present value (discounted at 5.5 percent) of the net cost of future services and use of facilities exceeds the deferred revenue from entrance fees, a liability is recorded. Based upon Management computations, deferred revenue exceeds the net present value of the estimated net cost of future services and the use of facilities to be provided to current residents and accordingly, no provision for future service obligations is required during the forecast period.



Summary of Revenue and Entrance Fee Assumptions Independent Living Units Independent living monthly service fee revenue is based upon charges for services provided to Residents of the Independent Living Units and upon the assumed occupancy and the Monthly Service Fees of the respective units. Management assumes the Independent Living Units Monthly Service Fees increase 4.0 percent beginning in July 1, 2016 and annually thereafter.

Independent living service fees revenue also consists of revenues related to the additional resident meals, transportation services, guest apartment rentals, and other miscellaneous revenues. These revenues are assumed to increase 4.0 percent annually throughout the forecast period. The Independent Living Units are assumed to achieve and maintain a 95 percent occupancy level in June 2018 and remain at that level throughout the forecast period. The following table summarizes the assumed occupancy of the Independent Living Units.

Table 38 Utilization of the Independent Living Units

Years ended June 30,

Average Units Occupied

Average Units Available

Average Occupancy

Forecasted:

2016 55.3 163.0 33.9%

2017 118.0 163.0 72.4%

2018 (1)

148.3 163.0 91.0%

2019 155.0 163.0 95.1%

Source: Management (1) The Independent Living Units are to be available for occupancy in July 2015 and fill to a 95.1 percent occupancy level of a

36-month period at an average of approximately 4.3 units per month.

The double occupancy percentage in the Independent Living Units is assumed to be 68 percent of occupied units in fiscal year 2016, declining to 48 percent in fiscal year 2019, as provided by A.V. Powell & Associates, LLC (the “Actuary”).



Residents are assumed to begin moving into the Independent Living Units in July 2015. The following table summarizes the assumed move-in pattern for the Independent Living Units.

Table 39 Monthly Move-in Pattern (Net of Move-Outs) Independent Living Units

Fiscal Year/Month Monthly Total Cumulative Total Cumulative Percentage (1) FY 2016

July 14 14 9%

August 14 28 17%

September 10 38 23%

October 10 48 29%

November 5 53 33%

December 5 58 36%

January - 2016 6 64 39%

February 6 70 43%

March 6 76 47%

April 6 82 50%

May 5 87 53%

June 5 92 56%

FY 2017

July 5 97 60%

August 5 102 63%

September 5 107 66%

October 4 111 68%

November 4 115 71%

December 4 119 73%

January - 2017 4 123 75%

February 4 127 78%

March 3 130 80%

April 3 133 82%

May 3 136 83%

June 3 139 85%

FY 2018

July 2 141 87%

August 2 143 88%

September 2 145 89%

October 2 147 90%

November 1 148 91%

December 1 149 91%

January - 2018 1 150 92%

February 1 151 93%

March 1 152 93%

April 1 153 94%

May 1 154 94%

June 1 155 95%

Total 155 95%

Source: Management (1) Cumulative occupancy based on 163 Independent Living Units.



Assumed Independent Living Turnover The assumed turnover for the Independent Living Units due to death, withdrawal or transfer to the Assisted Living Units, Memory Support Units or the Health Center has been based, in part, on the report of the Actuary.

Refunds of Entrance Fees are generated upon death or termination of the Resident and Care Agreement and withdrawal from the Community, subject to the re-occupancy of the vacated Independent Living Units. Entrance Fees may be generated from Independent Living Units turning over without a corresponding refund because the Resident has not withdrawn from the Community, but has permanently transferred to the Assisted Living Units, Memory Support Units or Health Center. The assumed number of refunds for the Independent Living Units is provided by the Actuary. The following table presents the assumed initial and attrition Entrance Fees received and the total Entrance Fee refunds.

Table 40 Initial and Attrition Entrance Fees Receipts and Total Entrance Fees Refunds

(In Thousands)

2016 2017 2018 2019 Number of Entrance Fees Received (1) (Initial) 85 44 13 -

Entrance Fees Received (Initial) $54,318 $27,749 $8,474 -

Number of Entrance Fees Received (Attrition) 1.0 3.0 5.0 7.0

Entrance Fees Received (Attrition) $774 $2,104 $3,609 $4,647

Total Entrance Fees Refunded ($624) ($1,455) ($1,990) ($2,167)

Entrance Fees Received, Net of Refunds $54,468 $28,398 $10,093 $2,480

Source: Management and the Actuary

(1) No Entrance Fees are to be collected for the 12 Brambling Independent Living Units to be available

under the Rental Plan.



Assisted Living and Memory Support Units

Assisted Living Units and Memory Support Units monthly service fees are based on the assumed occupancy of the respective units and are generated from services provided to Residents transferring from the Independent Living Units, as well as direct admissions from the local surrounding area. Entrance Fee Plan Residents receive a discount of 50 percent off the then-current assisted living or memory care market rate. For Residents who signed a Reservation Agreement prior to May 1, 2013, the Health Care Benefit is effective for the term of the Resident and Care Agreement. For Residents who sign a Reservation Agreement on or after May 1, 2013, the Health Care Benefit is for a period up to four years. Management assumes the Assisted Living Units and Memory Support Units Monthly Fees increase 4.0 percent on July 1, 2015 (fiscal year 2016) and annually thereafter.

The Assisted Living Units are assumed to achieve and maintain a 93 percent occupancy level beginning in February 2017 and remain constant at that level throughout the forecast period. The Memory Support Units are assumed to achieve and maintain a 92 percent occupancy level beginning in August 2016 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Assisted Living Units and Memory Support Units.

Table 41 Utilization of Assisted Living Units and Memory Support Units

Assisted Living Units Memory Support Units

Year Ending June 30,

Average Units

Occupied

Average Units

Available Average

Occupancy

Average Units

Occupied

Average Units

Available Average

Occupancy Total Occupancy (3)

Forecasted

2016 (1) 21.4 42.0 51% 21.1 37.0 57% 42.5 54%

2017 (2) 36.5 42.0 87% 33.8 37.0 91% 70.3 89%

2018 39.2 42.0 93% 34.0 37.0 92% 73.2 93%

2019 39.2 42.0 93% 34.0 37.0 92% 73.2 93%

Source: Management (1) The Assisted Living Units and Memory Support Units are assumed to be available for occupancy in July 2015. (2) The Assisted Living Units are anticipated to fill over a 20 month period at an average of 2.1 units per month and achieve

93 percent occupancy by February 2017.The Memory Support Units are anticipated to fill over a 14 month period at an average of 2.4 units per month and achieve 92 percent occupancy by August 2016.

(3) Residents permanently transferring from the Independent Living Units are provided by the Actuary and are estimated to be 0.3 average Residents in fiscal year 2016; 1.2 average Residents in fiscal year 2017; 3.2 average Residents in fiscal year 2018 and 6.5 average Residents in fiscal year 2019.



Nursing Beds

Nursing service fees are based on the assumed occupancy of the Skilled Nursing Beds and are generated from services provided to residents transferring from the Independent Living Units as well as direct admissions from the local surrounding area. Entrance Fee Plan Residents receive a discount of 50 percent off the then-current nursing market rate. For Residents who signed a Reservation Agreement prior to May 1, 2013, the Health Care Benefit is effective for the term of the Resident and Care Agreement. For Residents who sign a Reservation Agreement on or after May 1, 2013, the Health Care Benefit is for a period up to four years. Management assumes Skilled Nursing Bed Daily Fees to increase 4.0 percent beginning July 1, 2015 (fiscal year 2016) and annually thereafter. The Health Center is assumed to achieve and maintain a 93.2 percent occupancy level in September 2016 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Health Center’s nursing beds.

Table 42

Utilization of the Nursing Beds Average Number of Residents Average Number of

Year Ending June 30,

Permanent Residents

Direct Admit Private Pay Temp.

Beds Occupied

Beds Available

Average Occupancy Percentage

Forecasted

2016 (1) - 21.7 0.2 21.9 44.0 50%

2017 0.3 38.6 1.6 40.5 44.0 92%

2018 1.0 37.6 2.4 41.0 44.0 93%

2019 2.3 35.8 2.9 41.0 44.0 93%

Source: Management

(1) The Nursing Beds are assumed to be available for occupancy in July 2015 and fill to stabilized occupancy of 93.2

percent over a 15-month period at an average of approximately 2.7 beds per month.



Earned Entrance Fees Earned entrance fees are based on the non-refundable portion of the Entrance Fees received each year amortized over the life expectancy of each Resident in the Independent Living Units throughout the forecast period. Turnover of the Independent Living Units has been based on information provided by Management and the experience of comparable facilities. Management assumes the Entrance Fees would increase 3.5 percent beginning July 1, 2016 and annually thereafter.

Other Income Other revenue consists of revenues from barber and beauty fees, catering, liquor sales, bank lease, and other miscellaneous sources. These revenues are assumed to increase 4.0 percent annually throughout the forecast period. Investment Income Management has assumed the following average annual rate of return on the Corporation’s cash, cash equivalent, unrestricted investments, Minimum Liquid Reserves (hereinafter defined), the Entrance Fee Fund, Operating Reserve Fund, and Working Capital Fund:

Table 43 Assumed Investment Earnings Rates – Cash, Cash Equivalents and Investments

Years Ending June 30, 2014 2015 2016 2017 2018 2019

Cash, Cash Equivalents & Investments 1.65% 2.00% 2.50% 3.00% 3.50% 4.00%

Source: Management

Management has assumed average annual rates of return on the bond funds related to the Series 2013 Bonds as follows: 0.50 percent on the Project Account, 0.41 percent on the Funded Interest Account; 1.66 percent on the Series 2013A Bonds Debt Service Reserve Account, 0.82 percent on the Series 2013B-1 Bonds Debt Service Reserve Account and 0.56 percent on the Series 2013B-2 Bonds Debt Service Reserve Account.

Summary of Expense Assumptions Operating expenses are estimated by Management based upon the historical experience of the Corporation. Staff salaries and wages are estimated based on prevailing local salary and wage rates. Salary and wage costs are assumed to increase 4.0 percent annually throughout the forecast period. The cost of employee fringe benefits, consisting primarily of payroll taxes, health insurance and other costs are assumed to average approximately 23.1 percent of salaries and wages throughout the forecast.



The following table summarizes the assumed staffing levels for all departments in the stabilized fiscal year of 2019.

Source: Management Other non-salary operating expenses are assumed to include raw food costs, utilities, supplies, maintenance and security contracts, property taxes or payment in lieu of property taxes, Consulting Fees, building and general liability insurance, legal and accounting fees, and other miscellaneous expenses. The cost of these non-salary operating expenses is assumed to increase 4.0 percent annually throughout the forecast period. Assets Limited as to Use Trustee Held Funds

Wells Fargo Bank, N.A., as bond trustee (the “Bond Trustee”) is assumed to maintain the following funds and accounts for the Series 2013 Bonds under the terms of the Master Indenture and the Bond Trust Indenture:

(1) Principal Account and Interest Account – Series 2013 Bonds, which contains the bond principal and interest payments to be used for payment of debt service on the Series 2013 Bonds.

(2) Project Account, to be gross funded at closing from Series 2013 Bonds proceeds to be used to pay construction costs to complete the Community.

(3) Funded Interest Account, net funded from Series 2013 Bonds proceeds, to be used to fund interest costs for 24 months.

(4) Series 2013 Reserve Accounts are assumed to be funded at closing with Series 2013 Bond proceeds. Additionally, the Series 2013 Reserve Accounts associated with each series of the Series 2013 Bonds is assumed to be released and available to pay debt service in the year that the respective series of the Series 2013 Bonds are repaid in full.

Table 44 Schedule of Staffing Levels (FTEs) – Fiscal Year 2019

Department FTE Totals Administration 9.9

Marketing 4.0

Activities 9.9

Housekeeping 28.5

Environmental Services 14.4

Dietary 48.0

Skilled Nursing 33.4

Assisted Living and Memory Support 40.0

Total FTE’s 188.1



(5) Entrance Fee Fund, to be funded with initial Entrance Fees from the Community, available to: pay Entrance Fee refunds; fund the Working Capital Fund and the Operating Reserve Fund; redeem Series 2013 Bonds and to reimburse any amounts advanced for Project costs under the Liquidity Support Agreement.

(6) Operating Reserve Fund, to be initially funded with $5,000,000 from initial Entrance Fees received. The Operating Reserve Fund is to be available to pay debt service, additional project costs, operating expenses, development fees or capital expenditures as needed.

(7) Working Capital Fund, to be funded with $2,000,000 of proceeds from the Series 2013 Bonds and $10,250,000 from initial Entrance Fees received, to pay for development fees, debt service payments, project costs, operating expenses, or capital expenditures as needed.

Minimum Liquid Reserves As described in Chapter 651 of the Florida Statutes, additional minimum liquid reserve accounts (“Minimum Liquid Reserves”) are required to be maintained in continuing care escrow funds.

The Minimum Liquid Reserves are not subject to the lien of the Master Indenture and include the following:

(1) Statutory Debt Service Reserve Fund, as calculated to meet the "Debt Reserve Requirement" established by Florida Statute, in an amount equal to the annual interest and principal of outstanding debt and property taxes. To the extent that a Debt Service Reserve Fund has been established by the Master Indenture, the Corporation is not required to fund an additional amount for interest and principal on the Series 2013 Bonds for the Community.

(2) Statutory Operating Reserve Fund, as calculated to meet the "Operating Reserve Requirement" established by Florida Statute, equal to 15 percent of “Total Annual Operating Expenses”, excluding, depreciation, amortization, interest, taxes, insurance and certain extraordinary expenses. Total Annual Operating Expenses is determined by averaging the total annual operating expenses over the preceding three year period, as reported on the Corporation’s annual report filing.

(3) Statutory Renewal and Replacement Fund, as calculated to meet the "Replacement Reserve Requirement" established by Florida Statute, equal to 15 percent of the Community’s accumulated depreciation, not to exceed 15 percent of the Community’s average operating expenses during the immediately preceding three-year period.

(4) Statutory Entrance Fee Escrow Fund, to equal 75 percent of Entrance Fees received. The Statutory Entrance Fee Escrow Fund is maintained until Entrance Fees payments on 70 percent of the Independent Living Units have been received in full and other requirements under Chapter 651 of the Florida Statutes have been met.

The plan of finance contemplates utilizing Entrance Fees to repay the Series 2013B Bonds (when released from escrow) and fund working capital, statutory reserves and operating reserves.



Property and Equipment and Depreciation Expense The Corporation is assumed to incur routine capital additions during the forecast period that are

anticipated to be capitalized as property and equipment. Depreciation expense is computed

based on the straight-line method for buildings and equipment over the estimated average useful

lives of the related assets. The Corporation’s property and equipment costs, net of accumulated

depreciation, during the forecast period are summarized in the table below.

Table 45 Schedule of Property and Equipment

(In Thousands)

Years Ending June 30,

2014 2015 2016 2017

2018 2019Property and equipment, gross Beginning balance 40,863 72,963 149,978 156,533 157,007 157,370

Project costs 25,456 63,137 6,430 224 38 -

Capitalized interest 6,644 13,878 - - - -

Routine capital additions - - 125 250 325 400

Property and equipment, gross 72,963 149,978 156,533 157,007 157,370 157,770

Accumulated depreciation - - (3,661) (7,328) (10,996) (14,664)

Property and equipment, net Ending balance 72,963 149,978 152,872 149,679 146,374 143,106

Source: Management

Long-Term Debt and Interest Expense As of June 30, 2013, the Corporation had debt outstanding of approximately $31,129,000, including approximately $30,390,000 of Pre-Finance Loans and approximately $739,000 of the Mortgage Loan. LCEF Land Loan

Of the Pre-Finance Loans, approximately $19,490,000 consists of the LCEF Land Loan, which consists of a five year, interest bearing promissory note, at a current interest rate of 4.25 percent per annum. LCEF has the right to review and adjust the interest rate monthly and over the life of the LCEF Land Loan, the interest rate has fluctuated from 4.25 percent to 6.375 percent. Interest payments on the LCEF Land Loan are accrued and would be payable upon redemption of the LCEF Land Loan. As of June 30, 2013, total accrued interest on the LCEF Land Loan was approximately $4,988,000. Principal and accrued interest on the LCEF Land Loan is assumed to be repaid upon permanent financing of the Series 2013 Bonds.



Series 2011 Notes Of the Pre-Finance Loans, $10,900,000 consists of the Series 2011 Notes, which consist of non-rated, tax-exempt notes at an average interest rate of 14.00 percent per annum. The Series 2011 Notes were issued at a discount, the balance of which was approximately $264,000 as of June 30, 2013. Interest payments on the Series 2011 Notes are accrued, compound semi-annually, and are payable upon redemption of the Series 2011 Notes. As of June 30, 2013, total accrued interest on the Series 2011 Notes was approximately $1,613,000. Principal and accrued interest on the Series 2011 Notes is assumed to be repaid upon permanent financing of the Series 2013 Bonds.

Mortgage Loan In March 2009, the Corporation entered into the 15-year Mortgage Loan with MainSource Bank with interest of 6.125 percent per annum and monthly payments of $7,871 (including interest). As of June 30, 2013, approximately $739,000 of the Mortgage Loan was outstanding.

Series 2013 Bonds The Collier County Industrial Development Authority intends to issue the Series 2013 Bonds, the proceeds of which are to be lent to the Corporation to pay for the Community’s construction and other project-related costs. The Series 2013 Bonds are assumed to consist of:

� $128,295,000 of non-rated fixed rate, tax-exempt Series 2013A Bonds; and

� $62,000,000 of non-rated fixed rate, tax-exempt Series 2013B Bonds.

The Series 2013A Bonds are assumed to be issued at a discount with assumed coupon rates ranging from 7.00 to 8.25 percent per annum and yields ranging from 7.00 to 8.35 percent per annum. Interest on the Series 2013A Bonds is assumed to be payable semi-annually on May 15 and November 15 of each year beginning May 15, 2014. Principal on the Series 2013A Bonds is assumed to be payable annually commencing May 15, 2020 with a final maturity on May 15, 2049.

The Series 2013B Bonds are assumed to consist of $62,000,000 of non-rated fixed rate TEMPSSM with assumed interest rates ranging from 6.50 to 6.875 percent per annum. Interest on the Series 2013B Bonds is assumed to be payable semi-annually on May 15 and November 15 of each year beginning May 15, 2014. The Series 2013B Bonds consist of $12,000,000 of Series 2013B-1 Bonds (TEMPS-85SM) anticipated to be redeemed in full by approximately 82 percent initial occupancy of the Independent Living Units by approximately August 2017; and $50,000,000 of Series 2013B-2 Bonds (TEMPS-70SM) anticipated to be redeemed in full by approximately 70 percent initial occupancy of the Independent Living Units by approximately February 2017.



The following table presents the assumed annual debt service during the forecast period and thereafter.

Table 46 Schedule of Annual Debt Service

(in thousands of dollars)

Mortgage Loan The Series 2013 Bonds Total

Debt Service Year Ending

June 30,

Principal Interest

Principal Interest

2014 $50 $45 $ - $ 5,072 $5,167

2015 53 42 - 14,376 14,471

2016 56 38 - 14,376 14,470

2017 60 35 59,375 13,512 72,982

2018 64 31 2,625 10,347 13,067

2019 68 27 - 10,302 10,397

Thereafter 388 62 128,295 225,317 354,062

Total 739 280 $ 190,295 $293,302 $484,616

Source: Management and the Underwriter

LLM Note Payable Upon permanent financing of the Series 2013 Bonds, LLM is anticipated to provide a note payable of approximately $6,509,000 (the “LLM Note Payable”). No interest is assumed to accrue on the outstanding LLM Note Payable. Principal payments on the LLM Note Payable is deferred and subordinated to the debt service payments of the Series 2013 Bonds and would occur only if the Corporation meets certain financial and occupancy conditions.

Early Extinguishment of Debt The loss on the early extinguishment of the Series 2011 Notes is reflected as a non-operating expense during the fiscal year ending June 30, 2014. The loss on the early extinguishment of debt resulting from current refunding of the Series 2011 Notes is equal to the unamortized deferred financing costs and original issue discount associated with the Series 2011 notes at the time of refinancing.



Current Assets and Current Liabilities Operating expenses exclude amortization, depreciation, other non-cash expenses and interest expense. Operating revenues include Monthly Service Fees and Health Center Daily Service Fees. Working capital components have been estimated based on industry standards and Management’s historical experience as follows:

Table 47 Working Capital – Days on Hand

Accounts receivable 15 days operating revenues

Prepaid expenses and other assets 15 day operating expenses

Accounts payable 30 days operating expenses

Accrued payroll and employee benefits 14 days operating expenses

Source: Management

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INDEPENDENT ACCOUNTANTS’ REPORT ON SUPPLEMENTAL INFORMATION

Board of Directors The Arlington of Naples Naples, Florida Our examination of the financial forecast presented in the preceding section of this document was made for the purpose of forming an opinion on whether the financial forecast is presented in conformity with AICPA guidelines for the presentation of a forecast and that the underlying assumptions provide a reasonable basis for the forecast. The study was undertaken to evaluate the Corporation’s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements based on Management’s assumptions of future operations of the Corporation. However, future events could occur which could adversely affect the financial forecast of the Corporation and its ability to meet debt service requirements. These factors include, among others, legislation and regulatory action, changes in assumptions concerning occupancy, the rate of entrance fee producing unit turnover, per diem rates, financing and operating costs.

The accompanying supplemental analysis is presented for purposes of additional analysis and is not a required part of the financial forecast nor considered an all inclusive list. Such information has not been subjected to procedures applied in the examination of the financial forecast and, accordingly, we express no opinion or any other form of assurance on it.

Atlanta, Georgia December 13, 2013

The Arlington of Naples Supplemental Disclosure

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Sensitivity Analysis I – Occupancy Management expects the Community’s Residents are to begin moving into the Independent Living Units and Health Center in July 2015. Management expects the Memory Support Units to achieve and maintain a 92 percent occupancy level by August 2016, the Nursing Beds to achieve and maintain a 94 percent occupancy level by September 2016, the Assisted Living Units to achieve and maintain a 93 percent occupancy level by February 2017, and the Independent Living Units to achieve and maintain a 95 percent occupancy level by June 2018, based on the historical experience of Management. The period of time it takes for the Community to achieve stabilized occupancy and actual occupancy rates may vary from Management’s assumptions included in the forecast, depending upon economic conditions, the competitive environment, and Management’s ability to execute the marketing and sales plan. Accordingly, the following analyses have been presented for the purpose of demonstrating the significance of occupancy assumptions on the financial forecast. Sensitivity Analysis IA The data presented in the table below demonstrates the impact of an extension in the assumed move-in period of the Independent Living Units from 36 months to 60 months. Sensitivity Analysis IB The data presented in the table below provides a “Breakeven Analysis” assuming a proportionally lower stabilized occupancy of the Independent Living Units such that a 1.00x Maximum Annual Debt Service Coverage Ratio or zero Days Cash on Hand is achieved in fiscal year 2019. In the Sensitivity IB Breakeven Analysis, the Independent Living Units stabilized occupancy was reduced to “Breakeven” while occupancy in the Health Center remained as originally forecasted. For purposes of this analysis, operating expenses have not been adjusted for reductions of the occupancy of the Independent Living Units.

Sensitivity Analysis IC The data presented in the table below demonstrates the impact of an extension in the assumed move-in period of the Independent Living Units from 36 months to 60 months and a proportionally lower stabilized occupancy of the Health Center, such that a 1.00x Maximum Annual Debt Service Coverage Ratio or zero Days Cash on Hand is achieved in fiscal year 2019. For purposes of this analysis, operating expenses including staffing expenses have not been adjusted for reductions of the occupancy of the Community’s units.


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Table 48 Sensitivity Analysis – I

Estimated Financial Information For the Year Ending June 30, 2019

As Forecasted Sensitivity IA (1)(2) Sensitivity IB(1) Sensitivity IC (1)(2)

Independent Living Units:

Months of Move-in Period 36 months 60 months 36 months 60 months

Stable Occupancy Achieved June 2018 June 2020 June 2018 June 2020

Occupancy at June 30, 2019 95.1% 4.1% 69.3% 84.1%

Average Move-ins per Month 4.3 2.6 3.1 2.6

Health Center:

Occupancy at June 30, 2019 92.9% 92.9% 92.9% 78.4%

Max. Annual Debt Service Coverage Ratio 1.38x 1.22x 1.07x 1.00x

Annual Debt Service Coverage Ratio 1.53x 1.35x 1.18x 1.11x

Days Cash on Hand 463 290 2 192

Cash to Debt Ratio 0.34x 0.24x 0.09x 0.19x

Source: Management (1) The sensitivity in the liquidity ratios is due to the extended move-in occupancy of the Independent Living Units without a

corresponding adjustment to certain fixed operating expenses, staffing expenses or an adjustment to the repayment of the Series 2013 Bonds.

(2) The Independent Living Units are estimated to reach 84.1% occupancy in June 2019 and stabilized occupancy of 95.0% in June 2020, which is outside of the forecast period.

Sensitivity Analysis II – Entrance Fee Cash Flow Predictability Actual net Entrance Fee cash flow receipts from turnover may vary from Management’s assumptions included in the forecast. Estimates regarding turnover of the Independent Living Units are based on average age, percentage of couples, morbidity tables, assumed transfer rates to other levels of care, the historical experience of Management and estimates from the Actuary. Assumptions regarding the timing of Entrance Fee refunds and pricing are also subject to variances. Accordingly, the following analyses have been presented for the purpose of demonstrating the significance of entrance fee cash flow assumptions on the financial forecast.

Sensitivity Analysis IIA The data presented in the table below is provided to demonstrate the impact of assuming no turnover Entrance Fee cash flow receipts or refunds in the stabilized year of 2019. Sensitivity Analysis IIB Pursuant to the Residence and Care Contract, refunds of Entrance Fees upon death or withdrawal of a Resident are subject to re-occupancy of the Resident’s vacated Independent Living Unit. Independent Living Units that are re-occupied as a result of the prior occupant(s) transferring to the Health Center do not generate a corresponding Entrance Fee refund until the prior occupant(s) died or withdrew from the Community, thereby terminating the Residence and Care Contract. The data presented in the table below is provided to demonstrate the cumulative impact assuming that each Independent Living Unit turnover generating an Entrance Fee also generates a refund paid to Residents in each year of the six-year forecast period ending June 30, 2019.


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Sensitivity Analysis IIC

The data presented in the table below is provided to demonstrate the impact of assuming a 25 percent reduction in turnover Entrance Fees received. For purposes of this analysis, the number of turnover Entrance Fees received and number and amount of Entrance Fees refunds paid have not been adjusted.

Table 49 Sensitivity Analysis – II

Estimated Financial Information For the Year Ending June 30, 2019

(In Thousands, Except for Ratios)

As Forecasted Sensitivity IIA(1)

Sensitivity IIB(1)(2)

Sensitivity IIC(1)

Turnover Entrance Fees Received $ 4,674 - $ 4,674 $ 3,487

Entrance Fee Refunds Paid $ (2,167) - $ (3,792) $ (2,167)

Net Entrance Fees Received $ 2,480 - $ 855 $ 1,320

Max. Annual Debt Service Coverage Ratio 1.38x 1.16x 1.23x 1.27x

Annual Debt Service Coverage Ratio 1.53x 1.28x 1.36x 1.40x

Days Cash on Hand 463 426 406 420

Cash to Debt Ratio 0.34x 0.32x 0.31x 0.31x

Source: Management

(1) For purposes of the sensitivity analysis, the assumed schedule for the repayment of debt remains as originally forecasted.

APPENDIX C

DEFINITIONS OF CERTAIN TERMS AND EXCERPTS OF CERTAIN PROVISIONS OF CERTAIN PRINCIPAL DOCUMENTS


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TABLE OF CONTENTS

DEFINITIONS OF CERTAIN TERMS ........................................................................................................................ 1

EXCERPTS FROM MASTER TRUST INDENTURE............................................................................................... 27 SECTION 2.01. SERIES AND AMOUNT OF OBLIGATIONS ................................................................ 27 SECTION 2.02. APPOINTMENT OF OBLIGATED GROUP REPRESENTATIVE ................................ 27 SECTION 2.04. SUPPLEMENT CREATING OBLIGATIONS ................................................................. 27 SECTION 2.05. CONDITIONS TO ISSUANCE OF OBLIGATIONS HEREUNDER ............................. 28 SECTION 2.06. LIST OF HOLDERS OF OBLIGATIONS ........................................................................ 28 SECTION 2.08. MUTILATED, DESTROYED, LOST AND STOLEN OBLIGATIONS ......................... 28 SECTION 3.01. ENTRANCE FEE FUND .................................................................................................. 29 SECTION 3.02. WORKING CAPITAL FUND .......................................................................................... 31 SECTION 3.03. LIQUIDITY SUPPORT FUND ......................................................................................... 32 SECTION 3.04. OPERATING RESERVE FUND ...................................................................................... 32 SECTION 3.05. REVENUE FUND ............................................................................................................. 33 SECTION 3.06. INVESTMENT OF FUNDS .............................................................................................. 34 SECTION 3.07. ALLOCATION AND TRANSFERS OF INVESTMENT INCOME ............................... 34 SECTION 3.08. MASTER TRUSTEE RELIEVED FROM RESPONSIBILITY ....................................... 34 SECTION 3.09. PAYMENTS ON AFFILIATE SUBORDINATED INDEBTEDNESS............................ 34 SECTION 3.10. PAYMENTS ON AFFILIATE MANAGEMENT FEES AND DEFERRED

AFFILIATE DEVELOPMENT FEES. ..................................................................... 35 SECTION 4.01. TITLE TO TRUST ESTATE ............................................................................................ 35 SECTION 4.02. FURTHER ASSURANCES .............................................................................................. 35 SECTION 4.03. RECORDING AND FILING ............................................................................................ 35 SECTION 4.04. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST........................................... 36 SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS ............................................................ 36 SECTION 4.06. MAINTENANCE OF PROPERTIES................................................................................ 37 SECTION 4.07. CORPORATE EXISTENCE; STATUS OF OBLIGOR ................................................... 37 SECTION 4.08. PRESERVATION OF QUALIFICATIONS ..................................................................... 37 SECTION 4.09. ADDITIONS TO FACILITIES ......................................................................................... 37 SECTION 4.10. INSURANCE .................................................................................................................... 37 SECTION 4.11. RATES AND CHARGES ................................................................................................. 38 SECTION 4.12. DAMAGE OR DESTRUCTION ....................................................................................... 40 SECTION 4.13. CONDEMNATION ........................................................................................................... 41 SECTION 4.14. OTHER PROVISIONS WITH RESPECT TO NET PROCEEDS .................................... 42 SECTION 4.15. FINANCIAL STATEMENTS, ETC ................................................................................. 42 SECTION 4.16. PERMITTED ADDITIONAL INDEBTEDNESS ............................................................. 45 SECTION 4.17. CALCULATION OF DEBT SERVICE AND DEBT SERVICE COVERAGE ............... 50 SECTION 4.18. SALE OR LEASE OF PROPERTY .................................................................................. 51 SECTION 4.19. LIENS ON PROPERTY .................................................................................................... 53 SECTION 4.20. LIQUIDITY COVENANT ................................................................................................ 53 SECTION 4.21. MARKETING COVENANT ............................................................................................ 54 SECTION 4.22. OCCUPANCY COVENANT ............................................................................................ 56 SECTION 4.23. CUMULATIVE CASH OPERATING LOSS COVENANT ............................................ 57 SECTION 4.24. USE OF MONEYS IN FUNDS ......................................................................................... 58 SECTION 4.25. ACTUARIAL STUDY ...................................................................................................... 58 SECTION 4.26. RATING APPLICATION ................................................................................................. 58 SECTION 4.27. APPROVAL OF CONSULTANTS .................................................................................. 58 SECTION 4.28. MANAGEMENT .............................................................................................................. 59 SECTION 5.01. MERGER, CONSOLIDATION, SALE OR CONVEYANCE ......................................... 59 SECTION 6.01. ADMISSION OF OBLIGATED GROUP MEMBERS .................................................... 60 SECTION 6.02. OBLIGATED GROUP MEMBERS .................................................................................. 61 SECTION 6.03. WITHDRAWAL OF OBLIGATED GROUP MEMBERS ............................................... 62

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SECTION 6.04. SUCCESSOR OBLIGATED GROUP REPRESENTATIVE ........................................... 62 SECTION 7.01. EVENTS OF DEFAULT ................................................................................................... 63 SECTION 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT .................... 63 SECTION 7.03. POWERS OF SALE, TRANSFER, ASSIGNMENT, LEASE, AND OTHER

DISPOSITIONS; SUITS FOR ENFORCEMENT .................................................... 64 SECTION 7.04. INCIDENTS OF SALE ..................................................................................................... 65 SECTION 7.05. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY

MASTER TRUSTEE ................................................................................................ 66 SECTION 7.06. MASTER TRUSTEE MAY FILE PROOFS OF CLAIM ................................................. 66 SECTION 7.07. MASTER TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF

OBLIGATIONS ........................................................................................................ 67 SECTION 7.08. APPLICATION OF MONEY COLLECTED ................................................................... 67 SECTION 7.09. LIMITATION ON SUITS ................................................................................................. 67 SECTION 7.10. UNCONDITIONAL RIGHT OF HOLDERS OF OBLIGATIONS TO RECEIVE

PRINCIPAL, PREMIUM AND INTEREST ............................................................. 68 SECTION 7.11. RESTORATION OF RIGHTS AND REMEDIES ............................................................ 68 SECTION 7.12. RIGHTS AND REMEDIES CUMULATIVE ................................................................... 68 SECTION 7.13. DELAY OR OMISSION NOT WAIVER ......................................................................... 68 SECTION 7.14. CONTROL BY HOLDERS OF OBLIGATIONS ............................................................. 68 SECTION 7.15. WAIVER OF PAST DEFAULTS AND FUTURE COVENANT REQUIREMENTS ..... 68 SECTION 7.16. UNDERTAKING FOR COSTS ........................................................................................ 69 SECTION 7.17. WAIVER OF STAY OR EXTENSION LAWS ................................................................ 69 SECTION 9.01. SUPPLEMENTS WITHOUT CONSENT OF HOLDERS OF OBLIGATIONS ............. 69 SECTION 9.02 SUPPLEMENTS WITH CONSENT OF HOLDERS OF OBLIGATIONS ..................... 70 SECTION 10.01. SATISFACTION AND DISCHARGE OF INDENTURE ................................................ 71 SECTION 10.02. OBLIGATIONS DEEMED PAID ..................................................................................... 71 SECTION 10.03. APPLICATION OF TRUST MONEY .............................................................................. 71 SECTION 10.04. PAYMENT OF RELATED BONDS ................................................................................ 72

EXCERPTS FROM BOND INDENTURE ................................................................................................................. 73 SECTION 2.02. ALL BONDS EQUALLY AND RATABLY SECURED, BONDS NOT AN

OBLIGATION OF ISSUER ...................................................................................... 73 SECTION 2.05. REGISTRATION AND EXCHANGE OF BONDS; PERSONS TREATED AS

OWNERS .................................................................................................................. 73 SECTION 2.06. LOST, STOLEN, DESTROYED, AND MUTILATED BONDS ..................................... 73 SECTION 2.13. PAYMENTS TO CEDE & CO ......................................................................................... 74 SECTION 3.02. CREATION OF THE BOND FUND ................................................................................ 74 SECTION 3.03. PAYMENTS INTO THE BOND FUND........................................................................... 74 SECTION 3.04. USE OF MONEYS IN THE PRINCIPAL ACCOUNT AND THE INTEREST

ACCOUNT ................................................................................................................ 74 SECTION 3.06. CONSTRUCTION FUND ................................................................................................. 75 SECTION 3.07. COMPLETION CERTIFICATE ....................................................................................... 75 SECTION 3.08. CREATION OF THE RESERVE FUND .......................................................................... 75 SECTION 3.09. PAYMENTS INTO THE RESERVE FUND .................................................................... 75 SECTION 3.10. USE OF MONEYS IN THE RESERVE FUND ............................................................... 76 SECTION 3.12. NONPRESENTMENT OF BONDS.................................................................................. 76 SECTION 3.16. REBATE FUND ................................................................................................................ 77 SECTION 3.17. COST OF ISSUANCE FUND ........................................................................................... 78 SECTION 4.01. PERFORMANCE OF COVENANTS; AUTHORITY ..................................................... 78 SECTION 4.02. PAYMENTS OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST ........................ 79 SECTION 4.03. SUPPLEMENTAL INDENTURES; RECORDATION OF BOND INDENTURE

AND SUPPLEMENTAL INDENTURES ................................................................. 79 SECTION 4.04. LIEN OF BOND INDENTURE ........................................................................................ 79 SECTION 4.05. RIGHTS UNDER THE LOAN AGREEMENT ................................................................ 79 SECTION 4.06. TAX COVENANTS .......................................................................................................... 79 SECTION 4.07. CHANGE IN LAW ........................................................................................................... 80

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SECTION 4.08. PROGRAM INVESTMENT ............................................................................................. 80 SECTION 5.03. METHOD OF SELECTION OF BONDS IN CASE OF PARTIAL REDEMPTION;

REDEMPTION PRIORITY ...................................................................................... 81 SECTION 5.04. NOTICE OF REDEMPTION ............................................................................................ 81 SECTION 5.05. BONDS DUE AND PAYABLE ON REDEMPTION DATE; INTEREST CEASES

TO ACCRUE ............................................................................................................. 82 SECTION 5.08. EXTRAORDINARY OPTIONAL REDEMPTION.......................................................... 82 SECTION 5.09. MANDATORY REDEMPTION FROM SURPLUS CONSTRUCTION FUND

MONEY .................................................................................................................... 82 SECTION 5.10. MANDATORY ENTRANCE FEE REDEMPTION......................................................... 82 SECTION 6.01. INVESTMENT OF BOND FUND, CONSTRUCTION FUND AND RESERVE

FUND MONEYS ...................................................................................................... 83 SECTION 6.02. ALLOCATION AND TRANSFERS OF INVESTMENT INCOME ............................... 83 SECTION 6.03. VALUATION OF PERMITTED INVESTMENTS .......................................................... 84 SECTION 7.01. DISCHARGE OF THE BOND INDENTURE .................................................................. 84 SECTION 8.01. EVENTS OF DEFAULT ................................................................................................... 85 SECTION 8.02. REMEDIES ON EVENTS OF DEFAULT ....................................................................... 86 SECTION 8.03. MAJORITY OF BONDHOLDERS MAY CONTROL PROCEEDINGS ........................ 87 SECTION 8.04. RIGHTS AND REMEDIES OF BONDHOLDERS .......................................................... 87 SECTION 8.05. APPLICATION OF MONEYS ......................................................................................... 87 SECTION 8.06. BOND TRUSTEE MAY ENFORCE RIGHTS WITHOUT BONDS ............................... 88 SECTION 8.07. BOND TRUSTEE TO FILE PROOFS OF CLAIM IN RECEIVERSHIP, ETC .............. 88 SECTION 8.08. DELAY OR OMISSION NO WAIVER ........................................................................... 89 SECTION 8.09. DISCONTINUANCE OF PROCEEDINGS ON DEFAULT, POSITION OF

PARTIES RESTORED ............................................................................................. 89 SECTION 8.10. ENFORCEMENT OF RIGHTS ........................................................................................ 89 SECTION 8.11. UNDERTAKING FOR COSTS ........................................................................................ 89 SECTION 8.12. WAIVER OF EVENTS OF DEFAULT ............................................................................ 89 SECTION 10.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF

BONDHOLDERS ..................................................................................................... 90 SECTION 10.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF

BONDHOLDERS ..................................................................................................... 90 SECTION 10.03. EXECUTION OF SUPPLEMENTAL INDENTURE ....................................................... 91 SECTION 10.04. CONSENT OF OBLIGOR ................................................................................................ 91 SECTION 10.05. AMENDMENTS, ETC., OF THE LOAN AGREEMENT NOT REQUIRING

CONSENT OF BONDHOLDERS ............................................................................ 91 SECTION 10.06. AMENDMENTS, ETC., OF THE LOAN AGREEMENT REQUIRING CONSENT

OF BONDHOLDERS ............................................................................................... 92

EXCERPTS FROM LOAN AGREEMENT ............................................................................................................... 93 SECTION 2.1. REPRESENTATIONS BY THE ISSUER ........................................................................ 93 SECTION 2.2. REPRESENTATIONS BY THE OBLIGOR .................................................................... 94 SECTION 3.1. TERM OF THIS LOAN AGREEMENT ........................................................................... 95 SECTION 4.2. AGREEMENT TO CONSTRUCT PROJECT; COMPLETION CERTIFICATE ............ 95 SECTION 4.3. COST OF CONSTRUCTION ........................................................................................... 96 SECTION 4.4. PLANS; MODIFICATIONS OF PROJECT ..................................................................... 96 SECTION 4.5. COMPLIANCE WITH REGULATORY REQUIREMENTS; DRAW ON

MINIMUM LIQUID RESERVE ACCOUNTS ........................................................ 96 SECTION 4.6. DISBURSEMENTS FROM CONSTRUCTION FUND ................................................... 96 SECTION 4.7. DISBURSEMENTS FROM COST OF ISSUANCE FUND ............................................. 96 SECTION 4.8. MODIFICATION OF DISBURSEMENTS ...................................................................... 96 SECTION 4.9. COVENANTS REGARDING TAX EXEMPTION .......................................................... 97 SECTION 4.10. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE

PROJECT .................................................................................................................. 97 SECTION 4.11. REPRESENTATIONS AND WARRANTIES AS TO TAX-EXEMPT STATUS OF

OBLIGOR ................................................................................................................. 97

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SECTION 4.12. DISPOSITION OF PROJECT ........................................................................................... 98 SECTION 4.13. SURPLUS CONSTRUCTION FUND MONEYS ............................................................ 98 SECTION 5.2. REPAYMENT OF LOAN ................................................................................................. 99 SECTION 5.3. CREDITS ........................................................................................................................... 99 SECTION 5.6. RESERVE FUND .............................................................................................................. 99 SECTION 5.9. OBLIGATIONS OF OBLIGOR HEREUNDER UNCONDITIONAL ........................... 100 SECTION 7.1. NO WARRANTY OF MERCHANTABILITY, CONDITION OR SUITABILITY

BY THE ISSUER .................................................................................................... 100 SECTION 7.8. NO PERSONAL LIABILITY ......................................................................................... 100 SECTION 8.1. ASSIGNMENT AND LEASING BY OBLIGOR ........................................................... 100 SECTION 8.2. ASSIGNMENT AND PLEDGE BY ISSUER................................................................. 101 SECTION 9.1. FAILURE TO PERFORM COVENANTS...................................................................... 101 SECTION 9.2. REMEDIES FOR FAILURE TO PERFORM ................................................................. 101 SECTION 9.3. DISCONTINUANCE OF PROCEEDINGS .................................................................... 102 SECTION 9.4. NO REMEDY EXCLUSIVE ........................................................................................... 102 SECTION 9.5. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES ................................ 102 SECTION 9.6. WAIVERS ....................................................................................................................... 102 SECTION 10.1. GENERAL OPTION TO PREPAY SERIES 2013 NOTES ............................................ 102 SECTION 10.2. CONDITIONS TO EXERCISE OF OPTION ................................................................. 102

EXCERPTS FROM MORTGAGE ........................................................................................................................... 103 2. MORTGAGE ................................................................................................................... 103 3. SECURED INDEBTEDNESS; FUTURE ADVANCES; MAXIMUM AMOUNT

AND TIME .............................................................................................................. 103 5. TITLE COVENANTS ..................................................................................................... 104 6. CONDITIONS TO CHANGES IN MORTGAGED PROPERTY .................................. 104 7. AFTER-ACQUIRED PROPERTY ................................................................................. 104 8. REMOVAL WITH NOTICE; REPLACEMENTS AND SUBSTITUTIONS

SUBJECT TO MORTGAGE .................................................................................. 104 13. MAINTENANCE AND REPAIR ................................................................................... 104 15. INSURANCE .................................................................................................................. 104 16. INSURANCE PROCEEDS AND CONDEMNATION AWARDS ................................ 105 19. ACCELERATION UPON TRANSFER OF MORTGAGED PROPERTY .................... 105 21. EVENTS OF DEFAULT ................................................................................................. 106 22. REMEDIES ON DEFAULT ........................................................................................... 106 23. POWER AND AUTHORITY ......................................................................................... 107 24. RIGHTS CUMULATIVE AND CONTINUING ............................................................ 107 27. CURING OF DEFAULTS BY MORTGAGEE .............................................................. 108 30. RELEASE OR SATISFACTION .................................................................................... 108

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DEFINITIONS OF CERTAIN TERMS

Summarized below are definitions of certain words and terms used in this Official Statement. Any documents referred to in the following definitions include any modifications, amendments or supplements thereto from time to time made in accordance with the provisions of such documents. Words and terms that are capitalized in this Official Statement, whether or not defined below or elsewhere herein, are qualified by reference to the meanings assigned in the Master Indenture, the Bond Indenture, the Loan Agreement or the Mortgage, as applicable, unless a different meaning clearly appears from the context.

"Account" means any account established within a Fund.

"Accountant" means a certified public accountant, or a firm of certified public accountants, who or which is "independent" as that term is defined in Rule 101 and related interpretations of the Code of Professional Ethics of the American Institute of Certified Public Accountants, of recognized standing, who or which does not devote his or its full time to any Member or its Affiliates (but who or which may be regularly retained by a Member or its Affiliates).

"Act" means (a) with respect to the Loan Agreement and Bond Indenture, Parts II and III, Chapter 159, Florida Statutes, and other applicable provisions of law, and (b) with respect to the Master Trust Indenture, when used with respect to any Holder of Obligations has the meaning specified in Section 1.04 and not the meaning assigned such term in any documents delivered in connection with the issuance of Obligations or Related Bonds, unless specifically provided for in such documents.

"Additional Indebtedness" means Indebtedness incurred by any Member subsequent to the issuance of the Series 2013 Notes.

"Additional Obligation" means any evidence of Indebtedness or evidence of any repayment obligation under any Interest Rate Agreement issued after the issuance of the Series 2013 Notes, which is authorized to be issued by a Member pursuant to the Master Trust Indenture which has been authenticated by the Master Trustee pursuant to Section 2.03 of the Master Trust Indenture.

"Administration Expenses" means the reasonable and necessary fees and expenses incurred by the Issuer pursuant to this Loan Agreement and the Bond Indenture.

"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the policies of such Person, directly or indirectly, whether through the power to appoint and remove its directors, the ownership of voting securities, by contract, or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Affiliate Management Fees" means regularly scheduled periodic fees payable by the Obligor or any other Member of the Obligated Group pursuant to the Services Agreement, including any Deferred Affiliate Management Fees as defined in Section 3.10 of the Master Trust Indenture.

"Affiliate Subordinated Indebtedness" means (a) the Liquidity Provider Subordinated Debt, and (b) fees and other amounts due to an Affiliate of a Member of the Obligated Group for money borrowed, credit extended or services rendered, the payment of which are deferred pursuant to Section 3.05 or 3.10 of the Master Trust Indenture or not yet payable at the time of calculation and which are subordinate to payments due on all Obligations issued hereunder in accordance with the written agreements between the Member of the Obligated Group and the Affiliates.

"Aggregate Principal Amount" means the outstanding principal amount including, in the case of a security sold at a discount to the purchaser thereof the accreted value of such discount calculated in accordance with the documents authorizing such security, or if not so defined, generally accepted accounting principles.

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"Annual Budget" means the annual budget of the Obligated Group required to be provided by the Obligated Group Representative pursuant to Section 4.15 of the Master Trust Indenture.

"Authorized Denominations" means the denomination of $100,000 or any integral multiple of $5,000 in excess thereof.

"Authorized Representative" shall mean, with respect to the Obligated Group Representative and each Obligated Group Member, its respective chief executive officer, president, secretary or treasurer, or any other person or persons designated an Authorized Representative thereof by an Officer's Certificate of the Obligated Group Representative or the Obligated Group Member and delivered to the Master Trustee.

"Balloon Indebtedness" means Funded Indebtedness, 25% or more of the original principal of which matures during any consecutive 12 month period, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption or prepayment prior to such 12 month period. Balloon Indebtedness does not include Indebtedness which otherwise would be classified hereunder as Put Indebtedness.

"Board Resolution" of any specified Person means a copy of a resolution certified by the Person responsible for maintaining the records of the Governing Body of such Person to have been duly adopted by the Governing Body of such Person and to be in full force and effect on the date of such certification, and delivered to the Master Trustee.

"Bond Counsel" means Nabors, Giblin & Nickerson, P.A., Tampa, Florida or any other attorney at law or firm of attorneys of nationally recognized experience in matters pertaining to the validity of, and exclusion from gross income for federal income tax purposes of interest on, the obligations of states and their political subdivisions as may be selected by the Obligor but is reasonably acceptable to the issuer of the Related Bonds.

"Bond Fund" means the Bond Fund created in Section 3.02 of the Bond Indenture.

"Bondholder" or "Owner" of the Bonds mean the registered owner of any fully registered Bond.

"Bond Indenture" means the Indenture of Trust of even date herewith relating to the Bonds between the Issuer and the Bond Trustee, including any indentures supplemental thereto made in conformity therewith.

"Bonds" means, collectively, the Series 2013A Bonds and the Series 2013B Bonds issued pursuant to the Bond Indenture.

"Bond Trustee" means Wells Fargo Bank, National Association, being the registrar, a paying agent and the trustee under the Bond Indenture, or any successor corporate trustee.

"Book Value" when used with respect to Property of a Member, means the value of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited financial statements of such Member that have been prepared in accordance with generally accepted accounting principles, and when used with respect to Property of all Members, means the aggregate of the values of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited combined financial statements of the Obligated Group prepared in accordance with generally accepted accounting principles, provided that such aggregate shall be calculated in such a manner that no portion of the value of any Property of any Member is included more than once.

"Business Day" means any day other than (a) a Saturday, a Sunday (b) a day the payment system of the U.S. Federal Reserve is not operational, (c) a day on which banking institutions are authorized or required by law or executive order to close, or (d) a day on which the New York Stock Exchange is closed.

"Capital Addition" means any addition, improvements, extensions, alterations, relocations, enlargements, expansions, modifications or replacement of or to the Facilities and the cost of which is properly capitalized under generally accepted accounting principles applied in accordance with Section 1.02 of the Master Trust Indenture.

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"Capitalized Lease" means any lease of real or personal property which, in accordance with generally accepted accounting principles, is required to be capitalized on the balance sheet of the lessee.

"Capitalized Rentals" means, as of the date of determination, the amount at which the aggregate Net Rentals due and to become due under a Capitalized Lease under which a Person is a lessee would be reflected as a liability on a balance sheet of such Person.

"Cash and Investments" means the sum of cash, cash equivalents, Short Term Resident Notes marketable securities of the Obligated Group Members, including without limitation Related Bonds held by the Obligated Group Members, board-designated assets, and amounts, if any, on deposit in the Operating Reserve Fund, Working Capital Fund, Entrance Fee Fund and Minimum Liquid Reserve Accounts, but at all times excluding (a) any debt service reserve fund for the benefit of Related Bonds and other trustee-held funds (including amounts held in escrow or otherwise set aside pursuant to the requirements of the Residency Agreement and Chapter 651, Florida Statutes) other than those described above in this definition, (b) funds restricted by the donor to a use that would not permit the use of such funds to pay expenses or debt service on Indebtedness of the Obligated Group, and (c) any funds pledged or otherwise subject to a security interest for debt other than the Obligations, as shown on the most recent audited or unaudited financial statements of the Obligated Group. For the purposes of calculations hereunder, an Unrestricted Contribution from an Affiliate shall be treated as being made during the period of such calculation so long as the Unrestricted Contribution is made prior to the date the applicable certificate is required to be delivered with respect to such calculation.

"Cash to Indebtedness Ratio" means, as of any date of calculation, the number obtained by dividing (a) Cash and Investments plus any moneys held in any debt service reserve fund, by (b) the aggregate principal amount of Funded Indebtedness Outstanding but excluding the then current portion of the Debt Service Requirements of Funded Indebtedness.

"Chapter 651 Escrow Agent" means initially SunTrust Bank, as escrow agent for the Minimum Liquid Reserve Accounts and the Entrance Fee Escrow Account, required to be maintained pursuant to Chapter 651, Florida Statutes.

"Claims" shall mean all claims, lawsuits, causes of action and other legal actions and proceedings of

whatever nature brought against (whether by way of direct action, counter claim, cross action or impleader) any Indemnified Party, even if groundless, false, or fraudulent, so long as the claim, lawsuit, cause of action or other legal action or proceeding is alleged or determined, directly or indirectly, to arise out of, to result from, to relate to or to be based upon, in whole or in part: (a) the issuance of the Bonds; (b) the duties, activities, acts or omissions (even if negligent) of any Person in connection with the issuance of the Bonds, or the obligations of the various parties arising under the Bond Indenture, this Loan Agreement or the Master Indenture; or (c) the duties, activities, acts or omissions (even if negligent) of any Person in connection with the design, construction, installation, operation, use, occupancy, maintenance or ownership of the Project or any part thereof.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, including, when appropriate, the statutory predecessor thereof, or any applicable corresponding provisions of any future laws of the United States of America relating to federal income taxation, and except as otherwise provided herein or required by the context hereof, includes interpretations thereof contained or set forth in the applicable regulations of the Department of the Treasury (including applicable final or temporary regulations and also including regulations issued pursuant to the statutory predecessor of the Code), the applicable rulings of the Internal Revenue Service (including published Revenue Rulings and private letter rulings), and applicable court decisions.

"Collateral Assignment" means the Collateral Assignment of Contracts, dated as of December 1, 2013, between the Obligor and the Master Trustee.

"Commitment Indebtedness" means the obligation of any Member to repay amounts disbursed pursuant to a commitment from a financial institution to refinance or purchase when due, when tendered or when required to be purchased (a) other Indebtedness of such Member, or (b) Indebtedness of a Person who is not a Member, which Indebtedness is guaranteed by a Guaranty of such Member or secured by or payable from amounts paid on Indebtedness of such Member, in either case which Indebtedness or Guaranty of such Member was incurred in

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accordance with the provisions of Section 4.16 of the Master Trust Indenture, and the obligation of any Member to pay interest payable on amounts disbursed for such purposes, plus any fees, costs or expenses payable to such financial institution for, under or in connection with such commitment, in the event of disbursement pursuant to such commitment or in connection with enforcement thereof, including without limitation any penalties payable in the event of such enforcement.

"Completion Funded Indebtedness" means any Funded Indebtedness for borrowed money: (a) incurred for the purpose of financing the completion of the acquisition, construction, remodeling, renovation or equipping of Facilities or marketing or other pre-opening expenses of such Facilities with respect to which Funded Indebtedness has been incurred in accordance with the provisions of the Master Trust Indenture; and (b) with a principal amount not in excess of the amount which is required to provide completed and equipped Facilities of substantially the same type and scope contemplated at the time such prior Funded Indebtedness was originally incurred, to provide for Funded Interest during the period of construction, to provide any reserve fund relating to such Completion Funded Indebtedness and to pay the costs and expenses of issuing such Completion Funded Indebtedness.

"Completion Certificate" means a certificate of the Obligor delivered pursuant to Section 4.2(b) of the Loan Agreement.

"Consent" means of any specified Person a written consent signed in the name of such Person by the Chairman of the Governing Body, the Chief Executive Officer, the President, a Vice President, the Treasurer, an Assistant Treasurer or the Chief Financial Officer of such Person or any other person or persons designated by an Officer's Certificate and delivered to the Master Trustee.

"Construction Fund" means the construction fund created under Section 3.06 of the Bond Indenture.

"Continuing Disclosure Agreement" means (a) with respect to the Bonds, the Continuing Disclosure Agreement between the Obligor and the Bond Trustee, as dissemination agent, dated the Delivery Date of the Bonds, and (b) with respect to any other series of Bonds, the continuing disclosure certificate or agreement delivered by the Obligor in connection with the issuance of such series of Bonds in order to comply with the provisions of Rule 15c2-12 of the Securities Exchange Act of 1934.

"Construction Index" means the most recent issue of the "Dodge Construction Index for U.S. and Canadian Cities" with reference to the city in which the subject property is located (or, if such index is not available for such city, with reference to the city located closest geographically to the city in which the subject property is located), or, if such index is no longer published or used by the federal government in measuring costs under Medicare or Medicaid programs, such other index which is certified to be comparable and appropriate by the Obligated Group Representative in an Officer's Certificate delivered to the Master Trustee.

"Consultant" means a professional consulting, accounting, investment banking or commercial banking firm or individual selected by the Obligated Group Representative having the skill and experience necessary to render the particular report required and having a favorable reputation for such skill and experience, which firm or individual does not control any Member of the Obligated Group or any Affiliate thereof and is not controlled by or under common control with any Member of the Obligated Group or an Affiliate thereof.

"Contributions" means the aggregate amount of all contributions, grants, gifts, bequests and devises actually received in cash or marketable securities by any Person in the applicable fiscal year of such Person and any such contributions, grants, gifts, bequests and devises originally received in a form other than cash or marketable securities by any Person which are converted in such fiscal year to cash or marketable securities and deposited into the accounts of the Obligated Group.

"Cost" or "Costs" as applied to the Project means and includes any and all costs permitted by the Code and the Act.

"Cost of Issuance" means (a) with respect to any tax-exempt Bonds all costs that are treated as issuance costs within the meaning of Section 1.150-1(b) of the Code, and (b) with respect to any Bonds, all costs associated

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with the issuance of such Bonds including, but not limited to, (i) underwriter's spread (whether realized directly or derived through purchase of the Bonds at a discount below the price at which they are expected to be sold to the public); (ii) counsel fees (including Bond Counsel, underwriter's counsel, Issuer's counsel, Bond Trustee's counsel and Obligor's counsel fees that relate to the issuance of the Bonds, as well as any other specialized counsel fees incurred in connection with the issuance of the Bonds); (iii) financial advisory fees incurred in connection with the issuance of the Bonds; (iv) Rating Agency fees; (v) Bond Trustee fees incurred in connection with the issuance of the Bonds; (vi) Paying Agent and certifying registrar and authenticating agent fees related to issuance of the Bonds; (vii) accountant fees related to the issuance of the Bonds; (viii) printing costs of the Bonds and of the preliminary and final offering materials; (ix) publication costs associated with the financing proceedings; (x) any fees paid to the Issuer; and (xi) costs of engineering and feasibility studies necessary to the issuance of the Bonds; provided, that bond insurance premiums and certain credit enhancement fees, to the extent treated as interest expense under the Code, shall not be treated as "Costs of Issuance" in connection with the issuance of tax-exempt Bonds.

"Cost of Issuance Fund" means the cost of issuance fund created under Section 3.17 of the Bond Indenture.

"Credit Facility" means any Liquidity Facility, letter of credit, bond insurance policy, standby purchase agreement, guaranty, line of credit, surety bond or similar credit or liquidity facility securing any Indebtedness of any Obligated Group Member.

"Crossover Date" means, with respect to Crossover Refunding Indebtedness, the date on which the principal portion of the Crossover Refunded Indebtedness is paid or redeemed, or on which it is anticipated that such principal portion will be paid or redeemed, from the proceeds of such Crossover Refunding Indebtedness.

"Crossover Refunded Indebtedness" means Indebtedness of a Person refunded by Crossover Refunding Indebtedness.

"Crossover Refunding Indebtedness" means Indebtedness of a Person issued for the purpose of refunding other Indebtedness of such Person if the proceeds of such Crossover Refunding Indebtedness are irrevocably deposited in escrow to secure the payment on the applicable Crossover Date of the Crossover Refunded Indebtedness and earnings on such escrow deposit are required to be applied to pay interest or principal on either or both of such Crossover Refunding Indebtedness or such Crossover Refunded Indebtedness until the Crossover Date.

"Cumulative Cash Operating Loss" means, commencing nine months prior to the last day of either (a) the first fiscal quarter ending after the Initial Occupancy Date if the date is more than 30 days prior to the end of such fiscal quarter, or (b) the first full fiscal quarter ending after the Initial Occupancy Date if the Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, an amount determined on a cumulative basis as (a) the sum of (i) resident service revenues (excluding amortization of Entrance Fees), (ii) other operating revenues, (iii) Unrestricted Contributions, (iv) Entrance Fees (excluding Initial Entrance Fees), and (v) investment earnings, less (b) the sum of (i) Entrance Fees refunded to residents, and (ii) the aggregate of all operating expenses (including development fees) and capital expenditures which are not part of the Project paid from moneys other than proceeds of the Series 2013 Bonds, but excluding (x) depreciation and amortization and other non-cash expenses, and (y) any cost, fee or expense paid from the proceeds of Series 2013 Bonds or interest earnings thereon.

"Current Value" means (a) with respect to Property, Plant and Equipment: (i) the aggregate fair market value of such Property, Plant and Equipment as reflected in the most recent written report of an appraiser selected by the Obligated Group Representative and, in the case of real property, who is a member of the American Institute of Real Estate Appraisers (MAI), delivered to the Master Trustee (which report shall be dated not more than three years prior to the date as of which Current Value is to be calculated) increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated, minus the fair market value (as reflected in the most recent appraiser's report) of any Property, Plant and Equipment included in such report but disposed of since the last such report increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated; plus (ii) the Book Value of any Property, Plant and Equipment acquired since the last such report increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such acquisition to

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the date as of which Current Value is to be calculated, minus (iii) the Book Value of any such Property, Plant and Equipment acquired since the last such report but disposed of; and (b) with respect to any other Property, the fair market value of such Property.

"Days Cash on Hand" means, as of the date of calculation, the amount determined by dividing (a) the amount of Cash and Investments on such date by, (b) the quotient obtained by dividing Expenses (including interest on Indebtedness but excluding provisions for bad debt amortization, depreciation or any other non cash expenses) as shown on the most recent annual audited financial statements (or, with respect to any calculation of Days Cash on Hand as of any June 30, as reflected in the unaudited trailing twelve month financial statements for the period ending such June 30, as derived from the quarterly financial statements delivered pursuant to Section 4.15(b)(ii) of the Master Trust Indenture), by 365.

"Debt Service Requirements" means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment or otherwise) and interest on outstanding Funded Indebtedness of each Person or a group of Persons with respect to which such requirements are calculated; provided that: (a) the amount of such payments for a future period shall be calculated in accordance with the assumptions contained in Sections 4.16 and 4.17 of the Master Trust Indenture; (b) interest shall be excluded from the determination of the Debt Service Requirements to the extent that Funded Interest is available to pay such interest; (c) principal of Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal; (d) principal of Indebtedness due in its final year shall be excluded from the determination of Debt Service Requirements to the extent moneys were initially deposited and are on deposit as of the date of calculation in a debt service reserve fund which required that moneys on deposit in the debt service reserve fund be used to pay a principal payment in the final year of such Indebtedness (e) any annual fees payable in respect of a Credit Facility (other than annual fees to be paid from proceeds of a bond issue escrowed for such purpose) shall be included in the determination of Debt Service Requirements; (f) principal of and interest on Qualified Intermediate Term Indebtedness shall be excluded; and (g) all payments due on Deferred Affiliate Management Fees, Deferred Affiliate Development Fees and any other Affiliate Subordinated Indebtedness shall be excluded from the determination of Debt Service Requirements.

"Delivery Date" means the date the Bonds are delivered to the initial purchasers against payment therefor.

"Defeasance Obligations" means:

(a) Direct obligations of the United States of America or obligations to the full and prompt payment of which the full faith and credit of the United States of America is pledged or evidences of ownership of proportionate interests in future interest and principal payments on such obligations held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor on such obligations, and which underlying obligations are not available to satisfy any claim of the custodian or any Person claiming through the custodian or to whom the custodian may be obligated; and

(b) Obligations issued or guaranteed by the following instrumentalities or agencies of the United States of America:

(1) Federal Home Loan Bank System;

(2) Export-Import Bank of the United States;

(3) Federal Financing Bank;

(4) Government National Mortgage Association;

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(5) Farmers Home Administration;

(6) Federal Home Loan Mortgage Company;

(7) Federal Housing Administration;

(8) Federal National Mortgage Association;

(9) Any other agency or instrumentality of the United States of America created by an Act of Congress which is substantially similar to the foregoing in its legal relationship to the United States of America; and

(c) Obligations described in Section 103(a) of the Code, provision for the payment of the principal of (and premium, if any) and interest on which shall have been made by the irrevocable deposit at least 123 days preceding the date of determination with a bank or trust company acting as a trustee or escrow agent for holders of such obligations of money, or obligations described in clause (a) above, the maturing principal of and interest on which, when due and payable, without reinvestment will provide money, sufficient to pay when due the principal of (and premium, if any) and interest on such obligations, and which money, or obligations described in clause (a) above, are not available to satisfy any other claim, including any claim of the trustee or escrow agent or any claim of any Person claiming through the trustee or escrow agent or any claim of any Person to whom the Person on whose behalf such irrevocable deposit was made, the trustee, or the escrow agent may be obligated, whether arising out of the insolvency of the Person on whose behalf such irrevocable deposit was made, the trustee or escrow agent or otherwise.

"Deferred Affiliate Management Fees" shall have the meaning set forth in Section 3.10 of the Master Trust Indenture.

"Deferred Affiliate Development Fees" means the amounts payable by the Obligated Group pursuant to that certain Development Consulting Agreement, dated as of August 21, 2013, between the Obligor and Lutheran Life Communities f/k/a VeriSpring, Inc., as amended from time to time.

"Disbursement Agreement" means the Construction Disbursement and Monitoring Agreement dated as of December 1, 2013 among the Obligor, zumBrunnen, Inc. and the Bond Trustee.

"Discretionary Amount" shall have the meaning set forth in Section 3.01 of the Master Trust Indenture.

"EMMA" means the Electronic Municipal Market Access System, or any successor depository or system, designated and/or maintained by the Municipal Securities Rulemaking Board and its successors.

"Encumbered" means, with respect to Property, subject to (a) a Lien described in the following subsections of the definition of Permitted Encumbrances: subsection (b) other than a Lien securing Non-Recourse Indebtedness; subsection (e) but including only Capitalized Leases; subsection (m)(ii); subsection (s); and subsection (u)(ii), and (b) all other Liens not described in the definition of Permitted Encumbrances; provided that any amounts on deposit in a construction fund created in connection with the issuance of an Obligation which are held as security for the payment of such Obligation or any Indebtedness incurred to purchase such Obligation or the proceeds of which are advanced or otherwise made available in connection with the issuance of such Obligation, shall not be deemed to be Encumbered if the amounts are to be applied to construct or otherwise acquire Property which is not subject to a Lien.

"Entrance Fee Escrow Account" means the account maintained pursuant to the Entrance Fee Escrow Agreement, in order to satisfy the escrow account requirements of Sections 651.022(7), 651.023(3), and 651.033(3), Florida Statutes. Any funds on deposit in such account shall not be subject to any liens, charges, judgments, garnishments or creditors' claims against the Obligor including, not limited to, holders of Obligations issued hereunder, except as provided in Section 651.033(1)(d), Florida Statutes, as may be amended from time to time.

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"Entrance Fee Escrow Agreement" means The Arlington of Naples Reservation Deposit and Entrance Fee Escrow Agreement, dated as of November 30, 2009, between the Obligor and the Chapter 651 Escrow Agent.

"Entrance Fee Fund" means (a) the Entrance Fee Fund created by Section 3.01 of the Master Trust Indenture, and (b) any entrance fee fund or account established by a Supplement in connection with the financing of any Capital Addition, if required pursuant to Chapter 651, Florida Statutes, as amended from time to time.

"Entrance Fee Receipt" shall have the meaning set forth in Section 3.01 of the Master Trust Indenture.

"Entrance Fees" means fees, other than security deposits, monthly rentals or monthly service charges, paid to a Member by residents of Entrance Fee Units for the purpose of obtaining the right to reside in those units including any refundable resident deposits described in any lease or similar Residency Agreement with respect to those Entrance Fee Units, but shall not include any such amounts held in escrow or otherwise set aside pursuant to the requirements of any such agreement prior to the occupancy of the unit covered by such Residency Agreement or pursuant to Chapter 651, Florida Statutes (which amounts shall be included if and when occupancy occurs and such set-aside is no longer required).

"Entrance Fee Redemption Account" means the account of such name in the Bond Fund created in Section 3.02 of the Bond Indenture.

"Entrance Fee Redemption Date" means the 15th date of each month following an Entrance Fee Transfer Date.

"Entrance Fee Transfer Date" means the first Business Day of each month prior to the termination of the Entrance Fee Fund pursuant to Section 3.01 of the Master Trust Indenture.

"Entrance Fee Unit" means the independent living units that are part of the Project and are offered for occupancy on an Entrance Fee basis.

"Escrowed Amount" shall have the meaning set forth in Section 3.01 of the Master Trust Indenture.

"Event of Default" means (a) with respect to the Master Trust Indenture, the meaning set forth in Article VII thereof, and (b) with respect to the Loan Agreement and Bond Indenture, means those Defaults set forth in Section 8.01 of the Bond Indenture.

"Excluded Property" means the condominium utilized for non-essential purposes of the Project the legal description for which is described as follows:

Parcel 1:

Unit 501, Equestrian Professional Center, a condominium, according to the Declaration of Condominium thereof, as recorded in Official Records Book 3575, Page 389, and subsequent amendments thereto, of the Public Records of Collier County, Florida.

Parcel 2:

Non-exclusive easement for the benefit of Parcel 1 as created by Declaration of Easement Two recorded February 14, 2002, in Official Records Book 2982, Page 134, as modified by Extension Agreement recorded July 30, 2003, in Official Records Book 3356, Page 244, and as amended by Amendment to Declaration of Easement Two recorded December 17, 2007, in Official Records Book 4312, Page 821, all of the Public Records of Collier County, Florida, or ingress and egress over and across the land described as the "Expanded Easement Area" and described in Exhibit "B" of said Amendment to Declaration of Easement Two.

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"Expenses" means, for any period, the aggregate of all expenses calculated under generally accepted accounting principles, including without limitation any accrual for taxes, assessments and insurance, incurred by the Person or group of Persons involved during such period, but excluding (a) interest on Funded Indebtedness, (b) depreciation and amortization, (c) extraordinary expenses, losses on the sale or disposition of assets other than in the ordinary course of business and losses on the extinguishment of debt or termination of pension plans, (d) any expenses resulting from a forgiveness of or the establishment of reserves against Indebtedness of an Affiliate which does not constitute an extraordinary expense, (e) losses resulting from any reappraisal, revaluation or write down of assets other than bad debts, (f) non cash expenses or losses, (g) any expenses paid with proceeds of any Related Bonds, (h) any development, marketing, operating, overhead or management fees that have been deferred from the year in which they were originally due, and (i) interest on Affiliate Subordinated Indebtedness. If such calculation of Expenses is being made with respect to the Obligated Group, any such expenses attributable to transactions between any Member and any other Member shall be excluded.

"Extendable Indebtedness" means Indebtedness which is repayable or subject to purchase at the option of the holder thereof prior to its stated maturity, but only to the extent of money available for the repayment or purchase therefor and not more frequently than once every year.

"Facilities" means the continuing care retirement community and related healthcare facilities owned by the Obligated Group Members located on the Premises, including any independent living units, assisted living units, a health center including nursing beds, all necessary and useful furnishings, equipment and machinery, and such interests in land as may be necessary or suitable for the foregoing, including roads and rights of access, utilities and other necessary site preparation facilities; provided, however, Facilities does not include the Excluded Property.

"Feasibility Report" means a report prepared and signed by a Consultant, who is an Accountant, setting forth for a forecast period not exceeding five Fiscal Years from the later of the date of the issuance of the Indebtedness in question, or the completion of the Capital Additions financed with such Indebtedness: (a) forecasted financial statements prepared on the same basis as the Obligated Group's audited financial statement; and (b) a full explanation of the assumptions and rationale used in preparing such forecasts, including that such forecasts have taken into account the projected utilization of the Facilities, the rates and charges to patients and residents and such other data and information as may be necessary to support the forecasted financial statements; which shall be accompanied by an opinion of such Consultant that the underlying assumptions provide a reasonable basis for such forecast.

"Federal Subsidy Payments" means the direct payments made by the United States Department of Treasury or other federal governmental agency or entity authorized to make such payments to the issuer or conduit borrower for any Related Bonds which constitute Subsidy Bonds.

"Fiscal Year" means any 12 month period beginning on July 1 of any calendar year and ending on June 30 of the following calendar year, or such other consecutive 12 month period selected by the Obligated Group Representative as the fiscal year for the Members.

"Fitch" means Fitch Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group, with written notice to the Master Trustee.

"Funded Interest Account" means the account of such name in the Construction Fund created in Section 3.06 of the Bond Indenture.

"Funded Indebtedness" means, with respect to any Person, (a) all Indebtedness of such Person for money borrowed, credit extended, incurred or assumed which is not Short Term; (b) all Short Term Indebtedness incurred by the Person which is of the type described in Section 4.16(d) of the Master Trust Indenture; (c) the Person's Guaranties of Indebtedness which are not Short Term (but including Guaranties of Short Term Indebtedness described in Section 4.16(d) of the Master Trust Indenture); and (d) Capitalized Rentals under Capitalized Leases entered into by the Person; provided, however, that (i) Indebtedness that could be described by more than one of the foregoing categories shall not in any case be considered more than once for the purpose of any calculation made

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pursuant to this Master Trust Indenture, and (ii) Affiliate Subordinated Indebtedness shall not be considered Funded Indebtedness.

"Funded Interest" means amounts irrevocably deposited in an escrow or other trust account (other than a debt service reserve fund held under a Related Bond Indenture) to pay interest on Funded Indebtedness or Related Bonds and interest earned on such amounts to the extent such interest earned is required to be applied to pay interest on Funded Indebtedness or Related Bonds.

"Funds" means the Cost of Issuance Fund, the Bond Fund, the Reserve Fund, the Rebate Fund and the Construction Fund.

"Governing Body" means, with respect to a Member, the board of directors, the board of trustees or similar group in which the right to exercise the powers of corporate directors or trustees is vested.

"Government Obligations" means direct obligations of the United States of America or obligations the full and timely payment of the principal of and interest on which is unconditionally guaranteed by the United States of America.

"Gross Revenues" means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third party payments), condemnation awards, Entrance Fees, Federal Subsidy Payments and other moneys received by or on behalf of any Obligated Group Member, including (without limitation) revenues derived from (a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, (b) proceeds received from (i) accounts, (ii) securities and other investments, (iii) inventory and other tangible and intangible property, and (iv) accounts receivable, general intangibles, contract rights, chattel paper, instruments and other rights and assets now existing or hereafter coming into existence or whether now owned or held or hereafter acquired, and (c) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities; provided, however, that there shall be excluded from Gross Revenues (i) all such items, whether now owned or hereafter acquired by the Obligated Group Members, which by their terms or by reason of applicable law cannot be granted, assigned or pledged hereunder or which would become void or voidable if granted, assigned or pledged hereunder by the Obligated Group Members, or which cannot be granted, pledged or assigned hereunder without the consent of other parties whose consent is not secured, or without subjecting the Master Trustee to a liability not otherwise contemplated by the provisions of the Master Trust Indenture, or which otherwise may not be, or are not, hereby lawfully and effectively granted, pledged and assigned by the Obligated Group Members, (ii) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent, (iii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use of payments required under this Master Trust Indenture, (iv) any moneys received by any Obligated Group Member from prospective residents or commercial tenants in order to pay for customized improvements to those Independent Living Units or other areas of the Facilities to be occupied or leased to such residents or tenants, (v) all deposits made pursuant to Residency Agreements to be held in escrow pursuant to Chapter 651, Florida Statutes, until construction of the Facilities is completed, a certificate of occupancy has been issued and appropriate licenses, if required, have been issued, and (vi) all deposits and/or advance payments made in connection with any leases of the Independent Living Units and received prior to receipt of such certificate and licenses.

"Guaranty" means all obligations of a Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any Primary Obligor in any manner, whether directly or indirectly, including but not limited to obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any Property constituting security therefor; (b) to advance or supply funds: (i) for the purchase or payment of such Indebtedness or obligation, or (ii) to maintain working capital or other balance sheet condition; (c) to purchase securities or other Property or services primarily for the purpose of assuring the owner of

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such Indebtedness or obligation of the ability of the Primary Obligor to make payment of the Indebtedness or obligation; or (d) otherwise to assure the owner of such Indebtedness or obligation against loss in respect thereof.

"Historical Debt Service Coverage Ratio" means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Debt Service Requirements for such period and a denominator of one; provided, however, that in calculating the Debt Service Requirements for such period, (a) the principal amount of any Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in accordance with the provisions of this Master Trust Indenture, and (b) to the extent an Interest Rate Agreement has been entered into in connection with any particular Indebtedness, the actual debt service paid after the effect of payments made to or received from the provider of the Interest Rate Agreement shall be used in the calculation.

"Historical Pro Forma Debt Service Coverage Ratio" means, for any period of time, the ratio consisting of a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Maximum Annual Debt Service Requirement for the Funded Indebtedness then outstanding (other than any Funded Indebtedness being refunded with the Funded Indebtedness then proposed to be issued) and the Funded Indebtedness then proposed to be issued and a denominator of one.

"Holder" means a bearer of any Obligation issued in bearer form, and the registered owner of any Obligation issued in registered form.

"Holder Consent" means the written consent of the Holders of a majority in aggregate principal amount of the total amount of Obligations then Outstanding.

"Immediate Notice" shall mean notice by telephone, telegram, telex, telecopier or other telecommunication device, receipt of which has been confirmed by the recipient, to such phone numbers or addresses as are specified in Section 11.09 of the Bond Indenture or such other phone number or address as the addressee shall have directed in writing, promptly followed by written notice by overnight carrier or delivery service, expenses prepaid, to such addresses.

"Income Available for Debt Service" means for any period, the excess of Revenues over Expenses of the Person or group of Persons involved.

"Indebtedness" means, for any Person, (a) all Guaranties by such Person, (b) all liabilities (exclusive of reserves such as those established for deferred taxes or litigation) recorded or required to be recorded as such on the audited financial statements of such Person in accordance with generally accepted accounting principles, and (c) all obligations for the payment of money incurred or assumed by such Person (i) due and payable in all events, or (ii) if incurred or assumed primarily to assure the repayment of money borrowed or credit extended, due and payable upon the occurrence of a condition precedent or upon the performance of work, possession of Property as lessee, rendering of services by others or otherwise; provided that Indebtedness shall not include Indebtedness of one Member to another Member, any Guaranty by any Member of Indebtedness of any other Member, the joint and several liability of any Member on Indebtedness issued by another Member, Interest Rate Agreements, any Subordinated Indebtedness owed to an Affiliate of such Person evidencing an obligation to repay funds advanced or to pay fees owed to such Affiliate or any obligation to repay Entrance Fees or moneys deposited by patients or others with a Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, senior living facilities or similar facilities to endowment or similar funds deposited by or on behalf of such residents.

"Indemnified Party" shall mean the Issuer and any of its respective officers, directors, members, officials, consultants, agents, servants and employees, and any successor to any of such Persons.

"Indemnified Persons" means the Indemnified Parties and the Bond Trustee.

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"Independent Counsel" means an attorney duly admitted to practice law in any state and, without limitation, may include independent legal counsel for any Member, the Master Trustee or any Related Bond Trustee.

"Independent Living Units" means all of the independent living units that are part of the Project regardless of whether or not they are offered for occupancy on an Entrance Fee basis or rental basis.

"Initial Entrance Fees" means Entrance Fees received upon the initial occupancy of any Independent Living Unit not previously occupied.

"Initial Occupancy Date" means the earliest date a resident has taken physical possession of one of the Entrance Fee Units included in the Project.

"Initial Purchaser" means B.C. Ziegler and Company, the initial purchaser of the Series 2013 Bonds.

"Initial Supplemental Indenture" means Supplemental Master Trust Indenture Number 1 dated as of December 1, 2013, between the Obligated Group Representative and the Master Trustee, related to the issuance of the Series 2013 Notes.

"Initial Testing Period" means the earlier of (a) Stable Occupancy, or (b) the Fiscal Year ending June 30, 2020.

"Insurance Consultant" means a person or firm who in the case of an individual is not an employee or officer of any Member and which, in the case of a firm, does not control any Member of the Obligated Group or any Affiliate thereof and is not controlled by or under common control with any Member of the Obligated Group or an Affiliate thereof, appointed by the Obligated Group Representative, qualified to survey risks and to recommend insurance coverage for senior living facilities or health care facilities and services of the type involved, and having a favorable reputation for skill and experience in such surveys and such recommendations, and which may include a broker or agent with whom any Member transacts business.

"Interest Rate Agreement" means an interest rate exchange, hedge or similar agreement, expressly identified in an Officer's Certificate of the Obligated Group Representative delivered to the Master Trustee as being entered into in order to hedge the interest payable on all or a portion of any Indebtedness, which agreement may include, without limitation, an interest rate swap, a forward or futures contract or an option (e.g., a call, put, cap, floor or collar) and which agreement does not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof. An Interest Rate Agreement shall not constitute Indebtedness hereunder.

"Interest Account" means the account of such name in the Bond Fund created in Section 3.02 of the Bond Indenture.

"Interest Payment Date" means each May 15 and November 15, commencing May 15, 2014 or, if such day is not a Business Day, the immediately succeeding business day in the years during which the Bonds are Outstanding under the provisions of the Bond Indenture.

"Issuer" means Collier County Industrial Development Authority, or any public corporation succeeding to its rights and obligations under this Loan Agreement.

"Issuer Representative" means the Chairman of the Issuer or such other person at the time, and from time to time, designated by written certificate of the Issuer furnished to the Obligor and the Bond Trustee containing the specimen signature of such person and signed on behalf of the Issuer by its Chairman. Such certificate shall designate an alternate or alternates, any of whom may act at any time as Issuer Representative.

"Lien" means any mortgage, pledge or lease of, security interest in or lien, charge or encumbrance on any Property of the Person involved in favor of, or which secures any obligation to, any Person other than any Member, and any Capitalized Lease under which any Member is lessee and the lessor is not another Member.

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"Liquidity Facility" means a written commitment to provide money to purchase or retire any Indebtedness if (a) on the date of delivery of such Liquidity Facility, the unsecured Funded Indebtedness or claims-paying ability of the provider of such Liquidity Facility or its parent holding company or other controlling entity is rated at least "A" by a least one of the Rating Agencies, and (b) as of any particular date of determination, no amount realized under such Liquidity Facility for the payment of the principal or the purchase or redemption price of such Indebtedness (exclusive of amounts realized for the payment of accrued interest on such Indebtedness) shall be required to be repaid by the obligor on such Funded Indebtedness for a period of at least one year.

"Liquidity Provider" means the Parent Corporation.

"Liquidity Provider Subordinated Debt" means the Obligor's obligation to repay the Liquidity Provider for any draws on the Liquidity Support Fund as set forth in the Liquidity Support Agreement.

"Liquidity Requirement" has the meaning given such term in Section 4.20 of the Master Trust Indenture.

"Liquidity Support Fund" means the fund by that name established by the Liquidity Provider with the Master Trustee pursuant to the Liquidity Support Agreement.

"Liquidity Support Agreement" means the Liquidity Support Agreement dated as of December 1, 2013, among the Obligor, the Liquidity Provider, the Master Trustee and the Bond Trustee.

"Loan Agreement" means this Loan Agreement and any amendments and supplements hereto made in conformity herewith and with the Bond Indenture.

"Losses" means losses, costs, damages, expenses, judgments, and liabilities of whatever nature (including, but not limited to, reasonable attorney's, accountant's and other professional's fees, litigation and court costs and expenses, amounts paid in settlement and amounts paid to discharge judgments and amounts payable by Indemnified Persons to any other Person under any arrangement providing for indemnification of that Person) directly or indirectly resulting from or arising out of or relating to one or more Claims.

"Master Indenture" or "Master Trust Indenture" means the Master Trust Indenture dated as of December 1, 2013, between the Obligor and the Master Trustee, as supplemented by the Supplemental Indenture and any supplements or amendments thereto and modifications thereof.

"Master Trustee" means Wells Fargo Bank, National Association, a national banking association with trust powers in the State of Florida, as trustee hereunder, and any successor in trust appointed pursuant to Article VIII of the Master Trust Indenture.

"Maturity" when used with respect to any Indebtedness means the date on which the principal of such Indebtedness or any installment thereof becomes due and payable as therein provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption, or otherwise.

"Maximum Annual Debt Service Requirement" means (a) with respect to the Bond Indenture or Loan Agreement, an amount equal to the maximum principal and interest requirements (taking into account all mandatory sinking fund payments) due in any calendar year on the Bonds calculated in accordance with the provisions of the Master Indenture; provided, however, that principal of the Bonds in its final year shall be excluded from the determination of Maximum Annual Debt Service Requirement to the extent moneys are on deposit as of the date of calculation in the Reserve Fund, and (b) with respect to the Master Trust Indenture, the largest total Debt Service Requirements for the current or any succeeding Fiscal Year.

"Maximum Principal Indebtedness" means an aggregate principal amount of Obligations now or hereafter issued and Outstanding under the Master Indenture in an amount not to exceed the aggregate principal sum of $400,000,000.

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"Maximum Rate" means the lesser of (a) 15% per annum, or (b) the maximum interest rate permitted by applicable Florida law.

"Minimum Liquid Reserve Accounts" means the accounts maintained pursuant to the Agreement for The Arlington of Naples Debt Reserve Escrow Account Operating Reserve Escrow Account Renewal and Replacement Reserve Escrow Account, dated as of November 30, 2009, among the Obligor and the Chapter 651 Escrow Agent, as acknowledged by the Florida Office of Insurance Regulation, in order to satisfy the minimum liquid reserve requirements of Section 651.035, Florida Statutes. Any funds on deposit in such accounts shall not be subject to any liens, charges, judgments, garnishments or creditors' claims against the Obligor including, not limited to, holders of Obligations issued hereunder, except as provided in Section 651.033(1)(d), Florida Statutes, as may be amended from time to time.

"Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group, with written notice to the Master Trustee.

"Mortgage" means the Mortgage and Security Agreement dated as of December 1, 2013, from the Obligor to the Master Trustee, as amended or modified from time to time.

"Mortgaged Property" means (a) with respect to the Mortgage, the Mortgagor's interest in the property described in Section 2 of the Mortgage, and all rents, receipts, issues, profits, proceeds (including insurance proceeds and condemnation awards) and products thereof, and all substitutions therefor or renewals or replacements thereof, and (b) with respect to the Master Trust Indenture, the real property of the Members which is subject to the Lien and security interest of the Master Trust Indenture and the Mortgage.

"Net Proceeds" means, when used with respect to any insurance (other than the proceeds of business interruption insurance) or condemnation award or sale consummated under threat of condemnation, the gross proceeds from the insurance or condemnation award or sale with respect to which that term is used less all expenses (including attorney's fees, adjuster's fees and any expenses of the Obligated Group or the Master Trustee) incurred in the collection of such gross proceeds.

"Net Rentals" means all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the leased Property other than upon termination of the lease for a default thereunder) payable under a lease or sublease of real or personal Property excluding any amounts required to be paid by the lessee (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Net Rentals for any future period under any so called "percentage lease" shall be computed on the basis of the amount reasonably estimated to be payable thereunder for such period, but in any event not less than the amount paid or payable thereunder during the immediately preceding period of the same duration as such future period; provided that the amount estimated to be payable under any such percentage lease shall in all cases recognize any change in the applicable percentage called for by the terms of such lease.

"New York Time" means the time on any given day in the City of New York, New York, whether such time be Eastern Standard Time or Eastern Daylight Savings Time.

"Non-Recourse Indebtedness" means any Indebtedness the liability for which is effectively limited to Property, Plant and Equipment (other than the Premises) and the income therefrom, with no recourse, directly or indirectly, to any other Property of any Member.

"Obligated Group" means, collectively, all of the Obligated Group Members.

"Obligated Group Member" or "Member" means the Obligor and any other Person who has satisfied the requirements set forth in this Master Trust Indenture for becoming an Obligated Group Member and its

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successors until any such Person or a successor or transferee Person satisfies the requirements set forth in this Master Trust Indenture for ceasing to be an Obligated Group Member.

"Obligated Group Representative" means the Obligor, or any successor Obligated Group Representative appointed pursuant to Section 6.04 of the Master Trust Indenture.

"Obligation" means any promissory note, guaranty, lease, contractual agreement to pay money or other obligation of any Obligated Group Member which is authenticated and delivered pursuant to this Master Trust Indenture and which is entitled to the benefits of this Master Trust Indenture.

"Obligation Register" means the register of ownership of the Obligations to be maintained pursuant to this Master Trust Indenture.

"Obligor" means The Arlington of Naples, an Illinois not for profit corporation, registered to do business in the State of Florida as The Arlington of Naples, Inc., and any and all successors thereto in accordance with this Master Trust Indenture.

"Obligor Documents" means this Loan Agreement, the Master Indenture, the Mortgage, the Collateral Assignment, the Continuing Disclosure Agreement, the Tax Compliance Agreement and any other agreements entered into by the Obligor related to the issuance of the Bonds.

"Occupied" means (a) an Entrance Fee Unit for which a Residency Agreement has been executed, all related Entrance Fees then due have been paid in accordance with such Residency Agreement (or subject to a Short Term Resident Note), the monthly service fees for which are currently being paid (for purposes of this definition, combined Entrance Fee Units are counted as the number of original individual units so combined) and the occupant of such Entrance Fee Unit continues to permanently reside therein, and (b) with respect to any other Independent Living Unit, such units that are occupied by a resident or patient for which monthly service fees are currently charged and paid; provided, however, with respect to nursing beds, to the extent a resident desires a private room and pays the appropriate fees to convert a semi-private room to a private room, then in such case the number of available nursing beds shall be reduced accordingly for such period.

"Officer's Certificate" means a certificate signed, in the case of a certificate delivered by a Member of the Obligated Group, by the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Vice President, Director of Finance or any other Authorized Representative of any Member of the Obligated Group or in the case of a certificate delivered by any other corporation, by the President, any Vice President, Chief Operating Officer, Chief Financial Officer, Director of Finance or any other officer or agent authorized to sign by resolution of the Governing Body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive or chief financial officer of such other Person.

"Operating Reserve Fund" means the Operating Reserve Fund created by Section 3.04 of the Master Trust Indenture.

"Opinion of Bond Counsel" shall mean an opinion in writing signed by Bond Counsel.

"Opinion of Counsel" means a written opinion of counsel who may (except as otherwise expressly provided herein) be counsel to any Obligated Group Member.

"Outstanding" means, as of any particular time, all Bonds which have been duly authenticated and delivered by the Bond Trustee under the Bond Indenture, except:

(a) Bonds theretofore cancelled by the Bond Trustee or delivered to the Bond Trustee for cancellation after purchase in the open market or because of payment at or redemption prior to maturity;

(b) Bonds for the payment or redemption of which cash funds (or Government Obligations to the extent permitted in Section 7.01 of the Bond Indenture) shall have been theretofore deposited with the Bond Trustee

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(whether upon or prior to the maturity or redemption date of any such Bonds); provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Bond Trustee, shall have been filed with the Bond Trustee and provided further that prior to such payment or redemption, the Bonds to be paid or redeemed shall be deemed to be Outstanding for the purpose of transfers and exchanges under Section 2.05 of the Bond Indenture; and

(c) Bonds in lieu of which other Bonds have been authenticated under Section 2.06 of the Bond Indenture.

"Outstanding" when used with respect to Obligations means, as of the date of determination, all Obligations theretofore authenticated and delivered under the Master Trust Indenture, except:

(a) Obligations theretofore cancelled and delivered to the Master Trustee or delivered to the Master Trustee for cancellation;

(b) Obligations for whose payment or redemption money (or Defeasance Obligations to the extent permitted by Section 10.02 of the Master Trust Indenture) shall have theretofore been deposited with the Master Trustee or any Paying Agent for such Obligations in trust for the Holders of such Obligations pursuant to this Master Trust Indenture; provided, that, if such Obligations are to be redeemed, notice of such redemption has been duly given or waived pursuant to this Master Trust Indenture or irrevocable provision for the giving of such notice satisfactory to the Master Trustee has been made pursuant to this Master Trust Indenture; and

(c) Obligations upon transfer of or in exchange for or in lieu of which other Obligations have been authenticated and delivered pursuant to this Master Trust Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Obligations have given any request, demand, authorization, direction, notice, consent, or waiver hereunder, Obligations owned by any Obligated Group Member or any Affiliate of any Obligated Group Member shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Master Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only Obligations that the Master Trustee knows to be so owned shall be so disregarded. Obligations so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Master Trustee the pledgee's right so to act with respect to such Obligations and that the pledgee is not an Obligated Group Member or an Affiliate of any Obligated Group Member.

"Parent Corporation" means Lutheran Life Ministries, f/k/a Lutheran Life Communities, an Illinois not for profit corporation, and its successors.

"Paying Agent" means (a) with respect to any Bonds, any bank or trust company, including the Bond Trustee, designated pursuant to the Bond Indenture to serve as a paying agency or place of payment for the Bonds, and any successor designated pursuant to the Bond Indenture, and (b) with respect to any Obligations, any Person authorized by the Obligated Group Representative to pay the principal of (and premium, if any) or interest on any Obligations on behalf of the Obligated Group.

"Payment Office" with respect to the Bond Trustee or other Paying Agent means the office maintained by the Bond Trustee or any affiliate of the Bond Trustee or of another Paying Agent for the payment of interest and principal on the Bonds.

"Permitted Encumbrances" means this Master Trust Indenture, any Related Loan Agreement, any Related Bond Indenture and, as of any particular date:

(a) Liens arising by reason of good faith deposits with a Member in connection with tenders, leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Member to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges; any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or

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governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Member to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workers' compensation, unemployment insurance, pensions or profit sharing plans or other social security plans or programs, or to share in the privileges or benefits required for corporations participating in such arrangements;

(b) any Lien described in EXHIBIT B hereto which is existing on the date of execution of this Master Trust Indenture provided that no such Lien may be extended, renewed or modified to apply to any Property of a Member of the Obligated Group not subject to such Lien on such date, unless such Lien as so extended, renewed or modified otherwise qualifies as a Permitted Encumbrance;

(c) any Lien on the Property of any Member granted in favor of or securing Indebtedness to any other Member, with Holder Consent;

(d) this Master Trust Indenture, the Mortgage and any other Lien on Property if such Lien equally and ratably secures all of the Obligations and only the Obligations;

(e) leases which relate to Property of the Obligated Group which is of a type that is customarily the subject of such leases, such as office space for physicians and educational institutions, food service facilities, gift shops, commercial, beauty shop, banking, radiology, other similar specialty services, pharmacy and similar departments or employee rental apartments; and any leases, licenses or similar rights to use Property whereunder a Member is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would obtain in a comparable arm's length transaction;

(f) Liens for taxes and special assessments which are not then delinquent, or if then delinquent are being contested in accordance with Section 4.05 of the Master Trust Indenture;

(g) utility, access and other easements and rights of way, restrictions, encumbrances and exceptions which do not materially interfere with or materially impair the operation of the Property affected thereby (or, if such Property is not being then operated, the operation for which it was designed or last modified);

(h) any mechanic's, laborer's, materialman's, broker's, appraiser's, supplier's or vendor's Lien or right in respect thereof if payment is not yet due under the contract in question or has been due for less than 60 days, or if such Lien is being contested in accordance with the provisions of this Master Trust Indenture;

(i) such Liens, defects, irregularities of title and encroachments on adjoining property as normally exist with respect to property similar in character to the Property involved and which do not materially adversely affect the value of, or materially impair, the Property affected thereby for the purpose for which it was acquired or is held by the owner thereof;

(j) zoning laws and similar restrictions which are not violated by the Property affected thereby;

(k) statutory rights under Section 291, Title 42 of the United States Code, as a result of what are commonly known as Hill Burton grants, and similar rights under other federal statutes or statutes of the state in which the Property involved is located;

(l) all right, title and interest of the state where the Property involved is located, municipalities and the public in and to tunnels, bridges and passageways over, under or upon a public way;

(m) Liens on or in Property given, granted, bequeathed or devised by the owner thereof existing at the time of such gift, grant, bequest or devise, provided that (i) such Liens consist solely of restrictions on the use thereof or the income therefrom, or (ii) such Liens secure Indebtedness which is not assumed by any Member and such Liens attach solely to the Property (including the income therefrom) which is the subject of such gift, grant, bequest or devise;

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(n) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which any Member shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall be in existence;

(o) Liens on moneys deposited by patients or others with a Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, senior living facilities or similar facilities to endowment, prepayment or similar funds deposited by or on behalf of such residents;

(p) Liens on Property due to rights of third party payors for recoupment of excess reimbursement paid;

(q) any security interest in a rebate fund, any depreciation reserve, debt service or interest reserve, debt service, construction fund or any similar fund established pursuant to the terms of any Supplement, Related Bond Indenture or Related Loan Agreement in favor of the Master Trustee, a Related Bond Trustee or the holder of the Indebtedness issued pursuant to such Supplement, Related Bond Indenture or Related Loan Agreement or the holder of any related Commitment Indebtedness;

(r) any Lien on any Related Bond or any evidence of Indebtedness of any Member acquired by or on behalf of any Member which secures Commitment Indebtedness and only Commitment Indebtedness;

(s) any Lien on Property acquired by a Member which Lien secures Indebtedness issued, incurred or assumed by any Member, in connection with and to effect such acquisition or existing Indebtedness which will remain outstanding after such acquisition which Lien encumbers Property other than Property that is pledged pursuant to Granting Clause Second of this Master Trust Indenture, if in any such case the aggregate principal amount of such Indebtedness does not exceed 100% of the fair market value subject to such Lien as determined in good faith by the Governing Body of the Member;

(t) Liens on accounts receivable arising as a result of the sale of such accounts receivable with or without recourse, provided that the principal amount of Indebtedness secured by any such Lien does not exceed the face amount of such accounts receivable sold;

(u) such Liens, covenants, conditions and restrictions, if any, which do not secure Indebtedness and which are other than those of the type referred to above, and which (i) in the case of Property owned by the Obligated Group on the date of execution of this Master Trust Indenture, do not and will not, so far as can reasonably be foreseen, materially adversely affect the value of the Property currently affected thereby or materially impair the same, and (ii) in the case of any other Property, do not materially impair or materially interfere with the operation or usefulness thereof for the purpose for which such Property was acquired or is held by a Member;

(v) such Liens as are required to be granted by Chapter 651, Florida Statutes or any successor or similar law, if applicable to any Facilities; and

(w) any title policy exceptions described in EXHIBIT C of the Master Trust Indenture relating to the Premises.

"Permitted Investments" means, if and to the extent the same are at the time legal for investment of funds held under this Master Trust Indenture, dollar denominated investments in any of the following:

(a) Government Obligations;

(b) debt obligations which are (i) issued by any state or political subdivision thereof or any agency or instrumentality of such state or political subdivision, and (ii) at the time of purchase, rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency;

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(c) any bond, debenture, note, participation certificate or other similar obligation issued by a government sponsored agency (such as the Federal National Mortgage Association, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation or the Federal Farm Credit Bank) which is either (i) at the time of purchase, rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, or (ii) backed by the full faith and credit of the United States of America;

(d) U.S. denominated deposit account, certificates of deposit and banker's acceptances of any bank, trust company, or savings and loan association, including the Master Trustee or their affiliates, which have a rating on their short-term certificates of deposit on the date of purchase in one of the two highest short-term rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which mature not more than 365 days after the date of purchase;

(e) commercial paper which is rated at the time of purchase in one of the two highest short-term rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which matures not more than 270 days after the date of purchase;

(f) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by a corporation which are, at the time of purchase, rated by any Rating Agency in any of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise);

(g) investment agreements with banks that at the time the agreement is executed are at the time of purchase rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency or investment agreements with non-bank financial institutions, provided that (i) all of the unsecured, direct long-term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency at the time the agreement is executed in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for obligations of that nature; or (ii) if the non-bank financial institution and any related guarantor have no outstanding long-term debt that is rated, all of the short-term debt of either the non-bank financial institution or the related guarantor of the non-bank financial institution is at the time of purchase rated by any Rating Agency in one of the two highest rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) assigned to short-term indebtedness by any Rating Agency. If such non-bank financial institution and any guarantor do not have any short-term or long-term debt, but do have a rating in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise), then investment agreements with the non-bank financial institution will be permitted;

(h) repurchase agreements with respect to and secured by Government Obligations or by obligations described in clause (b) and (c) above, which agreements may be entered into with a bank (including without limitation the Bond Trustee or the Master Trustee or its affiliates), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Master Trustee or a custodial agent of the Master Trustee has possession of the collateral and that the collateral is free and clear of third-party claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are valued no less frequently than monthly, (iv) the fair market value of the collateral securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%, and (v) such obligations must be held in the custody of the Master Trustee’s agent; and

(i) investments in a money market fund, including funds of the Master Trustee or its affiliates, rated (at the time of purchase) in the highest rating category for this type of investment by any Rating Agency; and

(j) shares in any investment company, money market mutual fund, fixed income mutual fund, Exchange Traded Fund or other collective investment fund registered under the federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and the majority of whose investments consist of Permitted Investments as defined in paragraphs (a) through (i) above, including money market mutual funds from which the Master Trustee or its affiliates derive a fee for investment advisory or other services to the fund.

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The Master Trustee shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter, absent receipt of written notice or information to the contrary.

For the purposes of this definition, obligations issued or held in the name of the Master Trustee in book-entry form on the books of the Department of Treasury of the United States shall be deemed to be deposited with the Master Trustee.

"Person" means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or any other entity.

"Phase II" means the construction, acquisition and equipping of not more than 16 additional Villas and related common areas to supplement the Project, the cost for which, inclusive of all required reserves, capitalized interest and costs of issuance does not exceed $15,000,000.

"Phase II Indebtedness" means any Funded Indebtedness incurred by the Obligated Group to finance and refinance the cost of Phase II.

"Place of Payment" for a series of Obligations means a city or political subdivision designated as such pursuant to this Master Trust Indenture or a Supplement.

"Premises" means (a) with respect to the Master Trust Indenture, the real property described in EXHIBIT A thereto, as it may be amended from time to time, and (b) with respect to the Mortgage, the real property described in EXHIBIT A attached thereto, together with all appurtenances, easements and rights of way pertaining thereto, including, without limitation, all appurtenant easements, whether now existing or hereafter granted or created, and including, without limitation, easements for access and utilities.

"Premium Security" means any Permitted Investment purchased or to be purchased at a premium from funds in the Project Account.

"Primary Obligor" means the Person who is primarily obligated on an obligation which is guaranteed by another Person.

"Principal Account" means the account of such name in the Bond Fund created in Section 3.02 of the Bond Indenture.

"Prior Debt" means (a) the Issuer's $10,900,000 Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project) Series 2011, and (b) the Obligor's $19,500,000 Lutheran Church Extension Fund - Missouri Synod Promissory Note.

"Project" means (a) with respect to the Master Indenture, the construction, acquisition and equipping of a continuing care retirement community with (i) an estimated 163 independent living units, an estimated 79 assisted living units (of which an estimated 37 will be memory support units), and an estimated 44 skilled nursing beds, (ii) community common space for use of all residents and a main kitchen to serve all residents, and (iii) various additional capital improvements and equipment for above, all located or to be located on the Obligor's campus in the City of Naples, Florida, and (b) with respect to the Loan Agreement, the project described in EXHIBIT A attached thereto.

"Project Account" means the account of such name in the Construction Fund created in Section 3.06 of the Bond Indenture.

"Projected Debt Service Coverage Ratio" means, for any future period, the ratio consisting of a numerator equal to the amount determined by dividing the projected Income Available for Debt Service for that

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period by the Maximum Annual Debt Service Requirement for the Funded Indebtedness expected to be outstanding during such period and a denominator of one.

"Projected Rate" means the projected yield at par of an obligation as set forth in the report of a Consultant. Such report shall state that in determining the Projected Rate such Consultant reviewed the yield evaluations at par of not less than three obligations (or such lesser number as the Consultant shall deem appropriate, but in no event less than one) selected by such Consultant, the interest on which is entitled to the exemption from federal income tax afforded by Section 103(a) of the Code or any successor thereto (or, if it is not expected that it will be reasonably possible to issue such tax-exempt obligations, or if the interest on the Indebtedness for which the Projected Rate is being calculated is not entitled to such exemption, then obligations the interest on which is subject to federal income taxation) which obligations such Consultant states in its report are reasonable comparators for utilizing in developing such Projected Rate and which obligations: (a) were outstanding on a date selected by the Consultant which date so selected occurred during the 90 day period preceding the date of the calculation utilizing the Projected Rate in question, (b) to the extent practicable, are obligations of Persons engaged in operations similar to those of the Obligated Group and having a credit rating similar to that of the Obligated Group, (c) are not entitled to the benefits of any credit enhancement (including without limitation any letter or line of credit or insurance policy) if the obligation for which the Projected Rate is being determined is not benefited by any credit enhancement, and (d) to the extent practicable, have a remaining term and amortization schedule substantially the same as the obligation with respect to which such Projected Rate is being developed.

"Property" means any and all rights, titles and interests in and to any and all property, whether real or personal, tangible (including cash) or intangible, wherever situated and whether now owned or hereafter acquired by a Person.

"Property, Plant and Equipment" means all Property of each Member which is classified as property, plant and equipment under generally accepted accounting principles.

"Put Date" means (a) any date on which an owner of Put Indebtedness may elect to have such Put Indebtedness paid, purchased or redeemed by or on behalf of the underlying obligor prior to its stated maturity date, or (b) any date on which Put Indebtedness is required to be paid, purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default.

"Put Indebtedness" means Indebtedness which is (a) payable or required to be purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner thereof, prior to its stated maturity date, or (b) payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default.

"Qualified Intermediate Term Indebtedness" shall mean any Indebtedness that (a) matures not more than seven years from the date of its issuance or incurrence and is issued or incurred to finance Facilities for the Obligor, and (b) will, according to an Officer's Certificate of the Obligated Group Representative and a Feasibility Report, be used to finance facilities the Initial Entrance Fees for which (based solely on prospective residents from whom the Obligor has received a deposit of at least 10% of the projected Initial Entrance Fee of such resident) will be sufficient to generate an amount of funds equal to the aggregate of the principal amount of such Qualified Intermediate Term Indebtedness and all interest to accrue thereon through the projected date on which such Qualified Intermediate Term Indebtedness is to be paid in full (excluding Funded Interest on such Qualified Intermediate Term Indebtedness).

"Qualified Project Costs" means Costs of the Project which constitute costs for property which is to be owned by the Obligor or another member of the Obligated Group and will not be used in an "unrelated trade or business" (as such term is used in Section 513(a) of the Code) of the Obligor (or any other organization described in Section 501(c)(3) of the Code) or in the trade or business of a person who is neither a governmental unit nor an organization described in Section 501(c)(3) of the Code. Costs of Issuance are not Qualified Project Costs and any fees paid to banks for letters of credit, for municipal bond insurance premiums or other guaranty fees and any

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capitalized interest on the Bonds shall be allocated between Qualified Project Costs to be paid or reimbursed from proceeds of the Bonds and Costs other than Qualified Project Costs to be paid or reimbursed from the proceeds of the Bonds. Qualified Project Costs shall not include costs or expenses paid more than sixty (60) days prior to the adoption by the Issuer, the Obligor or another member of the Obligated Group of a reimbursement resolution unless those expenditures qualify as "preliminary expenditures" within the meaning of the Code.

"Rating Agency" means, as applicable, Moody's, Standard & Poor's or Fitch.

"Rebate Fund" means that special fund established in the name of the Issuer with the Bond Trustee pursuant to Section 3.16 of the Bond Indenture.

"Registered Owner" or "Owners" means the person or persons in whose name or names a Bond shall be registered on books of the Issuer kept by the Bond Trustee for that purpose in accordance with the terms of the Bond Indenture.

"Regular Record Date" means the last day of the month preceding each regularly scheduled interest payment date therefor.

"Related Bond Indenture" means any indenture, bond resolution or other comparable instrument pursuant to which a series of Related Bonds is issued including, without limitation, the Series 2013 Bond Indenture.

"Related Bond Trustee" means the bond trustee and its successor in the trust created under any Related Bond Indenture including, without limitation, the Series 2013 Bond Trustee.

"Related Bonds" means the Series 2013 Bonds and any other revenue bonds or other obligations issued by any state, territory or possession of the United States or any municipal corporation or political subdivision formed under the laws thereof or any constituted authority or agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof ("governmental issuer"), pursuant to a single Related Bond Indenture, the proceeds of which are loaned or otherwise made available to any Obligated Group Member in consideration of the execution, authentication and delivery of an Obligation to or for the order of such governmental issuer.

"Related Bonds Debt Service Reserve Fund" means a debt service reserve fund established pursuant to a Related Bond Indenture to secure payment on any Related Bonds.

"Related Loan Agreement" means the Series 2013 Loan Agreement, any loan agreement, financing agreement, credit agreement or other comparable instrument entered into in connection with a series of Related Bonds.

"Renewal and Replacement Fund" means any repair, renewal or capital facility replacement fund or account established in connection with the financing of any Capital Addition.

"Request" means of any specified Person a written request signed in the name of such Person by the Chairman of the Governing Body, the Chief Executive Officer, the President, a Vice President, the Treasurer, an Assistant Treasurer, Secretary or the Chief Financial Officer of such Person or any other person or persons designated by an Officer's Certificate and delivered to the Master Trustee.

"Required Information Recipient" means the Master Trustee, each Related Bond Trustee, each provider of a Credit Facility so long as such Credit Facility is in effect, the Initial Purchaser, the Municipal Securities Rulemaking Board, which currently accepts continuing disclosure submissions through its EMMA web portal, or any successor entity authorized and approved by the Securities and Exchange Commission from time to time to act as a recognized municipal securities repository, and all Holders of Related Bonds who hold $500,000 or more in principal amount of Related Bonds and request such reports in writing (which written request shall include a certification as to such ownership).

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"Reserve Account" means an account established within the Reserve Fund relating to a specific series of Bonds issued under the Bond Indenture.

"Reserved" means an Entrance Fee Unit (a) which is Occupied, or (b) for which a Member of the Obligated Group has received a deposit equal to not less than 10% of the Entrance Fee related to such Entrance Fee Unit.

"Reserve Fund" means the Debt Service Reserve Fund created in Section 3.08 of the Bond Indenture.

"Reserve Fund Obligations" means cash and Permitted Investments.

"Reserve Fund Requirement" means, with respect to (a) the Series 2013A Bonds, an amount equal to Maximum Annual Debt Service on the Series 2013A Bonds (b) the Series 2013B Bonds, an amount equal to one year's interest on the Series 2013B Bonds and (c) any Additional Bonds, the amount specified in the supplemental indenture pursuant to which such Additional Bonds are issued.

"Residency Agreement" means each and every contract, including without limitation any "reservation agreement" or "residency agreement," as amended from time to time, between an Obligated Group Member and a resident of the Facilities giving the resident certain rights of occupancy in the Facilities, including, without limitation, the Independent Living Units, assisted living units, skilled nursing beds or specialty care (dementia) beds and providing for certain services to such resident.

"Responsible Officer" when used with respect to the Bond Trustee means an officer of the Bond Trustee having direct responsibility for administration of the Bond Indenture.

"Revenue Fund" means the Revenue Fund created by Section 3.05 of the Master Trust Indenture.

"Revenues" means, for any period, (a) in the case of any Person providing health care services and/or senior living services, the sum of (i) net patient service revenues and resident service revenues, plus (ii) other operating revenues, plus (iii) non-operating revenues (other than Contributions, income derived from the sale of assets not in the ordinary course of business, any gain from the extinguishment of debt or other extraordinary item, earnings which constitute Funded Interest or earnings on amounts which are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness, but including investment income), plus (iv) Unrestricted Contributions, plus (v) Entrance Fees (other than Initial Entrance Fees) received minus (A) Entrance Fees amortized during such Fiscal Year, and (B) Entrance Fees refunded to residents, plus (vi) payments received from any Affiliate of an Obligated Group Member, plus (vii) any Federal Subsidy Payments; and (b) in the case of any other Person, gross revenues less sale discounts and sale returns and allowances, as determined in accordance with generally accepted accounting principles; but excluding in either case (i) any unrealized gain or loss resulting from changes in the valuation of investment securities or unrealized changes in the value of derivative investments, (ii) any gains on the sale or other disposition of fixed or capital assets not in the ordinary course, (iii) earnings resulting from any reappraisal, revaluation or write up of fixed or capital assets, (iv) any revenues recognized from deferred revenues related to Entrance Fees, and (v) insurance (other than business interruption) and condemnation proceeds; provided, however, that if such calculation is being made with respect to the Obligated Group, such calculation shall be made in such a manner so as to exclude any revenues attributable to transactions between any Member and any other Member. For purposes of calculations under this Master Trust Indenture, an Unrestricted Contribution from an Affiliate shall be treated as being made during the period of such calculation so long as the Unrestricted Contribution is made prior to the date the applicable certificate is required to be delivered with respect to such calculation.

"Review Date" shall have the meaning set forth in Section 3.01 of the Master Trust Indenture.

"Securities Depository" means The Depository Trust Company, New York, New York, and any successor thereto as permitted by the Bond Indenture.

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"Secured Indebtedness" means the obligations secured by this Mortgage consisting of (i) the principal amount of, and all interest, redemption premiums, if any, and other amounts due on or with respect to, all Obligations of the Obligated Group now or hereafter issued and Outstanding pursuant to the terms of the Master Indenture, and (ii) all other amounts due and owing under the Master Indenture.

"Series 2013A Note" means the Note issued by the Obligor pursuant to the Supplemental Indenture relating to the Series 2013A Bonds.

"Series 2013A Bonds" means the Collier County Industrial Development Authority Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013A issued pursuant to the Bond Indenture.

"Series 2013B Bonds" means the Collier County Industrial Development Authority Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B issued pursuant to the Bond Indenture.

"Series 2013B Note" means the Note issued by the Obligor pursuant to the Supplemental Indenture relating to the Series 2013B Bonds.

"Series 2013 Bond Indenture" means the Indenture of Trust, dated as of December 1, 2013, between the Collier County Industrial Development Authority and the Series 2013 Bond Trustee, relating to the Series 2013 Bonds.

"Series 2013 Bonds" means the Series 2013A Bonds and the Series 2013B Bonds issued pursuant to the Series 2013 Bond Indenture.

"Series 2013 Bond Trustee" means Wells Fargo Bank, National Association, as bond trustee under the Series 2013 Bond Indenture.

"Series 2013 Loan Agreement" means the Loan Agreement, dated as of December 1, 2013, between the Collier County Industrial Development Authority and the Obligor, relating to the Series 2013 Bonds.

"Series 2013 Notes" means the Series 2013A Note and Series 2013B Note issued by the Obligated Group Representative pursuant to the terms hereof and of the Initial Supplemental Indenture to secure repayment of the Series 2013 Bonds.

"Services Agreement" means the Consulting Services Agreement effective date as of July 1, 2015 between the Obligor and Lutheran Life Communities f/k/a VeriSpring, Inc., as amended and supplemented from time to time.

"Short Term" when used in connection with Indebtedness, means having an original maturity less than or equal to one year and not renewable at the option of the debtor for a term greater than one year beyond the date of original issuance.

"Short Term Resident Note" means a note or other debt instrument which matures within 365 days payable to a Member of the Obligated Group executed by a current or future resident that is a party to a Residency Agreement.

"Special Record Date" means a special date fixed to determine the names and addresses of owners of Bonds for purposes of paying interest on a special interest payment date for the payment of defaulted interest, all as further provided in Section 2.03 of the Bond Indenture.

"Stabilization Date" means the first date on which all of these conditions have been met: (a) the percentage occupancy of the Independent Living Units in the Project is equal to or greater than 95%, and (b) all the Series 2013B Bonds have been paid in full, and are no longer outstanding.

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"Stable Occupancy" means: (a) with respect to the Project, the first full Fiscal Year following the year in which all these conditions have been met: (i)(A) the percentage occupancy of the Independent Living Units in the Project is equal to or greater than 95%, and (B) the total percentage occupancy of all units and beds in the Project is equal to or greater than 94%, both calculated as of the last day of a fiscal quarter, and (ii) all the Series 2013B Bonds have been paid in full, and are no longer outstanding; provided, if the Series 2013 Bonds referred to in (ii) above are repaid no later than September 1 of a particular year, they shall be deemed to have been fully repaid in the prior Fiscal Year (as if they were repaid prior to June 30 of the prior Fiscal Year), and (b) in connection with the incurrence of Additional Indebtedness for any Capital Addition, the meaning given such term in the Supplement relating to such Additional Indebtedness based on the sustainable capacity for which such facility was designed as stated in the Consultant's report issued at such time.

"Standard & Poor's" means Standard & Poor's, a business of Standard & Poor's Financial Services LLC, a limited liability company organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Standard & Poor's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative, with written notice to the Master Trustee.

"Stated Maturity" when used with respect to any Indebtedness or any installment of interest thereon means any date specified in the instrument evidencing such Indebtedness or such installment of interest as a fixed date on which the principal of such Indebtedness or any installment thereof or the fixed date on which such installment of interest is due and payable.

"Subordinated Indebtedness" means (a) Affiliate Subordinated Indebtedness, and (b) any promissory note, guaranty, lease, contractual agreement to pay money or other obligation the terms of the documents providing for the issuance of which expressly provide that all payments on such indebtedness shall be subordinated to the timely payment of all Obligations, whether currently Outstanding or subsequently issued.

"Subsidy Bonds" means any Related Bonds for which the issuer or conduit borrower is entitled to receive Federal Subsidy Payments directly from the United States Department of Treasury or other federal governmental agency or entity authorized to make such payments under the Code.

"Supplemental Indenture" means the Supplemental Master Trust Indenture Number 1, dated as of December 1, 2013, by the Obligor executed and delivered to the Master Trustee, supplementing the Master Trust Indenture and providing for the issuance of the Series 2013 Notes.

"Surplus Construction Fund Moneys" means all moneys (including moneys earned pursuant to the provisions of Article VI of the Bond Indenture) remaining in the Project Account of the Construction Fund after completion or termination of the Project (as evidenced by a Completion Certificate) and payment of all other costs then due and payable from the Project Account of the Construction Fund.

"Supplement" means an indenture supplemental to, and authorized and executed pursuant to the terms of, this Master Trust Indenture.

"Tax Compliance Agreement" means the Tax Exemption Agreement and Certificate dated January 8, 2013, between the Issuer and the Obligor related to the Bonds.

"Tax-Exempt Organization" means a Person organized under the laws of the United States of America or any state thereof that is exempt from federal income taxes under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

"Testing Date" shall have the meaning ascribed to it in Section 4.20 of the Master Trust Indenture.

"Threshold Amount" means the greater of (a) 3% of Book Value or, at the option of the Obligated Group Representative, the Current Value of the Property, Plant and Equipment of the Obligated Group, or (b) $1,000,000

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plus an amount equal to $1,000,000 multiplied by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from its level as of December 1, 2013.

"Trust Estate" means the property pledged and assigned to the Bond Trustee pursuant to the granting clauses of the Bond Indenture.

"Unrestricted Contributions" means Contributions which are not restricted in any way that would prevent their application to the payment of debt service on Indebtedness of the Person receiving such Contributions.

"Villas" means independent living units designed as multiple bedroom single family residences constructed either as detached or duplex dwelling structures.

"Working Capital Fund" means the Working Capital Fund established pursuant to Section 3.02 of the Master Trust Indenture, and (b) any working capital fund or account established in connection with the financing of a Capital Addition.

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EXCERPTS FROM MASTER TRUST INDENTURE

The following are certain excerpts from the Master Trust Indenture. These excerpts do not purport to be complete and are qualified in their entirety by reference to the Master Trust Indenture.

ARTICLE II THE OBLIGATIONS

SECTION 2.01. SERIES AND AMOUNT OF OBLIGATIONS. (a) Obligations shall be issued under this Master Trust Indenture in series created by Supplements permitted hereunder. Each series shall be designated to differentiate the Obligations of such series from the Obligations of any other series. No Obligation issued hereunder shall be secured on a basis senior to other Obligations; provided, however, that the provision of an Interest Rate Agreement, letter or line of credit, standby bond purchase agreement, bond insurance policy or other similar instrument or obligation issued by a financial institution or municipal bond insurer or the establishment of a debt service reserve fund or account for the sole benefit of the Holders of certain Obligations, shall be permitted provided, further, that any Subordinated Indebtedness issued by an Obligated Group Member shall contain a provision to the effect that payment on the Subordinated Indebtedness is subordinate to payment on Obligations issued pursuant to this Master Trust Indenture. The number of series of Obligations that may be created under this Master Trust Indenture is not limited. The aggregate principal amount of Obligations of each series that may be created under this Master Trust Indenture is not limited except as restricted by Supplement and the provisions of Article IV of this Master Trust Indenture.

(b) Any Obligated Group Member proposing to incur Indebtedness, other than the Series 2013 Notes, whether evidenced by Obligations issued pursuant to a Supplement or by evidences of Indebtedness issued pursuant to documents other than this Master Trust Indenture, shall give written notice of its intention to incur such Indebtedness, including in such notice the amount of Indebtedness to be incurred, to the Obligated Group Representative and the other Obligated Group Members. The Obligated Group Representative shall provide the Master Trustee with a copy of any such notice it receives prior to the date such Indebtedness is to be incurred. Any such Obligated Group Member, other than the Obligated Group Representative, proposing to incur such Indebtedness other than the Series 2013 Notes, shall obtain the written consent of the Obligated Group Representative, which consent shall be evidenced by an Officer's Certificate of the Obligated Group Representative filed with the Master Trustee or an endorsement to such Indebtedness signed by the Obligated Group Representative. The Series 2013 Notes are issued simultaneously with the execution and delivery hereof.

SECTION 2.02. APPOINTMENT OF OBLIGATED GROUP REPRESENTATIVE. Each Obligated Group Member, by becoming an Obligated Group Member, irrevocably appoints the Obligated Group Representative as its agent and true and lawful attorney in fact and grants to the Obligated Group Representative (a) full and exclusive power to execute Supplements authorizing the issuance of Obligations or series of Obligations, (b) full and exclusive power to execute Obligations for and on behalf of the Obligated Group and each Obligated Group Member, (c) full and exclusive power to execute Supplements on behalf of the Obligated Group and each Obligated Group Member pursuant to Sections 9.01 and 9.02 hereof, and (d) full power to prepare, or authorize the preparation of, any and all documents, certificates or disclosure materials reasonably and ordinarily prepared in connection with the issuance of Obligations hereunder, or Related Bonds associated therewith, and to execute and deliver such items to the appropriate parties in connection therewith.

SECTION 2.04. SUPPLEMENT CREATING OBLIGATIONS. The Obligated Group Representative (on behalf of the Obligated Group Members) and the Master Trustee may from time to time enter into a Supplement in order to create Obligations hereunder. Each Supplement authorizing the issuance of Obligations shall specify and determine the date of the Obligations, the principal amount thereof, the purposes for which such Obligations are being issued, the form, title, designation, and the manner of numbering or denominations, if applicable, of such Obligations, the date or dates of maturity of such Obligations, the rate or rates of interest (or method of determining the rate or rates of interest) and premium, if any, borne by such Obligations, the arrangement for place and medium of payment, and any other provisions deemed advisable or necessary, and any of the foregoing terms may be incorporated into such Supplement by reference. Each Obligation shall be issuable, shall be transferable and exchangeable and shall be subject to redemption as specified in this Master Trust Indenture and in the Supplement. Any Obligation to be held by a Related Bond Trustee in connection with the issuance of Related Bonds shall be in

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the principal amount equal to the aggregate principal amount of such Related Bonds and shall be registered in the name of the Related Bond Trustee as assignee of the issuer of the Related Bonds. Unless an Obligation has been registered under the Securities Act of 1933, as amended (or similar legislation subsequently enacted), each such Obligation shall be endorsed with a legend which shall read substantially as follows: "This [describe Obligation] has not been registered under the Securities Act of 1933 or any state securities law (or any such similar subsequent legislation)"; provided, however, such legend shall not be required if the Master Trustee is provided with an Opinion of Counsel to the effect that such legend is not required.

A Supplement and the Obligations issued thereunder may contain, as applicable, provisions relating to bond insurance or other forms of credit or liquidity enhancement, as well as any and all compatible provisions necessary in order to make the Obligations meet the requirements of an issuer of any credit or liquidity enhancement. Similarly, a Supplement may provide for Obligations to be issued in fixed or variable rate forms, as the case may be, with such tender and redemption provisions as may be deemed necessary for the issuance thereof and provide for the execution of required documents necessary for such purposes, and may specifically subordinate payment, remedies and any other provisions of the Obligations issued thereunder to the provisions of any other Obligations.

SECTION 2.05. CONDITIONS TO ISSUANCE OF OBLIGATIONS HEREUNDER. With respect to Obligations created hereunder, simultaneously with or prior to the execution, authentication and delivery of Obligations pursuant to this Master Trust Indenture:

(a) the Obligated Group Representative (on behalf of the Obligated Group Members) and the Master Trustee shall have entered into a Supplement as provided in Section 2.04 hereof, and all requirements and conditions to the issuance of such Obligations set forth in the Supplement and in this Master Trust Indenture, including, without limitation, the provisions of Sections 4.16 and 9.01 hereof (provided that such provisions shall not be applicable to the Series 2013 Notes), shall have been complied with and satisfied, as provided in an Officer's Certificate of the Obligated Group Representative, a copy of which shall be delivered to the Master Trustee;

(b) the Obligated Group Representative shall have delivered to the Master Trustee an Opinion of Counsel to the effect that (i) registration of such Obligations under the Securities Act of 1933, as amended, and qualification of this Master Trust Indenture or the Supplement under the Trust Indenture Act of 1939, as amended, is not required, or, if such registration or qualification is required, that all applicable registration and qualification provisions of said acts have been complied with, and (ii) this Master Trust Indenture, as amended and supplemented by such Supplement, and the Obligations are valid, binding and enforceable obligations of each of the Obligated Group Members in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and other laws affecting creditors' rights generally, usual equity principles and other customary exclusions; and

(c) if Obligations are issued with respect to tax-exempt Related Bonds, the Obligated Group Representative shall have delivered to the Master Trustee an Opinion of Bond Counsel to the effect that issuance of such Obligations will not adversely affect the exclusion from gross income of interest on such Related Bonds.

SECTION 2.06. LIST OF HOLDERS OF OBLIGATIONS. The Master Trustee shall keep on file at its office the Obligation Register which shall consist of a list of the names and addresses of the Holders of all Obligations. At reasonable times and under reasonable regulations established by the Master Trustee, the Obligation Register may be inspected and copied by any Obligated Group Member, the Holder of any Obligation or the authorized representative thereof; provided that the ownership by such Holder and the authority of any such designated representative shall be evidenced to the satisfaction of the Master Trustee.

SECTION 2.08. MUTILATED, DESTROYED, LOST AND STOLEN OBLIGATIONS. If (a) any mutilated Obligation is surrendered to the Master Trustee, or the Master Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Obligation, and (b) there is delivered to the Master Trustee such security or indemnity as may be required by the Master Trustee to save it and the Obligated Group Representative harmless, then, in the absence of notice to the Obligated Group Representative or the Master Trustee that such Obligation has been acquired by a bona fide purchaser, the Obligated Group Representative shall execute and upon its request the Master Trustee shall authenticate and deliver in exchange for or in lieu of any such mutilated, destroyed, lost or

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stolen Obligation, a new Obligation of like tenor, series, interest rate and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Obligation has become or is about to become due and payable, the Obligated Group Representative in its discretion may, instead of issuing a new Obligation, pay such Obligation.

Upon the issuance of any new Obligation under this Section, the Obligated Group Representative and the Master Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Master Trustee) connected therewith.

Every new Obligation issued pursuant to this Section in lieu of any destroyed, lost or stolen Obligation shall constitute an original additional contractual obligation of the maker thereof, whether or not the destroyed, lost or stolen Obligation shall be at any time enforceable by anyone, and shall be entitled to all the benefits and security of this Master Trust Indenture equally and proportionately with any and all other Obligations duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Obligations.

ARTICLE III FUNDS AND ACCOUNTS

SECTION 3.01. ENTRANCE FEE FUND.

(a) Establishment of Entrance Fee Fund. The Master Trustee shall establish and maintain a separate fund to be known as the "Entrance Fee Fund" (the "Entrance Fee Fund"). All moneys received by the Master Trustee and held in the Entrance Fee Fund pursuant to this Section 3.01 shall be trust funds under the terms of this Master Trust Indenture for the benefit of all of the Obligations outstanding hereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of this Master Trust Indenture.

(b) Transfer of Initial Entrance Fees. The Members of the Obligated Group hereby agree that each portion of an Initial Entrance Fee received by the Members of the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof as follows:

(i) prior to the release described in subsection (d) below, each transfer shall also be accompanied by (i) a copy of the related entrance fee receipt forwarded to the Chapter 651 Escrow Agent (an "Entrance Fee Receipt"), and (ii) written directions from the Obligated Group Representative to the Master Trustee indicating the amount of such Initial Entrance Fee that is to be deposited to the Entrance Fee Fund (the "Discretionary Amount") and the amount of such Initial Entrance Fee that is to be transferred to the Chapter 651 Escrow Agent for deposit to the Entrance Fee Escrow Account (the "Escrowed Amount"), such Discretionary Amount shall be deposited and applied by the Master Trustee in accordance with subsection (c) below;

(ii) upon the release described in subsection (d) below, the Initial Entrance Fees so released and received by the Master Trustee shall be deposited and applied in accordance with subsection (d) below; and

(ii) After the release described in subsection (d) below, the Initial Entrance Fees received by the Master Trustee shall be deposited and applied in accordance with subsection (e) below.

The Master Trustee shall be entitled to conclusively rely on the determination of the Obligated Group Representative as to the allocation of the Initial Entrance Fee between the amounts to be deposited to the Entrance Fee Fund and the Entrance Fee Escrow Account and shall have no duty or obligation to review or verify any of the

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information or calculations set forth in the Entrance Fee Receipt, except to confirm receipt of the amount set forth therein.

(c) Application of Discretionary Amount. The Discretionary Amount shall be deposited to the Entrance Fee Fund and shall be applied by the Master Trustee within two Business Days of receipt, as follows:

First: To the Obligor to pay refunds required by Residency Agreements for which the Obligor has not received a corresponding replacement Entrance Fee with respect to the applicable Entrance Fee Unit. Such disbursements shall be made upon receipt by the Master Trustee and Chapter 651 Escrow Agent of an Officer's Certificate of the Obligor certifying that the Obligor is required by a Residency Agreement to pay refunds within the next 30 days, and the amount of such refunds to be funded from the Entrance Fee Fund and Entrance Fee Escrow Account.

Second: To the Working Capital Fund established pursuant to Section 3.02 hereof, until the total Discretionary Amount deposited into the Working Capital Fund equals $10,250,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund or transfer moneys from the Entrance Fee Fund once a total Discretionary Amount of $10,250,000 has been deposited.

Third: To the Operating Reserve Fund established pursuant to Section 3.04 hereof, until the total Discretionary Amount deposited into the Operating Reserve Fund equals $5,000,000.

(d) Application upon Release of Escrowed Amount. Once the Escrowed Amount, together with any other amount on deposit in the Entrance Fee Escrow Account, is released pursuant to the terms of the Entrance Fee Escrow Agreement, the Obligated Group Representative shall direct the Chapter 651 Escrow Agent to use such released moneys to fund the Minimum Liquid Reserve Accounts to their required level and then direct the Chapter 651 Escrow Agent to transfer the remaining amount to the Master Trustee for deposit to the Entrance Fee Fund (such directions to be provided in writing to the Chapter 651 Escrow Agent with a copy to the Master Trustee) and shall be applied by the Master Trustee within two Business Days of receipt, as follows:

First: To the Obligor to pay refunds required by Residency Agreements for which the Obligor has not received a corresponding replacement Entrance Fee with respect to the applicable Entrance Fee Unit. Such disbursements shall be made upon receipt by the Master Trustee of an Officer's Certificate of the Obligor certifying that the Obligor is required by a Residency Agreement to pay refunds within the next 30 days, and the amount of such refunds to be funded from the Entrance Fee Fund. Such Officer's Certificate of the Obligor shall be furnished to the Master Trustee at least one Business Day before the Master Trustee is required to apply the funds.

Second: To the Operating Reserve Fund established pursuant to Section 3.04 hereof until the initial amount on deposit in the Operating Reserve Fund equals $5,000,000.

Third: To the Liquidity Support Fund, any amount necessary (as evidenced by written direction from the Obligated Group Representative based on requisitions submitted to the Master Trustee pursuant to Section 3.3(a) of the Liquidity Support Agreement) to reimburse any amounts advanced for Project Costs (but not for operating expenses) under the Liquidity Support Agreement.

After the transfers described above have been made, thereafter the Master Trustee shall review the amount on deposit in the Entrance Fee Fund in accordance with subsection (e) below.

(e) Periodic Review. After the release described in subsection (d) above, all Initial Entrance Fees received by the Master Trustee will be deposited to the Entrance Fee Fund and on the first Business Day of each month thereafter (each, a "Review Date") the Master Trustee shall review the amount on deposit in the Entrance Fee Fund and shall apply moneys on deposit therein as follows:

First: To the Obligor to pay refunds required by Residency Agreements for which the Obligor has not received a corresponding replacement Entrance Fee with respect to the applicable Entrance Fee Unit.

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Such disbursements shall be made upon receipt by the Master Trustee of an Officer's Certificate of the Obligor certifying that the Obligor is required by a Residency Agreement to pay refunds within the next 30 days, and the amount of such refunds to be funded from the Entrance Fee Fund. Such Officer's Certificate of the Obligor shall be furnished to the Master Trustee at least one Business Day before the Master Trustee is required to apply the funds.

Second: To the Operating Reserve Fund established pursuant to Section 3.04 hereof the following:

(i) until the initial amount on deposit in the Operating Reserve Fund equals $5,000,000; and

(ii) thereafter the amount needed, if any, to replenish any funds withdrawn from the Operating Reserve Fund until the amount on deposit in the Operating Reserve Fund equals $5,000,000; provided that the aggregate amount transferred from the Entrance Fee Fund to the Operating Reserve Fund shall not exceed $10,000,000; and

(iii) if a transfer of moneys from the Liquidity Support Fund to the Operating Reserve Fund pursuant to Section 3.03 hereof has occurred, the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to $2,000,000 (without regard to the replenishment limit described in clause (ii) above).

Third: into the Entrance Fee Redemption Account established pursuant to Section 3.02 of the Series 2013 Bond Indenture.

(f) Closure of Entrance Fee Fund. After all of the Series 2013B Bonds have been redeemed or otherwise paid in full (as established by an Officer's Certificate of the Obligor delivered to the Master Trustee) and no Event of Default has occurred and is continuing, the Members of the Obligated Group need not deposit any Initial Entrance Fees into the Entrance Fee Fund. Upon the satisfaction of such conditions, any amounts on deposit in the Entrance Fee Fund shall be remitted to the Obligor and the Entrance Fee Fund shall be closed.

SECTION 3.02. WORKING CAPITAL FUND. The Master Trustee shall establish and maintain a separate fund to be known as the "Working Capital Fund" (the "Working Capital Fund"). All moneys received by the Master Trustee and held in the Working Capital Fund shall be trust funds under the terms of this Master Trust Indenture for the benefit of all of the Obligations outstanding hereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of this Master Trust Indenture.

Moneys in the Working Capital Fund shall be disbursed by the Master Trustee to or for the account of the Obligor within seven days of receipt by the Master Trustee of an Officer's Certificate of the Obligor to the effect that such moneys will be used to pay (a) costs of the Project, (b) lease up and operating expenses of the Project, including any development and marketing fees, (c) the costs of needed repairs to the Project, (d) the costs of capital improvements to the Project, (e) judgments against any Member of the Obligated Group, (f) refunds of Entrance Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (g) amounts required to restore funds on deposit in any Related Bonds Debt Service Reserve Fund if such amount is less than the applicable requirement due to a valuation deficiency on any valuation date, or (h) amounts due on any Indebtedness of any Member of the Obligated Group, but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by any Affiliate.

After all of the Series 2013B Bonds have been redeemed or otherwise paid in full (as established by an Officer's Certificate of the Obligor delivered to the Master Trustee) and no Event of Default has occurred and is continuing, any amounts on deposit in the Working Capital Fund shall be remitted to the Obligor, and the Working Capital Fund shall be closed.

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SECTION 3.03. LIQUIDITY SUPPORT FUND.

(a) The Liquidity Provider will establish a Liquidity Support Fund with the Master Trustee pursuant to the Liquidity Support Agreement. The Liquidity Support Fund shall be the property of the Liquidity Provider, but shall be pledged to fund and secure the Liquidity Provider's obligations under the Liquidity Support Agreement.

(b) The Master Trustee may withdraw moneys from the Liquidity Support Fund to the extent necessary to pay Costs of the Project (as defined in the Series 2013 Loan Agreement) in accordance with the Liquidity Support Agreement. The Obligor may withdraw moneys from the Liquidity Support Fund for other purposes in accordance with the Liquidity Support Agreement.

(c) The Master Trustee shall undertake at all times to monitor the amount in the Liquidity Support Fund. If the amount in the Liquidity Support Fund drops to or below $1,000,000 before the Operating Reserve Fund is closed pursuant to Section 3.04 hereof, then the Master Trustee shall transfer the remaining moneys in the Liquidity Support Fund to the Operating Reserve Fund.

(d) If there is an initial withdrawal from the Liquidity Support Fund, (i) within five days of the initial withdrawal, the Master Trustee shall notify each Required Information Recipient of the withdrawal, and (ii) within 30 days of the initial withdrawal, the Obligated Group Representative shall submit an Officer's Certificate to each Required Information Recipient containing a management report setting forth (A) the expected amount of working capital needed to be sufficient, along with revenues and other available moneys, to pay expenses and debt service until management expects to achieve a Historical Debt Service Coverage Ratio of 1.0:1, (B) whether management expects that the Liquidity Support Fund, together with other moneys expected to be available, will be sufficient for that purpose, (C) a revised fill-up schedule for the Project, and (D) the expected schedule for the redemption of the Series 2013B Bonds.

(e) If funds in the Liquidity Support Fund are transferred to the Operating Reserve Fund pursuant to subsection (c) above, (i) within five days of that transfer, the Master Trustee shall notify each Required Information Recipient of the transfer, and (ii) the Obligated Group Representative shall engage a Consultant to make recommendations regarding (A) an overall corrective action plan, (B) the projected amount of working capital needed to be sufficient, along with revenues and other available moneys, to pay expenses and debt service until the Obligated Group is projected to achieve a Historical Debt Service Coverage Ratio of 1.0:1, (C) a revised fill-up schedule for the Project, (D) a plan for the payment of the Series 2013B Bonds, (E) a plan to improve the profitability of the Obligated Group, and (F) a recommendation regarding additional sources of working capital. The Obligated Group Representative shall select a Consultant and notify the Master Trustee of the selection within 30 days after the transfer and shall thereafter engage the Consultant in accordance with Section 4.27 hereof.

(f) The Obligated Group shall not draw upon the Minimum Liquid Reserve Accounts until the Liquidity Support Fund, Working Capital Fund and Operating Reserve Fund are depleted.

(g) Upon reduction of the amount required to be on deposit in the Liquidity Support Fund pursuant to the provisions of the Liquidity Support Agreement, within five (5) days of such reduction, the Master Trustee shall transfer the funds released pursuant to the written direction of the Liquidity Provider.

SECTION 3.04. OPERATING RESERVE FUND. The Master Trustee shall establish and maintain a separate fund to be known as the "Operating Reserve Fund" (the "Operating Reserve Fund"). All moneys received by the Master Trustee and held in the Operating Reserve Fund shall be trust funds under the terms of this Master Trust Indenture for the benefit of all of the Obligations outstanding hereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of this Master Trust Indenture.

Moneys in the Operating Reserve Fund shall be disbursed by the Master Trustee to or for the account of the Obligor within seven days of receipt by the Master Trustee of an Officer's Certificate of the Obligor to the effect that (a) such moneys will be used to pay (i) costs of the Project, (ii) lease up and operating expenses of the Project, including any development and marketing fees, (iii) the costs of needed repairs to the Project, (iv) the costs of capital improvements to the Facilities, (v) judgments against any Obligated Group Member, (vi) refunds of Entrance

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Fees as required by Residency Agreements pursuant to which such Entrance Fees were received, (vii) amounts required to restore funds on deposit in any Related Bonds Debt Service Reserve Fund if such amount is less than the applicable requirement due to a valuation deficiency on any valuation date, or (viii) amounts due on any Indebtedness of the Obligated Group Members, but not to reimburse amounts advanced under the Liquidity Support Agreement or otherwise advanced by any Affiliate, (b) such moneys are anticipated to be expended in the calendar month following the month in which such Officer's Certificate is submitted, together with an itemized budget describing the uses for which such moneys are needed and the amount needed for each such use, (c) no moneys are on deposit in the Working Capital Fund or are otherwise available to the Obligor for such purpose, and (d) if such moneys are to be used to pay costs of the Project, the aggregate amount on deposit in the Operating Reserve Fund immediately after such draw will be at least $2,000,000.

After all of the Series 2013B Bonds have been redeemed or otherwise paid in full (as established by an Officer's Certificate of the Obligor delivered to the Master Trustee) and no Event of Default has occurred and is continuing, any amounts on deposit in the Operating Reserve Fund shall be remitted to the Obligor, and the Operating Reserve Fund shall be closed.

SECTION 3.05. REVENUE FUND. (a) If an Event of Default under Section 7.01(a) of this Master Trust Indenture shall occur and continue for a period of five days, the Master Trustee shall establish a fund to be known as the "Revenue Fund" and each Obligated Group Member shall deposit with the Master Trustee all Gross Revenues of such Obligated Group Member (except to the extent otherwise provided by or inconsistent with any instrument creating any mortgage, lien, charge, encumbrance, pledge or other security interest granted, created, assumed, incurred or existing in accordance with the provisions of Section 4.19 of this Master Trust Indenture) during each succeeding month, beginning on the first day thereof and on each day thereafter, until no default under Section 7.01(a) of this Master Trust Indenture or in the payment of any other Obligations then exists.

(b) On the fifth Business Day preceding the end of each month in which any Obligated Group Member has made payments to the Master Trustee for deposit into the Revenue Fund, the Master Trustee shall withdraw and pay or deposit from the amounts on deposit in the Revenue Fund the following amounts in the order indicated:

First: to the payment of all amounts due the Master Trustee under this Master Trust Indenture;

Second: to an operating account designated by the Obligated Group Representative (which shall be subject to the lien of this Master Trust Indenture), the amount necessary to pay the Expenses due or expected to become due in the month in which such transfer is made, all as set forth in the then-current Annual Budget;

Third: to the payment of the amounts then due and unpaid upon the Obligations, other than Obligations constituting Subordinated Indebtedness, for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Obligations for principal (and premium, if any) and interest, respectively;

Fourth: to restore any deficiency in a Related Bonds Debt Service Reserve Fund;

Fifth: to the payment of the amounts then due and unpaid upon the Obligations constituting Subordinated Indebtedness for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Obligations for principal (and premium, if any) and interest, respectively; and

Sixth: to the Obligated Group Representative.

(c) The money deposited to the Revenue Fund, together with all investments thereof and investment income therefrom, shall be held in trust and applied solely as provided in this Section and in Section 7.08 hereof.

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Pending disbursements of the amounts on deposit in the Revenue Fund, the Master Trustee shall promptly invest and reinvest such amounts in accordance with Section 3.06 hereof. All such investments shall have a maturity not greater than 91 days from date of purchase.

(d) Except as described in Section 3.05(a) above, each Obligated Group Member shall be entitled to full possession and use of its Gross Revenues other than any Entrance Fees then required to be deposited into an Entrance Fee Fund established by a Supplement.

SECTION 3.06. INVESTMENT OF FUNDS. Any moneys held by the Master Trustee hereunder, including any fund or account established pursuant to any Supplement, shall be invested or reinvested by the Master Trustee in Permitted Investments upon the receipt of an Obligated Group Representative Request (upon which the Master Trustee is entitled to rely). Any such investments shall be held by or under the control of the Master Trustee and shall mature, or be redeemable at the option of the Master Trustee at such times as it is anticipated by the Obligated Group Representative that moneys from the particular fund will be required for the purposes of this Master Trust Indenture. For the purpose of any investment or reinvestment under this Section, investments shall be deemed to mature at the earliest date on which the obligor under such investment is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligation. Any Permitted Investments may be purchased from or sold to the Master Trustee or any of its respective affiliates. Confirmations of investments are not required to be issued by the Master Trustee for each month in which a monthly statement is rendered. The Master Trustee shall keep or cause to be kept proper and detailed books of record and account containing complete and correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the moneys held under this Master Trust Indenture. The Master Trustee shall make copies of such records available to the Obligated Group Representative, upon its reasonable written request.

SECTION 3.07. ALLOCATION AND TRANSFERS OF INVESTMENT INCOME. Any investments in any fund or account shall be held by or under the control of the Master Trustee and shall be deemed at all times a part of the fund or account from which the investment was made. Any loss resulting from such investments shall be charged to such fund or account. Any interest or other gain from any fund or account from any investment or reinvestment pursuant to Section 3.06 hereof on deposit in such fund or account (other than the Revenue Fund) on each July 1, October 1, January 1 and April 1 shall be transferred to the Obligated Group Representative upon its written request.

SECTION 3.08. MASTER TRUSTEE RELIEVED FROM RESPONSIBILITY. The Master Trustee shall be fully protected in relying upon any Obligated Group Representative Request relating to investments in any fund, and shall not be liable for any losses or prepayment penalties as a result of complying with any such Obligated Group Representative Request, and shall not be required to ascertain any facts with respect to such Request. In the event that the Master Trustee is not provided direction as to investments in any fund, the Master Trustee is entitled to hold funds on deposit therein uninvested.

SECTION 3.09. PAYMENTS ON AFFILIATE SUBORDINATED INDEBTEDNESS. Except with respect to the reimbursement of costs related to the Project advanced by the Parent Corporation paid from proceeds of the Series 2013 Bonds, a Member of the Obligated Group will not make payments on Affiliate Subordinated Indebtedness (except for repayment to the Liquidity Support Fund pursuant to Section 3.01 hereof), unless the Obligated Group Representative delivers an Officer's Certificate to the Master Trustee prior to any payment on such Affiliate Subordinated Indebtedness certifying that the following conditions are satisfied:


(b) if the proposed payment on the Affiliate Subordinated Indebtedness had occurred as of the last day of the most recent Testing Date pursuant to Section 4.20 hereof, the Obligated Group would have met the Liquidity Requirement after making such payment;


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(e) there is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under this Master Trust Indenture.

SECTION 3.10. PAYMENTS ON AFFILIATE MANAGEMENT FEES AND DEFERRED AFFILIATE DEVELOPMENT FEES.

(a) For each Fiscal Year commencing with Stable Occupancy, Affiliate Management Fees, Deferred Affiliate Development Fees, plus any Deferred Affiliate Management Fees then payable, may be paid by the Obligated Group Representative if the conditions set forth in Section 3.09 hereof have been satisfied.

(b) Amounts due to an Affiliate with respect to any portion of Affiliate Management Fees not paid under Section 3.10(a) hereof because the conditions set forth in Section 3.09 hereof cannot be satisfied, shall be deferred in accordance with the provisions of this Section 3.10 and the Services Agreement (the "Deferred Affiliate Management Fees").

(c) Amounts due with respect to any Deferred Affiliate Development Fees not paid under Section

3.10(a) hereof because the conditions set forth in Section 3.09 hereof cannot be satisfied, shall continue to be deferred in accordance with the provisions of this Section 3.10.

(d) All Affiliate Management Fees and Deferred Affiliate Development Fees payable shall be subordinated to all payments due on any Obligations Outstanding and shall constitute Affiliate Subordinated Indebtedness hereunder.

ARTICLE IV COVENANTS OF THE OBLIGATED GROUP MEMBERS

SECTION 4.01. TITLE TO TRUST ESTATE. The Obligor warrants that it has good and indefeasible title to the Trust Estate free and clear of any liens, charges, encumbrances, security interests and adverse claims whatsoever except the encumbrances permitted by Section 4.19 hereof. The Obligor represents that it has the right to mortgage the Mortgaged Property and to enter into the Mortgage and will warrant and defend to Master Trustee, the title and the lien of this Master Trust Indenture and the Mortgage as a valid and enforceable mortgage thereon and lien on the Trust Estate, including the Mortgaged Property, and a security interest therein subject to Permitted Encumbrances. This Master Trust Indenture constitutes a valid and subsisting lien on and security interest in the Trust Estate, all in accordance with the terms hereof, subject to Permitted Encumbrances.

SECTION 4.02. FURTHER ASSURANCES. The Obligor, upon the request of the Master Trustee or any Related Bond Trustee, will execute, acknowledge, deliver and record and/or file such further instruments and do such further acts as may be necessary, desirable or proper to carry out more effectively the purpose of this Master Trust Indenture and to subject the Trust Estate to the liens and security interests hereof.

SECTION 4.03. RECORDING AND FILING. The Obligor shall cause the Mortgage and all other instruments necessary to create and/or preserve the liens and security interests granted hereunder and all amendments and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and refiled in such manner and in such places as are necessary to protect the lien on and security interests in the Trust Estate and will pay all such recording, filing, re-recording and refiling taxes, fees and other charges. Additionally, the Obligor hereby authorizes the Master Trustee at any time and from time to time to file any financing statements, amendments thereto and continuation statements with or without the signature of the Obligor as authorized by applicable law, as applicable to all or part of the Property for the purpose of securing the lien on and security interest in the Trust Estate created pursuant to this Master Trust Indenture and the Mortgage. Notwithstanding the preceding sentence, the Master Trustee shall not be liable for failure to effect any such filings. For purposes of such filings, the Obligor agrees to furnish any information requested by the Master Trustee promptly upon request by the Master Trustee. The Obligor hereby irrevocably constitutes and appoints the Master Trustee and any officer or agent of the Master Trustee, with full power of substitution, as its true and lawful attorneys in fact with full irrevocable power and authority in the place and stead of the Obligor or in the Obligor's own name to execute in the Obligor's name

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any documents and otherwise to carry out the purposes of this Section 4.03, to the extent that the Obligor's authorization above is not sufficient. To the extent permitted by law, the Obligor hereby ratifies all acts said attorneys in fact have lawfully done in the past or shall lawfully do or cause to be done in the future by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable. Information concerning the security interest herein granted may be obtained at the addresses of the Obligor and the Master Trustee as set forth in Section 1.05 of this Master Trust Indenture. The Obligor shall promptly notify the Master Trustee of any change in its organizational identification number or address.

SECTION 4.04. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Obligated Group Representative will duly and punctually pay the principal of (and premium, if any) and interest on the Obligations in accordance with the terms of the Obligations and this Master Trust Indenture.

Each Obligated Group Member hereby jointly and severally unconditionally agrees to the full and timely payment of the principal of, and premium, if any, and interest on all Outstanding Obligations which such Person has not created or otherwise made (and on which such Person is not otherwise primarily liable) in accordance with the terms thereof, whether at Stated Maturity, declaration of acceleration, call for redemption or otherwise. Such agreement shall not be affected, modified or impaired upon the happening from time to time of any event, other than the payment of such Obligations (or provision therefor), including, without limitation, any of the following, whether or not with notice to, or the consent of, each Obligated Group Member:

(a) the waiver, compromise, settlement, release or termination by any Person of the obligations evidenced by such Obligations or any covenant or security in support thereof;

(b) the failure to give notice to the guarantor of the occurrence of an event of default under the terms and provisions of this Master Trust Indenture or any agreement under which such Obligations are created, assumed, guaranteed or secured;

(c) any failure, omission, or delay on the part of the Master Trustee or the Holder of such Obligations to enforce, assert or exercise any right, power or remedy conferred on the Master Trustee or such Holder in this Master Trust Indenture or any other agreement under which such Obligations are created, assumed, guaranteed or secured;

(d) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or arrangement under bankruptcy or similar laws, composition with creditors or readjustment of, or other similar proceedings affecting any such guarantor or any other obligor on Obligations;

(e) the invalidity, irregularity, illegality, unenforceability, or lack of value of, or any defect in any of the Obligations so guaranteed or any collateral security therefor; or

(f) to the extent permitted by law, any event or action that would, in the absence of this Section, result in the release or discharge by operation of laws of such guarantor from the performance or observance of any obligation, covenant, or agreement contained in this Master Trust Indenture.

SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS. Each Obligated Group Member will pay or discharge or cause to be paid or discharged before the same shall become delinquent, (a) all taxes, assessments, and other governmental charges lawfully levied or assessed or imposed upon it or upon its income, profits, or property, and (b) all lawful claims for labor, materials, and supplies which, if unpaid, might by law become a lien upon its property; provided, however, that no such Person shall be required to pay and discharge or cause to be paid and discharged any such tax, assessment, governmental charge, or claim to the extent that the amount, applicability, or validity thereof shall currently be contested in good faith by appropriate proceedings, such Person shall have established and shall maintain adequate reserves on its books for the payment of the same and such property is not jeopardized as a result of nonpayment.

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SECTION 4.06. MAINTENANCE OF PROPERTIES. Each Obligated Group Member will cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment, ordinary wear and tear, casualty, condemnation, and acts of God excepted. Each Obligated Group Member will cause to be made all necessary repairs, renewals, replacements, betterments, and improvements thereof, all as in the judgment of the Obligated Group Representative may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent any such Person from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of such Person (and in the opinion of the Governing Body of such Person if the property involved is any substantial part of the properties of such Person taken in the aggregate), desirable in the conduct of its business and not disadvantageous in any material respect to the Holders of the Obligations.

SECTION 4.07. CORPORATE EXISTENCE; STATUS OF OBLIGOR. (a) Subject to Section 5.01 hereof, each Obligated Group Member will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory), and franchises; provided, however, that no Person shall be required to preserve any right or franchise if the Governing Body of such Person shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect to the Holders of the Obligations.

(b) The Obligor's exact legal name is correctly set forth at the beginning of this Master Trust Indenture, and the Obligor is an organization of the type specified in the first paragraph of this Master Trust Indenture. The Obligor is registered to conduct business under the laws of the State of Florida. The Obligor will not cause or permit any change to be made in its name or identity unless the Obligor shall have first notified the Master Trustee in writing of such change at least 30 days prior to the effective date of such change, and shall have first taken all action required by applicable law for the purpose of perfecting or protecting the lien and security interest of the Master Trustee created hereby or by the Mortgage. The place where the Obligor keeps its books and records, including recorded data of any kind or nature, regardless of the medium or recording, including software, writings, plans, specifications and schematics, has been for the preceding two months and will continue to be the address of the Obligor set forth in Section 1.05 hereof (unless the Obligor notifies the Master Trustee in writing at least 30 days prior to the date of such change).

(c) The Obligor covenants and agrees to take all action necessary to preserve its status as an organization described in Section 501(c)(3) of the Code.

SECTION 4.08. PRESERVATION OF QUALIFICATIONS. Each Obligated Group Member will not allow any permit, right, license, franchise or privilege so long as it is necessary for the ownership or operation of the Trust Estate as a continuing care retirement community to lapse or be forfeited. If an Obligated Group Member becomes a provider of services under and a participant in the Medicare program or any successor program thereto or any program by a federal, state or local government providing for payment or reimbursement for services rendered for health care, such Obligated Group Member shall use its commercially reasonable efforts to remain fully qualified as a provider of services and a participant in such program; provided, however, that no Obligated Group Member shall be required to maintain any such qualification if (a) the Governing Board of such Person shall determine that the maintenance of such qualification is not in the best economic interest of such Person, and (b) at least 30 days prior to the discontinuance of such qualification, such Person shall notify the Initial Purchaser of such proposed discontinuance and shall provide the Initial Purchaser with a written explanation of the basis for such determination.

SECTION 4.09. ADDITIONS TO FACILITIES. Any additions, improvements and extensions to the Facilities and repairs, renewals and replacements thereof, including (without limitation) any capital improvements, shall upon their acquisition become part of the Facilities.

SECTION 4.10. INSURANCE. Each Member shall maintain, or cause to be maintained at its sole cost and expense, insurance with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks (including but not limited to public liability and employee dishonesty) and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as is adequate to protect its Property and operations. Except in the case of self-insurance described below, all insurance provided shall be maintained with an insurer rated "A-" or higher by A.M. Best & Company or by S&P.

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The Master Trustee shall be named as an additional insured under all such policies (to the extent such option is commercially available). The Obligated Group Representative shall annually review the insurance each Member maintains as to whether such insurance is customary and adequate. In addition, the Obligated Group Representative shall, commencing with the opening of the Facilities and thereafter, at least once every two Fiscal Years with respect to commercial insurance and at least once every Fiscal Year with respect to self-insurance, cause a certificate of an Insurance Consultant or Insurance Consultants to be delivered to the Master Trustee within 120 days of the applicable Fiscal Year which indicates that the insurance then being maintained by the Members meets the standards described above. The Obligated Group Representative shall cause copies of its review, or the certificates of the Insurance Consultant or Insurance Consultants, as the case may be, to be delivered promptly to the Master Trustee. The Obligated Group or any Member may self-insure if the Insurance Consultant or Insurance Consultants determine(s) that such self-insurance meets the standards set forth in the first sentence of this paragraph and is prudent under the circumstances.

Naming of the Master Trustee as an insured or additional insured under any insurance policy, or the furnishing to the Master Trustee of information relating thereto, shall not impose upon the Master Trustee any responsibility or duty to approve the form of such policy, the level of coverage, the qualifications of the company issuing same or any other matters relating thereto.

SECTION 4.11. RATES AND CHARGES. (a) Each Member covenants and agrees to operate all of its Facilities on a revenue producing basis and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it hereunder to the extent permitted by law. Each Member further covenants and agrees that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of this Section.

The Members covenant and agree that the Obligated Group Representative will calculate the Historical Debt Service Coverage Ratio of the Obligated Group for each Fiscal Year, commencing with the Initial Testing Period and will deliver a copy of such calculation to the Persons to whom such report is required to be delivered under Section 4.15 hereof.

(b) If, for the Initial Testing Period, the Historical Debt Service Coverage Ratio of the Obligated Group is less than 1.10:1, the Obligated Group Representative, at the Obligated Group's expense, shall select a Consultant and notify the Master Trustee of the selection within 30 days following the calculation described herein, and shall engage a Consultant in accordance with Section 4.27 hereof to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group's methods of operation and other factors affecting its financial condition in order to generate an Historical Debt Service Coverage Ratio of at least 1.20:1 for the following Fiscal Year.

(c) If the Historical Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Initial Testing Period, and for any Fiscal Year thereafter is less than 1.20:1, the Obligated Group Representative, at the Obligated Group's expense, shall select a Consultant and notify the Master Trustee of the selection within 30 days following the calculation described herein, and shall engage a Consultant in accordance with Section 4.27 hereof to make recommendations with respect to the rates, fees and charges of the Members and the Obligated Group's methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

(d) Within 60 days of the actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant's report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law. This Section shall not be construed to prohibit any Member from serving indigent residents to the extent required for such Member to continue its qualification as a Tax-Exempt Organization or from serving any other class or classes of residents without charge or at reduced rates so long as such service does not prevent the Obligated Group from satisfying the other requirements of this Section.

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(e) The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required above, the Master Trustee shall not be obligated to require the Obligated Group to select a Consultant to make such recommendations if: (i) there is filed with the Master Trustee (who shall provide a copy to each Required Information Recipient) a written report addressed to them of a Consultant which contains an opinion of such Consultant that applicable laws or regulations have prevented the Obligated Group from generating Income Available for Debt Service during such Fiscal Year sufficient to meet the requirements of this Section, and such report is accompanied by a concurring opinion of Independent Counsel as to any conclusions of law supporting the opinion of such Consultant; (ii) the report of such Consultant indicates that the rates charged by the Obligated Group are such that, in the opinion of the Consultant, the Obligated Group has generated the maximum amount of Revenues reasonably practicable given such laws or regulations; and (iii) the Historical Debt Service Coverage Ratio of the Obligated Group for such Fiscal Year was at least 1.00:1. The Obligated Group shall not be required to cause the Consultant's report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group provides to the Master Trustee (who shall provide a copy to each Related Bond Trustee) an opinion of Independent Counsel to the effect that the applicable laws and regulations underlying the Consultant's report delivered in respect of the previous Fiscal Year have not changed in any material way.

(f) If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of 1.20:1 for a Fiscal Year (or, in the case of the Initial Testing Period, a Historical Debt Service Coverage Ratio of 1.10:1), such failure shall not constitute an Event of Default under this Master Trust Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

Commencing with the Initial Testing Period, if the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year, such failure shall constitute an Event of Default under this Master Trust Indenture.

(g) Notwithstanding any other provisions of this Master Trust Indenture, in the event that any Member of the Obligated Group incurs any Additional Indebtedness for any acquisition, construction, renovation or replacement project, the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses relating to the project or projects financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated Group for the purposes of complying with this Section 4.11 until the first full Fiscal Year following the later of (i) the estimated completion of the acquisition, construction, renovation or replacement project being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such project set forth in the Consultant's report described in paragraph (iii)(A) below, or (ii) the first full Fiscal Year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of senior living facilities or nursing facilities financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected in the report of the Consultant referred to in (iii)(A) below to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, or (iii) the end of the fifth full Fiscal Year after the incurrence of such Additional Indebtedness, if the following conditions are met:

(A) there is delivered to the Master Trustee a report or opinion of a Consultant to the effect that the Projected Debt Service Coverage Ratio for the first full Fiscal Year following the later of (1) the estimated completion of the acquisition, construction, renovation or replacement being paid for with the proceeds of such Additional Indebtedness, or (2) the first full Fiscal Year following the year in which Stable Occupancy is achieved in the case of construction, renovation or replacement of senior living facilities or nursing facilities being financed with the proceeds of such Additional Indebtedness, which Stable Occupancy shall be projected to occur no later than during the fifth (or sixth, in the case of Phase II Indebtedness) full Fiscal Year following the incurrence of such Additional Indebtedness, will be not less than 1.20:1 (or 1.25:1, in the case of Phase II Indebtedness) after giving effect to the incurrence of such Additional Indebtedness and the application of the proceeds thereof; provided, however, that in the event that a Consultant shall deliver a report to the Master Trustee to the effect that state or federal laws or regulations or administrative interpretations of such laws or regulations then in existence do not permit or by their application make it impracticable for Members to produce the required ratio, then such ratio shall

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be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less than 1.00:1; provided further, however, that in the event a Consultant's report is not required to incur such Additional Indebtedness, the Obligated Group may deliver an Officer's Certificate to the Master Trustee in lieu of the Consultant's report described in this subparagraph (A); and

(B) there is delivered to the Master Trustee an Officer's Certificate on the date on which financial statements are required to be delivered to the Master Trustee pursuant to Section 4.15 hereof until the first Fiscal Year in which the exclusion from the calculation of the Historical Debt Service Coverage Ratio no longer applies, calculating the Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year, and demonstrating that such Historical Debt Service Coverage Ratio is not less than 1.00:1, such Historical Debt Service Coverage Ratio to be computed without taking into account (1) the Additional Indebtedness to be incurred if (x) the interest on such Additional Indebtedness during such period is funded from proceeds thereof or other funds of the Member then on hand and available therefore, and (y) no principal of such Additional Indebtedness is payable during such period, and (2) the Revenues to be derived from the project to be financed from the proceeds of such Additional Indebtedness.

SECTION 4.12. DAMAGE OR DESTRUCTION. Each Member agrees to notify the Master Trustee in writing immediately in the case of the destruction of its Facilities or any portion thereof as a result of fire or other casualty, or any damage to such Facilities or portion thereof as a result of fire or other casualty, the Net Proceeds of which are estimated to exceed the Threshold Amount. If such Net Proceeds do not exceed the Threshold Amount, such Net Proceeds may be paid directly to the Member suffering such casualty or loss. The Members covenant that they will expend or contract to expend an amount not less than the amount of any such Net Proceeds within 24 months after receipt thereof to (a) repair, replace or restore the damaged or destroyed Facilities, (b) acquire or construct additional capital assets for any one or more Members, or (c) repay the principal portion of any Indebtedness incurred by any one or more Members of the Obligated Group to acquire or construct capital assets or refinance Indebtedness incurred for such purpose.

In the event such Net Proceeds exceed the Threshold Amount, the Member suffering such casualty or loss shall within 12 months after the date on which the Net Proceeds are finally determined, elect by written notice to the Master Trustee one of the following three options:

(a) Option A - Repair and Restoration. Such Member may elect to replace, repair, reconstruct, restore or improve any of the Facilities of the Obligated Group or acquire additional Facilities for the Obligated Group or repay Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event an amount equal to the Net Proceeds of any insurance relating thereto shall be deposited, when received, with the Master Trustee and such Member shall proceed forthwith to replace, repair, reconstruct, restore or improve Facilities of the Obligated Group or to acquire additional Facilities and will apply the Net Proceeds of any insurance relating to such damage or destruction received from the Master Trustee to the payment or reimbursement of the costs of such replacement, repair, reconstruction, restoration, improvement or acquisition or to the repayment of such Indebtedness. So long as an Event of Default has not occurred and is continuing hereunder, any Net Proceeds of insurance relating to such damage or destruction received by the Master Trustee shall be released from time to time by the Master Trustee to such Member upon the receipt by the Master Trustee of:

(i) financial projections, which may be prepared by management, demonstrating that the Obligated Group will have sufficient funds, including the proceeds of business interruption insurance, to pay all Debt Service Requirements, and pay necessary operating expenses until completion of the replacement, repair, reconstruction, restoration, or improvement;

(ii) the Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such replacement, repair, reconstruction, restoration, improvement or acquisition and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such replacement, repair, reconstruction, restoration, improvement or acquisition; and

(iii) if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Request by an independent architect.

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It is further understood and agreed that in the event such Member shall elect this Option A, such Member shall complete the replacement, repair, reconstruction, restoration, improvement and acquisition of the Facilities, whether or not the Net Proceeds of insurance received for such purposes are sufficient to pay for the same.

(b) Option B - Prepayment of Obligations. Such Member may elect to have all of the Net Proceeds payable as a result of such damage or destruction applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of Obligations on a pro rata basis among all Obligations Outstanding.

(c) Option C - Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds applied to the replacement, repair, reconstruction, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds with the remainder of such Net Proceeds to be applied to prepay Obligations on a pro rata basis among all Obligations Outstanding, in which event such Net Proceeds to be used for replacement, repair, reconstruction, restoration, improvement and acquisition shall be applied as set forth in subparagraph (a) of this Section 4.12 and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (b) of this Section.

Notwithstanding the foregoing, the proceeds of business interruption insurance are not subject to the provisions of this Section.

SECTION 4.13. CONDEMNATION. The Master Trustee shall cooperate fully with the Members in the handling and conduct of any prospective or pending condemnation proceedings with respect to their Facilities or any part thereof. Each Member hereby irrevocably assigns to the Master Trustee, as its interests may appear, all right, title and interest of such Member in and to any Net Proceeds of any award, compensation or damages payable in connection with any such condemnation or taking, or payment received in a sale transaction consummated under threat of condemnation (any such award, compensation, damages or payment being hereinafter referred to as an "award"), which exceeds the Threshold Amount. Such Net Proceeds shall be initially paid to the Master Trustee for disbursement or use as hereinafter provided. If such Net Proceeds do not exceed the Threshold Amount, such Net Proceeds may be paid to the Member in question. The Members covenant that they will expend or contract to expend an amount not less than the amount of any such Net Proceeds within 24 months of the receipt thereof to (i) restore, replace or repair the condemned Facilities, (ii) acquire or construct additional capital assets, or (iii) repay the principal portion of Indebtedness incurred by one or more Members of the Obligated Group to acquire or construct capital assets or to refinance Indebtedness incurred for such purpose.

In the event such Net Proceeds exceed the Threshold Amount, the Member in question shall within 12 months after the date on which the Net Proceeds are finally determined elect by written notice of such election to the Master Trustee one of the following three options:

(a) Option A - Repairs and Improvements. The Member may elect to use the Net Proceeds of the award for restoration or replacement of or repairs and improvements to the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event, so long as an Event of Default has not occurred and is continuing hereunder, such Member shall have the right to receive such Net Proceeds from the Master Trustee from time to time upon the receipt by the Master Trustee of:

(i) financial projections, which may be prepared by management, demonstrating that the Obligated Group will have sufficient funds, including the proceeds of business interruption insurance, to pay all Debt Service Requirements, and pay necessary operating expenses until completion of the replacement, repair, reconstruction, restoration, or improvement;

(ii) the Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such restoration, replacement, repairs, improvements and acquisitions and stating that such Net Proceeds, together with any other moneys legally available for such

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purposes, will be sufficient to complete such restoration, replacement, repairs, improvements and acquisition; and

(iii) if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Request by an independent architect.

(b) Option B - Prepayment of Obligations. Such Member may elect to have such Net Proceeds of the award applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of Obligations on a pro rata basis among all Obligations Outstanding.

(c) Option C - Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds of the award applied to the repair, replacement, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds, with the remainder of such Net Proceeds to be applied to the prepayment of Obligations on a pro rata basis among all Obligations Outstanding, in which event such Net Proceeds to be used for repair, replacement, restoration, improvement and acquisition shall be applied as set forth in subparagraph (a) of this Section 4.13 and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (b) of this Section.

SECTION 4.14. OTHER PROVISIONS WITH RESPECT TO NET PROCEEDS. Amounts received by the Master Trustee in respect of any awards shall, at the Request of the Obligated Group Representative, be deposited with the Master Trustee in a special trust account and be invested or reinvested by the Master Trustee as directed in writing by the Obligated Group Representative in Permitted Investments subject to any Member's right to receive the same pursuant to Sections 4.12 and 4.13 hereof. If any Member elects to proceed under either Section 4.12(a) or (c) hereof or 4.13(a) or (c) hereof, any amounts in respect of such Net Proceeds not so paid to such Member shall be used to prepay Obligations on a pro rata basis among all Obligations Outstanding.

SECTION 4.15. FINANCIAL STATEMENTS, ETC. (a) The Members covenant that they will keep or cause to be kept proper books of records and accounts in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Obligated Group in accordance with generally accepted accounting principles consistently applied except as may be disclosed in the notes to the audited financial statements referred to in subparagraph (b) below. To the extent that generally accepted accounting principles would require consolidation of certain financial information of entities which are not Members of the Obligated Group with financial information of one or more Members, consolidated financial statements prepared in accordance with generally accepted accounting principles which include information with respect to entities which are not Members of the Obligated Group may be delivered in satisfaction of the requirements of this Section 4.15 so long as: (i) supplemental information in sufficient detail to separately identify the information with respect to the Members of the Obligated Group is delivered to the Required Information Recipients with the audited financial statements; (ii) such supplemental information has been subjected to the auditing procedures applied as a whole in the audit of the consolidated financial statements delivered to the Required Information Recipients and, in the opinion of the Accountant, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole; and (iii) such supplemental information is used for the purposes hereof or for any agreement, document or certificate executed and delivered in connection or pursuant to this Master Trust Indenture.

(b) The Obligated Group Representative will furnish or cause to be furnished to each Required Information Recipient (and the Master Trustee shall have no duty or obligation to review or examine the contents thereof), all of the following:

(i) A monthly statement of the Obligated Group as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including (A) prior to the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) a summary statement as to the status of construction including the report of any construction

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monitor; (3) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (4) statements of the balances for each fund and account required to be established hereunder or the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative, and (B) after the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), (1) a calculation of the marketing levels for the Project as of the end of such month, including the number of Entrance Fee Units that have been sold or cancelled during that month and on an aggregate basis; (2) occupancy levels of the Project as of the end of such month including the number of Entrance Fee Units that were Occupied and vacated during that month and on an aggregate basis; (3) a summary statement on the status of construction until the issuance of the last certificate of occupancy for the Project; (4) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last certificate of occupancy for the Project; (5) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month compared to the approved budget for that month and an unaudited balance sheet of the Obligated Group as of the end of such month; and (6) statements of the balances for each fund and account required to be established hereunder or under the Liquidity Support Agreement or under any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), all in reasonable detail and certified by an officer of the Obligated Group Representative. The Obligated Group Representative does not need to deliver any monthly statement of the Obligated Group described in this subsection (i) after Stable Occupancy.

(ii) Beginning with the first full fiscal quarter following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas) quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, and a calculation of the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, and Historical Debt Service Coverage Ratio, for such fiscal quarter if required to be calculated by Sections 4.11, 4.20, 4.21, 4.22 and 4.23 hereof, all prepared in reasonable detail and certified, subject to year end adjustment, by an officer of the Obligated Group Representative. Such financial statements and calculations shall be accompanied by a comparison to the annual budget provided pursuant to subsection (iv) below, together with a report describing the refund liabilities coming due resulting from residents vacating Independent Living Units and move through levels of care, refunds coming due for Independent Living Units not yet reoccupied, refunds now due after units are reoccupied and the age of the refunds now due.

If the Historical Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year is less than 1.00:1 and the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, of the Obligated Group is less than the Liquidity Requirement for any Testing Date as provided herein, the Obligated Group will deliver the financial information and the calculations described in the above paragraph on a monthly basis within 45 days of the end of each month until the Historical Debt Service Coverage Ratio of the Obligated Group is at least 1.00:1 and the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, of the Obligated Group is at least equal to the applicable Liquidity Requirement.

(iii) Within 150 days of the end of each Fiscal Year, an annual audited financial report of the Obligated Group prepared by Accountants, including a combined and an unaudited combining balance sheet as of the end of such Fiscal Year, a combined and an unaudited combining statement of cash flows for such Fiscal Year, and a combined and an unaudited combining statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the Accountants preparing such report (or another firm of certified public accountants) containing calculations of the Obligated Group's Historical Debt Service Coverage Ratio for said Fiscal Year (beginning with the Fiscal Year following the issuance of a certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas)) and a statement that such Accountants have no knowledge of any default under this Master Trust Indenture insofar as it

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relates to accounting matters or to the Obligated Group's financial covenants, or if such Accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof.

(iv) On or before the date of delivery of the financial reports referred to in subsection (b)(iii) above, an Officer's Certificate of the Obligated Group Representative (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of this Master Trust Indenture, any Related Loan Agreement, and any Related Bond Indenture or, if not, specifying all such defaults and the nature thereof, (B) calculating and certifying the marketing, occupancy, Cumulative Cash Operating Loss, Cash to Indebtedness Ratio or Days Cash on Hand, and the Historical Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by Sections 4.11, 4.20, 4.21, 4.22 and 4.23 hereof, as of the end of such month or Fiscal Year, as appropriate, (C) attaching a summary of the Obligated Group's annual operating and capital budget for the coming Fiscal Year, (D) showing a comparison of the audited financial reports with the operating budget for the preceding Fiscal Year, and (E) including an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year, if any.

(v) On or before the date of delivery of the financial reports referred to in subsections (b)(ii) and (iii) above, a management's discussion and analysis of results for the applicable fiscal period.

(vi) Copies of (A) any board approved revisions to the summary of the annual budget provided pursuant to subsection (b)(iv) above, or (B) any correspondence to or from the Internal Revenue Service concerning the status of any Member of the Obligated Group as an organization described in Section 501(c)(3) of the Code or with respect to the tax-exempt status of any Related Bonds, promptly upon receipt.

(vii) Within 30 days of (A) receipt of any Occupancy Certificate for any portion of the Project, (B) completing the Project, or (C) achieving Stable Occupancy, the Obligated Group Representative will provide notice of such event to the Master Trustee.

(viii) Such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of this Master Trust Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such Accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee.

(c) The Members also agree that, within 10 days after its receipt thereof, the Obligated Group Representative will file with the Required Information Recipients a copy of each Consultant's final report or counsel's opinion required to be prepared under the terms of this Master Trust Indenture.

(d) The Obligated Group Representative shall give prompt written notice of a change of Accountants by the Obligated Group to the Master Trustee and each Related Bond Trustee. The notice shall state (i) the effective date of such change; (ii) whether there were any unresolved disagreements with the former Accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which the Accountants claimed would have caused them to refer to the disagreement in a report on the disputed matter, if it was not resolved to their satisfaction; and (iii) such additional information relating thereto as such Related Bond Trustee or the Master Trustee may reasonably request.

(e) Without limiting the foregoing, each Member will permit, upon reasonable notice, the Master Trustee or any such Related Bond Trustee (or such persons as they may designate) to visit and inspect, at the expense of such Person, its Property and to discuss the affairs, finances and accounts of the Obligated Group with its officers and independent accountants, all at such reasonable times and locations and as often as the Master Trustee or such Related Bond Trustee may reasonably desire.

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(f) The Obligated Group Representative may designate a different Fiscal Year for the Members of the Obligated Group by delivering a notice to the Master Trustee designating the first and last day of such new Fiscal Year and whether or not there will be any interim fiscal period (the "Interim Period") of a duration of greater than or less than 12 months preceding such new Fiscal Year. The Members covenant that they will furnish to the Master Trustee and each Related Bond Trustee, as soon as practicable after they are available, but in no event more than 150 days after the last day of such Interim Period, a financial report for such Interim Period certified by Accountants selected by the Obligated Group Representative covering the operations of the Obligated Group for such Interim Period and containing a combined balance sheet as of the end of such Interim Period and a combined statement of changes in fund balances and changes in financial position for such Interim Period and a combined statement of revenues and expenses for such Interim Period, showing in each case in comparative form the financial figures for the comparable period in the preceding Fiscal Year, together with a separate written statement of the Accountants preparing such report containing a calculation of the Obligated Group's Historical Debt Service Coverage Ratio for the Interim Period and a statement that such Accountants have obtained no knowledge of any default by any Member in the fulfillment of any of the terms, covenants, provisions or conditions of this Master Trust Indenture, or if such Accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such Accountants shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default).

(g) Delivery of such reports, information and documents described in this Section 4.15 to the Master Trustee is for informational purposes only, and the Master Trustee's receipt thereof shall not constitute notice to it of any information contained therein or determinable from information contained therein, including compliance by the Obligated Group or the Members with any of its or their covenants hereunder, as to which the Master Trustee is entitled to rely exclusively on Officer's Certificates.

SECTION 4.16. PERMITTED ADDITIONAL INDEBTEDNESS. So long as any Obligations are outstanding, the Obligated Group will not incur any Additional Indebtedness (whether or not incurred through the issuance of Additional Obligations) other than:

(a) Funded Indebtedness, if prior to incurrence thereof or, if such Funded Indebtedness was incurred in accordance with another subsection of this Section 4.16 and any Member wishes to have such Indebtedness classified as having been issued under this subsection (a), prior to such classification, there is delivered to the Master Trustee:

(i) an Officer's Certificate to the effect that for the most recent Fiscal Year for which audited financial statements have been filed with the Master Trustee as required by this Master Trust Indenture, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group was not less than 1.20:1; or

(ii) (A) an Officer's Certificate to the effect that for the most recent Fiscal Year or four consecutive quarters for which audited financial statements have been filed with the Master Trustee as required by this Master Trust Indenture, the Historical Debt Service Coverage Ratio of the Obligated Group was not less than 1.20:1; and (B) a written report of a Consultant (prepared in accordance with industry standards) to the effect that the estimated Projected Debt Service Coverage Ratio of the Obligated Group will be not less 1.25:1 for the first full Fiscal Year following the later of (1) the estimated completion of the development, marketing, acquisition, construction, renovation or replacement facilities being paid for with the proceeds of such additional Funded Indebtedness, or (2) the first full Fiscal Year following the attainment of Stable Occupancy in the case of construction, renovation or replacement of senior living facilities being financed with the proceeds of such additional Funded Indebtedness, provided that the attainment of Stable Occupancy is projected to occur no later than during the sixth full Fiscal Year following the incurrence of such Funded Indebtedness, or (3) following the incurrence of Funded Indebtedness for other purposes; provided that such report shall include forecast balance sheets, statements of revenues and expenses and statements of changes in financial position for such Fiscal Year and a statement of the relevant assumptions upon which such forecasted statements are based, which financial statements must indicate that sufficient revenues and cash flow could be generated to pay the operating expenses of the Obligated Group's proposed and existing Facilities and the debt service on the Obligated Group's other existing Indebtedness during such Fiscal Year.

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(b) Completion Funded Indebtedness in an amount of no more than 10% of the Funded Indebtedness originally incurred to finance the construction of the Facilities, if there is delivered to the Master Trustee: (i) an Officer's Certificate of the Member for whose benefit such Indebtedness is being issued stating that at the time the original Funded Indebtedness for the Facilities to be completed was incurred, such Member had reason to believe that the proceeds of such Funded Indebtedness together with other moneys then expected to be available would provide sufficient moneys for the completion of such Facilities, (ii) a statement of an independent architect or an expert setting forth the amount estimated to be needed to complete the Facilities, and (iii) an Officer's Certificate of such Member stating that the proceeds of such Completion Funded Indebtedness to be applied to the completion of the Facilities, together with a reasonable estimate of investment income to be earned on such proceeds and available to pay such costs, the amount of moneys, if any, committed to such completion from available cash or marketable securities and reasonably estimated earnings thereon, enumerated loans from Affiliates or bank loans (including letters or lines of credit) and federal or state grants reasonably expected to be available, will be in an amount not less than the amount set forth in the statement of an independent architect or other expert, as the case may be, referred to in (ii) above.

(c) Funded Indebtedness for the purpose of refunding (whether in advance or otherwise, including without limitation refunding through the issuance of Crossover Refunding Indebtedness) any outstanding Funded Indebtedness if prior to the incurrence thereof an Officer's Certificate of a Member is delivered to the Master Trustee stating that, taking into account the issuance of the proposed Funded Indebtedness and the application of the proceeds thereof and any other funds available to be applied to such refunding, the Maximum Annual Debt Service Requirement of the Obligated Group will not be increased by more than 10%, provided that if only a portion of any outstanding Funded Indebtedness is being refunded, such Officer's Certificate shall state that under such assumptions the Maximum Annual Debt Service Requirement of the Obligated Group will not be increased.

(d) Short Term Indebtedness (other than accounts payable under subsection (h) hereof), in a total principal amount which at the time incurred does not, together with the principal amount of all other such Short Term Indebtedness of the Obligated Group then outstanding under this subsection (d) but excluding the principal payable on all Funded Indebtedness during the next succeeding 12 months and also excluding such principal to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increments to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal, exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available; provided, however, that for a period of 20 consecutive calendar days in each Fiscal Year the total amount of such Short Term Indebtedness of the Obligated Group outstanding under this subsection (d) shall be not more than 5% of the Revenues of the Obligated Group during the preceding Fiscal Year plus such additional amount as the Obligated Group Representative certifies in an Officer's Certificate is (i) attributable to Short Term Indebtedness incurred to offset a temporary delay in the receipt of funds due from third party payors, and (ii) in the minimum amount reasonably practicable taking into account such delay. For the purposes of this subsection, Short Term Indebtedness shall not include overdrafts to banks to the extent there are immediately available funds of the Obligated Group sufficient to pay such overdrafts and such overdrafts are incurred and corrected in the normal course of business.

(e) Balloon Indebtedness if:

(i) (A) there is in effect at the time such Balloon Indebtedness is incurred a binding commitment (including without limitation letters or lines of credit or insurance) which may be subject only to commercially reasonable contingencies by a financial institution or bond insurer or surety generally regarded as responsible, to provide financing sufficient to pay the principal amount of such Balloon Indebtedness coming due in each consecutive 12 month period in which 25% or more of the original principal amount of such Balloon Indebtedness comes due; and (B) the conditions set forth in subsection (a) above are met for any Fiscal Year in which 25% or more of the original principal amount of such Balloon Indebtedness comes due when it is assumed that (1) the portion of Balloon Indebtedness coming due in such Fiscal Year matures over 30 years from the date of issuance of the Balloon Indebtedness, bears interest on the unpaid balance at the Projected Rate and is payable on a level annual debt service basis over a period of no more than 30 years, or (2) the portion of Balloon Indebtedness coming due in such Fiscal Year matures according to its actual principal amortization schedule, bears interest on the unpaid balance at

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the Projected Rate, but this clause (2) shall only be used if the amortization of all Indebtedness of the Obligated Group outstanding, when the Balloon Indebtedness debt service being calculated is calculated according to this subsection (e), varies no more 10% per year; or

(ii) the aggregate principal amount of all Balloon Indebtedness issued pursuant to this subsection (e) does not exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available, and the total amount of all Indebtedness outstanding which was issued pursuant to the provisions of this subsection (e)(ii), and subsections (d), (f)(iii), (l) and (n) shall not exceed 15% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available; or

(iii) the Balloon Indebtedness to be incurred has a remaining term of five years or greater beginning in such Fiscal Year, and

(A) the Member incurring such Balloon Indebtedness establishes in an Officer's Certificate filed with the Master Trustee an amortization schedule for such Balloon Indebtedness, which amortization schedule shall provide for payments of principal and interest for each Fiscal Year that are not less than the amounts required to make any actual payments required to be made in such Fiscal Year by the terms of such Balloon Indebtedness;

(B) such Member agrees in such Officer's Certificate to deposit each Fiscal Year with a bank or trust company (pursuant to an agreement between such Member and such bank or trust company) the amount of principal shown on such amortization schedule net of any amount of principal actually paid on such Balloon Indebtedness during such Fiscal Year (other than from amounts on deposit with such bank or trust company) which deposit shall be made prior to any such required actual payment during such Fiscal Year if the amounts so on deposit are intended to be the source of such actual payments; and

(C) the conditions described in subsection (a) above are met with respect to such Balloon Indebtedness when it is assumed that such Balloon Indebtedness is actually payable in accordance with such amortization schedule.

(f) Put Indebtedness if:

(i) the amount of such Put Indebtedness does not exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported upon by independent certified public accountants are available and the conditions set forth in subsection (a) above are met with respect to such Put Indebtedness when it is assumed that (A) such Put Indebtedness bears interest at the Projected Rate and is payable on a level annual debt service basis over a period of no more than 30 years commencing with the next succeeding Put Date, or (B) such Put Indebtedness bears interest at the Projected Rate and is payable according to its actual principal amortization schedule, but this subsection (i) shall only be used if the debt service of all Indebtedness of the Obligated Group outstanding, when the Put Indebtedness debt service being calculated is calculated according to this subsection (i), varies no more than 10% per year;

(ii) (A) there is in effect at any time such Put Indebtedness is incurred a binding commitment (including without limitation letters or lines of credit or insurance) which may be subject only to commercially reasonable contingencies by a financial institution or bond insurer or surety generally regarded as responsible, to provide financing sufficient to pay the principal amount of such Put Indebtedness on any Put Date, and (B) the conditions set forth in subsection (a) are met for any Fiscal Year in which 25% or more of the original principal amount of such Put Indebtedness may come due when it is assumed that (1) the portion of Put Indebtedness which may come due in such Fiscal Year matures over 30 years from the date of issuance of the Put Indebtedness, bears interest on the unpaid balance at the Projected Rate and is payable on a level annual debt service basis over a period of no more than 30 years, or (2) the portion of Put Indebtedness which may come due in such Fiscal Year matures according to its

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actual principal amortization schedule, bears interest on the unpaid balance at the Projected Rate, but this subsection (ii) shall only be used if the amortization of all Indebtedness of the Obligated Group outstanding, when the Balloon Indebtedness debt service being calculated is calculated according to this subsection (ii), varies more than 10% per year; or

(iii) the aggregate principal amount of all Put Indebtedness issued pursuant to this subsection (f) does not exceed 10% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available, and the total amount of all Indebtedness outstanding which was issued pursuant to the provisions of this subsection (f)(iii), and subsections (d), (e)(ii), (l) and (n) shall not exceed 15% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available.

(g) Liabilities for contributions to self-insurance or shared or pooled risk insurance programs required or permitted to be maintained under this Master Trust Indenture.

(h) Indebtedness consisting of accounts payable incurred in the ordinary course of business or other Indebtedness not incurred or assumed primarily to assure the repayment of money borrowed or credit extended which Indebtedness is incurred in the ordinary course of business, including but not limited to deferred obligations for the refund or repayment of Entrance Fees.

(i) Indebtedness incurred in connection with a sale or pledge of accounts receivable with or without recourse by any Member consisting of an obligation to repurchase all or a portion of such accounts receivable upon certain conditions, provided that the principal amount of such Indebtedness permitted hereby shall not exceed the aggregate sale price of such accounts receivable received by such Member, with Holder Consent.

(j) Non-Recourse Indebtedness, without limit.

(k) Extendable Indebtedness if the conditions set forth in subsection (a) above are met when it is assumed that (i) such Indebtedness bears interest at the Projected Rate and is amortized on a level debt service basis over a term equal to the remaining term of the Extendable Indebtedness, or (ii) such Extendable Indebtedness bears interest at the Projected Rate and is payable according to its actual principal amortization schedule, but only if the debt service of all Indebtedness of the Obligated Group outstanding, when the Extendable Indebtedness debt service being calculated is calculated according to this subsection (ii), varies no more than 10% per year.

(l) Subordinated Indebtedness, without limit.

(m) Commitment Indebtedness, without limit.

(n) Indebtedness the principal amount of which at the time incurred, together with the aggregate principal amount of all other Indebtedness then outstanding which was issued pursuant to the provisions of this subsection (n) and which has not been subsequently reclassified as having been issued under another subsection of this Section 4.16, does not exceed 10% of the Revenues of the Obligated Group for the latest preceding Fiscal Year for which financial statements reported upon by independent certified public accountants are available; provided, however, that the total amount of all Indebtedness outstanding which was issued pursuant to the provisions of subsections (d), (e)(ii), (f)(iii), (l) and this subsection (n) shall not exceed 15% of the Revenues of the Obligated Group for the most recent Fiscal Year for which financial statements reported on by independent certified public accountants are available.

(o) Phase II Indebtedness, if prior to incurrence thereof or, if such Phase II Indebtedness was incurred in accordance with another subsection of this Section 4.16 and any Member wishes to have such Indebtedness classified as having been issued under this subsection (o), prior to such classification, there is delivered to the Master Trustee (i) a written report of a Consultant (prepared in accordance with industry standards) to the effect that the estimated Projected Debt Service Coverage Ratio of the Obligated Group will be not less 1.25:1 for the first full Fiscal Year following the later of (A) the estimated completion of Phase II, or (B) the first full Fiscal Year following

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achievement of Stable Occupancy of Phase II, provided that the achievement of stable Occupancy is projected to occur no later than during the sixth full Fiscal Year following the incurrence of such Phase II Indebtedness; provided that such report shall include forecast balance sheets, statements of revenues and expenses and statements of changes in financial position for such Fiscal Years and a statement of the relevant assumptions upon which such forecasted statements are based, which financial statements must indicate that sufficient revenues and cash flow could be generated to pay the operating expenses of the Obligated Group's proposed and existing facilities and the debt service on the Obligated Group's other existing Indebtedness during such Fiscal Year, (ii) an Officer's Certificate of the Obligated Group Representative dated the date of the incurrence of the Phase II Indebtedness to the effect that (A) the Obligated Group is then in compliance with all covenants in the Master Trust Indenture and no Event of Default or event that with the passage of time could become an Event of Default then exists with respect to the Master Trust Indenture, (B) the Obligor has executed and delivered a guaranteed maximum price construction contract, stipulated sum construction contract or such other construction contract that establishes the complete construction cost with respect to Phase II, (C) the amount of Phase II units Reserved is not less than the amount required for issuance of a certificate of authority under Chapter 651, Florida Statutes, as amended from time to time, (D) a construction monitor having the skill and experience necessary to perform its duties with respect to the monitoring of the construction process and having a favorable reputation for such skill and experience has been engaged with respect to Phase II, (E) all permits required to be obtained for the commencement of construction of Phase II have been obtained or receipt of any such permit is perfunctory and will be received prior to such commencement; and (F) the facilities constituting Phase II will be constructed on the Mortgaged Property, and (iii) either (A) the Series 2013B Bonds are fully redeemed prior to issuance of the Phase II Indebtedness, or (B) receipt of the prior written consent from a majority of the Series 2013B Bondholders.

It is agreed and understood by the parties hereto that various types of Indebtedness may be incurred under any of the above referenced subsections with respect to which the tests set forth in such subsection are met and need not be incurred under only a subsection specifically referring to such type of Indebtedness (e.g., Balloon Indebtedness and Put Indebtedness may be incurred under subsection (a) above if the tests therein are satisfied).

Each Member covenants that Indebtedness of the type permitted to be incurred under subsection (h) above will not be allowed to become overdue for a period in excess of that which is in the ordinary course of business, based on applicable industry standards and taking into consideration the size and type of the facility, without being contested in good faith and by appropriate proceedings.

Each Member covenants that prior to, or as soon as reasonably practicable after, the incurrence of Indebtedness by such Member for money borrowed or credit extended, or the equivalent thereof, after the date of issuance of the Series 2013 Notes, it will deliver to the Master Trustee an Officer's Certificate which identifies the Indebtedness incurred, identifies the subsection of this Section 4.16 pursuant to which such Indebtedness was incurred, demonstrates compliance with the provisions of such subsection and attaches a copy of the instrument evidencing such Indebtedness; provided, however, that this requirement shall not apply to Indebtedness incurred pursuant to subsection (g) or (h) of this Section 4.16.

Each Member agrees that, prior to incurring Additional Indebtedness for money borrowed from or credit extended by entities other than issuers of Related Bonds, sellers of real or personal property for purchase money debt, lessors of such property or banks or other institutional lenders, it will provide the Master Trustee with an opinion of Independent Counsel to the effect that, to such Counsel's knowledge, such Member has complied in all material respects with all applicable state and federal laws regarding the sale of securities in connection with the incurrence of such Additional Indebtedness (including the issuance of any securities or other evidences of indebtedness in connection therewith) and such Counsel has no reason to believe that a right of rescission under such laws exists on the part of the entities to which such Additional Indebtedness is to be incurred.

The provisions of this Master Trust Indenture notwithstanding, the Members of the Obligated Group may not incur any Additional Indebtedness the proceeds of which will be used for the acquisition of real Property or the construction of any Facilities unless the right, title and interest in any assets to be financed or refinanced with the proceeds of such Additional Indebtedness and the real estate upon which such assets will be located have been mortgaged and assigned to the Master Trustee pursuant to the Mortgage or pursuant to a mortgage in substantially the form of the Mortgage and such assets and real estate are not subject to any other Lien except for Permitted Encumbrances.

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SECTION 4.17. CALCULATION OF DEBT SERVICE AND DEBT SERVICE COVERAGE. The various calculations of the amount of Indebtedness of a Person, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness required under certain provisions of this Master Trust Indenture shall be made in a manner consistent with that adopted in Section 4.16 hereof and in this Section 4.17. In the case of Balloon or Put Indebtedness issued pursuant to subsection (b), (e), (f) or (m) of Section 4.16 hereof, unless such Indebtedness is reclassified pursuant to this Section 4.17 as having been issued pursuant to another subsection of Section 4.16 hereof, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness for future periods shall be calculated on the assumption that such Indebtedness is being issued simultaneously with such calculation. With respect to Put Indebtedness, if the option of the holder to require that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date, or if the requirement that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date (other than at the option of such holder and other than pursuant to any mandatory sinking fund or any similar fund), has expired or lapsed as of the date of calculation, such Put Indebtedness shall be deemed payable in accordance with its terms.

In determining the amount of debt service payable on Indebtedness in the course of the various calculations required under certain provisions of this Master Trust Indenture, if the terms of the Indebtedness being considered are such that interest thereon for any future period of time is expressed to be calculated at a varying rate per annum, a formula rate or a fixed rate per annum based on a varying index, then for the purpose of making such determination of debt service, interest on such Indebtedness for such period (the "Determination Period") shall be computed by assuming that the rate of interest applicable to the Determination Period is equal to the average of the rate of interest (calculated in the manner in which the rate of interest for the Determination Period is expressed to be calculated) which was in effect on the last date of each of the 12 full calendar months immediately preceding the month in which such calculation is made; provided that if the index or other basis for calculating such interest was not in existence for at least 12 full calendar months next preceding the date of calculation, the rate of interest for such period shall be deemed to be the average rate of interest that was in effect on the last day of each full calendar month next preceding the date of calculation; and if the average rate of interest borne by such Indebtedness for such shorter period cannot be calculated, the rate of interest for such period shall be deemed to be the Projected Rate. No debt service shall be deemed payable upon the exercise by a holder of Extendable Indebtedness of the option to tender such Indebtedness for payment.

Obligations issued to secure Indebtedness permitted to be incurred under Section 4.16 hereof shall not be treated separately as Additional Indebtedness from the Indebtedness secured thereby in a manner which would require such Indebtedness to be included more than one time in the calculations performed under this Master Trust Indenture.

No debt service shall be deemed payable with respect to Commitment Indebtedness until such time as funding occurs under the commitment which gave rise to such Commitment Indebtedness. From and after such funding, the amount of such debt service shall be calculated in accordance with the actual amount required to be repaid on such Commitment Indebtedness and the actual interest rate and amortization schedule applicable thereto. No Additional Indebtedness shall be deemed to arise when any funding occurs under any such commitment or any such commitment is renewed upon terms which provide for substantially the same terms of repayment of amounts disbursed pursuant to such commitment as obtained prior to such renewal. In addition, no Additional Indebtedness shall be deemed to arise when Indebtedness which bears interest at a variable rate of interest is converted to Indebtedness which bears interest at a fixed rate or the method of computing the variable rate on such Indebtedness is changed or the terms upon which Indebtedness, if Put Indebtedness, may be or is required to be tendered for purchase are changed, if such conversion or change is in accordance with the provisions applicable to such variable rate Indebtedness or Put Indebtedness in effect immediately prior to such conversion or change.

Balloon Indebtedness incurred as provided under subsection (b) or (n) of Section 4.16 hereof, unless reclassified pursuant to this Section 4.17, shall be deemed to be payable in accordance with the assumptions set forth in subsection (e)(i)(B) of Section 4.16 hereof. Put Indebtedness incurred as provided under subsection (b) or (n) of Section 4.16 hereof, unless reclassified pursuant to this Section 4.17, shall be deemed to be payable in accordance with the assumptions set forth in subsection (f)(i) of Section 4.16 hereof.

For the purpose of determining whether any particular Guaranty may be incurred, it shall be assumed that 100% of the Indebtedness guaranteed is Funded Indebtedness of the guarantor under such Guaranty. For the purpose

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of calculating any historical Debt Service Requirements, the guarantor's Debt Service Requirements under a Guaranty shall be deemed to be the actual amount paid on such Guaranty by the guarantor. For any other purpose, a guarantor shall be considered liable only for 20% of the annual debt service requirement on the Indebtedness guaranteed; provided, however, if the guarantor has been required by reason of its guaranty to make a payment in respect of such Indebtedness within the immediately preceding 24 months, the guarantor shall be considered liable for 100% of the annual debt service requirement on the Indebtedness guaranteed.

For purposes of the various calculations required under this Master Trust Indenture for Capitalized Leases, the Capitalized Rentals under a Capitalized Lease at the time of such calculation shall be deemed to be the principal payable thereon.

In the case of Indebtedness related to any Subsidy Bonds, debt service payable shall be computed net of Federal Subsidy Payments scheduled to be received by the issuer of such Subsidy Bonds or the Obligor in connection with such Subsidy Bonds during the applicable time period.

Each Member may elect to have Indebtedness issued pursuant to one provision of Section 4.16 hereof, including without limitation subsection (n) of Section 4.16 hereof, reclassified as having been incurred under another provision of Section 4.16 hereof, by demonstrating compliance with such other provision on the assumption that such Indebtedness is being reissued on the date of delivery of the materials required to be delivered under such other provision including the certification of any applicable Projected Rate. From and after such demonstration, such Indebtedness shall be deemed to have been incurred under the provision with respect to which such compliance has been demonstrated until any subsequent reclassification of such Indebtedness.

Anything herein to the contrary notwithstanding, any portion of any Indebtedness of any Member for which an Interest Rate Agreement has been obtained by such Member shall be deemed to bear interest for the period of time that such Interest Rate Agreement is in effect at a net rate which takes into account the interest payments made by such Member on such Indebtedness and the payments made or received by such Member on such Interest Rate Agreement; provided that the long term credit rating of the provider of such Interest Rate Agreement (or any guarantor thereof) is in one of the three highest rating categories of any Rating Agency (without regard to any refinements of gradation of rating category by numerical modifier or otherwise) or is at least as high as that of the Obligated Group. In addition, so long as any Indebtedness is deemed to bear interest at a rate taking into account an Interest Rate Agreement, any payments made by a Member on such Interest Rate Agreement shall be excluded from Expenses and any payments received by a Member on such Interest Rate Agreement shall be excluded from Revenues, in each case, for all purposes of this Master Trust Indenture.

SECTION 4.18. SALE OR LEASE OF PROPERTY. Each Member agrees that it will not sell, lease, donate, transfer or otherwise dispose (including without limitation any involuntary disposition) of Property (either real or personal property, including Cash and Investments) unless the Obligated Group Representative determines that the Property has been sold, leased, donated, transferred or otherwise disposed of in one or more of the following transfers or other dispositions of Property:

(a) in return for other Property of equal or greater value and usefulness (if such value is estimated to be greater than $25,000 it shall be evidenced by an independent appraisal of such Property obtained in the manner provided for under the definition of "Current Value" herein);

(b) in the ordinary course of business upon fair and reasonable terms;

(c) to any Person, if prior to such sale, lease or other disposition there is delivered to the Master Trustee an Officer's Certificate of a Member stating that, in the judgment of the signer, such Property has, or within the next succeeding 24 calendar months is reasonably expected to, become inadequate, obsolete, worn out, unsuitable, unprofitable, undesirable or unnecessary and the sale, lease or other disposition thereof will not impair the structural soundness, efficiency or economic value of the remaining Property;

(d) from a Member to another Member; provided that no portion of any Facilities financed with proceeds of any Related Bonds shall be transferred by the Obligor to any other Member unless the Related Bond

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Trustee has received an Opinion of Bond Counsel to the effect that such transfer will not adversely affect (i) the validity of such Related Bonds, or (ii) with respect to any Related Bonds the interest on which is tax-exempt, the exclusion of interest on such Related Bonds from the gross income of the owners thereof for federal income tax purposes;

(e) upon fair and reasonable terms no less favorable to the Member than would be obtained in a comparable arm's length transaction;

(f) the Property sold, leased, donated, transferred or otherwise disposed of does not, for any consecutive 12 month period, exceed 3% of the total Book Value or, at the option of the Obligated Group Representative, the Current Value of all Property of the Obligated Group and (i) the Historical Debt Service Coverage Ratio was not less than 1.30:1 for the last Fiscal Year for which audited financial statements have been delivered to the Master Trustee; provided that if such transfer is of cash or investments, then in calculating the Historical Debt Service Coverage Ratio for purposes of such transfer, the Income Available for Debt Service will be reduced by one year's estimated interest earnings attributable the moneys to be used for such transfer using, at the option of the Obligated Group Representative, either (A) the current budgeted investment rate identified in the Annual Budget, or (B) the actual average investment rate on the transferred funds, each as certified in an Officer's Certificate, and (ii) as of the end of the last fiscal quarter for which financial statements have been delivered to the Master Trustee as required under Section 4.15 hereof, the Obligated Group had not less than 180 Days Cash on Hand after giving effect to the transaction. If the Historical Debt Service Coverage Ratio as calculated above is not less than 1.30:1, the foregoing percentage of the total Book Value or Current Value may be increased as follows under the following conditions:

(A) to 5%, if Days Cash on Hand would not be less than 200 after the effect of such sale, lease or disposition of assets; or

(B) to 7.5%, if Days Cash on Hand would not be less than 300 after the effect of such sale, lease or disposition of assets; or

(C) to 10%, if Days Cash on Hand would not be less than 400 after the effect of such sale, lease or disposition of assets;

(g) to any Person if such Property consists solely of assets which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use for payment on the Obligations.

(h) payments permitted in accordance with Section 3.09 and Section 3.10 hereof.

No transfer of any of the Obligated Group Members' cash will be made prior to Stable Occupancy. For avoidance of doubt, it is understood that this Section 4.18 does not prohibit any transfer of cash by a Member in payment of any of its obligations, indebtedness and liabilities, the incurrence of which obligation, indebtedness or liability did not or would not, either immediately or with the giving of notice, the passage of time or both, result in the occurrence of an Event of Default.

For purposes of this Section 4.18, payments by the Obligated Group of any development, marketing, operating, or other subordinated fees that have been deferred from the year in which they were originally due as a result of subordination will not be treated as a disposition of Property.

In connection with any sale, lease or other disposition of Property, to the extent the Member of the Obligated Group receives Property in return for such sale, lease or disposition, the Property which is sold, leased or disposed of shall be treated, for purposes of the provisions of this Section 4.18, as having been transferred in satisfaction of the provisions of subsection (a) above to the extent of the fair market value of the Property received by the Member of the Obligated Group. The Member shall be required, however, to satisfy the conditions contained in one of the other provisions of this Section 4.18 with respect to the remaining value of such Property in excess of the fair market value of the Property received by the Member in return therefor prior to any such sale, lease or other disposition.

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Each Member further agrees that it will not sell, lease, donate or otherwise dispose of Property (A) which could reasonably be expected at the time of such sale, lease, donation or disposition to result in a reduction of the Historical Debt Service Coverage Ratio for the Obligated Group such that the Obligated Group would be required to retain a Consultant pursuant to Section 4.11 hereof, or (B) if a Consultant has been retained in the circumstances described in Section 4.11 hereof, such action, in the opinion of such Consultant, will have an adverse effect on the Income Available for Debt Service of the Obligated Group. The rendering of any service, the making of any loan or gift, the extension of any credit or any other transaction, with any Affiliate shall be permitted if there is compliance with any of subsections (a) through (g) above or if such transaction is pursuant to the reasonable requirements of such Member's activities and upon fair and reasonable terms no less favorable to it than would obtain in a comparable arm's length transaction with a person not an Affiliate.

Upon Request of the Obligated Group Representative accompanied by an Officer's Certificate and an Opinion of Counsel to the effect that the conditions precedent for the disposition of such property set forth in this Section 4.18 (other than the condition precedent set forth in Section 4.18(d) above) have been satisfied, the rights, title, liens, security interests and assignments herein granted shall cease, determine and be void as to such property only and the lien of this Master Trust Indenture shall be released by the Master Trustee as to such property in due form at the expense of the Obligated Group Members;

SECTION 4.19. LIENS ON PROPERTY. (a) Each Member covenants that it will not create or permit to be created or remain and, at its cost and expense, promptly discharge or terminate all Liens on its Property or any part thereof which are not Permitted Encumbrances.

(b) Subsection (a) notwithstanding, a Lien on Property of any Member securing Indebtedness shall be classified a Permitted Encumbrance (as provided in clause (b) of the definition thereof) and therefore be permitted if:

(i) such Lien secures Non-Recourse Indebtedness; or

(ii) (A) after giving effect to such Lien and all other Liens classified as Permitted Encumbrances under this subsection (ii)(A), the Book Value or, at the option of the Obligated Group Representative, the Current Value of the Property of the Obligated Group which is Encumbered is not more than 2% of the value of all of the Property of the Obligated Group (calculated on the same basis as the value of the Encumbered Property), and (B) the conditions described in Section 4.16(a) are met for allowing the incurrence of one dollar of additional Funded Indebtedness.

SECTION 4.20. LIQUIDITY COVENANT. The Obligated Group covenants that it will calculate the Days Cash on Hand and/or the Cash to Indebtedness Ratio of the Obligated Group as of December 31 and June 30 of each Fiscal Year (each such date being a "Testing Date"), commencing with June 30 in the Initial Testing Period. The Obligated Group shall deliver an Officer's Certificate setting forth such calculation as of December 31 to the Master Trustee not less than 45 days after such December 31, and include such calculation as of June 30 in the Officer's Certificate delivered pursuant to Section 4.15 hereof.

Each Obligated Group Member is required to conduct its business so that on each Testing Date the Obligated Group shall have: (a) a Cash to Indebtedness Ratio of (i) no less than 0.25:1 on each of the first two Testing Dates, (ii) no less than 0.275:1 for the next two following Testing Dates, and (iii) no less than 0.30:1 on each Testing Date thereafter; and (b) 180 Days Cash on Hand on each Testing Date (collectively, the "Liquidity Requirement"). At the option of the Obligated Group Representative, the Liquidity Requirement can be changed to eliminate the Cash to Indebtedness Ratio if for three consecutive Fiscal Years the Obligated Group has reported (a) a Historical Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30:1 or more on each Testing Date. The Obligated Group Representative may elect to change the Liquidity Requirement as of a specified date (the "Liquidity Requirement Conversion Date") in an Officer's Certificate, demonstrating compliance with the test in the preceding sentence. After the Liquidity Requirement Conversion Date, the Liquidity Requirement will be a covenant to maintain no less than 180 Days Cash on Hand on each December 31 and June 30.

If the Cash to Indebtedness Ratio and/or the amount of the Days Cash on Hand, as applicable, as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Representative shall, within 30 days after

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delivery of the Officer's Certificate disclosing such deficiency, deliver an Officer's Certificate to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to raise the level of the Cash to Indebtedness Ratio and/or Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods.

If the Obligated Group has not raised the level of the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, to the Liquidity Requirement by the next Testing Date immediately subsequent to delivery of the Officer's Certificate required in the preceding paragraph, the Obligated Group Representative shall, within 30 days after delivery of the Officer's Certificate disclosing such deficiency, select a Consultant in accordance with Section 4.27 hereof to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group's methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio and/or the Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. A copy of the Consultant's report and recommendations, if any, shall be filed with each Member and each Required Information Recipient within 60 days of the actual engagement of any such Consultant. Each Member of the Obligated Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.

Notwithstanding any other provision of this Master Trust Indenture, failure of the Obligated Group to achieve the required Liquidity Requirement for any Testing Date shall not constitute an Event of Default under this Master Trust Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for adopting a plan and follows each recommendation contained in such plan or Consultant's report to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law; provided, that failure to maintain at least 30 Days Cash on Hand for two consecutive Testing Dates shall constitute an Event of Default under this Master Trust Indenture.

SECTION 4.21. MARKETING COVENANT. Commencing with the fiscal quarter ending December 31, 2013, and ending with the first full fiscal quarter following the fiscal quarter in which the Stabilization Date occurs, the Obligated Group will use its best efforts to maintain the percentage of Entrance Fee Units which are Reserved (the "Percentage of Reserved Entrance Fee Units") at or above the applicable levels set forth in the tables below, which determinations shall be measured as of the last day of the applicable quarter (the "Marketing Requirements"). The Marketing Requirements for the applicable quarter shall be either (i) the Level I Marketing Requirements as long as the Adjusted Level I Occupancy Requirements set forth in Section 4.22 hereof have not been satisfied, or (ii) the Adjusted Level I Marketing Requirements if the Adjusted Level I Occupancy Requirements set forth in Section 4.22 hereof have been satisfied.

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Percentage of Reserved Entrance Fee Units

(%) Quarter Ending Level I


Percentage of Reserved Entrance Fee Units

(%) Occupancy Quarter Adjusted Level I

1 70.8% 2 72.1 3 73.5 4 74.8 5 76.8

If the Percentage of Reserved Entrance Fee Units for any fiscal quarter is less than the applicable Marketing Requirement set forth above for that fiscal quarter the Obligated Group Representative shall submit to the Master Trustee, within 30 days of the end of such fiscal quarter, a marketing report (a "Management Marketing Report") which includes the following information: (a) the Percentage of Reserved Entrance Fee Units, including the number of reservations and cancellations of Entrance Fee Units during the immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared by management of the Obligated Group Representative, of the number of reservations of Entrance Fee Units expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Management Marketing Report is being prepared; and (c) a description of the sales and marketing plan of the Obligated Group Representative.

If the Obligated Group fails to meet the Marketing Requirement for any two consecutive fiscal quarters, the Obligated Group Representative shall select a Consultant in accordance with Section 4.27 hereof within 30 days thereafter to prepare a report which addresses the information identified in the Management Marketing Report described above and to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Entrance Fee Units to at least the Marketing Requirements set forth herein for future periods. Within 60 days of the actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant's report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant's report for failing to meet a Marketing Requirement if such failure

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occurs within three (3) fiscal quarters of the failure that triggered the delivery of a prior Consultant's report addressing the information identified in the Management Marketing Report described above.

Notwithstanding any other provision of this Master Trust Indenture, failure of the Obligated Group to achieve the Marketing Requirements for any fiscal quarter shall not constitute an Event of Default under this Master Trust Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Management Marketing Report or obtaining a Consultant's report and adopting a plan and follows each recommendation contained in such Management Marketing Report or Consultant's report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

SECTION 4.22. OCCUPANCY COVENANT. The Obligated Group covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of the first certificate of occupancy for the first building containing Entrance Fee Units (excluding the Villas), and (b) ending with the first full fiscal quarter following the fiscal quarter in which the Stabilization Date occurs (each an "Occupancy Quarter"), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Entrance Fee Units (the "Percentage of Units Occupied") at or above the Level I Occupancy Requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the "Occupancy Requirements"):


Adjusted Level I Occupancy Requirements (%)

1 15.8% 29.8%

2 29.1 50.3

3 39.7 64.9

4 49.0 70.2

5 57.6 76.2

6 64.2

7 69.5

8 74.8

9 78.1

10 80.1

11 82.1

12 84.4

13 86.0

14 87.4

15 88.7


If the Percentage of Units Occupied for any Occupancy Quarter is less than the Level I Occupancy Requirement set forth above for that Occupancy Quarter, the Obligated Group Representative shall within 30 days thereafter submit an Officer's Certificate to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above for future periods (a "Corrective Occupancy Action Plan").

If the Percentage of Units Occupied for any two consecutive fiscal quarters is less than the Level I Occupancy Requirement set forth above for those fiscal quarters, the Obligated Group Representative shall select a Consultant in accordance with Section 4.27 hereof within 30 days thereafter to prepare a report which addresses the information identified in the Corrective Occupancy Action Plan described above and to make recommendations

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regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above for future periods. Within 60 days of the actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant's report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member shall follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant's report for failing to meet an Occupancy Requirement if such failure occurs within three (3) fiscal quarters of the failure that triggered the delivery of a prior Consultant's report addressing the information identified in the Corrective Occupancy Action Plan described above.

Notwithstanding any other provision of this Master Trust Indenture, failure of the Obligated Group to achieve the Occupancy Requirement for any Occupancy Quarter shall not constitute an Event of Default under this Master Trust Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Corrective Occupancy Action Plan and for obtaining a Consultant's report and adopting a plan and follows each recommendation contained in such Corrective Occupancy Action Plan or Consultant's report to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.

SECTION 4.23. CUMULATIVE CASH OPERATING LOSS COVENANT. The Obligated Group covenants that during the period (a) commencing with (i) the first fiscal quarter ending after the Initial Occupancy Date if such date is more than 30 days prior to the end of such fiscal quarter, or (ii) the first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, and (b) ending with the fiscal quarter immediately preceding the Initial Testing Period (Cumulative Cash Operating Loss is not required to be calculated for the Initial Testing Period of the rate covenant set forth in Section 4.11 hereof), it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter. Each Member is required to conduct its business so that as of the end of each such testing quarter the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount set forth below:

Quarter Cumulative

Cash Operating Loss

1 ($4,000,000) 2 (6,000,000) 3 (7,000,000) 4 (7,500,000) 5 (9,000,000) 6 (10,000,000) 7 (11,000,000) 8 and thereafter (12,250,000)

If, as of any testing date, the Cumulative Cash Operating Loss of the Obligated Group is greater than the amounts required above, the Obligated Group Representative shall, within 30 days after receipt of the Officer's Certificate disclosing such deficiency, deliver an Officer's Certificate to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to achieve compliance for future periods.

If, as of any two consecutive testing dates, the Cumulative Cash Operating Loss is greater than the levels set forth above required, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, select a Consultant in accordance with Section 4.27 hereof to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group's methods of operation and other factors affecting its financial condition in order to decrease Cumulative Cash Operating Loss to the required level for future periods. Within 60 days of the actual engagement of any such Consultant, the Obligated Group Representative shall cause a copy of the Consultant's report and recommendations, if any, to be filed with each Member and each Required Information Recipient. Each Member of the Obligated

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Group shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant's report for exceeding the permitted Cumulative Cash Operating Loss if such failure occurs within three (3) fiscal quarters of the failure that triggered the delivery of a prior Consultant's report addressing the information described above.

Notwithstanding any other provision of this Master Trust Indenture, failure of the Obligated Group to achieve the required Cumulative Cash Operating Loss level will not constitute an Event of Default under this Master Trust Indenture if the Obligated Group takes all action necessary to comply with the required procedures for preparing a report and adopting a plan and follows each recommendation contained in such report to the extent feasible (as determined by the Governing Body of such Member) and permitted by law.

SECTION 4.24. USE OF MONEYS IN FUNDS. The Obligor covenants that it will use amounts on deposit in the Working Capital Fund and the Operating Reserve Fund to pay debt service on any Indebtedness of the Obligor prior to any amounts on deposit in any debt service reserve fund relating to such Indebtedness being used for such purpose.

SECTION 4.25. ACTUARIAL STUDY. During the Fiscal Year following the first full Fiscal Year of operations and at least once every three Fiscal Years thereafter, the Obligated Group Representative, at the Obligated Group's expense, shall provide the actuarial study described below to each Member and each Required Information Recipient. The actuarial study shall be prepared by a Consultant and include (a) the amount, if any, of the Obligated Group's obligations to provide services under the Residency Agreements anticipated to be in excess of those that could be satisfied using the rates, fees and charges for the Project then in effect, and (b) recommendations, if any, with respect to the rates, fees and charges of the Members and the Obligated Group's methods of operation and other factors affecting its financial condition in order to enable the Obligated Group to satisfy such obligations. Each Member shall follow each recommendation of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.

SECTION 4.26. RATING APPLICATION. The Obligated Group Representative covenants that, not later than 150 days after receipt by the Obligated Group Representative of the audited financial report of the Obligated Group for the first full Fiscal Year following the achievement of Stable Occupancy and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains an investment grade credit rating from any Rating Agency. Notwithstanding the foregoing, (a) the requirement to annually approach a Rating Agency shall be suspended for such time as the Obligated Group maintains an investment grade credit rating; and (b) the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group Representative reasonably believes that the Obligated Group will not meet the criteria of any Rating Agency for an investment grade credit rating based on the then-existing published rating criteria of the Rating Agencies.

SECTION 4.27. APPROVAL OF CONSULTANTS. (a) If at any time the Members of the Obligated Group are required to engage a Consultant under Sections 4.11, 4.20, 4.21, 4.23 and 4.25 hereof, such Consultant shall be engaged in the manner set forth in this Section 4.27.

(b) Upon selecting a Consultant as required under the provisions of this Master Trust Indenture, the Obligated Group Representative will notify the Master Trustee of such selection. The Master Trustee shall, as soon as practicable but in no case longer than five Business Days after receipt of notice, notify the Holders of all Obligations Outstanding under this Master Trust Indenture of such selection. Such notice (which shall be provided by the Obligated Group Representative) shall (i) include the name of the Consultant and a brief description of the Consultant, (ii) state the reason that the Consultant is being engaged including a description of the covenant(s) of this Master Trust Indenture that require the Consultant to be engaged, and (iii) state that the Holder of the Obligation will be deemed to have consented to the selection of the Consultant named in such notice unless such Holder submits an objection to the selected Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If 66.6% or more in aggregate principal amount of the Holders of the Outstanding Obligations have been deemed to have consented to the selection of the Consultant or have not responded to the request for consent,

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the Obligated Group Representative shall engage the Consultant within three Business Days. If 33.4% or more in aggregate principal amount of the Holders of the Obligations Outstanding have objected to the Consultant selected, the Obligated Group Representative shall select another Consultant which may be engaged upon compliance with the procedures of this Section 4.27.

(c) When the Master Trustee notifies the Holders of Obligations of such selection, the Master Trustee will also request any Related Bond Trustee to send a notice containing the information required by subparagraph (b) above to the owners of all of the Related Bonds outstanding. Such Related Bond Trustee shall, as the owner of an Obligation securing such Related Bonds, consent or object to the selection of the Consultant in accordance with the response of the owners of such Related Bonds. If 66.6% or more in aggregate principal amount of the owners of the Related Bonds have been deemed to have consented to the selection of the Consultant or have not responded to the request for consent, the Obligated Group Representative shall engage the Consultant within three Business Days. If 33.4% or more in aggregate principal amount of the owners of the Related Bonds outstanding have objected to the Consultant selected, the Obligated Group Representative shall select another Consultant which may be engaged upon compliance with the procedures of this Section 4.27.

The 15-day notice period described in (b) above may be extended by the Master Trustee in order to permit each Related Bond Trustee to give the owners of the Related Bonds 15 days to respond to the notice given by the Related Bond Trustee. By acceptance of an Obligation securing any Related Bonds, the Related Bond Trustee agrees to comply with the provisions of this Section 4.27.

SECTION 4.28. MANAGEMENT. The Obligor covenants to provide for management of the Facilities through competent and qualified persons having experience in the management of a continuing care retirement community and related healthcare facilities similar to the Facilities. Any contract with a manager shall provide that such contract may be terminated by the Obligor at any time. While any Obligations with respect to tax-exempt Related Bonds are Outstanding, the Obligor shall not enter into any management contract or contract for services at the Facilities unless the contract complies with Internal Revenue Service Rev. Proc. 97-13 (1997-1 C.B. 632), as modified by Rev. Proc. 2001-39, as may be modified further from time to time.

ARTICLE V CONSOLIDATION, MERGER, CONVEYANCE AND TRANSFER

SECTION 5.01. MERGER, CONSOLIDATION, SALE OR CONVEYANCE. (a) Each Member agrees that it will not merge into, or consolidate with, one or more corporations which are not Members, or allow one or more of such corporations to merge into it, or sell or convey all or substantially all of its Property to any Person who is not a Member, unless:

(i) Any successor corporation to such Member (including without limitation any purchaser of all or substantially all the Property of such Member) is a corporation organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument containing the agreement of such successor corporation to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on all Outstanding Obligations according to their tenor and the due and punctual performance and observance of all the covenants and conditions of this Master Trust Indenture to be kept and performed by such Member;

(ii) Immediately after such merger or consolidation, or such sale or conveyance, no Member would be in default in the performance or observance of any covenant or condition of any documents delivered in connection with any Indebtedness including, without limitation, Related Bond Indentures, Related Loan Agreements and Credit Facilities, or this Master Trust Indenture;

(iii) Assuming that any Indebtedness of any successor or acquiring corporation is Indebtedness of such Member and that the Revenues and Expenses of the Member for such most recent Fiscal Year include the Revenues and Expenses of such other corporation, (A) immediately after such merger or consolidation, sale or conveyance, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available would be not less than 1.20:1 or that such

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Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group is greater than the Historical Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year prior to such merger or consolidation, sale or conveyance, and (B) immediately after such merger or consolidation, sale or conveyance, the Obligated Group would be in compliance with the Liquidity Requirement of Section 4.20 hereof of this Master Trust Indenture for the most recent quarter after adjustment for the change or that such calculation of Days Cash on Hand of the Obligated Group is greater than such calculation would be immediately prior to such merger or consolidation, sale or conveyance; and

(iv) If all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or fully provided for, there shall be delivered to the Master Trustee an Opinion of Bond Counsel to the effect that under the existing law the consummation of such merger, consolidation, sale or conveyance would not, in and of itself, adversely affect the validity of such Related Bonds or the exemption otherwise available from federal or state income taxation of interest payable on such Related Bonds.

(b) In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named herein as such Member. Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the conditions described in Section 6.01 hereof to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member's corporate status. Any successor corporation to such Member thereupon may cause to be signed and may issue in its own name Obligations hereunder and the predecessor corporation shall be released from its obligations hereunder and under any Outstanding Obligations, if such predecessor corporation shall have conveyed all Property owned by it (or all such Property shall be deemed conveyed by operation of law) to such successor corporation. All Obligations so issued by such successor corporation hereunder shall in all respects have the same legal rank and benefit under this Master Trust Indenture as Obligations theretofore or thereafter issued in accordance with the terms of this Master Trust Indenture as though all of such Obligations had been issued hereunder by such prior Member without any such consolidation, merger, sale or conveyance having occurred.

(c) In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in Obligations thereafter to be issued as may be appropriate.

(d) The Master Trustee may rely upon an opinion of Independent Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Master Trust Indenture summarized under this Section 5.01 and that it is proper for the Master Trustee under the provisions of this Master Trust Indenture to join in the execution of any instrument required to be executed and delivered by the Master Trustee.

ARTICLE VI MEMBERSHIP IN THE OBLIGATED GROUP

SECTION 6.01. ADMISSION OF OBLIGATED GROUP MEMBERS. Any other Person may become a Member of the Obligated Group if:

(a) Such Person is a business entity;

(b) Such Person shall execute and deliver to the Master Trustee a Supplement in a form acceptable to the Master Trustee which shall be executed by the Master Trustee and the Obligated Group Representative, containing the agreement of such Person (i) to become a Member of the Obligated Group and thereby to become subject to compliance with all provisions of this Master Trust Indenture, and (ii) unconditionally and irrevocably (subject to the right of such Person to cease its status as a Member of the Obligated Group pursuant to the terms and conditions of Section 6.03 hereof) to jointly and severally make payments upon each Obligation;

(c) The Obligated Group Representative and each Member shall have approved the admission of such Person to the Obligated Group; and

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(d) The Master Trustee shall have received (i) an Officer's Certificate of the Obligated Group Representative which (A) demonstrates that (1) immediately upon such Person becoming a Member of the Obligated Group, the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available, after adjustment for the addition of the new Member, would be not less than 1.20:1, or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group with such Person is greater than the Historical Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year without such Person becoming a Member of the Obligated Group, and (2) immediately upon such Person becoming a Member of the Obligated Group, the Obligated Group would be in compliance with the Liquidity Requirement of Section 4.20 hereof based on the most recent quarterly financial statements delivered to the Master Trustee pursuant to Section 4.15 hereof or that such calculation of Days Cash on Hand of the Obligated Group is greater than such calculation would be without such Person becoming a Member of the Obligated Group; (B) states that prior to and immediately after such Person becoming a Member of the Obligated Group, no event of default exists hereunder and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an event of default; and (C) prior to and immediately after such Person becoming a Member of the Obligated Group, the Members would not be in default in the performance or observance of any covenant or condition to be performed or observed hereunder; (ii) an opinion of Independent Counsel in form and substance acceptable to the Master Trustee to the effect that (x) the instrument described in Section 6.01(b) above has been duly authorized, executed and delivered and constitutes a legal, valid and binding agreement of such Person, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors' rights and application of general principles of equity, and (y) the addition of such Person to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status; (iii) evidence from each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the admission of such Person to the Obligated Group will not result in a lower rating on such series of Related Bonds; (iv) if all amounts due or to become due on all Related Bonds have not been paid to the holders thereof and provision for such payment has not been made in such manner as to have resulted in the defeasance of all Related Bond Indentures, an Opinion of Bond Counsel to the effect that under then existing law the consummation of such transaction would not, in of itself, adversely affect the validity of any Related Bonds or any exemption from federal or state income taxation of interest payable on such Related Bonds otherwise entitled to such exemption; provided that in making the calculation called for by subsection (d)(i) above, (x) there shall be excluded from Revenues any Revenues generated by Property of such Person transferred or otherwise disposed of by such Person since the beginning of the Fiscal Year during which such Person's entry into the Obligated Group occurs, and (y) there shall be excluded from Expenses any Expenses related to Property of such Person transferred or otherwise disposed of by such Person since the beginning of the Fiscal Year during which such Person's entry into the Obligated Group occurs.

Notwithstanding the foregoing, the Parent Corporation may be admitted to the Obligated Group without the need to satisfy the provisions of paragraph (d) above as long as an Officer's Certificate is delivered with respect to such admission stating that the Parent Corporation has no more than $50,000 in liabilities (realized or unrealized) at the time of such admission.

Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the above described conditions to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member's corporate status.

SECTION 6.02. OBLIGATED GROUP MEMBERS. Upon any Person's becoming an Obligated Group Member as provided in Section 6.01:

(a) the Master Trustee may pursue any remedies consequent upon an Event of Default against any Obligated Group Member, or all of them, without notice to, demand upon or joinder of (and without in any way releasing) any of the others, or against any one or more or all of them at the same time or at different times;

(b) any right of contribution or right acquired by subrogation by any Obligated Group Member against any other Obligated Group Member arising out of the payment of Indebtedness shall be subordinated to the rights of the Master Trustee and the Holders of Obligations; and

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(c) each Obligated Group Member shall designate the Obligated Group Representative as its attorney in fact with full power of substitution to perform, satisfy, and discharge every obligation, covenant, duty or liability to be performed on the part of the Obligated Group Member hereunder.

SECTION 6.03. WITHDRAWAL OF OBLIGATED GROUP MEMBERS. Each Member covenants that it will not take any action, corporate or otherwise, which would cause it or any successor thereto into which it is merged or consolidated under the terms of this Master Trust Indenture to cease to be a Member of the Obligated Group unless:

(a) prior to cessation of such status, there is delivered to the Master Trustee an Opinion of Bond Counsel to the effect that, under then existing law, the cessation by the Member of its status as a Member will not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable thereon to which such Bond would otherwise be entitled;

(b) prior to the cessation of such status, there is delivered to the Master Trustee an Officer's Certificate of the Obligated Group Representative to the effect that: (i) (A) immediately after such cessation the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which financial statements that have been reported upon by independent certified public accountants are available, after adjustment for the removal of the Member, would be not less than 1.20:1 or that such Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group is greater than the Historical Debt Service Coverage Ratio of the Obligated Group was for such Fiscal Year prior to such cessation, and (B) immediately after such cessation, the Obligated Group would be in compliance with the Liquidity Requirement of Section 4.20 hereof for the most recent quarter after adjustment for the removal of the Member, or that such calculation of Days Cash on Hand of the Obligated Group is greater than such calculation would be immediately prior to such cessation; (ii) prior to and immediately after such cessation, no Event of Default exists hereunder and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an Event of Default; (iii) evidence from each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the withdrawal of such Person from the Obligated Group will not result in a lower rating on such series of Related Bonds; and (iv) prior to and immediately after such cessation, the Members would not be in default in the performance or observance of any covenant or condition to be performed or observed hereunder;

(c) prior to such cessation there is delivered to the Master Trustee an opinion of Independent Counsel to the effect that the cessation by such Member of its status as a Member will not, in of itself, adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status;

(d) prior to such cessation of such status there is delivered to the Master Trustee evidence from each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the cessation of such status will not result in a lower rating on such series of Related Bonds;

(e) any Liens in favor of the withdrawing Member on the Property of a remaining Member is released and satisfied unless such Lien constitutes a Permitted Encumbrance after the withdrawing Member is no longer a Member; and

(f) prior to cessation of such status, the Obligated Group Representative and each Member, consents in writing to the withdrawal by such Member.

SECTION 6.04. SUCCESSOR OBLIGATED GROUP REPRESENTATIVE. The Obligor shall serve as the Obligated Group Representative until such time as the Obligor either (i) withdraws from the Obligated Group in accordance with this Article VI hereof, or (ii) delivers to the Master Trustee its resignation as the Obligated Group Representative. The Obligor covenants to fulfill all of the duties of the Obligated Group Representative under this Master Trust Indenture. The Obligor agrees that it shall not withdraw from the Obligated Group or resign as Obligated Group Representative until the Obligor has appointed another Obligated Group Representative and such successor Obligated Group Representative has accepted its duties in writing. Each Obligated Group Member by becoming an Obligated Group Member acknowledges that the Obligated Group Representative has certain powers and duties under this Master Trust Indenture and authorizes the Obligated Group Representative to exercise such powers and carry out such duties.

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ARTICLE VII REMEDIES OF THE MASTER TRUSTEE AND HOLDERS OF SECURED OBLIGATIONS IN EVENT

OF DEFAULT

SECTION 7.01. EVENTS OF DEFAULT. Event of Default, as used herein, shall mean any of the following events, whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body:

(a) default in the payment of the principal of (or premium, if any) or interest on any Obligation when it becomes due and payable at its Maturity and the continuance of such default beyond the period of grace, if any, provided in the instrument creating such Obligation; or

(b) any Obligated Group Member shall fail duly to observe or perform any other covenant or agreement (other than a covenant or agreement whose performance or observance is elsewhere in this Section 7.01 specifically dealt with) on the part of such Person contained in this Master Trust Indenture for a period of 45 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Obligated Group Representative by the Master Trustee, or to the Obligated Group Representative and the Master Trustee by the Holders of at least 25% in aggregate principal amount of Obligations then Outstanding; provided that if any such default can be cured by such Obligated Group Member but cannot be cured within the 45 day curative period described above, it shall not constitute an Event of Default if corrective action is instituted by such Obligated Group Member within such 45 day period and diligently pursued until the default is corrected; or

(c) a decree or order by a court having jurisdiction in the premises shall have been entered adjudging any Obligated Group Member a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization or arrangement of any Obligated Group Member under the Federal Bankruptcy Code or any other similar applicable Federal or state law, and such decree or order shall have continued undischarged and unstayed for a period of 90 days; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of any Obligated Group Member or of its property, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged and unstayed for a period of 90 days; or

(d) any Obligated Group Member shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the institution of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or arrangement under the Federal Bankruptcy Code or any other similar applicable Federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of it or of its Trust Estate, or shall make assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or action shall be taken by the Governing Body of any Obligated Group Member in furtherance of any of the aforesaid purposes; or

(e) any Obligated Group Member shall fail to pay or make provision for payment of any recourse Indebtedness (other than Subordinated Indebtedness owed to an Affiliate of the Obligated Group Member) having a principal balance of not less than $250,000 and the continuance of such failure beyond the applicable grace period, if any; or

(f) the Master Trustee has received written notice that an event of default, as therein defined, under any instrument under which Obligations may be incurred or secured, including, without limitation, Related Bond Indentures, Related Loan Agreements, Credit Facilities, the Mortgage, the Liquidity Support Agreement or other documents delivered in connection with the issuance of Related Bonds, has occurred and is continuing beyond the applicable period of grace, if any.

SECTION 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default occurs and is continuing, then and in every such case the Master Trustee or the Holders of not less than 25% in principal amount of the Outstanding Obligations (or, in the case of any Event of Default described in subparagraph (f) of Section 7.01 above resulting in the loss of any exclusion from gross income of interest on, or the invalidity of, any Indebtedness secured by a pledge of Obligations, the Holders of not less than 25% in principal

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amount of the Outstanding Obligations of the affected series) may declare the principal of all the Obligations to be due and payable immediately, by a notice in writing to the Obligated Group Representative and all of the Holders of Obligations (and to the Master Trustee if given by Holders of Obligations), and upon any such declaration such principal shall become immediately due and payable.

At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Master Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the affected Outstanding Obligations, by written notice to the Obligated Group Representative and the Master Trustee, shall rescind and annul such declaration and its consequences if:

(a) one or more Obligated Group Members has paid or deposited with the Master Trustee a sum sufficient to pay:

(1) all overdue installments of interest on all Obligations,

(2) the principal of (and premium, if any, on) any Obligations which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Obligations, and

(3) all sums paid or advanced by the Master Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel; and

(b) all Events of Default, other than the nonpayment of the principal of Obligations which have become due solely by such acceleration, have been cured or waived as provided in Section 7.15 hereof.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 7.03. POWERS OF SALE, TRANSFER, ASSIGNMENT, LEASE, AND OTHER DISPOSITIONS; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Master Trustee, in its discretion may, subject to the provisions of Section 7.17, Section 8.01(c)(4) and Section 8.03(n) hereof:

(a) foreclose the Mortgage;

(b) protect and enforce its rights and the rights of the Master Trustee under this Master Trust Indenture by sale pursuant to judicial proceedings or by a suit, action, or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Master Trust Indenture or in aid of the execution of any power granted in this Master Trust Indenture or for the foreclosure of this Master Trust Indenture or for the enforcement of any other legal, equitable, or other remedy, as the Master Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Master Trustee; or

(c) as to all or part of the personal property (tangible or intangible) and fixtures included in the Trust Estate (such portion of the Trust Estate herein referred to as the "Collateral"),

(i) proceed under the Florida Uniform Commercial Code and exercise with respect to the Collateral all the rights, remedies, and powers of a secured party under the Florida Uniform Commercial Code, including, without limitation, the right and power to sell, at public or private sale or sale, or otherwise dispose of, lease, or utilize, the Collateral and any part or parts thereof in any manner authorized or permitted under the Florida Uniform Commercial Code after default by a debtor, and, to the extent permitted by law, the Obligor expressly waives any notice of sale or other disposition of the Collateral and any other rights and remedies of a debtor or formalities prescribed by law relative to sale or disposition of the Collateral or exercise of any other right or remedy of the Master Trustee existing after default hereunder, and, to the extent any such notice is required and cannot be waived, the Obligor agrees that if such notice is mailed, postage prepaid, to the Obligor at its address stated in the first paragraph hereof at

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least ten days before the time of the sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving of said notice,

(ii) take possession of the Collateral and enter upon any premises where the same may be situated for such purpose without being deemed guilty of trespass and without liability for damages thereby occasioned and take any action deemed necessary or appropriate or desirable by the Master Trustee, at its option and in its discretion, to repair, refurbish, or otherwise prepare the Collateral for sale, lease, or other use or disposition as herein authorized,

(iii) transfer at any time to itself or to its nominee the Collateral, or any part thereof, and receive the money, income proceeds, or benefits attributable or accruing thereto and hold the same as security for the Outstanding Obligations or apply same as herein provided, and

(iv) require the Members to assemble the Collateral and make it available to the Master Trustee at a place to be designated by the Master Trustee that is reasonably convenient to all parties.

The Master Trustee shall be fully subrogated to the rights of all vendor's lienholders and other lienholders whose indebtedness is paid in whole or in part from proceeds of Obligations.

The filing of a suit to foreclose any security interest hereunder shall never be considered an election so as to preclude foreclosure under any power of sale herein contained after dismissal of such a suit.

SECTION 7.04. INCIDENTS OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law:

(a) any Holder or Holders of Obligations or the Master Trustee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain, and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, deliver any Outstanding Obligations or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such Obligations, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Holders thereof after being appropriately stamped to show partial payment;

(b) the Master Trustee may make and deliver to the purchaser or purchasers a good and sufficient bill of sale, and instrument of assignment and transfer of the property sold;

(c) the Master Trustee is hereby irrevocably appointed the true and lawful attorney of each Member, in its name and stead, to make all necessary deeds, bills of sale, and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale, and instruments of assignment and transfer, and may substitute one or more persons, firms, or corporation with like power, each Member hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Master Trustee or by any purchaser, any Member shall ratify and confirm any such sale or transfer by executing and delivering the Master Trustee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer, and release as may be designated in any such request;

(d) rights, titles, interests, claims, and demands whatsoever, either at law or in equity or otherwise, of the Members of, in, and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against each of the Members and their respective successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof by, through, or under the Members or their respective successors and assigns; and

(e) receipt of the Master Trustee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchaser money and such purchaser or purchasers and his or their assigns or personal representative shall not, after paying such purchase money and receiving such receipt, be

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obligated to see to the application of such purchase money, or be in any wise answerable for any loss, misapplication, or non application thereof.

Upon a sale of substantially all the Trust Estate, whether made under the power of sale hereby granted or pursuant to judicial proceedings, the Obligated Group Representative will permit, to the extent permitted by law, the purchaser thereof and its successors and assigns to take and use the names of the Members and to carry on business under such name or any variant thereof and to use and employ any and all other trade names, brands, and trademarks of the Members; and in such event, upon written request of such purchaser, its successors, or its assigns, any Member will, at the expense of the purchaser, change its name in such manner as to eliminate any similarity.

SECTION 7.05. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY MASTER TRUSTEE. The Obligated Group Members covenant (subject to any notice and grace periods contained herein) that if:

(a) default is made in the payment of any installment of interest on any Obligation when such interest becomes due and payable, or

(b) default is made in the payment of the principal of (or premium, if any, on) any Obligation at the maturity thereof, each Obligated Group Member will, upon demand of the Master Trustee, pay to it, for the benefit of the Holders of such Obligations, the whole amount then due and payable on such Obligations for principal (and premium, if any) and interest, with interest at the rate borne by the Obligations upon the overdue principal (and premium, if any); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel.

If the Obligated Group Members fail to pay any of the foregoing amounts forthwith upon demand, the Master Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Obligated Group Members or any other obligor upon the Obligations and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Obligated Group Members or any other obligor upon the Obligations, wherever situated.

If an Event of Default occurs and is continuing, the Master Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Obligations by such appropriate judicial proceedings as the Master Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Master Trust Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

If an Event of Default occurs and is continuing, the Master Trustee, as the beneficiary under the Mortgage, may in its discretion proceed to enforce its rights and seek any remedies available to it under the Mortgage.

SECTION 7.06. MASTER TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceeding relative to the Obligated Group Members or any other obligor upon the Obligations or the property of the Obligated Group Members or of such other obligor or their creditors, the Master Trustee (irrespective of whether the principal of the Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Master Trustee shall have made any demand on the Obligated Group Members for the payment of overdue principal, premium, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

(i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Master Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel which shall be deemed an administrative claim) and of the Holders of Obligations allowed in such judicial proceeding, and

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(ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator, custodian, or other similar official in any such judicial proceeding is hereby authorized by each Holder of Obligations to make such payments to the Master Trustee, and in the event that the Master Trustee shall consent to the making of such payments directly to the Holders of Obligations, to pay to the Master Trustee any amount due to it for the reasonable compensation, expenses, disbursements, and advances of the Master Trustee, its agents and counsel, and any other amounts due the Master Trustee under this Master Trust Indenture which shall be deemed an administrative claim.

Nothing herein contained shall be deemed to authorize the Master Trustee to authorize or consent to or accept or adopt on behalf of any Holder of Obligations any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Holder thereof, or to authorize the Master Trustee to vote in respect of the claim of any Holder of Obligations in any such proceeding.

SECTION 7.07. MASTER TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF OBLIGATIONS. All rights of action and claims under this Master Trust Indenture or the Obligations may be prosecuted and enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Master Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements, and advances of the Master Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Obligations in respect of which such judgment has been recovered.

SECTION 7.08. APPLICATION OF MONEY COLLECTED. Any money collected by the Master Trustee pursuant to this Article VII and any proceeds of any sale (after deducting the costs and expenses of such sale, including a reasonable compensation to the Master Trustee, its agents and counsel, payment of any outstanding fees and expenses of the Master Trustee and any taxes, assessments, or liens prior to the lien of this Master Trust Indenture, except any thereof subject to which such sale shall have been made), whether made under any power of sale herein granted or pursuant to judicial proceedings, together with, in the case of any entry or sale as otherwise provided herein, any other sums then held by the Master Trustee as part of the Trust Estate, shall be deposited in the Revenue Fund created by this Master Trust Indenture, shall be applied in the order specified in Section 3.05 hereof, at the date or dates fixed by the Master Trustee and, in case of the distribution of such money on account of principal (or premium, if any), upon presentation of the Obligations and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid.

In the event the Master Trustee incurs expenses or renders services in any proceedings which result from the occurrence or continuance of an Event of Default under Section 7.01(c) or 7.01(d) hereof, or from the occurrence of any event which, by virtue of the passage of time, would become such Event of Default, the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the United States Bankruptcy Code or equivalent law.

SECTION 7.09. LIMITATION ON SUITS. No Holder of any Obligation shall have any right to institute any proceeding, judicial or otherwise, with respect to this Master Trust Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a) such Holder has previously given written notice to the Master Trustee of a continuing Event of Default;

(b) the Holders of not less than 25% in principal amount of the Outstanding Obligations shall have made written request to the Master Trustee to institute proceedings in respect of such Event of Default in its own name as Master Trustee hereunder;

(c) such Holder or Holders have offered to the Master Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) the Master Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

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(e) no direction inconsistent with such written request has been given to the Master Trustee during such 60 day period by the Holders of a majority in principal amount of the Outstanding Obligations; it being understood and intended that no one or more Holders of Obligations shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Master Trust Indenture to affect, disturb or prejudice the rights of any other Holders of Obligations, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Master Trust Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Obligations.

SECTION 7.10. UNCONDITIONAL RIGHT OF HOLDERS OF OBLIGATIONS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision in this Master Trust Indenture, the Holder of any Obligation shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 2.07 hereof) interest on such Obligation on the respective Stated Maturities expressed in such Obligation (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 7.11. RESTORATION OF RIGHTS AND REMEDIES. If the Master Trustee or any Holder of Obligations has instituted any proceeding to enforce any right or remedy under this Master Trust Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Master Trustee or to such Holder of Obligations, then and in every such case the Obligated Group Members, the Master Trustee and the Holders of Obligations shall, subject to any court determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Master Trustee and the Holders of Obligations shall continue as though no such proceeding had been instituted.

SECTION 7.12. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Master Trustee or to the Holders of Obligations is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 7.13. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Master Trustee or of any Holder of any Obligation to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VII or by law to the Master Trustee or to the Holders of Obligations may be exercised from time to time, and as often as may be deemed expedient, by the Master Trustee or by the Holders of Obligations, as the case may be.

SECTION 7.14. CONTROL BY HOLDERS OF OBLIGATIONS. The Holders of a majority in principal amount of the Outstanding Obligations shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Master Trustee or exercising any trust or power conferred on the Master Trustee, provided that:

(a) such direction shall not be in conflict with any rule of law or with this Master Trust Indenture,

(b) the Master Trustee may take any other action deemed proper by the Master Trustee which is not inconsistent with such direction; and

(c) the Master Trustee shall not be required to act on any direction given to it pursuant to this Section until indemnity as set forth in Section 8.03(e) hereof is provided to it by such Holders.

SECTION 7.15. WAIVER OF PAST DEFAULTS AND FUTURE COVENANT REQUIREMENTS. The Holders of not less than a majority in principal amount of the Outstanding Obligations may on behalf of the

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Holders of all the Obligations waive any past default hereunder and its consequences (or future covenant requirements), except a default or covenant requirement with respect to:

(a) in the payment of the principal of (or premium, if any) or interest on any Obligation, or

(b) a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Obligation affected.

Upon any such waiver, such default shall be deemed to have never occurred, and any Event of Default arising therefrom shall be deemed to have been cured ab initio, for every purpose of this Master Trust Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 7.16. UNDERTAKING FOR COSTS. All parties to this Master Trust Indenture agree, and each Holder of any Obligation by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Master Trust Indenture, or in any suit against the Master Trustee for any action taken or omitted by it as Master Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Master Trustee, to any suit instituted by any Holder of Obligations, or group of Holders of Obligations, holding in the aggregate more than 10% in principal amount of the Outstanding Obligations, or to any suit instituted by any Holder of Obligations for the enforcement of the payment of the principal of (or premium, if any) or interest on any Obligation on or after the respective Stated Maturities expressed in such Obligation (or, in the case of redemption, on or after the redemption date).

SECTION 7.17. WAIVER OF STAY OR EXTENSION LAWS. Each Obligated Group Member covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Master Trust Indenture; and each Obligated Group Member (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay, or impede the execution of any power herein granted to the Master Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE IX SUPPLEMENTS AND AMENDMENTS

SECTION 9.01. SUPPLEMENTS WITHOUT CONSENT OF HOLDERS OF OBLIGATIONS. Without the Consent of the Holders of any Obligations, each Obligated Group Member, when authorized by a Board Resolution, and the Master Trustee at any time may enter into one or more Supplements for any of the following purposes:

(a) to evidence the succession of another Person to an Obligated Group Member, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of an Obligated Group Member as permitted by this Master Trust Indenture or to evidence additions to, or withdrawals from, membership in the Obligated Group in accordance with the provisions of Article VI hereof;

(b) to add to the covenants of the Obligated Group Members for the benefit of the Holders of Obligations, or to surrender any right or power herein conferred upon the Obligated Group Members, or to add to the Events of Default enumerated in Section 7.01 hereof;

(c) to cure any ambiguity or to correct or supplement any provision herein that may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Master Trust Indenture that shall not be inconsistent with this Master Trust Indenture, provided such action shall not adversely affect the interests of the Holders of Obligations;

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(d) to modify or supplement this Master Trust Indenture in such manner as may be necessary or appropriate to qualify this Master Trust Indenture under the Trust Indenture Act of 1939 as then amended, or under any similar Federal or State statute or regulation, including provisions whereby the Master Trustee accepts such powers, duties, conditions and restrictions hereunder and the Obligated Group Members undertake such covenants, conditions or restrictions additional to those contained in this Master Trust Indenture as would be necessary or appropriate so to qualify this Master Trust Indenture; provided, however, that nothing herein contained shall be deemed to authorize inclusion in this Master Trust Indenture or in any Supplements provisions referred to in Section 316(a)(2) of the said Trust Indenture Act or any corresponding provision provided for in any similar statute hereafter in effect;

(e) to create and provide for the issuance of Obligations as permitted hereunder;

(f) to increase or maintain any credit rating assigned to any series of Related Bonds by a Rating Agency so long as no Obligation issued hereunder shall be secured on a basis senior to other Obligations;

(g) to change Section 4.15 hereof to permit the financial statements required therein to more accurately reflect the financial position and operations of the Obligated Group;

(h) To specify and determine matters necessary or desirable for the incorporation of any future rules and regulations with respect to Subsidy Bonds; and

(i) to make any amendment to any provision of this Master Trust Indenture or to any Supplement which is only applicable to Obligations issued thereafter or which will not apply so long as any Obligation then Outstanding remains Outstanding.

SECTION 9.02 SUPPLEMENTS WITH CONSENT OF HOLDERS OF OBLIGATIONS. With the Consent of the Holders of not less than a majority in principal amount of the Outstanding Obligations, by Act of said Holders delivered to the Obligated Group Representative and the Master Trustee, each Obligated Group Member, when authorized by a Board Resolution, and the Master Trustee may enter into Supplements for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Master Trust Indenture or of modifying in any manner the rights of the Holders of the Obligations under this Master Trust Indenture; provided, however, that no such Supplement shall, without the Consent of the Holder of each Outstanding Obligations affected thereby,

(a) change the Stated Maturity of the principal of, or any installment of interest on, any Obligations or any date for mandatory redemption thereof, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Obligations or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date), or

(b) reduce the percentage in principal amount of the Outstanding Obligations, the Consent of whose Holders is required for any such Supplement, or the Consent of whose Holders is required for any waiver (of compliance with certain provisions of this Master Trust Indenture or certain defaults hereunder and their consequences) provided for in this Master Trust Indenture, or

(c) modify any of the provisions of this Section or Section 7.15 hereof, except to increase any such percentage or to provide that certain other provisions of this Master Trust Indenture cannot be modified or waived without the Consent of the Holder of each Obligation affected thereby.

It shall not be necessary for any Act of Holders of Obligation under this Section to approve the particular form of any proposed Supplement, but it shall be sufficient if such Act shall approve the substance thereof.

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ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

SECTION 10.01. SATISFACTION AND DISCHARGE OF INDENTURE. If at any time the Obligated Group Members shall have paid or caused to be paid the principal of (and premium, if any) and interest on all the Obligations Outstanding hereunder, as and when the same shall have become due and payable (in the case of Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments), and if the Obligated Group Members shall also pay or provide for the payment of all other sums payable hereunder by each Obligated Group Member then this Master Trust Indenture shall cease to be of further effect (except as to (1) rights of registration of transfer and exchange, (2) substitution of mutilated, defaced, or apparently destroyed, lost or stolen Obligations, (3) rights of Holders to receive payments of principal thereof (and premium, if any) and interest thereon, (4) the rights, remaining obligations, if any, and immunities of the Master Trustee hereunder, and (5) the rights of the Holders as beneficiaries hereof with respect to the property so deposited with the Master Trustee payable to all or any of them) and the Master Trustee, on the Obligated Group Representative's Request accompanied by an Officer's Certificate and an Opinion of Counsel (both to the effect that all conditions precedent in this Master Trust Indenture relating to the satisfaction and discharge of this Master Trust Indenture have been satisfied) and at the cost and expense of the Obligated Group Representative, shall execute proper instruments acknowledging satisfaction of and discharging this Master Trust Indenture.

Notwithstanding the satisfaction and discharge of this Master Trust Indenture, the obligations of the Obligated Group Members to the Master Trustee under Section 8.07 hereof and, if funds shall have been deposited with the Master Trustee pursuant to Section 10.02 hereof, the obligations of the Master Trustee under Section 10.03 hereof shall survive.

SECTION 10.02. OBLIGATIONS DEEMED PAID. Obligations of any series shall be deemed to have been paid if (a) (1) in case such Obligations are to be redeemed on any date prior to their Stated Maturity, the Obligated Group Representative by Obligated Group Representative Request shall have given to the Master Trustee in form satisfactory to it irrevocable instructions to give notice of redemption of such Obligations on said redemption date, (2) there shall have been deposited with the Master Trustee either money sufficient, or Defeasance Obligations the principal of and the interest on which will provide money sufficient without reinvestment (as established by an Officer's Certificate delivered to the Master Trustee accompanied by a report of an independent accountant setting forth the calculations upon which such Officer's Certificate is based), to pay when due the principal of (and premium, if any) and interest due and to become due on said Obligations (in the case of Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments) on and prior to the redemption date or Stated Maturity thereof, as the case may be, and (3) in the event said Obligations are not by their terms subject to redemption within the next 45 days, the Obligated Group Representative shall have given the Master Trustee in form satisfactory to it irrevocable instructions to give a notice to the Holders of such Obligations that the deposit required by clause (2) above has been made with the Master Trustee and that said Obligations are deemed to have been paid in accordance with this Section and stating such maturity or redemption date upon which money is to be available for the payment of the principal of (and premium, if any) and interest on said Obligations (in the case of Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments), or (b) such Obligations are delivered to the Master Trustee by the Related Bond Trustee together with instructions from the Obligated Group Representative directing the Master Trustee to retire and cancel such Obligations.

SECTION 10.03. APPLICATION OF TRUST MONEY. The Defeasance Obligations and money deposited with the Master Trustee pursuant to Section 10.02 hereof and principal or interest payments on any such Defeasance Obligations shall be held in trust, shall not be sold or reinvested, and shall be applied by it, in accordance with the provisions of the Obligations and this Master Trust Indenture, to the payment, either directly or through any Paying Agent (including the Obligated Group Representative acting as Paying Agent) as the Master Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money or Defeasance Obligations were deposited; provided that, upon delivery to the Master Trustee of an Officer's Certificate (accompanied by the report of an independent Accountant setting forth the calculations upon which such Officer's Certificate is based) establishing that the money and Defeasance Obligations on deposit following the taking of the proposed action will be sufficient for the purposes described in clause (2) of Section 10.02 hereof, any money received from principal or interest payments on Defeasance Obligations deposited with the Master Trustee or the proceeds of any sale of such Defeasance Obligations, if not then needed for such purpose,

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shall, upon Obligated Group Representative Request be reinvested, to the extent practicable, in other Defeasance Obligations or disposed of as requested by the Obligated Group Representative. For purposes of any calculation required by this Article X, any Defeasance Obligation which is subject to redemption at the option of its issuer, the redemption date for which has not been irrevocably established as of the date of such calculation, shall be assumed to cease to bear interest at the earliest date on which such obligation may be redeemed at the option of the issuer and the principal of such obligation shall be assumed to be received at its stated maturity.

SECTION 10.04. PAYMENT OF RELATED BONDS. Notwithstanding any other provision of this Article X, no Obligation will be considered paid or deemed to have been paid unless the Related Bonds, if any, have been paid or deemed paid pursuant to the Related Bond Indenture.

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EXCERPTS FROM BOND INDENTURE

The following are certain excerpts from the Bond Indenture. These excerpts do not purport to be complete and are qualified in their entirety by reference to the Bond Indenture.

ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS

SECTION 2.02. ALL BONDS EQUALLY AND RATABLY SECURED, BONDS NOT AN OBLIGATION OF ISSUER. All Bonds issued under this Bond Indenture and at any time Outstanding shall in all respects be equally and ratably secured hereby, without preference, priority, or distinction on account of the date or dates or the actual time or times of the issuance or maturity of the Bonds, so that all Bonds at any time issued and Outstanding hereunder shall have the same right, lien, and preference under and by virtue of this Bond Indenture, and shall all be equally and ratably secured hereby. The Bonds shall be payable solely out of the revenues and other security pledged hereby and shall not constitute an indebtedness of the Issuer within the meaning of any state constitutional provision or statutory limitation and shall never constitute nor give rise to a pecuniary liability of the Issuer.

SECTION 2.05. REGISTRATION AND EXCHANGE OF BONDS; PERSONS TREATED AS OWNERS. The Issuer shall cause books for the registration and for the transfer of the Bonds as provided in this Bond Indenture to be kept by the Bond Trustee which is hereby appointed the bond registrar of the Issuer for the Bonds. Upon surrender for transfer of any fully registered Bond at the Payment Office of the Bond Trustee, duly endorsed for transfer or accomplished by an assignment duly executed by the Registered Owner or his attorney duly authorized in writing, the Issuer shall execute and the Bond Trustee shall authenticate and deliver in the name of the transferee or transferees a new fully registered Bond or Bonds of a like Aggregate Principal Amount for a like principal amount and maturity.

The Issuer shall execute and the Bond Trustee shall authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously Outstanding. The execution by the Issuer of any fully registered Bond of any denomination shall constitute full and due authorization of such denomination and the Bond Trustee shall thereby be authorized to authenticate and deliver such Bond.

The Bond Trustee shall not be required to transfer or exchange any Bond after the mailing of notice calling such Bond or any portion thereof for redemption has been given as herein provided, nor during the period beginning at the opening of business fifteen days before the day of mailing by the Bond Trustee of a notice of prior redemption and ending at the close of business on the day of such mailing except for Bondholders of $1,000,000 or more in aggregate principal amount of the Bonds.

As to any Bond, the Person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal of or interest on any Bond shall be made only to or upon the written order of the Registered Owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums paid.

The Bond Trustee shall require the payment by any Bondholder requesting exchange or transfer of any tax or other governmental charge required to be paid with respect to such exchange or transfer.

SECTION 2.06. LOST, STOLEN, DESTROYED, AND MUTILATED BONDS. Upon receipt by the Bond Trustee of evidence satisfactory to it of the ownership of and the loss, theft, destruction, or mutilation of any Bond and, in the case of a lost, stolen, or destroyed Bond, of indemnity satisfactory to it, and upon surrender and cancellation of the Bond if mutilated, (a) the Issuer shall execute, and the Bond Trustee shall authenticate and deliver, a new Bond of the same series, date and maturity as the lost, stolen, destroyed or mutilated Bond in lieu of such lost, stolen, destroyed, or mutilated Bond, or (b) if such lost, stolen, destroyed, or mutilated Bond shall have matured or have been called for redemption, in lieu of executing and delivering a new Bond as aforesaid, the Issuer may pay such Bond. Any such new Bond shall bear a number not contemporaneously Outstanding. The applicant for any such new Bond may be required to pay all expenses and charges of the Issuer and of the Bond Trustee in

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connection with the issue of such new Bond. All Bonds shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing conditions are exclusive with respect to the replacement and payment of mutilated, destroyed, lost, or stolen Bonds, negotiable instruments, or other securities. If, after the delivery of such new Bond, a bona fide purchaser of the original Bond in lieu of which such duplicate Bond was issued presents for payment such original Bond, the Obligor or the Bond Trustee shall be entitled to recover upon such new Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense (including attorneys' fees, costs and expenses) incurred by the Obligor or the Bond Trustee in connection therewith.

SECTION 2.13. PAYMENTS TO CEDE & CO. Notwithstanding any other provision of this Bond Indenture to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on, such Bond and all notices, transfers and deliveries with respect to such Bond shall be made and given, respectively, in the manner provided in the DTC Letter.

ARTICLE III REVENUES AND FUNDS

SECTION 3.02. CREATION OF THE BOND FUND. There is hereby created by the Issuer and ordered established with the Bond Trustee a trust fund to be designated as the "Collier County Industrial Development Authority Continuing Care Community Revenue Bonds (The Arlington of Naples Project) Bond Fund" (the "Bond Fund"). There are hereby created by the Issuer and ordered established with the Bond Trustee three separate accounts within the Bond Fund to be designated as the Principal Account, the Interest Account and the Entrance Fee Redemption Account, respectively. Moneys on deposit in the Principal Account shall be used to pay the principal of and premium, if any, on the Bonds, when due and payable. Moneys on deposit in the Interest Account shall be used to pay the interest on the Bonds. Moneys on deposit in the Entrance Fee Redemption Account shall be used to pay the redemption price of, first, Series 2013B-2 Bonds, then Series 2013B-1 Bonds and then Bonds on each Entrance Fee Redemption Date as provided in Section 5.10 hereof.

SECTION 3.03. PAYMENTS INTO THE BOND FUND.

(a) There shall be deposited into the Interest Account all accrued interest received from the sale of the Bonds to the initial purchasers thereof. In addition, there shall also be deposited into the Principal Account or the Interest Account, as and when received, (i) all payments on the Series 2013 Notes, (ii) all moneys transferred to the Bond Fund from the Reserve Fund pursuant to Section 3.10 hereof, (iii) all other moneys required to be deposited therein pursuant to the Loan Agreement, and (iv) all other moneys received by the Bond Trustee when accompanied by directions that such moneys are to be paid into the Principal Account or the Interest Account. There also shall be retained or deposited in the Principal Account or the Interest Account all interest and other income received on investments or moneys required to be transferred thereto, in accordance with Section 6.02 hereof. The Issuer hereby covenants and agrees that so long as any of the Bonds are Outstanding it will deposit, or cause to be deposited, into the Principal Account or the Interest Account for its account sufficient sums from revenues and receipts derived from the Loan Agreement promptly to meet and pay the principal of, premium, if any, and interest on the Bonds as the same become due and payable.

(b) There shall be deposited into the Entrance Fee Redemption Account all moneys received by the Bond Trustee from the Master Trustee on each Entrance Fee Transfer Date pursuant to Section 3.01(b) of the Master Trust Indenture for deposit therein.

SECTION 3.04. USE OF MONEYS IN THE PRINCIPAL ACCOUNT AND THE INTEREST ACCOUNT. The amounts deposited into the Interest Account pursuant to Section 3.01 hereof, if any, shall be used to pay accrued interest on the appropriate series of Bonds on the first Interest Payment Date. Except as provided in Sections 3.15 and 8.05 hereof, moneys in the Principal Account or the Interest Account shall be used solely for the payment of the principal of, premium, if any, and interest on the Bonds on a pro rata basis.

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SECTION 3.06. CONSTRUCTION FUND. (a) There is hereby created and established with the Bond Trustee a trust fund designated as the "Collier County Industrial Development Authority Continuing Care Community Revenue Bonds (The Arlington of Naples Project) Construction Fund" (the "Construction Fund"). There are hereby created by the Issuer and ordered established with the Bond Trustee two separate accounts within the Construction Fund to be designated as the Funded Interest Account and the Project Account. Moneys in the Project Account shall be used to pay Costs of the Project or as hereinafter provided. Moneys in the Funded Interest Account of the Construction Fund shall be used to pay interest accruing on a portion of the Series 2013 Bonds through May 15, 2016; provided, however, to the extent monies remain in the Funded Interest Account after such date such monies shall be transferred to the Principal Account of the Bond Fund and used only for payment of principal on the Series 2013 Bonds. Under no circumstances shall moneys in the Construction Fund be used to pay Cost of Issuance.

(b) In the event there are insufficient moneys in the Interest Account of the Bond Fund to pay interest on the Bonds when due, the Bond Trustee shall transfer moneys in the Funded Interest Account of the Construction Fund to the Interest Account of the Bond Fund to pay such interest when due. Moneys in the Funded Interest Account of the Construction Fund shall be used to pay investment management fees as set forth in a written request of the Obligor to the Bond Trustee. Upon the maturity or sale of a Premium Security, the Bond Trustee shall transfer the appropriate amount of premium as set forth in Section 6.01 hereof to the account in which such Premium Security was held. The Bond Trustee shall disburse moneys in the Project Account of the Construction Fund as provided herein and in Section 4.6 of the Loan Agreement. Any Surplus Construction Fund Moneys shall be treated in accordance with Section 4.13 of the Loan Agreement.

(c) Payments from the Construction Fund shall be made in accordance with this Article III and Article IV of the Loan Agreement. Upon receipt of the required certificates, the Bond Trustee shall pay the amount requested to the extent that the Obligor is entitled to payment pursuant to the Loan Agreement.

(d) If an Event of Default occurs under this Bond Indenture, and the Bond Trustee declares the principal of all Bonds and the interest accrued thereon to be due and payable, no moneys may be paid out of the Construction Fund by the Bond Trustee during the continuance of such an Event of Default; provided, however, that if such an Event of Default shall be waived and such declaration shall be rescinded by the Bond Trustee or the holders and owners of the Bonds pursuant to the terms of this Bond Indenture, the full amount of any such remaining moneys in the Construction Fund may again be disbursed by the Bond Trustee in accordance with the provisions of the Loan Agreement and this Bond Indenture.

SECTION 3.07. COMPLETION CERTIFICATE. At such time as the Obligor determines that construction of the Project has been completed in substantial compliance with the final plans and specifications for the Project or has determined to terminate any further construction of the Project, it shall deliver the Completion Certificate to the Bond Trustee in accordance with and to the extent required by the Loan Agreement.

SECTION 3.08. CREATION OF THE RESERVE FUND. (a) There is hereby created and established with the Bond Trustee a trust fund designated as the "Collier County Industrial Development Authority Continuing Care Community Revenue Bonds (The Arlington of Naples Project) Debt Service Reserve Fund" (the "Reserve Fund"). Within the Reserve Fund there are hereby created and established two separate Reserve Accounts: (i) the Series 2013A Reserve Account and (ii) the Series 2013B Reserve Account.

(b) Moneys on deposit in the Reserve Fund shall be used to provide a reserve for the payment of the principal of and interest on the Bonds in accordance with Section 3.10 hereof.

SECTION 3.09. PAYMENTS INTO THE RESERVE FUND. In addition to the deposits required by Section 3.01 hereof, there shall be deposited into the appropriate Reserve Account of the Reserve Fund any Reserve Fund Obligations delivered by the Obligor to the Bond Trustee pursuant to Section 5.6 of the Loan Agreement. In addition, there shall be deposited into the appropriate Reserve Account of the Reserve Fund all moneys required to be transferred thereto pursuant to Section 6.02 hereof, and all other moneys received by the Bond Trustee when accompanied by directions that such moneys are to be paid into the appropriate Reserve Account of the Reserve Fund. There shall also be retained in each Reserve Account of the Reserve Fund all interest and other income

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received on investments of Reserve Fund moneys in such Reserve Account to the extent provided in Section 6.02 hereof.

SECTION 3.10. USE OF MONEYS IN THE RESERVE FUND. (a) Except as provided in this Section 3.10 and in Section 3.15 hereof, moneys in each Reserve Account of the Reserve Fund shall be used solely for the payment of the principal of and interest on the related series of the Bonds in the event moneys in the Bond Fund and the Funded Interest Account are insufficient to make such payments when due, whether on an interest payment date, redemption date, maturity date, acceleration date or otherwise; provided that moneys on deposit in a Reserve Account of the Reserve Fund shall be used only to make such payments with respect to the related series of Bonds.

(b) Upon the occurrence of an Event of Default of which the Bond Trustee is deemed to have notice hereunder and the election by the Bond Trustee of the remedy specified in Section 8.02(a) hereof, any Reserve Fund Obligations in the Reserve Fund shall, subject to the provisions of Section 3.16 hereof, be transferred by the Bond Trustee to the Principal Account and applied in accordance with Section 8.05 hereof. In the event of the redemption of any series of Bonds, any Reserve Fund Obligations on deposit in the applicable Reserve Account of the Reserve Fund in excess of the Reserve Fund Requirement on the Bonds of such series to be Outstanding immediately after such redemption may, subject to the provisions of Section 3.16 hereof, be transferred to the Principal Account and applied to the payment of the principal of the series of Bonds to be redeemed. On May 15 and November 15 in each year, any earnings on the Reserve Fund Obligations on deposit in a Reserve Account of the Reserve Fund that are in excess of the Reserve Fund Requirement for such Reserve Account shall be transferred during the construction period for the Project into the Funded Interest Account of the Construction Fund created in connection with the issuance of Bonds for the Project or, if after the completion of such construction period, into the Interest Account of the Bond Fund.

(c) On the final maturity date of any series of Bonds, any Reserve Fund Obligations in the related Reserve Account of the Reserve Fund in excess of the Reserve Fund Requirement for such Reserve Account after giving effect to such maturity may, upon the direction of the Obligor, be used to pay the principal of and interest on such series of Bonds on such final maturity date.

(d) If at any time moneys in a Reserve Account of the Reserve Fund are sufficient to pay the principal or redemption price of all Bonds of the related series, the Bond Trustee may use the moneys on deposit in such Reserve Account to pay such principal or redemption price of the related series of Bonds.

(e) In accordance with Section 651.035, Florida Statutes, not less than ten (10) days prior to any withdrawal of monies from the Reserve Fund, notice of the withdrawal from the Reserve Fund shall be given by the Bond Trustee by telephone (850/413-3140) (promptly confirmed in writing) or facsimile (850/488-7061) to the Florida Office of Insurance Regulation, Specialty Product Administration, The Larson Building 200 East Gaines Street, Tallahassee, Florida 32399-0327 (the "Office of Insurance"), provided that such notice by telephone, by facsimile or in writing may be given to the Office of Insurance at other telephone numbers or other addresses if required by the Office of Insurance to be used in lieu of the foregoing. The Bond Trustee shall provide the Office of Insurance with any information concerning the Reserve Fund upon request of the Office of Insurance or the Borrower.

SECTION 3.12. NONPRESENTMENT OF BONDS. In the event that any Bonds shall not be presented for payment when the principal thereof or interest thereon becomes due, either at maturity, the date fixed for redemption thereof, or otherwise, if funds sufficient for the payment thereof shall have been deposited into the Bond Fund or otherwise made available to the Bond Trustee for deposit therein as provided in Section 3.03 hereof, all liability of the Issuer to the owner or owners thereof for the payment of such Bonds shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Bond Trustee to hold such fund or funds, without liability for interest thereon, for the benefit of the owner or owners of such Bonds, who shall thereafter be restricted exclusively to such fund or funds for any claim of whatever nature on his or their part under this Bond Indenture or on, or with respect to, said Bond, and all such funds shall remain uninvested. If any Bond shall not be presented for payment within the period of two years following the date of final maturity of such Bond, the Bond Trustee shall, to the extent required by law, transfer such funds to the state treasury of the state in which the designated office of the Bond Trustee is located, in which case the owner of such Bonds shall look only to such state for payment, or, in the alternative, to the extent permitted by law, the Bond Trustee shall, upon request in writing by

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the Obligor, return such funds to the Obligor free of any trust or lien and such Bond shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Obligor. In either event, the Bond Trustee shall have no further responsibility with respect to such moneys or payment of such Bonds. Thereafter, the Bondholders shall be entitled to look only to the Obligor for payment, and then only to the extent of the amount so repaid by the Bond Trustee. The Obligor shall not be liable for any interest on any sums paid to it.

SECTION 3.16. REBATE FUND.

(a) A special Rebate Fund is hereby established by the Issuer to be held by the Bond Trustee for the sole benefit of the United States of America and shall not be subject to the claim of any other Person, including without limitation the Bondholders. The Rebate Fund is established for the purpose of complying with Section 148 of the Code. The money deposited in the Rebate Fund, together with all investments thereof and investment income therefrom, shall be held in trust and applied solely as provided in this Section. The Rebate Fund is not a portion of the Trust Estate and is not subject to the lien of this Bond Indenture. Notwithstanding the foregoing, the Bond Trustee with respect to the Rebate Fund is afforded all the rights, protections and immunities otherwise accorded to it hereunder.

(b) Within 60 days after the close of each fifth "Bond Year," the Obligor shall provide the Bond Trustee a computation in the form of a certificate of an officer of the Obligor of the amount of "Excess Earnings," if any, for the period beginning on the date of delivery of the Bonds and ending at the close of such "Bond Year" and the Obligor shall pay to the Bond Trustee for deposit into the Rebate Fund an amount equal to the difference, if any, between the amount then in the Rebate Fund and the Excess Earnings so computed. The term "Bond Year" means with respect to the Bonds each one-year period ending on the anniversary of the date of delivery of the Bonds or such other period as may be elected by the Issuer in accordance with the Code and notice of which election has been given to the Bond Trustee. If, at the close of any Bond Year, the amount in the Rebate Fund exceeds the amount that would be required to be paid to the United States of America under paragraph (d) below if the Bonds had been paid in full (as determined in accordance with paragraph (e) below), such excess may, at the written request of the Obligor, be transferred from the Rebate Fund and paid to the Obligor.

(c) In general, "Excess Earnings" for any period of time means the sum of

(i) the excess of --

(A) the aggregate amount earned during such period of time on all "Nonpurpose Investments" (including gains on the disposition of such Obligations) in which "Gross Proceeds" of the issue are invested (other than amounts attributable to an excess described in this subparagraph (c)(i)), over

(B) the amount that would have been earned during such period of time if the "Yield" on such Nonpurpose Investments (other than amounts attributable to an excess described in this subparagraph (c)(i)) had been equal to the yield on the issue, plus

(ii) any income during such period of time attributable to the excess described in subparagraph (c)(i) above.

The term Nonpurpose Investments, Gross Proceeds, Issue Date and Yield shall have the meanings given to such terms in Section 148 of the Code.

(d) The Bond Trustee shall, as directed in writing by the Obligor, pay to the United States of America at least once every five years, to the extent that funds are available in the Rebate Fund or otherwise provided by the Obligor, an amount that ensures that at least 90 percent of the Excess Earnings from the date of delivery of the Bonds to the close of the period for which the payment is being made will have been paid. The Bond Trustee shall pay to the United States of America not later than 60 days after the Bonds have been paid in full as directed by the Obligor in writing, to the extent that funds are available in the Rebate Fund or otherwise provided by the Obligor, 100 percent of the amount then required to be paid under Section 148(f) of the Code as a result of Excess Earnings.

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(e) The amounts to be computed, paid, deposited or disbursed under this section shall be determined by the Obligor acting on behalf of the Issuer within thirty days after each Bond Year. By such date, the Obligor shall also notify, in writing, the Bond Trustee and the Issuer of the determinations the Obligor has made and the payment to be made pursuant to the provisions of this section. Upon written request of any Registered Owner of Bonds, the Obligor shall furnish to such Registered Owner of Bonds a certificate (supported by reasonable documentation, which may include calculation by Bond Counsel or by some other service organization) showing compliance with this section and other applicable provisions of Section 148 of the Code.

(f) The Bond Trustee shall maintain a record of the periodic determinations by the Obligor of the Excess Earnings for a period beginning on the first anniversary date of the issuance of the Bonds and ending on the date six years after the final retirement of the Bonds. Such records shall state each such anniversary date and summarize the manner in which the Excess Earnings, if any, was determined.

(g) If the Bond Trustee shall declare the principal of the Bonds and the interest accrued thereon immediately due and payable as the result of an Event of Default specified in this Bond Indenture, or if the Bonds are optionally or mandatorily prepaid or redeemed prior to maturity as a whole in accordance with their terms, any amount remaining in any of the funds shall be transferred to the Rebate Fund to the extent that the amount therein is less than the Excess Earnings computed by the Obligor as of the date of such acceleration or redemption, and the balance of such amount shall be used immediately by the Bond Trustee for the purpose of paying principal of, redemption premium, if any, and interest on the Bonds when due. In furtherance of such intention, the Issuer hereby authorizes and directs its Chairman to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds.

(h) The requirements contained in this Section relating to the computation and payment of Excess Earnings shall not be applicable if all Gross Proceeds of the Bonds are expended in compliance with Section 1.148-7 of the Code.

(i) Notwithstanding any of the provisions of this Section, the Bond Trustee shall have no duty or responsibility with respect to the Rebate Fund except to follow the specific written instructions of the Obligor.

SECTION 3.17. COST OF ISSUANCE FUND. There is hereby created and established with the Bond Trustee a trust fund designated as the "Collier County Industrial Development Authority Continuing Care Community Revenue Bonds (The Arlington of Naples Project) Cost of Issuance Fund" (the "Cost of Issuance Fund"). The Bond Trustee shall disburse moneys in the Cost of Issuance Fund as provided in Article IV of the Loan Agreement. Moneys in the Cost of Issuance Fund may be used only for payment of the Cost of Issuance. On the earlier of (a) the day the Bond Trustee receives a certificate of the Obligor to the effect that all Cost of Issuance relating to the Bonds has been paid, and (b) the 180th day following the Delivery Date, any moneys remaining in the Cost of Issuance Fund shall be transferred to the Project Account of the Construction Fund, and thereafter no such moneys shall be used to pay Cost of Issuance. The Cost of Issuance Fund shall then be closed.

ARTICLE IV COVENANTS OF THE ISSUER

SECTION 4.01. PERFORMANCE OF COVENANTS; AUTHORITY. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Bond Indenture, in any and every Bond and in all proceedings of the Issuer pertaining hereto; provided, however, that except for the covenant of the Issuer set forth in Section 4.02 hereof relating to payment of the Bonds, the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof until it shall have been requested to do so by the Obligor or by the Bond Trustee, or shall have received the instrument to be executed and at the option of the Issuer shall have received from the party requesting such execution assurance satisfactory to the Issuer that the Issuer shall be reimbursed for its reasonable expenses incurred or to be incurred in connection with taking such action or executing such instrument. The Issuer covenants that it is duly authorized under the laws of the State of Florida, including particularly and without limitation the Act, to issue the Bonds and

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to execute this Bond Indenture, and to pledge the revenues and receipts hereby pledged, and to assign its rights under and pursuant to the Loan Agreement and the Series 2013 Notes in the manner and to the extent herein set forth, that all action on its part and to the extent herein set forth, that all action on its part for the issuance of the Bonds and the execution and delivery of this Bond Indenture has been duly and effectively taken and will be duly taken as provided herein, and that the Bonds in the hands of the owners thereof are and will be valid and enforceable limited obligations of the Issuer according to the import hereof, except as enforcement thereof and hereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting the rights of creditors and by the application of general principles of equity, if such remedies are pursued.

SECTION 4.02. PAYMENTS OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. The Issuer will promptly pay or cause to be paid the principal of, premium, if any, and interest on all Bonds issued hereunder according to the terms hereof. The principal, premium, if any, and interest payments are payable solely from revenues and other amounts derived from the Series 2013 Notes, and from the other security pledged hereby, which revenues and security are hereby specifically pledged to the payment thereof in the manner and to the extent herein specified. Nothing in the Bonds or in this Bond Indenture shall be considered or construed as pledging any funds or assets of the Issuer other than those pledged hereby.

SECTION 4.03. SUPPLEMENTAL INDENTURES; RECORDATION OF BOND INDENTURE AND SUPPLEMENTAL INDENTURES. The Issuer will execute and deliver all indentures supplemental hereto, and will cause this Bond Indenture, the Loan Agreement, and all supplements hereto and thereto, as well as all security instruments and financing statements relating thereto, to be filed in each office required by law in order to publish notice of the liens created by this Bond Indenture and the Loan Agreement. The Bond Trustee, at the Obligor's expense, will cause all continuation statements and all supplements to any financing statement filed upon issuance of the Series 2013 Bonds or continuation statement and other instruments as may be required, at all times to be recorded, registered and filed in such manner and in such places as may be required by law in order fully to preserve and protect the security of the Bondholders and all rights of the Bond Trustee hereunder. Notwithstanding the preceding sentence, the Bond Trustee shall not be liable for failure to effect any such filings.

SECTION 4.04. LIEN OF BOND INDENTURE. The Issuer hereby agrees not to create any lien having priority or preference over the lien of this Bond Indenture upon the Trust Estate or any part thereof, other than the security interest granted by it to the Bond Trustee, except as otherwise specifically provided in Article VIII hereof. The Issuer agrees that no obligations the payment of which is secured by payments or other moneys or amounts derived from the Loan Agreement and the other sources provided herein will be issued by it except in accordance with Sections 2.09 and 2.10 of this Bond Indenture.

SECTION 4.05. RIGHTS UNDER THE LOAN AGREEMENT. The Issuer will observe all of the obligations, terms and conditions required on its part to be observed or performed under the Loan Agreement. The Issuer agrees that wherever in the Loan Agreement it is stated that the Issuer will notify the Bond Trustee, give the Bond Trustee some right or privilege, or in any way attempts to confer upon the Bond Trustee the ability for the Bond Trustee to protect the security for payment of the Bonds, that such part of the Loan Agreement shall be as though it were set out in this Bond Indenture in full.

The Issuer agrees that the Bond Trustee as assignee of the Loan Agreement may enforce, in its name or in the name of the Issuer, all rights of the Issuer (except those rights of the Issuer to indemnification and payment under Sections 5.7, 7.5 and 9.5 thereof) and all obligations of the Obligor under and pursuant to the Loan Agreement for and on behalf of the Bondholders, whether or not the Issuer is in default hereunder.

SECTION 4.06. TAX COVENANTS. (a) The Issuer covenants and agrees that until the final maturity of the Bonds, based upon the Obligor's covenants in Section 4.9 of the Loan Agreement, it will not knowingly take any action, use any money on deposit in any fund or account maintained in connection with the Bonds, whether or not such money was derived from the proceeds of the sale of the Bonds or from any other source, in a manner that would cause the Bonds to be arbitrage bonds, within the meaning of Section 148 of the Code. In the event the Obligor notifies the Issuer (with a copy of such notification to be provided to the Bond Trustee) that it is necessary to restrict or limit the yield on the investment of moneys held by the Bond Trustee pursuant to this Bond Indenture, or to use such moneys in any certain manner to avoid the Bonds being considered arbitrage bonds, the Issuer at the written direction and expense of the Obligor shall deliver to the Bond Trustee appropriate written instructions of the

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Issuer, in which event the Bond Trustee shall take such action as instructed to restrict or limit the yield on such investment or to use such moneys in accordance with such instructions.

(b) The Issuer shall not knowingly use any proceeds of Bonds or any other funds of the Issuer, directly or indirectly, in any manner, and shall not knowingly take any other action or actions, that would result in any of the Bonds being treated other than as an obligation described in Section 103(a) of the Code.

(c) The Issuer will not knowingly use any portion of the proceeds of the Bonds, including any investment income earned on such proceeds, directly or indirectly, to make or finance loans to Persons who are not "Exempt Persons." For purposes of the preceding sentence, a loan to an organization described in Section 501(c)(3) of the Code for use with respect to an unrelated trade or business, determined according to Section 513(a) of the Code, constitutes a loan to a Person who is not an "Exempt Person."

(d) The Issuer will not knowingly take any action that would result in all or any portion of the Bonds being treated as federally guaranteed within the meaning of Section 149(b)(2) of the Code.

(e) For purposes of this Section, the Issuer's compliance shall be based solely on acts or omissions by the Issuer, and no acts, omissions or directions of the Obligor, the Bond Trustee or any other Persons shall be attributable to the Issuer.

SECTION 4.07. CHANGE IN LAW. To the extent that published rulings of the Internal Revenue Service, or amendments to the Code modify the covenants of the Issuer that are set forth in this Bond Indenture or that are necessary for interest on the Bonds to be excludable from gross income for federal income tax purposes, the Issuer, upon receiving the written Opinion of Bond Counsel to such effect, will comply, at the expense of the Obligor, with such modifications and direct the Bond Trustee to take such action as may be required to comply with such modifications.

SECTION 4.08. PROGRAM INVESTMENT. A portion of the proceeds of the Bonds are to be used to finance the Project. With respect to such portion of the Bonds, the Issuer asserts -

(a) At least 95 percent of all obligations acquired with the proceeds of the Bonds, by amount of cost outstanding, will be evidences of loans to a substantial number of persons representing the general public, loans to exempt persons, or loans to provide housing and related facilities, or any combination of the foregoing.

(b) At least 95 percent of all amounts received by the Issuer with respect to the Bonds will be used for one or more of the following purposes: to make loans to exempt organizations, to pay the principal or interest or otherwise to service the debt on the Bonds; to reimburse the Issuer or to pay for administrative costs of issuing such obligations; or to redeem or retire such Bonds of the Issuer at the next earliest possible date of redemption.

(c) Any person or any related party, as defined in Section 1.150-1 of the Code, as amended, from whom the Issuer may acquire obligations, shall not, pursuant to an arrangement, formal or informal, purchase the Issuer's bonds in an amount related to the amount of the obligations to be acquired from such person by the Issuer.

(d) The Issuer does not waive the right to treat the Loan Agreement as a program investment.

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ARTICLE V REDEMPTION OF BONDS

SECTION 5.03. METHOD OF SELECTION OF BONDS IN CASE OF PARTIAL REDEMPTION; REDEMPTION PRIORITY.

(a) In the event that less than all of the Outstanding Bonds or portions thereof are to be redeemed as provided in Sections 5.01, 5.08 or 5.09 hereof, the Bonds to be redeemed shall be selected first, from any Outstanding Series 2013B-2 Bonds, then from any Outstanding Series 2013B-1 Bonds, and then from any Outstanding Series 2013A Bonds.

(b) In the event that less than all of the Outstanding Bonds or portions thereof of a particular series are to be redeemed as provided in Sections 5.01, 5.08 or 5.09 hereof, the Obligor may select the particular maturities of such series to be redeemed. If less than all Bonds or portions thereof of a single maturity are to be redeemed, they shall be selected by the Securities Depository or by lot in such manner as the Bond Trustee may determine.

(c) If a Bond is of a denomination larger than the minimum Authorized Denomination, a portion of such Bond may be redeemed, but Bonds shall be redeemed only in the principal amount of an Authorized Denomination and no Bond may be redeemed in part if the principal amount to be Outstanding following such partial redemption is not an Authorized Denomination.

SECTION 5.04. NOTICE OF REDEMPTION. Bonds shall be called for redemption by the Bond Trustee as herein provided upon receipt by the Bond Trustee at least 45 days prior to the redemption date of a certificate of the Obligor specifying the principal amount of Bonds to be called for redemption, the applicable redemption price or prices and the provision or provisions of this Bond Indenture pursuant to which such Bonds are to be called for redemption. The provisions of the preceding sentence shall not apply to the redemption of Bonds pursuant to the sinking fund provided in Section 5.02 hereof or pursuant to the mandatory entrance fee redemption provided in Section 5.10 hereof, and such Bonds shall be called for redemption by the Bond Trustee without the necessity of any action by the Obligor or the Issuer. In case of every redemption, the Bond Trustee shall cause notice of such redemption to be given by mailing by first class mail, postage prepaid, a copy of the redemption notice to the owners of the Bonds designated for redemption in whole or in part, at their addresses as the same shall last appear upon the registration books, in each case not more than 60 nor less than 30 days prior to the redemption date. In addition, notice of redemption shall be sent by first class or registered mail, return receipt requested, or by overnight delivery service (1) contemporaneously with such mailing: (A) to any owner of $1,000,000 or more in principal amount of Bonds, and (B) to at least two or more information services of national recognition that disseminate redemption information with respect to municipal bonds; and (2) to any securities depository registered as such pursuant to the Securities Exchange Act of 1934, as amended, that is an owner of Bonds to be redeemed so that such notice is received at least two days prior to such mailing date. An additional notice of redemption shall be given by certified mail, postage prepaid, mailed not less than 60 nor more than 90 days after the redemption date to any owner of Bonds selected for redemption that has not surrendered the Bonds called for redemption, at the address as the same shall last appear upon the registration books.

All notices of redemption shall state:

(1) the redemption date,

(2) the redemption price,

(3) the identification, including complete designation (including series) and issue date of the Bonds and the CUSIP number (and in the case of partial redemption, certificate number and the respective principal amounts, interest rates and maturity dates) of the Bonds to be redeemed,

(4) the condition for redemption, if any,

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(5) that on the redemption date the redemption price will become due and payable upon each such Bonds, and that interest thereon shall cease to accrue from and after said date, and

(6) the name and address of the Bond Trustee and any paying agent for such Bonds, including the place where such Bonds are to be surrendered for payment of the redemption price and the name and phone number of a contact person at such address.

Provided, however, that failure to give any such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of such Bonds.

SECTION 5.05. BONDS DUE AND PAYABLE ON REDEMPTION DATE; INTEREST CEASES TO ACCRUE. On or before the business day prior to the redemption date specified in the notice of redemption, an amount of money sufficient to redeem all Bonds called for redemption at the appropriate redemption price, including accrued interest to the date fixed for redemption, shall be deposited with the Bond Trustee. If at the time of mailing of notice of any optional redemption in connection with a refunding of all or a portion of the Bonds the Obligor shall not have deposited with the Bond Trustee moneys sufficient to redeem all of the Bonds called for redemption, such notice may state that it is conditional in that it is subject to the deposit of the proceeds of refunding bonds with the Bond Trustee not later than the redemption date, and such notice shall be of no effect unless such moneys are so deposited. On the redemption date the principal amount of each Bond to be redeemed, together with the accrued interest thereon to such date and redemption premium, if any, shall become due and payable; and from and after such date, notice having been given and deposit having been made in accordance with the provisions of this Article V, then, notwithstanding that any Bonds called for redemption shall not have been surrendered, no further interest shall accrue on any such Bonds. From and after such date of redemption (such notice having been given and such deposit having been made), the Bonds to be redeemed shall not be deemed to be Outstanding hereunder, and the Issuer shall be under no further liability in respect thereof.

SECTION 5.08. EXTRAORDINARY OPTIONAL REDEMPTION. The Bonds shall be subject to optional redemption by the Issuer at the written direction of the Obligor prior to their scheduled maturities, in whole or in part (proportionally among each series) at a redemption price equal to the principal amount thereof plus accrued interest from the most recent interest payment date to the redemption date on any date following the occurrence of any of the following events:

(1) in case of damage or destruction to, or condemnation of, any property, plant, and equipment of any Obligated Group Member, to the extent that the net proceeds of insurance or condemnation award exceed the Threshold Amount and the Obligor has determined not to use such net proceeds or award to repair, rebuild or replace such property, plant, and equipment; or

(2) as a result of any changes in the Constitution or laws of the State of Florida or of the United States of America or of any legislative, executive, or administrative action (whether state or federal) or of any final decree, judgment, or order of any court or administrative body (whether state or federal), the obligations of the Obligor under the Loan Agreement have become, as established by an Opinion of Counsel, void or unenforceable in each case in any material respect in accordance with the intent and purpose of the parties as expressed in the Loan Agreement.

SECTION 5.09. MANDATORY REDEMPTION FROM SURPLUS CONSTRUCTION FUND MONEY. The Bonds are subject to mandatory redemption in whole or in part on any date for which timely notice of redemption can be given by the Bond Trustee upon receipt of the Completion Certificate at a redemption price equal to the aggregate principal amount of the Bonds to be redeemed plus accrued interest to the redemption date, without premium, to the extent Surplus Construction Fund Moneys are transferred to the Principal Account of the Bond Fund.

SECTION 5.10. MANDATORY ENTRANCE FEE REDEMPTION.

(a) On or after May 15, 2015, and to the extent that moneys are on deposit in the Entrance Fee Redemption Account on the day following any Entrance Fee Transfer Date, the Series 2013B-2 Bonds and the

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Series 2013B-1 Bonds are subject to mandatory redemption on the next following Entrance Fee Redemption Date at a redemption price equal to the principal amount thereof plus accrued interest to such redemption date.

(b) The principal amount of the Series 2013B-2 Bonds and the Series 2013B-1 Bonds to be redeemed on an Entrance Fee Redemption Date shall be equal to the largest Authorized Denomination of the Bonds of the applicable series for which the redemption price thereof is on deposit in the Entrance Fee Redemption Account on the day following the immediately preceding Entrance Fee Transfer Date.

(c) As soon as practicable after each Entrance Fee Redemption Date, the Bond Trustee shall give notice to the Master Trustee of the principal amount of the Series 2013B-2 Bonds and the 2013B-1 Bonds redeemed on such date, together with the principal amount of the Series 2013B-2 Bonds and the Series 2013B-1 Bonds that remains Outstanding after such redemption.

(d) Notwithstanding the foregoing, the Series 2013B-2 Bonds shall be redeemed first, and then the Series 2013B-1 Bonds shall be redeemed.

ARTICLE VI INVESTMENTS

SECTION 6.01. INVESTMENT OF BOND FUND, CONSTRUCTION FUND AND RESERVE FUND MONEYS. Any moneys held as part of the Bond Fund, Construction Fund or Reserve Fund shall be invested or reinvested by the Bond Trustee at the written request and direction of the Obligor (upon which the Bond Trustee is entitled to rely) in Permitted Investments. The Bond Trustee shall not be responsible for losses on investments made in compliance with the provisions hereof. All Permitted Investments shall be either subject to redemption at any time at a fixed value at the option of the owner thereof or shall mature or be marketable not later than the business day prior to the date on which the proceeds are expected to be expended. For the purpose of any investment or replacement under this Section, the Permitted Investments shall be deemed to mature at the earliest date on which the Obligor is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligation. The Bond Trustee may make any and all investments permitted by the provisions of this Section through its trust department. In order to comply with the directions of the Obligor, the Bond Trustee may sell, or present for redemption, or may otherwise cause liquidation prior to their maturities, any of the obligations in which funds have been invested, and the Bond Trustee shall not be liable for any loss or penalty of any nature resulting therefrom. In order to avoid loss in the event of any need for funds, the Obligor may instruct the Bond Trustee, in lieu of a liquidation or redemption of investments in the fund or account needing funds, to exchange such investment for investments in another fund or account that may be liquidated at no, or at reduced, loss. The Bond Trustee shall be under no liability for interest on any moneys received hereunder unless specifically agreed to in writing. Notwithstanding anything to the contrary in this Section 6.01, (i) the Obligor shall not direct the Bond Trustee to purchase any Premium Security unless the written instructions of the Obligor to make such purchase set forth the amount of premium on such Premium Security, and (ii) the Obligor shall not direct the Bond Trustee to sell any Premium Security, unless prior to such sale, the Obligor has directed the Bond Trustee in writing as to the amount of realized premium on such Premium Security to be transferred from the Funded Interest Account to the account in which such Premium Security was held. The Bond Trustee may conclusively rely upon the Obligor’s written instructions as to both the suitability and legality of all directed investments. The Bond Trustee shall have no responsibility to monitor the ratings of investments after the initial purchase of such investments. In the absence of written investment instructions from the Obligor, the Bond Trustee shall not be responsible or liable for keeping the moneys held by it hereunder fully invested. Confirmations of investments are not required to be issued by the Bond Trustee for each month in which a monthly statement is rendered.

SECTION 6.02. ALLOCATION AND TRANSFERS OF INVESTMENT INCOME. Any investments in any Fund shall be held by or under the control of the Bond Trustee and shall be deemed at all times a part of the Fund from which the investment was made. Any loss resulting from such investments shall be charged to such Fund. The Bond Trustee shall not be liable for any loss or penalty resulting from any such investment made in accordance with any permitted direction by an Obligor or for the Bonds becoming "arbitrage bonds" by reason of any such investment. Any interest or other gain from any fund from any investment or reinvestment pursuant to Section 6.01 hereof shall be allocated and transferred as follows:

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(a) Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Funded Interest Account of the Construction Fund or the Project Account of the Construction Fund shall be credited to the Funded Interest Account of the Construction Fund until such Funded Interest Account of the Construction Fund expires, and thereafter, to the Interest Account of the Bond Fund.

(b) Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Principal Account and the Interest Account of the Bond Fund shall be credited at least semiannually to the Interest Account unless a deficiency exists in any Reserve Account of the Reserve Fund, in which case such interest or other gain shall be paid into such Reserve Account forthwith.

(c) Any interest or other gain realized as a result of any investments or reinvestments of moneys in any Reserve Account of the Reserve Fund shall be credited to such Reserve Account if a deficiency exists therein at that time. If a deficiency does not exist in a Reserve Account at that time, such interest or other gain on other amounts paid into such Reserve Account shall be paid during the construction period for the Project for deposit into the Funded Interest Account of the Construction Fund created in connection with the issuance of Bonds for the Project or if after the completion of such construction period, for deposit into the Interest Account of the Bond Fund, in each case at least semiannually.

The Bond Trustee shall sell and reduce to cash a sufficient portion of such investments whenever the cash balance in any fund is insufficient for the purposes of such fund.

SECTION 6.03. VALUATION OF PERMITTED INVESTMENTS. Accounting and valuation of Permitted Investments in any Fund or Account will be performed as follows:

(a) On a monthly basis the Bond Trustee shall furnish to the Obligor a full and complete statement of all receipts and disbursements of Permitted Investments in any Fund and Account covering such period.

(b) The Bond Trustee shall also furnish on or before May 15 of each year a statement of the assets contained in each Fund and Account. Assets will be valued at market value as of April 30 by the Bond Trustee in such statement in accordance with the normal valuation procedures of the Bond Trustee; provided, however, in the event monies are withdrawn from any Reserve Account of the Reserve Fund for a deficiency in the Principal Account or Interest Account pursuant to Section 3.10(b) hereof, assets in the Reserve Fund shall also be valued as of the first Business Day after such transfer is made (such date and each April 30 referred to as a "Valuation Date").

(c) If on any Valuation Date, the amount on deposit in any Reserve Account of the Reserve Fund is less than 90% of the related Reserve Fund Requirement as a result of a decline in the market value of investments on deposit in the Reserve Account, the Obligor shall deposit with the Bond Trustee an amount necessary to restore such Reserve Account to the related Reserve Fund Requirement within 120 days following the date on which the Obligor receives notice of such deficiency.

(d) If at any time, the amount on deposit in any Reserve Account is less than 100% of the related Reserve Fund Requirement as a result of a draw on such Reserve Account, the Obligor shall deposit with the Bond Trustee an amount necessary to restore such Reserve Account to the related Reserve Fund Requirement in not more than 12 substantially equal monthly installments beginning on the first day of the seventh month after the month in which such draw occurred.

ARTICLE VII DISCHARGE OF BOND INDENTURE

SECTION 7.01. DISCHARGE OF THE BOND INDENTURE. If, when the Bonds secured hereby shall become due and payable in accordance with their terms or otherwise as provided in this Bond Indenture and the whole amount of the principal of, premium, if any, and interest due and payable upon all of the Bonds shall be paid, or provision shall have been made for the payment of the same, together with all other sums payable hereunder (including but not limited to the fees and expenses of the Bond Trustee and any Paying Agent, in accordance with Section 3.13 hereof), then the right, title and interest of the Bond Trustee in and to the Trust Estate and all

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covenants, agreements and other obligations of the Issuer to the Bondholders shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, upon the written request of the Issuer or of the Obligor, and upon receipt of an Opinion of Counsel to the effect that all conditions precedent herein provided relating to the satisfaction and discharge of this Bond Indenture have been complied with, the Bond Trustee shall execute such documents as may be reasonably required by the Issuer and shall turn over to the Obligor any surplus in the Cost of Issuance Fund, Bond Fund, Reserve Fund and Construction Fund.

All Outstanding Bonds of any one or more series shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in this Section if (i) in case said Bonds are to be redeemed on any date prior to their maturity, the Obligor shall have given to the Bond Trustee in form satisfactory to it irrevocable written instructions to give on a date in accordance with the provisions of Section 5.04 hereof notice of redemption of such Bonds on said redemption date, such notice to be given in accordance with the provisions of Section 5.04 hereof, (ii) there shall have been deposited with the Bond Trustee (or another Paying Agent) either moneys in an amount which shall be sufficient, or Government Obligations which shall not contain provisions permitting the redemption thereof at the option of the issuer, or any other Person other than the holder thereof, the principal of and the interest on which when due, and without any reinvestment thereof, will provide moneys which, together with the moneys, if any, deposited with or held by the Bond Trustee or any Paying Agent at the same time (including the Bond Fund and the Reserve Fund), shall be sufficient, in the opinion of an independent certified public accountant, to pay when due the principal of, premium, if any, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof, as the case may be, and (iii) in the event that said Bonds are not by their terms subject to redemption within the next 45 days, the Obligor shall have given the Bond Trustee in form satisfactory to it irrevocable written instructions to give, as soon as practicable in the same manner as the notice of redemption is given pursuant to Section 5.04 hereof, a notice to the owners of such Bonds that the deposit required by subclause (ii) above has been made with the Bond Trustee (or another depository) and that said Bonds are deemed to have been paid in accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of, premium, if any, and interest on said Bonds. Neither the Government Obligations nor moneys deposited with the Bond Trustee pursuant to this Section nor principal or interest payments on any such Government Obligations shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of, premium, if any, and interest on said Bonds; provided any such cash received from such principal or interest payments on such Government Obligations deposited with the Bond Trustee, if not then needed for such purpose, shall, at the written direction of the Obligor, either (1) be reinvested, to the extent practicable, in Government Obligations of the type described in clause (ii) of this paragraph maturing at the times and in amounts sufficient to pay when due the principal of, premium, if any, and interest to become due on said Bonds on or prior to such redemption date or maturity date thereof, as the case may be, or (2) be used to pay principal and/or interest on the Bonds. At such time as any Bond shall be deemed paid as aforesaid, it shall no longer be secured by or entitled to the benefits of this Bond Indenture, except for the purpose of any payment from such moneys or Government Obligations deposited with the Bond Trustee and the purpose of transfer and exchange pursuant to Section 2.05 hereof.

The release of the obligations of the Issuer under this Section shall be without prejudice to the rights of the Bond Trustee to be paid reasonable compensation for all services rendered by it hereunder and all its reasonable and necessary expenses, charges and other disbursements incurred on or about the administration of the trust hereby created and the performance of its powers and duties hereunder.

ARTICLE VIII DEFAULTS AND REMEDIES

SECTION 8.01. EVENTS OF DEFAULT. If any of the following events occur, it is hereby defined as and shall be deemed an "Event of Default":

(a) Default in the payment of the principal of or premium, if any, on any Bond when the same shall become due and payable, whether at the stated maturity thereof, or upon proceedings for redemption or as required by the sinking fund provisions hereof or otherwise.

(b) Default in the payment of any installment of interest on any Bond when the same shall become due and payable.

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(c) Declaration under the Master Indenture that the principal of, and accrued interest on, any Obligation issued thereunder is immediately due and payable.

(d) Failure by the Issuer in the performance or observance of any other of the covenants, agreements or conditions on its part in this Bond Indenture or in the Bonds contained, which failure shall continue for a period of 60 days after written notice specifying such failure and requesting that it be remedied, is given to the Issuer and the Obligor by the Bond Trustee or to the Issuer, the Obligor and to the Bond Trustee by the owners of not less than 25% in principal amount of the Bonds Outstanding; provided that such failure is the result of the failure of the Obligor to perform its obligations under the Loan Agreement.

SECTION 8.02. REMEDIES ON EVENTS OF DEFAULT. Upon the occurrence of an Event of Default, the Bond Trustee shall have the following rights and remedies:

(a) The Bond Trustee shall, in the event that the payment of the principal of and accrued interest on any Note has been declared due and payable immediately by the Master Trustee, by notice in writing given to the Issuer and the Obligor, declare the principal amount of all Bonds then Outstanding and the interest accrued thereon to be immediately due and payable and said principal and interest shall thereupon become immediately due and payable. Upon any declaration of acceleration hereunder, the Bond Trustee shall give notice to the Bondholders in the same manner as a notice of redemption under Article V hereof, stating the date upon which the Series 2013 Notes and the Bonds shall be payable.

The provisions of the preceding paragraph, however, are subject to the condition that if, after the payment of the principal of, and accrued interest on, the Series 2013 Notes and the Bonds has been declared due and payable immediately, the declaration of the acceleration of the Series 2013 Notes shall be annulled in accordance with the provisions of the Master Indenture, the declaration of the acceleration of the Bonds shall be automatically annulled, and the Bond Trustee shall promptly give written notice of such annulment to the Issuer and the Obligor and notice to Bondholders in the same manner as a notice of redemption under Article V hereof; but no such annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon;

(b) The Bond Trustee may, by mandamus, or other suit, action or proceeding at law or in equity, enforce the rights of the Bondholders, and require the Issuer or the Obligor or both of them to carry out the agreements with or for the benefit of the Bondholders and to perform its or their duties under the Act, the Loan Agreement and this Bond Indenture.

(c) The Bond Trustee may, by action or suit in equity, require the Issuer to account as if it were the trustee of an express trust for the Bondholders but any such judgment against the Issuer shall be enforceable only against the funds and accounts hereunder in the hands of the Bond Trustee.

(d) The Bond Trustee may, by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders.

(e) The Bond Trustee may, upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and the Bondholders, have appointed a receiver or receivers of the Trust Estate upon a showing of good cause with such powers as the court making such appointment may confer.

No right or remedy is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

If any Event of Default shall have occurred and if requested by the owners in writing of at least 25% in Aggregate Principal Amount of Bonds then Outstanding and indemnified as provided in Section 9.01(m) hereof (except the remedy under Section 8.02(a) above, for which no indemnity may be required), the Bond Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section as it, being advised by counsel, shall deem most expedient in the interests of such Bondholders. In the event the Bond Trustee shall receive inconsistent or conflicting requests and indemnity from two or more groups of owners of Outstanding Bonds, each

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representing less than a majority of the aggregate principal amount of the Outstanding Bonds, the Bond Trustee, in its sole discretion, may determine what action, if any, shall be taken.

SECTION 8.03. MAJORITY OF BONDHOLDERS MAY CONTROL PROCEEDINGS. Anything in this Bond Indenture to the contrary notwithstanding the owners of at least a majority in Aggregate Principal Amount of the Bonds then Outstanding shall have the right, at any time, to the extent permitted by law, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the time, method, and place of conducting all proceedings, to be taken in connection with the enforcement of the terms and conditions of this Bond Indenture, or for the appointment of a receiver, and any other proceedings hereunder; provided that such direction shall not be otherwise than in accordance with the provisions hereof and provided, further, that notwithstanding anything to the contrary in this Bond Indenture, the Issuer shall have the sole ability to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of Section 4.10 of the Loan Agreement. The Bond Trustee shall not be required to act on any direction given to it pursuant to this Section until indemnity as set forth in Section 9.01(m) hereof is provided to it by such Bondholders.

SECTION 8.04. RIGHTS AND REMEDIES OF BONDHOLDERS. No owner of any Bond shall have any right to institute any suit, action, or proceeding in equity or at law for the enforcement of this Bond Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other applicable remedy hereunder, unless a default has occurred of which the Bond Trustee has been notified as provided in Section 9.01 hereof, or of which by said Section it is deemed to have notice, nor unless such default shall have become an Event of Default and the owners of at least a majority in Aggregate Principal Amount of Bonds then Outstanding shall have made written request to the Bond Trustee and shall have offered reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit, or proceeding in their own names, nor unless they have also offered to the Bond Trustee indemnity as provided in Section 9.01(m) hereof, nor unless the Bond Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit, or proceeding in its own name; and such notification, request, and offer of indemnity are hereby declared in every case at the option of the Bond Trustee to be conditions precedent to the execution of the powers and trusts of this Bond Indenture, and to any action or cause of action for the enforcement of this Bond Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more owners of the Bonds shall have the right in any manner whatsoever to affect, disturb, or prejudice the lien of this Bond Indenture by his, her, its, or their action or to enforce any right hereunder except in the manner herein provided and that all proceedings at law or in equity shall be instituted, had, and maintained in the manner herein provided and for the equal benefit of the owners of all Bonds then Outstanding. Nothing in this Bond Indenture contained shall, however, affect or impair the right of any owner of Bonds to enforce the payment of the principal of, premium, if any, or interest on any Bond at and after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, and interest on each of the Bonds to the respective owners of the Bonds at the time and place, from the source and in the manner herein, and in the Bonds expressed.

SECTION 8.05. APPLICATION OF MONEYS. (a) Subject to the provisions of subparagraph (c) hereof, all moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the costs and expenses (including reasonable attorney fees) of the proceedings resulting in the collection of such moneys and the outstanding fees, expenses, liabilities, and advances incurred or made by the Bond Trustee, be deposited into the Bond Fund, and all moneys so deposited into the Bond Fund and all moneys held in or deposited into the Bond Fund during the continuance of an Event of Default and available for payment of the Bonds under the provisions of Section 3.04 hereof shall (after payment of the fees and expenses of the Bond Trustee) be applied as follows:

(i) Unless the principal of all of the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:

First: To the payment to the Persons entitled thereto of all installments of interest then due on the Bonds in the order of the maturity of the installments of such interest and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; and

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Second: To the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Bond Indenture), in the order of their due dates, with interest on such Bonds from the respective dates upon which they become due at the rate of interest borne by such Bonds and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled thereto, without any discrimination or privilege.

(ii) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon all of the Bonds (together with interest on overdue installments of principal at the rate of interest borne by each Bond), without preference or priority of principal over interest, any other installment of interest, or of any Bond over any other Bond, or of any series of Bonds over any other series of Bonds ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege.

(iii) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article then, subject to the provisions of paragraph (ii) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of the foregoing paragraph (i) of this Section.

(b) Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Bond Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such date shall cease to accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit of any such moneys and of the fixing of any such date, and shall not be required to make payment to the owner of any unpaid Bond until such unpaid Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid.

(c) Notwithstanding the foregoing, any moneys transferred into any Account of the Bond Fund from any Reserve Account of the Reserve Fund shall be (i) held by the Bond Trustee separate and apart from any other moneys in such Account of the Bond Fund, and (ii) applied solely to payment of principal of and interest on the series of Bonds related to such Reserve Account.

(d) Whenever all of the Bonds and interest thereon have been paid under the provisions of this Section and all expenses and fees of the Bond Trustee and the Paying Agents and all Administration Expenses have been paid, any balance remaining in any funds shall be paid to the Obligor as provided in Section 3.15 hereof.

SECTION 8.06. BOND TRUSTEE MAY ENFORCE RIGHTS WITHOUT BONDS. All rights of action and claims under this Bond Indenture or any of the Bonds Outstanding hereunder may be enforced by the Bond Trustee without the possession of any of the Bonds or the production thereof in any trial or proceedings relative thereto; and any suit or proceeding instituted by the Bond Trustee shall be brought in its name as Bond Trustee, without the necessity of joining as plaintiffs or defendants any owners of the Bonds and any recovery of judgment shall be for the ratable benefit of the owners of the Bonds, subject to the provisions of this Bond Indenture.

SECTION 8.07. BOND TRUSTEE TO FILE PROOFS OF CLAIM IN RECEIVERSHIP, ETC. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial proceedings affecting the Obligor, the Bond Trustee shall, to the extent permitted by law, be entitled to file such proofs of claims and other documents as may be necessary or advisable in order to have claims of the Bond Trustee and of the Bondholders allowed in such proceedings for the entire amount due and payable by the Issuer under the Bond Indenture or by the Obligor at the date of the institution of such proceedings and for any additional

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amounts which may become due and payable by it after such date, without prejudice, however, to the right of any Bondholder to file a claim in his, her or its own behalf.

No provision of this Bond Indenture empowers the Bond Trustee to authorize, consent to, accept or adopt on behalf of any Bondholder any plan or reorganization, arrangement, adjustment or composition affecting any of the rights of any Bondholders, or authorizes the Bond Trustee to vote in respect of the claim in any proceeding described in this Section.

In the event the Bond Trustee incurs expenses or renders services in any proceedings affecting the Obligor and described in this Section, the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the United States Bankruptcy Code or equivalent law.

SECTION 8.08. DELAY OR OMISSION NO WAIVER. No delay or omission of the Bond Trustee or of any Bondholder to exercise any right or power accruing upon any default or Event of Default shall exhaust or impair any such right or power or shall be construed to be a waiver of any such default or Event of Default, or acquiescence therein; and every power and remedy given by this Bond Indenture may be exercised from time to time and as often as may be deemed expedient.

SECTION 8.09. DISCONTINUANCE OF PROCEEDINGS ON DEFAULT, POSITION OF PARTIES RESTORED. In case the Bond Trustee shall have proceeded to enforce any right under this Bond Indenture, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Trustee, then and in every such case the Issuer and the Bond Trustee shall be restored to their former positions and rights hereunder with respect to the Trust Estate, and all rights, remedies, and powers of the Bond Trustee shall continue as if no such proceedings had been taken.

SECTION 8.10. ENFORCEMENT OF RIGHTS. The Bond Trustee, as pledgee and assignee for security purposes of all the right, title, and interest of the Issuer in and to the Loan Agreement (except those rights under Section 5.7, 7.5, and 9.5 thereof) and the Series 2013 Notes shall, upon compliance with applicable requirements of law and except as otherwise set forth in this Article VIII, be the sole real party in interest in respect of, and shall have standing, exclusive of owners of Bonds to enforce each and every right granted to the Issuer under the Loan Agreement and under the Series 2013 Notes. The Issuer and the Bond Trustee hereby agree, without in any way limiting the effect and scope thereof, that the pledge and assignment hereunder to the Bond Trustee of any and all rights of the Issuer in and to the Series 2013 Notes and the Loan Agreement shall constitute an agency appointment coupled with an interest on the part of the Bond Trustee which, for all purposes of this Bond Indenture, shall be irrevocable and shall survive and continue in full force and effect notwithstanding the bankruptcy or insolvency of the Issuer or its default hereunder or on the Bonds. Subject to Section 9.01 hereof, in exercising such right and the rights given the Bond Trustee under this Article VIII, the Bond Trustee shall take such action as, in the judgment of the Bond Trustee, would best serve the interests of the Bondholders, taking into account the provisions of the Master Indenture, together with the security and remedies afforded to owners of Series 2013 Notes.

SECTION 8.11. UNDERTAKING FOR COSTS. All parties to this Bond Indenture agree, and each Bondholder by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Bond Indenture, or in any suit against the Bond Trustee for any action taken or omitted by it as Bond Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Bond Trustee, to any suit instituted by any Bondholder, or group of Bondholders, holding in aggregate more than 10% in principal amount of the Outstanding Bonds, or to any suit instituted by a Bondholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Bond on or after the respective maturities thereof expressed in such Bond (or, in the case of redemption, on or after the redemption date).

SECTION 8.12. WAIVER OF EVENTS OF DEFAULT. The Bond Trustee may in its discretion waive any Event of Default hereunder and its consequences, and shall do so upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that the Bond Trustee may not waive an Event of Default described in subparagraph (a) of Section 8.01 hereof without the written consent

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of the Registered Owners of all Bonds then Outstanding; and provided, further, that notwithstanding anything to the contrary in this Bond Indenture, the Issuer shall have the sole ability to waive any Event of Default in connection with the covenants and obligations of the Obligor under Section 4.10 of the Loan Agreement.

ARTICLE X SUPPLEMENTAL INDENTURES AND AMENDMENTS TO THE LOAN AGREEMENT

SECTION 10.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS. The Issuer and the Bond Trustee may, without the consent of, or notice to, the Bondholders, enter into such indentures or agreements supplemental hereto (which supplemental indentures or agreements shall thereafter form a part hereof) for any one or more or all of the following purposes:

(a) To add to the covenants and agreements in this Bond Indenture contained other covenants and agreements thereafter to be observed for the protection or benefit of the Bondholders.

(b) To cure any ambiguity, or to cure, correct, or supplement any defect or inconsistent provision contained in this Bond Indenture, or to make any provisions with respect to matters arising under this Bond Indenture or for any other purpose if such provisions are necessary or desirable and do not, in the judgment of the Bond Trustee, adversely affect the interests of the owners of Bonds.

(c) To subject to this Bond Indenture additional revenues, properties, or collateral.

(d) To qualify this Bond Indenture under the Trust Indenture Act of 1939, if such be hereafter required in the Opinion of Counsel.

(e) To satisfy any requirements imposed by a Rating Agency if necessary to maintain the then current rating on the Bonds.

(f) To maintain the extent to which the interest on the Bonds is not includable in the gross income of the recipients thereof, if in the Opinion of Bond Counsel such supplemental indenture or agreement is necessary.

SECTION 10.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS. Exclusive of supplemental indentures covered by Section 10.01 hereof, the owners of not less than a majority in Aggregate Principal Amount of the Bonds then Outstanding affected thereby shall have the right, from time to time, to consent to and approve the execution by the Issuer and the Bond Trustee of such indenture or indentures supplemental hereto as shall be deemed necessary or desirable by the Issuer for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in this Bond Indenture; provided, however, that without the consent of the owners of all the Bonds at the time Outstanding nothing herein contained shall permit, or be construed as permitting any of the following:

(a) An extension of the maturity of, or a reduction of the principal amount of, or a reduction of the rate of, or extension of the time of payment of interest on, or a reduction of a premium payable upon any redemption of, any Bond.

(b) The deprivation of the owner of any Bond then Outstanding of the lien created by this Bond Indenture (other than as originally permitted hereby).

(c) A privilege or priority of any Bond or Bonds, over any other Bond.

(d) A reduction in the Aggregate Principal Amount of the Bonds required for consent to any supplemental bond indenture.

Upon the execution of any supplemental bond indenture pursuant to the provisions of this Section, this Bond Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties, and obligations under this Bond Indenture of the Issuer, the Bond Trustee and all owners of Bonds then

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Outstanding shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such modifications and amendments.

If at any time the Issuer shall request the Bond Trustee in writing to enter into such supplemental bond indenture for any of the purposes of this Section, the Bond Trustee shall, upon being satisfactorily indemnified with respect to costs, fees and expenses (including attorneys fees), cause notice of the proposed execution of such supplemental indenture to be mailed to the Registered Owners of the Bonds at their addresses as the same last appear on the registration books. Such notice shall briefly set forth the nature of the proposed supplemental bond indenture and shall state that copies thereof are on file at the designated office of the Bond Trustee for inspection by all Bondholders. If, within sixty days or such longer period as shall be prescribed by the Issuer following the giving of such notice, the owners of not less than a majority in Aggregate Principal Amount of the Bonds Outstanding at the time of the execution of any such supplemental bond indenture shall have consented to and approved the execution thereof as herein provided, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.

SECTION 10.03. EXECUTION OF SUPPLEMENTAL INDENTURE. The Bond Trustee is authorized to join with the Issuer in the execution of any such supplemental bond indenture and to make further agreements and stipulations which may be contained therein, but the Bond Trustee shall not be obligated to enter into any such supplemental bond indenture which affects its rights, duties, or immunities under this Bond Indenture. The Bond Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution and delivery of a supplemental bond indenture is authorized or permitted by this Bond Indenture and has been effected in compliance with the provisions hereof. In connection with a supplemental bond indenture entered into pursuant to Section 10.01(b) hereof, the Bond Trustee may in its discretion determine whether or not in accordance with such provision the Bondholders would be affected by modification or amendment of this Bond Indenture, and any such determination shall be binding and conclusive upon the Issuer, the Obligor, and Bondholders. The Bond Trustee may receive an Opinion of Counsel as conclusive evidence as to whether the Bondholders would be so affected by any such modification or amendment to this Bond Indenture.

Any supplemental bond indenture executed in accordance with the provisions of this Article shall thereafter form a part of this Bond Indenture; and all the terms and conditions contained in any such supplemental bond indenture as to any provision authorized to be contained therein shall be deemed to be part of this Bond Indenture for any and all purposes. In case of the execution and delivery of any supplemental bond indenture, express reference may be made thereto in the text of the Bonds issued thereafter, if any, if deemed necessary or desirable by the Bond Trustee.

SECTION 10.04. CONSENT OF OBLIGOR. Anything herein to the contrary notwithstanding, a supplemental bond indenture under this Article shall not become effective unless and until the Obligor shall have consented in writing to the execution and delivery of such supplemental bond indenture unless the Obligor is in default under the Loan Agreement or an Event of Default described under Section 8.01(a), (b) or (c) hereunder has occurred and is continuing, in which case no consent of the Obligor shall be required. The Bond Trustee shall cause notice of the proposed execution of any supplemental indenture together with a copy of the proposed supplemental bond indenture to be mailed to the Obligor at least fifteen days prior to the proposed date of execution of such supplemental bond indenture.

SECTION 10.05. AMENDMENTS, ETC., OF THE LOAN AGREEMENT NOT REQUIRING CONSENT OF BONDHOLDERS. The Issuer and the Bond Trustee shall, without the consent of or notice to the Bondholders, consent to any amendment, change, or modification of the Loan Agreement as may be required (a) by the provisions of the Loan Agreement and this Bond Indenture, (b) for the purpose of curing any ambiguity or formal defect or omission, (c) to satisfy any requirements imposed by a Rating Agency if necessary to maintain the then current rating on the Bonds, (d) to maintain the extent to which the interest on the Bonds is not includable in the gross income of the recipients thereof, if in the Opinion of Bond Counsel such amendment is necessary, and (e) in connection with any other change therein which does not adversely affect the Bond Trustee or the owners of the Bonds.

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SECTION 10.06. AMENDMENTS, ETC., OF THE LOAN AGREEMENT REQUIRING CONSENT OF BONDHOLDERS. Except for the amendments, changes, or modifications as provided in Section 10.05 hereof, neither the Issuer nor the Bond Trustee shall consent to any other amendment, change, or modification of the Loan Agreement without the giving of notice to and the written approval or consent of the owners of not less than a majority in Aggregate Principal Amount of the Bonds at the time Outstanding given and procured as provided in Section 10.02 hereof. If at any time the Issuer and the Obligor shall request in writing the consent of the Bond Trustee to any such proposed amendment, change, or modification of the Loan Agreement, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change, or modification to be given in the same manner as provided in Section 10.02 hereof. Such notice shall briefly set forth the nature of such proposed amendment, change, or modification and shall state that copies of the instrument embodying the same are on file at the designated office of the Bond Trustee for inspection by all Bondholders.

In executing any amendment, change or modification of the Loan Agreement, the Bond Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution and delivery of such amendment, change, modification of the Loan Agreement is authorized or permitted by this Bond Indenture and the Loan Agreement and has been effected in compliance with the provisions of this Bond Indenture and the Loan Agreement. The Bond Trustee may, but shall not be obligated to, enter into any such amendment, change, or modification which affects the Bond Trustee's own rights, duties or immunities. In connection with any amendment, change or modification in connection with Section 10.05(e) hereof, the Bond Trustee may in its discretion determine whether or not in accordance with such provision the Bond Trustee or the Bondholders would be prejudiced by such amendment, change, modification. Any such determination shall be binding and conclusive on the Issuer, the Obligor, and the Bondholders. The Bond Trustee may receive an Opinion of Counsel as conclusive evidence as to whether the Bondholders would be so affected by any such amendment, change, or modification of the Loan Agreement.

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EXCERPTS FROM LOAN AGREEMENT

The following are certain excerpts from the Loan Agreement. These excerpts do not purport to be complete and are qualified in their entirety by reference to the Loan Agreement.

ARTICLE II REPRESENTATIONS

SECTION 2.1. REPRESENTATIONS BY THE ISSUER. The Issuer represents that:

(a) The Issuer is a duly organized and validly existing industrial development authority under and pursuant to the laws of the State of Florida and has full power and authority under the laws of the State of Florida (including, in particular, the Act) to enter into the transactions contemplated by this Loan Agreement and to carry out its obligations hereunder. By proper action the Issuer has duly authorized the execution and delivery of this Loan Agreement and the Bond Indenture and the performance of its obligations under this Loan Agreement and the Bond Indenture.

(b) To the best of the Issuer's knowledge, neither the execution and delivery of the Bonds, the Bond Indenture or this Loan Agreement, the consummation of the transactions contemplated thereby and hereby nor the fulfillment of or compliance with the terms and conditions or provisions of the Bonds, the Bond Indenture or this Loan Agreement conflict with or result in the breach of any of the terms, conditions or provisions of any constitutional provision or statute of the State of Florida or of any agreement or instrument or judgment, order or decree of which the Issuer has notice that it is a party or constitutes a default under any of the foregoing or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature upon any property or assets of the Issuer under the terms of any instrument or agreement.

(c) The Issuer has the power and authority to issue the Bonds for the purpose of refunding the Prior Debt, financing and refinancing a portion of the Cost of the Project, to fund a debt service reserve fund and to pay a portion of the Cost of Issuance. The Bonds shall be in the principal amount, mature, bear interest, be subject to redemption prior to maturity, be secured, and have such other terms and conditions as are set forth in the Bond Indenture.

(d) The Bonds are to be issued under and secured by the Bond Indenture pursuant to which the Issuer's interest in this Loan Agreement and in the Series 2013 Notes, and the revenues and receipts derived by the Issuer from the Series 2013 Notes, will be pledged and assigned to the Bond Trustee as security for payment of the principal of, premium, if any, and interest on the Bonds.

(e) The Obligor has represented to the Issuer that that the Project constitutes a "project" within the meaning of the Act.

(f) The issuance of the Bonds and the execution of this Loan Agreement and the Bond Indenture have been approved by the Issuer at a duly constituted meeting.

(g) Except as otherwise permitted by this Loan Agreement, the Issuer covenants that it has not and will not pledge the income and revenues derived from this Loan Agreement other than to secure the Bonds.

(h) After reasonable public notice given by publication in the Naples Daily News, a newspaper published and of general circulation in Collier County, Florida on August 8, 2013, the Issuer held a public hearing on August 26, 2013 concerning the issuance of the Bonds, the refunding of the Prior Debt, the financing of the Project and the location of the Project. After such hearing, the Issuer approved the resolution for the issuance of the Bonds by duly adopting a resolution on August 26, 2013. The Board of County Commissioners of Collier County, Florida, the elected legislative body of Collier County, Florida, approved issuance of the Bonds by duly adopting a resolution on September 10, 2013.

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SECTION 2.2. REPRESENTATIONS BY THE OBLIGOR. The Obligor represents that:

(a) The Obligor is a not for profit corporation registered to do business in the State of Florida and duly incorporated and in good standing under the laws of the State of Illinois, has power to enter into the Obligor Documents and by proper corporate action has duly authorized the execution and delivery of the Obligor Documents.

(b) Neither the execution and delivery of any of the Obligor Documents, the consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms and conditions of the Obligor Documents, conflict with or result in a breach of any of the terms, conditions or provisions of any corporate restriction or any agreement or instrument to which the Obligor is now a party or by which it is bound or constitute a default under any of the foregoing.

(c) No event of default or any event which, with the giving of notice or the lapse of time, or both, would constitute an event of default under the Master Indenture, has occurred.

(d) To the best of the Obligor's knowledge, information and belief, all of the documents, instruments and written information supplied by or on behalf of the Obligor, which have been reasonably relied upon by Bond Counsel in rendering their opinion with respect to the exclusion from gross income of the interest on the Bonds for federal income tax purposes or counsel to the Obligor in rendering its opinion with respect to the status of the Obligor under Section 501(c)(3) of the Code, are true and correct in all material respects, do not contain any untrue statement of a material fact and do not omit to state any material fact necessary to be stated therein to make the information provided therein, in light of the circumstances under which such information was provided, not misleading.

(e) The Project consists entirely of property that is owned, or to be owned, and operated by the Obligor. None of the Project will be used in an "unrelated trade or business" (as such term is used in Section 513(a) of the Code) of the Obligor (or any other organization that is exempt from federal income tax under Section 501(c)(3) of the Code that may rent or use any portion of the Project) or for any private business use (other than by an organization that is exempt from federal income tax under Section 501(c)(3) of the Code) within the meaning and contemplation of Section 141(b) of the Code.

(f) The Tax Compliance Agreement executed and delivered by the Obligor concurrently with the issuance and delivery of the Bonds is true, accurate and complete in all material respects as of the date on which executed and delivered.

(g) The Obligor agrees that it and any other Obligated Group Member (i) shall not perform any act or enter into any agreement which would adversely affect its members' federal income tax status and shall conduct its operations in the manner which conforms to the standards necessary to qualify the members as a charitable organization within the meaning of Section 501(c)(3) of the Code or any successor provisions of federal income tax law, (ii) shall not perform any act, enter into any agreement or use or permit the Facilities or the Project, or any portion thereof, to be used in any manner, or for any trade or business or other non-exempt use related to the purposes of the Obligor, which would adversely affect the exclusion of interest on the Bonds, from federal gross income pursuant to Section 103 of the Code, (iii) shall not do or fail to do any act or undertaking which may give rise to unrelated trade or business income with respect to its operations at the Facilities or Project, and (iv) shall not directly or indirectly use or permit the use (including the making of any investment) of any proceeds of the Bonds or any other funds of the Issuer or the Obligated Group, or take or omit to take any action, that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code.

(h) The Obligor agrees that neither it nor any related party to the Obligor (as defined in Section 1.150-1(b) of the Code) will purchase any of the Bonds in an amount related to the obligation represented by this Loan Agreement, as described in Section 1.148-1(b) of the Code.

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(i) Any information that has been or will be supplied by the Obligor that has been or will be relied upon by the Issuer, the Bond Trustee and Bond Counsel with respect to the exclusion from gross income for federal income tax purposes of interest on the Bonds is true and correct.

(j) The Obligor is duly authorized to operate the Facilities and the Project under the laws, rulings, regulations and ordinances of the State of Florida and the departments, agencies and political subdivisions thereof.

(k) The Project constitutes a "project" within the meaning of the Act. All proceeds of the Bonds will be used to finance a "cost" within the meaning of the Act.

(l) Based on current facts, estimates and circumstances, it is currently expected that the Project will not be sold or disposed of in a manner producing sale proceeds which, together with accumulated proceeds of the Bonds or earnings thereon, would be sufficient to enable the Obligor to retire substantially all of the Bonds prior to the maturity of the Bonds.

(m) The Obligor will construct the Project and operate its Facilities in accordance with all applicable zoning, planning, building and environmental laws, ordinances, rules and regulations of governmental authorities rating or inspection organizations, bureaus, associations, or offices having jurisdiction over the Facilities or the Project, as the case may be. The Obligor has obtained or will cause to be obtained all requisite approvals of the State of Florida and of other federal, state, regional and local governmental bodies for the Facilities and the Project.

(n) Substantially all of the net proceeds of the Bonds, including earnings from the investment thereof, were used, or will be used, to pay Qualified Project Costs.

(o) The Obligor will not discriminate against the residents of its Facilities or the Project on the basis of race, religion, sex or national origin.

(p) The Obligor agrees to perform all obligations imposed upon it by the express terms of the Bond Indenture.

ARTICLE III TERM OF LOAN AGREEMENT

SECTION 3.1. TERM OF THIS LOAN AGREEMENT. Subject to Section 11.12 herein, this Loan Agreement shall remain in full force and effect from the date of delivery hereof until such time as all of the Bonds shall have been fully paid or provision made for such payment pursuant to the Bond Indenture and all reasonable and necessary fees and expenses of the Bond Trustee and the Issuer accrued and to accrue through final payment of the Bonds and all liabilities of the Obligor with respect to the Bonds accrued and to accrue through final payment of the Bonds have been paid.

ARTICLE IV ISSUANCE OF THE BONDS; CONSTRUCTION OF PROJECTS; DISBURSEMENTS

SECTION 4.2. AGREEMENT TO CONSTRUCT PROJECT; COMPLETION CERTIFICATE. (a) The Obligor shall cause the Project to be acquired, constructed, and improved with due diligence and pursuant to the requirements of the applicable laws of the State of Florida in all material respects.

(b) The Obligor shall deliver to the Bond Trustee within 90 days after the final completion or termination of the Project a certificate (the "Completion Certificate") of the Obligor to the effect that:

(i) the Project has been completed substantially in accordance with the plans and specifications, as then amended, and the date of completion;

(ii) the Cost of the Project has been fully paid for and no claim or claims exist against the Obligor or against the Project out of which a lien based on furnishing labor or material exists or might

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ripen; provided, however, there may be excepted from the foregoing statement any claim or claims out of which a lien exists or might ripen in the event that the Obligor intends to contest such claim or claims in accordance with this Loan Agreement, in which event such claim or claims shall be described; provided, further, that it shall be stated that moneys are on deposit in the applicable account of the Construction Fund sufficient to make payment of the full amount that might in any event be payable in order to satisfy such claim or claims; provided, further, that there may also be excepted from the foregoing statement any claim that has been insured over pursuant to an endorsement to any title insurance; and

(iii) all permits, certificates and licenses necessary for the occupancy and use of the Project have been obtained and are in full force and effect.

SECTION 4.3. COST OF CONSTRUCTION. The Obligor represents and warrants that it will use its best efforts to construct or cause the construction of the Project at a price which will permit completion of the Project within the amount of the funds to be deposited in the Construction Fund and within the amount of other available funds of the Obligor.

SECTION 4.4. PLANS; MODIFICATIONS OF PROJECT. The Obligor hereby covenants and agrees that no changes or modifications, or substitutions, deletions, or additions shall be made with respect to the Project if such change disqualifies the Project under the Act.

SECTION 4.5. COMPLIANCE WITH REGULATORY REQUIREMENTS; DRAW ON MINIMUM LIQUID RESERVE ACCOUNTS. The Obligor agrees that the Project shall be constructed strictly in accordance with all applicable ordinances and statutes, and in accordance with the requirements of all regulatory authorities in all material respects, and any rating or inspection organization, bureau, association, or office having jurisdiction, and it will furnish to the Issuer all information necessary for the Issuer to comply with all of the foregoing and all laws, regulations, orders and other governmental requirements.

The Obligor shall, at no expense to the Issuer, promptly comply in all material respects or cause compliance in all material respects with all laws, ordinances, orders, rules, regulations and requirements of duly constituted public authorities which may be applicable to the Obligor or to its Facilities and operations, including without limitation, Chapter 651, Florida Statutes. The Obligor shall cause the Minimum Liquid Reserve Accounts to be maintained and funded in an amount which, together with the moneys on deposit in the Reserve Fund, shall satisfy all of the Obligor's escrow requirements under Section 651.035, Florida Statutes.

The Obligor shall not draw upon the Minimum Liquid Reserve Accounts until the Liquidity Support Fund, Working Capital Fund and Operating Reserve Fund are depleted.

SECTION 4.6. DISBURSEMENTS FROM CONSTRUCTION FUND.

(a) The Obligor shall be entitled to disbursements of moneys in the Project Account of the Construction Fund to pay the Costs related to the Project. Requests for disbursements from such account by the Obligor are to be made to the Bond Trustee in accordance with the Disbursement Agreement.

(b) Notwithstanding the foregoing, the Obligor shall make no request for disbursement of moneys from the Construction Fund for payment of Cost of Issuance.

SECTION 4.7. DISBURSEMENTS FROM COST OF ISSUANCE FUND. The Obligor shall be entitled to disbursement of moneys in the Cost of Issuance Fund to pay the Cost of Issuance. The Obligor shall request disbursements from the Cost of Issuance Fund on the form attached hereto as EXHIBIT B to pay Cost of Issuance, and to reimburse itself for Cost of Issuance paid by the Obligor, upon presentation to the Bond Trustee of a request for disbursement signed by the Obligor, but in no event more often than four times a month.

SECTION 4.8. MODIFICATION OF DISBURSEMENTS. The making of any disbursement or any part of a disbursement shall not be deemed an approval or acceptance by the Bond Trustee of the work theretofore done. Upon prior notice to the Obligor and in order to satisfy requirements specified in the Master Indenture, the

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Bond Trustee may deduct from any disbursement to be made under this Loan Agreement any amount necessary for the payment of fees and expenses required to be paid under this Loan Agreement and any insurance premiums, taxes, assessments, water rates, sewer rents and other charges, liens and encumbrances upon the facilities, whether before or after the making of this Loan Agreement, and any amounts necessary for the discharge of mechanic's liens, and apply such amounts in payment of such fees, expenses, premiums, taxes, assessments, charges, liens and encumbrances. All such sums so applied shall be deemed disbursements under this Loan Agreement.

SECTION 4.9. COVENANTS REGARDING TAX EXEMPTION. The Obligor hereby represents and covenants as follows:

(a) the Obligor will, at the expense of the Obligor, comply with, and make all filings required by, all effective rules, rulings or regulations promulgated by the Department of the Treasury or the Internal Revenue Service with respect to the obligations such as the Bonds, if any;

(b) the Obligor will continue to conduct its operations in a manner that will result in its continuing to qualify as an organization described in Section 501(c)(3) of the Code including but not limited to the timely filing of all returns, reports and requests for determination with the Internal Revenue Service and the timely notification of the Internal Revenue Service of all changes in its organization and purposes from the organization and purposes previously disclosed to the Internal Revenue Service;

(c) the Obligor will not divert any substantial part of its corpus or income for a purpose or purposes other than those for which it is organized and operated as described in Section 4.11 hereof;

(d) the Obligor will use no portion of the proceeds of the Bonds to provide any airplane, sky-box or other private luxury box, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises; and

(e) the Obligor agrees to provide to the Bond Trustee, at such time as required by the Bond Trustee, all information required by the Bond Trustee with respect to Nonpurpose Investments (as defined in Section 148 of the Code) not held in any fund under the Bond Indenture.

SECTION 4.10. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT. The Obligor covenants to account for the expenditure of sale proceeds and investment earnings to be used for the Cost of the Project on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the Obligor shall not expend sale proceeds or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired, unless the Obligor obtains an Opinion of Bond Counsel that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Obligor shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest.

SECTION 4.11. REPRESENTATIONS AND WARRANTIES AS TO TAX-EXEMPT STATUS OF OBLIGOR. The Obligor hereby represents and warrants as follows:

(a) the Obligor is an organization exempt from federal income taxation under Section 501(a) of the Code by virtue of being described in Section 501(c)(3) of the Code;

(b) the purposes, character, activities and methods of operation of the Obligor have not changed materially since its organization and are not materially different from the purposes, character, activities and methods of operation at 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");

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(c) the Obligor 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 disclosed to the Internal Revenue Service in connection with its Determination;

(d) the Obligor has not operated since its organization in a manner that would result in it being classified as an "action" organization within the meaning of Section 1.501(c)(3)-1(c)(3) of the Code including, but not limited to, promoting or attempting to influence legislation by propaganda or otherwise as a substantial part of its activities;

(e) with the exception of the payment of compensation (and the payment or reimbursement of expenses) which is not excessive and is for personal services which are reasonable and necessary to carrying out the purposes of the Obligor, no person controlled by any such individual or individuals nor any person having a personal or private interest in the activities of the Obligor has acquired or received, directly or indirectly, any income or assets, regardless of form, of the Obligor during the current Fiscal Year and the period, if any, preceding the current Fiscal Year, other than as reported to the Internal Revenue Service by the Obligor;

(f) the Obligor is not a "private foundation" within the meaning of Section 509(a) of the Code;

(g) the Obligor has not received any indication or notice whatsoever to the effect that its exemption under Section 501(a) of the Code as an organization described in 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) the Obligor 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 its Determination;

(i) the Obligor has not devoted more than an insubstantial part of its activities in furtherance of a purpose other than an exempt purpose within the meaning of Section 501(c)(3) of the Code; and

(j) the Obligor 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 the Obligor to lose its exemption from taxation under Section 501(a) of the Code or cause the interest on the Bonds 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.

SECTION 4.12. DISPOSITION OF PROJECT. The Obligor covenants that the property constituting the Project or any portion thereof will not be sold or otherwise disposed in a transaction resulting in the receipt by the Obligor of cash or other compensation, unless the Obligor obtains an Opinion of Bond Counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds.

SECTION 4.13. SURPLUS CONSTRUCTION FUND MONEYS. If, upon delivery of the Completion Certificate, there shall be any Surplus Construction Fund Moneys, such Surplus Construction Fund Moneys (to the extent not otherwise required to be rebated to the United States in accordance with section 148(f) of the Code) shall, upon the written request of the Obligor to the Bond Trustee, be used by the Bond Trustee either (i) to purchase for cancellation Bonds at any reasonable price as determined by the Obligor, which price, however, shall not exceed the principal amount thereof plus accrued interest thereon; (ii) unless the Project has been canceled, for application toward the costs of acquisition, construction, and improvement of additional facilities related thereto; or (iii) for any combination of (i) and (ii) above all as set forth in such written request. If the Bonds are then subject to redemption at par, any of such Surplus Construction Fund Moneys not to be used in a manner set forth in (i), (ii) or (iii) above shall be applied to redeem Bonds in the largest principal amount then subject to redemption at par that does not exceed the amount of such Surplus Construction Fund Moneys. Prior to any such application described above the Bond Trustee shall have been furnished with an Opinion of Bond Counsel to the effect that such action will not adversely affect any exclusion of interest on the Bonds from the gross income of the owners thereof for federal

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income tax purposes. Any of such Surplus Construction Fund Moneys not to be applied for the purposes set forth in (i), (ii) or (iii) above or which may not be applied to redeem Bonds as set forth above shall be deposited in an escrow account and moneys on deposit in such escrow account shall at the written request of the Obligor be applied to pay the principal of Bonds upon redemption thereof on the earliest practicable redemption date upon which such Bonds may be redeemed at par; provided, that any moneys held in such escrow account shall be invested in accordance with Section 6.01 of the Bond Indenture but may not be invested to produce a yield greater than the yield on the Bonds except to the extent permitted by the Code. In lieu of treating the Surplus Construction Fund Moneys as set forth above, upon the written request of the Obligor, such Surplus Construction Fund Moneys shall either be deposited or disbursed by the Bond Trustee in any manner designated in writing by the Obligor if the Bond Trustee shall have been furnished with an Opinion of Bond Counsel to the effect that such action will not adversely affect any exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax purposes and is authorized by the Act.

ARTICLE V LOAN OF BOND PROCEEDS; SERIES 2013 NOTES;

PROVISION FOR PAYMENT

SECTION 5.2. REPAYMENT OF LOAN. The Obligor agrees to pay to the Bond Trustee for the account of the Issuer all payments when due on the Series 2013 Notes pursuant to the payment provisions contained in such Series 2013 Notes. If for any reason the amounts paid to the Bond Trustee by the Obligor on the Series 2013 Notes, together with any other amounts available in the Bond Fund, are not sufficient to pay principal of, premium, if any, and interest on the Bonds when due, the Obligor agrees to pay the amount required to make up such deficiency.

SECTION 5.3. CREDITS. Any amount in an account of the Bond Fund at the close of business of the Bond Trustee on the day immediately preceding any payment date on the Series 2013 Notes in excess of the aggregate amount then required to be contained in such account of the Bond Fund pursuant to Section 5.2 hereof shall be credited pro rata against the payments due by the Obligor on such next succeeding principal or interest payment date on the Series 2013 Notes.

In the event that all of the Bonds then Outstanding are called for redemption, any amounts contained in the Reserve Fund and the Bond Fund at the close of business of the Bond Trustee on the day immediately preceding such redemption date shall be credited against the payments due by the Obligor on the Series 2013 Notes, as provided below.

The principal amount of any Bonds to be applied by the Bond Trustee as a credit against any sinking fund payment pursuant to Section 5.02 of the Bond Indenture shall be credited against the obligation of the Obligor with respect to payment of installments of principal of the related Series 2013 Note as described in the Supplemental Indenture.

The cancellation by the Bond Trustee of any Bonds purchased by the Obligor or of any Bonds redeemed or purchased by the Issuer through funds other than funds received on the Series 2013 Notes shall constitute payment of a principal amount of the related Series 2013 Note equal to the principal amount of the Bonds so cancelled. Upon receipt of written notice from the Bond Trustee of such cancellation, the Master Trustee shall at the request of the Obligor endorse on the related Series 2013 Note such payment of such principal amount thereof.

SECTION 5.6. RESERVE FUND. (a) In the event any moneys in any Reserve Account of the Reserve Fund are transferred to the Bond Trustee for deposit to the Bond Fund pursuant to Section 3.10 or 3.11 of the Bond Indenture, except if such moneys are transferred due to the redemption of all Bonds of a related series, the Obligor agrees to deposit additional Reserve Fund Obligations in an amount sufficient to satisfy the Reserve Fund Requirement for such Reserve Account, such amount to be deposited in accordance with Section 6.03(d) of the Bond Indenture.

(b) In the event the value of the Reserve Fund Obligations (as determined pursuant to the statement of the Bond Trustee furnished in accordance with Section 6.03(b) of the Bond Indenture) on deposit in any Reserve Account of the Reserve Fund is less than 90% of the Reserve Fund Requirement for such Reserve Account as a

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result of a decline in the market value of investments on deposit in the Reserve Fund, the Obligor agrees to deposit additional Reserve Fund Obligations in an amount sufficient to satisfy the Reserve Fund Requirement for such Reserve Account, such amount to be deposited in accordance with Section 6.03(c) of the Bond Indenture.

SECTION 5.9. OBLIGATIONS OF OBLIGOR HEREUNDER UNCONDITIONAL. The obligations of the Obligor to make the payments required in Section 5.2 hereof shall be absolute and unconditional. The Obligor will not suspend or discontinue, or permit the suspension or discontinuance of, any payments provided for in Section 5.2 hereof for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws or administrative rulings of or administrative actions by the United States of America or the State of Florida or any political subdivision of either, or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability, or obligation arising out of or connected with this Loan Agreement, whether express or implied. Nothing contained in this Section shall be construed to release the Issuer from the performance of any agreements on its part herein contained; and in the event the Issuer shall fail to perform any such agreement, the Obligor may institute such action against the Issuer as the Obligor may deem necessary to compel performance, provided that no such action shall violate the agreements on the part of the Obligor contained herein and the Issuer shall not be required to pay any costs, expenses, damages or any amounts of whatever nature except for amounts received pursuant to this Loan Agreement. Nothing herein shall be construed to impair the Obligor's right to institute an independent action for any claim that it may have against the Issuer, the Bond Trustee, any Bondholder or any other third party. The Obligor may, however, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceedings or take any other action involving third persons which the Obligor deems reasonably necessary in order to secure or protect this right of possession, occupancy, and use hereunder, and in such event the Issuer hereby agrees to cooperate fully with the Obligor.

ARTICLE VII SPECIAL COVENANTS

SECTION 7.1. NO WARRANTY OF MERCHANTABILITY, CONDITION OR SUITABILITY BY THE ISSUER. The Issuer makes no warranty, either express or implied, as to the condition of the Project or that the Project will be suitable for the Obligor's purposes or needs. Without limiting the effect of the preceding sentence, it is expressly agreed that in connection with each sale or conveyance pursuant to this Loan Agreement (a) the Issuer makes no warranty of merchantability, and (b) there are no warranties which extend beyond the description contained herein.

SECTION 7.8. NO PERSONAL LIABILITY. No obligations contained in the Bonds, the Bond Indenture or this Loan Agreement shall be deemed to be the obligations of any officer, director, member, trustee, agent or employee of the Issuer, Collier County, Florida, the Bond Trustee or the Obligor in his or her individual capacity, and neither the governing body of the Obligor or the Bond Trustee, any official of the Issuer, Collier County, Florida, nor any official of the Issuer executing the Bonds, the Bond Indenture or this Loan Agreement shall be liable personally thereon or be subject to any personal liability or accountability with respect thereto.

ARTICLE VIII ASSIGNMENT AND LEASING

SECTION 8.1. ASSIGNMENT AND LEASING BY OBLIGOR. This Loan Agreement may be assigned, and all or any portion of the Project may be leased by the Obligor without the consent of either the Issuer or the Bond Trustee, provided that each of the following conditions is complied with:

(a) No assignment or leasing shall relieve the Obligor from primary liability for any of its obligations hereunder, and in the event of any such assignment or leasing the Obligor shall continue to remain primarily liable for payment of the loan payments and other payments specified in Article V hereof and for performance and observance of the other covenants and agreements contained herein; provided that if: (i) the Obligor withdraws from the Obligated Group (as defined in the Master Indenture) and is released from its obligations on the Series 2013 Notes by the Master Trustee pursuant to the Master Indenture; and (ii) this Loan Agreement has been assigned to a remaining member of the Obligated Group in accordance with this Section 8.1, the Obligor shall also be released

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from its liability for its obligations hereunder, including payment of the loan payments and other payments specified in Article V hereof and the performance and observance of the other covenants and agreements contained herein.

(b) The assignee or lessee shall assume in writing the obligations of the Obligor hereunder to the extent of the interest assigned or leased, provided that the provisions of this subsection shall not apply to a lease of a portion of the Project or an operating contract for the performance by others of Obligor or medical services on or in connection with the Project, or any part thereof.

(c) The requirements relating to assignment and leasing contained in the Tax Compliance Agreement and Master Indenture are met.

(d) The Obligor shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Issuer and the Bond Trustee a true and complete copy of each such assumption of obligations and assignment or lease of the Project, as the case may be.

SECTION 8.2. ASSIGNMENT AND PLEDGE BY ISSUER. Solely pursuant to the Bond Indenture, the Issuer may assign its interest in and pledge any moneys receivable under the Series 2013 Notes and this Loan Agreement (except in respect of certain rights to indemnification and for Administration Expenses, indemnification and payment of attorneys' fees and expenses pursuant to Sections 5.7, 7.5 and 9.5 hereof and to the right to receive notices) to the Bond Trustee as security for payment of the principal of, premium, if any, and interest on the Bonds. The Obligor consents to such assignment and pledge.

ARTICLE IX FAILURE TO PERFORM COVENANTS AND REMEDIES THEREFOR

SECTION 9.1. FAILURE TO PERFORM COVENANTS. Upon failure of the Obligor to pay when due any payment (other than failure to make any payment on any Series 2013 Note, which default shall have no grace period) required to be made under this Loan Agreement or to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, and continuation of such failure for a period of forty-five (45) days after written notice, specifying such failure and requesting that it be remedied, is given to the Obligor by the Issuer or the Bond Trustee (provided that if any such failure can be cured by the Obligor but cannot be cured within the 45 day curative period described above, it shall not constitute a failure hereunder if corrective action is instituted by the Obligor within such 45 day period and diligently pursued until the failure is corrected), the Issuer or the Bond Trustee shall have the remedies provided in Section 9.2 hereof.

SECTION 9.2. REMEDIES FOR FAILURE TO PERFORM. Upon the occurrence of a failure of the Obligor to perform as provided in Section 9.1 hereof, the Issuer or the Bond Trustee, as assignee or successor of the Issuer, upon compliance with all applicable law, in its discretion may take any one or more of the following steps:

(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Issuer, and require the Obligor to carry out any agreements with or for the benefit of the Bondholders and to enforce performance and observance of any duty, obligation, agreement or covenant of the Obligor under the Act or this Loan Agreement; or

(b) by action or suit in equity require the Obligor to account as if it were the trustee of an express trust for the Issuer; or

(c) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer; or

(d) upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and the Bondholders, have appointed a receiver or receivers of the Trust Estate upon a showing of good cause with such powers as the court making such appointment may confer.

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SECTION 9.3. DISCONTINUANCE OF PROCEEDINGS. In case any proceeding taken by the Issuer or the Bond Trustee on account of any failure to perform under Section 9.1 hereof shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Issuer or the Bond Trustee, then and in every case the Issuer and the Bond Trustee shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Issuer and the Bond Trustee shall continue as though no such proceeding had been taken.

SECTION 9.4. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or reserved to the Issuer or the Bond Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default 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 the Issuer or the Bond Trustee to exercise any remedy reserved to it in this Article IX, it shall not be necessary to give any notice, other than notice required in Section 9.1 hereof. Such rights and remedies given the Issuer hereunder shall also extend to the Bond Trustee and the holders of the Bonds, subject to the Bond Indenture.

SECTION 9.5. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the event the Issuer or the Bond Trustee should employ attorneys or incur other costs or expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Obligor herein or in the Bond Indenture contained, the Obligor agrees that it will on demand therefor pay to the Issuer or the Bond Trustee, as the case may be, the reasonable fees, costs and expenses of such attorneys and such other reasonable costs or expenses incurred by the Issuer or the Bond Trustee.

SECTION 9.6. WAIVERS. In the event any agreement contained in this Loan Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach waived and shall not be deemed to waive any other breach hereunder. In view of the assignment of the Issuer's rights in and under this Loan Agreement to the Bond Trustee under the Bond Indenture, the Issuer shall have no power to waive any failure to perform under Section 9.1 hereunder without the consent of the Bond Trustee (other than a failure to observe the covenants contained in Section 4.10 hereof, which may be waived by the Issuer without the consent of the Bond Trustee).

ARTICLE X PREPAYMENT OF SERIES 2013 NOTES

SECTION 10.1. GENERAL OPTION TO PREPAY SERIES 2013 NOTES. The Obligor shall have and is hereby granted the option exercisable at any time to prepay all or any portion of its payments due or to become due on any or all of the Series 2013 Notes by depositing with the Bond Trustee for payment into the Bond Fund an amount of money or Government Obligations the principal and interest on which when due, will be equal to an amount sufficient to pay the principal of, premium, if any, and interest on any portion of the Bonds then Outstanding under the Bond Indenture, without penalty. The exercise of the option granted by this Section shall not be cause for redemption of Bonds unless such redemption is permitted at that time under the provisions of the Bond Indenture and the Obligor specifies the date for such redemption. In the event the Obligor prepays all of its payments due and to become due on all the Series 2013 Notes by exercising the option granted by this Section and upon payment of all reasonable and necessary fees and expenses of the Bond Trustee, the Issuer and any Paying Agent accrued and to accrue through final payment of the Bonds called for redemption as a result of such prepayment and of all Administration Expenses through final payment of the Bonds called for redemption as a result of such prepayment, this Loan Agreement shall terminate; provided that no such termination shall occur unless all of the Bonds are no longer Outstanding.

SECTION 10.2. CONDITIONS TO EXERCISE OF OPTION. To exercise the option granted in Section 10.1 hereof, the Obligor shall give written notice to the Bond Trustee which shall specify therein the date of such redemption, which date shall be not less than 30 days from the date the notice is mailed.

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EXCERPTS FROM MORTGAGE

The following are certain excerpts from the Mortgage. These excerpts do not purport to be complete and are qualified in their entirety by reference to the Mortgage.

2. Mortgage. In consideration of ten dollars and other valuable consideration received by the Mortgagor, the receipt and sufficiency of which is hereby acknowledged, and in order to secure the Secured Indebtedness and the performance and observance of all of the provisions of the Master Indenture and this Mortgage, the Mortgagor hereby mortgages, grants, bargains, sells, liens, remises, releases, conveys, assigns, transfers, hypothecates, pledges, delivers, sets over, warrants and confirms to the Mortgagee, and grants the Mortgagee a security interest in, the Mortgagor's interest in the following described real and personal property, rights, titles, interests and estates:

(a) All Gross Revenues of the Obligated Group Members;

(b) The Premises, including, without limitation, all buildings, structures, fixtures, additions, enlargements, extensions, improvements, modifications or repairs now or hereafter located thereon or therein and with the tenements, hereditaments, servitudes, appurtenances, rights, privileges and immunities thereunto belonging or appertaining which may from time to time be owned by the Obligated Group Members, and all claims or expectancy, of, in and to the Premises, it being the intention of the parties hereto that, so far as may be permitted by law, all property of the character hereinabove described, which is now owned or is hereafter acquired by the Obligated Group Members and is affixed or attached or annexed to the Premises, shall be and remain or become and constitute a portion of the Premises, and the security covered by and subject to the lien of this Mortgage;

(c) All of the rights, titles, interests and estates, now owned or hereafter acquired by the Obligated Group Members in and to all fixtures, engines, boilers, incinerators, building materials and supplies to be incorporated into the improvements or attached as fixtures to the Premises and in each case solely to the extent purchased using funds provided by Mortgagee.

(d) Any and all leases, subleases, tenancies, licenses, occupancy agreements or agreements to lease all or any portion of the Premises and all extensions, renewals, amendments, modifications and replacements thereof, and any options, rights of first refusal or guarantees relating thereto (collectively, the "Leases"); all rents, income, receipts, revenues, security deposits, escrow accounts, reserves, issues, profits, awards and payments of any kind payable under the Leases or otherwise arising from the Premises including, without limitation, minimum rents, additional rents, percentage rents, parking, maintenance and deficiency rents;

(e) Any amounts on deposit from time to time in any fund or account with or paid over to the Mortgagee under the Master Indenture, subject to the provisions of the Master Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein;

(f) Any and all property that may, from time to time hereinafter, by delivery or by writing of any kind, be subjected to the lien and security interest hereof by the Obligated Group Members or by anyone on their behalf (and the Mortgagee is hereby authorized to receive the same at any time as additional security hereunder), which subject to the lien and security interest hereof of any such property as additional security may be made subject to any reservations, limitations, or conditions which shall be set forth in a written instrument executed by the grantor or the person so acting in its behalf or by the Mortgagee respecting the use and disposition of such property or the proceeds thereof; and

(g) All the appurtenances appertaining to any of the foregoing.

3. Secured Indebtedness; Future Advances; Maximum Amount and Time. As specified above, this Mortgage shall secure the Secured Indebtedness, including, without limitation, future advances hereafter constituting Secured Indebtedness, whether such future advances are obligatory or are to be made at the option of the Mortgagee,

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or otherwise, as are made within twenty (20) years from the date hereof, to the same extent as if such future advances were made on the date of execution of this Mortgage. The total principal amount of Secured Indebtedness secured hereby may decrease or increase from time to time, but the total unpaid principal amount so secured at any one time shall not exceed the Maximum Principal Indebtedness, plus (i) interest, redemption premium, if any, and other amounts (without duplication) due thereon, (ii) any disbursements made for the payment of taxes, levies or insurance on the Mortgaged Property, (iii) payments made for maintenance, repair, protection and preservation of the Mortgaged Property, (iv) any amounts owed to the Mortgagee hereunder or under Section 8.07 of the Master Indenture, and (v) interest on all such disbursements, all as provided in this Mortgage and the Master Indenture. This Mortgage shall not secure any future advances constituting Secured Indebtedness made more than twenty (20) years from the date hereof.

5. Title Covenants. The Mortgagor covenants that the Mortgaged Property is free from all encumbrances, other than Permitted Encumbrances, that lawful seisin of and good right to encumber the Mortgaged Property are vested in the Mortgagor, and that the Mortgagor hereby fully warrants the title to the Mortgaged Property and will defend the same against the lawful claims of all persons whomsoever. The mortgage and security interest granted to Mortgagee herein is senior to all obligations except Permitted Encumbrances.

6. Conditions to Changes in Mortgaged Property. The right of the Mortgagor to make any changes to the Mortgaged Property or other property placed on the Premises in the manner hereinafter provided is expressly subject to the condition that such changes will not materially impair the structural soundness, usefulness or market value of the Mortgaged Property or significantly alter the character or purpose or significantly detract from the operating efficiency of the Mortgaged Property, materially impair its revenue-producing capacity, or otherwise materially adversely affect its operation or otherwise materially adversely affect the purposes of this Mortgage and, to the extent that such changes will modify the nature, scope or purpose of any portion of the Mortgaged Property financed or refinanced with the proceeds of tax-exempt Related Bonds, the Mortgagor must deliver an Opinion of Bond Counsel addressed to the Master Trustee and any issuer of such tax-exempt Related Bonds confirming that such changes, in and of themselves, will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on such tax-exempt Related Bonds.

7. After-Acquired Property. All right, title and interest of the Mortgagor in and to all improvements, betterments, renewals, substitutions and replacements of the Mortgaged Property or any part thereof hereafter constructed or acquired by the Mortgagor, immediately upon such construction or acquisition, and without any further mortgaging, conveyance or assignment, shall become and be part of the Mortgaged Property and shall be subject to the UCC and security interest of this Mortgage as fully and completely and with the same effect as though now owned by the Mortgagor, but at any and all times the Mortgagor will execute and deliver to the Master Trustee all such further assurances, mortgages, conveyances or assignments therefor and other instruments with respect thereto as the Master Trustee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien and security interest of this Mortgage.

8. Removal with Notice; Replacements and Substitutions Subject to Mortgage. If the Mortgagor in its sole discretion determines that any real property constituting a part of the Mortgaged Property has become unsuitable, undesirable or unnecessary, and if the conditions of Section 6 hereof and the applicable provisions of the Master Indenture are complied with, then the Mortgagor may request a release of such property from the Mortgaged Property and may, to the extent permitted by law, sell, trade in, exchange or otherwise dispose of same, in whole or in part. The Mortgagee shall, at the Mortgagor's written request, join in the execution of any instruments necessary to release the lien on such property created by this Mortgage on property permitted to be released by this Section.

13. Maintenance and Repair. The Mortgagor agrees that until payment of the Secured Indebtedness due and payable shall have been made, it will, at its own expense, keep or cause to be kept the Mortgaged Property (i) in safe operating condition, and (ii) in good repair and in good operating condition, and make from time to time all necessary repairs thereto and renewals and replacements thereof. The Mortgagor shall not permit or suffer others to commit a nuisance in or about the Mortgaged Property or itself commit a nuisance in connection with its use or occupancy thereof.

15. Insurance. The Mortgagor shall during the term of this Mortgage keep the Mortgaged Property continuously insured against such risks as are customarily insured against in connection with the operation of similar

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facilities of like size, type and location, paying as the same become due and payable all premiums with respect thereto. Such insurance shall include, without intending to limit the foregoing, all such insurance required to be maintained pursuant to the terms of the Master Indenture. All property and casualty insurance policies carried pursuant to the foregoing shall name the Mortgagee as an additional named insured thereunder as the interest of such party may appear, and proceeds thereunder shall be made payable and shall be applied as provided in Section 16 below. Each property and casualty insurance policy required by this Section shall prohibit termination, expiration, or cancellation (for reasons other than non-payment of premiums), without at least thirty (30) days prior written notice to the Mortgagee or cancellation (for reason of non-payment of premiums) without at least ten (10) days prior written notice to the Mortgagee. A certificate of, or copies of, each such policy shall be filed with the Mortgagee.

The Mortgagor shall pay all premiums (either up front or in agreed installments) and charges for the maintenance and renewal of the insurance and, upon written notice or demand from the Mortgagee, shall promptly furnish the Mortgagee with receipts and proofs thereof. If the Mortgagor fails to provide the receipts and proofs so requested, then the Mortgagee, without waiving the option to foreclose or exercise any other remedy hereunder, may (but shall not be required to), after written notice to the Mortgagor, obtain such insurance for the protection of the Mortgagee, and any expenses reasonably incurred by the Mortgagee in so doing shall become part of the Secured Indebtedness secured hereby, shall become immediately due and payable, and shall bear interest at the maximum lawful rate. In the event of foreclosure of this Mortgage or transfer of the Mortgaged Property in full or partial satisfaction of the Secured Indebtedness secured hereby, all interest of the Mortgagor in the policy or policies of insurance (including any claim to proceeds attributable to losses theretofore occurring but not yet paid to Mortgagor) shall pass to the purchaser, grantee or transferee, subject, however, to the terms and provisions of this Mortgage and the Master Indenture. If a policy shall provide that the insurance benefits thereunder shall be payable through any period of grace beyond the stated expiration date, for purposes of this Mortgage, such policy's expiration date shall be deemed to be the last day of such grace period.

The Mortgagor shall provide to its insurers all reports or notices of change in value of the Mortgaged Property so as to maintain the insurance coverage required by the terms of this Section 15. Nothing in the preceding sentence requires the Mortgagor to obtain market value appraisals on the Mortgaged Property (or any part thereof) unless required by an insurer or such insurers' insurance policy.

16. Insurance Proceeds and Condemnation Awards. If, prior to the payment in full or satisfaction of the Secured Indebtedness (or provision for payment thereof having been made in accordance with the provisions of the Master Indenture) the Mortgaged Property, or any part or component thereof, shall be damaged, lost or destroyed, by whatever cause, or if any public authority or entity, in the exercise of its power of eminent domain, takes or damages the Mortgaged Property, or any part or component thereof, there shall be no abatement or reduction in the Secured Indebtedness payable by the Mortgagor under the Master Indenture or hereunder, and all of the insurance proceeds (whether payable from the policies of insurance described in Section 15 above or from other policies of insurance carried by the Mortgagor or third parties), and any award or compensation resulting from such taking or damage by condemnation shall be applied as provided in the Master Indenture, the terms of which are incorporated herein by reference.

This Mortgage extends to and shall encumber any insurance proceeds payable on account of or related to the Mortgaged Property and the operations thereof and any judgments, awards, damages and settlements hereafter rendered or paid and resulting from condemnation proceedings with respect to the Mortgaged Property, or any portion thereof, or the taking of the Mortgaged Property, or any portion thereof, under the power of eminent domain. Any sums payable to the Mortgagor and arising out of the power of eminent domain with respect to the property and any proceeds of casualty insurance on the Mortgaged Property shall be applied as provided in the Master Indenture.

19. Acceleration Upon Transfer of Mortgaged Property. Except to the extent permitted by Section 8 of this Mortgage or by the terms of the Master Indenture, if all or any material part of the Mortgaged Property or an interest therein is sold or transferred by Mortgagor in any manner whatsoever without Mortgagee's prior written consent, Mortgagee may, at Mortgagee's option, declare all of the sums secured by this Mortgage to be accelerated and immediately due and payable. Mortgagee's right to accelerate this Mortgage upon any such sale or transfer of the Mortgaged Property or any interest therein is included in this Mortgage as a material inducement to Mortgagee's extending the credit secured hereby and has been relied upon by Mortgagee in establishing the terms and conditions

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thereof; accordingly, the limitations contained in this paragraph shall be strictly construed against the Mortgagor and Mortgagor's successor(s) in interest and in favor of Mortgagee.

21. Events of Default. Each of the following events is hereby declared an "event of default" hereunder; provided, however, that in any case in which such event of default shall be occasioned by the action or inaction of the Master Trustee, such action or inaction may be cured by the Mortgagor within the time and in the manner as contemplated by the provisions of this Mortgage and the Master Indenture:

(a) The Mortgagor shall fail to make full and punctual payment or to fully perform any of its obligations in a manner constituting an "Event of Default" as defined in Section 7.01 of the Master Indenture; or

(b) The Mortgagor shall fail to make full and punctual payment of any sum due under this Mortgage when due, or to fully perform any of its other obligations under this Mortgage and such failure to perform its other obligations shall continue for forty-five (45) days after written notice specifying such default and requiring the same to be remedied shall have been given to the Mortgagor and by the Mortgagee; or

(c) This Mortgage shall cease to be a first priority mortgage and/or security agreement with respect to the Mortgaged Property, or any thereof, subject only to Permitted Encumbrances, or shall be invalid or unenforceable in any material respect.

Before the entry of final judgment or decree in any suit, action or proceeding instituted by the Mortgagee under the provisions of this Mortgage or the Master Indenture or before the completion of the enforcement of any other remedy under this Mortgage or the Master Indenture, the Mortgagee shall be permitted (with the consent of the Holders of Outstanding Obligations if and to the extent required under the Master Indenture) to discontinue such suit, action, proceeding or enforcement of any remedy if, in its opinion, any default forming the basis of such suit, action, proceeding or enforcement of any remedy shall have been remedied.

22. Remedies on Default. In the event any of the Secured Indebtedness shall at the time be outstanding and unpaid and provision for the payment thereof shall not have been made in accordance with the provisions of the Master Indenture, whenever any event of default referred to in Section 21 above shall have occurred and be continuing, the Mortgagee may, subject to the terms and provisions of the Master Indenture (including, without limitation, the provisions set forth in the Master Indenture concerning the Master Trustee's exercise of remedies), take any one or more of the following remedial steps:

(a) Declare all Secured Indebtedness and other amounts payable under the Master Indenture for the remainder of the term thereof and of this Mortgage to be immediately due and payable, whereupon the same shall become immediately due and payable;

(b) Foreclose on this Mortgage, enter into possession of the Mortgaged Property or any part thereof without notice or demand and sell or lease the Mortgaged Property or any part thereof for the account of the Mortgagor, holding the Mortgagor liable for the difference between the amounts received and the Secured Indebtedness and other amounts payable by the Mortgagor hereunder;

(c) Collect and apply to the Secured Indebtedness all rents and profits from the Mortgaged Property in the manner provided in the Master Indenture;

(d) Inspect, examine and make copies of the books and records and any and all accounts and data of the Mortgagor relating to the use and operation of the Mortgaged Property;

(e) Take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Master Indenture or in this Mortgage, or in aid of the execution of any power herein granted, or for any foreclosure

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hereunder, or for the enforcement of any other appropriate legal or equitable remedy or otherwise as the Mortgagee shall elect;

(f) Apply, on motion to any court of competent jurisdiction, for the appointment of a receiver to take charge of, manage, preserve, protect, complete construction of and operate the Mortgaged Property; to collect the rents, issues, profits and income therefrom; to make all necessary and needed repairs to the Mortgaged Property; to pay all taxes and assessments against the Mortgaged Property and insurance premiums for insurance thereon; and after the payment of the expense of the receivership, including reasonable attorneys' fees to the Mortgagee's attorney, and after compensation to the receiver for management and completion of the Mortgaged Property, to apply the net proceeds derived therefrom in reduction of the Secured Indebtedness secured hereby or in such manner as such court shall direct. The appointment of such receiver shall be a matter of strict right to the Mortgagee, regardless of the value of the security for the Secured Indebtedness secured hereby or of the solvency of any party bound for the payment of such Secured Indebtedness. All expenses, fees and compensation incurred pursuant to a receivership approved by any such court shall be secured by the lien of this Mortgage until paid. The receiver and the receiver's agents shall be entitled to enter upon and take possession of any and all of the Mortgaged Property, together with any and all business assets used in conjunction therewith or thereon, or any part or parts thereof, and operate and conduct such business or businesses to the same extent and in the same manner as any owner of such property might lawfully do. The receiver, personally or through his agents, may exclude any parties entitled thereto pursuant to the Master Indenture wholly from the Mortgaged Property, and have, hold, use, operate, manage and control the same and each and every part thereof, and may, in the name of the Mortgagor exercise all of the Mortgagor's rights and powers and maintain, restore, insure and keep insured, the Mortgaged Property as the receiver may deem judicious. Such receivership shall, at the option of the Mortgagee, continue until full payment of all sums secured hereby, or until title to the Mortgaged Property shall have passed by foreclosure sale under this Mortgage;

(g) Take or exercise all rights and remedies granted a secured party by the Florida Uniform Commercial Code; and

(h) Take all other actions and pursue all other remedies available under any other contract or agreement or otherwise by statute, at law or in equity, whether or not inconsistent with the foregoing, that may appear necessary or appropriate to collect the sums then due and thereafter to become due from the Mortgagor by reason of this Mortgage or the Master Indenture, or to enforce specific performance and observance of any obligation, agreement or covenant of the Mortgagor thereunder.

23. Power and Authority. In order to further and more fully secure the payment of the principal of and interest on the Secured Indebtedness upon the happening of any event of default as herein provided, the Mortgagor hereby authorizes and permits the Mortgagee for and on its behalf and on behalf of and in the name of the Holders of Outstanding Obligations, to foreclose the Mortgagor's interest in the Mortgaged Property by foreclosure in the manner provided by the Florida Statutes, which remedy shall be in addition to the other remedies provided in any other applicable provisions of this Mortgage and the Master Indenture. The Mortgagee shall have full power and authority to deal in and with the Mortgaged Property, including the power and authority to protect, conserve and to sell or to lease or to encumber or otherwise to manage and dispose of the Mortgaged Property.

24. Rights Cumulative and Continuing. The rights, powers and remedies of the Mortgagee granted and arising under this Mortgage and the Master Indenture, or any other instrument or agreement existing between the Mortgagor and the Mortgagee shall be separate, distinct, and cumulative of other powers and rights herein granted and of all other rights which the Mortgagee may have in law or equity, and the exercise of any one or more of them shall not be construed as an election to proceed under any one provision herein, or under the Master Indenture, or under any such other instrument or agreement, to the exclusion of any other provisions, or an election of remedies to the bar of any other remedy allowed in law or equity. No waiver of any obligation hereunder or of any obligation secured hereby shall at any time thereafter be held to be a waiver of the terms hereof or of the terms of any other instrument or agreement. No delay or omission by the Mortgagee to exercise any right, power or remedy accruing upon any default shall exhaust or impair any such right, power or remedy or shall be construed to be a waiver of any such default or acquiescence therein. Every right, power and remedy given by this Mortgage to the Mortgagee may be exercised from time to time and as often as may be deemed expedient by the Mortgagee.

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Each and every right, power and remedy shall be in addition to any other right, power or remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every right and remedy given hereunder shall extend fully to the Mortgagee, and the Holders of the Obligations issued and Outstanding under the Master Indenture shall be deemed third party beneficiaries of all covenants and agreements herein contained, the enforcement of which is subject, however, to all of the terms and conditions set forth in this Mortgage and the Master Indenture. In the event any agreement contained in this Mortgage should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.

27. Curing of Defaults by Mortgagee. The Mortgagee shall, after giving written notice to the Mortgagor at least five (5) days prior to taking any action under this provision (unless under the circumstances, delay caused by the requirement of such notice could result in the Mortgaged Property or any substantial part thereof, being materially endangered or subject to loss or forfeiture), have the right to pay, or cause to be paid, any sums required to be paid and to take, or cause to be taken, any other action deemed by the Mortgagee to be necessary or convenient to cure any Event of Default of the Mortgagor under the Master Indenture or any event of default hereunder. Any and all sums expended or expenses incurred by the Mortgagee in so curing such an Event of Default or event of default shall become immediately due and payable by the Mortgagor to the Mortgagee and, together with interest from date of disbursement, shall be secured by the lien of this Mortgage. The Mortgagee shall be subrogated to the interest of any lien holder paid out of sums secured by this Mortgage. No payment by the Mortgagee under this section or any other provisions contained herein or in the Master Indenture shall be deemed to cure or waive any default, Event of Default or event of default.

30. Release or Satisfaction. Whenever there is no outstanding obligation secured hereby (including, without limitation, any contingent or unmatured obligation or any other amount due or to become due from the Obligated Group under the Master Indenture) and no commitment to make advances secured hereby, the Mortgagee shall, on written demand by the Mortgagor, give a release or satisfaction hereof in recordable form.

APPENDIX D

FORM OF OPINION OF BOND COUNSEL


APPENDIX D

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FORM OF OPINION OF NABORS, GIBLIN & NICKERSON, P.A.

WITH RESPECT TO THE SERIES 2013 BONDS Upon delivery in definitive form, Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel, proposes to render its opinion with respect to such Series 2013 Bonds in substantially the following form:

(Date of Delivery) Collier County Industrial Development Authority Naples, Florida Members:

In the capacity of Bond Counsel we have examined a record of proceedings relating to the issuance by the Collier County Industrial Development Authority (the "Issuer"), of its $128,295,000 aggregate principal amount of Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013A (the "Series 2013A Bonds") and $62,000,000 aggregate principal amount of Continuing Care Community Revenue Bonds (The Arlington of Naples Project), Series 2013B (the "Series 2013B Bonds," and collectively with the Series 2013A Bonds, the "Series 2013 Bonds"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

The Series 2013 Bonds are issued under and pursuant to the laws of the State of Florida including, particularly, Parts II and III, Chapter 159, Florida Statutes, and other applicable provisions of Florida law (collectively, the "Act"), and pursuant to a resolution of the Issuer adopted on August 26, 2013 (the "Resolution"), and that certain Indenture of Trust, dated as of December 1, 2013 (the "Bond Indenture"), between the Issuer and Wells Fargo Bank, National Association, as bond trustee thereunder (the "Bond Trustee").

The Series 2013 Bonds are payable from the Trust Estate established under the Bond Indenture, including loan repayments made by The Arlington of Naples, Inc. (the "Obligor") to the Issuer pursuant to that certain Loan Agreement, dated as of December

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1, 2013, between the Issuer and the Obligor related to the Series 2013 Bonds (the "Loan Agreement"). The right of the Issuer to receive payments from the Obligor under the Loan Agreement, other than certain retained rights as described in the Loan Agreement and the Bond Indenture), have been assigned to the Bond Trustee.

The Issuer, the State of Florida, and any political subdivision or agency of the State of Florida, including Collier County, Florida, shall not be liable for the payment of the principal of, premium, if any, or interest on any of the Series 2013 Bonds or for the performance of any pledge, obligation or agreement undertaken by the Issuer except to the extent that the Trust Estate is sufficient therefor. No owner of any Series 2013 Bonds has the right to compel any exercise of the taxing power of the State of Florida, the Issuer or any political subdivision or agency thereof including Collier County, Florida, to pay the Series 2013 Bonds or the interest thereon, and the Series 2013 Bonds do not constitute an indebtedness of the Issuer or a loan of credit thereof within the meaning of any constitutional or statutory provision or limitation.

The Series 2013 Bonds are dated as of the date hereof and shall mature, bear interest and are redeemable all as provided in the Bond Indenture. The Series 2013 Bonds are in the form of fully registered bonds in denominations of $100,000 and any integral multiple of $5,000 in excess thereof.

The Series 2013 Bonds are being issued for the principal purposes of providing funds to make a loan to the Obligor which, together with other available funds of the Obligor, shall be used to (a) refinance all or a portion of (1) the outstanding principal and interest on the Issuer's $10,900,000 Continuing Care Community Revenue Bond Anticipation Notes (The Arlington of Naples Project), Series 2011, and (2) the outstanding principal and interest on the Obligor's $19,490,000 Lutheran Church Extension Fund - Missouri Synod Promissory Note; and (b) finance and refinance the cost of (or reimburse the Obligor or one or more of its affiliates for) all or a portion of (1) construction of a campus consisting of an estimated 163 independent living units, an estimated 79 assisted living units (of which an estimated 37 will be memory support units), and an estimated 44 skilled nursing beds along with associated common areas (collectively, the "Project") to be located in Naples, Florida, (2) capitalized interest during the construction period, (3) any necessary reserves, and (4) costs of issuance related to the Series 2013 Bonds.

As to questions of fact material to our opinion we have relied upon representations of the Issuer and the Obligor and the certified proceedings and other certifications of appropriate officials of the Issuer and the Obligor furnished to us (including certifications as to the use of proceeds of the Series 2013 Bonds and accounting treatment thereof), without undertaking to verify the same by independent investigation. Reference is also made to the opinions of even date of Chuhak & Tecson, P.C., counsel to the Obligor, relating to various matters, including, the corporate power of the Obligor to enter into and

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perform the Loan Agreement, the authorization, execution and delivery of the Loan Agreement by the Obligor and the status of the Obligor as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code") by inclusion in a group exemption. Reference is also made to the opinions of Holland & Knight LLP, special Florida counsel to the Obligor, as to the enforceability of certain documents under Florida law. We also have relied on the matters addressed in such opinions.

Based upon the foregoing and in reliance upon the matters hereinafter referred to, we are of the opinion that:

1. The Issuer is a public body corporate and politic and a duly created and validly existing industrial development authority under the laws of the State of Florida including, particularly, the Act, and has full power and authority to enter into, execute and deliver the Bond Indenture and the Loan Agreement, and to issue, sell and deliver the Series 2013 Bonds.

2. The Bond Indenture and the Loan Agreement have each been duly authorized by all necessary action on the part of the Issuer, have been duly executed and delivered by authorized officers of the Issuer and, assuming the due authorization, execution and delivery of such instruments by the other parties thereto, each constitutes a legal, valid and binding obligation of the Issuer, enforceable in accordance with its respective terms.

3. The Series 2013 Bonds have been duly authorized by all necessary action on the part of the Issuer, have been duly executed and issued by the Issuer, and constitute legal, valid and binding limited and special obligations of the Issuer enforceable in accordance with their terms, and are entitled to the benefit and security of the Trust Estate created by the Bond Indenture and are payable solely from such Trust Estate in the manner and pursuant to the terms set forth in the Bond Indenture and the Loan Agreement. In connection with the issuance of the Series 2013 Bonds, the Obligor has executed a Master Trust Indenture, dated as of December 1, 2013, as supplemented by Supplemental Master Trust Indenture Number 1, dated as of December 1, 2013 (collectively, the "Master Indenture"), with Wells Fargo Bank, National Association, as master trustee. Pursuant to the Master Indenture the Obligor has issued its Series 2013 Notes to the Issuer to secure its obligations under the Loan Agreement, which Series 2013 Notes have been assigned by the Issuer to the Bond Trustee.

4. The Series 2013 Bonds and interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, as defined in said Chapter 220.

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5. Under existing statutes, regulations, rulings and court decisions, the interest on the Series 2013 Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes. Such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that such interest is taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on corporations under the Code. The opinion set forth in the first sentence of this paragraph is subject to the condition that the Issuer and the Obligor comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2013 Bonds in order that interest thereon be (or continues to be) excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements could cause the interest on the Series 2013 Bonds to be so included in gross income retroactive to the date of issuance of the Series 2013 Bonds. The Issuer and the Obligor have covenanted to comply with all such requirements. Ownership of the Series 2013 Bonds may result in collateral federal tax consequences to certain taxpayers. We express no opinion regarding such collateral federal tax consequences arising with respect to the Series 2013 Bonds.

Except as may expressly be set forth in an opinion delivered by us to the underwriter of the Series 2013 Bonds on the date hereof (upon which only it may rely), (1) we have not been engaged or undertaken to review the accuracy, sufficiency or completeness of the Official Statement or other offering material relating to the Series 2013 Bonds and we express no opinion relating thereto, and (2) we have not been engaged or undertaken to review the compliance with any federal or state law with regard to the sale or distribution of the Series 2013 Bonds and we express no opinion relating thereto.

The opinions expressed in paragraphs 2 and 3 hereof are qualified to the extent that the enforceability of the Series 2013 Bonds, the Bond Indenture and the Loan Agreement may be limited by any applicable bankruptcy, insolvency, moratorium, reorganization, or other similar laws affecting creditors' rights generally, or by the exercise of judicial discretion in accordance with general principles of equity or public policy.

This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

We have examined the form of the Series 2013 Bonds and, in our opinion, the form of the Series 2013 Bonds is regular and proper.

Respectfully submitted,

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