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Resolution 13-12 Exhibit B. Loan Agreement v LOAN AGREEMENT by and among CITY OF ATLANTIC BEACH, FLORIDA and NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC. Dated as of October 1, 2013 RELATING TO CITY OF ATLANTIC BEACH, FLORIDA HEALTH CARE FACILITIES REVENUE BONDS (FLEET LANDING PROJECT), SERIES 2013B 4848-1157-2757.4. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION 1.1. DEFINITIONS 2 ARTICLE II REPRESENTATIONS SECTION 2.1. REPRESENTATIONS BY THE ISSUER 9 SECTION 2.2. REPRESENTATIONS BY THE OBLIGOR 10 ARTICLE III TERM OF LOAN AGREEMENT SECTION 3.1. TERM OF THIS LOAN AGREEMENT 13 ARTICLE IV ISSUANCE OF THE BONDS; CONSTRUCTION OF PROJECTS; DISBURSEMENTS SECTION 4.1. AGREEMENT TO ISSUE BONDS, APPLICATION OF BOND PROCEEDS 14 SECTION 4.2. PROJECT; COMPLETION CERTIFICATE 14 SECTION 4.3. COST OF CONSTRUCTION 15 SECTION 4.4. PLANS; MODIFICATIONS OF PROJECT 15 SECTION 4.5. COMPLIANCE WITH REGULATORY REQUIREMENTS 15 SECTION 4.6. REQUESTS FOR DISBURSEMENTS 15 SECTION 4.7. COST OF ISSUANCE FUND 15 SECTION 4.8. MODIFICATION OF DISBURSEMENTS 16 SECTION 4.9. COVENANTS REGARDING TAX EXEMPTION 16 SECTION 4.10. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT 17 SECTION 4.11. REPRESENTATIONS AND WARRANTIES AS TO TAX EXEMPT STATUS OF OBLIGOR 17 SECTION 4.12. DISPOSITION OF PROJECT 18 SECTION 4.13. SURPLUS PROJECT FUND MONEYS 18 ARTICLE V LOAN OF BOND PROCEEDS; NOTE; PROVISION FOR PAYMENT SECTION 5.1. LOAN OF BOND PROCEEDS 20 SECTION 5.2. REPAYMENT OF LOAN 20 SECTION 5.3. CREDITS 20 SECTION 5.4. NOTE 20 SECTION 5.5. PAYMENT OF BOND TRUSTEE'S AND PAYING AGENT'S FEES AND EXPENSES 21 SECTION 5.6. RESERVE FUND 21 SECTION 5.7. PAYMENT OF ADMINISTRATION EXPENSES 21 SECTION 5.8. PAYEES OF PAYMENTS 21 SECTION 5.9. OBLIGATIONS OF OBLIGOR HEREUNDER UNCONDITIONAL 22 ARTICLE VI MAINTENANCE AND INSURANCE SECTION 6.1. MAINTENANCE AND MODIFICATIONS OF PROJECT BY OBLIGOR 23 SECTION 6.2. INSURANCE 23 ARTICLE VII SPECIAL COVENANTS SECTION 7.1. NO WARRANTY OF MERCHANTABILITY, CONDITION OR SUITABILITY BY THE ISSUER 24 SECTION 7.2. RIGHT OF ACCESS TO THE PROJECT 24 SECTION 7.3. NONSECTARIAN USE 24 SECTION 7.4. FURTHER ASSURANCES 24 SECTION 7.5. INDEMNIFICATION 24 SECTION 7.6. AUTHORITY OF OBLIGOR 26 SECTION 7.7. AUTHORITY OF ISSUER REPRESENTATIVE 27 SECTION 7.8. NO PERSONAL LIABILITY 27 SECTION 7.9. FEES AND EXPENSES 27 ARTICLE VIII ASSIGNMENT AND LEASING SECTION 8.1. ASSIGNMENT AND LEASING BY OBLIGOR 28 SECTION 8.2. ASSIGNMENT AND PLEDGE BY ISSUER 28 ARTICLE IX FAILURE TO PERFORM COVENANTS AND REMEDIES THEREFOR SECTION 9.1. FAILURE TO PERFORM COVENANTS 29 SECTION 9.2. REMEDIES FOR FAILURE TO PERFORM 29 SECTION 9.3. DISCONTINUANCE OF PROCEEDINGS 29 SECTION 9.4. NO REMEDY EXCLUSIVE 29 ii SECTION 9.5. LOAN AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES 30 SECTION 9.6. WAIVERS 30 ARTICLE X PREPAYMENT OF NOTE SECTION 10.1. GENERAL OPTION TO PREPAY NOTE 31 SECTION 10.2. CONDITIONS TO EXERCISE OF OPTION 31 ARTICLE XI MISCELLANEOUS SECTION 11.1. NOTICES 32 SECTION 11.2. BINDING EFFECT 33 SECTION 11.3. SEVERABILITY 33 SECTION 11.4. AMOUNTS REMAINING IN FUNDS 33 SECTION 11.5. AMENDMENTS, CHANGES, AND MODIFICATIONS 33 SECTION 11.6. EXECUTION IN COUNTERPARTS 33 SECTION 11.7. PAYMENT 33 SECTION 11.8. GOVERNING LAW 33 SECTION 11.9. NO PECUNIARY LIABILITY OF ISSUER 33 SECTION 11.10. PAYMENTS DUE ON HOLIDAYS 34 SECTION 11.11. NO INDIVIDUAL LIABILITY 34 SECTION 11.12. SURVIVAL OF COVENANTS 34 EXHIBIT A PROJECT DESCRIPTION EXHIBIT B FORM FOR COST OF ISSUANCE DISBURSEMENT iii LOAN AGREEMENT THIS LOAN AGREEMENT is dated as of October 1, 2013 (the "Loan Agreement"), between CITY OF ATLANTIC BEACH, a municipality duly organized and existing under the laws of the State of Florida (the "Issuer"), and the NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC., a nonprofit corporation duly organized and validly existing under the laws of the State of Florida (the "Obligor"), WITNESSETH: WHEREAS, pursuant to the provisions of the Act, the Issuer has determined to issue, sell and deliver its Bonds and to loan the proceeds derived from the sale thereof to the Obligor for the purpose of(i) financing all or a portion of the cost of the Project, (ii) funding a debt service reserve fund and (iii) paying a portion of the costs of issuance of the Bonds; and WHEREAS, the Obligor and the Issuer each have full right and lawful authority to enter into this Loan Agreement and to perform and observe the provisions hereof on their respective parts to be performed and observed; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto formally covenant, agree and bind themselves as follows: 1 ARTICLE I DEFINITIONS SECTION 1.1. DEFINITIONS. Except as otherwise provided herein, the terms used in this Loan Agreement shall have the meanings given such terms in the Master Indenture (as defined below). In addition to such terms defined in the Master Indenture, the following terms, except where the context indicates otherwise, shall have the respective meanings set forth below. "Account" means any account established within a Fund. "Act" means Part II, Chapter 159, Florida Statutes, and other applicable provisions of law. "Administration Expenses" means the reasonable and necessary fees and expenses incurred by the Issuer pursuant to this Loan Agreement and the Bond Indenture. "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. "Authorized Denominations" means the denomination of $5,000 or any integral multiple thereof. "Bond Fund" means the Bond Fund created in Section 3.02 of the Bond Indenture. "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. "Bondholder" or "Owner" of the Bonds mean the registered owner of any fully registered Bond. "Bonds" means the City of Atlantic Beach, Florida Health Care Facilities Revenue Bonds (Fleet Landing Project), Series 2013B issued pursuant to the Bond Indenture. "Bond Trustee" means U.S. Bank National Association, being the registrar, a paying agent and the trustee under the Bond Indenture, or any successor corporate trustee. "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, 2 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. "Completion Certificate" means a certificate of the Obligor delivered pursuant to Section 4.2(b) hereof. "Continuing Disclosure Agreement" means (i) 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 (ii) 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. "Cost" or "Costs" as applied to a 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 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. 3 "Cost of Issuance Fund" means the cost of issuance fund created under Section 3.17 of the Bond Indenture. "Delivery Date" means the date the Bonds are delivered to the initial purchasers against payment therefor. "Event of Default" means those defaults specified in Section 8.01 of the Bond Indenture. "Facilities" means the continuing care retirement facilities known as "Fleet Landing" which are located at One Fleet Landing Boulevard in Atlantic Beach, Florida and all land, buildings, structures, improvements, equipment, fixtures, machinery, furniture, furnishings and other real and personal property located thereon and all land, buildings, structures, improvements, equipment, fixtures, machinery, furniture, furnishings and other real and personal property now or hereafter attached to, or located in, or used in connection with, any such land, buildings, structures or improvements and all additions thereto, substitutions therefor and replacements thereof, whether now owned or hereafter acquired by the Borrower. "First Supplemental Indenture" means the Supplemental Master Trust Indenture Number 1, dated as of April 1, 2013, by the Obligor executed and delivered to the Master Trustee, supplementing the Master Trust Indenture and providing for the issuance of the Note. "Funds" means the Cost of Issuance Fund, Bond Fund, the Reserve Fund, Rebate Fund and the Project Fund. "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. "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 City of Atlantic Beach, Florida, or any public corporation succeeding to its rights and obligations under this Loan Agreement. 4 "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. "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 arising out of or relating to one or more Claims. "Master Indenture" means the Master Trust Indenture dated as of April 1, 2013, between the Obligor and the Master Trustee, as supplemented by the First Supplemental Indenture and the Second Supplemental Indenture and any supplements or amendments thereto and modifications thereof. "Maximum Annual Debt Service Requirement" means 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. "Maximum Rate" means the lesser of (a) 15% per annum, or (b) the maximum interest rate permitted by applicable Florida law. "Minimum Liquid Reserve Account" means the account maintained pursuant to the Escrow Agreement, dated as of October 1, 1994 and reissued on October 23, 2002, as amended by the Escrow Agreement Amendment, dated as of May 9, 2007, the Third Amendment to Escrow Agreement dated as of April 1, 2013, and the Fourth Amendment to Escrow Agreement dated as of October 24, 2013, each between the Obligor and U.S. Bank National Association or predecessor entity, as escrow agent, as acknowledged by the Florida Department of Insurance, in order to satisfy the minimum liquid reserve requirements of Section 651.035, Florida Statutes. In accordance with said Section 651.035, Florida Statues, amounts on deposit in the Reserve Fund shall be credited against the amounts required to be on deposit in the Minimum Liquid Reserve Account. 5 "Mortgage" means the Mortgage and Security Agreement dated as of April 1, 2013, as supplemented by the Notice of Future Advance dated as of October 1, 2013, each from the Obligor as Mortgagor, to the Master Trustee, as mortgagee. "Note" means the promissory note issued by the Obligor pursuant to the Supplemental Indenture relating to the Bonds. "Obligor Documents" means this Loan Agreement, the Master Indenture, the Second Supplemental Indenture and the Mortgage. "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 (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. "Paying Agent" means 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. "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. "Premium Security" means any Permitted Investment purchased or to be purchased at a premium from funds in the Project Fund. "Principal Account" means the account of such name in the Bond Fund created in Section 3.02 of the Bond Indenture. 6 "Project" means the project described in EXHIBIT A attached hereto. "Project Fund" means the project fund created under Section 3.06 of the Bond Indenture. "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 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. "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. "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, (i) for the period commencing on the date of issuance of the Bonds to but not including November 15, 2014, an amount equal to the interest due on the Bonds on November 15, 2014 ($1,048,345.31), (ii) for the period commencing on November 15, 2014, to but not including November 15, 2037, amount equal to 12 months of interest due on the Bonds during such period ($990,562.50), and (iii) from November 15, 2037 until maturity of the Bonds, an amount equal to the Maximum Annual Debt Service on the Bonds ($3,540,812.50). 7 "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. "Second Supplemental Indenture" means the Supplemental Master Trust Indenture Number 2, dated as of October 1, 2013, by the Obligor executed and delivered to the Master Trustee, supplementing the Master Trust Indenture and providing for the issuance of the Note. "Securities Depository" means The Depository Trust Company, New York, New York, and any successor thereto as permitted by the Bond Indenture. "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. "Surplus Project Fund Moneys" means all moneys (including moneys earned pursuant to the provisions of Article VI of the Bond Indenture) remaining in the Project 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 Fund. "Tax Compliance Agreement" means the Tax Regulatory Agreement dated October 1, 2013, among the Issuer, the Obligor and the Bond Trustee related to the Bonds. "Trust Estate" means the property pledged and assigned to the Bond Trustee pursuant to the granting clauses of the Bond Indenture. 8 ARTICLE II REPRESENTATIONS SECTION 2.1. REPRESENTATIONS BY THE ISSUER. The Issuer represents that: (a) The Issuer is a municipality duly organized and validly existing 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 financing all or a portion of the Cost of the Project, funding a debt service reserve fund and paying 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 Note, and the revenues and receipts derived by the Issuer from the Note, 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. 9 (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 Beaches Leader, a newspaper published and of general circulation in the City of Atlantic Beach, Florida on September 5, 2013, the Issuer held a public hearing on September 23, 2013 concerning the issuance of the Bonds, financing of the Project and the location of the Project. After such hearing, the Issuer authorized the issuance of the Bonds by duly adopting a resolution on September 23, 2013. SECTION 2.2. REPRESENTATIONS BY THE OBLIGOR. The Obligor represents that: (a) The Obligor is a nonprofit corporation duly incorporated and in good standing under the laws of the State of Florida, 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. The Project 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 10 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 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, 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. (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 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. (1) 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 11 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. 12 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. 13 ARTICLE IV ISSUANCE OF THE BONDS; CONSTRUCTION OF PROJECTS; DISBURSEMENTS SECTION 4.1. AGREEMENT TO ISSUE BONDS, APPLICATION OF BOND PROCEEDS. The Issuer will sell and cause to be delivered to the initial purchasers thereof the Bonds and will deliver the proceeds thereof to the Bond Trustee for disposal as follows: (a) Deposit into the Project Fund $15,603,188.18 for Costs of the Project. (b) Deposit, into the Reserve Fund, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(d) of the Bond Indenture. (c) Deposit, into the Cost of Issuance Fund, the amount specified in the request and authorization to the Bond Trustee described in Section 2.07(d) of the Bond Indenture. SECTION 4.2. PROJECT; COMPLETION CERTIFICATE. (a) The Obligor shall cause the Project to be acquired, constructed and improved, as applicable, 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 an 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 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 Project 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. 14 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. 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 Account 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. SECTION 4.6. REQUESTS FOR DISBURSEMENTS. (a) The Obligor shall be entitled to disbursements of moneys in the Project Fund to pay the Costs related to the Project. The Obligor shall request disbursements from the Project Fund on the form attached hereto as EXHIBIT B to pay Costs of the Project, and to reimburse itself for Costs of the Project 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 once a month. (b) Notwithstanding the foregoing, the Obligor shall make no request for disbursement of moneys from the Project Fund for payment of Cost of Issuance. SECTION 4.7. 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 C to pay Cost of Issuance, and to reimburse itself for 15 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 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 16 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"); (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 17 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 PROJECT FUND MONEYS. If, upon delivery of the Completion Certificate, there shall be any Surplus Project Fund Moneys, such Surplus Project 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) 18 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 Project 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 Project 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 income tax purposes. Any of such Surplus Project 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 Project Fund Moneys as set forth above, upon the written request of the Obligor, such Surplus Project 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. 19 ARTICLE V LOAN OF BOND PROCEEDS; NOTE; PROVISION FOR PAYMENT SECTION 5.1. LOAN OF BOND PROCEEDS. The Issuer hereby agrees to loan to the Obligor the proceeds of the Bonds to provide financing and refinancing for the Costs of the Project. The Obligor hereby agrees to repay the loan pursuant to the conditions set forth in Section 5.2 hereof 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 Note pursuant to the payment provisions contained in such Note. If for any reason the amounts paid to the Bond Trustee by the Obligor on the Note, 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 Note 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 Note. 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 Note, 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 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 Note shall constitute payment of a principal amount of the 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 Note such payment of such principal amount thereof. SECTION 5.4. NOTE. Concurrently with the sale and delivery by the Issuer of the Bonds, the Obligor shall execute and deliver the Note substantially in the form set forth in the Supplemental Indenture. 20 SECTION 5.5. PAYMENT OF BOND TRUSTEE'S AND PAYING AGENT'S FEES AND EXPENSES. The Obligor agrees to pay the reasonable and necessary fees and expenses (including attorney's fees) of the Bond Trustee and any Paying Agents as and when the same become due, upon submission by the Bond Trustee or any Paying Agent of a statement therefor. SECTION 5.6. RESERVE FUND. (a) In the event any moneys in 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, the Obligor agrees to deposit additional Reserve Fund Obligations into the Reserve Fund in an amount sufficient to satisfy the Reserve Fund Requirement, 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 the Reserve Fund is less than 90% of the Reserve Fund Requirement as a 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 into the Reserve Fund in an amount sufficient to satisfy the Reserve Fund Requirement, such amount to be deposited in accordance with Section 6.03(c) of the Bond Indenture. (c) On or prior to November 15, 2014 and November 15, 2037, the Obligor agrees to deposit additional Reserve Fund Obligations into the Reserve Fund in an amount sufficient, together with Reserve Fund Obligations then on deposit in the Reserve Fund, to satisfy the Reserve Fund Requirement in effect on November 14, 2014 or November 15, 2037, respectively, such amount to be deposited in accordance with Section 6.03(d) of the Bond Indenture. SECTION 5.7. PAYMENT OF ADMINISTRATION EXPENSES. In consideration of the agreement of the Issuer to issue the Bonds and loan the proceeds thereof to provide financing for the Project, the Obligor hereby agrees to pay any and all costs paid or incurred by the Issuer in connection with the financing or refinancing of the Project, whenever incurred, including out of pocket expenses and compensation in connection with the issuance of Bonds, including, without limitation, reasonable sums for reimbursement of the fees and expenses incurred by the Issuer's financial advisors, consultants and legal counsel in connection with the Project and the issuance of the Bonds. SECTION 5.8. PAYEES OF PAYMENTS. The payments on the Note pursuant to Section 5.2 hereof shall be paid in funds immediately available at the Payment Office of the Bond Trustee, directly to the Bond Trustee for the account of the 21 Issuer and shall be deposited into the appropriate account of the Bond Fund. The amounts provided for in Section 5.6 hereof shall be paid to the Bond Trustee for the account of the Issuer and shall be deposited into the Reserve Fund. The payments to be made to the Bond Trustee and the Paying Agent under Section 5.5 hereof shall be paid directly to the Bond Trustee and the Paying Agent for their own use. The payments for Administration Expenses under Section 5.7 hereof shall be paid directly to the Issuer for its own use. 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. 22 ARTICLE VI MAINTENANCE AND INSURANCE SECTION 6.1. MAINTENANCE AND MODIFICATIONS OF PROJECT BY OBLIGOR. The Obligor may, at its own expense, cause to be made from time to time any additions, modifications or improvements to the Project provided such additions, modifications or improvements do not impair the character of the Project as a "health care facility" and a "project" within the meaning of the Act or impair the extent of the exemption of interest on the Bonds from Federal income taxation. SECTION 6.2. INSURANCE. Throughout the term of this Loan Agreement, the Obligor will, at its own expense, provide or cause to be provided insurance against loss or damage to the Project in accordance with the terms of the Master Indenture. 23 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 (i) the Issuer makes no warranty of merchantability and (ii) there are no warranties which extend beyond the description contained herein. SECTION 7.2. RIGHT OF ACCESS TO THE PROJECT. The Obligor agrees that the Issuer, the Bond Trustee, and any of their duly authorized agents shall have the right at all reasonable times upon reasonable notice to the Obligor to examine and inspect the Project to determine that the Obligor is in compliance with the terms and conditions of this Loan Agreement; provided that any such inspection will be conducted in a manner that will minimize any intrusion on the operations of the Project. SECTION 7.3. NONSECTARIAN USE. The Obligor agrees that no proceeds of the Bonds will be used to construct, acquire or install any portion of the Project which is intended to be used or which is being used for sectarian purposes. SECTION 7.4. FURTHER ASSURANCES. The Issuer and the Obligor agree that they will, from time to time, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Loan Agreement. SECTION 7.5. INDEMNIFICATION. (a) THE OBLIGOR AGREES THAT IT WILL AT ALL TIMES INDEMNIFY AND HOLD HARMLESS EACH OF THE INDEMNIFIED PARTIES AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DEMANDS OR EXPENSES (INCLUDING ATTORNEYS FEES), INCLUDING LOSSES AS A RESULT OF THE NEGLIGENT ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTY, OTHER THAN LOSSES RESULTING FROM FRAUD, WILLFUL MISCONDUCT OR THEFT ON THE PART OF THE INDEMNIFIED PARTY CLAIMING INDEMNIFICATION. THE OBLIGOR ALSO SHALL INDEMNIFY THE BOND TRUSTEE FOR, AND DEFEND AND HOLD IT HARMLESS AGAINST, ANY LOSSES, LIABILITIES, CLAIMS OR DEMANDS OR EXPENSES (INCLUDING ATTORNEYS FEES) INCURRED WITHOUT NEGLIGENCE OR BAD FAITH ON ITS PART, ARISING OUT OF OR IN CONNECTION WITH THE ACCEPTANCE OR ADMINISTRATION OF THE TRUST CREATED UNDER THE BOND INDENTURE OR THE PERFORMANCE OF ITS DUTIES UNDER THE BOND INDENTURE, INCLUDING THE COSTS AND EXPENSES OF DEFENDING ITSELF AGAINST ANY CLAIM OR LIABILITY IN 24 CONNECTION WITH THE EXERCISE OR PERFORMANCE OF ANY OF ITS POWERS OR DUTIES UNDER THE BOND INDENTURE. THE BOND TRUSTEE MAY ENFORCE ITS RIGHTS UNDER THE PRECEDING SENTENCE AS A THIRD PARTY BENEFICIARY OF THIS LOAN AGREEMENT. (b) NONE OF THE INDEMNIFIED PERSONS SHALL BE LIABLE TO THE OBLIGOR FOR, AND THE OBLIGOR HEREBY RELEASES EACH OF THEM FROM, ALL LIABILITY TO THE OBLIGOR FOR, ALL INJURIES, DAMAGES OR DESTRUCTION TO ALL OR ANY PART OF ANY PROPERTY OWNED OR CLAIMED BY THE OBLIGOR THAT DIRECTLY OR INDIRECTLY RESULT FROM, ARISE OUT OF OR RELATE TO THE DESIGN, CONSTRUCTION, OPERATION, USE, OCCUPANCY, MAINTENANCE OR OWNERSHIP OF THE PROJECT OR ANY PART THEREOF, EVEN IF SUCH INJURIES, DAMAGES OR DESTRUCTION DIRECTLY OR INDIRECTLY RESULT FROM, ARISE OUT OF OR RELATE TO, IN WHOLE OR IN PART, ONE OR MORE ACTS OR OMISSIONS, INCLUDING ACTS OR OMISSIONS CONSTITUTING NEGLIGENCE ON THE PART OF ANY INDEMNIFIED PERSON (BUT NOT INCLUDING ACTS OR OMISSIONS CONSTITUTING FRAUD, WILLFUL MISCONDUCT OR THEFT ON THE PART OF THE INDEMNIFIED PERSON CLAIMING RELEASE) IN CONNECTION WITH THE ISSUANCE OF ANY SERIES OF THE BONDS OR IN CONNECTION WITH THE PROJECT. (c) Each Indemnified Person, as appropriate, shall reimburse the Obligor for payments made by the Obligor pursuant to this Section to the extent of any proceeds, net of all expenses of collection, actually received by it from any other source (but not from the proceeds of any claim against any other Indemnified Person) with respect to any Loss to the extent necessary to prevent a recovery of more than the Loss by such Indemnified Person with respect to such Loss. At the request and expense of the Obligor, each Indemnified Person shall claim or prosecute any such rights of recovery from other sources (other than any claim against another Indemnified Person) and such Indemnified Person shall assign its rights to such rights of recovery from other sources (other than any claim against another Indemnified Person), to the extent of such required reimbursement, to the Obligor. (d) In case any Claim shall be brought or, to the knowledge of any Indemnified Person, threatened against any Indemnified Person in respect of which indemnity may be sought against the Obligor, such Indemnified Person promptly shall notify the Obligor in writing; provided, however, that any failure so to notify shall not relieve the Obligor of its obligations under this Section. (e) The Obligor shall have the right to assume the investigation and defense of all Claims, including the employment of counsel and the payment of all expenses. Each Indemnified Person shall have the right to employ separate counsel in any such action and participate in the investigation and defense thereof, but the fees and expenses of such 25 counsel shall be paid by such Indemnified Person unless (i) the employment of such counsel has been specifically authorized by the Obligor, in writing, (ii) the Obligor has failed after receipt of notice of such Claim to assume the defense and to employ counsel, or (iii) the named parties to any such action (including any impleaded parties) include both an Indemnified Person and the Obligor, and the Indemnified Person shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Obligor (in which case, if such Indemnified Person notifies the Obligor in writing that it elects to employ separate counsel at the Obligor's expense, the Obligor shall not have the right to assume the defense of the action on behalf of such Indemnified Person; provided, however, that the Obligor shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegation or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for the Indemnified Parties, which firm shall be designated in writing by the Indemnified Parties). (f) Each Indemnified Person shall cooperate with the Obligor, and the Obligor shall cooperate with each Indemnified Person, in the defense of any action or Claim. (g) The Obligor shall not be liable for any settlement of any action or Claim without the Obligor's consent but, if any such action or Claim is settled with the consent of the Obligor or there be final judgment for the plaintiff in any such action or with respect to any such Claim, the Obligor shall indemnify and hold harmless the Indemnified Persons from and against any Loss by reason of such settlement or judgment to the extent provided in subsection (a) above. (h) The provisions of this Section shall survive the termination of this Loan Agreement, and the obligations of the Obligor hereunder shall apply to Losses or Claims under subsection (a) above whether asserted prior to or after the termination of this Loan Agreement or the resignation or removal of the Bond Trustee. In the event of failure by the Obligor to observe the covenants, conditions and agreements contained in this Section, any Indemnified Person may take any action at law or in equity to collect amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Obligor under this Section. The obligations of the Obligor under this Section shall not be affected by any assignment or other transfer by the Issuer of its rights, titles or interests under this Loan Agreement to the Bond Trustee pursuant to the Bond Indenture and will continue to inure to the benefit of the Indemnified Parties after any such transfer. The provisions of this Section shall be cumulative with and in addition to any other agreement by the Obligor to indemnify any Indemnified Person. SECTION 7.6. AUTHORITY OF OBLIGOR. Whenever under the provisions of this Loan Agreement the approval of the Obligor is required, or the Issuer or the Bond Trustee are required to take some action at the request of the Obligor, such 26 approval or such request shall be made by the Obligor unless otherwise specified in this Loan Agreement and the Issuer or the Bond Trustee shall be authorized to act on any such approval or request and the Obligor shall have no complaint against the Issuer or the Bond Trustee as a result of any action taken. SECTION 7.7. AUTHORITY OF ISSUER REPRESENTATIVE. Whenever under the provisions of this Loan Agreement the approval of the Issuer or the Bond Trustee are required, or the Obligor is required to take some action at the request of the Issuer, such approval or such request shall be made by the Issuer Representative unless otherwise specified in this Loan Agreement and the Obligor or the Bond Trustee shall be authorized to act on any such approval or request and the Issuer shall have no complaint against the Obligor or the Bond Trustee as a result of any such action taken. 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, the Bond Trustee or the Obligor in his or her individual capacity, and neither the governing body of the Obligor or the Bond Trustee, 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. SECTION 7.9. FEES AND EXPENSES. The Obligor agrees to pay promptly upon demand therefor all costs paid, incurred or charged by the Issuer in connection with the Bonds, including without limitation, (i) all fees required to be paid to the Issuer with respect to the Bonds, (ii) all out of pocket expenses and Cost of Issuance (including reasonable fees and expenses of attorneys employed by the Issuer) reasonably incurred by the Issuer in connection with the issuance of the Bonds, and (iii) all out of pocket expenses (including reasonable fees and expenses of attorneys employed by the Issuer) reasonably incurred by the Issuer in connection with the enforcement of any of its rights or remedies or the performance of its duties under the Bond Indenture or this Loan Agreement. 27 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 Note 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 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 Note 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. 28 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 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 60 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, 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. 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 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 29 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. LOAN AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the event the Issuer or the Bond Trustee should employ attorneys or incur other 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 fee of such attorneys and such other reasonable 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). 30 ARTICLE X PREPAYMENT OF NOTE SECTION 10.1. GENERAL OPTION TO PREPAY NOTE. 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 the Note 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 the Note 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. 31 ARTICLE XI MISCELLANEOUS SECTION 11.1. NOTICES. Any notice, request or other communication under this Loan Agreement shall be given in writing and shall be deemed to have been given by either party to the other party at the addresses shown below upon any of the following dates: (a) The date of notice by facsimile, electronic mail or similar communications, which is confirmed promptly in writing; (b) Three Business Days after the date of the mailing thereof, as shown by the post office receipt if mailed to the other party hereto by registered or certified mail; or (c) The date of the receipt thereof by such other party if not given pursuant to (a) or (b) above. The address for notice for each of the parties shall be as follows: To the Issuer: City of Atlantic Beach, Florida 800 Seminole Road Atlantic Beach, Florida 32233-5445 Attn: City Manager Telephone: (904) 247-5809 Telecopier: (904) 247-5805 To the Borrower: Naval Continuing Care Retirement Foundation, Inc. 1 Fleet Landing Boulevard Atlantic Beach, Florida 32233 Attn: Executive Director Telephone: (904) 246-9900 Telecopier: (904) 246-9447 To the Bond Trustee: U.S. Bank National Association 1349 N. Peachtree Street, Suite 1050 Atlanta, Georgia 30309 Attention: Stephanie Cox Telephone: (404) 898-8837 Notwithstanding the foregoing, notices to the Bond Trustee shall be effective only upon receipt. 32 SECTION 11.2. BINDING EFFECT. This Loan Agreement shall inure to the benefit of and shall be binding upon the Issuer, the Obligor, and their respective successors and assigns, subject, however, to the limitations contained in Sections 8.1, 8.2 and 11.9 hereof. SECTION 11.3. SEVERABILITY. In the event any provision of this Loan Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 11.4. AMOUNTS REMAINING IN FUNDS. It is agreed by the parties hereto that any amounts remaining in the Cost of Issuance Fund, Bond Fund, the Reserve Fund and any Project Fund upon expiration or sooner termination of this Loan Agreement, after payment in full of the Bonds (or provision for payment thereof having been made in accordance with the provisions of the Bond Indenture), the fees, charges, and expenses of the Bond Trustee, the Issuer and the Paying Agent in accordance with the Bond Indenture, the Administration Expenses and all other amounts required to be paid under this Loan Agreement and the Bond Indenture, shall belong to and be paid to the Obligor by the Bond Trustee or the Issuer. SECTION 11.5. AMENDMENTS, CHANGES, AND MODIFICATIONS. Except as otherwise provided in this Loan Agreement or in the Bond Indenture, subsequent to the initial issuance of Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Bond Indenture), this Loan Agreement may not be effectively amended, changed, modified, altered, or terminated without the written consent of the Bond Trustee. SECTION 11.6. EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 11.7. PAYMENT. At such time as the principal of, premium, if any, and interest on all Bonds Outstanding under the Bond Indenture shall have been paid, or shall be deemed to be paid, in accordance with the Bond Indenture, and all other sums payable by the Obligor under this Loan Agreement shall have been paid, the Note shall be deemed to be fully paid and shall be delivered by the Bond Trustee to the Obligor. SECTION 11.8. GOVERNING LAW. This Loan Agreement shall be governed and construed in accordance with the law of the State of Florida. SECTION 11.9. NO PECUNIARY LIABILITY OF ISSUER. No provision, covenant, or agreement contained in this Loan Agreement, or any obligations herein imposed upon the Issuer, or the breach thereof, shall constitute an indebtedness of the Issuer within the meaning of any Florida constitutional provision or statutory 33 limitation or shall constitute or give rise to a pecuniary liability of the Issuer or a charge against its general credit. In making the agreements, provisions, and covenants set forth in this Loan Agreement, the Issuer has not obligated itself except with respect to the application of the revenues, income, and all other property therefrom, as hereinabove provided. SECTION 11.10. PAYMENTS DUE ON HOLIDAYS. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Loan Agreement, shall be a legal holiday or a day on which banking institutions in Jacksonville, Florida are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed with the same force and effect as if done on the nominal date provided in this Loan Agreement. SECTION 11.11. NO INDIVIDUAL LIABILITY. No covenant or agreement contained in this Loan Agreement or the Bond Indenture shall be deemed to be the covenant or agreement of any member of the governing body of the Obligor or the Bond Trustee or of any officer, director, trustee, agent or employee of the Issuer, the Bond Trustee or the Obligor or the governing body of Duval County, Florida, in his or her individual capacity, and none of such persons shall be subject to any personal liability or accountability by reason of the execution hereof, whether by virtue of any constitution, statute or rule of law, or by the enforcement or any assessment or penalty, or otherwise. SECTION 11.12. SURVIVAL OF COVENANTS. All covenants, agreements, representations and warranties made by the Obligor in this Loan Agreement, the Bond Indenture, the Note and the Bonds, and in any certificates or other documents or instruments delivered pursuant to this Loan Agreement or the Bond Indenture, shall survive the execution and delivery of this Loan Agreement, and the Bond Indenture and the Note and shall continue in full force and effect until the Bonds and the Note are paid in full and all of the Obligor's other payment obligations (including without limitation the indemnification obligation under Section 7.5 hereof and the obligations under Sections 5.5, 5.7 and 9.5 hereof) under this Loan Agreement, the Bond Indenture, the Note and the Bonds are satisfied. All such covenants, agreements, representations and warranties shall be binding upon any successor and assigns of the Obligor. [Remainder of this Page Intentionally Left Blank; Signature Page Follows.] 34 IN WITNESS WHEREOF, the Issuer and the Obligor have caused this Loan Agreement to be executed in their respective corporate names, all as of the date first above written. CITY OF ATLANTIC BEACH, FLORIDA By: Yl . - Louis M. Borno, Jr., Mayor [Signature Page to Loan Agreement] NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC. By: Joshu Ashby, Ex utive Director [Signature Page to Loan Agreement] EXHIBIT A PROJECT DESCRIPTION The Project consists of: (i) the acquisition of approximately 0.5 acres of land located at 2935 Mayport Road, Atlantic Beach, Florida immediately adjacent to Fleet Landing, for future use in connection with the operation of Fleet Landing, (ii) the acquisition, construction and installation of renovations to the existing 80-bed skilled nursing center which will reduce the number of skilled nursing beds to approximately 64 beds and increase the number of private rooms, (ii) acquisition, construction and installation of a one-story building containing approximately 20,000 square feet to house a 24-unit memory care facility, (iii) the acquisition, construction and installation of a one- story building containing approximately 7,200 square feet to be used as a facility operations and maintenance center, (iv) the acquisition, construction and installation of the expansion of and renovations to the existing outpatient clinic and outpatient therapy spaces; (v) the acquisition, construction and installation of renovations to the Annex building; (vi) the acquisition, construction and installation of renovations to the Coleman Center's dining establishment; (vii) the acquisition and installation of a campus-wide fiber optic and wireless network; and (viii) the acquisition, construction and installation of related facilities, improvements, fixtures, furnishings and equipment in connection with the foregoing and other capital improvements and expenditures to be used in connection with the operation of Fleet Landing, all located or to be located at Fleet Landing, One Fleet Landing Boulevard, in the City of Atlantic Beach, Florida, and all of which is owned and operated or to be owned and operated by the Borrower. A-1 EXHIBIT B FORM FOR PROJECT FUND DISBURSEMENT NO. U.S. Bank National Association 225 Water Street, Suite 700 Jacksonville, Florida 32202 Attention: Corporate Trust Department Re: City of Atlantic Beach, Florida Health Care Facilities Revenue Bonds (Fleet Landing Project), Series 2013B Ladies and Gentlemen: This request for disbursement is submitted to you pursuant to Section 4.6 of the Loan Agreement (the "Loan Agreement") dated as of October 1, 2013, between the City of Atlantic Beach, Florida and the Naval Continuing Care Retirement Foundation, Inc. (the "Obligor") relating to the captioned Bonds. Terms used in this requisition shall have the meanings specified for them in the Loan Agreement. The Bond Trustee is hereby authorized and directed to make payment from the Project Fund as specified in SCHEDULE A attached hereto. The undersigned authorized representative of the Obligor hereby certifies to you in connection with the amount for which payment is requested by this requisition, as follows: 1. The obligations in the amounts stated on Schedule A hereto have been incurred by the Obligor for the Cost of the Project and are presently due and payable or to be reimbursed for the payment thereof. 2. All previous disbursements, if any, made pursuant to Section 4.6 of the Loan Agreement have been expended for Costs of the Project described in prior requisitions, if any, submitted by the authorized representative of the Obligor; 3. This requisition is for costs that were properly incurred and are proper charges against the Project Fund; 4. Nothing has come to the attention of the Obligor that would cause it to conclude that the representations and warranties contained in the Loan Agreement are not true and correct as of the date hereof; and B-1 5. No event has occurred and is continuing which constitutes an Event of Default under the Bond Indenture or the Loan Agreement. Date: NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC., as Obligor By: Authorized Officer B-2 EXHIBIT C FORM FOR COST OF ISSUANCE DISBURSEMENT NO. U.S. Bank National Association 1349 N. Peachtree Street, Suite 1050 Atlanta, Georgia 30309 Attention: Stephanie Cox, Corporate Trust Department Re: City of Atlantic Beach, Florida Health Care Facilities Revenue Bonds (Fleet Landing Project), Series 2013B Ladies and Gentlemen: This request for disbursement is submitted to you pursuant to Section 4.7 of the Loan Agreement (the "Loan Agreement") dated as of October 1, 2013, between the City of Atlantic Beach, Florida and the Naval Continuing Care Retirement Foundation, Inc. (the "Obligor") relating to the captioned Bonds. Terms used in this requisition shall have the meanings specified for them in the Loan Agreement. The Bond Trustee is hereby authorized and directed to make payment from the Cost of Issuance Fund as specified in SCHEDULE A attached hereto. The undersigned authorized representative of the Obligor hereby certifies to you in connection with the amount for which payment is requested by this requisition, as follows: 1. The obligations as set forth on this requisition were incurred in connection with the issuance of the Bonds; 2. All previous disbursements, if any, made pursuant to Section 4.7 of the Loan Agreement have been expended for Costs of Issuance described in prior requisitions, if any, submitted by the authorized representative of the Obligor; 3. This requisition is for costs that were properly incurred and are proper charges against the Cost of Issuance Fund; 4. The expenditures of the amount requested under this requisition, when added to all disbursements under previous requisitions, will result in no more than two percent (2%) of the aggregate face amount of the Bonds being used for payment of Costs of Issuance related to the Bonds; C-1 5. Nothing has come to the attention of the Obligor that would cause it to conclude that the representations and warranties contained in the Loan Agreement are not true and correct as of the date hereof; and 6. No event has occurred and is continuing which constitutes an Event of Default under the Bond Indenture or the Loan Agreement. Date: NAVAL CONTINUING CARE RETIREMENT FOUNDATION, INC., as Obligor By: Authorized Officer C-2