Idaho Health Facilities Authority

NEW ISSUE RATING: NOT RATEDBOOK-ENTRY ONLY SEE “NO RATING” HEREIN

In the opinion of Sherman & Howard L.L.C., Bond Counsel, assuming continuous compliance with certain covenants described herein, interest on the Tax-Exempt Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the Tax-Exempt Bonds (the “Code”), and interest on the Tax-Exempt Bonds is excluded from alternative minimum taxable income, as defined in Section 55(b)(2) of the Code except that such interest is required to be included in calculating the “adjusted current earnings” adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. In the opinion of Bond Counsel, interest on the Taxable Bonds is included in gross income pursuant to the Code. Interest on the Tax-Exempt Bonds and the Taxable Bonds is exempt from all State of Idaho income taxes under present Idaho income tax laws. See “TAX MATTERS” herein.

$103,185,000IDAHO HEALTH FACILITIES AUTHORITY

$80,685,000 Revenue Bonds, SERIES 2014A

(The Terraces of Boise Project) FINAL CUSIP†: 451295VR7

$4,875,000 Revenue Bonds, SERIES 2014B-1

(Tax Exempt Mandatory Paydown Securities (TEMPS-75SM))

(The Terraces of Boise Project) CUSIP†: 451295VW6



(The Terraces of Boise Project) CUSIP†: 451295VX4



(The Terraces of Boise Project) CUSIP†: 451295VY2

$1,750,000 Revenue Bonds, SERIES 2014C

(Taxable Mandatory Paydown Securities (Taxable MPS))

(The Terraces of Boise Project) CUSIP†: 451295VZ9

Maturities, Interest Rates, and Prices or Yields are Shown on the Inside Cover

The Idaho Health Facilities Authority (the “Authority”) is issuing its $80,685,000 Revenue Bonds, Series 2014A (The Terraces of Boise Project) (the “Series 2014A Bonds”), its $4,875,000 Revenue Bonds, Series 2014B-1 (Tax Exempt Mandatory Paydown Securities (TEMPS-75SM)) (The Terraces of Boise Project) (the “Series 2014B-1 Bonds”), its $7,375,000 Revenue Bonds, Series 2014B-2 (Tax Exempt Mandatory Paydown Securities (TEMPS-65SM)) (The Terraces of Boise Project) (the “Series 2014B-2 Bonds”), its $8,500,000 Revenue Bonds, Series 2014B-3 (Tax Exempt Mandatory Paydown Securities (TEMPS-50SM)) (The Terraces of Boise Project) (the “Series 2014B-3 Bonds” and, together with the Series 2014A Bonds, the Series 2014B-1 Bonds and the Series 2014B-2 Bonds, the “Tax-Exempt Bonds”) and its $1,750,000 Revenue Bonds, Series 2014C (Taxable Mandatory Paydown Securities (Taxable MPS)) (The Terraces of Boise Project) (the “Taxable Bonds”) pursuant to a Bond Indenture of Trust dated as of January 1, 2014 (the “Bond Indenture”), between the Authority and U.S. Bank National Association, as bond trustee (the “Bond Trustee”). The Tax-Exempt Bonds and the Taxable Bonds are collectively referred to herein as the “Bonds.” The proceeds of the Bonds will be loaned to Boise Retirement Community d/b/a The Terraces of Boise (the “Corporation”) pursuant to a Loan Agreement dated as of January 1, 2014 (the “Loan Agreement”), between the Authority and the Corporation. The Corporation will use the proceeds of the Bonds, together with certain other moneys, to (i) finance or reimburse the Corporation for a portion of the costs of the Project (as herein described); (ii) refinance outstanding indebtedness of an affiliate of the Corporation incurred in connection with the acquisition of the land upon which the Project will be located; (iii) pay a portion of the interest on the Bonds during the construction of the Project; (iv) fund a debt service reserve fund; and (v) pay certain costs associated with the issuance of the Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “PLAN OF FINANCE” herein. Except as described in this Official Statement, each series of Bonds will be payable solely from payments by the Corporation to be made under the Loan Agreement and Obligation No. 1 (hereinafter defined) issued by the Corporation under the Master Indenture (hereinafter defined). The sources of payment of, and security for, the Bonds are more fully described in this Official Statement.

The Bonds are subject to extraordinary optional, optional and mandatory sinking fund redemption and mandatory tender for purchase prior to maturity as described herein under “THE BONDS – Redemption of the Bonds.”

The Bonds will be originally issued in authorized denominations of $100,000 and integral multiples of $5,000 in excess thereof. When issued, the Bonds will be registered only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased. Ownership by the beneficial owners of the Bonds will be evidenced by book-entry only. Principal of and interest on the Bonds will be paid by the Bond Trustee to DTC, which in turn will remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments on the Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. See APPENDIX G – “BOOK-ENTRY ONLY SYSTEM.”

THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY AND DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF IDAHO, ITS LEGISLATURE OR ANY OF ITS POLITICAL SUBDIVISIONS OR AGENCIES OTHER THAN THE AUTHORITY TO THE EXTENT HEREIN DESCRIBED. THE AUTHORITY IS NOT AUTHORIZED TO LEVY OR COLLECT ANY TAXES OR ASSESSMENTS TO PAY THE BONDS OR FOR ANY OTHER PURPOSE. THE AUTHORITY HAS NO TAXING POWER.

An investment in the 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 Bondholder is advised to read “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS” and “RISK FACTORS” herein for a description of the security for the Bonds and for a discussion of certain risk factors which should be considered in connection with an investment in the Bonds.

The Bonds are being offered when, as and if issued by the Authority and received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer without any notice, and to the approval of legality of the Bonds by Sherman & Howard L.L.C., Denver, Colorado, as Bond Counsel. Certain legal matters will be passed upon for the Authority by its counsel, Hawley Troxell Ennis & Hawley LLP, Boise, Idaho; for the Corporation by its counsel, Stamper Rubens, P.S., Spokane, Washington; and for the Underwriter by its counsel, Jones Day. It is expected that the 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 28, 2014.

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

The date of this Official Statement is January 14, 2014

SMTEMPS-75, TEMPS-65 and TEMPS-50 are Service Marks of B.C. Ziegler and Company.† Copyright, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service Bureau, a Standard & Poor’s Financial Services LLC business. CUSIP numbers

are provided for convenience of reference only. The Authority, the Corporation and the Underwriter assume no responsibility for the accuracy of such numbers.

SERIES 2014A BONDS

DATED: Date of Delivery

$5,080,000 7.000% Term Bonds due October 1, 2024 Priced @ 100% to Yield 7.000% CUSIP† 451295VS5$4,000,000 7.375% Term Bonds due October 1, 2029 Priced @ 98.843% to Yield 7.500% CUSIP† 451295VT3

$11,135,000 7.750% Term Bonds due October 1, 2034 Priced @ 98.717% to Yield 7.875% CUSIP† 451295VU0$32,230,000 8.000% Term Bonds due October 1, 2044 Priced @ 98.577% to Yield 8.125% CUSIP† 451295VV8$28,240,000 8.125% Term Bonds due October 1, 2049 Priced @ 98.550% to Yield 8.250% CUSIP† 451295VR7

SERIES 2014B BONDS


Maturity (October 1)

PrincipalAmount

Interest Rate Price Yield CUSIP†

Series 2014B-1 Bonds 2022 $4,875,000 6.50% 100% 6.50% 451295VW6Series 2014B-2 Bonds 2021 7,375,000 6.00 100 6.00 451295VX4Series 2014B-3 Bonds 2020 8,500,000 5.25 100 5.25 451295VY2

SERIES 2014C BONDS


Maturity (October 1)

PrincipalAmount

Interest Rate Price Yield CUSIP†

Series 2014C Bonds 2019 $1,750,000 7.00% 100% 7.00% 451295VZ9

† Copyright, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service Bureau, a Standard & Poor’s Financial Services LLC business. CUSIP numbers are provided for convenience of reference only. The Authority, the Corporation and the Underwriter assume no responsibility for the accuracy of such numbers.

L e g e n dIndependent Living ResidencesAssisted Living/Memory SupportSkilled NursingCottage HomesCommons Areas

1901

1902

1903

1904

1905

1906

1907

1908

19091911 19121910

Common Spaces

REGARDING USE OF THIS OFFICIAL STATEMENT

The information set forth herein under the captions “THE AUTHORITY” and “LITIGATION – The Authority” has been furnished by the Authority. The information set forth herein in APPENDIX G – “BOOK-ENTRY ONLY SYSTEM” has been furnished by DTC. The information set forth herein under the caption “UNDERWRITING” has been furnished by the Underwriter. All other information in this Official Statement has been provided by the Corporation or obtained from other sources identified herein that are believed 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 information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement, nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in the affairs of the Authority, DTC, the Bond Trustee, the Master Trustee or the Corporation since the date hereof.

No dealer, broker, sales representative or other person has been authorized by the Authority, the Corporation, its affiliated organizations, or the Underwriter to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official 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.

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 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE BOND INDENTURE OR THE MASTER INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAS PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

U.S. Bank National Association, as Bond Trustee and Master Trustee, has not reviewed or participated in the preparation of this Official Statement and assumes no responsibility for the nature,

contents, accuracy or completeness of the information set forth in this Official Statement or for the recitals contained in the Master Indenture, the Bond Indenture or the Bonds, or for the validity, sufficiency, or legal effect of any such documents. The Master Trustee and Bond Trustee have no oversight responsibility and are not accountable for the use or application by the Authority of any of the Bonds authenticated or delivered pursuant to the Bond Indenture or for the use or application of the proceeds of such Bonds. The Master Trustee and Bond Trustee have not evaluated the risks, benefits, or propriety of any investment in the Bonds and make no representation, and have reached no conclusions, regarding the value or condition of any assets pledged or assigned as security for the Bonds, the technical or financial feasibility of the projects to be financed with the proceeds from the sale of the Bonds, or the investment quality of the Bonds, about all of which the Bond Trustee and Master Trustee express no opinion and expressly disclaim the expertise to evaluate.

____________________

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

____________________

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. Such forward-looking statements include, among others, certain of the information under the captions “PLAN OF FINANCE” and “RISK FACTORS” herein and in Appendix A to this Official Statement.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVES 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 ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED, OCCUR.

TABLE OF CONTENTS

SUMMARY STATEMENT ......................................................................................................................... I

INTRODUCTION ....................................................................................................................................... 1

Purpose of this Official Statement .................................................................................................. 1 Purpose of the Bonds ...................................................................................................................... 2 The Authority .................................................................................................................................. 2 The Corporation and its Affiliates .................................................................................................. 2 Development and Management Agreements .................................................................................. 3 Security for the Bonds .................................................................................................................... 4 Certain Covenants under the Master Indenture ............................................................................... 5 The Financial Feasibility Study ...................................................................................................... 5 Continuing Disclosure .................................................................................................................... 6 Risk Factors .................................................................................................................................... 6

THE AUTHORITY ..................................................................................................................................... 6

Organization .................................................................................................................................... 6 Members of the Authority ............................................................................................................... 6 Executive Staff ................................................................................................................................ 7 Financial Advisor ............................................................................................................................ 7 Powers of the Authority .................................................................................................................. 7 Limited Obligations of the Authority ............................................................................................. 8

THE BONDS ............................................................................................................................................... 8

General Description ........................................................................................................................ 8 Redemption of the Bonds ................................................................................................................ 9 Purchase in Lieu of Redemption ................................................................................................... 13 Defeasance .................................................................................................................................... 13

SECURITY AND SOURCE OF PAYMENT FOR THE BONDS ........................................................... 14

General .......................................................................................................................................... 14 Debt Service Reserve Fund ........................................................................................................... 15 The Master Indenture and Obligation No. 1 ................................................................................. 16 Additional Indebtedness; Additional Obligations ......................................................................... 16 Security Interest in Gross Revenues and the Deed of Trust.......................................................... 17

PLAN OF FINANCE ................................................................................................................................. 18

The Project .................................................................................................................................... 18 Liquidity Support .......................................................................................................................... 18 Pre-Finance Construction Development Capital ........................................................................... 19 Development and Management of the Project .............................................................................. 20

ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 21

ANNUAL DEBT SERVICE REQUIREMENTS ...................................................................................... 22

CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE ....................................................................................................................................... 23

Marketing Covenant...................................................................................................................... 23 Occupancy Covenant .................................................................................................................... 25 Cumulative Cash Operating Loss Covenant ................................................................................. 26 Rate Covenant ............................................................................................................................... 27 Liquidity Covenant ....................................................................................................................... 28

TABLE OF CONTENTS

Actuarial Study ............................................................................................................................. 30 Approval of Consultants ............................................................................................................... 30 Application for Rating .................................................................................................................. 30 Entrance Fee Fund ........................................................................................................................ 31 Working Capital Fund................................................................................................................... 32 Operating Reserve Fund ............................................................................................................... 33 Investment of Funds ...................................................................................................................... 35 Payments on Affiliate Related Subordinated Indebtedness and Management Fees to

Affiliates and Liquidity Support Repayment Obligations ....................................................... 35 Other Covenants ........................................................................................................................... 35

LIQUIDITY SUPPORT ............................................................................................................................. 36

American Baptist Properties Liquidity Support Fund ................................................................... 36 ABHOW Liquidity Support Fund ................................................................................................. 36 Supplemental Liquidity Support Fund .......................................................................................... 36 Reductions of the Support Obligations ......................................................................................... 36 Draws on Each Support Obligation .............................................................................................. 38 General .......................................................................................................................................... 40 Investment ..................................................................................................................................... 40 Subordination Provisions .............................................................................................................. 41 Amendments ................................................................................................................................. 41

PRIORITY OF DRAWINGS FROM VARIOUS FUNDS ....................................................................... 43

RISK FACTORS ....................................................................................................................................... 44

General .......................................................................................................................................... 44 Impact of Disruptions in the Credit Markets and General Economic Factors .............................. 44 Proposed Changes to Tax Treatment of Bonds ............................................................................. 44 Development and Management .................................................................................................... 45 General Risks of Long Term Care Facilities ................................................................................ 45 Uncertainty of Revenues ............................................................................................................... 45 Failure to Achieve and Maintain Occupancy and Turnover ......................................................... 46 Sale of Personal Residences .......................................................................................................... 46 Nature of the Income of the Elderly.............................................................................................. 46 Utilization and Demand ................................................................................................................ 46 Competition .................................................................................................................................. 47 Uncertainty of Investment Income ................................................................................................ 47 Rights of Residents ....................................................................................................................... 47 Additional Capital Requirements .................................................................................................. 47 Construction Risks ........................................................................................................................ 47 Present and Prospective Federal and State Regulation ................................................................. 48 Increases in Medical Costs ............................................................................................................ 54 General Liability Insurance ........................................................................................................... 55 Labor Relations ............................................................................................................................. 55 Nursing Shortage .......................................................................................................................... 55 Tax Exempt Status; Continuing Legal Requirements ................................................................... 55 Amendments to the Documents .................................................................................................... 57 Additional Indebtedness ................................................................................................................ 57 Bankruptcy .................................................................................................................................... 57 Certain Matters Relating to Enforceability of the Master Indenture ............................................. 58 Certain Matters Relating to Enforceability of Security Interest in Gross Revenues ..................... 59

TABLE OF CONTENTS

Certain Risks Associated with the Deed of Trust ......................................................................... 60 Feasibility Study ........................................................................................................................... 60 Environmental Matters .................................................................................................................. 60 Other Possible Risk Factors .......................................................................................................... 61

LITIGATION ............................................................................................................................................. 62

The Authority ................................................................................................................................ 62 The Corporation ............................................................................................................................ 62

LEGAL MATTERS ................................................................................................................................... 62

TAX MATTERS ........................................................................................................................................ 63

Tax-Exempt Bonds ....................................................................................................................... 63 Taxable Bonds .............................................................................................................................. 65

FEASIBILITY STUDY ............................................................................................................................. 66

UNDERWRITING .................................................................................................................................... 66

LEGAL INVESTMENTS .......................................................................................................................... 66

FINANCIAL ADVISOR ........................................................................................................................... 66

NO RATING .............................................................................................................................................. 67

FINANCIAL REPORTING ....................................................................................................................... 67

CONTINUING DISCLOSURE ................................................................................................................. 70

MISCELLANEOUS .................................................................................................................................. 70

APPENDIX A: INFORMATION CONCERNING BOISE RETIREMENT COMMUNITY D/B/A THE TERRACES OF BOISE ...................................................................... A-1

APPENDIX B: FINANCIAL FEASIBILITY STUDY ...................................................................... B-1 APPENDIX C: SUMMARY OF MASTER INDENTURE AND DEED OF TRUST ....................... C-1 APPENDIX D: SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE ...................... D-1 APPENDIX E: FORMS OF APPROVING OPINIONS OF BOND COUNSEL ............................... E-1 APPENDIX F: FORM OF CONTINUING DISCLOSURE AGREEMENT ..................................... F-1 APPENDIX G: BOOK-ENTRY ONLY SYSTEM ............................................................................. G-1

[THIS PAGE INTENTIONALLY LEFT BLANK]

i

SUMMARY STATEMENT

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

The Bonds

The Idaho Health Facilities Authority (the “Authority”) is issuing its $80,685,000 Revenue Bonds, Series 2014A (The Terraces of Boise Project) (the “Series 2014A Bonds”), its $4,875,000 Revenue Bonds, Series 2014B-1 (Tax Exempt Mandatory Paydown Securities (TEMPS-75SM)) (The Terraces of Boise Project) (the “Series 2014B-1 Bonds”), its $7,375,000 Revenue Bonds, Series 2014B-2 (Tax Exempt Mandatory Paydown Securities (TEMPS-65SM)) (The Terraces of Boise Project) (the “Series 2014B-2 Bonds”) and its $8,500,000 Revenue Bonds, Series 2014B-3 (Tax Exempt Mandatory Paydown Securities (TEMPS-50SM)) (The Terraces of Boise Project) (the “Series 2014B-3 Bonds” and, together with the Series 2014A Bonds, the Series 2014B-1 Bonds and the Series 2014B-2 Bonds, the “Tax-Exempt Bonds”) and its $1,750,000 Revenue Bonds, Series 2014C (Taxable Mandatory Paydown Securities (Taxable MPS)) (The Terraces of Boise Project) (the “Series 2014C Bonds” or the “Taxable Bonds”). The Series 2014B-1 Bonds, the Series 2014B-2 Bonds and the Series 2014B-3 Bonds are collectively referred to herein as the “Series 2014B Bonds.” The Tax-Exempt Bonds and the Taxable Bonds are collectively referred to herein as the “Bonds.”

Purpose of the Bonds

The Bonds will be issued pursuant to a Bond Indenture of Trust dated as of January 1, 2014 (the “Bond Indenture”), by and between the Authority and U.S. Bank National Association, as bond trustee (the “Bond Trustee”). The proceeds of the Bonds will be loaned to Boise Retirement Community d/b/a The Terraces of Boise, a California nonprofit public benefit corporation (the “Corporation”), pursuant to a Loan Agreement dated as of January 1, 2014 (the “Loan Agreement”), by and between the Authority and the Corporation.

The Corporation will use the proceeds from the sale of the Bonds, together with other available funds, to: (i) finance or reimburse the Corporation for a portion of the costs of the Project (as herein described); (ii) refinance outstanding indebtedness of an affiliate of the Corporation incurred in connection with the acquisition of the land upon which the Project will be located; (iii) pay a portion of the interest on the Bonds during the construction of the Project; (iv) fund a debt service reserve fund; and (v) pay certain costs associated with the issuance of the Bonds. See “PLAN OF FINANCE – The Project” and “ESTIMATED SOURCES AND USES OF FUNDS” herein and APPENDIX A – “THE COMMUNITY.”

The Authority

The Authority is an independent public body politic and corporate constituting a public instrumentality of the State of Idaho (the “State”). See “THE AUTHORITY” herein.

The Corporation and its Affiliates

The Corporation is a California nonprofit public benefit corporation qualified to do business in the State of Idaho. The Corporation was incorporated in August 2005 and was formed for the

ii

purpose of developing, owning and operating not-for-profit senior care facilities providing housing and health care services to senior members of the public. The Corporation is a start-up entity that is currently developing a senior living community to be located on a 12.6 acre site in Boise, Idaho to be known as The Terraces of Boise (the “Community”). The Community will consist of 149 residential living apartments, 12 residential living duplex apartments, 40 residential-style assisted living apartments, 24 special care assisted living suites and three, one-story cottage style buildings housing a total of 48 private skilled nursing rooms, as well as administrative support and common areas. Construction and equipping of the Community will be financed with proceeds of the Bonds and is referred to herein as the “Project.”

Further information regarding the Corporation and the Project is included in APPENDIX A and APPENDIX B hereto. Also see “PLAN OF FINANCE” herein.

The sole member of the Corporation is Cornerstone Affiliates (“Cornerstone”), a California nonprofit public benefit corporation. Cornerstone was established to support the operations and activities of its tax-exempt affiliates and to develop and expand the retirement communities owned by its affiliates, including the Corporation. See the organization chart set forth under the heading APPENDIX A - “CORNERSTONE AFFILIATES AND ABHOW” for additional information regarding Cornerstone and its affiliates.

The Corporation has retained American Baptist Homes of the West (“ABHOW”) to provide certain development services to the Community. Cornerstone is the sole corporate member of ABHOW. ABHOW is a California nonprofit public benefit corporation that owns and operates seven continuing care retirement communities in California and manages additional continuing care communities owned by its affiliates. ABHOW is also active in supporting and managing affordable housing with owned or managed communities in California and Washington state. ABHOW will provide liquidity support to the Corporation as described under the heading “LIQUIDITY SUPPORT” and “PLAN OF FINANCE – Liquidity Support” herein.

American Baptist Properties, Inc. (“American Baptist Properties”) is a California nonprofit corporation created to facilitate strategic growth initiatives including the acquisition of real property. ABHOW is the sole member of American Baptist Properties.

ABHOW and American Baptist Properties will provide liquidity support to the Corporation as described under the heading “LIQUIDITY SUPPORT” and “PLAN OF FINANCE – Liquidity Support” herein.

The Corporation, Cornerstone, ABHOW and American Baptist Properties have each received determination letters from the Internal Revenue Service that they are organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), exempt from federal income taxation under Section 501(a) of the Code and are not private foundations under Section 509(a) of the Code.

ONLY THE CORPORATION IS OBLIGATED TO MAKE DEBT SERVICE PAYMENTS ON THE BONDS AS DESCRIBED HEREIN. CORNERSTONE, ABHOW AND AMERICAN BAPTIST PROPERTIES HAVE NO OBLIGATION TO MAKE ANY DEBT SERVICE PAYMENTS WITH RESPECT TO THE BONDS.

See APPENDIX A for a more detailed description of the history and organization of the Corporation and its relationship to Cornerstone, ABHOW and American Baptist Properties and their agreements with the Corporation.

iii

Development and Management Agreements

The Corporation entered into a Development Consulting Agreement effective December 21, 2007, as amended, with Greystone Development Company II, LP (“GDC”) and its affiliated entity Greystone Development Services XX, LLC (“GDS”). The Corporation entered into an Amended and Restated Management and Marketing Services Agreement effective October 25, 2013 with GMSC Idaho, LLC, a Texas limited liability company and an affiliate of GDC (“GMSC”), under which GMSC will serve as manager of the Community (the “Manager”) and manage day-to-day operations of the Community. Pursuant to the terms of the Management Agreement, the manager is required to provide all management services necessary to operate the Community, including but not limited to, financial management, purchasing, public relations, recruitment of personnel, and supervision of the day-to-day operations and programs of the Community. GDC, GDS, and GMSC are collectively referred to herein as “Greystone.”

See APPENDIX A for a more detailed description of Greystone and its agreements with the Corporation.

Security for the Bonds

The Bonds will be payable from payments made by the Corporation under the Loan Agreement, from payments made by the Obligated Group on Obligation No. 1 (described below) and from certain funds held under the Bond Indenture.

The Bonds will be limited obligations of the Authority and will be secured by the Corporation’s Direct Note Obligation No. 1 (“Obligation No. 1”) issued under the Master Trust Indenture dated as of January 1, 2014 (the “Original Master Indenture”), between the Corporation, as the sole Member of the Obligated Group created thereunder, and U.S. Bank National Association, as master trustee (the “Master Trustee”), as supplemented by the First Supplemental Master Trust Indenture dated as of January 1, 2014 (the “First Supplemental Master Indenture” and, together with the Original Master Indenture, the “Master Indenture”) between the Corporation and the Master Trustee. Pursuant to Obligation No. 1, the Obligated Group agrees to make payments on Obligation No. 1 in an amount sufficient to pay, when due, the principal of and interest on the Bonds. The Corporation is currently the only Member of the Obligated Group. Cornerstone, ABHOW and American Baptist Properties have no obligation to make any payments with respect to Obligation No. 1 or any other Obligation issued under the Master Indenture.

The Authority will pledge and assign Obligation No. 1 and certain of its rights under the Loan Agreement (other than Unassigned Rights) to the Bond Trustee as security for the Bonds. Obligation No. 1 will entitle the Bond Trustee, as the holder thereof, to the protection of the covenants, restrictions and other obligations imposed by the Master Indenture upon the Corporation and any other Person which may become a Member of the Obligated Group in the future.

Obligation No. 1 and all other Obligations subsequently issued under the Master Indenture will be secured by (i) a security interest in the Gross Revenues of the Obligated Group and (ii) a mortgage and security interest in the real and personal property of the Corporation described in the Deed of Trust and Security Agreement dated as of January 28, 2014 (the “Deed of Trust”), among the Corporation, as trustor, First American Title Insurance Company, as trustee, and the Master Trustee. See “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS – Security Interest in Gross Revenues and the Deed of Trust” and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE –PLEDGE OF GROSS REVENUES” and “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST.”

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The obligations of the Corporation and any other future Members of the Obligated Group to make payments on Obligation No. 1 are full and unlimited, joint and several obligations of the Corporation and such other Members of the Obligated Group. The Gross Revenues of the Members of the Obligated Group are pledged under the Master Indenture to secure all the Obligations issued thereunder. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES.” Notwithstanding such security interest in the Obligated Group’s Gross Revenues and the Deed of Trust, the Members of the Obligated Group may sell or otherwise transfer Gross Revenues and create Permitted Encumbrances thereon, in accordance with the provisions of the Master Indenture. See “RISK FACTORS – Certain Matters Relating to Enforceability of the Master Indenture” and “– Certain Risks Associated with the Deed of Trust” herein and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES.”

Payment of the principal of, and interest on, the Bonds will be additionally secured by moneys deposited to the credit of a Debt Service Reserve Fund established under the Bond Indenture.

For further information concerning the security for the Bonds, see the information under the caption “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS” below.

Liquidity Support Agreements

ABHOW and American Baptist Properties will enter into a Liquidity Support Agreement dated as of January 1, 2014 (the “Sponsor Liquidity Support Agreement”) in favor of the Corporation, the Bond Trustee and the Master Trustee, pursuant to which American Baptist Properties will deposit $1.0 million to a Liquidity Support Fund upon the issuance of the Bonds and ABHOW will, under certain circumstances, deposit $1.25 million to a Liquidity Support Fund which, in each case, will be held under the Master Indenture to pay costs of the Project, operating costs of the Corporation or debt service payments with respect to the Bonds. See “LIQUIDITY SUPPORT” herein.

In addition, GCI Boise, L.P. (“GCI Boise”) will enter into a Liquidity Support Agreement dated as of January 1, 2014 (the “Greystone Liquidity Support Agreement” and, together with the Sponsor Liquidity Support Agreement, the “Liquidity Support Agreements”) in favor of the Corporation, the Bond Trustee and the Master Trustee pursuant to which GCI Boise will deposit $2.25 million upon the issuance of the Bonds in a Liquidity Support Fund to be held under the Master Indenture to pay costs of the Project, operating costs of the Corporation or debt service payments on the Bonds. See “LIQUIDITY SUPPORT” herein.

Pre-Finance Construction Development Capital

GCI Boise is a Delaware limited partnership, of which GDC Boise, LLC is the general partner (the “General Partner”) and The Ziegler Companies, Inc., Ziegler Equity Funding IV, LLC (“ZEFIV”), Ziegler Equity Funding V, LLC (“ZEFV”) and Greystone Senior Living Investors LP (“GSLI”) are the limited partners. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. (“Greystone Partners”) which is controlled by the principals of Greystone.

GCI Boise was formed to fund the pre-finance development costs (the “Pre-finance Capital”) for the Project. Pre-finance Capital in the amount of $6,250,000 was funded in December 2007; $650,000 was funded in April 2011; $600,000 was funded in January 2012; $750,000 was funded in July 2012 and $350,000 was funded in March 2013 for a total funding of $8,600,000.

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For a description of the return of a portion of the pre-finance capital, see “DEVELOPMENT OF THE COMMUNITY” in APPENDIX A.

It is anticipated that a portion of the Pre-Finance Capital described above, along with a portion of a fixed base development fee (the “Fixed Base Fee”), will be repaid upon delivery of the Bonds. The Corporation has no obligation to reimburse advances made by GCI Boise unless and until the issuance of the Bonds. All risks for such advances associated with the failure to achieve issuance of the Bonds will be borne by GCI Boise. See “DEVELOPMENT OF THE COMMUNITY” in APPENDIX A.

ZEFIV and ZEFV is each an investment fund, which primarily includes third party investors and certain employees of the Underwriter. The Ziegler Companies, Inc. is the parent of the Underwriter. See “DEVELOPMENT OF THE COMMUNITY” in APPENDIX A.

Certain Covenants under the Master Indenture

Pursuant to the Master Indenture, the Members of the Obligated Group have agreed to subject themselves to certain operational and financial restrictions contained therein. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE.”

Entrance Fee Fund. The Members of the Obligated Group agree in the Master Indenture that all Initial Entrance Fees (as defined in APPENDIX C) received by the Members of the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fee Fund.

Pursuant to the Master Indenture, the Master Trustee shall establish and maintain a separate account to be known as the “Entrance Fee Fund – Series 2014 Bonds” (the “Entrance Fee Fund”). All moneys received by the Master Trustee and held in the Entrance Fee Fund shall be trust funds under the terms of the Master Indenture for the benefit of Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture, but are not bond proceeds (within the meaning of the Code), and are not, except as specifically described below, pledged to payment of principal and interest on the Bonds.

Moneys in the Entrance Fee Fund on the first Business Day of each month shall be disbursed by the Master Trustee, as follows:

FIRST: To the Obligated Group to pay refunds of Initial Entrance Fees as required by residency agreements with respect to the residential living apartments in the Project. Such disbursements shall be made upon receipt by the Master Trustee of an Officer’s Certificate of the Obligated Group Representative certifying that the Obligated Group is required by a residency agreement to pay refunds within the next 15 days and the amount of such refunds.

SECOND: To the Working Capital Fund established under the Master Indenture, until the total principal amount deposited into the Working Capital Fund equals $12,000,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund.

THIRD: To the Operating Reserve Fund established under the Master Indenture, until the amount on deposit in the Operating Reserve Fund equals $3,000,000 (the “Operating Reserve Fund Requirement”). On the first Business Day of each month, the Master Trustee shall disburse the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to the Operating Reserve

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Fund Requirement, provided, however that the Master Trustee shall replenish no more than $3,000,000 of any funds withdrawn from the Operating Reserve Fund from funds deposited in the Entrance Fee Fund so that the total aggregate deposits to the Operating Reserve Fund do not exceed $6,000,000. Notwithstanding the foregoing limitations on the amount of Initial Entrance Fees deposited in the Operating Reserve Fund, if a transfer of moneys from the Liquidity Support Funds (as herein defined) to the Operating Reserve Fund has occurred as described under the caption “LIQUIDITY SUPPORT” below or in the Liquidity Support Agreements, the Master Trustee shall deposit to the Operating Reserve Fund the amount, if any, needed to increase the amount on deposit in the Operating Reserve Fund to $1,000,000.

FOURTH: to the Supplemental Liquidity Support Fund (as herein defined), the American Baptist Properties Liquidity Support Fund (as herein defined) and the ABHOW Liquidity Support Fund (in that order) any amount necessary to replenish any amounts advanced under the Liquidity Support Agreements to pay costs prior to the issuance of the initial Occupancy Certificate for the Project.

FIFTH: If the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014C Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

SIXTH: After all the Series 2014C Bonds have been redeemed, and if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014B-3 Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

SEVENTH: After all the Series 2014C Bonds and the Series 2014B-3 Bonds have been redeemed, and if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014B-2 Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

EIGHTH: After all Series 2014C Bonds, the Series 2014B-3 Bonds and the Series 2014B-2 Bonds have been redeemed, and if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014B-1 Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

After the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds have been redeemed, 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 Obligated Group and the Entrance Fee Fund shall be closed.

Also see APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – ENTRANCE FEE FUND.”

Working Capital Fund. Pursuant to the Master Indenture, the Master Trustee shall establish and maintain a separate account to be known as the “Working Capital Fund – Series 2014 Bonds” (the “Working Capital Fund”). All moneys received by the Master Trustee and held in the Working Capital

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Fund shall be trust funds under the terms of the Master Indenture for the benefit of Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor 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 Obligated Group within seven days after receipt by the Master Trustee of a Written Request to the Master Trustee certifying that (i) the withdrawal is made to pay (A) development and marketing fees and expenses related to the Project, (B) operating expenses of the Obligated Group, (C) the costs of needed repairs to the Obligated Group’s Facilities, (D) routine capital expenditures of the Obligated Group, (E) judgments against the Obligated Group, (F) refunds of any Entrance Fees as required by residency agreements with respect to residential living apartments in the Project, (G) amounts required to restore funds on deposit in the Debt Service Reserve Fund to the required level, or (H) amounts due on any Obligations (other than optional prepayment or redemption), other than funds advanced by an Affiliate of the Obligated Group, (ii) such moneys have been expended or are anticipated to be expended in the calendar month following the month in which such Officer’s Certificate is submitted, together with a budget describing the uses for which such moneys are needed and the amount needed for each such use, and (iii) no other funds are available or will reasonably be available to make such payments.

All amounts on deposit in the Working Capital Fund shall be released to the Obligated Group, and the Working Capital Fund shall be closed when all the Series 2014B Bonds and Series 2014C Bonds have been redeemed and if no Event of Default has occurred and is continuing under the Master Indenture.

Operating Reserve Fund. Pursuant to the Master Indenture, the Master Trustee shall establish and maintain a separate account to be known as the “Operating Reserve Fund – Series 2014 Bonds” (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 Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor 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 Obligated Group within seven days of receipt by the Master Trustee of an Officer’s Certificate of the Obligated Group to the effect that (i) such moneys will be used to pay (A) costs of the Project, (B) development and marketing fees and expenses of the Project, (C) operating expenses of the Obligated Group, (D) the costs of needed repairs to the Obligated Group’s Facilities, (E) routine capital expenditures of the Obligated Group, (F) judgments against the Obligated Group, (G) refunds of any Entrance Fees as required by residency agreements, (H) amounts required to restore funds on deposit in the Debt Service Reserve Fund to the required level, or (I) amounts due on any Obligations (other than optional prepayment or redemption), other than funds advanced by an Affiliate of the Obligated Group, (ii) such moneys have been expended or are anticipated to be expended in the calendar month following the month in which such Officer’s Certificate is submitted, together with a budget describing the uses for which such moneys are needed and the amount needed for each such use, and (iii) no other funds are available or will reasonably be available to make such payments.

All amounts on deposit in the Operating Reserve Fund shall be released to the Obligated Group and the Operating Reserve Fund shall be closed when all the Series 2014B Bonds and Series 2014C Bonds have been redeemed and if no Event of Default has occurred and is continuing under the Master Indenture.

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Marketing Covenant. The Obligated Group covenants in the Master Indenture that, beginning with the fiscal quarter ending March 31, 2014, and ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved, the Obligated Group will use its best efforts to maintain the percentage of Independent Living Units which are Reserved (the “Percentage of Reserved Independent Living Units”) at or above the applicable levels set forth below (the “Marketing Requirements”), which determinations shall be measured as of the last day of the applicable quarter.

Percentage of Reserved Independent Quarter Ending Living Units (%)

03/31/14 67.7% 06/30/14 69.5 09/30/14 72.6 12/31/14 76.3 03/31/15 73.9 06/30/15 70.8 09/30/15 70.1 12/31/15 71.4 03/31/16 72.6 06/30/16 74.5 09/30/16 77.0 12/31/16 78.8 03/31/17 80.7 06/30/17 81.9 09/30/17 84.4 12/31/17 86.9 03/31/18 88.8

6/30/18 and thereafter 90.0

In lieu of satisfying the Marketing Requirements set forth in the preceding paragraph, the

applicable Marketing Requirements for the applicable Occupancy Quarter (as defined under “Occupancy Covenant” below) shall be the Adjusted Level I Marketing Requirements set forth below if the Adjusted Level I Occupancy Requirements set forth under the caption “Occupancy Covenant” below have been satisfied.

Percentage of Reserved Independent Occupancy Living Units (%)

Quarter Adjusted Level I 1 62.1% 2 61.4 3 63.3 4 65.2 5 67.7

If the Percentage of Reserved Independent Living Units for any fiscal quarter is less than the

Marketing Requirement for that fiscal quarter, the Obligated Group Representative shall submit to the Master Trustee, within 45 days after the end of such fiscal quarter, a marketing corrective action plan (a “Marketing Corrective Action Plan”) which includes the following information: (a) the Percentage of Reserved Independent Living Units, including the number of reservations and cancellations during such fiscal quarter and on an aggregate basis, (b) a forecast, prepared by management of the Corporation, of

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the number of reservations expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Marketing Corrective Action Plan is being prepared; and (c) a detailed description of the reasons for the Obligated Group’s failure to satisfy the Marketing Requirements and management’s plan to increase the Percentage of Reserved Independent Living Units to at least the level required by the Marketing Requirements summarized above by the end of the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Officer’s Certificate is being submitted.

If the Obligated Group has failed to meet the Marketing Requirements for any two consecutive fiscal quarters, the Obligated Group Representative shall select an Independent Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to at least the Marketing Requirement summarized above on the earliest date practicable (a “Marketing Consultant Engagement”). Each Member shall follow each recommendation of the Independent Consultant to the extent feasible and permitted by law. The Obligated Group shall not be required to obtain an Independent Consultant’s Report after failing to meet a Marketing Requirement if such failure occurs during the two successive fiscal quarters after a covenant default that leads to a Marketing Consultant Engagement.

Failure of the Obligated Group to achieve the Marketing Requirement for any fiscal quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary for preparing a Marketing Corrective Action Plan or obtaining an Independent Consultant’s report and follows each recommendation contained in such report to the extent feasible and permitted by law. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – MARKETING COVENANT.”

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Occupancy Covenant. The Obligated Group covenants in the Master Indenture that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the initial Occupancy of any of the Independent Living Units included in the Project and (b) ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved (an “Occupancy Quarter”), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units included in the Project (the “Percentage of Units Occupied”) at or above the Level I Occupancy Requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

Occupancy Level I Adjusted Level I Quarter Occupancy Requirements Occupancy Requirements*

1 9.3% 21.7% 2 21.1 37.3 3 30.4 50.3 4 37.8 65.2 5 43.4 75.2 6 49.0 7 54.6 8 60.2 9 65.8 10 71.4 11 77.0 12 83.0 13 84.0 14 86.0 15 88.0

16 and thereafter 90.0

*Adjusted Level I Occupancy Requirements are used only for the purpose described under the caption “Marketing Covenant” above.

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 45 days after the end of such Occupancy Quarter submit an occupancy corrective action plan prepared by management to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above by the Occupancy Quarter immediately succeeding the Occupancy Quarter with respect to which the corrective action plan is being submitted (a “Corrective Occupancy Action Plan”).

If the Percentage of Units Occupied for any two consecutive Occupancy Quarters is less than the Level I Occupancy Requirement set forth above for those Occupancy Quarters, the Obligated Group Representative shall select an Independent Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above on the earliest date practicable (an “Occupancy Consultant Engagement”). Each Member shall follow each recommendation of the Independent Consultant to the extent feasible and permitted by law. The Obligated Group shall not be required to obtain an Independent Consultant’s report after failing to meet an Occupancy Requirement if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in an Occupancy Consultant Engagement.

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Failure of the Obligated Group to achieve the Occupancy Requirement for any Occupancy Quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Corrective Occupancy Action Plan or obtaining an Independent Consultant’s report and follows each recommendation contained in such report to the extent feasible and permitted by law. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – Occupancy Covenant.”

Cumulative Cash Operating Loss Covenant. The Obligated Group covenants in the Master Indenture that commencing with (a) the first fiscal quarter ending after the earliest date a resident has taken physical possession of one of the Independent Living Units included in the Project (the “Initial Occupancy Date”) if such date is more than 30 days prior to the end of such fiscal quarter or (b) the first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (an “Operating Loss Testing Date”). The requirement to test Cumulative Cash Operating Loss shall end on the Initial Testing Date (as herein defined). Each Member is required to conduct its business so that as of each such Operating Loss Testing Date the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount described below.

Quarter Cumulative Cash

Operating Loss ($) Forecasted Cumulative

Cash Operating Loss ($)(1)

1 (2,300,000) (1,250,000) 2 (4,000,000) (2,847,000) 3 (6,100,000) (5,093,000) 4 (7,900,000) (6,790,000) 5 (9,200,000) (8,025,000) 6 (10,700,000) (9,312,000) 7 (11,700,000) (10,166,000)

8 and thereafter (12,000,000) (10,411,000) (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.

If, as of any Operating Loss Testing Date, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels set forth above, the Obligated Group Representative shall, within 45 days of such Operating Loss Testing Date, submit an Officer’s Certificate to each Required Information Recipient setting forth in reasonable detail the reasons for such noncompliance and adopting a specific plan setting forth steps to be taken designed to achieve compliance for future periods.

If, as of any two consecutive Operating Loss Testing Dates, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels set forth above, the Obligated Group Representative shall select, within 45 days of the second such Operating Loss Testing Date, an Independent Consultant to make recommendations (an “Operating Loss Consultant Engagement”). The Independent Consultant shall make recommendations with respect to the Obligated Group’s methods of operation and other factors affecting its financial condition in order to decrease the Cumulative Cash Operating Loss to the required level for future periods. Each Member of the Obligated Group shall follow each recommendation of the Independent Consultant applicable to it to the extent feasible and permitted by law. The Obligated Group shall not be required to obtain an Independent Consultant’s

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report after failing to meet a covenant described under this caption if such failure occurs during the two successive fiscal quarters after the covenant violation which resulted in an Operating Loss Consultant Engagement.

Noncompliance with the Cumulative Cash Operating Loss covenant set forth above shall 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 and permitted by law. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – CUMULATIVE CASH OPERATING LOSS COVENANT.”

Rate Covenant. The Obligated Group covenants in the Master Indenture that the Obligated Group Representative shall compute, within 150 days after the end of each Fiscal Year (commencing with the earlier of (a) the last day of the first full Fiscal Year after Stable Occupancy for the Project has been achieved or (b) September 30, 2020 (the “Initial Testing Date”)), Income Available for Debt Service and Annual Debt Service and promptly furnish to the Required Information Recipients an Officer’s Certificate setting forth the results of such computation. If the Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year with respect to which the Initial Testing Date relates is less than 1.10:1, the Master Trustee shall require the Obligated Group to select an Independent 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 such Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

If the Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Fiscal Year with respect to which the Initial Testing Date relates is less than 1.20:1, the Master Trustee shall require the Obligated Group to retain an Independent 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 such Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

The Obligated Group will not be required to engage a Consultant more than once in any one year period.

See “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Rate Covenant” herein and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – RATE COVENANT” hereto for additional detail regarding Income Available for Debt Service, Annual Debt Service and the Debt Service Coverage Ratio.

An Event of Default arising from the Debt Service Coverage Ratio shall occur if one or more of the following conditions applies: (i) the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.20:1 and fails to take all necessary action to comply with the procedures summarized above for preparing a report, adopting a plan, and following all recommendations contained in such report or plan to the extent feasible and permitted by law; or (ii) the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – DEFAULTS AND REMEDIES.”

Liquidity Covenant. The Obligated Group covenants in the Master Indenture that it will calculate the Cash to Indebtedness Ratio or the Days Cash on Hand of the Obligated Group as of March 31 and September 30 of each Fiscal Year (each such date being a “Liquidity Testing Date”), commencing with

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the Initial Testing Date. The Obligated Group shall deliver an Officer’s Certificate to the Master Trustee setting forth such calculation as of March 31 not later than May 15 of each year, and setting forth such calculation as of September 30 to the Master Trustee not later than November 15 of each year.

The Master Indenture requires that each Obligated Group Member conduct its business so that on each Liquidity Testing Date the Obligated Group shall have a Cash to Indebtedness Ratio of (a) no less than 0.25 for the first two Liquidity Testing Dates, starting with the Initial Testing Date, (b) no less than 0.275 for the next year (the next two Liquidity Testing Dates), and (c) no less than 0.30 thereafter (the “Liquidity Requirement”). At the option of the Obligated Group Representative, the Liquidity Requirement can be converted to a covenant to maintain no less than 180 Days Cash on Hand on each Liquidity Testing Date if for three consecutive Fiscal Years the Obligated Group has reported (a) a Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30 or more on each Liquidity Testing Date. The Obligated Group Representative may elect to convert the Liquidity Requirement as of a specified date (the “Liquidity Requirement Conversion Date”) in an Officer’s Certificate, demonstrating compliance with the test summarized 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 March 31 and September 30.

If the Cash to Indebtedness Ratio or the amount of Days Cash on Hand as of any Liquidity Testing Date is less than the Liquidity Requirement, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate approved by a resolution of the Governing Body of the Obligated Group Representative 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 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 Liquidity Testing Date following delivery of the Officer’s Certificate required in the preceding paragraph, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, retain an Independent Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. Each Member of the Obligated Group shall follow each recommendation of the Independent Consultant applicable to it to the extent feasible and permitted by law. The Obligated Group will not be required to engage a Consultant more than once in any one year period.

See “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Liquidity Covenant” herein and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIQUIDITY COVENANT” hereto for additional detail regarding the Cash to Indebtedness Ratio and the Days Cash on Hand calculation, as applicable, and the Liquidity Requirement (including the requirement to deliver an Officer’s Certificate or to retain a Consultant if the Obligated Group fails to satisfy the Liquidity Requirement).

The failure to meet the Liquidity Requirement shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary under the Master Indenture 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 and permitted by law. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIQUIDITY COVENANT.”

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Approval of Consultants. Pursuant to the Master Indenture, the owners of outstanding Obligations have certain approval rights as to Independent Consultants selected by the Obligated Group Representative. See “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Approval of Consultants,” and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – APPROVAL OF CONSULTANTS.”

Additional Indebtedness. In certain circumstances, the Corporation and other Members of the Obligated Group may incur Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by Obligations issued under the Master Indenture. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ADDITIONAL INDEBTEDNESS.” Additional Obligations issued under the Master Indenture may be issued to the Authority or to other Persons. Additional Obligations will not be pledged under the Bond Indenture but will be equally and ratably secured (except as described herein) under the Master Indenture with each Obligation, including Obligation No. 1, issued and from time to time outstanding under the Master Indenture. Additional Indebtedness may be entitled to the benefit of security, including Liens on Property (including senior living Facilities) of the Corporation and other Members of the Obligated Group, letters or lines of credit or insurance. Such security need not be extended to any other Indebtedness (including Obligation No. 1). See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES.” The Master Indenture provides that Supplemental Master Indentures pursuant to which one or more series of Obligations entitled to additional security are issued may provide for such amendments to provisions of the Master Indenture, including the provisions thereof relating to the exercise of remedies upon the occurrence of an event of default, as are necessary to provide for such security and to permit realization upon such security solely for the benefit of the Obligations entitled thereto.

Other Covenants. APPENDIX C contains a summary of the terms of the Master Indenture, including certain restrictions imposed on the Obligated Group’s actions for the benefit of all holders of Obligations issued under the Master Indenture. Such terms include, among others, restrictions on Liens on Property (see APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES”) and provisions governing the transfer of Property (see APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – SALE, LEASE OR OTHER DISPOSITION OF PROPERTY”).

Limited Obligations

The Bonds are limited obligations of the Authority and do not constitute an indebtedness or liability of the State of Idaho, its legislature or any of its political subdivisions or agencies other than the Authority to the extent herein described. No provision in the Loan Agreement or the Bond Indenture or any obligations therein imposed upon the Authority, or the breach thereof, will constitute an indebtedness or liability of the Authority within the meaning of any Idaho constitutional provision or statutory limitation or will constitute or give rise to a pecuniary liability of the Authority or a charge against its general credit. For a more detailed description of the Bonds and the security therefor, see “THE BONDS” and “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS” herein.

The Financial Feasibility Study

Dixon Hughes Goodman LLP, independent certified public accountants, has prepared a Financial Feasibility Study dated January 14, 2014 (the “Feasibility Study”), which is included as APPENDIX B

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hereto. The Feasibility Study includes management’s financial forecast of the Corporation for the six years ending September 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 and for the fiscal year ending September 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 assumed structure and terms of the Bonds as follows:

The Series 2014A Bonds will consist of $80,685,000 nonrated tax-exempt fixed rate bonds, consisting of term maturities to October 1, 2049, with interest rates ranging from 7.00% to 8.125% per annum.

The Series 2014B-1 Bonds will consist of $4,875,000 nonrated tax-exempt fixed rate bonds with an interest rate of 6.50% per annum and anticipated to be redeemed in full by approximately 75% initial occupancy of the Independent Living Units by approximately January 1, 2018.

The Series 2014B-2 Bonds will consist of $7,375,000 nonrated tax-exempt fixed rate bonds with an interest rate of 6.0% per annum and anticipated to be redeemed in full by approximately 65% initial occupancy of the Independent Living Units by approximately July 1, 2017.

The Series 2014B-3 Bonds will consist of $8,500,000 nonrated tax-exempt fixed rate bonds with an interest rate of 5.25% per annum and anticipated to be redeemed in full by approximately 50% initial occupancy of the Independent Living Units by approximately January 1, 2017.

The Series 2014C Bonds will consist of $1,750,000 taxable fixed rate bonds with an interest rate of 7.0% per annum and anticipated to be redeemed in full by approximately 35% initial occupancy of the Independent Living Units by approximately July 1, 2016.

The Series 2014B Bonds and the Series 2014C Bonds have early call provisions that provide for repayment prior to the maturity date without penalties, and are assumed to be redeemed in full prior to their respective maturities based on the availability of Project-related entrance fee receipts.

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Long-Term Debt Service Coverage Ratio 2019

Increase in net deficit (1,348)$ Deduct:

Entrance fee amortization (1,122) Add:

Depreciation 2,317Amortization 414Interest expense 6,523Entrance fees received from reoccupancy (non-refundable) 1,011Entrance fees received from reoccupancy (refundable) 3,033Entrance fees refunded (1,553)

Income Available for Debt Service 9,275$ Maximum Annual Debt Service (a) 7,072$ Maximum Annual Debt Service Coverage Ratio 1.31x

Annual Debt Service 6,386$ Annual Debt Service Coverage Ratio 1.45x

Days Cash on Hand 2019

Cash and cash equivalents 990$ Investments 15,135

Cash on hand 16,125$

Total expenses 21,300 Less:

Depreciation (2,317) Amortization (414)

Total expenses less depreciation and amortization 18,569 Daily operating expenses (b) 51 Days cash on hand 316

Cash to Indebtedness Ratio 2019

Cash and cash equivalents 990$ Investments 15,135Debt Service Reserve Fund - Series A 7,100

Funds Available for Debt Service 23,225$ Long-Term Indebtedness Outstanding (c) 79,975$ Cash to Debt Ratio 29%

(a) The Maximum Annual Debt Service is equal to the greatest debt service requirement in the then current or any future fiscal year,other than the debt service requirements on the Series 2014B-1, Series 2014B-2, Series 2014B-3, and Series 2014C Bonds.The Maximum Annual Debt Service based on the bond year is $7,100,000 as shown in the forepart of the offering statement.

(b) Daily operating expenses are equal to total operating expenses less depreciation and amortization divided by 365 days.(c) Long-term indebtedness outstanding includes the Series 2014 bonds only.

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Financial Reporting

The Master Indenture requires the Obligated Group Representative to provide certain information to the Underwriter, the Master Trustee, each Related Bond Trustee, the Municipal Securities Rulemaking Board’s (“MSRB”) Electronic Municipal Market Access System (“EMMA”) or any other nationally recognized securities information repository identified by the Securities and Exchange Commission (collectively, the “Required Information Recipients”), including the following:

(i) until the end of the fiscal quarter in which the Obligated Group achieves Stable Occupancy with respect to the Project, a monthly statement of the Obligated Group as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including; (A) prior to the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) a summary statement as to the status of construction; (III) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (IV) statements of the balances for each fund and account required to be held under the Master Indenture or any Related Bond Indenture as of the end of such month (to the extent available from the applicable trustee), all in reasonable detail, and (B) after the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) information with respect to the payor mix for the health center portion of the Project; (III) occupancy levels of the Project as of the end of such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; (IV) a summary statement on the status of construction until the issuance of the last Occupancy Certificate for the Project; (V) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last Occupancy Certificate for the Project; (VI) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month with a comparison to the operating budget and an unaudited balance sheet of the Obligated Group as of the end of such month; (VII) a calculation of the Cumulative Cash Operating Loss as of the end of such month, (VIII) statements of the balances in each fund and account required to be held under the Master Indenture or any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), and (IX) a statement showing the amount of the Bonds that have been redeemed in the aggregate and during that calendar month, all in reasonable detail.

(ii) Beginning with the first full fiscal quarter following the date that Stable Occupancy with respect to the Project is achieved, the following information as soon as practicable after it is available but in no event more than 45 days after the completion of such fiscal quarter: (A) quarterly unaudited financial statements of the Obligated Group (including a report with respect to the fourth quarter of each fiscal year), including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period and a combined or combining balance sheet as of the end of each such fiscal quarter with a comparison to the operating budget, (B) a calculation of Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, as of the last day of such quarter, the Debt Service Coverage Ratio of the Obligated Group for such quarter, and the Cumulative Cash Operating Loss, if required to be calculated or submitted for such fiscal quarter, (C) information with respect to the payor mix for the health center portion of the Project, and (D) a calculation of the marketing/reservation levels for the Project as of the end of each month in the quarter, including the number of units that have been reserved or cancelled during that month and on an aggregate basis and occupancy levels of the Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; all prepared in reasonable detail and certified, subject to

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year-end adjustment, by an officer of the Obligated Group Representative, with a management’s discussion and analysis of results.

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

(iv) Within 150 days of the end of each Fiscal Year commencing with the Fiscal Year ending September 30, 2013, an annual financial report of the Obligated Group audited by a firm of certified public accountants, including a balance sheet as of the end of such Fiscal Year and a statement of changes in fund balances for such Fiscal Year and a statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year (the annual financial report may include combined or combining schedules as required by GAAP), together with a separate written statement of the accountants auditing such report containing calculations of the Obligated Group’s Debt Service Coverage Ratio for said Fiscal Year and of the Obligated Group’s Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, (beginning with the Fiscal Year in which such calculations are first required to be made) as of the last day of such Fiscal Year and if such accountants shall have obtained knowledge of any default or defaults in any of the financial covenants included in the Master Indenture or the financial reporting requirements summarized under this caption, they shall disclose the default or defaults and the nature thereof in a statement to the Master Trustee which statement shall comply with the reporting standards promulgated by the American Institute of Certified Public Accountants.

(v) On or before the date of delivery of the financial reports referred to in subparagraph (iv) above, an Officer’s Certificate of the Obligated Group Agent (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture or if not, specify all such defaults and the nature thereof, (B) calculating and certifying the marketing and occupancy percentages, Cumulative Cash Operating Loss, Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, and Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such fiscal period or Fiscal Year, as appropriate, (C) a comparison of the audited financial statements with the operating budget for the preceding Fiscal Year and (D) an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year as required by the provisions of the Master Indenture.

(vi) Within 45 days of the end of each Fiscal Year, the Obligated Group Representative shall deliver a summary of the operating and capital budgets for the Fiscal Year then started.

Also see “FINANCIAL REPORTING” and “CONTINUING DISCLOSURE” in this Official Statement.

$103,185,000 IDAHO HEALTH FACILITIES AUTHORITY

(THE TERRACES OF BOISE PROJECT)

$80,685,000

Revenue Bonds, SERIES 2014A

(The Terraces of Boise Project) FINAL CUSIP†: 451295VR7

$4,875,000Revenue Bonds, SERIES 2014B-1


(The Terraces of Boise Project) CUSIP†: 451295VW6

$7,375,000

Revenue Bonds, SERIES 2014B-2


(The Terraces of Boise Project) CUSIP†: 451295VX4

$8,500,000

Revenue Bonds, SERIES 2014B-3


(The Terraces of Boise Project) CUSIP†: 451295VY2

$1,750,000Revenue Bonds, SERIES 2014C

(Taxable Mandatory Paydown Securities (Taxable MPS))

(The Terraces of Boise Project) CUSIP†: 451295VZ9

INTRODUCTION

Purpose of this Official Statement

This Official Statement, including the cover, inside front cover and the Appendices, is provided to set forth certain information in connection with the offering by the Idaho Health Facilities Authority (the “Authority”) of its $80,685,000 Revenue Bonds, Series 2014A (The Terraces of Boise Project) (the “Series 2014A Bonds”), its $4,875,000 Revenue Bonds, Series 2014B-1 (Tax Exempt Mandatory Paydown Securities (TEMPS-75SM)) (The Terraces of Boise Project) (the “Series 2014B-1 Bonds”), its $7,375,000 Revenue Bonds, Series 2014B-2 (Tax Exempt Mandatory Paydown Securities (TEMPS-65SM)) (The Terraces of Boise Project) (the “Series 2014B-2 Bonds”), its $8,500,000 Revenue Bonds, Series 2014B-3 (Tax Exempt Mandatory Paydown Securities (TEMPS-50SM)) (The Terraces of Boise Project) (the “Series 2014B-3 Bonds” and, together with the Series 2014A Bonds, the Series 2014B-1 Bonds and the Series 2014B-2 Bonds, the “Tax-Exempt Bonds”) and its $1,750,000 Revenue Bonds, Series 2014C (Taxable Mandatory Paydown Securities (Taxable MPS)) (The Terraces of Boise Project) (the “Series 2014C Bonds” or the “Taxable Bonds”). The Series 2014B-1 Bonds, the Series 2014B-2 Bonds and the Series 2014B-3 Bonds are collectively referred to herein as the “Series 2014B Bonds.” The Tax-Exempt Bonds and the Taxable Bonds are collectively referred to herein as the “Bonds.”

The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of all terms and conditions thereof. All statements herein regarding any such documents are qualified in their entirety by reference to such documents. This Introduction is intended only to serve as a brief description of this Official Statement and is expressly qualified by reference to the Official Statement as a whole, as well as the documents summarized or described herein. All capitalized terms used in this Official Statement and not otherwise defined herein are defined in APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST” and APPENDIX D – “SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE.” This Official Statement speaks only as of its date, and the information contained herein is subject to change.

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Purpose of the Bonds

The Bonds will be issued pursuant to a Bond Indenture of Trust dated as of January 1, 2014 (the “Bond Indenture”), by and between the Authority and U.S. Bank National Association, as bond trustee (the “Bond Trustee”). The proceeds of the Bonds will be loaned to Boise Retirement Community d/b/a The Terraces of Boise, a California nonprofit public benefit corporation (the “Corporation”), pursuant to a Loan Agreement dated as of January 1, 2014 (the “Loan Agreement”), by and between the Authority and the Corporation.

The Corporation will use the proceeds from the sale of the Tax-Exempt Bonds, together with other available funds, to: (i) finance or reimburse the Corporation for a portion of the costs of the Project (as herein described); (ii) refinance outstanding indebtedness of an affiliate of the Corporation incurred in connection with the acquisition of the land upon which the Project will be located; (iii) pay a portion of the interest on the Tax-Exempt Bonds during the construction of the Project; (iv) fund a debt service reserve fund; and (v) pay certain costs associated with the issuance of the Tax-Exempt Bonds. The Corporation will use the proceeds from the sale of the Taxable Bonds, together with other available funds, to: (i) finance or reimburse the Corporation for the portion of the costs of the Project that are not financed with proceeds of the Tax-Exempt Bonds; (ii) pay a portion of the interest on the Taxable Bonds during the construction of the Project; (iii) fund a debt service reserve fund; and (iv) pay certain costs associated with the issuance of the Taxable Bonds. See “PLAN OF FINANCE – The Project” and “ESTIMATED SOURCES AND USES OF FUNDS” herein and APPENDIX A – “THE COMMUNITY.”

The Authority

The Authority is an independent public body politic and corporate constituting a public instrumentality of the State of Idaho (the “State”). See “THE AUTHORITY” herein.

The Corporation and its Affiliates

The Corporation is a California nonprofit public benefit corporation qualified to do business in the State of Idaho. The Corporation was incorporated in August 2005 and was formed for the purpose of developing, owning and operating not-for-profit senior care facilities providing housing and health care services to senior members of the public. The Corporation is a start-up entity that is currently developing a senior living community to be located on a 12.6 acre site in Boise, Idaho to be known as The Terraces of Boise (the “Community”). The Community will consist of 149 residential living apartments, 12 residential living duplex apartments, 40 residential-style assisted living apartments, 24 special care assisted living suites and three, one-story cottage style buildings housing a total of 48 private skilled nursing rooms, as well as administrative support and common areas. Construction and equipping of the Community will be financed with proceeds of the Bonds and is referred to herein as the “Project.”

Further information regarding the Corporation and the Project is included in APPENDIX A and APPENDIX B hereto. Also see “PLAN OF FINANCE” herein.

The sole member of the Corporation is Cornerstone Affiliates (“Cornerstone”), a California nonprofit public benefit corporation. Cornerstone was established to support the operations and activities of its tax-exempt affiliates and to develop and expand the retirement communities owned by its affiliates, including the Corporation. See the organization chart set forth under the heading APPENDIX A - “CORNERSTONE AFFILIATES AND ABHOW” for additional information regarding Cornerstone and its affiliates.

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The Corporation has retained American Baptist Homes of the West (“ABHOW”) to provide development services to the Community. Cornerstone is the sole corporate member of ABHOW. ABHOW is a California nonprofit public benefit corporation that owns and operates seven continuing care retirement communities in California and manages additional continuing care communities owned by its affiliates. ABHOW is also active in supporting and managing affordable housing with owned or managed communities in California and Washington State. ABHOW will provide liquidity support to the Corporation as described under the heading “LIQUIDITY SUPPORT” and “PLAN OF FINANCE – Liquidity Support” herein.

American Baptist Properties, Inc. (“American Baptist Properties”) is a California nonprofit corporation created to facilitate strategic growth initiatives including the acquisition of real property. ABHOW is the sole member of American Baptist Properties.

ABHOW and American Baptist Properties will provide liquidity support to the Corporation as described under the heading “LIQUIDITY SUPPORT” and “PLAN OF FINANCE – Liquidity Support” herein.

The Corporation, Cornerstone, ABHOW and American Baptist Properties have each received determination letters from the Internal Revenue Service that they are organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), exempt from federal income taxation under Section 501(a) of the Code and are not private foundations under Section 509(a) of the Code.

ONLY THE CORPORATION IS OBLIGATED TO MAKE DEBT SERVICE PAYMENTS ON THE BONDS AS DESCRIBED HEREIN. CORNERSTONE, ABHOW AND AMERICAN BAPTIST PROPERTIES HAVE NO OBLIGATION TO MAKE ANY DEBT SERVICE PAYMENTS WITH RESPECT TO THE BONDS.

See APPENDIX A for a more detailed description of the history and organization of the Corporation and its relationship to Cornerstone, ABHOW and American Baptist Properties and its agreements with the Corporation.

Development and Management Agreements

The Corporation entered into a Development Consulting Agreement effective December 21, 2007, as amended, with Greystone Development Company II, LP (“GDC”) and its affiliated entity Greystone Development Services XX, LLC (“GDS”). The Corporation entered into an Amended and Restated Management and Marketing Services Agreement effective October 25, 2013 with GMSC Idaho, LLC, a Texas limited liability company and an affiliate of GDC (“GMSC”), under which GMSC will serve as manager of the Community (the “Manager”) and manage day-to-day operations of the Community. Pursuant to the terms of the Management Agreement, the manager is required to provide all management services necessary to operate the Community, including but not limited to, financial management, purchasing, public relations, recruitment of personnel, and supervision of the day-to-day operations and programs of the Community. GDC, GDS, and GMSC are collectively referred to herein as “Greystone.”

See APPENDIX A for a more detailed description of Greystone and its agreements with the Corporation.

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Security for the Bonds

The Bonds will be payable from payments made by the Corporation under the Loan Agreement, from payments made by the Obligated Group on Obligation No. 1 (described below) and from certain funds held under the Bond Indenture.

The Bonds will be limited obligations of the Authority and will be secured by the Corporation’s Direct Note Obligation No. 1 (“Obligation No. 1”) issued under the Master Trust Indenture dated as of January 1, 2014 (the “Original Master Indenture”), between the Corporation, as the sole Member of the Obligated Group created thereunder, and U.S. Bank National Association, as master trustee (the “Master Trustee”), as supplemented by the First Supplemental Master Trust Indenture dated as of January 1, 2014 (the “First Supplemental Master Indenture” and, together with the Original Master Indenture, the “Master Indenture”) between the Corporation and the Master Trustee. Pursuant to Obligation No. 1, the Obligated Group agrees to make payments on Obligation No. 1 in an amount sufficient to pay, when due, the principal of and interest on the Bonds. The Corporation is currently the only Member of the Obligated Group. Cornerstone, ABHOW and American Baptist Properties have no obligation to make any payments with respect to Obligation No. 1 or any other Obligation issued under the Master Indenture.

The Authority will pledge and assign Obligation No. 1 and certain of its rights under the Loan Agreement (other than Unassigned Rights) to the Bond Trustee as security for the Bonds. Obligation No. 1 will entitle the Bond Trustee, as the holder thereof, to the protection of the covenants, restrictions and other obligations imposed by the Master Indenture upon the Corporation and any other Person which may become a Member of the Obligated Group in the future.

Obligation No. 1 and all other Obligations subsequently issued under the Master Indenture will be secured by (i) a security interest in the Gross Revenues of the Obligated Group and (ii) a mortgage and security interest in the real and personal property of the Corporation described in the Deed of Trust and Security Agreement dated as of January 28, 2014 (the “Deed of Trust”), among the Corporation, as trustor, First American Title Insurance Company, as trustee, and the Master Trustee. See “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS – Security Interest in Gross Revenues and the Deed of Trust” and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES” and “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST.”

The obligations of the Corporation and any other future Members of the Obligated Group to make payments on Obligation No. 1 are full and unlimited, joint and several obligations of the Corporation and such other Members of the Obligated Group. The Gross Revenues of the Members of the Obligated Group are pledged under the Master Indenture to secure all the Obligations issued thereunder. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES.” Notwithstanding such security interest in the Obligated Group’s Gross Revenues and the Deed of Trust, the Members of the Obligated Group may sell or otherwise transfer Gross Revenues and create Permitted Encumbrances thereon, in accordance with the provisions of the Master Indenture. See “RISK FACTORS – Certain Matters Relating to Enforceability of the Master Indenture” and “– Certain Risks Associated with the Deed of Trust” herein and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES.”

Payment of the principal of, and interest on, the Bonds will be additionally secured by moneys deposited to the credit of a Debt Service Reserve Fund established under the Bond Indenture.

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ABHOW and American Baptist Properties will enter into a Liquidity Support Agreement dated as of January 1, 2014 (the “Sponsor Liquidity Support Agreement”) in favor of the Corporation, the Bond Trustee and the Master Trustee, pursuant to which American Baptist Properties will deposit $1.0 million to a Liquidity Support Fund upon the issuance of the Bonds and ABHOW will, under certain circumstances, deposit $1.25 million to a Liquidity Support Fund which, in each case, will be held under the Master Indenture to pay costs of the Project, operating costs of the Corporation or debt service payments with respect to the Bonds. See “LIQUIDITY SUPPORT” herein.

In addition, GCI Boise, L.P. (“GCI Boise”) will enter into a Liquidity Support Agreement dated as of January 1, 2014 (the “Greystone Liquidity Support Agreement” and, together with the Sponsor Liquidity Support Agreement, the “Liquidity Support Agreements”) in favor of the Corporation, the Bond Trustee and the Master Trustee pursuant to which GCI Boise will deposit $2.25 million in a Liquidity Support Fund to be held under the Master Indenture to pay costs of the Project, operating costs of the Corporation or debt service payments on the Bonds. See “LIQUIDITY SUPPORT” herein.

For further information concerning the security for the Bonds, see the information under the caption “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS” below.

Certain Covenants under the Master Indenture

Pursuant to the Master Indenture, the Members of the Obligated Group have agreed to subject themselves to certain operational and financial restrictions contained therein. See “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE” herein and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE.”

Limited Obligations

The Bonds are limited obligations of the Authority and do not constitute an indebtedness or liability of the State of Idaho, its legislature or any of its political subdivisions or agencies other than the Authority to the extent herein described. No provision in the Loan Agreement or the Bond Indenture or any obligations therein imposed upon the Authority, or the breach thereof, will constitute an indebtedness or liability of the Authority within the meaning of any Idaho constitutional provision or statutory limitation or will constitute or give rise to a pecuniary liability of the Authority or a charge against its general credit. For a more detailed description of the Bonds and the security therefor, see “THE BONDS” and “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS” herein.

The Financial Feasibility Study

Dixon Hughes Goodman LLP, independent certified public accountants, has prepared a Financial Feasibility Study dated January 14, 2014 (the “Feasibility Study”), which is included as APPENDIX B hereto. The Feasibility Study includes management’s financial forecast of the Corporation for the six years ending September 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.

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Continuing Disclosure

The Corporation will enter into an undertaking for the benefit of the Bondholders of the Bonds to provide certain information and to provide notice of certain events to the Municipal Securities Rulemaking Board on its Electronic Municipal Market Access system. For further information, see “CONTINUING DISCLOSURE” herein. The Authority has not made and will not make any provision to provide any annual financial statements or other credit information of the Authority or the Corporation to investors on a periodic basis.

Risk Factors

There are risks associated with the purchase of the Bonds. See the information under the caption “RISK FACTORS” for a discussion of some of these risks.

THE AUTHORITY

Organization

The Authority, organized in 1972, is an independent public body politic and corporate constituting a public instrumentality of the State of Idaho. The Authority was created by the Idaho Health Facilities Authority Act, constituting Chapter 134 of the Acts of 1972 of the State of Idaho, as amended, and Section 39-1441 et seq. of the Idaho Code, as amended (the “Act”). The purpose of the Act is to provide a measure of assistance and alternative methods to enable health institutions in Idaho to finance or refinance health facilities and to provide additional facilities for related health care purposes.

Members of the Authority

The Act provides that the Authority shall consist of seven members appointed to staggered five-year terms by the Governor. As of the date of this Official Statement, there are seven members.

Members must be Idaho residents, and not more than four members may be of the same political party. The current members of the Authority, the dates their current terms expire and their principal occupations are as follows:

Michael P. Wilson, Chairman. Mr. Wilson, a resident of Coeur d’Alene, Idaho, is a self-employed Business Consultant. He was first appointed in June, 1998, and his term as a member expires July 1, 2018.

Ruth L. Keeth, Vice Chairman. Ms. Keeth, a resident of Boise, Idaho, is a retired Senior Vice President and Manager of West One Bank Corporate Trust Department of Boise, Idaho. She was first appointed in January, 1992, and her term as member expires July 1, 2015.

Sean J. Coletti. Mr. Coletti, a resident of Ammon, Idaho, is a Partner in the law firm Hopkins Roden Crockett Hansen & Hoopes, PLLC, and serves on the Ammon City Council. He was first appointed in November 2013, and his term as a member expires July 1, 2018.

John “Rick” Katovich, MD. Dr. Katovich, a resident of Harrison, Idaho, is a physician, specializing in Family Practice in St. Maries, Idaho. He was first appointed in February, 2000, and his term as a member expires July 1, 2014.

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Tom Katsilometes. Mr. Katsilometes, a resident of Boise, Idaho, is a Commissioner of the Idaho State Tax Commission. He was first appointed in February, 2000, and his term as a member expires July 1, 2014.

B.J. Swanson. Ms. Swanson, a resident of Troy, Idaho, is the Executive Director of the Latah Economic Development Council, Moscow, Idaho, and Chairman of the Board of the Gritman Medical Center, Moscow, Idaho. She was first appointed in October, 2012, and her term as a member expires July 1, 2016.

Thomas M. Zabala. Mr. Zabala, a resident of Boise, Idaho, is a principal and founding partner in the firm of ZGA Architects and Planners, Chartered. He was first appointed in April, 2006, and his term as a member expires July 1, 2017.

Executive Staff

The Executive Director of the Authority is Shelley Shannon. Ms. Shannon, a resident of Boise, Idaho, was appointed Executive Director on August 10, 2007. Prior to that she had been Associate Executive Director of the Authority since resigning as Bannock County Treasurer in 2001. She was formerly an Authority member from 1987 to 2000.

The Associate Executive Director and Controller of the Authority is Gail L. Wees. Ms. Wees, a resident of Boise, Idaho, has worked for the Authority since 1979 and has been Controller since 2003. She was appointed Associate Executive Director on August 10, 2007.

The mailing address of the Authority and the office of the Executive Director is PO Box 8867, Boise, Idaho 83707, and the Authority’s telephone number is (208) 342-8772.

Financial Advisor

Ponder & Co. serves as financial advisor to the Authority in connection with the issuance of the Bonds.

Powers of the Authority

Under the Act, the Authority has the powers, among others, (a) to borrow money and to issue bonds, notes, bond anticipation notes or other obligations for any of its corporate purposes and to refund the same, (b) to acquire, construct, reconstruct, renovate, improve, replace, maintain, repair, operate, lease as lessee or lessor and regulate any facility to be financed under the Act, to enter into contracts for any and all such purposes and for the management and operation of a facility or to designate a participating health institution as its agent to perform such acts, (c) to lease to a participating health institution any or all of the facilities upon such terms and conditions as the Authority shall deem proper, (d) to fix and revise from time to time and charge and collect rates, rents, fees and charges for the use of and services furnished or to be furnished by facilities, (e) to mortgage all or any portion of the facilities and the site or sites thereof for the benefit of the holders of bonds issued to finance such facilities or any portion thereof, (f) to make loans to any participating health institution, for the cost of the facilities in accordance with an agreement between the Authority and such participating health institution, (g) to make mortgage loans or other secured or unsecured loans to a participating health institution, to refund outstanding obligations, mortgages or advances issued, made or given by such institution for the cost of its facilities including the function to issue bonds and make loans to a participating health institution and to refinance outstanding obligations and indebtedness incurred for facilities undertaken and completed prior to or after the enactment of the Act, subject to certain conditions set forth in the Act, (h) to do all things necessary and

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convenient to carry out the purposes of the Act and (i) to charge to and equitably apportion among participating health institutions the administrative costs and expenses of the Authority. The Authority does not have the power to operate facilities as a business other than as a lessee or lessor.

The Authority may impose upon any health institution applying to the Authority for financial assistance an initial planning service fee and an annual planning service fee in amounts to be determined by the Authority. These fees may be used to pay various expenses of the Authority, including administrative expenses, and to provide reserves for unanticipated future expenses.

The Authority has offered and plans to offer other obligations from time to time to finance other health care facilities in Idaho. Such obligations have been and will be issued pursuant to instruments separate and apart from the Bond Indenture and are payable from revenue-producing properties separate and apart from the revenue-producing properties from which the Bonds are payable.

Limited Obligations of the Authority

The Bonds are limited obligations of the Authority and do not constitute an indebtedness or liability of the State of Idaho, its legislature or any of its political subdivisions or agencies other than the Authority to the extent herein described. The Authority is not authorized to levy or collect any taxes or assessments to pay the Bonds or for any other purpose. The Authority has no taxing power.

THE BONDS

General Description

The following is a summary of certain provisions of the Bonds and the Bond Indenture. Reference is made to the Bonds for the complete text thereof and to the Bond Indenture for a more detailed description of these provisions. The discussion herein is qualified by such reference.

The Bonds will be issued only in fully registered form in denominations of $100,000 and integral multiples of $5,000 in excess thereof and, if the outstanding aggregate principal amount of any series of the Bonds is less than $100,000, with respect to such series of the Bonds, $5,000 and any integral multiple thereof. The Bonds will bear interest (based on a 360-day year of twelve 30-day months) at the respective rates per annum and will mature, subject to earlier redemption, in the amounts and on the dates set forth on the inside cover page of this Official Statement. The Bonds will bear interest from their dated date payable on April 1 and October 1 of each year, commencing April 1, 2014 (each, an “Interest Payment Date”).

The Bonds will be transferable and exchangeable as set forth in the Bond Indenture 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 for the Bonds. So long as Cede & Co. is the registered owner, the Bond Trustee will pay such principal of and interest on the Bonds to DTC, which will remit such principal of and interest to its participants for disbursement to the beneficial owners of the Bonds, as described in APPENDIX G – “BOOK-ENTRY ONLY SYSTEM” herein.

The principal of the Bonds will be payable at the designated corporate trust office of the Bond Trustee upon presentation and surrender of such Bonds. Interest payments on the Bonds (other than with respect to Defaulted Interest) will be payable on each Interest Payment Date to the registered owner thereof appearing on the registration books of the Authority kept by the Bond Trustee to evidence the registration and transfer of the Bonds (the “Bond Register”) as of the close of business of the Bond Trustee on the Record Date. “Record Date” means the 15th day (whether or not a Business Day) of the

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calendar month prior to each Interest Payment Date. Interest on the Bonds shall, except as hereinafter provided, be paid by check or draft of the Bond Trustee mailed on the Interest Payment Date to such registered owner at the address of such owner as it appears on the Bond Register or by wire transfer sent on the Interest Payment Date to the registered owner upon written notice to the Bond Trustee from the registered owner containing the wire transfer address (which shall be in the continental United States) to which the registered owner wishes to have such wire directed which written notice is received not later than the Business Day prior to the Interest Payment Date, it being understood that such notice may refer to multiple interest payments.

In the event of a default in the payment of interest due on an Interest Payment Date, such defaulted interest shall be payable to the person in whose name such Bond is registered at the close of business on a special record date for the payment of such defaulted interest, which date shall be established by the Bond Trustee not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after receipt by the Bond Trustee of the notice of the proposed payment from the Corporation.

Redemption of the Bonds

General. No redemption of less than all of the Bonds of a series at the time outstanding will be made unless the aggregate principal amount of such Bonds to be redeemed is equal to a multiple of an Authorized Denomination and the aggregate principal amount of Bonds of such series outstanding after the redemption is an Authorized Denomination.

In lieu of redeeming the Bonds, the Bond Trustee may, at the request of the Corporation, use such funds otherwise available under the Bond Indenture for redemption of the Bonds to purchase an equal principal amount of Bonds in the open market at prices not exceeding the redemption prices then applicable to such Bonds, such Bonds to be delivered to the Bond Trustee for the purpose of cancellation. In the case of any such purchase of the Bonds, the Authority shall receive credit against its required Bond Sinking Fund deposits in the same manner as would be applicable if such Bonds were optionally redeemed.

Extraordinary Optional Redemption. The Bonds are callable for redemption prior to maturity in the event of damage to or destruction of the Property of any Member of the Obligated Group or any part thereof or condemnation or sale consummated under threat of condemnation of such Property or any part thereof, to the extent the proceeds of insurance, condemnation or sale received in connection therewith exceed $1,000,000 and are applied to make prepayments on Obligation No. 1 pursuant to the Bond Indenture. If called for redemption as provided in this paragraph, Bonds will be subject to redemption by the Authority at any time, in whole or in part, and if in part, by random method as selected by the Bond Trustee, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date and without premium.

Optional Redemption. The Series 2014A Bonds maturing on or after October 1, 2029 are callable for redemption prior to maturity on any date on or after October 1, 2024; the Series 2014B-1 Bonds are callable for redemption prior to maturity on any date on or after October 1, 2015; the Series 2014B-2 Bonds are callable for redemption prior to maturity on any date on or after October 1, 2015; the Series 2014B-3 Bonds are callable for redemption prior to maturity on any date on or after October 1, 2015; and the Series 2014C Bonds are callable for redemption prior to maturity on any date on or after October 1, 2015, in each case at the option of the Authority upon the direction of the Corporation, from amounts prepaid on Obligation No. 1 and deposited in the Optional Redemption Fund (including, if applicable, amounts transferred from the Entrance Fee Fund as described in the following paragraph), in whole or in part (and if in part, by maturities or portions thereof designated by the Corporation, and if less

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than all of a single maturity is being redeemed, in such random manner as the Bond Trustee shall deem appropriate). The redemption price for any such redemption shall be equal to 100% of the principal amount of the Bonds to be redeemed on the redemption date, plus accrued interest thereon to the redemption date, without premium.

Amounts prepaid on Obligation No. 1 representing Initial Entrance Fees transferred to the Bond Trustee by the Master Trustee in accordance with the Master Indenture shall be used monthly to optionally redeem: (i) the Series 2014C Bonds until the Series 2014C Bonds are no longer outstanding, then (ii) the Series 2014B-3 Bonds until the Series 2014B-3 Bonds are no longer outstanding, then (iii) the Series 2014B-2 Bonds until the Series 2014B-2 Bonds are no longer outstanding, then (iv) the Series 2014B-1 Bonds until the Series 2014B-1 Bonds are no longer outstanding, in each case without further request or approval from the Corporation, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date, without premium. Amounts prepaid on Obligation No. 1 representing Initial Entrance Fees shall not be used to optionally redeem the Series 2014A Bonds. See “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Entrance Fee Fund” below.

In the event of any partial redemption of the Series 2014A Bonds pursuant to the provisions under the headings “Extraordinary Optional Redemption” and “Optional Redemption” above, the mandatory Bond Sinking Fund redemption payments for the Series 2014A Bonds shall be reduced in such order as the Corporation shall elect prior to such redemption or, if no such election is made, in the inverse order thereof. The Bond Trustee shall (in such manner as it in its sole discretion shall choose) adjust the amount of each such reduction in required Bond Sinking Fund redemption payment so that each such required Bond Sinking Fund redemption payment is made in integral amounts of $5,000.

Mandatory Sinking Fund Redemption.

Series 2014A Bonds. The Authority shall pay or redeem Series 2014A Bonds from moneys on deposit in the Bond Sinking Fund, at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption or maturity date, in the amounts and at the times, as follows:

Series 2014A Bonds Maturing October 1, 2024

Mandatory Sinking Fund Redemption Dates

(October 1) Mandatory Sinking Fund

Redemption Amounts 2019 $710,000 2020 760,000 2021 815,000 2022 870,000 2023 930,000 2024† 995,000

† Stated Maturity

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Redemption Amounts 2025 $690,000 2026 740,000 2027 800,000 2028 855,000 2029† 915,000

† Stated Maturity




Redemption Amounts 2025 $375,000 2026 405,000 2027 435,000 2028 470,000 2029 510,000 2030 1,530,000 2031 1,650,000 2032 1,780,000 2033 1,915,000 2034† 2,065,000

† Stated Maturity

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Redemption Amounts 2035 $2,225,000 2036 2,405,000 2037 2,595,000 2038 2,805,000 2039 3,025,000 2040 3,270,000 2041 3,530,000 2042 3,815,000 2043 4,115,000 2044† 4,445,000

† Stated Maturity




Redemption Amounts 2045 $4,800,000 2046 5,190,000 2047 5,615,000 2048 6,070,000 2049† 6,565,000

† Stated Maturity

The moneys on deposit in the Bond Sinking Fund shall be reduced (a) by the amount of Series 2014A Bonds acquired and delivered in accordance with the Bond Indenture in satisfaction of such Bond Sinking Fund requirements, and (b) in connection with a partial redemption of the Series 2014A Bonds if the Corporation elects to reduce mandatory Bond Sinking Fund redemptions in the manner described under the heading “Purchase in Lieu of Redemption” below.

Series 2014B Bonds and Series 2014C Bonds. The Series 2014B Bonds and the Series 2014C Bonds are not subject to mandatory sinking fund redemption prior to their respective stated maturity.

Notice of Redemption. Except as provided below, a copy of the notice of the call for any such redemption identifying the Bonds to be redeemed shall be given by electronic means and by first class mail, postage prepaid, to the registered owners of the Bonds to be redeemed at their addresses as shown on the Bond Register not less than 20 days nor more than 60 days prior to the redemption date. Such notice shall specify the redemption date, the redemption price, the place and manner of payment and that from the redemption date interest will cease to accrue on the Bonds which are the subject of such notice

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and shall include such other information as the Bond Trustee shall deem appropriate or necessary at the time such notice is given to comply with any applicable law, regulation or industry standard.

If any Bonds are to be redeemed pursuant to an extraordinary or optional redemption described above, the notice of redemption may specify that the redemption is contingent on the deposit of moneys with the Bond Trustee in an amount sufficient to pay the redemption price of the Bonds being redeemed on that date.

Failure to give notice in the manner prescribed with respect to any Bond, or any defect in such notice, shall not affect the validity of the proceedings for redemption for any Bond with respect to which notice was properly given. Upon the happening of the conditions described above, the Bonds thus called will not, after the applicable redemption date, bear interest, be protected by the Bond Indenture or be deemed to be outstanding under the provisions of the Bond Indenture.

If any Bond is transferred or exchanged on the Bond Register by the Bond Trustee after notice has been given of an optional or mandatory redemption of such Bond, the Bond Trustee will attach a copy of such notice to the Bond issued in connection with such transfer.

Purchase in Lieu of Redemption

The Authority and, by their acceptance of the Bonds, the bondholders, irrevocably grant to the Corporation and any assigns of the Corporation with respect to this right, the option to purchase in lieu of redemption, at any time and from time to time, any Bond which is subject to optional redemption as described under the caption entitled “Redemption of the Bonds – Optional Redemption” above at a purchase price equal to the optional redemption price therefor. To exercise such option, the Corporation shall give the Bond Trustee a Written Request exercising such option within the time period specified in the Bond Indenture as though such Written Request were a written request of the Authority for redemption, and the Bond Trustee shall thereupon give the holders of the Bonds to be purchased notice of such mandatory tender and purchase in the same manner as described under the caption “Redemption of the Bonds – Notice of Redemption” above. The purchase of such Bonds shall be mandatory and enforceable against the Bondholders, and Bondholders will not have the right to retain their Bonds. On the date fixed for purchase pursuant to any exercise of such option, the Corporation shall pay or cause to be paid the purchase price of the Bonds then being purchased to the Bond Trustee in immediately available funds not later than 8:00 a.m. Pacific time on the purchase date, and the Bond Trustee shall pay the same to the sellers of such Bonds against delivery thereof. Following such purchase, the Bond Trustee shall cause such Bonds to be registered in the name of the Corporation or its nominee or as otherwise directed by the Corporation and shall deliver them to the Corporation or its nominee or as otherwise directed by the Corporation. In the case of the purchase of less than all of a series of the Bonds, the particular Bonds to be purchased shall be selected in accordance with the Bond Indenture. No such purchase of the Bonds shall operate as a redemption to extinguish the indebtedness of the Authority evidenced thereby, and the Bonds will remain outstanding with the Corporation named as the beneficial owner thereof. Notwithstanding the foregoing, no such purchase shall be made unless the Corporation shall have delivered to the Bond Trustee and the Authority concurrently with such purchase an Opinion of Bond Counsel to the effect that such purchase and any resale thereof will not affect the validity of the Bonds or any exemption from federal income taxation to which the interest on the Bonds would otherwise be entitled.

Defeasance

The Bond Indenture provides that the Bonds, or any portion thereof, may be defeased prior to payment or redemption by the deposit of cash or Government Obligations, or a combination thereof,

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sufficient to provide for the payment of all principal of and interest on the Bonds through maturity or the date upon which the Bonds will be redeemed pursuant to the Bond Indenture. Bonds that are defeased will no longer be entitled to any security under the Bond Indenture, except for the right to payment from such moneys or Government Obligations. See APPENDIX D – “SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE – THE BOND INDENTURE – Defeasance.”

SECURITY AND SOURCE OF PAYMENT FOR THE BONDS

General

The Bonds are limited obligations of the Authority, payable solely from (a) payments or prepayments on Obligation No. 1, (b) payments or prepayments made under the Loan Agreement (other than Unassigned Rights), (c) moneys and investments held by the Bond Trustee under, and to the extent provided in, the Bond Indenture and (d) in certain circumstances, proceeds from insurance, condemnation awards and proceeds from sales made under threat of condemnation. Certain investment earnings on monies held by the Bond Trustee may be transferred to a Rebate Fund established pursuant to the Bond Indenture. Amounts held in such Rebate Fund will not be part of the “trust estate” pledged to secure the Bonds and consequently will not be available to make payments on the Bonds.

In the Loan Agreement, the Corporation agrees to make payments to the Bond Trustee which, in the aggregate, are required to be in an amount sufficient for the payment in full of all amounts payable on the Bonds whether due at maturity, upon redemption, by declaration of acceleration or otherwise, and certain fees and expenses (consisting generally of fees and charges of the Bond Trustee, taxes, accountants’ fees and any fees and expenses of the Authority and the Bond Trustee associated with the Bonds) (the “Additional Payments”).

The Authority will assign its right, title and interest in the Loan Agreement and Obligation No. 1 to the Bond Trustee (except for Unassigned Rights).

Obligation No. 1 and all other Obligations subsequently issued under the Master Indenture will be secured by (i) a security interest in the Gross Revenues of the Obligated Group and (ii) a mortgage and security interest in the real and personal property of the Corporation described in the Deed of Trust. See “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS – Security Interest in Gross Revenues and the Deed of Trust” below and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES” and “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST.”

The Bonds and the interest payable thereon do not constitute an indebtedness or liability, or a pledge or lending of the faith and credit, of the State of Idaho, its legislature or of any of its political subdivisions or agencies other than the Authority to the extent herein described, but are payable solely from the funds pledged therefor in accordance with the Bond Indenture. The issuance of the Bonds does not, directly, indirectly or contingently, obligate the State of Idaho or any political subdivision thereof to levy or collect any form of taxation or to make any appropriation for the payment thereof and any such levy or appropriation is prohibited. The Bonds and the interest payable thereon do not now and will never constitute a debt of the State of Idaho within the meaning of the Constitution or the statutes of the State of Idaho and do not now and will never constitute a charge against the credit or taxing power of the State of Idaho or any political subdivision thereof. The State of Idaho is not and will not be liable for the payment of the principal of, premium, if any, or interest on the Bonds or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the Authority. No breach by the Authority of any such pledge, mortgage, obligation or agreement will impose any pecuniary

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liability upon the State of Idaho or any charge upon its general credit or against its taxing power. The Authority has no taxing power.

The Act provides that the State of Idaho pledges to, and agrees with, holders of any bonds, notes and other obligations issued under the Act that the State of Idaho will not limit, alter, restrict or impair the rights vested in the Authority by the Act to fulfill the terms of any agreements made with the holders of bonds, notes or other obligations authorized and issued pursuant to the Act or in any way impair the rights or remedies of the holders of such bonds, notes or other obligations until such bonds, notes and other obligations, together with the interest thereon, are fully met and discharged. The Act does not preclude such limitation or alteration if and when adequate provision shall be made by law for the protection of the holders of such bonds, notes and other obligations.

Neither the members of the Authority nor any person executing the Bonds will be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

Debt Service Reserve Fund

Pursuant to the Bond Indenture, a Debt Service Reserve Fund will be established and held by the Bond Trustee for the benefit of the Bonds (the “Debt Service Reserve Fund”). Within the Debt Service Reserve Fund, the Bond Trustee will maintain separate accounts for each series of the Bonds. At the time of issuance of the Bonds, $8,428,075 will be deposited into such accounts of the Debt Service Reserve Fund. Monies in each account of the Debt Service Reserve Fund will be maintained in an amount equal to the related Debt Service Reserve Fund Requirement. “Debt Service Reserve Fund Requirement” shall mean (a) with respect to the Series 2014A Account of the Debt Service Fund, the lesser of (x) $7,099,950 or (y) the lesser of (i) the maximum amount of principal and interest which shall be payable during the current or any succeeding 12 month period starting on October 1 of a year and ending on September 30 of the next year, (ii) an amount equal to 10% of the original principal amount of the Series 2014A Bonds or (iii) an amount equal to 125% of the average annual debt service with respect to the Series 2014A Bonds; (b) with respect to the Series 2014B-1 Account of the Debt Service Reserve Fund, $316,875; (c) with respect to the Series 2014B-2 Account of the Debt Service Reserve Fund, $442,500; (d) with respect to the Series 2014B-3 Account of the Debt Service Reserve Fund, $446,250; and (e) with respect to the Series 2014C Account of the Debt Service Reserve Fund, $122,500. Monies on deposit in each account of the Debt Service Reserve Fund will be used by the Bond Trustee whenever, and to the extent that, monies on deposit in the related account of the Interest Fund and the related account of the Bond Sinking Fund (in the order listed) are insufficient for the purpose of paying interest on or principal of the related series of Bonds as the same becomes due (either on Interest Payment Dates or on mandatory sinking fund redemption dates). Money on deposit in the Debt Service Reserve Fund shall be invested in Qualified Investments. Qualified Investments deposited in the Debt Service Reserve Fund shall be valued as of the first Business Day of each Fiscal Year on the basis of fair market value (which valuation shall take into account any accrued and unpaid interest).

If, at any time, the amount on deposit in any account of the Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement for such account as a result of such account of the Debt Service Reserve Fund having been drawn upon as provided in the Bond Indenture, the Loan Agreement requires the Corporation to restore the amount on deposit in such account to an amount equal to the Debt Service Reserve Fund Requirement for such account in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred. If, on any Valuation Date, the amount on deposit in any account of the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement for such account as a result of a decline in the market value of the investments in such account, the Loan Agreement requires the

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Corporation to deposit in such account the amount necessary to restore the amount on deposit in such account to equal the Debt Service Reserve Fund Requirement for such account within 120 days following the date the Corporation receives notice of such deficiency. For more information concerning the Debt Service Reserve Fund, see APPENDIX D – “SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE – THE BOND INDENTURE – Debt Service Reserve Fund.”

The Master Indenture and Obligation No. 1

The Bonds will be limited obligations of the Authority and will be secured by Obligation No. 1 issued by the Corporation under the Master Indenture. Pursuant to Obligation No. 1, the Obligated Group agrees to make payments on Obligation No. 1 in an amount sufficient to pay, when due, the principal of and interest on the Bonds. Upon the issuance of the Bonds, the Corporation will be the only Member of the Obligated Group and will be the only entity obligated to make debt service payments with respect to the Bonds and Obligation No. 1. Upon the satisfaction of certain conditions set forth in the Master Indenture, additional Persons may become Members and Members may withdraw from the Obligated Group. The Master Indenture provides that payments on any Obligations issued and outstanding thereunder, including Obligation No. 1, are the joint and several obligations of each Member of the Obligated Group (subject to the right of each Member to cease its status as a Member of the Obligated Group pursuant to the terms and conditions of the Master Indenture). Notwithstanding uncertainties with respect to the enforceability of the covenants in the Master Indenture of each Member of the Obligated Group to be jointly and severally liable for each Obligation, as described herein under the caption “RISK FACTORS – Certain Matters Relating to Enforceability of the Master Indenture,” the accounts of the Members of the Obligated Group will be consolidated for financial reporting purposes and will be used in determining whether the covenants and tests contained in the Master Indenture are met.

The Gross Revenues of the Members of the Obligated Group are pledged under the Master Indenture to secure all the Obligations issued thereunder. See “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS – Security Interest in Gross Revenues and the Deed of Trust” below and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES.”

Pursuant to the Master Indenture, the Members of the Obligated Group have agreed to subject themselves to certain operational and financial restrictions contained therein. See “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE” below and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE.”

The Bond Indenture designates the Bond Trustee as the holder of Obligation No. 1.

Certain amendments to the Master Indenture may be made with the consent of the holders of not less than a majority in aggregate principal amount of the Obligations then outstanding. Such amendments may be material, and such percentage may be composed entirely of the holders of Obligations other than the holder of Obligation No. 1. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – SUPPLEMENTS AND AMENDMENTS.”

Additional Indebtedness; Additional Obligations

Subject to compliance with the provisions of the Master Indenture, the Members of the Obligated Group may in the future incur Additional Indebtedness (including Guaranties) which may, but need not, be evidenced or secured by an Obligation issued under the Master Indenture. See APPENDIX C –

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“SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ADDITIONAL INDEBTEDNESS.” Any such additional Obligation shall, except as described herein, be equally and ratably secured on a parity with the Obligations then outstanding under the Master Indenture, including Obligation No. 1. Subject to certain conditions set forth in the Master Indenture, such additional Obligations and other Additional Indebtedness may be secured by security in addition to that provided for Obligation No. 1, including Liens on the Property (including senior living Facilities) of the Obligated Group, which additional security or Liens need not be extended to any other Indebtedness (including, without limitation, Obligation No. 1). See the information set forth under the captions “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – DEFINITIONS OF CERTAIN TERMS – Permitted Encumbrances” and “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES,” and “– SALE, LEASE OR OTHER DISPOSITION OF PROPERTY” in APPENDIX C. The restrictions on the creation of Liens on Property and the transfer of Property imposed on the Obligated Group under the Master Indenture are not applicable to Excluded Property. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – DEFINITIONS OF CERTAIN TERMS – Excluded Property.”

Security Interest in Gross Revenues and the Deed of Trust

Obligation No. 1 will be issued pursuant to the Master Indenture and will be a general obligation of the Corporation and each Obligated Group Member under the Master Indenture and secured by (i) a security interest in the Gross Revenues of the Obligated Group granted pursuant to the Master Indenture and (ii) a lien and security interest in the Mortgaged Property pursuant to the Deed of Trust. The “Mortgaged Property” consists of approximately 12.6 acres of land owned by the Corporation and will include the buildings comprising the Community, which will be constructed with the proceeds of the Bonds. There can be no assurance that the value of the Mortgaged Property would be realized upon its disposition or at foreclosure. In the future, the value of the Mortgaged Property could be substantially less than the principal amount of Obligations outstanding under the Master Indenture. Upon the issuance of the Bonds, the Obligated Group will deliver a title insurance policy with respect to the Mortgaged Property for the benefit of the Master Trustee. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES,” and “– SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST.” Also see “RISK FACTORS – Certain Risks Associated with the Deed of Trust” and “– Certain Matters Relating to Enforceability of the Master Indenture” herein.

“Gross Revenues” are defined as (i) all receipts, revenues, payments, income and other moneys received by or on behalf of a Member from any source, whether or not in connection with the ownership or the operation of all or any part of a Member’s facilities, including, without limitation, all Entrance Fees (earned and unearned), monthly service fees and all other operating and non-operating revenues, and (ii) all rights to receive the same whether in the form of accounts receivable, contract rights, chattel paper, instruments, general intangibles of a Member and the proceeds thereof, the proceeds of any insurance coverage on and condemnation awards in respect of a Member’s facilities or any gain on the sale or other disposition of property by a Member; and (iii) all of the foregoing, whether now existing or hereafter coming into existence and whether now owned or hereafter acquired by a Member. As of the date hereof, the Corporation is the only Member of the Obligated Group.

The pledge of Gross Revenues will be perfected to the extent and only to the extent that such security interest may be perfected by control as provided in the Uniform Commercial Code of the State of Idaho. It may not be possible to perfect a security interest in any manner whatsoever in certain types of Gross Revenues (e.g., gifts, donations, certain insurance proceeds, Medicare and Medicaid payments)

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prior to actual receipt by the Corporation for deposit into the Gross Revenue Fund established under the Master Indenture.

Pursuant to the Master Indenture, each Member of the Obligated Group has covenanted to execute a depository account control agreement with each Depository Bank (as defined in APPENDIX C), and to execute and deliver such other documents as may be necessary or reasonably requested by the Master Trustee in order to perfect or maintain as perfected the security interest in Gross Revenues or give public notice thereof.

Notwithstanding such security interest in the Obligated Group’s Gross Revenues, the Members of the Obligated Group may sell or otherwise transfer Gross Revenues and create Permitted Encumbrances thereon, in accordance with the provisions of the Master Indenture. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – DEFINITIONS OF CERTAIN TERMS – Permitted Encumbrances.” Also see “RISK FACTORS – Certain Matters Relating to Enforceability of the Master Indenture.”

PLAN OF FINANCE

The Corporation will use the proceeds of the Tax-Exempt Bonds, together with certain other moneys, to (i) finance or reimburse the Corporation for a portion of the costs of the Project; (ii) refinance outstanding indebtedness of an affiliate of the Corporation incurred in connection with the acquisition of the land upon which the Project will be located; (iii) pay a portion of the interest on the Tax-Exempt Bonds during the construction of the Project; (iv) fund a debt service reserve fund; and (v) pay certain costs associated with the issuance of the Tax-Exempt Bonds.

The Corporation will use the proceeds of the Taxable Bonds, together with certain other moneys, to (i) finance or reimburse the Corporation for the portion of the costs of the Project that are not financed with proceeds of the Tax-Exempt Bonds; (ii) pay a portion of the interest on the Taxable Bonds during the construction of the Project; (iii) fund a debt service reserve fund; and (iv) pay certain costs associated with the issuance of the Taxable Bonds.

The Project

See APPENDIX A – “THE COMMUNITY” for a description of the Project. See “ESTIMATED SOURCES AND USES OF FUNDS” below for a description of the expected uses of the proceeds of the Bonds and the sources and uses of financing for the Project. See APPENDIX B – “FINANCIAL FEASIBILITY STUDY” for additional information regarding the Project.

Liquidity Support

The Corporation, American Baptist Properties, ABHOW, the Master Trustee and the Bond Trustee will enter into a Liquidity Support Agreement (the “Sponsor Liquidity Support Agreement”) in connection with the issuance of the Bonds. Pursuant to the Sponsor Liquidity Support Agreement, American Baptist Properties will provide liquidity support to the Corporation of $1,000,000. Such moneys will be deposited in the American Baptist Properties Liquidity Support Fund held by the Master Trustee. The ABHOW Liquidity Support Fund will not be funded upon the issuance of the Bonds. The Sponsor Liquidity Support Agreement requires ABHOW to provide liquidity support to the Corporation of up to $1,250,000 upon the occurrence of a Funding Event (as defined herein). Such moneys will be deposited in the ABHOW Liquidity Support Fund held by the Master Trustee.

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In addition, the Corporation, GCI Boise, the Master Trustee and the Bond Trustee will enter into a Liquidity Support Agreement (the “Greystone Liquidity Support Agreement”) in connection with the issuance of the Bonds. Pursuant to the Greystone Liquidity Support Agreement, GCI Boise will provide liquidity support to the Corporation of $2,250,000. Such moneys will be deposited in the Supplemental Liquidity Support Fund held by the Master Trustee.

Collectively, the American Baptist Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund are referred to herein as the “Liquidity Support Funds.”

Liquidity Support Funds available under the Sponsor Liquidity Support Agreement and the Greystone Liquidity Support Agreement may be drawn by the Bond Trustee or the Master Trustee or the Corporation to pay for certain Project construction costs, interest on the Bonds, or any operating expenses in conjunction with the Project, if no other funds are available for those purposes in any trustee-held fund held by the Bond Trustee (other than the Debt Service Reserve Fund) or Master Trustee subject to the provisions of the Liquidity Support Agreements. Repayments of draws under the Liquidity Support Agreements (“Corporation’s Repayment Obligations”) are subject to certain repayment restrictions. No payment of the Corporation’s Repayment Obligations and any Affiliated Related Subordinated Debt set forth in the Master Indenture may be made except as described in “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates and Liquidity Support Repayment Obligations” below.

Also see “LIQUIDITY SUPPORT” herein.

Pre-Finance Construction Development Capital

GCI Boise is a Delaware limited partnership, of which GDC Boise, LLC is the general partner (the “General Partner”) and The Ziegler Companies, Inc., Ziegler Equity Funding IV, LLC (“ZEFIV”), Ziegler Equity Funding V, LLC (“ZEFV”) and Greystone Senior Living Investors LP (“GSLI”) are the limited partners. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. (“Greystone Partners”) which is controlled by the principals of Greystone.

GCI Boise was formed to fund the pre-finance development costs (the “Pre-finance Capital”) for the Project. Pre-finance Capital in the amount of $6,250,000 was funded in December 2007; $650,000 was funded in April 2011; $600,000 was funded in January 2012; $750,000 was funded in July 2012 and $350,000 was funded in March 2013 for a total funding of $8,600,000.

For a description of the return of a portion of the Pre-finance Capital, see “DEVELOPMENT OF THE COMMUNITY” in APPENDIX A.

It is anticipated that a portion of the Pre-finance Capital described above, along with a portion of a fixed base development fee (the “Fixed Base Fee”), will be repaid upon delivery of the Bonds. The Corporation has no obligation to reimburse advances made by GCI Boise unless and until the issuance of the Bonds. All risks for such advances associated with the failure to achieve issuance of the Bonds will be borne by GCI Boise. See “DEVELOPMENT OF THE COMMUNITY” in APPENDIX A.

ZEFIV and ZEFV is each an investment fund, which primarily includes third party investors and certain employees of the Underwriter. The Ziegler Companies, Inc. is the parent of the Underwriter. See “DEVELOPMENT OF THE COMMUNITY” in APPENDIX A.

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Development and Management of the Project

Greystone. The Corporation entered into a Development Consulting Agreement effective December 21, 2007, as amended (the “Greystone Development Consulting Agreement”), with Greystone Development Company II, LP (“GDC”), on behalf of itself and its permitted assignee Greystone Development Services XX, LLC (“GDS”), to provide development consulting services during the planning and development of the Community. GDS is a Delaware limited liability company comprised of GCI Boise and GDC as members. GDC has assigned its rights and duties under the Greystone Development Consulting Agreement to GDS. The Corporation entered into an Amended and Restated Management and Marketing Services Agreement effective October 25, 2013 with GMSC Idaho, LLC, a Texas limited liability company and an affiliate of GDC (“GMSC”), under which GMSC will serve as manager of the Community (the “Manager”) and manage day-to-day operations of the Community. Pursuant to the terms of the Management Agreement, the manager is required to provide all management services necessary to operate the Community, including but not limited to, financial management, purchasing, public relations, recruitment of personnel, and supervision of the day-to-day operations and programs of the Community. See APPENDIX A – “DEVELOPMENT OF THE COMMUNITY” and “MANAGEMENT OF THE COMMUNITY” for more information regarding the development of the Community and the terms of the Greystone Development Consulting Agreement.

ABHOW. The Corporation has entered into a separate Development Administrative Services Agreement with ABHOW dated as of February 1, 2008 (as amended and supplemented from time to time, the “ABHOW Development Agreement”) whereby ABHOW will provide certain development administrative support services in connection with the development of the Community. Seniority, Inc. (“Seniority”), which is owned by ABHOW, has executed a Sales and Marketing Oversight Agreement with the Corporation under which Seniority provided certain marketing services to the Corporation. ABHOW and Seniority will defer receipt of a total of $1,455,000 in fees until certain conditions set forth in the Master Indenture have been satisfied as described below under the caption “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates and Liquidity Support Repayment Obligations” herein. See APPENDIX A – “DEVELOPMENT OF THE COMMUNITY” for more information regarding the development of the Community and the terms of the ABHOW Development Agreement.

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ESTIMATED SOURCES AND USES OF FUNDS

Proceeds to be received from the sale of the Bonds are estimated to be applied as set forth in the following table (all amounts are rounded to the nearest whole dollar).

Sources of Funds Par Amount of Series 2014A Bonds $80,685,000 Par Amount of Series 2014B-1 Bonds 4,875,000 Par Amount of Series 2014B-2 Bonds 7,375,000 Par Amount of Series 2014B-3 Bonds 8,500,000 Par Amount of Series 2014C Bonds 1,750,000 Original Issue Discount (1,057,255) Equity Contribution 3,000,000 Subordinate ABP Note 2,000,000 Deferred Pre-Finance Capital 3,000,000

Total Sources of Funds $110,127,745

Uses of Funds

Deposit to Project Fund $85,653,240 Funded Interest(1) 13,610,117 Debt Service Reserve Fund(2) 8,428,075 Costs of Issuance and Other Costs(3) 2,436,313

Total Uses of Funds $110,127,745

(1) Proceeds of the Bonds will be used to pay interest on the Bonds for approximately 22 months after

issuance of the Bonds. (2) The aggregate of the amounts on deposit in each of the accounts of the Debt Service Reserve Fund

held by the Bond Trustee. See “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS – Debt Service Reserve Fund.”

(3) Includes Underwriter’s discount, legal, accounting, feasibility, administrative and miscellaneous fees and expenses. Costs of issuance in excess of 2% of the proceeds of the Tax-Exempt Bonds will be paid from the proceeds of the Taxable Bonds.

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ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth, for each bond year ending October 1, the estimated amounts required to be available for the payment of (a) principal of the Series 2014A

Bonds (including Bond Sinking Fund payments), (b) anticipated payment of the principal of the Series 2014B-1 Bonds, the Series 2014B-2 Bonds, the Series 2014B-3 Bonds and the Series 2014C Bonds from anticipated entrance fees, and (c) interest on the Bonds. The totals of the columns and rows may not correspond exactly due to rounding.

Bond Year Series 2014A Bonds Series 2014B-1

Bonds(1) Series 2014B-2

Bonds(1) Series 2014B-3

Bonds(1) Series 2014C

Bonds(1) Ending

(October 1) Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Total Debt

Service 2014 - $4,310,862 - $213,891 - $298,688 - $301,219 - $82,688 $5,207,347 2015 - 6,386,463 - 316,875 - 442,500 - 446,250 - 122,500 7,714,588 2016 - 6,386,463 - 316,875 - 442,500 $7,550,000 393,028 $1,750,000 77,088 16,915,953 2017 - 6,386,463 $3,640,000 301,194 $7,375,000 216,525 950,000 12,469 18,881,650 2018 - 6,386,463 1,235,000 20,069 7,641,531 2019 $710,000 6,386,463 7,096,463 2020 760,000 6,336,763 7,096,763 2021 815,000 6,283,563 7,098,563 2022 870,000 6,226,513 7,096,513 2023 930,000 6,165,613 7,095,613 2024 995,000 6,100,513 7,095,513 2025 1,065,000 6,030,863 7,095,863 2026 1,145,000 5,950,913 7,095,913 2027 1,235,000 5,864,950 7,099,950 2028 1,325,000 5,772,238 7,097,238 2029 1,425,000 5,672,756 7,097,756 2030 1,530,000 5,565,750 7,095,750 2031 1,650,000 5,447,175 7,097,175 2032 1,780,000 5,319,300 7,099,300 2033 1,915,000 5,181,350 7,096,350 2034 2,065,000 5,032,938 7,097,938 2035 2,225,000 4,872,900 7,097,900 2036 2,405,000 4,694,900 7,099,900 2037 2,595,000 4,502,500 7,097,500 2038 2,805,000 4,294,900 7,099,900 2039 3,025,000 4,070,500 7,095,500 2040 3,270,000 3,828,500 7,098,500 2041 3,530,000 3,566,900 7,096,900 2042 3,815,000 3,284,500 7,099,500 2043 4,115,000 2,979,300 7,094,300 2044 4,445,000 2,650,100 7,095,100 2045 4,800,000 2,294,500 7,094,500 2046 5,190,000 1,904,500 7,094,500 2047 5,615,000 1,482,813 7,097,813 2048 6,070,000 1,026,594 7,096,594 2049 6,565,000 533,406 7,098,406

Total $80,685,000 $169,181,181 $4,875,000 $1,168,903 $7,375,000 $1,400,213 $8,500,000 $1,152,966 $1,750,000 $282,275 $276,370,537 _____________________________________

(1) The Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds mature on October 1, 2019; October 1, 2020, October 1, 2021 and October 1, 2022, respectively, and are not subject to mandatory bond sinking fund redemption. The Corporation anticipates redeeming the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds in full from entrance fees by July 1, 2016, January 1, 2017, July 1, 2017 and January 1, 2018, respectively. The actual timing of the prepayment of the Series 2014B Bonds may differ from the assumed timing because of timing differences in the receipt of entrance fees. See “THE BONDS – Redemption of the Bonds” and “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Entrance Fee Fund” herein.

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CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE

Pursuant to the Master Indenture, the Members of the Obligated Group have agreed to comply with certain operational and financial restrictions contained therein. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE.”

Marketing Covenant

Beginning with the fiscal quarter ending March 31, 2014, and ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved, the Obligated Group will use its best efforts to maintain the percentage of Independent Living Units which are Reserved (the “Percentage of Reserved Independent Living Units”) at or above the applicable levels set forth below (the “Marketing Requirements”), which determinations shall be measured as of the last day of the applicable quarter.


03/31/14 67.7% 06/30/14 69.5 09/30/14 72.6 12/31/14 76.3 03/31/15 73.9 06/30/15 70.8 09/30/15 70.1 12/31/15 71.4 03/31/16 72.6 06/30/16 74.5 09/30/16 77.0 12/31/16 78.8 03/31/17 80.7 06/30/17 81.9 09/30/17 84.4 12/31/17 86.9 03/31/18 88.8


In lieu of satisfying the Marketing Requirements set forth in the preceding paragraph, the applicable Marketing Requirements for the applicable Occupancy Quarter (as defined under “Occupancy Covenant”) below shall be the Adjusted Level I Marketing Requirements set forth below if the Adjusted Level I Occupancy Requirements set forth in the Master Indenture have been satisfied.

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Percentage of Reserved Independent Occupancy Living Units (%)

Quarter Adjusted Level I 1 62.1% 2 61.4 3 63.3 4 65.2 5 67.7

If the report submitted pursuant to the provisions of the Master Indenture summarized in

subparagraph (i) under the caption “FINANCIAL REPORTING” states that the Percentage of Reserved Independent Living Units for any fiscal quarter is less than the Marketing Requirement for that fiscal quarter, the Obligated Group Representative shall submit to the Master Trustee, within 45 days after the end of such fiscal quarter, a marketing corrective action plan (a “Marketing Corrective Action Plan”) which includes the following information: (a) the Percentage of Reserved Independent Living Units, including the number of reservations and cancellations during such fiscal quarter and on an aggregate basis, (b) a forecast, prepared by management of the Corporation, of the number of reservations expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Marketing Corrective Action Plan is being prepared; and (c) a detailed description of the reasons for the Obligated Group’s failure to satisfy the Marketing Requirements and management’s plan to increase the Percentage of Reserved Independent Living Units to at least the level required by the Marketing Requirements described under this caption by the end of the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Officer’s Certificate is being submitted.

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (i) under the caption “FINANCIAL REPORTING” states that the Obligated Group has failed to meet the Marketing Requirements for any two consecutive fiscal quarters, the Obligated Group Representative shall select an Independent Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to at least the Marketing Requirement described under this caption on the earliest date practicable (a “Marketing Consultant Engagement”). Within 60 days of retaining any such Independent Consultant, the Obligated Group Representative shall cause a copy of the Independent Consultant’s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall follow each recommendation of the Independent Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The Obligated Group shall not be required to obtain a Consultant’s report after failing to meet a Marketing Requirement if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in a Marketing Consultant Engagement.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Marketing Requirement for any fiscal quarter shall not constitute an event of default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures described under this caption for preparing a Marketing Corrective Action Plan or obtaining an Independent Consultant’s report 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.

See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – MARKETING COVENANT.”

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Occupancy Covenant

Within 30 days of the initial Occupancy of any of the Independent Living Units included in the Project, the Corporation shall notify the Master Trustee and deliver a copy of the Occupancy Certificate with such notice. The Obligated Group covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the initial Occupancy of any of the Independent Living Units included in the Project and (b) ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved (an “Occupancy Quarter”), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units included in the Project (the “Percentage of Units Occupied”) at or above the Level I Occupancy Requirements set forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

Occupancy Level I Adjusted Level I Quarter Occupancy Requirements Occupancy Requirements*

1 9.3% 21.7% 2 21.1 37.3 3 30.4 50.3 4 37.8 65.2 5 43.4 75.2 6 49.0 7 54.6 8 60.2 9 65.8 10 71.4 11 77.0 12 83.0 13 84.0 14 86.0 15 88.0


*Adjusted Level I Occupancy Requirements are used only for the purposes described under the caption “Marketing Covenant” above.

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (i) under the caption “FINANCIAL REPORTING” states that the Percentage of Units Occupied for any Occupancy Quarter is less than the Level I Occupancy Requirement described under this caption for that Occupancy Quarter, the Obligated Group Representative shall within 45 days after the end of such Occupancy Quarter submit an occupancy corrective action plan prepared by management to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above by the Occupancy Quarter immediately succeeding the Occupancy Quarter with respect to which the corrective action plan is being submitted (a “Corrective Occupancy Action Plan”).

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (i) under the caption “FINANCIAL REPORTING” states that the Percentage of Units Occupied for any two consecutive Occupancy Quarters is less than the Level I Occupancy Requirement described under this caption for those Occupancy Quarters, the Obligated Group Representative shall select an Independent Consultant within 45 days of the end of such second fiscal quarter to make

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recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement described under this caption on the earliest date practicable (an “Occupancy Consultant Engagement”). Within 60 days after retaining any such Independent Consultant, the Obligated Group Representative shall cause a copy of the Independent Consultant’s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall follow each recommendation of the Independent Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The Obligated Group shall not be required to obtain an Independent Consultant’s report after failing to meet an Occupancy Requirement, if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in an Occupancy Consultant Engagement.

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 described under this caption for preparing a Corrective Occupancy Action Plan or obtaining an Independent Consultant’s report 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.

See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OCCUPANCY COVENANT.”

Cumulative Cash Operating Loss Covenant

The Obligated Group covenants that commencing with (a) the first fiscal quarter ending after the earliest date a resident has taken physical possession of one of the Independent Living Units included in the Project (the “Initial Occupancy Date”) if such date is more than 30 days prior to the end of such fiscal quarter or (b) the first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (an “Operating Loss Testing Date”). The requirement to test Cumulative Cash Operating Loss shall end on the Initial Testing Date. Each Member is required to conduct its business so that as of each such Operating Loss Testing Date the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount described below.

Quarter Cumulative Cash

Operating Loss ($) Forecasted Cumulative

Cash Operating Loss ($)(1)

1 (2,300,000) (1,250,000) 2 (4,000,000) (2,847,000) 3 (6,100,000) (5,093,000) 4 (7,900,000) (6,790,000) 5 (9,200,000) (8,025,000) 6 (10,700,000) (9,312,000) 7 (11,700,000) (10,166,000)

8 and thereafter (12,000,000) (10,411,000) (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.

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If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (i) or subparagraph (ii) under the caption “FINANCIAL REPORTING” states that, as of any Operating Loss Testing Date, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels described under this caption, the Obligated Group Representative shall, within 45 days of such Operating Loss Testing Date, submit an Officer’s Certificate to each Required Information Recipient setting forth in reasonable detail the reasons for such noncompliance and adopting a specific plan setting forth steps to be taken designed to achieve compliance for future periods.

If, as of any two consecutive Operating Loss Testing Dates, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels described under this caption, the Obligated Group Representative shall select, within 45 days of the second such Operating Loss Testing Date, an Independent Consultant to make recommendations. The Independent Consultant shall make recommendations with respect to the Obligated Group’s methods of operation and other factors affecting its financial condition in order to decrease the Cumulative Cash Operating Loss to the required level for future periods. A copy of the Independent Consultant’s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days of the date the Independent Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Independent 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 an Independent Consultant’s report after failing to meet a covenant described under this caption if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in an Operating Loss Consultant Engagement.

Notwithstanding any other provision of the Master Indenture, noncompliance with the Cumulative Cash Operating Loss covenant described under this caption shall 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.

See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – CUMULATIVE CASH OPERATING LOSS COVENANT.”

Rate Covenant

Each Obligated Group Member covenants in the Master Indenture to operate all of its Principal Property in the aggregate 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 facilities 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 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 Master Indenture.

Beginning with the Fiscal Year ending on the Initial Testing Date, the Members covenant and agree that the Obligated Group Representative shall compute the Debt Service Coverage Ratio and promptly furnish to the Master Trustee an Officer’s Certificate setting forth the results of such computation. If the Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year with respect to which the Initial Testing Date relates is less than 1.10:1, the Master Trustee shall require the Obligated

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Group to select an Independent Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase such Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

If the Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Fiscal Year with respect to which the Initial Testing Date relates is less than 1.20:1, the Master Trustee shall require the Obligated Group to retain an Independent 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 such Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

The Obligated Group will not be required to engage a Consultant more than once in any one year period.

For purposes of calculations described in the previous paragraphs, an unrestricted contribution from any Affiliate of any Member of the Obligated Group may, at the sole discretion of the Obligated Group Representative, be treated as Income Available for Debt Service being earned during the period of such calculation so long as the unrestricted contribution is made prior to the date the applicable Officer’s Certificate is required to be delivered with respect to such calculation. If the unrestricted contribution is counted in a period prior to the date of such transfer in accordance with the previous sentence, it shall not be included in the calculation for the period in which such contribution was actually made.

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

Notwithstanding any other provisions of the Master Indenture, an Event of Default arising from the Debt Service Coverage Ratio shall only occur under the Master Indenture if: (i) the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.20:1 and fails to take all necessary action to comply with the procedures set forth above for preparing a report, adopting a plan, and following all recommendations contained in such report or plan to the extent feasible (as determined by the Governing Body of the Obligated Group Representative) and permitted by law; or (ii) the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year.

See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – RATE COVENANT.”

Liquidity Covenant

The Obligated Group covenants that it will calculate the Days Cash on Hand or the Cash to Indebtedness Ratio of the Obligated Group as of March 31 and September 30 of each Fiscal Year (each such date a “Liquidity Testing Date”, commencing with the Initial Testing Date). The Obligated Group shall include such calculations in the Officer’s Certificates for the quarters ending March 31 and

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September 30 delivered pursuant to the provisions of the Master Indenture summarized under the heading “FINANCIAL REPORTING” below.

Each Obligated Group Member is required to conduct its business so that on each Liquidity Testing Date the Obligated Group shall have a Cash to Indebtedness Ratio of (a) no less than 0.25 for the first two Liquidity Testing Dates, starting with the Initial Testing Date, (b) no less than 0.275 for the next year (the next two Liquidity Testing Dates), and (c) no less than 0.30 thereafter (the “Liquidity Requirement”). At the option of the Obligated Group Representative, the Liquidity Requirement can be converted to a covenant to maintain no less than 180 Days Cash on Hand on each Liquidity Testing Date if for three consecutive Fiscal Years the Obligated Group has reported (a) a Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30 or more on each Liquidity Testing Date. The Obligated Group Representative may elect to convert the Liquidity Requirement as of a specified date (the “Liquidity Requirement Conversion Date”) in an Officer’s Certificate, demonstrating compliance with the test summarized 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 March 31 and September 30.


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 Liquidity Testing Date following delivery of the Officer’s Certificate required by the provisions of the Master Indenture summarized in the preceding paragraph, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, select an Independent Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. A copy of the Independent Consultant’s report and recommendations, if any, shall be filed with each of the Required Information Recipients within 60 days of the date such Independent Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Independent 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 engage a Consultant more than one time in any one year period.

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 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.

See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIQUIDITY COVENANT.”

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Actuarial Study

During the Fiscal Year following the second 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 the amount, if any, by which the Obligated Group’s obligations to provide services under the Residency Agreements are anticipated to be in excess of those that could be satisfied using the rates, fees and charges for the Obligated Group then in effect.

Approval of Consultants

If at any time the Members of the Obligated Group are required to engage an Independent Consultant under the Master Indenture, the Independent Consultant shall be engaged in the manner set forth below.

Upon selecting an Independent Consultant as required under the Master Indenture, the Obligated Group Representative will notify the Master Trustee of the selection. The Master Trustee shall, as soon as practicable but in no case longer than five Business Days after receipt of notice, notify the owners of the Obligations Outstanding of such selection and the Obligated Group Representative will post a copy of such notice (or cause a copy of such notice to be posted) on EMMA. Such notice shall (i) include the name and a brief description of the Independent Consultant, (ii) state the reason that the Independent Consultant is being engaged including a description of the covenant(s) of the Master Indenture that require the Independent Consultant to be engaged, and (iii) state that each owner of an Obligation will be deemed to have consented to the selection of the Independent Consultant named in such notice unless such owner submits an objection to the selected Independent Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Obligation holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If two-thirds or more in aggregate principal amount of the holders of the Outstanding Obligations have been deemed to have consented to the selection of the Independent Consultant, the Obligated Group Representative may engage the Independent Consultant within five days of receiving notice of that consent. If more than one-third in aggregate principal amount of the owners of the Obligations Outstanding have objected to the Independent Consultant selected, the Obligated Group Representative shall select another Independent Consultant within 14 days after receiving notice of such objection, which Independent Consultant may be engaged upon compliance with the procedures summarized in this paragraph.

All Independent Consultant reports required under the Master Indenture shall be prepared in accordance with then-effective industry-appropriate standards.

See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – APPROVAL OF CONSULTANTS.”

Application for Rating

Not later than 150 days after receipt by the Obligated Group Representative of audited financial statements for the first full Fiscal Year following the achievement of Stable Occupancy with respect to the Project, and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains a credit rating of “BBB-” (or an equivalent rating) or better from any Rating Agency (an “Investment Grade Credit Rating”). Notwithstanding the foregoing,

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the requirement to annually approach a Rating Agency shall be suspended for so long as the Obligated Group maintains an Investment Grade Credit Rating. Notwithstanding the foregoing, the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group 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.

Entrance Fee Fund

The Members of the Obligated Group agree in the Master Indenture that all Initial Entrance Fees (as defined in APPENDIX C) received by the Members of the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fee Fund.

Pursuant to the Master Indenture, the Master Trustee shall establish and maintain the Entrance Fee Fund. All moneys received by the Master Trustee and held in the Entrance Fee Fund shall be trust funds under the terms of the Master Indenture for the benefit of Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture, but are not bond proceeds (within the meaning of the Code), and are not, except as specifically described below, pledged to payment of principal and interest on the Bonds.

Moneys in the Entrance Fee Fund on the first Business Day of each month shall be disbursed by the Master Trustee, as follows:

FIRST: To the Obligated Group to pay refunds of Initial Entrance Fees as required by residency agreements with respect to the residential living apartments in the Project. Such disbursements shall be made upon receipt by the Master Trustee of an Officer’s Certificate of the Obligated Group Representative certifying that the Obligated Group is required by a residency agreement to pay refunds within the next 15 days and the amount of such refunds.

SECOND: To the Working Capital Fund established under the Master Indenture, until the total principal amount deposited into the Working Capital Fund equals $12,000,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund.

THIRD: To the Operating Reserve Fund established under the Master Indenture, until the amount on deposit in the Operating Reserve Fund equals the Operating Reserve Fund Requirement ($3,000,000). On the first Business Day of each month, the Master Trustee shall disburse the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to the Operating Reserve Fund Requirement, provided, however that the Master Trustee shall replenish no more than $3,000,000 of any funds withdrawn from the Operating Reserve Fund from funds deposited in the Entrance Fee Fund so that the total aggregate deposits to the Operating Reserve Fund do not exceed $6,000,000. Notwithstanding the foregoing limitations on the amount of Initial Entrance Fees deposited in the Operating Reserve Fund, if a transfer of moneys from the Liquidity Support Funds to the Operating Reserve Fund has occurred as described under the caption “LIQUIDITY SUPPORT” below or in the Liquidity Support Agreements, the Master Trustee shall deposit to the Operating Reserve Fund the amount, if any, needed to increase the amount on deposit in the Operating Reserve Fund to $1,000,000.

FOURTH: to the Supplemental Liquidity Support Fund, the American Baptist Properties Liquidity Support Fund and the ABHOW Liquidity Support Fund (in that order), any amount necessary to replenish any amounts advanced under the Liquidity Support Agreements to pay costs prior to the issuance of the initial Occupancy Certificate for the Project.

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FIFTH: If the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014C Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

SIXTH: After all the Series 2014C Bonds have been redeemed, and if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014B-3 Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

SEVENTH: After all the Series 2014C Bonds and the Series 2014B-3 Bonds have been redeemed, and if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014B-2 Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

EIGHTH: After all Series 2014C Bonds, the Series 2014B-3 Bonds and the Series 2014B-2 Bonds have been redeemed, and if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund established under the Bond Indenture for optional redemption of Series 2014B-1 Bonds pursuant to the Bond Indenture. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

After the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds have been redeemed, 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 Obligated Group and the Entrance Fee Fund shall be closed.

Also see APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – ENTRANCE FEE FUND.”

Working Capital Fund

Pursuant to the Master Indenture, the Master Trustee shall establish and maintain 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 Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor 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 Obligated Group within seven days after receipt by the Master Trustee of a Written Request to the Master Trustee certifying that (i) the withdrawal is made to pay (A) development and marketing fees and expenses related to the Project, (B) operating expenses of the Obligated Group, (C) the costs of needed repairs to the Obligated Group’s Facilities, (D) routine capital expenditures of the Obligated Group, (E) judgments against the Obligated Group, (F) refunds of any Entrance Fees as required by residency agreements with respect to residential living apartments in the Project, (G) amounts required to restore funds on deposit in the Debt Service Reserve Fund to the required level, or (H) amounts due on any Obligations (other than optional prepayment or redemption), other than funds

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advanced by an Affiliate of the Obligated Group, (ii) such moneys have been expended or are anticipated to be expended in the calendar month following the month in which such Officer’s Certificate is submitted, together with a budget describing the uses for which such moneys are needed and the amount needed for each such use, and (iii) no other funds are available or will reasonably be available to make such payments.

All amounts on deposit in the Working Capital Fund shall be released to the Obligated Group, and the Working Capital Fund shall be closed when all the Series 2014B Bonds and the Series 2014C Bonds have been redeemed and if no Event of Default has occurred and is continuing under the Master Indenture.

Operating Reserve Fund

Pursuant to the Master Indenture, the Master Trustee shall establish and maintain 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 Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture.


All amounts on deposit in the Operating Reserve Fund shall be released to the Obligated Group and the Operating Reserve Fund shall be closed when all the Series 2014B Bonds and the Series 2014C Bonds have been redeemed and if no Event of Default has occurred and is continuing under the Master Indenture.

The following sets forth a diagram of the flow of Initial Entrance Fees as described above, but assumes the costs of the Project are fully paid from the Project Fund and the earnings thereon and that there is no draw on the Liquidity Support Funds to pay those Project costs:

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Corporation Receives Initial Entrance Fees and transfers them to the Master Trustee within five

Business Days of receipt ($46.8 million total entrance fee pool at

100% occupancy) ($44.5 million total entrance fee pool at

95% occupancy)

→ Master Trustee Deposits Initial Entrance Fees

into Entrance Fee Fund upon receipt from the Corporation. The Master Trustee will apply these funds on the first Business Day of each month.

↓

First, to pay Refunds (As required by Residency Agreements)

Approximate Percentage Occupancy1

↓

Second, Working Capital Fund $12.0 million

25%

↓

The initial deposit to the Operating Reserve Fund will be $3.0 million and the Operating Reserve Fund

is subject to $3.0 million of replenishment, for a maximum deposit, prior to the transfers described in

the paragraph below, of $6.0 million.

Third, Operating Reserve Fund $3.0 million

30%

After the Working Capital Fund and the Operating Reserve Fund have received the full amount of the initial deposit, subsequent Initial Entrance Fees not

to exceed $4.5 million (equal to the Support Obligations under the Liquidity Support Agreements)

may be used to restore the balance in the Liquidity Support Funds to $1.0 million, $1.25 million and $2.25 million after draws on the Liquidity Support Funds prior

to the opening of the Project.

↓

Fourth, Liquidity Support Funds For replenishment of draws on Liquidity Support Funds

prior to opening (up to $4.5 million)

If the Liquidity Support Funds are drawn upon

and the total balance remaining in the Liquidity Support Funds following a Funding Event falls below $1.0

million, an amount equal to the remaining amounts on deposit in the Liquidity Support

Funds will be transferred to the Operating Reserve Fund. Thereafter, Initial Entrance Fees may be transferred to

the Operating Reserve Fund on a monthly basis in order to maintain a balance of $1.0 million.

↓

The Entrance Fee Fund will automatically be swept

monthly. The Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds, in that order, will be repaid gradually during the

fill-up period. Monthly redemptions of the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2

Bonds and the Series 2014B-1 Bonds, in that order, will only occur if the three steps described above have

occurred.

Fifth, Temporary Debt Redemption Debt Service Reserve Funds will be released at the final redemption date of

each of the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds

Par amounts to be redeemed are:

$1.75 million Series 2014C Bonds, Debt Service Reserve Fund $122,500 $8.5 million Series 2014B-3 Bonds, Debt Service Reserve Fund $446,250

$7.375 million Series 2014B-2 Bonds, Debt Service Reserve Fund $442,500 $4.875 million Series 2014B-1 Bonds, Debt Service Reserve Fund $316,875

35% 50% 65% 75%

↓

Once the preceding items are satisfied and the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series

2014B-2 Bonds and the Series 2014B-1 Bonds, in that order, have been repaid,

all future Initial Entrance Fees can be used by the Corporation as unrestricted cash.

Sixth, Unrestricted Cash to Corporation Remaining Initial Entrance Fees

$10.6 million (at 100% occupancy, assuming no replenishment) $8.4 million (at 95% occupancy assuming no replenishment)

1 This information is based on Management’s forecasts as contained in the Feasibility Study. See APPENDIX B — “FINANCIAL FEASIBILITY STUDY.” This information is not included in the Master Indenture and is set forth herein for purposes of comparison only. There can be no assurance that the Project will achieve the occupancy levels forecasted.

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Investment of Funds

The Master Indenture provides that any moneys held by the Master Trustee in the Entrance Fee Fund, the Operating Reserve Fund and the Working Capital Fund shall be invested by the Master Trustee, upon a written request of the Obligated Group Representative, in Qualified Investments. See additional information about investment of these funds in APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – INVESTMENT OF FUNDS.”

Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates and Liquidity Support Repayment Obligations

A Member will not make payments on (i) Affiliate Related Subordinated Indebtedness or other Management Fees to Affiliates or (ii) Liquidity Support Repayment Obligations to the Greystone Liquidity Provider, unless the Obligated Group Representative delivers an Officer’s Certificate to the Master Trustee prior to any such payment certifying that the following conditions are satisfied:

(a) 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 nursing beds included in the Project was, in the aggregate, at least 90% and the average occupancy for the independent living units was at least 88% occupied;

(b) If the proposed payment on the Affiliated Related Subordinated Indebtedness or Management Fees to Affiliates had occurred as of the last day of the most recent fiscal quarter for which financial statements have been delivered as described under the heading “FINANCIAL REPORTING,” the Obligated Group would have had a Cash to Debt Indebtedness ratio of at least 0.30 after that payment;

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

(d) No Series 2014B Bonds or Series 2014C Bonds remain Outstanding; and

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

Other Covenants

The Master Indenture contains other covenants, restrictions and limitations of the Obligated Group including without limitation: incurrence of additional indebtedness; merger; transfer of assets; sale, lease or other disposition of property; and permitted liens. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE.”

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LIQUIDITY SUPPORT

American Baptist Properties Liquidity Support Fund

Under the Sponsor Liquidity Support Agreement, American Baptist Properties has agreed to provide $1,000,000 (the “American Baptist Properties Support Obligation”) to the Corporation for Project completion costs, working capital or operating expenses, and interest on the Bonds, all as provided therein and summarized below.

The American Baptist Properties Liquidity Support Obligation will be deposited in the American Baptist Properties Liquidity Support Fund with the Master Trustee under the Master Indenture. The American Baptist Properties Liquidity Support Fund shall be the property of American Baptist Properties, but shall be pledged to fund and secure American Baptist Properties’ obligations under the Sponsor Liquidity Support Agreement.

ABHOW Liquidity Support Fund

The ABHOW Liquidity Support Fund will not be funded upon the issuance of the Bonds. Under the Sponsor Liquidity Support Agreement, upon receipt of notice from the Master Trustee that the aggregate amount on deposit in the American Baptist Properties Liquidity Support Fund and the Supplemental Liquidity Support Fund (described below) is less than $500,000 (a “Funding Event”), ABHOW has agreed to provide $1,250,000 (the “ABHOW Support Obligation”) to the Corporation for Project completion costs, working capital or operating expenses, and interest on the Bonds, all as provided therein and summarized below.

After a Funding Event, the ABHOW Liquidity Support Obligation will be deposited in the ABHOW Liquidity Support Fund with the Master Trustee under the Master Indenture. The ABHOW Liquidity Support Fund shall be the property of ABHOW, but shall be pledged to fund and secure ABHOW’s obligations under the Sponsor Liquidity Support Agreement.

Supplemental Liquidity Support Fund

Under the Greystone Liquidity Support Agreement, GCI Boise has agreed to provide $2,250,000 (the “Greystone Support Obligation”) to the Corporation for Project completion costs, working capital or operating expenses, and interest on the Bonds, all as provided therein and summarized below.

The Greystone Liquidity Support Obligation will be deposited in the Supplemental Liquidity Support Fund with the Master Trustee under the Master Indenture. The Supplemental Liquidity Support Fund shall be the property of GCI Boise, but shall be pledged to fund and secure GCI Boise’s obligations under the Greystone Liquidity Support Agreement.

The American Baptist Properties Support Obligation, the ABHOW Support Obligation and the Greystone Support Obligation are collectively referred to herein as the “Support Obligations.”

Reductions of the Support Obligations

The aggregate amount available for payment under each Support Obligation shall be reduced to each of the amounts described in clauses (A), (B) and (C) of this paragraph if the conditions described therein have been met.

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Anticipated Reductions. (A) The American Baptist Properties Support Obligation shall be reduced to the greater of the amount currently drawn under the American Baptist Properties Support Obligation or $725,000 if a Funding Event has not occurred or $450,000 if a Funding Event has occurred, and the Greystone Support Obligation shall be reduced to the greater of the amount currently drawn under the Greystone Support Obligation or $900,000 if a Funding Event has not occurred or $550,000 if a Funding Event has occurred, when (i) the Series 2014B Bonds and Series 2014C Bonds are no longer Outstanding, and (ii) the Corporation delivers to the Master Trustee and the Bond Trustee an Officer’s Certificate certifying that:

(w) 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 nursing beds included in the Project was, in the aggregate, at least 90% and the average occupancy for the independent living units was at least 88% occupied;

(x) the 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 1.10;

(y) the Cash to Indebtedness Ratio of the Obligated Group as of the most recent March 31 or September 30 was not less than 0.20; and

(z) no event of default has occurred and is continuing under the Master 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.

(B) The ABHOW Support Obligation, the American Baptist Properties Support Obligation and the Greystone Support Obligation, each shall be reduced to zero and the related Liquidity Support Agreement shall cease to be of any further force and effect, when (i) the Series 2014B Bonds and Series 2014C Bonds are no longer Outstanding, (ii) at least 12 months have lapsed since the reduction in the Support Obligations described in subsection (A) above has occurred, and (iii) the Corporation delivers to the Master Trustee and the Bond Trustee an Officer’s Certificate certifying that:

(v) 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 nursing beds included in the Project was, in the aggregate, at least 90% and the average occupancy for the independent living units was at least 88% occupied;

(w) the Cash to Indebtedness Ratio of the Obligated Group as of the most recent March 31 or September 30 was no less that the Cash to Indebtedness Ratio then required under the Master Indenture;


(y) the Debt Service Coverage Ratio of the Obligated Group for the last fiscal year prior to the year for which audited financial statements are available was not less than 1.10; and

(z) no event of default has occurred and is continuing under the Master Indenture 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.

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High Performance Reductions. (C) The ABHOW Support Obligation, the American Baptist Properties Support Obligation and the Greystone Support Obligation, each shall be reduced to zero and the related Liquidity Support Agreement shall terminate and cease to be of any further force and effect, when (i) the Series 2014B Bonds and Series 2014C Bonds are no longer Outstanding; and (ii) the Corporation delivers to the Master Trustee and the Bond Trustee an Officer’s Certificate certifying that:

(v) 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 nursing beds included in the Project was, in the aggregate, at least 90% and the average occupancy for the independent living units was at least 88% occupied;

(w) the Cash to Indebtedness Ratio of the Obligated Group as of the most recent March 31 or September 30 was no less than 0.35;


(y) the Debt Service Coverage Ratio of the Obligated Group for the last fiscal year from operations only was not less than 1.00; and

(z) no event of default has occurred and is continuing under the Master Indenture 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.

Refundings. The ABHOW Support Obligation, the ABP Support Obligation and the Greystone Support Obligation shall be reduced to zero if the Bonds are no longer outstanding under the Bond Indenture.

Draws on Each Support Obligation

Moneys shall be drawn from the American Baptist Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund, in the following order of priority:

(i) First, from amounts on deposit in the Supplemental Liquidity Support Fund until the amount on deposit therein is equal to $1,250,000; and

(ii) Second, from amounts on deposit in the Supplemental Liquidity Support Fund and the American Baptist Properties Liquidity Support Fund, on a pro rata basis, until such funds have been depleted; and

(iii) Third, from amounts on deposit in the ABHOW Liquidity Support Fund.

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

(a) If moneys are on deposit in the Project 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 (as defined in the Liquidity Support Agreements) or additional construction costs and expenses arising from unanticipated events or problems including without limitation changes

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required pursuant to applicable law or requirements of governmental authorities (and not arising from a Discretionary Change (as defined in the Liquidity Support Agreements)), 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 from the Liquidity Support Funds to the Bond Trustee for deposit in the Project Fund under the Bond Indenture but only if they are to pay those costs of the Project. Notwithstanding the foregoing, no moneys in the Liquidity Support Funds shall be used to pay interest on the Bonds until all moneys in the Special Interest Account of the Interest Fund under the Bond Indenture are exhausted.

(b) If at any time (i) the Corporation needs money for payment of any expenses that (A) would have been payable from the Working Capital Fund or the Operating Reserve Fund under the Master Indenture and (B) are either (1) consistent with the level of services described in the form of Residency Agreement as of the Closing Date, (2) the result of an Approved Change in Services or Facilities, or (3) required pursuant to applicable law or requirements of governmental authorities or for interest payments on Obligation No. 1, and (ii) (y) 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 (z) the Entrance Fee Fund and the Operating Reserve 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 from the Liquidity Support Funds, on a pro rata basis, to the Corporation for the payment of any such expenses (other than any amounts subordinated in accordance with the Master Indenture, the Management Agreement or the Development Agreement or any Affiliate Related Subordinated Debt.

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

(d) If funds held in an account in the Special Interest Account of the Interest Fund and the Bond Sinking Fund under the Bond Indenture are insufficient to pay the principal of or interest on a series of Bonds as the same come due, then moneys in the Working Capital Fund, the Operating Reserve Fund and the Liquidity Support Funds (in that order) shall be used for that purpose before any moneys in the Debt Service Reserve Fund held under the Bond Indenture are used, and any moneys so used from the American Baptist Properties Liquidity Support Fund and the Supplemental Liquidity Support Fund shall be drawn from such funds. 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) If funds held in the Debt Service Reserve Fund held under the Bond Indenture are less than the related Debt Service Reserve Fund Requirement and the Corporation has not fulfilled its obligation to replenish the Debt Service Reserve Fund as provided in the Loan Agreement, then moneys in the Liquidity Support Funds shall be used to replenish each such Debt Service Reserve Fund, also on a pro rata basis, until such Debt Service Reserve Fund is equal to its related Debt Service Reserve Fund Requirement. 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.

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General

If the combined amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to the terms of the Master Indenture, no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund and the Liquidity Support Obligations have not been reduced to zero as provided in the Liquidity Support Agreements, then the Master Trustee shall transfer the remaining moneys in the Liquidity Support Funds to the Operating Reserve Fund.

If there is an initial withdrawal from the Liquidity Support Funds, (i) within five days of the initial withdrawal, the Master Trustee shall notify each Required Information Recipient of the withdrawal and (ii) within 30 days of the initial withdrawal, the Obligated Group Agent shall submit an Officer’s Certificate to each Required Information Recipient containing a management report setting forth (A) the expected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Project costs and debt service until management expects to achieve a Historical Debt Service Coverage Ratio of 1.0, (B) whether management expects that the Liquidity Support Funds, together with other moneys expected to be available, will be sufficient for that purpose, (C) a revised fill-up schedule for the Project, and (D) the expected schedule for the redemption of the Series 2014B Bonds and the Series 2014C Bonds.

If funds in the Liquidity Support Funds are transferred to the Operating Reserve Fund pursuant to the terms of the Master Indenture, (i) within five days of that transfer, the Master Trustee shall notify each Required Information Recipient of the transfer and (ii) the Obligated Group Agent shall select an Independent Consultant to make recommendations regarding (A) an overall corrective action plan, (B) the projected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Project costs and debt service until the Obligated Group is projected to achieve a Historical Debt Service Coverage Ratio of 1.0, (C) a revised fill-up schedule for the Project, (D) a plan for the payment of the Series 2014B Bonds and Series 2014C Bonds, (E) a plan to improve the profitability of the Obligated Group and (F) a recommendation regarding additional sources of working capital. The Obligated Group Agent shall select a Independent Consultant and notify the Master Trustee of the selection within 30 days after the transfer and shall thereafter engage the Independent Consultant in accordance with the terms of the Master Indenture described above under “CERTAIN COVENANTS OF THE OBLIGATED GROUP UNDER THE MASTER INDENTURE – Approval of Consultants.” The Obligated Group shall not be required to obtain a Consultant’s report more than one time in any nine-month period.

Investment

Moneys held in the Liquidity Support Funds shall be invested and reinvested by the Master Trustee in accordance with the provisions thereof in Qualified Investments. The interest earned on and any profit realized from Qualified Investments held in each Liquidity Support Fund shall be deposited into such Liquidity Support Fund. Any loss resulting from such Qualified Investments shall be charged to such account. Qualified Investments held in the Liquidity Support Funds shall be valued: (i) on March 31 and September 30 in each Fiscal Year, (ii) at the time of any withdrawal from the Liquidity Support Funds, (iii) at the time of any reduction of the Support Obligations in accordance with the Liquidity Support Agreement and (iv) at any other time requested by the Corporation.

If on any Liquidity Support Valuation Date, the amount on deposit in a Liquidity Support Fund is in excess of the related Support Obligation less any amounts drawn on such Support Obligation plus any amounts by which such Liquidity Support Fund has been replenished from the Entrance Fee Fund, the amount of such excess shall be held in the respective Liquidity Support Fund.

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If on any valuation date, the amount on deposit in the American Baptist Properties Liquidity Support Fund or the ABHOW Liquidity Support Fund is less than the related Support Obligation less any amounts drawn on such Support Obligation plus any amounts by which such Liquidity Support Fund has been replenished from the Entrance Fee Fund, the Master Trustee shall immediately notify the Liquidity Provider of such deficiency, and the respective Liquidity Provider shall make up such deficiency by making payment directly to the Master Trustee for deposit in the related Liquidity Support Fund within 120 days of the valuation.

Investment income on the amounts on deposit in each Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the applicable Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in a Liquidity Support Fund in excess of the related Liquidity Support Obligation shall be transferred as provided in the Liquidity Support Agreement.

Subordination Provisions

The Liquidity Providers and the Corporation covenant and agree as follows:

The Corporation’s obligation to repay any Liquidity Support Payments made under a Liquidity Support Agreement (the “Repayment Obligations”) will constitute Subordinated Indebtedness of the Corporation, as defined in the Master Indenture, and as such the Corporation’s Repayment Obligations are subject to the conditions set forth in the Liquidity Support Agreements summarized below.

The Corporation’s Repayment Obligations shall, to the extent and in the manner hereinafter described, be subordinated and subject in right to the prior payment in full of Superior Indebtedness. The term “Superior Indebtedness” shall mean all Obligations now or hereafter issued and secured under the Master Indenture, as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified.

No payment on the Corporation’s Repayment Obligations shall be made by the Corporation, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the Corporation’s Repayment Obligations, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness is made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on the Corporation’s Repayment Obligations shall be made, nor shall any property or assets be applied to the retirement of the Corporation’s Repayment Obligations, if, at the time of such payment or application or immediately after giving effect thereto, (i) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (ii) there shall have occurred any other Event of Default with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is outstanding, permitting the Owners thereof to accelerate the maturity thereof and such Event of Default is not cured or waived or shall not have ceased to exist.

Amendments

(a) Except as described subparagraph (b) below, the Master Trustee, the Bond Trustee, the related Liquidity Provider 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

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Agreement, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect in the Liquidity Support Agreement; (b) to grant to or confer upon the Master Trustee or the Bond Trustee, for the benefit of the owners of Obligation No. 1 and the Bonds, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Bond Trustee or the Master Trustee; (c) to amend or modify the Liquidity Support Agreement, or any part thereof, in any manner specifically required or permitted by the terms 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 Bonds; (d) to modify, amend or supplement the Liquidity Support Agreement, or any part thereof, or any supplement thereto, in such manner as the Master Trustee, the Bond Trustee and the Corporation deem necessary in order to comply with any statute, regulation, judicial decision or other law; and (e) to reflect the appointment of a successor Bond Trustee which has been appointed in accordance with the provisions of the Bond Indenture or to reflect the appointment of a successor Master Trustee which has been appointed in accordance with the provisions of the Master Indenture.

(b) Other than with respect to the amendments described in subparagraph (a) above, the Corporation shall submit a copy of any proposed amendment to GDS, the Liquidity Providers, 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 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 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 Bonds. No later than two Business Days after the end of the 15-day objection period, the Bond Trustee shall notify the Master Trustee, the Liquidity Provider, GDS and the Corporation of the number of objections. If the owners of more than two-thirds in aggregate principal amount of the 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 (subject to GDS’s right to consent to amendments to certain provisions of the Liquidity Support Agreement). If the owners of more than one-third in aggregate principal amount of the outstanding 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 it down until the balance is fully depleted, no replenishment permitted

↓

2nd Operating Reserve Fund Draw down the initial $3.0 million, plus $3.0 million

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

Support Fund reaches $1 million (see below)

↓

3rd Liquidity Support Funds Draw down funds in the Liquidity Support Funds

provided by GCI Boise LP ($2.25 million), American Baptist Properties ($1.0 million) and American Baptist Homes of the West ($1.25 million, upon

Funding Event) as follows: (1) $1.0 million Supplemental Liquidity Support Fund, (2) $1.0 million ABP Liquidity Support Fund and $1.25

million Supplemental Liquidity Support Fund on a pro rata basis (3) after a Funding Event under ABHOW

Liquidity Support Agreement, $1.25 million ABHOW Liquidity Support Fund

Once the balance in the Liquidity Support Funds after a Funding Event is equal to $1.0

million or less, the remaining funds in the Liquidity Support

Funds are transferred to the Operating Reserve Fund. At this point, Initial Entrance

Fees will be used on a monthly basis to increase the balance in the Operating

Reserve Fund to a total of $1.0 million.

↓

4th Operating Reserve Fund Maintained at $1.0 million balance on a monthly basis

(replenished with Entrance Fees)

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

available. ↓

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, the Liquidity Support Funds are available but only after all other funding sources have been depleted, including the Project Fund including all contingency funds. If the Liquidity Support Funds are drawn upon prior to opening of the Project for this purpose, Initial Entrance Fees can be used to replenish the Liquidity Support Funds after opening, as shown in the preceding diagram. Such reimbursement would occur after the Working Capital Fund is funded and the Operating Reserve Fund is funded but before any of the redemptions of the Series 2014C Bonds, the Series 2014B-3 Bonds, the Series 2014B-2 Bonds and the Series 2014B-1 Bonds.

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RISK FACTORS

Set forth below are certain risk factors that should be considered before any investment in the Bonds is made. Certain risks are inherent in the successful operation of the Corporation’s Community. This section discusses some of these risks but is not intended to be, and should not be considered, a comprehensive listing of all risks associated with the operation of the Corporation’s Community or the payment of the Bonds.

General

As described herein under the caption “INTRODUCTION – Security for the Bonds,” the principal of and interest on the Bonds, except to the extent that the Bonds will be payable, under certain circumstances, from proceeds of insurance, sale or condemnation awards or net amounts by recourse to the Deed of Trust, are payable solely from amounts payable by the Corporation under the Loan Agreement, from amounts payable by the Obligated Group on Obligation No. 1 and from certain funds held under the Bond Indenture. No representation or assurance is given or can be made that revenues will be realized by the Corporation in amounts sufficient to pay debt service on each series of the Bonds when due and other payments necessary to meet the obligations of the Corporation. The Risk Factors discussed below should be considered in evaluating the ability of the Corporation to make payments in amounts sufficient to provide for the payment of the principal of, the premium, if any, and interest on the Bonds.

The receipt of future revenues by the Corporation is 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 future economic and other conditions that are impossible to predict. The extent of the ability of the Corporation to generate future revenues has a direct effect upon the payment of principal of, premium, if any, and interest on the Bonds. Neither the Underwriter nor the Authority has made any independent investigation of the extent to which any such factors may have an adverse effect on the revenues of the Corporation.

Impact of Disruptions in the Credit Markets and General Economic Factors

The economic recession that began in 2008 has had and may continue to have negative repercussions upon the national and global economies, including a scarcity of credit, lack of confidence in the financial sector, extreme volatility in the financial markets, increase in interest rates, reduced business activity, increased consumer bankruptcies and increased business failures and bankruptcies.

The healthcare and senior care sectors have been materially adversely affected by these developments. The consequences of these developments have generally included realized and unrealized investment portfolio losses, reduced investment income, limitations on access to the credit markets, difficulties in extending existing or obtaining new liquidity facilities, difficulties in remarketing revenue bonds subject to tender, requiring the expenditure of internal liquidity to fund tenders of revenue bonds, and increased borrowing costs.

Proposed Changes to Tax Treatment of Bonds

Proposals to alter or eliminate the exclusion of interest on tax-exempt bonds from gross income for some or all taxpayers have been made in the past and may be made again in the future. Such legislative proposals, if enacted, could alter the federal and/or state tax treatment described under the heading “TAX MATTERS” herein, and certain of which, whether or not enacted, could adversely affect the market value or marketability of the Tax-Exempt Bonds. Certain legislative proposals, if enacted,

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could tax all or a portion of the interest on tax exempt bonds, including the Tax-Exempt Bonds, for certain taxpayers under the regular income tax, the alternative minimum tax or otherwise, and could apply to bonds issued before, on, or after the date of enactment.

It is unclear whether any legislation will be enacted affecting the tax treatment of interest on the Tax-Exempt Bonds. If any such legislation is retroactive and applies to tax-exempt bonds, including the Tax-Exempt Bonds, previously issued for the benefit of the Corporation, the adoption of any such legislation could adversely affect the market value or marketability of the Tax-Exempt Bonds and the financial condition of the Corporation. In addition, the adoption of any such legislation could increase the cost to the Corporation of financing future capital needs.

Development and Management

The successful operation of the Community is heavily dependent upon the efforts of its management. The Corporation has contracted for management services with GMSC Idaho, LLC for the day-to-day operations of the Community. For more information, see APPENDIX A – “MANAGEMENT OF THE COMMUNITY.”

General Risks of Long Term Care Facilities

There are many diverse factors not within the Corporation’s control that have a substantial bearing on the risks generally incident to the operation of its facilities. These factors include generally imposed fiscal policies, adverse use of adjacent or neighboring real estate, the ability to maintain the facilities, community acceptance of the facilities, changes in demand for the facilities, changes in the number of competing facilities, changes in the costs of operation of the facilities, changes in the laws of the State affecting long term care programs, the limited income of the elderly, changes in the long term care and health care industries, difficulties in or restrictions on the Corporation’s ability to raise rates charged, general economic conditions and the availability of working capital. In recent years, a significant number of long term care facilities throughout the United States have defaulted on various financing obligations or otherwise have failed to perform as originally expected. There can be no assurance the Corporation will not experience one or more of the adverse factors that caused other facilities to fail. Many other factors may adversely affect the operation of facilities like the Corporation’s and cannot be determined at this time.

Uncertainty of Revenues

As noted elsewhere, except to the extent that the holders of the Bonds are secured, under certain circumstances, by the proceeds of insurance, sale or condemnation awards or net amounts by recourse to the Deed of Trust, the Bonds will be payable solely from payments or prepayments to be made by the Corporation under the Loan Agreement, from payments to be made by the Members of the Obligated Group on Obligation No. 1 and from certain funds held under the Bond Indenture. The ability of the Corporation to make payments under the Loan Agreement and of the Members of the Obligated Group to make payments on Obligation No. 1 is dependent upon the generation by the Corporation of revenues in the amounts necessary for the Corporation to pay the principal, premium, if any, and interest on the 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 Corporation, government regulation and future economic and other conditions that are unpredictable and that may affect revenues and payment of principal of and interest on the Bonds. No representation or assurance can be made that revenues will be realized by the Corporation in amounts sufficient to make the required payments with respect to debt service on the Bonds. Neither the Underwriter nor the Authority has made any

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independent investigation of the extent to which any such factors may have an adverse effect on the revenues of the Corporation.

Failure to Achieve and Maintain Occupancy and Turnover

The economic feasibility of the Corporation’s operations depends in large part upon the ability of the Corporation to maintain substantial occupancy and turnover of occupancy throughout the term of the Bonds. This depends to some extent on factors outside management’s control, such as the residents’ right to terminate their residency agreements. Moreover, if a substantial number of residents live beyond the anticipated life expectancies assumed by the Corporation or if the permanent transfers to the nursing homes of the communities are substantially less than assumed by the Corporation, or if market changes require a reduction in the amount or deferral 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 Corporation’s operations. Such impairment could also result if the Corporation is unable to remarket units as they become available. If the Corporation’s operations fail to maintain occupancy levels, resell, in a timely manner, independent living units and assisted living units as they become available, or if there is a reduction in the amount of entrance fees received, there may be insufficient funds to pay the debt service on the Bonds.

Sale of Personal Residences

Prospective residents of the Corporation’s Community may be required to sell their current homes to pay the entrance fees prior to occupancy or to meet other financial obligations under their residency agreements. If prospective residents encounter difficulties in selling their current homes due to local or national economic conditions affecting the sale of residential real estate, such prospective residents may not have sufficient funds to pay the entrance fees or to meet other financial obligations under their residency agreements, thereby causing a delay in scheduled occupancy of the Corporation’s Community or the remarketing of vacated units, or a reduction in the amount or deferral of the entrance fees payable, all of which would have an adverse impact on the revenues of the Corporation.

Nature of the Income of the Elderly

A large percentage of the monthly income of the residents of the Corporation’s Community will be fixed income derived from pensions and Social Security. In addition, some residents will be liquidating assets in order to pay the monthly and other fees. If, due to inflation or otherwise, substantial increases in fees are required to cover increases in operating costs, including wages, benefits and other expenses, many residents may have difficulty paying or may be unable to pay such increased fees. Alternatively, any decrease in the amounts paid by such fixed income sources could affect the ability of residents to pay fees and additional restrictions imposed upon Social Security or other fixed income sources could affect the ability of future residents to pay the entrance fees or to meet other financial obligations under the residency agreements. The Corporation’s inability to collect from residents the full amount of their payment obligations may jeopardize the ability of the Corporation to pay amounts due under the Loan Agreement and the ability of the Members of the Obligated Group to pay amounts due on Obligation No. 1.

Utilization and Demand

Several factors could, if implemented, affect demand for services of the Corporation’s Community including: (i) efforts by insurers and governmental agencies to reduce utilization of nursing home and long-term care communities by such means as preventive medicine and home health care programs; (ii) advances in scientific and medical technology; and (iii) increased or more effective

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competition from nursing homes, assisted living communities and long-term care communities now or hereafter located in the service areas of the Corporation’s Community.

Competition

Competition from other lifecare communities, continuing care retirement communities, congregate housing, assisted living centers, home healthcare agencies and other long-term care communities which offer sheltered, assisted living or nursing care now or hereafter located in the Corporation’s service areas could adversely affect its revenues. The Corporation may face additional competition in the future from other providers of new, expanded, or renovated retirement living and nursing facilities servicing the housing and health care needs of seniors.

Uncertainty of Investment Income

The investment earnings of, and accumulations in, certain funds established pursuant to the Bond Indenture and the Master 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 and the Master Trustee are permitted to invest, 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 earnings will actually be realized. Guaranteed investment contracts may be entered into with respect to certain of the funds.

Rights of Residents

The Corporation enters into residency agreements with its residents. Although these agreements give to each resident a contractual right to use space and do not grant any ownership rights in the Corporation’s Community, in the event that either the Bond Trustee or the holders of the Bonds seek to enforce any of the remedies provided by the Bond Indenture upon the occurrence of a default or the Master Trustee seeks to enforce remedies under the Deed of Trust, management is unable to predict the resolution that a court might make of competing claims between the Master Trustee, the Bond Trustee, the Authority or the holders of the Bonds and a resident of the Corporation’s Community who has fully complied with all the terms and conditions of his or her residency agreement.

Additional Capital Requirements

The Corporation’s operations are capital intensive. Current economic conditions, including credit market dysfunction and increased regulation of the financial industry, could make it more difficult for the Corporation to access the capital markets or to otherwise fund capital expenses through borrowings on favorable terms and conditions. Any such limitation could result in delayed or deferred capital expenditures that could be integral to the operations of the Corporation.

Construction Risks

Construction projects are subject to a variety of risks, including but not limited to delays in issuance of required building permits or other necessary approvals or permits, strikes, shortages of qualified contractors or materials and adverse weather conditions. Such events could delay occupancy of the Project. Cost overruns may occur due to change orders, delays in construction schedules, scarcity of building materials and other factors. Cost overruns could cause project costs to exceed estimates and require more funds than originally allocated or require the Corporation to expend or borrow additional funds to complete the Project.

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Present and Prospective Federal and State Regulation

General. Health care providers are subject to federal, state and local laws and regulations, and sanctions imposed under or changes to such laws or regulations could adversely affect the operations or financial results of the Corporation. Further reductions in federal and state funding of health care below levels authorized by present law can be expected.

Nursing care facilities, including those owned by the Corporation, are subject to numerous licensing, certifications, accreditation, and other governmental requirements. These include, but are not limited to, requirements relating to state licensing agencies, private payors and accreditation organizations. Sheltered and assisted living communities, including those owned by the Corporation, are also subject to licensing requirements. Renewal and continuance of certain of these licenses, certifications, approvals and accreditations are based upon inspections, surveys, audits, investigations or other review, some of which may require or include affirmative action or response by the Corporation. An adverse determination could result in a loss, fine or reduction in the Corporation’s scope of licensure, certification or accreditation, could affect the ability to undertake certain expenditures or could reduce the payment received or require the repayment of the amounts previously remitted.

Budget Control Act. The Budget Control Act of 2011 (the “Budget Control Act”) limited the federal government’s discretionary spending to levels necessary to reduce expenditures between federal fiscal years 2012 and 2021 by $917 billion as compared to the federal budget baseline as of 2011. The Budget Control Act also created a Joint Select Committee on Deficit Reduction (the “Supercommittee”) tasked with making recommendations to further reduce the federal deficit by $1.2 trillion. Due to the Supercommittee’s failure to act within the time specified in the Budget Control Act, sequestration (across the board cuts) in an amount necessary to achieve $1.2 trillion in savings began on March 1, 2013.

While a wide range of spending is exempted from sequestration, including: Social Security, Medicaid, Veteran’s benefits and pensions, federal retirement funds, civil and military pay, child nutrition, and other programs, Medicare is not exempted from sequestration. As a result of these across the board spending reductions, Medicare provider payments are reduced annually by 2% of total program costs. In addition, the Bipartisan Budget Act of 2013 was signed into law in December 2013, extending sequestration for Medicare and other programs another two years, through 2023.

Because Congress may make changes to the budget in the future, it is impossible to predict the impact these and any additional spending cuts may have upon the Corporation. Reductions to Medicare and/or Medicaid spending may have a material adverse effect upon the financial condition of the Corporation.

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 as the “Health Care Reform Law”) is designed to overhaul the United States health care system and regulate many aspects of and players in the health care arena including individuals, employers and health insurers. This legislation addresses almost all aspects of hospital and provider operations and health care delivery, and has changed and will continue to change how health care services are covered, delivered, and reimbursed. These changes will result in lower reimbursement from Medicare, utilization changes, increased government enforcement and the necessity for health care providers to assess, and potentially alter, their business strategy and practices, among other consequences. While most providers will receive reduced payments for care, millions of uninsured Americans may have coverage. Requirements for state health information exchanges could fundamentally alter the health insurance market and negatively impact providers by taking on a rate-setting role. Federal deficit reduction efforts will likely curb federal Medicare and Medicaid spending further to the detriment of hospitals, physicians, and other health care providers.

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On June 28, 2012, the U.S. Supreme Court upheld most provisions of the Health Care Reform Law, including the requirement that individuals maintain health insurance coverage. The Supreme Court also ruled that the federal government could not compel states to comply with the Health Care Reform Law’s requirement to expand Medicaid by eliminating all federal funds a state receives for its existing Medicaid program. Since the Supreme Court’s decision was handed down, attempts to proceed with legislation to repeal or amend provisions of the Health Care Reform Law have continued. At this time, it is not possible to predict the outcome of legislative attempts to repeal or amend the Health Care Reform Law or other potential legislative efforts aimed at incentivizing a state’s expansion of its Medicaid program.

A significant component of the Health Care Reform Law is the expansion of the base of health care consumers through the reformation of the sources and methods by which consumers will pay for health care for themselves and their families and by which employers will procure health insurance for their employees and dependents of their employees. One of the primary drivers of the Health Care Reform Law is to provide, make available, or subsidize the premium costs of health care insurance for some of the millions of currently uninsured (or underinsured) consumers who fall below certain income levels. The Congressional Budget Office (“CBO”) estimated that 19 million consumers who are currently uninsured will become insured by federal fiscal year 2015, followed by an additional 11 million consumers in federal fiscal year 2016. To the extent all or any of the Health Care Reform Law provisions produce the intended result, an increase in utilization of health care services by those who are currently avoiding or rationing their health care can be expected and bad debt expenses may be reduced. Associated with increased utilization will be increased variable and fixed costs of providing health care services, which may or may not be offset by increased revenues, and a risk of physician shortages, especially in specialties necessary to provide critical intervention or chronic disease management (e.g., primary care).

The Health Care Reform Law also contains more than 32 sections related to health care fraud and abuse and program integrity as well as significant amendments to existing criminal, civil and administrative anti-fraud statutes. See “Regulatory and Contractual Matters” below. Increased compliance and regulatory requirements, disclosure and transparency obligations, quality of care expectations and extraordinary enforcement provisions that could greatly increase potential legal exposure are all aspects of the Health Care Reform Law that could increase operating expenses to the Corporation.

Some provisions of the Health Care Reform Law took effect immediately, while others will be phased in over time, ranging from a few months following final approval to ten years. Given the general complexity of the Health Care Reform Law, additional legislation is likely to be considered and enacted over time. The Health Care Reform Law will also require the promulgation of substantial regulations with significant effects on the health care industry and third-party payors. In response, third-party payors as well as suppliers and vendors of goods and services to health care providers are expected to impose new contractual terms and conditions. Thus, the health care industry will be subjected to significant new statutory and regulatory requirements as well as contractual terms and conditions, and consequently to structural and operational changes and challenges, for a substantial period of time.

Management of the Corporation is analyzing the Health Care Reform Law and will continue to do so in order to assess the effects of the legislation and/or regulations on current and projected operations, financial performance and financial condition. However, management cannot predict with any reasonable degree of certainty or reliability any interim or ultimate effects of the legislation or promulgated regulations.

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The Health Care Reform Law includes a number of initiatives that impact skilled nursing facility reimbursement. There is no assurance that payments made by CMS as a result of reimbursement reform measures will be sufficient to cover the facility’s costs. In addition, any future Congressional action related to value-based purchasing or adjustments to market basket updates could negatively affect the Corporation’s revenues.

Medicare and Medicaid Programs. Medicare provides certain health care benefits to beneficiaries who are 65 years of age or older, blind, disabled, or qualify for the end stage renal disease program. Medicaid is a program of financial assistance, funded jointly by the federal government and each of the various states, primarily for medical assistance to certain needy individuals and their dependents. Due to health care reform as well as continuing political and financial pressures, the legal and regulatory environment surrounding the Medicaid and Medicare programs has been changing and is expected to continue to change. Future changes to Medicare and Medicaid may alter features including: (1) services eligible for payment; (2) rates of payment; (3) eligibility requirements to participate or qualify for different levels of payment/reimbursement; (4) consequences of violations; (5) rates and requirements relating to additional payments unrelated to services offered to patients; (6) guidelines relating to interactions between the participating healthcare providers, third party payors and the federal and state governments; and (7) payment methodologies. Past federal budgets have contained cuts to the Medicare program budget. In addition, due to the sequestration required by the Budget Control Act, cuts to the Medicare program of 2% of total program costs began on April 1, 2013. See “Present and Prospective Federal and State Regulation - Budget Control Act.” As Congress continues to discuss the budget for the 2014 and 2015 fiscal years, reductions in Medicare and other health spending are cost-saving measures being considered. While it is uncertain what the outcome of current budget discussions will be and whether future federal budgets will propose additional cuts to these programs, any reduction in the level of Medicare spending or a reduction in the rate of increase of Medicare spending may have an adverse impact on the revenues of the Corporation derived from the Medicare program.

The State of Idaho offers three separate plans for patients eligible to participate in Idaho’s Medicaid program – the Basic Plan, the Enhanced Plan, and the Medicare-Medicaid Coordinated Plan. The Coordinated Plan requires participants to enroll in both Medicare and the Medicaid Enhanced Plan. Long-term care services are provided to all eligible participants under the Enhanced Plan, which offers the benefits of the Basic Plan, plus additional services to meet the needs of the elderly and the disabled.

The State currently reimburses operators of nursing care facilities on a prospective basis. The State’s Department of Health and Welfare establishes a per diem rate for each facility quarterly, taking into consideration economic conditions and trends as well as the facility’s reasonable, ordinary and necessary costs related to patient care, and pays each facility monthly. Medicaid reimbursement for interest expense, depreciation, property insurance, real estate taxes, amortization, rental expense, and utility expenses is determined differently than for patient care costs. Medicaid reimbursement is also available for assisted living and personal care services.

Federal budgetary pressures may reduce the total amount of federal government participation in paying for care for Medicaid recipients. Future health reform may involve a realignment of the Medicaid program or even its dissolution. There is no way of projecting what form any future program of financing health care delivery to the economically disadvantaged will take or whether levels of reimbursement will be adequate to cover the expenses incurred by any given provider rendering that care.

Because a portion of the Medicaid program’s costs are paid by the State, the absolute level of Medicaid revenues paid, as well as the timeliness of their receipt, may be affected by the financial condition of the budgetary factors facing the State. The actions the State could take with regard to reducing Medicaid expenditures to accommodate any budgetary shortfalls include a change in the method

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of payment to nursing home facilities, changing eligibility requirements for Medicaid recipients and delaying actual payments due to health care providers. Any such action taken by the State could adversely affect the financial condition of the Corporation.

Federal Privacy Laws. Specific state and federal laws govern the use and disclosure of confidential patient health information, as well as patients’ rights to access and amend their own health information. The Administrative Simplification Requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) established national standards to facilitate the electronic exchange of Protected Health Information (“PHI”) and to maintain the privacy and security of the PHI. These standards have a major effect on health care providers which transmit PHI in electronic form in connection with HIPAA standard transactions (e.g., health care claims). In particular, HIPAA established standards governing: (1) Electronic Transactions and Code Sets; (2) Privacy; (3) Security; and (4) National Identifiers. The Corporation has developed policies, procedures and practices that it believes comply with the HIPAA standards and requirements, but, if it was determined that the Corporation was not in compliance, there could be criminal and civil penalties imposed.

Title XIII of the American Recovery and Reinvestment Act of 2009, 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 infrastructure (“HITI”). The HITI is intended to improve health care quality, reduce costs and facilitate access to certain information. The HITECH Act also expands the scope and application of the administrative simplification provisions of HIPAA, and its implementing regulation, (i) imposing a written notice obligation upon covered entities for security breaches involving “unsecured” PHI, (ii) expanding the scope of a provider’s electronic health record disclosure tracking obligations, (iii) substantially limiting the ability of health care providers to sell PHI without patient authorization, (iv) increasing penalties for violations, and (v) providing for enforcement of violations by state attorneys general. While the effects of the HITECH Act cannot be predicted at this time, the obligations imposed thereunder could have a material adverse effect on the financial condition of the Corporation.

Medicare and Medicaid Anti-Fraud and Abuse Provisions. A federal law (known as the “Anti-Kickback Statute”) makes it a felony to knowingly and willfully offer, pay, solicit or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in order to induce referrals for business that is reimbursable under any federal health care program. The Anti-Kickback Statute has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain or pay money for the referral of services or to induce further referrals. Violation of the Anti-Kickback Statute may result in imprisonment for up to five years and/or fines of up to $25,000 for each act. In addition, the Office of Inspector General (“OIG”) has the authority to impose civil assessments and fines and to exclude healthcare providers engaged in prohibited activities from the Medicare, Medicaid, TRICARE (a health care program providing benefits to dependents of active duty and retired members of the United States military services) and other federal health care programs, for a period of not less than five years.

The Health Care Reform Law amended a number of provisions of the Anti-Kickback Statute. One such amendment provides that an Anti-Kickback Statute violation may be established without showing that an individual knew of the statute’s proscriptions or acted with specific intent to violate the Anti-Kickback Statute. The new standard could significantly expand criminal and civil fraud exposure for transactions and arrangements where there is no intent to violate the Anti-Kickback Statute. The Health Care Reform Law further amended the Anti-Kickback Statute to explicitly provide that a violation of the statute constitutes a false or fraudulent claim under the federal False Claims Act (the “FCA”).

In addition to certain statutory exceptions to the Anti-Kickback Statute, the OIG has promulgated a number of regulatory “safe harbors” under the Anti-Kickback Statute designed to protect certain

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payment and business practices. However, these safe harbors are narrow and do not cover a wide range of common economic relationships involving healthcare providers. The regulations do not purport to comprehensively describe all lawful or unlawful economic arrangements or other relationships between health care providers and referral sources. While the failure to comply with a statutory exception or regulatory safe harbor does not mean that an arrangement is unlawful, such failure may increase the likelihood of a regulatory challenge or the potential for investigation. To date, a limited number of final safe harbors have been established.

The Corporation has a compliance program designed to help ensure material compliance with the Anti-Kickback Statute. In light of the narrowness of the safe harbor regulations and the scarcity of case law interpreting the Anti-Kickback Statute, there can be no assurances that the Corporation will not be found to have violated the Anti-Kickback Statute, and, if so, whether any sanction imposed could have a material adverse effect on the operations of communities owned by the Corporation.

Restrictions on Referrals. Another federal law (known as the “Stark Law”) prohibits, subject to limited exceptions, a physician who has a financial relationship or whose immediate family has a financial relationship, with entities providing “designated health services” from referring Medicare patients to these entities for the furnishing of “designated health services.” The Stark Law defines designated health services as including: physical therapy services, occupational therapy services, radiology or other diagnostic services (including MRIs, CT scans and ultrasound procedures), durable medical equipment, radiation therapy services, parenteral and enteral nutrients, equipment and supplies, prosthetics, orthotics and prosthetic devices, home health services, outpatient prescription drugs, inpatient and outpatient hospital services and clinical laboratory services. The Stark Law also prohibits the entity receiving the referral from filing a claim or billing for the services arising out of the prohibited referral. The prohibition applies regardless of the reasons for the financial relationship and the referral; no finding of intent to violate the Stark Law is required. Sanctions for violation of the Stark Law include denial of payment for the services provided in violation of the prohibition, refunds of amounts improperly collected, a civil penalty of up to $15,000 for each service arising out of the prohibited referral, exclusion from participation in the federal health care programs and a civil penalty of up to $100,000 against parties that enter into a scheme to circumvent the Stark Law’s prohibition. Under an emerging legal theory, violations of the Stark Law may also serve as the basis for liability under the federal FCA. The types of financial arrangements between a physician (or a physician’s immediate family member) and an entity that trigger the self-referral prohibitions of the Stark Law are broad and include ownership and investment interests and compensation arrangements as well as certain disclosure obligations.

Regulations promulgated under the Stark Law are subject to frequent amendment. Such amendments are likely to require the Corporation to amend or terminate certain arrangements with physicians to comply with new regulatory requirements.

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

False Claims Act/Qui Tam Actions. There are principally three federal statutes addressing the issue of “false claims.” First, the civil FCA imposes civil liability (including substantial monetary penalties and damages) on any person or corporation that (1) knowingly presents or causes to be presented a false or fraudulent claim for payment to the United States government; (2) knowingly makes, uses or causes to be made or used a false record or statement to obtain payment; or (3) engages in a conspiracy to defraud the federal government by getting a false or fraudulent claim allowed or paid. A

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showing of specific intent to defraud the federal government is not required to establish the requisite knowledge. “Knowingly” is broadly defined to include not only actual knowledge but also deliberate ignorance or reckless disregard of the facts. This statute authorizes private persons to file qui tam actions on behalf of the United States. Because qui tam lawsuits are kept under seal while the federal government evaluates whether the United States will join the lawsuit, it is impossible to determine at this time whether any such actions are pending against the Corporation and no assurances can be made that such actions will not be filed in the future.

The Fraud and Enforcement and Recovery Act (“FERA”), signed into law on May 20, 2009, has expanded potential exposure under the civil FCA for a wide range of business transactions involving federal government funds. Pursuant to FERA amendments, the civil FCA may impose liability for false claims with more remote connections to the federal government. FERA has the effect of expanding liability for the retention of money owed to the government, including overpayments by Medicare.

The Health Care Reform Law requires a person who receives an overpayment to report and repay the overpayment within 60 days after the overpayment is identified or the date any corresponding cost report is due, whichever is later. The Health Care Reform Law defines overpayments as “any funds that a person receives or retains under Medicare or Medicaid to which the person, after applicable reconciliation is not entitled.” Failure to repay any overpayment within the deadline could lead to liability under the FCA.

In addition, the Health Care Reform Law, among other changes to the civil FCA, eliminates the “public disclosure bar” (which previously required dismissal of a qui tam suit where the allegations were publicly disclosed in (i) a criminal, civil or administrative proceeding, (ii) a congressional, administrative or U.S. Government Accountability Office report, hearing, audit or investigation, or (iii) news media) as a jurisdictional defense to qui tam suits.

In addition to the civil FCA, the Civil Monetary Penalties Law authorizes the imposition of substantial civil money penalties against an entity that engages in activities including, but not limited to, (1) knowingly presenting or causing to be presented, a claim for services not provided as claimed or which is otherwise false or fraudulent in any way; (2) knowingly giving or causing to be given false or misleading information reasonably expected to influence the decision to discharge a patient; (3) offering or giving remuneration to any beneficiary of a federal health care program likely to influence the receipt of reimbursable items or services; (4) arranging for reimbursable services with an entity which is excluded from participation from a federal health care program; (5) knowingly or willfully soliciting or receiving remuneration for a referral of a federal health care program beneficiary; (6) using a payment intended for a federal health care program beneficiary for another use; or (7) knowingly making or causing to be made a false statement, omission or misrepresentation of material fact in any application, bid or contract to participate in a federal health care program. The Secretary of HHS, acting through the OIG, also has both mandatory and permissive authority to exclude individuals and entities from participation in federal health care programs pursuant to this statute.

In addition, pursuant to HIPAA, the commission of either one of the prohibited practices listed below may lead to civil monetary penalties: (1) the practice or pattern of presenting a claim for an item or service on a reimbursement code that the person knows or should know will result in greater payment than appropriate, i.e., upcoding and (2) engaging in a practice of submitting claims for payment for medically unnecessary services. Violation of such prohibited practices could amount to civil monetary penalties of up to $10,000 for each item or service involved. Management of the Corporation does not expect that the prohibited practices provisions of HIPAA will affect the Corporation in a material respect.

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Finally, it is a criminal federal health care fraud offense to: (1) knowingly and willfully execute or attempt to execute any scheme to defraud any health care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations or promises any money or property owned or controlled by any health care benefit program. Penalties for a violation of this federal law include fines and/or imprisonment and a forfeiture of any property derived from proceeds traceable to the offense.

The DRA provides financial incentives to states that pass similar false claims statutes or amend existing false claims statutes that track the FCA more closely with regard to penalties and rewards to qui tam relators. A number of states, including Idaho, have passed similar statutes expanding the prohibition against the submission of false claims to nonfederal third-party payors.

Skilled nursing facilities in many states, including Idaho, also are subject to anti-kickback state laws (similar to the federal Anti-Kickback Statute or that are generally applicable anti-kickback or fraud laws). These prohibitions are similar in public policy and scope to the federal Anti-Kickback Statute and could pose the possibility of material adverse impact for the same reasons as the federal statutes.

At the present time, management of the Corporation is not aware of any pending or threatened claims, investigations or enforcement actions regarding the FCA which, if determined adversely to the Corporation, taking into account current reserves, would have a material adverse effect on the financial condition of the Corporation.

Licensure and Other Requirements. Nursing homes in Idaho are subject to various public health statutory and regulatory requirements that include, but are not limited to, licensure. In addition, nursing homes are subject to the requirements related to providing air ambulance services. In Idaho, all nursing homes are required to be licensed on a year-to-year basis by the Department of Health and Welfare of the State of Idaho. Assisted living facilities may be operated without such licensing. In addition, nursing homes, assisted living facilities and other housing facilities are subject to customary building and fire codes and regulations.

Certificate of Need. Idaho’s certificate of need law expired at the end of 1983, and has not been reauthorized by the Idaho Legislature. Generally, the effect of a state enacting certificate of need legislation is to erect a significant barrier to entry with respect to the provision of health care services, thus potentially decreasing competition and benefiting existing providers. Under present law, hospitals and nursing homes in Idaho may build facilities and add services as they determine. However, the Department of Health and Welfare of the State of Idaho, which licenses Idaho hospitals, continues to review plans and specifications for additional health care facilities. In addition, under the prospective payment system under the Medicaid Program described below, reimbursement to a health care provider in Idaho that adds additional beds or constructs a new facility is limited to a rate at the State median for reimbursable costs for a period of three years.

Increases in Medical Costs

Because the Corporation is obligated to provide its continuing care contract residents with the right to move to a higher level of care, a deviation from the anticipated mortality rate or medical care requirements of the resident population or substantial unanticipated increases in the cost of such care could have a negative impact on the operations of the Corporation’s Community. The undertaking to provide such care is a contractual obligation of the Corporation, and no assurance can be given that the Corporation will have sufficient funds to meet its anticipated obligations. Residents are required to obtain 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 qualifying hospital stay). In addition,

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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. Increases in third party therapy services and other ancillary costs such as drugs and medical supplies may also increase costs.

General Liability Insurance

The operations of the Corporation’s Community may also be affected by increases in the incidence of litigation against the Corporation or against healthcare providers in general, which would increase insurance premiums and difficulty in obtaining general liability insurance. It is not possible at this time to determine the premiums at which such general liability coverage can be obtained.

Labor Relations

Nonprofit health care providers and their employees are under the jurisdiction of the National Labor Relations Board. Unionization of employees or a shortage of qualified professional personnel could cause an increase in payroll costs beyond those projected. The Corporation cannot control the prevailing wage rates in its service area and any increase in such rates will directly affect the costs of its operations.

Nursing Shortage

In past years, the health care industry sometimes experienced a scarcity of nursing personnel, respiratory therapists and other trained health care technicians. A significant factor underlying this trend included a decrease in the number of persons entering such professions. As a result of the recent growth in the unemployment rate, however, these shortages have lessened. It is possible such shortages will reappear if the national economic conditions improve and demand for professional and technical staff increases. Such shortages have in the past and could in the future result in increased costs and lost revenues from time to time due to the need to hire agency nursing personnel at higher rates, increased compensation levels, and the inability to use otherwise available beds as a result of staffing shortages, which increased costs and lost revenues could adversely affect the operations or financial condition of the Corporation. A lack of qualified nursing personnel might also result in reduced census or require the Corporation to admit residents requiring a lower level of care, both of which could adversely affect operating results.

Tax Exempt Status; Continuing Legal Requirements

The tax exempt status of interest on the Tax-Exempt Bonds depends, among other things, upon maintenance by the Corporation of its status as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). The maintenance of such status is contingent on compliance with general rules based on the Code, Treasury regulations and judicial decisions regarding the organization and operation of tax-exempt healthcare providers. The IRS’ interpretation of and position on these rules as they affect the organization and operation of health care organizations are constantly evolving. The IRS can and in fact occasionally does, alter or reverse its positions concerning tax-exemption issues, even concerning long-held positions upon which tax-exempt health care organizations have relied.

Section 4958 of the Code imposes excise taxes on “excess benefit transactions” between “disqualified persons” and tax-exempt organizations such as the Corporation. According to the legislative history and regulations associated with Section 4958, these excise taxes may be imposed by the IRS either in lieu of or in addition to revocation of exemption. These intermediate sanctions may be imposed in

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situations in which a “disqualified person” (such as a voting member of the board, certain officers and others in a position to exercise substantial influence over the affairs of the exempt organization) engages in “excess benefit transactions” such as (i) a transaction with a tax-exempt organization on other than a fair market value basis, (ii) receipt of unreasonable compensation from a tax-exempt organization or (iii) receipt of payment in an arrangement that otherwise violates the prohibition against private inurement. A disqualified person who benefits from an excess benefit transaction will be subject to an excise tax equal to 25% of the amount of the excess benefit. Organization managers who participate in the excess benefit transaction knowing it to be improper are subject to an excise tax equal to 10% of the amount of the excess benefit, subject to a maximum penalty of $20,000 per transaction. A second penalty, in the amount of 200% of the excess benefit, may be imposed on the disqualified person (but not upon the organization manager) if the excess benefit is not corrected within a specified period of time. Fair market value and reasonable compensation for tax purposes typically reflect a range rather than a specific dollar amount, and the IRS does not rule in advance on whether a transaction results in more than fair market value payment or more than reasonable compensation to a disqualified person. Although it is not possible to predict what enforcement action, if any, the IRS might take related to potential excess benefit transactions, the regulations indicate that not all excess benefit transactions jeopardize exempt status. Rather, the IRS will consider all relevant facts and circumstances including: the size and scope of the organization’s activities that further exempt purposes before and after the excess benefit transaction or transactions occurred; the size and scope, and frequency, of any excess benefit transactions; whether the organization has implemented appropriate safeguards reasonably calculated to prevent excess benefit transactions; and whether the organization has corrected, or made good faith efforts to correct, any excess benefit such as by obtaining repayment of the amount of any excess benefit.

Moreover, the legislation is potentially favorable to taxpayers because it provides the IRS with a punitive option short of revocation of exempt status to deal with incidents of private inurement. However, the standards for tax exemption have not been changed, including the requirement that no part of the net earnings of an exempt entity inure to the benefit of any private individual. Consequently, although the IRS has only infrequently revoked the tax exemption of nonprofit health care corporations in the past, the risk of revocation remains and there can be no assurance that the IRS will not direct enforcement activities against the Corporation.

The Tax Exempt and Governmental Entities Division of the IRS is responsible for the Team Examination Program (referred to as “TEP”) of the IRS, which conducts audits of exempt organizations using teams of revenue agents. The TEP audit teams consider a wide range of possible issues, including the community benefit standard, private inurement and private benefit, partnerships and joint ventures, retirement plans and employee benefits, employment taxes, tax-exempt bond financing, political contributions and unrelated business income. In addition, the IRS conducts compliance checks and correspondence audits that focus initially on limited issues, such as executive compensation, unrelated business income or community benefit. Such limited scope reviews can be expanded in certain circumstances to include a variety of other issues as in a TEP audit.

The Corporation could be audited by the IRS. Management of the Corporation believes that it has properly complied with the tax laws. Nevertheless, because of the complexity of the tax laws and the presence of issues about which reasonable persons can differ, a TEP or other audit could result in additional taxes, interest and penalties. A TEP or other audit also could potentially affect the tax-exempt status of the Corporation.

Loss of tax-exempt status by the Corporation could result in loss of the exclusion from gross income of the interest on the Tax-Exempt Bonds that, in turn, could result in a default under the Bond Indenture, potentially triggering an acceleration of the Bonds. Any such event would have material adverse consequences on the future financial condition and results of operations of the Corporation.

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Additionally, the loss of federal tax-exempt status by the Corporation could adversely affect its access to future tax-exempt financing.

As described herein under the caption “TAX MATTERS,” failure to comply with certain legal requirements may cause the interest on the Tax-Exempt Bonds to become included in gross income of the recipients thereof for federal income tax purposes. In such event, the Bonds may be accelerated at the discretion of the Bond Trustee or at the written request of holders of not less than 25% of the aggregate principal amount of all the Bonds then outstanding under the Bond Indenture. The Bond Indenture does not provide for the payment of any additional interest or penalty in the event the interest on the Tax-Exempt Bonds is determined to be includible in gross income for federal income tax purposes.

Amendments to the Documents

Certain amendments to the Bond Indenture and the Loan Agreement may be made with the consent of the owners of a majority of the principal amount of the outstanding Bonds under the Bond Indenture. Certain amendments to the Master Indenture may be made with the consent of the owners of a majority of the principal amount of the Outstanding Obligations under the Master Indenture. Certain amendments to the Deed of Trust may be made with the consent of the Master Trustee, the Corporation and First American Title Insurance Company, as deed trustee. Such amendments may adversely affect the security of the Bondholders. See APPENDIX D – “SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE – THE BOND INDENTURE – Supplemental Indentures Not Requiring Consent of Owners of Bonds” and “– Supplemental Indentures Requiring Consent of Owners of Bonds,” “– THE LOAN AGREEMENT – Amendments, Changes and Modifications,” and APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – SUPPLEMENTS AND AMENDMENTS.”

Additional Indebtedness

The Master Indenture permits the Corporation to incur Additional Indebtedness which may be equally and ratably secured with Obligation No. 1. Any such additional parity debt would be entitled to share ratably with the owners of the Bonds any moneys realized from the exercise of remedies in the event of a default. 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 Corporation to make the necessary payments to repay the Bonds may not be materially, adversely affected upon the incurrence of Additional Indebtedness. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES” and “– LIMITATIONS ON ADDITIONAL INDEBTEDNESS.”

Bankruptcy

If the Corporation were to file a petition for relief under Title 11 of the United States Code (the “Bankruptcy Code”), the filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Corporation and any interest it has in property. If the bankruptcy court so ordered, the Corporation’s property, including its accounts receivable and proceeds thereof, could be used, at least temporarily, for the benefit of the Corporation’s bankruptcy estate despite the claims of its creditors.

In a case under the current Bankruptcy Code, the Corporation could file a plan of reorganization. The plan is the vehicle for satisfying, and provides for the comprehensive treatment of, all claims against the Corporation and could result in the modification of rights of any class of creditors, secured or unsecured. To confirm a plan of reorganization, with one exception discussed below, it must be approved

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by the vote of each class of impaired creditors. A class approves a plan if, of those who vote, those holding more than one-half in number and at least two-thirds in amount vote in favor of a plan. Approval by classes of interests requires a vote in favor of the plan by two-thirds in amount. If these levels of votes are attained, those voting against the plan or not voting at all are nonetheless bound by the terms thereof. Other than as provided in the confirmed plan, all claims and interests are discharged and extinguished. If fewer than all of the impaired classes accept the plan, the plan may nevertheless be confirmed by the bankruptcy court and the dissenting claims and interests would be bound thereby. For this to occur, at least one of the impaired classes must vote to accept the plan and the bankruptcy court must determine that the plan does not “discriminate unfairly” and is “fair and equitable” with respect to the nonconsenting class or classes. The Bankruptcy Code establishes different fair and equitable tests for secured claims and interest holders. To be confirmed, the bankruptcy court must also determine that a plan, among other requirements, provides creditors with not less than would be received in the event of liquidation, is proposed in good faith, and that the debtor’s performance is feasible.

Certain Matters Relating to Enforceability of the Master Indenture

The obligations of the Corporation and any future Members of the Obligated Group under Obligation No. 1 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 Obligations, including Obligation No. 1 pledged under the Bond Indenture as security for the Bonds. The obligations described herein of the Obligated Group to make payments of debt service on Obligations issued under the Master Indenture (including transfers in connection with voluntary dissolution or liquidation) may not be enforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights and by general equitable principles and (2) such payments (i) are requested with respect to payments on any Obligations issued by a Member other than the Member from which such payment is requested, issued for a purpose which is not consistent with the charitable purposes of the Member of the Obligated Group from which such payment is requested or issued for the benefit of a Member of the Obligated Group which is not a Tax-Exempt Organization; (ii) are requested to be made from any moneys or assets which are donor-restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (iii) would 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 Obligation No. 1 cannot now be determined. The amount of such assets which could fall within such categories could be substantial.

A Member of the Obligated Group may not be required to make any payment on any Obligation, or portion thereof, the proceeds of which were not loaned or otherwise disbursed to such Member of the Obligated Group to the extent that such payment would render such Member of the Obligated Group insolvent or which would conflict with or not be permitted by or which is subject to recovery for the benefit of other creditors of such Member of the Obligated Group under applicable laws. There is no clear precedent in the law as to whether such payments from a Member of the Obligated Group in order to

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pay debt service on Obligation No. 1 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 state fraudulent conveyance statutes. Under the United States Bankruptcy Code, a trustee in bankruptcy and, under state 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 state fraudulent conveyance statutes, or the guarantor is undercapitalized.

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

Certain Matters Relating to Enforceability of Security Interest in Gross Revenues

The effectiveness of the security interest in the Corporation’s Gross Revenues granted in the Master Indenture may be limited by a number of factors, including: (i) provisions prohibiting the direct payment of amounts due to health care providers from Medicare and Medicaid programs to persons other than such providers; (ii) the absence of an express provision permitting assignment of receivables owed to the Corporation under its contracts, and present or future prohibitions against assignment contained in any applicable statutes or regulations; (iii) certain judicial decisions which cast doubt upon the right of the Bond Trustee and the Master Trustee, in the event of the bankruptcy of the Corporation, to collect and retain accounts receivable from Medicare, Medicaid and other governmental programs; (iv) commingling of the proceeds of Gross Revenues with other moneys not subject to the security interest in the Gross Revenues; (v) statutory liens; (vi) rights arising in favor of the United States of America or any agency thereof; (vii) constructive trusts, equitable or other rights impressed or conferred by a federal or state court in the exercise of its equitable jurisdiction; (viii) federal bankruptcy laws or state insolvency laws which may affect the enforceability of the Deed of Trust or the security interest in the Gross Revenues of the Corporation which are earned by the Corporation 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 the Corporation; (ix) rights of third parties in Gross Revenues converted to cash and not in the possession of the Master Trustee; and (x) claims that might arise if appropriate financing or continuation statements are not filed or other documents are not executed in accordance with the Uniform Commercial Code of the State as from time to time in effect. Under the Uniform Commercial Code, such security interest ceases to attach to proceeds of Gross Revenues, e.g., collections of accounts receivable which cannot be traced to a specific account of the Corporation other than the Gross Revenue Fund created under the Master Indenture or otherwise have ceased to be “identifiable cash proceeds.”

Accounts receivable of the Corporation which constitute Gross Revenues and are pledged as security under the Master Indenture may be sold if such sale is in accordance with the provisions of the Master Indenture. Any lien created under the Master Indenture on such accounts receivable would terminate and be immediately released upon any such sale with respect to any such accounts receivable so sold.

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Certain Risks Associated with the Deed of Trust

The Corporation has executed the Deed of Trust to secure its obligations pursuant to the Master Indenture and with respect to all Obligations, including Obligation No. 1, and with respect to its obligations under the Master Indenture. In the event that there is a default under the Master Indenture, the Bond Indenture, the Loan Agreement, or any other financing document to which the Corporation is a party, the Master Trustee has the right to foreclose on the Mortgaged Property under certain circumstances. All amounts collected upon foreclosure of the Mortgaged Property pursuant to the Deed of Trust will be used to pay certain costs and expenses incurred by, or otherwise related to, the foreclosure, the performance of the Master Trustee and/or the beneficiary under the Deed of Trust, and then to pay amounts owing under the Master Indenture with respect to Obligation No. 1 and any future Obligations.

The real property subject to the Deed of Trust consists primarily of a residential care facility, housing for seniors and related facilities having limited potential uses. If the Master Trustee were to take possession of the property subject to the Deed of Trust pursuant to exercise of its remedies under the Deed of Trust, the number of persons who would be interested in purchasing the property likely would be limited. As a result, the ability of the Master Trustee to realize value from such property would be limited. Accordingly, upon an Event of Default and foreclosure or similar remedy under the Deed of Trust, the Master Trustee may not be able to realize an amount sufficient to satisfy all obligations secured by the Deed of Trust.

Feasibility Study

Management’s forecasts in APPENDIX B are based on assumptions and, because events and circumstances do not always occur as expected, investors should expect differences between forecasted results and actual results. The differences are likely to be material and may be adverse to the financial condition of the Corporation. In addition, such forecasts do not cover the entire period for which the Bonds will remain outstanding. Risks relating thereto include, but are not limited to, the following:

• Failure to attract future residents or to attract such residents on the anticipated terms;

• Failure to achieve the anticipated mix of contract types;

• Variance in resident attrition rates;

• Inability to raise monthly or entrance fees in accordance with the forecast, if applicable;

• Variance in forecasted census or payor mix of skilled nursing beds resulting in reduced revenues; and

• Variance in forecasted capital needs for maintenance or repairs.

Environmental Matters

Retirement communities, such as the Corporation’s, 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

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the public about hazardous materials handled by or located at such facility; 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.

Other Possible Risk Factors

The occurrence of any of the following events, or other unanticipated events, could adversely affect the operations of the Corporation:

(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;

(4) A decline in the population, a change in the age composition of the population or a decline in the economic conditions of the market areas of the Corporation;

(5) The cost and availability of energy which could, among other things, affect the cost of utilities of the Corporation’s Community;

(6) 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;

(7) Inflation or other adverse economic conditions;

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

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

(10) Inability to control the diminution of residents assets or insurance coverage with the result that the residents charges are reimbursed from government reimbursement programs rather than private payments;

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(11) The occurrence of natural disasters, including floods and earthquakes, which may damage the communities of the Corporation, interrupt utility service to the communities, or otherwise impair the operation and generation of revenues from said communities;

(12) Scientific and technological advances that could reduce demand for services offered by the Corporation;

(13) Cost and availability of any insurance, such as malpractice, fire, earthquake, automobile and general comprehensive liability, that organizations such as the Corporation generally carry; or

(13) Additional costs to the Corporation and its residents due to increases in estimated property taxes levied by state and local tax authorities.

LITIGATION

The Authority

There is not now pending or, to the knowledge of the Authority, threatened any litigation restraining or enjoining the issuance or delivery of the Bonds or questioning or affecting the validity of the Bonds or the proceedings or authority under which they are issued. There is no litigation pending or, to its knowledge, threatened which in any manner questions the right of the Authority to enter into the Bond Indenture or the Loan Agreement or to issue the Bonds in the manner provided in the Bond Indenture and the Act.

The Corporation

There is no litigation or proceeding pending or, to the knowledge of the Corporation, threatened against the Corporation which (i) seeks to restrain or enjoin the issuance or delivery of the Bonds or the execution or the performance by the Corporation of its obligations under the Loan Agreement or Obligation No. 1, (b) in any way contests or affects the issuance or the validity of the Bonds or the enforceability of the Loan Agreement or Obligation No. 1, or (c) in any way contests the legal existence or powers of the Corporation. There is no litigation or proceeding pending or, to the knowledge of the Corporation, threatened against the Corporation except for (i) litigation being defended by insurance carriers on behalf of the Corporation, the claims in which are entirely within the insurance policy limits of the Corporation, (ii) litigation in which the expected maximum aggregate recovery against the Corporation could be satisfied from the insurance or the reserves maintained by the Corporation or (iii) claims for damages arising in the ordinary course of its operations, none of which is deemed to be material to the operation or condition, financial or otherwise, of the Corporation. There is no litigation pending or, to the knowledge of the Corporation, threatened that might have a material adverse effect upon the operations or financial condition of the Corporation.

LEGAL MATTERS

All legal matters incident to the authorization and validity of the Bonds by the Authority are subject to the approval of Sherman & Howard L.L.C., Denver, Colorado, as Bond Counsel, whose approving opinion will be delivered with the Bonds. The form of Bond Counsel’s approving opinion is set forth in APPENDIX E hereto. Copies of the approving opinion of Bond Counsel will be available at the time of issuance and delivery of the Bonds. Certain legal matters will be passed upon for the Corporation by its counsel, Stamper Rubens, P.S., Spokane, Washington; for the Underwriter by its

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counsel, Jones Day; and for the Authority by its counsel, Hawley Troxell Ennis & Hawley LLP, Boise Idaho.

Randall L. Stamper, of Stamper Rubens, P.S., counsel to the Corporation , serves as chair of the Board of Directors of Cornerstone.

TAX MATTERS

Tax-Exempt Bonds

In the opinion of Sherman & Howard L.L.C., assuming continuous compliance with certain covenants described below, interest on the Tax-Exempt Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the Tax-Exempt Bonds (the “Code”), and interest on the Tax-Exempt Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Code except that such interest is required to be included in calculating the “adjusted current earnings” adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations as described below. Interest on the Tax-Exempt Bonds is exempt from all State income taxes under present State income tax laws. For purposes of this paragraph and the succeeding discussion, “interest” includes the original issue discount on certain of the Tax-Exempt Bonds only to the extent such original issue discount is accrued as described herein.

The Code imposes several requirements which must be met with respect to the Tax-Exempt Bonds in order for the interest thereon to be excluded from gross income and alternative minimum taxable income. Certain of these requirements must be met on a continuous basis throughout the term of the Tax-Exempt Bonds. These requirements include: (a) limitations as to the use of proceeds of the Tax-Exempt Bonds; (b) limitations on the extent to which proceeds of the Tax-Exempt Bonds may be invested in higher yielding investments; and (c) a provision, subject to certain limited exceptions, that requires all investment earnings on the proceeds of the Tax-Exempt Bonds above the yield on the Tax-Exempt Bonds to be paid to the United States Treasury. The Authority will covenant and represent in the Bond Indenture, in reliance upon the Corporation’s covenants and representations in the Loan Agreement, that it will take all steps to comply with the requirements of the Code to the extent necessary to maintain the exclusion of interest on the Tax-Exempt Bonds from gross income and alternative minimum taxable income (except to the extent of the aforementioned adjustment applicable to corporations) under such federal income tax laws. Bond Counsel’s opinion as to the exclusion of interest on the Tax-Exempt Bonds from gross income and alternative minimum taxable income (to the extent described above) is rendered in reliance on these covenants and assumes continuous compliance therewith. The failure or inability of the Authority to comply with these requirements could cause the interest on the Tax-Exempt Bonds to be included in gross income and alternative minimum taxable income from the date of issuance. Bond Counsel’s opinion also is rendered in reliance upon certifications of the Authority and the Corporation and other certifications furnished to Bond Counsel. Bond Counsel has not undertaken to verify such certifications by independent investigation.

Section 55 of the Code contains a 20% alternative minimum tax on the alternative minimum taxable income of corporations. Under the Code, 75% of the excess of a corporation’s “adjusted current earnings” over the corporation’s alternative minimum taxable income (determined without regard to this adjustment and the alternative minimum tax net operating loss deduction) is included in the corporation’s alternative minimum taxable income for purposes of the alternative minimum tax applicable to the corporation. “Adjusted current earnings” includes interest on the Tax-Exempt Bonds.

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With respect to Tax-Exempt Bonds that were sold in the initial offering at a discount (the “Discount Bonds”), the difference between the stated redemption price of the Discount Bonds at maturity and the initial offering price of those bonds to the public (as defined in Section 1273 of the Code) will be treated as “original issue discount” for federal income tax purposes and will, to the extent accrued as described below, constitute interest which is excluded from gross income, alternative minimum taxable income, or State taxable income under the conditions and subject to the exceptions described in the preceding paragraphs. The original issue discount on the Discount Bonds is treated as accruing over the respective terms of such Discount Bonds on the basis of a constant interest rate compounded at the end of each six-month period (or shorter period from the date of original issue) ending on April 1 and October 1 with straight line interpolation between compounding dates. The amount of original issue discount accruing each period (calculated as described in the preceding sentence) constitutes interest which is excluded from gross income, alternative minimum taxable income and State taxable income under the conditions and subject to the exceptions described in the preceding paragraphs and will be added to the owner’s basis in the Discount Bonds. Such adjusted basis will be used to determine taxable gain or loss upon disposition of the Discount Bonds (including sale or payment at maturity). Owners should consult their own tax advisors with respect to the tax consequences of the ownership of the Discount Bonds.

Owners who purchase Discount Bonds after the initial offering or who purchase Discount Bonds in the initial offering at a price other than the initial offering price (as defined in Section 1273 of the Code) should consult their own tax advisors with respect to the federal tax consequences of the ownership of the Discount Bonds. Owners who are subject to state or local income taxation (other than Idaho state income taxation) should consult their tax advisor with respect to the state and local income tax consequences of ownership of the Discount Bonds. It is possible that, under the applicable provisions governing determination of state and local taxes, accrued original issue discount on the Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment.

The Code contains numerous provisions which may affect an investor’s decision to purchase the Tax-Exempt Bonds. Owners of the Tax-Exempt Bonds should be aware that the ownership of tax-exempt obligations by particular persons and entities, including, without limitation, financial institutions, insurance companies, recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, foreign corporations doing business in the United States and certain “subchapter S” corporations may result in adverse federal tax consequences. Under Section 3406 of the Code, backup withholding may be imposed on payments on the Tax-Exempt Bonds made to any owner who fails to provide certain required information, including an accurate taxpayer identification number, to certain persons required to collect such information pursuant to the Code. Backup withholding may also be applied if the owner underreports “reportable payments” (including interest and dividends) as defined in Section 3406, or fails to provide a certificate that the owner is not subject to backup withholding in circumstances where such a certificate is required by the Code. Certain of the Tax-Exempt Bonds may be sold at a premium, representing a difference between the original offering price of those Tax-Exempt Bonds and the principal amount thereof payable at maturity. Under certain circumstances, an initial owner of such bonds (if any) may realize a taxable gain upon their disposition, even though such bonds are sold or redeemed for an amount equal to the owner’s acquisition cost. Bond Counsel’s opinion relates only to the exclusion of interest (and, to the extent described above for the Discount Bonds, original issue discount) on the Tax-Exempt Bonds from gross income, alternative minimum taxable income, and State taxable income as described above and will state that no opinion is expressed regarding other federal or State tax consequences arising from the receipt or accrual of interest on or ownership of the Tax-Exempt Bonds. Owners of the Tax-Exempt Bonds should consult their own tax advisors as to the applicability of these consequences.

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The opinions expressed by Bond Counsel are based on existing law as of the delivery date of the Tax-Exempt Bonds. No opinion is expressed as of any subsequent date nor is any opinion expressed with respect to pending or proposed legislation. Amendments to the federal or state tax laws may be pending now or could be proposed in the future that, if enacted into law, could adversely affect the value of the Tax-Exempt Bonds, the exclusion of interest (and, to the extent described above for the Discount Bonds, original issue discount) on the Tax-Exempt Bonds from gross income or alternative minimum taxable income or both from the date of issuance of the Tax-Exempt Bonds or any other date, the tax value of that exclusion for different classes of taxpayers from time to time, or that could result in other adverse tax consequences. In addition, future court actions or regulatory decisions could affect the tax treatment or market value of the Tax-Exempt Bonds. Owners of the Tax-Exempt Bonds are advised to consult with their own tax advisors with respect to such matters.

The IRS has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the IRS, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be given as to whether or not the IRS will commence an audit of the Tax-Exempt Bonds. If an audit is commenced, the market value of the Tax-Exempt Bonds may be adversely affected. Under current audit procedures, the IRS will treat the Authority as the taxpayer and the Bondholders may have no right to participate in such procedures. The Authority and the Corporation have covenanted in the Bond Indenture and the Loan Agreement not to take any action that would cause the interest on the Tax-Exempt Bonds to lose its exclusion from gross income for federal income tax purposes or lose its exclusion from alternative minimum taxable income except to the extent described above for the owners thereof for federal income tax purposes. None of the Authority, the Corporation, the Underwriter, Underwriter’s counsel, Ponder & Co. or Bond Counsel is responsible for paying or reimbursing any owner or Beneficial Owner of the Bonds for any audit or litigation costs relating to the Tax-Exempt Bonds.

Taxable Bonds

In the opinion of Bond Counsel, interest on the Taxable Bonds is included in gross income pursuant to the Code. Interest on the Taxable Bonds is exempt from all State of Idaho income taxes under present Idaho income tax laws.

The Code contains numerous provisions, including provisions related to the imposition of additional taxes, which may affect an investor’s decision to purchase the Taxable Bonds. Further, under Section 3406 of the Code, backup withholding may be imposed on payments on the Taxable Bonds in certain situations including: (i) an owner who fails to provide certain required information to certain persons required to collect such information; (ii) the owner underreports “reportable payments” (including interest and dividends) as defined in Section 3406; or (iii) an owner fails to provide a certificate that the owner is not subject to backup withholding when such a certificate is required by the Code.

The opinions expressed by Bond Counsel are based on existing law as of the delivery date of the Taxable Bonds. No opinion is expressed as of any subsequent date nor is any opinion expressed with respect to pending or proposed legislation. Amendments to the federal or state tax laws may be pending now or could be proposed in the future that, if enacted into law, could adversely affect the value of the Taxable Bonds. In addition, future court actions or regulatory decisions could affect the market value of the Taxable Bonds. Owners of the Taxable Bonds are advised to consult with their own tax advisors with respect to such matters.

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Any tax advice concerning the Taxable Bonds, interest on the Taxable Bonds or any other federal income tax issues associated with the Taxable Bonds, express or implicit in the provisions of this Official Statement, is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on any taxpayer by the Internal Revenue Service. This document supports the promotion or marketing of the transactions or matters addressed herein. Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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.

UNDERWRITING

Pursuant to a bond purchase agreement (the “Bond Purchase Agreement”) by and among the Authority, the Corporation and B.C. Ziegler and Company (the “Underwriter”), the Underwriter will purchase the Bonds at an aggregate purchase price of $100,741,432.55, which purchase price reflects $103,185,000 of aggregate par amount less $1,386,312.50 of Underwriter’s discount less $1,057,254.95 of original issue discount. The Bond Purchase Agreement will provide that the Underwriter will purchase all of the Bonds if any are purchased.

Certain entities related to the Underwriter are members of a partnership which provided pre-finance capital to the Corporation for the Project. See “PLAN OF FINANCE – Pre-Finance Construction Development Capital” herein.

The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Bond Purchase Agreement 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 Bonds will be subject to various conditions of the Bond Purchase Agreement.

LEGAL INVESTMENTS

The Act provides that bonds issued thereunder are securities in which the State of Idaho and all counties, cities, villages, incorporated towns and other municipal corporations, political subdivisions and public bodies, and public officers of any thereof, all banks, bankers, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, insurance companies and associations and fiduciaries may legally invest any sinking funds, moneys or other funds belonging to them or within their control.

FINANCIAL ADVISOR

Ponder & Co. has served as financial advisor to the Authority. Ponder & Co. is not obligated to undertake, and has not undertaken, an independent verification of, and does not assume responsibility for, the accuracy, completeness or fairness of the information contained in this Official Statement. Ponder & Co. is an independent advisory firm and is not engaged in the business of underwriting or distributing municipal securities or other public securities.

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NO RATING

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

FINANCIAL REPORTING

The Master Indenture requires the Obligated Group Representative to provide to the Underwriter, the Authority, the Master Trustee, each Related Bond Trustee, the Municipal Securities Rulemaking Board’s (“MSRB”) Electronic Municipal Market Access System (“EMMA”) or any other nationally recognized securities information repository identified by the Securities and Exchange Commission (collectively, the “Required Information Recipients”):

(i) until the end of the fiscal quarter in which the Obligated Group achieves Stable Occupancy with respect to the Project, a monthly statement of the Obligated Group as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including;

(A) prior to the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) a summary statement as to the status of construction; (III) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (IV) statements of the balances for each fund and account required to be held under the Master Indenture or any Related Bond Indenture as of the end of such month (to the extent available from the applicable trustee), all in reasonable detail, and

(B) after the issuance of the initial Occupancy Certificate for any portion of the Project, (I) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (II) information with respect to the payor mix for the health center portion of the Project; (III) occupancy levels of the Project as of the end of such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; (IV) a summary statement on the status of construction until the issuance of the last Occupancy Certificate for the Project; (V) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last Occupancy Certificate for the Project; (VI) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month with a comparison to the operating budget and an unaudited balance sheet of the Obligated Group as of the end of such month; (VII) a calculation of the Cumulative Cash Operating Loss as of the end of such month, (VIII) statements of the balances in each fund and account required to be held under the Master Indenture or any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), and (IX) a statement showing the amount of the Bonds that have been redeemed in the aggregate and during that calendar month, all in reasonable detail.

The Obligated Group Representative does not need to deliver any monthly statement of the Obligated Group described in this subparagraph (i) after the end of the fiscal quarter in which Stable Occupancy with respect to the Project has been achieved and the Obligated Group has commenced delivery of the quarterly reports required by subparagraph (ii) below.

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(ii) Beginning with the first full fiscal quarter following the date that Stable Occupancy with respect to the Project is achieved, the following information as soon as practicable after it is available but in no event more than 45 days after the completion of such fiscal quarter: (A) quarterly unaudited financial statements of the Obligated Group (including a report with respect to the fourth quarter of each fiscal year), including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period and a combined or combining balance sheet as of the end of each such fiscal quarter with a comparison to the operating budget, (B) a calculation of Days Cash on Hand or Cash to Indebtedness Ratio, as applicable, as of the last day of such quarter, the Debt Service Coverage Ratio of the Obligated Group for such quarter, and the Cumulative Cash Operating Loss, if required to be calculated or submitted for such fiscal quarter, (C) information with respect to the payor mix for the health center portion of the Project, and (D) a calculation of the marketing/reservation levels for the Project as of the end of each month in the quarter, including the number of units that have been reserved or cancelled during that month and on an aggregate basis and occupancy levels of the Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative, with a management’s discussion and analysis of results.

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

(iv) Within 150 days of the end of each Fiscal Year commencing with the Fiscal Year ending September 30, 2013, an annual financial report of the Obligated Group audited by a firm of certified public accountants, including a balance sheet as of the end of such Fiscal Year and a statement of changes in fund balances for such Fiscal Year and a statement of revenues and expenses for such Fiscal Year, showing in each case in comparative form the financial figures for the preceding Fiscal Year (the annual financial report may include combined or combining schedules as required by GAAP), together with a separate written statement of the accountants auditing such report containing calculations of the Obligated Group’s Debt Service Coverage Ratio for said Fiscal Year and of the Obligated Group’s Cash to Indebtedness Ratio or Days Cash on Hand, as applicable, (beginning with the Fiscal Year in which such calculations are first required to be made) as of the last day of such Fiscal Year and if such accountants shall have obtained knowledge of any default or defaults in any of the financial covenants included in the Master Indenture or the financial reporting requirements summarized under this caption, they shall disclose the default or defaults and the nature thereof in a statement to the Master Trustee which statement shall comply with the reporting standards promulgated by the American Institute of Certified Public Accountants.

(v) On or before the date of delivery of the financial reports referred to in subparagraph (iv) above, an Officer’s Certificate of the Obligated Group Agent (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture or if not, specify all such defaults and the nature thereof, (B) calculating and certifying the marketing and occupancy percentages, Cumulative Cash Operating Loss, Days

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Cash on Hand or Cash to Indebtedness Ratio, as applicable, and Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such fiscal period or Fiscal Year, as appropriate, (C) a comparison of the audited financial statements with the operating budget for the preceding Fiscal Year and (D) an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year as required by the provisions of the Master Indenture.

(vi) Within 45 days of the end of each Fiscal Year, the Obligated Group Representative shall deliver a summary of the operating and capital budgets for the Fiscal Year then started.

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

(viii) Within 30 days of receipt of any Occupancy Certificate for any portion of the Project, the Corporation will notify the Master Trustee that such Occupancy Certificate has been received and include a copy of the Occupancy Certificate with such notice.

(ix) Within 45 days of achieving Stable Occupancy with respect to the Project, the Corporation will notify the Master Trustee that Stable Occupancy has been achieved.

The Obligated Group Representative shall furnish or cause to be furnished to the Master Trustee or any Related Bond Trustee, such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of the Master Indenture have been complied with by the Members.

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 report or counsel’s opinion required to be prepared under the terms of the Master Indenture.

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.

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 a firm of independent certified public accountants selected by

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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 Debt Service Coverage Ratio for the Interim Period and a statement that such accountants have obtained no knowledge of any default by any Member in the fulfillment of any of the terms, covenants, provisions or conditions of the Master Indenture, or if such accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such accountants shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default).

Also see “CONTINUING DISCLOSURE” and APPENDIX F – “FORM OF CONTINUING DISCLOSURE AGREEMENT” for continuing disclosure requirements of the Obligated Group.

CONTINUING DISCLOSURE

Offerings of most municipal securities are subject to Rule 15c2-12 (the “Rule”) under the Securities Exchange Act of 1934, as amended.

The Corporation, on behalf of itself and any future Members of the Obligated Group, has undertaken all responsibilities for any continuing disclosure to Bondholders as described below, and the Authority shall have no liability to the holders of the Bonds or any other person with respect to the Rule. The Corporation, on behalf of itself and any future Members of the Obligated Group, has covenanted for the benefit of holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the Obligated Group by not later than 150 days following the end of each Fiscal Year commencing with the Fiscal Year ending September 30, 2014, to provide certain information on a quarterly basis commencing with the first full fiscal quarter following the date that Stable Occupancy with respect to the Project is achieved, to provide certain information on a monthly basis commencing with the month ending January 31, 2014 and to provide notices of the occurrence of certain enumerated events. See APPENDIX F – “FORM OF CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the Underwriter in complying with the Rule. The Corporation has not previously entered into any continuing disclosure agreement or undertaking pursuant to the Rule.

MISCELLANEOUS

The summaries or descriptions of provisions of the Bonds, the Loan Agreement, the Bond Indenture, the Deed of Trust, Obligation No. 1 and the Master Indenture and all references to other materials not purported to be quoted in full are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of the provisions thereof. Reference is made to the Bonds, the Loan Agreement, the Bond Indenture, the Deed of Trust, Obligation No. 1 and the Master Indenture for a full and complete statement of the provisions thereof. Such documents are on file at the offices of the Underwriter and following delivery of the Bonds will be on file at the offices of the Bond Trustee.

So far as any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of such statements will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds.

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

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

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

This Official Statement has been duly authorized, executed and delivered by the Authority and the Corporation.

IDAHO HEALTH FACILITIES AUTHORITY

By: /s/ Shelley Shannon Executive Director

Approved by:

BOISE RETIREMENT COMMUNITY D/B/A THE TERRACES OF BOISE

By: /s/ Pamela S. Claassen Chief Financial Officer

[Signature Page to Official Statement]

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APPENDIX A


The information contained herein as Appendix A to this Official Statement has been obtained from

Boise Retirement Community d/b/a The Terraces of Boise

TABLE OF CONTENTS

Page

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INTRODUCTION ..................................................................................................................... A-1 THE CORPORATION .............................................................................................................. A-2

Board of Directors.......................................................................................................... A-2 Reserved Powers to Cornerstone ................................................................................... A-3 Conflict of Interest Policy .............................................................................................. A-3

CORNERSTONE AFFILIATES AND ABHOW ..................................................................... A-4 Cornerstone Affiliates .................................................................................................... A-4 Cornerstone Board of Directors ..................................................................................... A-4 American Baptist Homes of the West ............................................................................ A-7 ABHOW Board of Directors ......................................................................................... A-7 ABHOW Membership ................................................................................................... A-8 Management of Cornerstone and ABHOW ................................................................... A-8

THE COMMUNITY ................................................................................................................ A-12 General Description ..................................................................................................... A-12 Land Acquisition .......................................................................................................... A-12 Residential Living Units .............................................................................................. A-12 Assisted Living ............................................................................................................ A-14 Health Center ............................................................................................................... A-15 Future Plans ................................................................................................................. A-16

REGULATIONS, PERMITS AND APPROVALS ................................................................. A-16 Zoning .......................................................................................................................... A-16 Healthcare Licensure ................................................................................................... A-16 Building Permits .......................................................................................................... A-17 Environmental Study/Geotechnical Testing ................................................................ A-17 Registration .................................................................................................................. A-17

RESERVATION AGREEMENT ............................................................................................ A-17 CARE AND RESIDENCE AGREEMENT............................................................................. A-18

Resident Fee Structure ................................................................................................. A-18 Preferred Resident Benefit ........................................................................................... A-21 Financial Assistance ..................................................................................................... A-21

TABLE OF CONTENTS (continued)

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Nondiscrimination........................................................................................................ A-22 Services to Residential Living Residents ..................................................................... A-23 Life Care Benefit .......................................................................................................... A-23 Termination and Refunds ............................................................................................. A-24

MARKETING.......................................................................................................................... A-25 Marketing Program ...................................................................................................... A-25 Reservation of Residential Living Units ...................................................................... A-26 Health Services ............................................................................................................ A-28

DEVELOPMENT OF THE COMMUNITY ........................................................................... A-28 ABHOW Development Administrative Services Agreement ...................................... A-28 Greystone ..................................................................................................................... A-29 GCI Boise, L.P ............................................................................................................. A-29 Greystone Development Experience ............................................................................ A-30 Greystone Corporate Officers ...................................................................................... A-34 Greystone Development Consulting Agreement ......................................................... A-36 Seniority ....................................................................................................................... A-39

MANAGEMENT OF THE COMMUNITY ............................................................................ A-40 Management Agreement .............................................................................................. A-40

OTHER PROFESSIONAL SERVICES .................................................................................. A-42 The General Contractor ................................................................................................ A-42 Construction Contract .................................................................................................. A-43 The Architect ............................................................................................................... A-45 Construction Consultant............................................................................................... A-45

COMPETITION AND SERVICE AREA ............................................................................... A-46

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INTRODUCTION

Boise Retirement Community d/b/a The Terraces of Boise (the “Corporation”), was incorporated as a California nonprofit public benefit corporation in 2005 exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). The Corporation was organized for the purpose of owning and operating The Terraces of Boise (the “Community”), a continuing care retirement community (“CCRC”) to be located in Boise, Idaho.

The Community is expected to consist of 149 residential living apartments (the “Residential Living Apartments”), 12 residential living duplex apartments (the “Residential Living Duplex Apartments” and collectively with the Residential Living Apartments, the “Residential Living Units”), 40 residential-style assisted living apartments (the “Assisted Living Apartments”), 24 special care assisted living suites (the “Special Care Assisted Living Suites” and collectively with the Assisted Living Apartments, “Assisted Living”) and three, one-story cottage style buildings housing a total of 48 private skilled nursing rooms (the “Health Center”).

The sole member of the Corporation is Cornerstone Affiliates (“Cornerstone”), a California nonprofit public benefit corporation established in 1999. Cornerstone was established to support the operations and activities of its tax-exempt affiliates and to develop and expand the retirement communities owned by its affiliates, including American Baptist Homes of the West (“ABHOW”). Cornerstone is the sole member of three nonprofit corporations that operate CCRCs located in Arizona, Nevada and California, respectively, that are managed by ABHOW and two nonprofit corporations that were incorporated for potential future developments. Cornerstone is also the sole shareholder of Seniority Properties, Inc., a California for-profit corporation created to acquire assisted living communities to be managed by Seniority, Inc. Cornerstone and each of its nonprofit affiliates are exempt from federal income taxation under Section 501(a) of the Code as organizations described in Section 501(c)(3) of the Code. See the organization chart set forth under the heading “CORNERSTONE AFFILIATES AND ABHOW” for additional information on Cornerstone and its affiliates.

ABHOW is a California nonprofit public benefit corporation that owns and operates CCRCs, manages affordable housing communities, is the sole member of fifteen nonprofit corporations, and is the sole shareholder of a for-profit corporation that provides management and support services to its affiliated entities. ABHOW directly owns and operates seven CCRCs in California. In addition to these seven CCRCs, ABHOW provides management services to its affiliated senior housing corporations and limited partnerships, to four affiliated CCRCs and 18 unrelated low and moderate-income senior rental housing communities. ABHOW also owns a 100% interest in Seniority, Inc. (“Seniority”), a for-profit California corporation that provides sales, marketing, consulting and management services to ABHOW’s owned and managed CCRCs, as well as a number of unrelated corporations. ABHOW and all of its affiliates except Seniority and its limited partnerships are exempt from federal income taxation under Section 501(a) of the Code as organizations described in Section 501(c)(3) of the Code. See the organization chart set forth under the heading “CORNERSTONE AFFILIATES AND ABHOW” for additional information on ABHOW and its affiliates.

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ABHOW and Greystone Development Company II, LP (“GDC”) are providing development and marketing services to the Corporation for the development of the Community. Seniority will also provide certain sales and marketing services to the Corporation. GMSC Idaho, LLC, an affiliate of GDC, will be providing management services at the Community. The project team also includes AG Architecture (the “Architect”), zumBrunnen, Inc. (the “Construction Consultant”), and Petra Inc. (the “General Contractor”). See “DEVELOPMENT OF THE COMMUNITY” and “MANAGEMENT OF THE COMMUNITY” herein.

The Corporation, as the sole member of the Obligated Group created under the Master Indenture, is the only entity obligated to make debt service payments with respect to the Series 2014 Bonds, Obligation No. 1 and any other Obligations issued under the Master Indenture. Neither Cornerstone, ABHOW nor any of their affiliated entities (other than the Corporation) has any obligation or liability with respect to the Master Indenture, the Series 2014 Bonds or Obligation No. 1.

THE CORPORATION

Board of Directors

The business affairs of the Corporation are governed by a voluntary Board of Directors (the “Directors” or the “Board”) who serve without compensation. The Directors are appointed by Cornerstone. The Board of the Corporation currently consists of seven Directors. The following is a summary of the business affiliations of the Board members and Officers of the Corporation:

Kent Hanway, AIA, Chair. Mr. Hanway serves as Chair of the Board of Directors. He is a licensed architect at CSHQA where he has been employed for 25 years. A native to the Treasure Valley area, Mr. Hanway grew up in Nampa, Idaho. He attended the University of Idaho in Moscow, where he graduated with a degree in architecture. He currently sits on the board of directors for several professional organizations including the Boise Metro Chamber of Commerce.

Stephanie Bender-Kitz, Ph.D., Board Member. Dr. Bender-Kitz is the Executive Director for Friends in Action, Inc., a non-profit collaborative organization dedicated to sustaining quality of life, dignity and independence for seniors and their families through education and volunteerism. She currently serves on the board for Friends in Action, as well as serving as a Committee Member with the Idaho Supreme Court Guardian and Fiduciary Association.

Mary Lou Long, Board Member. Ms. Long is a registered nurse with a master’s degree in Gerontology and has 30 years of experience in community health. Ms. Long is the Director of Community Services, Home Care and Hospice for St. Luke’s Health System in Boise.

Molly Mettler, Board Member. Ms. Mettler is a senior vice president of Healthwise, Inc., a non-profit organization. Ms. Mettler has served as the founding chair for the Health Promotion Institute for the past 20 years and founded and runs the National Leadership Council for NCOA.

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Michaelina (Mia) Murphy, Board Member. Ms. Murphy is the Managing Attorney for Murphy Law Office, PLLC and has been with the firm since September 2000. Ms. Murphy’s practice specializes in real estate transactions and litigation with a concentration in estate planning. She is a graduate of the University of Idaho College of Law (1994). Ms. Murphy is a member of the Idaho State Bar and the United States Supreme Court Bar. She is currently the President of Boise Capital Soccer Club, a 501(c)(3) corporation. Other civic and community affiliations include Soroptomists, Idaho’s State Bar Volunteer Lawyers Program, University of Idaho’s Center for Entrepreneurial and Economic Development and Kiwanis.

Bret Tinker, Board Member. Mr. Tinker is Vice President of Commercial Banking for Idaho Independent Bank and has over 25 years of banking experience. Mr. Tinker has served on various boards of directors including Idaho Community Reinvestment Corporation, Business Information Center/Small Business Association and Small Business Success Center. He is a member of Boise Vista Lion’s Club and Ride Idaho.

Nancy Vannorsdel, Board Member. Ms. Vannorsdel served as the President and CEO of the Boise Metro Chamber of Commerce from 1997 to 2008. Prior to her role at the Chamber of Commerce, she served as the President of the Idaho Bankers Association. She also has served as President of the Boise Philharmonic and President of the Idaho Thoroughbred Association. Currently, she is serving her second term as Chairman of the Board of Directors for Regence Blue Shield of Idaho.

M. Sloan Bentley, the President of the Corporation, has announced her resignation effective January 31, 2014. As of the date hereof, the Board has not approved a successor.

Reserved Powers to Cornerstone

In the Corporation’s organizational documents, Cornerstone reserves the right to approve any: (a) merger, consolidation or dissolution; (b) amendment, repeal, or restatement of the Articles of Incorporation or the Bylaws; (c) aggregate lending or borrowing for any purpose in excess of $50,000 including lease agreements and contracts of sale; (d) purchase, sale, lease, disposition, hypothecation, exchange, gift, pledge, encumbrance or mortgage of any real property, and of any personal property with a value in excess of $50,000 or (e) appointment of an independent auditor.

Conflict of Interest Policy

From time to time, the Corporation conducts business transactions with organizations or corporations with which one or more members of the Board may be affiliated. The Corporation has a conflict of interest policy which requires that any such duality of interest or possible conflict of interest on the part of any member of the Board be disclosed and be made a matter of record. In addition to disclosure, the policy requires that additional specified steps be taken, as appropriate, to ensure that the conflict does not impact objective deliberation or vote.

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CORNERSTONE AFFILIATES AND ABHOW

Cornerstone Affiliates

Cornerstone is the sole member of the Corporation and ABHOW. Cornerstone was established to support the operations and activities of its tax-exempt affiliates and to develop and expand the retirement communities owned by its affiliates. Cornerstone is also the sole member of American Baptist Estates, Inc. d/b/a The Terraces of Phoenix, which owns a CCRC in Phoenix, Arizona, Las Ventanas Retirement Community d/b/a Las Ventanas, which owns a CCRC in Las Vegas, Nevada and The Terraces at San Joaquin Gardens, which owns a CCRC in Fresno, California. These three CCRCs are managed by ABHOW. Cornerstone is the sole member of Pasadena Retirement Community and The Terraces Retirement Community, two nonprofit corporations that were incorporated for potential future developments. Cornerstone is also the sole shareholder of Seniority Properties, Inc., a California for-profit corporation created to acquire assisted living communities to be managed by Seniority. Cornerstone and each of its nonprofit affiliates have all received determination letters from the IRS that they are exempt from federal income taxation under Section 501(a) of the Code as organizations described in Section 501(c)(3) of the Code.

Cornerstone Board of Directors

Cornerstone is governed by a Board of Directors of nine members, of whom four are designated and elected by ABHOW and five are elected by the Cornerstone Board of Directors. Cornerstone’s directors serve staggered three-year terms. Cornerstone’s chief executive officer is David Ferguson, President of ABHOW, and its chief financial officer is Pamela Claassen, Chief Financial Officer of ABHOW. The current Board of Directors of Cornerstone is comprised of the following persons:

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Board Members Term

Expires

Occupation

Randall L. Stamper, Chair* 2016 Attorney, Stamper Rubens, P.S.

Bruce Laycook, Vice-Chair 2015 Software Engineer

Rev. Dr. Samuel Chetti 2014 Executive Minister, American Baptist Churches of Los Angeles

John Harrison 2016 Attorney

Richard E. Ice, L.H.D. 2015 Retired ABHOW CEO

Elizabeth Manera 2014 Professor Emeritus Arizona State University

Michael Manley 2016 Retired ABHOW General Counsel

Gloria P. Marshall 2014 Administrator Senior Services

Sue Roderick, D.P.A. 2015 Doctor of Gerontology

* Mr. Stamper’s firm serves as counsel to the Corporation in connection with the issuance of the Bonds.

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Cornerstone Organizational Structure September 30, 2013

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American Baptist Homes of the West

ABHOW, a California nonprofit public benefit corporation, was established in 1949 as Pilgrim Haven Home Corporation with the establishment of Pilgrim Haven retirement community in Los Altos, California. The original purpose and commitment to provide quality housing and health care for retired American Baptist ministers and missionaries has expanded to include older persons regardless of occupation or religious affiliation. ABHOW directly owns and operates seven CCRCs in California. In addition to these seven CCRCs, ABHOW provides management services to its affiliated senior housing corporations and limited partnerships, to four affiliated CCRCs and 18 unrelated low and moderate-income senior rental housing communities. ABHOW and all of its affiliates except Seniority and the limited partnerships identified below have received determination letters from the IRS that they are exempt from federal income taxation under Section 501(a) of the Code as organizations described in Section 501(c)(3) of the Code.

ABHOW is the sole member of ten nonprofit corporations that provide low and moderate-income senior rental housing in California and Washington as well as a California nonprofit corporation that is the general partner of six limited partnerships that provide, or are being developed to provide, low and moderate-income senior rental housing in California.

ABHOW is the sole member of several other corporations that supplement ABHOW’s mission and operations: (i) American Baptist Homes Foundation of the West, Inc., a California nonprofit public benefit corporation that administers charitable endowment funds for the benefit of ABHOW and its affiliates; (ii) American Baptist Homes of Washington, a Washington nonprofit corporation that owns and operates a CCRC in Des Moines, Washington known as Judson Park; and (iii) American Baptist Properties, Inc., a California nonprofit public benefit corporation (“American Baptist Properties”), created to hold real property to support ABHOW’s growth activities. ABHOW also owns a 100% interest in Seniority, a for-profit California corporation that provides sales, marketing, consulting and management services to the Corporation, ABHOW’s seven CCRCs, and a number of unrelated corporations.

ABHOW Board of Directors

ABHOW has a 15 member Board of Directors, of which eight, or a majority, are appointed by Cornerstone and the remaining seven are elected by the Regular Corporate Members of ABHOW. See “ABHOW Membership” below. The following table lists the members of the ABHOW Board of Directors as of January 1, 2014. There are two vacancies on the ABHOW Board.

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Board Members Term

Expires Occupation

Randall L. Stamper, Chair* 2016 Attorney, Stamper Rubens, P.S. Bruce Laycook, Vice-Chair 2014 Software Engineer Gloria P. Marshall, Secretary 2015 Administrator Senior Services H. Declan Brown 2016 Transportation Services Rev. Dr. Samuel S. Chetti 2015 Executive Minister, American

Baptist Churches of Los Angeles Walter Clarke 2014 Retired, L.A. County Department of

H.U.D. Hector M. Gonzalez 2015 Retired Engineer, Pacific Gas &

Electric Rev. Michelle Holmes 2016 CFO, American Baptist Seminary of

the West Rev. Lloyd Howard 2016 Retired Minister James Ella James 2014 Retired Manager U.S.P.S. Dr. Joel Martin 2014 Diversity Consultant Dr. Marcia J. Patton 2014 Executive Minister, Evergreen

Baptist Association Phyllis Stuewig 2015 Retired Nurse

* Mr. Stamper’s firm serves as counsel to the Corporation in connection with the issuance of the Bonds.

ABHOW Membership

ABHOW is a membership organization. There are two classes of Corporate Members. The Regular Corporate Members are the chairs of the boards of directors or advisory boards of each ABHOW CCRC, the chairs of the boards of directors of each ABHOW affordable housing community, and at least three persons who are members of an American Baptist Church or congregation in a geographic area near where ABHOW operates a CCRC or affordable housing community. ABHOW’s Bylaws provide that the majority of the Regular Corporate Members must be members of an American Baptist Church or an American Baptist Church congregation. The Honorary Corporate Members are former Regular Corporate Members who have served for three terms, or have served for two terms and are 70 years old, or are a retired officer of the Corporation, and who have been elected as Honorary Corporate Members by the Corporate Members.

Management of Cornerstone and ABHOW

ABHOW’s senior management team consists of the following individuals:

David B. Ferguson, President and Chief Executive Officer (age 65). Mr. Ferguson became President and CEO of ABHOW in 1995, having joined ABHOW in 1992 as Executive Vice President. He has over 35 years of experience in senior housing and services. Prior to joining ABHOW, Mr. Ferguson was a Partner and Senior Vice President at Greystone. He was responsible for the management division until his move to ABHOW. Prior to Greystone, Mr. Ferguson was Executive Vice President at the Forum Group from 1983 to 1988 with responsibility for construction, operations, and marketing. From 1977 to 1983 Mr. Ferguson

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worked at Life Care Services Corp. Mr. Ferguson is the recipient of the American Association of Homes and Services for the Aging (now LeadingAge) Award of Honor, their highest award, for exemplary national leadership and commitment to the future of aging services. He also is the former Chair of the Aging Services of California (now LeadingAge California), a member of the AAHSA Leadership Circle and has served on the AAHSA Long Term Care Financing Project, as well as on the Boards of LeadingAge, Coalition Leadership for Aging Services, and the AAHSA Development Corporation. He serves on the board of Masterpiece Living and Seniority, and is serving on the LeadingAge Long Term Services and Support Finance Reform Task Force. Mr. Ferguson has a Bachelor of Science degree from Cornell College, Mt. Vernon, Iowa.

Joseph E. Anderson, President, American Baptist Homes Foundation of the West (age 66). Mr. Anderson has been affiliated with ABHOW since 1994 when he became the Senior Vice President for Sales and Marketing, transitioning to President of Seniority in 1997, a role he held until 2006 when he became the President of the Foundation. Mr. Anderson is chair of the board of SQLC, a Dallas-based nonprofit operator of life care retirement communities; he is chairman of the SQLC Foundation; and a member of the board of directors of The Stayton at Museum Way, a Fort Worth, Texas life care community owned by SQLC. Prior to joining ABHOW, Mr. Anderson was the Chairman of Anderson Fischel Thompson, a Dallas, Texas-based subsidiary of J. Walter Thompson Advertising Agency. Mr. Anderson is a board member of Senior Helpline Services, a Lafayette, California, based nonprofit that provides transportation and assurance phone calls to seniors in Contra Costa and Alameda Counties, and he is the former Chair of the Endowment Committee of San Ramon Valley United Methodist Church, Alamo, California. He is a graduate of Illinois Wesleyan University, Bloomington, Illinois.

M. Sloan Bentley, President, Seniority, Inc. (age 50). Ms. Bentley’s career spans 25 years in the senior housing business. Ms. Bentley was one of the founding members of Seniority in 1997. First serving as vice president of sales and then as vice president of management, she was named President of Seniority in 2006. Prior to joining Seniority, Ms. Bentley served on both on the corporate staff and as a community executive director for Northern California Presbyterian Homes. She is a recognized sales trainer and a frequent speaker for state and national organizations in senior housing and health care. Ms. Bentley earned her Bachelor’s degree in Gerontology from Bowling Green State University (Ohio), and a Master of Long-Term Care Administration from the University of North Texas, Denton, Texas. Ms. Bentley has resigned as President of Seniority effective January 31, 2014. As of the date hereof, no successor has been appointed.

Pamela S. Claassen, Senior Vice President and Chief Financial Officer (age 58). Ms. Claassen joined ABHOW in May, 2000. Prior to ABHOW, Ms. Claassen spent 22 years with KPMG LLP and was a Partner delivering audit, consulting and technology services to public sector, nonprofit, real estate and financial services clients. Ms. Claassen served on ABHOW’s Board for two years and was active on several ABHOW committees prior to accepting her position as CFO. Ms. Claassen has responsibility for communicating complex financial information to various financial stakeholders including rating agencies, regulatory agencies, bondholders and credit providers, donors, staff and residents. Ms. Claassen oversees a staff of 20 in Finance at the ABHOW corporate office in Pleasanton, California. During her tenure, Ms. Claassen has participated on the financing teams for over ten transactions aggregating in excess of $500 million in tax exempt financings for ABHOW and its affiliates. Ms. Claassen is on the

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board of Caring Communities Risk Retention Group, the provider of liability insurance for ABHOW and its affiliates. In addition she is a Trustee for Linfield College, serving as chair of the audit committee and as a member of the executive committee.

Terese Farkas, Senior Vice President, Human Resources (age 52). Ms. Farkas has more than 20 years of combined experience in human resource management, organization development, and business management in companies similar to ABHOW in size and structure. Her major HR strengths include staffing, compensation and employee relations. Ms. Farkas has a solid reputation for inspiring and translating vision into practical, powerful and cost-effective programs. Her previous position was with SonicBlue Inc. in Santa Clara, California. During her tenure there as Senior Vice President, Human Resources, some of her accomplishments included rebuilding and managing worldwide human resources during an industry change from graphic chips to consumer electronics; staff alignment to company vision, mission, strategy and operating principles; developing an executive compensation plan, designing a new base pay program and performance management process and launching an employee communication program.

Jeff Glaze, Senior Vice President CCRC Operations (age 56). Mr. Glaze joined ABHOW in 1997 as Corporate Controller and Financial Planner. He has over 33 years of experience in healthcare and senior living financial and general management. In 2006 he was selected to lead ABHOW’s CCRC Operations. Prior to joining ABHOW, Mr. Glaze spent 15 years fulfilling a variety of financial roles in the acute hospital sector, working for Humana Inc as well as Merritt Peralta Medical Center and Children’s Hospital in Oakland, California. In addition, Mr. Glaze spent four years overseas working for the States of Guernsey’s Department of Health where he teamed with the Social Security Department to nationalize healthcare services in 1996 for the island’s population. He serves as a member of LeadingAge California’s Group Services Board, and is a member of the International Council on Active Aging’s Advisory Board. Mr. Glaze has a Bachelor of Science degree in Accounting from the University of Idaho in Moscow, Idaho, and a Masters degree in Business Administration from California State University in Hayward, California.

Joe Gerardi, Vice President and Chief Information Officer (age 60). Mr. Gerardi joined ABHOW in 2006. After eight years in the U.S. Army, Mr. Gerardi enjoyed a 26-year career at Hewlett-Packard Company. At Hewlett-Packard he was a senior technology manager and led both global and domestic teams focused on infrastructure, networking, security and technology research. Mr. Gerardi is on the advisory board of AGETECH West, is an active member of the Adaptive Business Leaders Technology Roundtable, and serves as a Commissioner for the Council on Aging Services Technologies, a LeadingAge group. He earned his degree in Business from the University of Maryland, College Park, and has done graduate work at the University of Phoenix.

Kay Kallander, Senior Vice President Strategic Planning (age 64). Ms. Kallander’s career in long term care began as Director of Nursing, then Assistant Administrator, then Executive Director at Plymouth Village, one of ABHOW’s CCRCs. She spent five years as ABHOW’s Chief Operations Manager for CCRCs, then moved to her current role. Since Ms. Kallander has been in her current position, the ABHOW strategic planning process was awarded the 2002 and 2008 Best Practices Award from the Continuing Care Accreditation Commission

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and LeadingAge California. Ms. Kallander has been recognized for her leadership development by the American Association of Homes and Services for the Aging (now LeadingAge) with the Dr. Herbert Shore Mentor of the Year Award in 2008, and with the Chair’s Citation for Leadership in 2010. She was recognized in 2012 by Leading Age California with the Award of Honor Award. Ms. Kallander served on the White House Conference on Aging and she serves as the Chair of LeadingAge California. She graduated from the University of Redlands with a Bachelor of Science in Health Care and a Masters in Business Administration, and was recognized as the 2001 Alumni of the Year and the Centennial Achievement Award in 2007.

Russell Mauk, Vice President of Design, Construction and Redevelopment (age 54). Mr. Mauk joined ABHOW in 2007. He is responsible for managing the major design and construction projects within ABHOW, and for defining the design and construction standards and project management methods used throughout the company. Mr. Mauk is a California Registered Architect and has been in the project management field for over 27 years. Prior to joining ABHOW, Mr. Mauk worked in the area of commercial real estate development and project management on retail, office and industrial properties. He managed the implementation of a number of corporate campuses for Sun Microsystems valued at over $350 million. Mr. Mauk has a Masters of Architecture degree from Columbia University and a Bachelor of Arts in Architecture from the University of California, Berkeley.

Andrew McDonald, Vice President, Controller (age 37). Mr. McDonald joined ABHOW in 2007 as its Controller after serving as the Controller for a real estate developer in Southern California. His professional background includes working on corporate restructurings in Arthur Andersen’s Global Corporate Finance group and acting as the lead financial analyst preparing long term financial forecasts for Southern California Edison. He is a Certified Public Accountant in the state of New Mexico and part-time accounting instructor at Las Positas College. Mr. McDonald obtained his Masters in Business Administration from University of California Los Angeles and his undergraduate degree in Economics and Accounting from Claremont McKenna College.

S. Louise Rankin, Senior Vice President and General Counsel (age 59). Ms. Rankin joined ABHOW in January 2013 after 31 years in private law practice. She came from Jones Day, where she spent 17 years as a partner, first in the Chicago office, then helping establish the firm’s Silicon Valley and San Francisco offices. She was the Administrative Partner of the San Francisco office for seven years. Ms. Rankin provided clients, including ABHOW, with healthcare finance advice. Ms. Rankin is licensed in California and Illinois, and is a member of the California Bar Association and the American Health Lawyers Association. She graduated from Minnesota State University Mankato (magna cum laude), and Vanderbilt Law School, Nashville, Tennessee, where she serves on the Board of Advisors of the Law School.

Ancel Romero, Senior Vice President, Affordable Housing (age 52). Mr. Romero joined ABHOW in 1998. He was previously the director of property management of G&K Management Co., one of the largest for-profit housing providers in the country. He has served as a board member of numerous nonprofit housing organizations such as the Association of Housing Management Agents of Northern California, Nevada and Hawaii (as president), Tenderloin Neighborhood Development Corporation, and Caring Communities. He has also served as a finance committee member of LeadingAge California. Mr. Romero is a nationally

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accredited Affordable Housing Professional (Executive Level), a certified Fair Housing Professional, a Certified Tax Credit Compliance Specialist (LIHTC C3P), and a Certified Property Manager (CPM) as designated by the Institute of Real Estate Management. Mr. Romero majored in Economics and has a Bachelor in Business Administration degree from Letran College in Manila, Philippines.

THE COMMUNITY

General Description

The Community will be constructed on a site of approximately 12.6 acres located northeast of the Harris Ranch neighborhood in Boise, Idaho. The south-eastern property boundary is adjacent to Riverstone International School, a private pre-K-12 school.

The Community will consist of 149 Residential Living Apartments, 12 Residential Living Duplex Apartments, 40 Assisted Living Apartments, 24 Special Care Assisted Living Suites and three, one-story cottage style buildings housing a total of 48 private skilled nursing rooms (the “Health Center”). Each level of care has its own common and support areas; however, the current design assumes the entire Community, with the exception of Residential Living Duplex Apartments and the Health Center, will be interconnected so that Residents and staff can move from one building to another in a protected environment. The Community will contain an underground parking garage as well as surface parking.

Construction of the Community is expected to commence in February 2014 with occupancy of the first Residential Living Units expected approximately 16 months later in June 2015. See the inside front cover of this Official Statement for a location map and site plan of the Community.

Land Acquisition

The ground on which the Community will be located is owned by American Baptist Properties. The Corporation entered into a ground lease (the “Lease”) with American Baptist Properties for the property, on March 24, 2008 (the “Commencement Date”). Upon closing of the Series 2014 Bonds, the Corporation will buy the real property from American Baptist Properties for $5,000,000 in proceeds of the Series 2014 Bonds by using $3,000,000 of the proceeds of the Series 2014 Bonds and issuing a $2,000,000 subordinated 4% fixed rate note to American Baptist Properties.

Residential Living Units

The 149 Residential Living Apartments in the Community will be in one- and two- bedroom configurations within a four-story building. The common areas include a full service kitchen, residential, administrative and support areas, private and group dining rooms, informal social areas, a multi-purpose room, a library/business center and a fitness center. Additionally, residents of the 12 Residential Living Duplex Apartments will have access to the commons areas associated with the main residential living structure.

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The following table summarizes the unit types and approximate square footage of the Residential Living Units.

Residential Living Unit Style Number of Units Approximate Square

Footage

One Bedroom/ One Bathroom Apartments Falcon’s Cove 8 700 Golden Eagle 17 700 Eagles Perch 2 797 Foothills 3 812 Table Rock 3 860 Quail 1 861

One Bedroom/ One and a Half Bathroom w/ Den Apartments

Blue Heron 21 923 The Rockies 7 1,066

Two Bedroom/ Two Bathroom Apartments Heron’s Cove 22 923 The Highlands 18 1,098 The McCall 21 1,243 The Mesa 11 1,364 The Mesa Plus 3 1,510 The Mesa Plus Deluxe 2 1,595 The Sun Valley 10 1,364

Duplex Apartments Rivers Edge 12 1,456

Overall Total/Wtd. Average 161 1,067

Each of the Residential Living Units will be furnished with a full kitchen with refrigerator/freezer, range with oven, microwave oven, dishwasher, stackable washer/dryer (in Residential Living Apartments only), window blinds, carpeting, ceramic tile, fire and smoke alarms, fire sprinkler system, emergency call system and individually controlled heating and air conditioning units. Residential Living Units also include a balcony or patio. In addition to the amenities listed above, the Residential Living Duplex Apartments will be furnished with a gas fired fireplace, utility room with full size washer/dryer, and carbon monoxide alarm. Telephone and cable television jacks will also be installed. All utilities, except telephone, internet service and premium cable television services, are included in the monthly service fee (the “Monthly Service Fee”).

By entering into a Care and Residence Agreement (as hereinafter defined), a resident (the “Residential Living Resident”) will be entitled to “life care” services provided by the Corporation at the Community (the “Life Care Benefit”). See “CARE AND RESIDENCE AGREEMENT – Services to Residential Living Residents” herein for a further description of the services provided to Residential Living Residents of the Community and “CARE AND RESIDENCE AGREEMENT – Resident Fee Structure” for a description of the types of fees paid by Residential Living Residents. In addition, underground garage parking spaces will be made available to Residential Living Residents of the Residential Living Units.

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Assisted Living

Assisted Living will consist of 40 Assisted Living Apartments and 24 secured Special Care Assisted Living Suites located in a three-story building and will have a separate central commons area on the ground floor. The Assisted Living Apartments have been designed to foster the continued independence of Residential Living Residents who require varying amounts of assistance with activities of daily living. The Assisted Living Apartments will be private one- and two-bedroom apartments with kitchenettes and full baths and will be furnished with amenities similar to the Residential Living Units, but do not include the kitchen range with oven, dishwasher, or washer and dryer. The Assisted Living Units’ common areas will include a lobby, lounge, arts and crafts area, multi-purpose room, dining room and administrative and support areas.

The Special Care Assisted Living Suites will be private one-bedroom suites with full baths that will be furnished with amenities similar to the Assisted Living Apartments, but without kitchenettes. The Special Care Assisted Living Suites will have secured access and separate common areas which include similar amenities as the Assisted Living common areas.

Admission to Assisted Living will be provided for Residential Living Residents of the Community in accordance with the terms of the Care and Residence Agreement. Assisted Living will be available for occupancy by persons other than Residential Living 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 Apartments or Special Care Assisted Living Suites are not required to accommodate Residential Living Residents of the Community. Direct Admit Residents will pay a monthly service fee (the “Direct Admit Monthly Service Fee”) and have access to Assisted Living as described below.

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Summarized below is the Direct Admit Monthly Service Fee planned to be effective through September 30, 2015 for Direct Admit Residents, and the types of Assisted Living Apartments and Special Care Assisted Living Suites and approximate square footage of each apartment type.

Assisted Living and Special Care Assisted Living

Apartment Type

Number of

Apartments

ApproximateSquare Footage

Direct Admit Monthly Service

Fee(1)(2)

AL Standard A (1BR) 6 454 $4,995 AL Standard B (1BR) 14 473 $4,995 AL Deluxe A (1BR) 4 565 $5,495 AL Deluxe B (1BR) 14 587 $5,495 AL Deluxe C (2BR) 2 895 $5,995 Assisted Living Total/Wtd. Average

40 540 $5,270

Special Care AL Standard A 10 330 $6,195 Special Care AL Standard B 1 338 $6,195 Special Care AL Standard C 1 346 $6,195 Special Care AL Accessible 12 346 $6,195 Special Care Assisted Living Total/Wtd. Average

24 339 $6,195

Overall Total/Wtd. Average 64 465 $5,617

________________________ (1) Assisted Living second person fees for residents receiving services are $2,251 in 2015 dollars. (2) In addition to Direct Admit Monthly Service Fees, Direct Admit Residents may be assessed level of

care fees. There are three additional level of care fees based on the specific needs of the resident. Level I is an additional $500 per month, Level II is an additional $900 per month and Level III is an additional $1,300 per month, in 2015 dollars.

Health Center

The Health Center will consist of 48 private skilled nursing rooms located in three cottage-style buildings each served by its own commons, administrative and support areas. There will be four different private room floor plans ranging in size from approximately 293 to 410 square feet. Each of the skilled nursing cottages will include their own community kitchen, dining areas, gathering spaces, salon, den, and outdoor courtyard.

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The Health Center will be available for occupancy by Residential Living Residents and Direct Admit Residents. The Community intends to obtain Medicare certification for the Health Center. Summarized below are the Direct Admit Per Diem Fees planned to be effective through September 30, 2015, for Direct Admit Residents and the types of Health Center beds and approximate square footage of each unit type.

Health Center Unit Type(1) Number of Beds

Approximate Square Footage of

Room Direct Admit

Per Diem Fee (2015)

Skilled Nursing Unit A 24 293 - 312 $285 Skilled Nursing Units B, C, D 24 385 - 410 $295

Total/Weighted Average 48 349 $290 ________________________ (1) Financial projections for the Community assume 16 of the nursing beds (8 Unit A and 8 Units B, C,

or D) are occupied by Medicare patients. The anticipated average reimbursement rate (including ancillary charges) for Medicare stays is approximately $480 per day in 2015.

Future Plans

The master plan for the Community includes a second phase development consisting of approximately 6 to 12 Residential Living Apartments. Development of the expansion will depend, in part, on the market demand at the time of development. The expansion has not been included in management’s forecast in the Feasibility Study. There is no assurance that any of the Phase II improvements will be built.

REGULATIONS, PERMITS AND APPROVALS

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

Zoning

The site is zoned to permit development of the Community as planned. The Corporation has received written acknowledgement from the City of Boise Planning and Development Services Department that the Corporation’s Continuing Care Retirement Community project has the proper zoning, by right, in place for the described project scope and level of care.

Healthcare Licensure

The Corporation will be required to obtain licensure of the Assisted Living Apartments, Special Care Assisted Living Suites, and Health Center from the Idaho Department of Health and Welfare upon completion of construction. No Certificate of Need is required to construct the Assisted Living Apartments, the Special Care Assisted Living Suites, or the Health Center as planned.

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Building Permits

The Corporation submitted the construction documents and application for the building permit to the City of Boise Planning and Development Services Department (the authority having jurisdiction over the Community) (the “Development Department”) on January 18, 2013. The Corporation has worked closely with the Development Department to respond to questions and complete minor clarifications required prior to issuing the building permits. On August 14, 2013, the Development Department notified the Corporation that the applied for Grading and Utility permit was approved. On January 8, 2014, the Development Department issued the Footing and Foundation permits for the building housing the Residential Living Apartments. At this time, nothing has come to the attention of the Corporation which would lead it to believe that the remaining permits will not be issued in due course

Environmental Study/Geotechnical Testing

A Phase 1 Environmental Site Assessment was completed on July 30, 2007 and revealed no adverse environmental conditions requiring any further investigation or mitigation.

As with all major construction projects, the Corporation must obtain numerous licenses, permits and approvals from various governmental agencies, both for construction work and to operate various portions of the Community after completion. Applications for some 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.

Registration

The Corporation is registered with the Idaho Department of Finance and received approval under the Idaho Continuing Care Disclosure Act to enter into Care and Residence Agreements with Residential Living Residents.

RESERVATION AGREEMENT

In order to reserve a Residential Living Unit at the Community, a prospective resident must execute a Reservation Agreement (“Reservation Agreement”), submit (on forms provided by the Corporation) a completed Personal Health History and Personal Financial Statement and place a deposit (the “Reservation Deposit”) equal to 10% of the Entrance Fee (as hereinafter defined) on the selected Residential Living Unit. To qualify to be a Resident at the Community, the prospective Resident must meet health and financial parameters as established by the Corporation. The prospective Resident must have assets at least equal to two times the Entrance Fee and have monthly income equal to 160% of the Monthly Service Fee for the specific Residential Living Unit selected. To qualify based on health parameters a prospective Resident must have the ability to live independently, have no diagnosis of Alzheimer’s or dementia and be at least 62 years old at or before the date in which the Resident’s Residential Living Unit is available for occupancy. See “MARKETING – Reservations of Residential Living Units.” The Reservation Agreement reserves the right of the prospective resident to choose his or her specific Residential Living Unit and to indicate his or her intent to execute a Care and Residence

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Agreement upon the opening of the Community. The Reservation Agreement also provides each prospective resident guaranteed direct admission, upon payment of the full Entrance Fee due, to an Assisted Living Unit, Special Care Assisted Living Unit or the Health Center under the Life Care Benefit should his or her health needs change prior to the opening of the Community.

CARE AND RESIDENCE AGREEMENT

The Care and Residence Agreement is a contract under which the Corporation is obligated, if a prospective Residential Living Resident establishes occupancy, to provide certain services to that prospective Residential Living Resident. See “Services to Residential Living Residents” below.

The Corporation considers applications for residence at the Community based upon the guidelines for the acceptance of Residential Living Residents described below and maintains sole discretion on the decision to accept a Residential Living Resident. An application for residence at the Community will be accepted only if the applicant demonstrates the ability to live independently and to meet the financial obligations as a Residential Living Resident of the selected Residential Living Unit. The Residential Living Resident must be at least 62 years of age at or before the date in which the Resident’s apartment is available for occupancy. In the event of two Residential Living Residents, only one must be 62 years of age at or before the Resident’s apartment is available for occupancy; however, the Resident must be at least 62 years of age to receive the Life Care Benefit. No dependent children may reside in the Community unless otherwise agreed by the Corporation.

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

Resident Fee Structure

There are two types of residency fees required of all Residential Living Residents executing Care and Residence Agreements: an Entrance Fee and ongoing Monthly Service Fees. The Entrance Fee is a lump sum, one-time payment based on the type of Residential Living Unit to be occupied by the Residential Living Resident and the type of Entrance Fee Plan selected. To reserve a Residential Living Unit, a prospective Residential Living Resident must make an initial payment equal to 10% of the Entrance Fee (“Reservation Deposit”) prior to or upon execution of the Care and Residence Agreement and pay the remaining 90% of the Entrance Fee on or before the date of occupancy. There is no additional Entrance Fee required for a second Residential Living Resident living in a Residential Living Unit.

The Monthly Service Fees are based on the type of Residential Living Unit selected by the Residential Living Resident. In addition to the first resident’s Monthly Service Fee, an additional Monthly Service Fee is payable for a second Residential Living Resident living in most of the Residential Living Units.

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The Corporation offers three residency plans to Residential Living Residents of the Community, which differ based on refundability of the Entrance Fee. Plan I is a 90% refundable contract for single occupants and an 80% refundable contract for couples (“Plan I”). Plan II is a 40% refundable contract for single occupants and a 30% refundable contract for couples (“Plan II”), and Plan III is a 10% refundable contract for single occupants and a nonrefundable plan for couples (“Plan III”). Under Plan II, the Entrance Fee will amortize 2% per month from the date of occupancy to the date of termination, but in no event will the Entrance Fee refund amortize below 40% of the Entrance Fee for single occupants or 30% of the Entrance Fee for couples, and the Monthly Service Fee will be discounted 20% per month from the Plan I pricing. Under Plan III, the Entrance Fee will be discounted by 30% from the Plan I pricing and will amortize 2% per month from the date of occupancy to the date of termination, until the Entrance Fee is no longer refundable for couples, but in no event will the Entrance Fee refund amortize below 10% for single occupants. The Monthly Service Fee under Plan III is the same as Plan I. It is anticipated that Plan III will only be offered to Preferred Members (described below). All three plans offer a Life Care Benefit. See “Life Care Benefit” below.

Plan I is the base pricing plan for the Community. Plans II and III are adjusted from Plan I pricing to reflect the refundability options. The Corporation plans to only offer a limited number of Plans II and III. The following table illustrates the planned Monthly Service Fees and Entrance Fees under Plan I (expressed in 2015 dollars):

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Plan I Resident Pricing

Residential Living Number

2015 Preferred 2015 Entrance Fees Monthly Service Preferred Construction Standard

Unit Style of Units Fee(1) Pricing(2) Pricing(3) Pricing(4)

One Bedroom/ One Bathroom Apartments

Falcon’s Cove 8 $1,995 $199,900 $210,421 $222,111 Golden Eagle 17 $1,995 $199,900 $210,421 $222,111 Eagles Perch 2 $2,395 $239,900 $252,526 $266,556 Foothills 3 $2,495 $199,900 $210,421 $222,111 Table Rock 3 $1,995 $189,900 $199,895 $211,000 Quail 1 $2,495 $229,900 $242,000 $255,444

One Bedroom/ One and a Half Bathroom w/ Den Apartments

Blue Heron 21 $2,595 $249,900 $263,053 $277,667 The Rockies 7 $2,995 $259,900 $273,579 $288,778

Two Bedroom/ Two Bathroom Apartments

Heron’s Cove A 19 $2,795 $249,900 $263,053 $277,667 Heron’s Cove B 3 $2,795 $209,900 $220,947 $233,222 The Highlands A 14 $3,195 $289,900 $305,158 $322,111 The Highlands B 4 $3,195 $249,900 $263,053 $277,667 The McCall A 14 $3,495 $299,900 $315,684 $333,222 The McCall B 3 $3,495 $299,900 $315,684 $333,222 The McCall C 4 $3,495 $259,900 $273,579 $288,778 The Mesa 11 $3,695 $369,900 $389,368 $411,000 The Mesa Plus 3 $3,795 $389,900 $410,421 $433,222 The Mesa Plus Deluxe 2 $3,795 $389,900 $410,421 $433,222 The Sun Valley 10 $3,695 $389,900 $410,421 $433,222

Duplex Apartments Rivers Edge 12 $3,895 $439,900 $463,053 $488,778

Overall Total/Wtd. Average

161 $2,993 $283,937 $299,666 $316,314

______________________ (1) Residential Living second person fees are $695 for all preferred residents and $995 for all standard

residents in 2015 dollars. A few apartments do not have a second person fee. (2) Preferred Resident Pricing refers to pricing offered to prospective residents prior to initiation of

construction of the Community and includes a discount from the Standard Entrance Fee. See “Preferred Resident Benefit” herein for additional information.

(3) Construction Pricing refers to pricing anticipated to be offered to prospective residents during construction of the Community and includes a discount from the Standard Entrance Fee.

(4) Standard Pricing refers to pricing anticipated to be offered to prospective residents after opening of the Community.

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The following table highlights the key differences between Plan I and the other plans.

Plan Type

Entrance Fee Discount off of Plan I Pricing Refundability Amortization Period(1)

Monthly Fee Discount off of Plan I Pricing

Plan II 0% 40% for single/ 30% for couple

30/35 months 20%

Plan III(2) 30% 10% for single/ 0% for couple

45/50 months 0%

______________________ (1) See “Care and Residence Agreements” herein. Refunds under Plan II and III reduce monthly over

time (2% per month) to 40%/30% and 10%/0%, respectively. (2) It is anticipated that Plan III will only be offered to Preferred Members.

The Corporation initially offered other pricing and refundability plans (Plans A, B, C, D and E, or collectively, the “Prior Plans”). The Prior Plans were offered from September 2009 through May 2012. Approximately 75 of the current Reservation Deposits are under Prior Plans. Plan A is a 95% refundable contract, Plan B is a 50% refundable contract, Plan C is a traditional fully amortizing plan, Plan D is a 90% refundable continuing care contract that does not offer a Life Care Benefit, and Plan E is a 70% refundable contract. See “Table 7 – Utilization of Entrance Fee Options” in APPENDIX B for a breakdown of Reservation Deposits by Prior Plan type.

Preferred Resident Benefit

To encourage early commitments to residency at the Community, the Corporation offers a package of benefits (“Preferred Resident Benefits”). Preferred Resident Benefits include, but are not limited to, the following: (i) a 10% discount from the Entrance Fee (“Preferred Entrance Fee”); (ii) no increase in Monthly Service Fees through December 31, 2013; (iii) a $300 discount from the second person Monthly Service Fee; (iv) interest paid at such a rate as is earned on the escrow account on the Entrance Fee deposit until the date the Residential Living Unit is ready for occupancy; (v) one month of complimentary Monthly Service Fees from the available occupancy date; (vi) a one-time credit against the Monthly Service Fee for every six months a full Entrance Fee Deposit was maintained from the date of deposit to the available occupancy date; (vii) an opportunity to customize the Residential Living Unit; (viii) pre-qualification regardless of changes in health between signing of the Reservation Agreement and occupancy, as long as the Corporation is able to provide the care needed in a safe environment.

Financial Assistance

It is the Corporation’s policy that the Care and Residence Agreement will not be terminated solely because of the resident’s financial inability to continue to pay the Monthly Fees or other charges payable under the terms the Care and Residence Agreement through no fault of their own or by reason of circumstances beyond the resident’s control; provided, this policy is not construed to qualify or limit the Corporation’s right to terminate the Care and Residence Agreement in accordance with its terms, as summarized under the caption “Termination and Refund”. Pursuant to the terms of the Care and Residence Agreement, if a Residential Living Resident becomes unable to pay the Monthly Fees or other charges promptly,

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the Corporation may, in its sole discretion, agree to grant the resident an extension of the time to make any payments that are due or to work out another mutually acceptable alternative payment arrangement so long as such arrangement can be made without impairing the ability of the Corporation to attain its objectives while operating on a sound financial basis. Before a resident may qualify for any alternative payment arrangement, the resident must first apply for, and seek the benefits of, any public assistance program for which the resident might qualify.

In the event the Corporation determines to provide the resident with any financial assistance or subsidy, the resident must agree that any deferral of subsidization of the Monthly Service Fees or other charges shall be deemed a loan to the resident by the Corporation, shall be a lien against the resident’s estate and the Corporation may charge such amounts against the refund of the Entrance Fee, including interest income lost as a result of applying a portion of the Entrance Fee to pay such amounts. The Corporation may require the resident to move to a smaller or less expensive residence.

The cost of any such financial assistance provided in excess of the refundable portion of the resident deposit shall be accrued and remain the resident’s obligation and the obligation of the resident’s estate. If the resident’s financial situation improves, the Corporation’s subsidy to the resident may be decreased or eliminated, as determined by the Corporation in its sole discretion. If the resident’s financial situation improves to the extent that the resident is able to repay all or part of the Corporation’s assistance, the resident will be required to make such repayment at a rate and on terms as established by the Corporation in its sole discretion. Upon repayment of all of the Corporation’s assistance, the Corporation will execute appropriate documents to release its lien.

In addition to the foregoing, in the event that the Corporation determines to provide the resident with any financial assistance or subsidy, the resident must do all of the following: (a) report promptly to the Corporation any material increase in the resident’s assets or their value; (b) refrain from transferring material portions of the resident’s assets or income for less than fair market value; (c) refrain from transferring assets or reducing the size of his/her estate in order to retain such alternative payment arrangement; (d) make arrangements at the Corporation’s request for the preservation and management of the resident’s assets by others, including conservators and trustees; (e) execute any documents that the Corporation deems necessary to secure the resident’s obligation to repay the Corporation for such financial assistance or subsidy; and (f) provide documentation necessary for an annual recertification of the resident’s assets and income.

Nondiscrimination

The Community will be operated on a non-discriminatory basis, and will provide the facilities and services described in the Care and Residence Agreement to individuals without unlawful discrimination due to race, color, religion, sex, age, national origin, ancestry, disability or any other unlawful reason.

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Services to Residential Living Residents

Upon payment in full of the Entrance Fee and ongoing payment of the Monthly Service Fee, each Residential Living Resident will be provided a Residential Living Apartment or Residential Living Duplex Apartment and receive certain basic services. Services provided include: (i) 20 meal credits per person per month; (ii) all utilities, except telephone, internet services and premium cable television services; (iii) scheduled housekeeping of the Residential Living Apartment or Duplex Apartment two times per month; (iv) scheduled cleaning and changing of personal bed linens two times per month; (v) maintenance of all common areas and equipment; (vi) regularly scheduled local transportation; (vii) 24-hour monitoring of the emergency call system; (viii) a variety of recreational, religious, educational, cultural, and social programs; (ix) use of the fitness and wellness center, dining rooms, lounges, social and recreational rooms and other common activity facilities; (x) use of one designated underground parking space; (xi) use of one individual storage locker per apartment; and (xii) limited tray service during illness.

Life Care Benefit

The Corporation will provide Residential Living Residents with nursing services that are available in the Health Center or assisted living/special care assisted living services that are available in Assisted Living when a determination is made by the Executive Director, in consultation with the resident and his or her physician, the Medical Director, appropriate specialist or licensing official, that the Residential Living Resident needs nursing care or assisted living care (the “Life Care Benefit”). The Corporation will pay for routine assisted living services, special care assisted living services and nursing care to the extent that it is not covered by the resident’s insurance, Medicare, or other governmental benefits or entitlements that Residential Living Residents are required to possess and maintain under the Care and Residence Agreement. Assisted living services will be provided in a standard, private one-bedroom apartment in Assisted Living 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. Special care assisted living services will be provided in a private one-bedroom suite in Assisted Living and will include assistance with activities of daily living, as described above, and the special needs of memory support residents in accordance with the routine care included in the applicable Monthly Service Fee then in effect and applicable laws. 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 and release of the Residential Living Unit, the resident’s Monthly Service Fee will be adjusted to the then-current Monthly Service Fee for the Residential Living Apartment named The Highlands plus the cost of two additional meals per day. In the case of double occupancy of a Residential Living Unit, in the event of a permanent transfer of both Residents and release of the Residential Living Unit, the Monthly Service Fee for the first resident will be adjusted to the then-current Monthly Service Fee for the Residential Living Apartment named The Highlands plus the then-current cost of two additional meals per day. The Monthly Service Fee for the second resident will also be adjusted to the then-current Monthly Service Fee for the Residential

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Living Apartment named The Highlands plus the then-current cost of two additional meals per day. If space is not available in the Health Center or Assisted Living, until such space becomes available, the Corporation will arrange and pay for a Residential Living resident’s temporary care in another assisted living center or health center of comparable quality to the same extent as if it were provided by the Corporation.

Residents who placed Reservation Deposits under Prior Plans A, B, C and E will receive a similar Life Care Benefit. For single occupancy, upon permanent transfer to the Health Center or Assisted Living and release of the Residential Living Unit, the resident’s Monthly Service Fee will be adjusted to the then-current Monthly Service Fee for the Residential Living Apartment named The Rockies plus the cost of two additional meals per day. In the case of double occupancy of a Residential Living Unit, in the event of a permanent transfer of both residents and release of the Residential Living Unit, the Monthly Service Fee for the first resident will be adjusted to then-current Monthly Service Fee for the Residential Living Unit named The Rockies plus the then-current cost of two (2) additional meals per day. The Monthly Service Fee for the second resident will also be adjusted to the then-current Monthly Service Fee for the Residential Living Unit named The Rockies plus the then-current cost of two additional meals per day.

Residents transferred to Assisted Living or the Health Center will be billed for non-routine care and ancillary services at the then-current rates for such items. Additional services may be available on a fee-for-service basis including, but not limited to, additional housekeeping, laundry services for personal items, catering for special occasions, additional tray service during illness, personalized transportation, additional resident and guest meals, barber and beauty services and temporary guest quarters.

Termination and Refunds

Termination Prior to Occupancy. Prior to occupancy, prospective Residential Living residents will be entitled to reimbursement of their Reservation Deposit in full with interest at the prevailing rate on the escrow account non-compounded, less any costs incurred by the Corporation on the Resident’s behalf within 30 days after notice, written if applicable, of termination of the Care and Residence Agreement under any one of the following conditions: (i) if a Residential Living Resident dies, or if, because of illness, injury or incapacity, the Residential Living Resident would be precluded from occupying the Residential Living Unit consistent with the representations made by the resident in the Personal Health History; (ii) if a Residential Living Resident terminates the Care and Residence Agreement before midnight of the seventh day beginning with the first full calendar day following the execution of the Care and Residence Agreement or the payment of an initial sum of money as a deposit or application fee whichever occurs last (“Rescission Period”); (iii) if a Residential Living Resident submits a written termination of the Care and Residence Agreement after expiration of the Rescission Period, but prior to occupancy; (iv) if the Corporation terminates the Care and Residence Agreement for resident’s failure to pay the Entrance Fee; (v) if the Corporation terminates its intention to fully construct the Community; or (vi) the residence is not available for occupancy within three years after the date of execution of the Care and Residence Agreement. For conditions (iii) and (iv) above, the resident will be charged at two hundred and fifty dollar ($250) processing fee.

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Termination After Occupancy. After occupancy, the Care and Residence Agreement may be terminated by the Residential Living Resident at any time by providing 30 days’ written notice of termination to the Corporation. Upon termination of the Care and Residence Agreement and release of the Residential Living Unit, the Corporation will refund the appropriate percentage of the Entrance Fee by the departing Residential Living Resident (depending on the Entrance Fee Plan selected), without interest, on the later of: (i) the effective date of termination of the Care and Residence Agreement, or (ii) the date a new Entrance Fee and executed Care and Residence Agreement have been received from a new Residential Living Resident, and the new Residential Living Resident has taken occupancy of the vacated Residential Living Unit.

The Corporation may terminate the Care and Residence Agreement at any time after the occupancy date for just cause upon giving 30 days’ written notice. Just cause shall include but not be limited to: (i) resident’s failure to perform his/her obligations under the Care and Residence Agreement, including failure to fulfill his/her obligation to pay the Monthly Service Fee and other charges due and failure to agree to be transferred pursuant to the terms and conditions of the Care and Residence Agreement. If the Corporation terminates the Care and Residence Agreement due to the resident’s failure to be transferred, 30 days’ notice is not required; (ii) there is a failure to comply with the rules and regulations described in the Resident Handbook by the resident or the resident’s family and/or guests; (iii) there is a creation of a disturbance within the facility or a condition or behavior that is detrimental to the health, safety or peaceful lodging of others; (iv) a material omission or misstatement in the resident’s application, financial report, medical history and examination, or any document filed with the Corporation by resident or on resident’s behalf; (v) a material omission or misrepresentation regarding resident’s financial condition discovered after the resident’s admission to the Community; (vi) resident’s failure to provide the Corporation the information requested as a condition of resident’s receipt of a subsidy from the Corporation; (vii) resident’s transfer of assets or reduction in the size of resident’s estate in order to receive an alternate payment arrangement; (viii) resident’s failure to furnish to the Corporation his/her IRS form 1040, financial statements, or other financial information that the Corporation reasonably requests; (ix) resident’s permanent transfer to an outside facility; (x) resident’s failure to permit the Corporation to access his/her Residential Living Unit; and (xi) the good faith determination, in writing, signed by the Medical Director and Executive Director that the Resident is a danger to himself or herself or others. If two Residential Living Residents occupy a Residential Living Unit and one dies, the Care and Residence Agreement will continue in full force and effect for the surviving resident, except the Monthly Service Fee will be reduced by the then-current charge for a second person for the Residence occupied by the surviving Residential Living Resident. No refund of the Entrance Fee will occur until the surviving resident leaves.

MARKETING

Marketing Program

Marketing efforts for the Community began in April 2008 with a “Priority Program.” Greystone conducted a direct mail campaign, on behalf of the Corporation, including a business reply card, to age and income qualified seniors in the Boise area. Prospective Residential Living Residents (the “Priority Members”) were placed on a priority list and given a priority number.

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Approximately 419 Priority Members signed up prior to September 2009 when the Corporation began accepting Reservation Deposits.

Reservation of Residential Living Units

A prospective Residential Living Resident may reserve a Residential Living Unit at the Community by submitting a confidential data profile, including health and financial disclosure, executing a Reservation Agreement (or a Care and Residence Agreement after opening of the Community) and submitting a Reservation Deposit for the Residential 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 Residential Living Resident. Prospective Residential Living Residents may terminate their Care and Residence Agreements and receive refunds of all amounts paid to the Corporation. See “CARE AND RESIDENCE AGREEMENT – Termination and Refunds” herein.

Priority Members were offered the opportunity to enter into a Reservation Agreement beginning in September 2009. As part of the reservation process, a prospective Residential Living Resident is provided with a financial disclosure statement and a draft Care and Residence Agreement. As of January 22, 2014, 119 of the 161 available Residential Living Units (representing approximately 73.9% of the total available Residential Living Units of the Community) were reserved by prospective Residential Living 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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Net and Cumulative Deposits

Month

Number of Units

Reserved

Number of Cancellations/

Refunds

Net Reservations

for Month

Cumulative Units

Reserved

Cumulative% of Total

Units

2009(1) 27 1 26 26 16.1% 2010 34 5 29 55 34.2% 2011 24 5 19 74 46.0% January 2012 4 0 4 78 48.4% February 2012 1 0 1 79 49.1% March 2012 3 0 3 82 50.9% April 2012 7 1 6 88 54.7% May 2012

0 1 (1) 87 54.0% June 2012 6 2 4 91 56.5% July 2012 1 0 1 92 57.1% August 2012 4 1 3 95 59.0% September 2012 5 0 5 100 62.1% October 2012 2 1 1 101 62.7% November 2012 3 3 0 101 62.7% December 2012 2 1 1 102 63.4% January 2013 1 1 0 102 63.4% February 2013 2 1 1 103 64.0% March 2013 4 0 4 107 66.5% April 2013 6 3 3 110 68.3% May 2013 3 2 1 111 68.9% June 2013 3 0 3 114 70.8% July 2013 5 1 4 118 73.3% August 2013 0 5 (5) 113 70.2% September 2013 2 2 0 113 70.2% October 2013 2 2 0 113 70.2% November 2013 3 0 3 116 72.0% December 2013 3 0 3 119 73.9% January 2014 1 1 0 119 73.9%

TOTAL(2): 158 39 119

(1) The Corporation began accepting Reservation Deposits on September 14, 2009. (2) Represents total net deposits and cancellations as of January 22, 2014.

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 “CARE AND RESIDENCE AGREEMENTS” herein. Each applicant is subsequently notified of the Corporation’s decision to accept or reject his or her application. In

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the case of applicants accepted for residency, a Reservation Agreement (or Care and Residence Agreement after opening of the Community) is executed by the prospective resident and the Corporation. In the case of applicants rejected for residency, their initial 10% Entrance Fee deposit is refunded within 30 days.

Health Services

The Corporation has not yet initiated marketing for services contemplated for the Health Center or Assisted Living. The Corporation anticipates that it will initiate a comprehensive health care oriented training of marketing personnel, direct marketing and presentations to the network of senior caregivers in the greater Boise area and personal contact with hospital discharge planners and physicians shortly before completion of construction of those portions of the Community.

DEVELOPMENT OF THE COMMUNITY

The Corporation has entered into separate development services agreements with ABHOW and Greystone Development Company II, LP (“GDC”) and a Sales and Marketing Oversight Agreement with Seniority. The following section summarizes the development services agreements with ABHOW and GDC and the Sales and Marketing Oversight Agreement with Seniority.

ABHOW Development Administrative Services Agreement

The Corporation entered into a Development Administrative Services Agreement with ABHOW, dated February 1, 2008, as amended, to provide certain development administrative support services in connection with development of the Community. Pursuant to the terms of the Development Administrative Services Agreement, the Corporation uses ABHOW to (a) review and assess components of the business plan or budgets, schedules, or strategies contained therein as prepared by Greystone (as described below); (b) review proposed revisions to the concepts, schedules, or strategies described in the business plan; (c) provide information necessary for the Corporation’s agents to prepare applications for any federal, state and local licenses, permits or approvals necessary for development and construction; (d) assist in the selection and engagement of architects, engineers, and other design professionals; (e) assist in review of the development requests for proposal and identifying firms to present their qualification to the Corporation; (f) review the work of the design consultants and determine that all such design and architectural work is consistent with the business plan for the Community; (g) meet with the Corporation’s project coordinator and design consultant to discuss the concept and goals of the Community as reflected in the business plan; (h) review the selection of a preconstruction consultant; and (i) provide oversight of the work of GDC in the preparation of a resident program, marketing plan, and pricing.

Under the terms of the Development Administrative Services Agreement, ABHOW will be paid a development administrative support services fee equal to $17,000 per month for each month that GDC is compensated. The development administrative support services fee payments are to be subject to the provisions of the Master Indenture with respect to Affiliate Related Subordinated Debt. Under the current terms of the Development Administrative Services

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Agreement and the Master Indenture, all development administrative support service fees are deferred until stabilization of the Community.

Greystone

The Corporation entered into a Development Consulting Agreement effective December 21, 2007, as amended, with GDC and its affiliated entity Greystone Development Services XX, LLC (“GDS”). GDC, GDS, and the Manager (as defined below) are collectively referred to herein as “Greystone.”

GDC, a Delaware limited partnership, was engaged to provide development consulting services during the planning and development of the Community. GDC specializes in providing planning, development, marketing, management and strategic consulting services related to all areas critical to the senior housing and services business. GDC currently has a staff of approximately 150. Pursuant to the terms of the Greystone Development Consulting Agreement, GDC is responsible for planning, coordinating and implementing a development plan relating to the construction and financing of the Community, and for the services and activities of the residents. GDC will also employ, train and supervise the marketing and sales staff for the Community, on behalf of the Corporation, and will be responsible for the payroll-related expenses, sales commissions and payroll tax liabilities for these staff. These personnel costs are billed monthly and are to be reimbursed to GDC by the Corporation.

Greystone was formed in 1989 as the successor to VHA Development Company, Inc., which was formed in 1982. GDC and its affiliates are owned by Greystone Partners II LP, a privately held partnership including employees of GDC.

GCI Boise, L.P.

Greystone is responsible for the development of the Community under the direction of the Corporation. GDS is a Delaware limited liability company whose members are comprised of GCI Boise, L.P. (the “Limited Partnership”) and GDC. The Limited Partnership’s role is to fund the pre-finance development costs (the “Pre-finance Capital”) associated with providing pre-finance development services under the Greystone Development Consulting Agreement. GDC’s role is to provide all services, on behalf of Greystone, which are required to be performed pursuant to the Greystone Development Consulting Agreement. See “Greystone Development Consulting Agreement” below. Neither the Limited Partnership nor Greystone is obligated to make payments under the Loan Agreement or on Obligation No. 1 or for payment on the Series 2014 Bonds.

The Limited Partnership was formed to fund the Pre-finance Capital. Pre-finance Capital in the amount of $6,250,000 was funded in December 2007; $650,000 was funded in April 2011; $600,000 was funded in January 2012; $750,000 was funded in July 2012 and $350,000 was funded in March 2013 for a total funding of $8.6 million. The general partner (the “General Partner”) of the Limited Partnership is GDC Boise, LLC, a Delaware limited liability company. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. (“Greystone Partners”), which is controlled by principals of Greystone. Limited Partners currently include The Ziegler Companies, Inc., Ziegler Equity Funding IV, LLC, Ziegler Equity Funding V, LLC

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and Greystone Senior Living Investors LP (“GSLI”). The Ziegler Companies, Inc. is the parent of B.C. Ziegler and Company, the underwriter of the Series 2014 Bonds. GSLI is also controlled by principals of Greystone.

As part of an amendment to the Greystone Development Consulting Agreement (as hereinafter defined), the Limited Partnership modified the repayment provisions of the Pre-Finance Capital to defer a portion of the repayment until after achievement of stabilized occupancy and to reduce the overall amount to be repaid. In addition, the amount of the Fixed Base Fee was reduced from approximately $5,757,576 to $1,022,727. See “Greystone Development Consulting Agreement” below.

The Pre-finance Capital will be repaid as follows: (i) $5,600,000 upon delivery of the Series 2014 Bonds along with the Fixed Base Fee (as hereinafter defined) and (ii) a maximum of $650,000 to be paid in three annual installments which amounts of such installments are determined by calculating the amount equal to 25% of the excess of Income Available for Debt Service (as defined in the Master Trust Indenture) above the amount necessary to satisfy a Debt Service Coverage Ratio (as defined in the Master Trust Indenture) of 1.30 until the earlier of the date on which the $650,000 has been repaid in full or the third payment has occurred. The Corporation has no obligation to reimburse advances made by the Limited Partnership unless and until the closing of the Series 2014 Bonds. All risk for such advances associated with the failure to achieve closing on the financing will be borne by the Limited Partnership.

Greystone Development Experience

Greystone is currently, or has been, responsible for more than 110 senior living community development and expansion projects. Senior living communities, both completed and in-process, for which Greystone has provided development services within the past five years include:

Sponsor Project Status The Terraces at Los Altos Los Altos, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates)

Phase III 81 Independent Living Apartments

2015 estimated construction start

Miralea Louisville, Kentucky (Masonic Homes of Kentucky)

Phase II 30 Independent Living Apartments


The Westerly at Wichita Presbyterian Manor Wichita, Kansas (Presbyterian Manors, Inc. an affiliate of Presbyterian Manors of Mid-America Corp.)



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Sponsor Project Status MRC The Crossings League City, Texas (MRC Senior Living at Clear Lake)

100 Independent Living Apartments 8 Catered Living Apartments

34 Assisted Living Apartments 24 Memory Support Apartments 48 Nursing Home Beds


Field Home Cortlandt Manor, New York (Field Home – Holy Comforter)

102 Independent Living Apartments 40 Existing Assisted Living Apartments 40 Existing Memory Support Apartments 96 Replacement Nursing Home Beds


The Terraces at Los Altos Los Altos, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates)

Phase II 30 Assisted Living Apartments


East Ridge Retirement Village Cutler Bay, Florida (East Ridge Retirement Village, Inc., an affiliate of SantaFe Senior Living, Inc.)

220 Existing Independent Living Cottages 60 Assisted Living Apartments 23 Memory Support Apartments 60 Nursing Home Beds


The Westerly at Wichita Presbyterian Manor Wichita, Kansas (Presbyterian Manors, Inc. an affiliate of Presbyterian Manors of Mid-America Corp.)

Phase I 30 Existing Independent Living Cottages 48 Assisted Living Apartments 24 Memory Support Apartments 50 Nursing Home Beds

To Open 2014

El Castillo Retirement Residence Santa Fe, New Mexico (El Castillo Retirement Residence, Inc.)

Expansion 7 Assisted Living Apartments

10 Memory Support Apartments 12 Nursing Home Beds

Existing Units 120 Independent Living Apartments 16 Assisted Living Apartments 27 Nursing Home Beds

To Open 2014

The Terraces at San Joaquin Gardens Fresno, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates)

Phase II 86 Independent Living Apartments 20 Assisted Living Apartments 24 Memory Support Apartments 54 Nursing Home Beds

To Open 2014

The Terraces at Los Altos Los Altos, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates)

16 Memory Support Apartments 30 Nursing Home Beds

To Open 2014

Redstone Village Huntsville, Alabama (Redstone Military Retirement Residence Assoc.)

Phase V 16 Nursing Home Beds

Opened 11/13

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Sponsor Project Status The Barrington Carmel, Indiana (Mayflower Communities, Inc., an affiliate of Senior Quality Lifestyles Corp.)

134 Independent Living Units 7 Catered Living Units 56 Assisted Living Units 26 Memory Support 48 Nursing Home Beds

Opened 11/13

Edgewood Summit Charleston, West Virginia (Edgewood Summit, Inc.)

Phase III 18 Memory Support Apartments 20 Nursing Home Beds

Opened 10/13

The Terraces at Bonita Springs Bonita Springs, Florida (Bonita Springs Retirement Village, an affiliate of SantaFe Senior Living, Inc.)

144 Independent Living Apartments 49 Assisted Living Apartments 18 Memory Support Apartments 40 Nursing Home Beds

Opened 7/13

Arbor Oaks at Crestview Bryan, Texas (MRC Crestview)


Opened 2/13

Redstone Village Huntsville, Alabama (Redstone Military Residence Association)

Phase IV 36 Independent Living Apartments

Opened 11/12

Miralea Louisville, Kentucky (Masonic Homes of Kentucky)

90 Independent Living Apartments 12 Independent Living Cottages

Opened 10/12

The Admiral at the Lake Chicago, Illinois (The Admiral at the Lake, an affiliate of The Kendal Corporation)


Opened 7/12

Park Place of Elmhurst Elmhurst, Illinois (Timothy Place, NFP, an affiliate of Providence Life Services)

173 Independent Living Apartments 10 Catered Living Apartments 46 Assisted Living Apartments 20 Memory Support Apartments 37 Nursing Home Beds

Opened 2/12

GreenFields of Geneva Geneva, Illinois (Friendship Village of Mill Creek, NFP, an affiliate of Friendship Senior Options, Inc.)


Opened 1/12

Crestview Retirement Community Bryan, Texas (MRC Crestview)

Phase I 48 Assisted Living Apartments 18 Memory Support Apartments 48 Nursing Home Beds

Opened 11/11

The Stayton at Museum Way Fort Worth, Texas (Tarrant County Senior Living Center, Inc. an affiliate of Senior Quality Lifestyles Corp.)

181 Independent Living Apartments 7 Catered Living Apartments

42 Assisted Living Apartments 20 Memory Support Apartments 46 Nursing Home Beds

Opened 10/11

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Sponsor Project Status Aberdeen Heights Kirkwood, Missouri (Ashfield Active Living and Wellness Communities, Inc., an affiliate of Presbyterian Manors of Mid-America Corp.)


Opened 9/11

Mirador Corpus Christi, Texas (SQLC Senior Living Center at Corpus Christi, Inc., an affiliate of Senior Quality Lifestyles Corp.)


Opened 6/11

The Amsterdam at Harborside Port Washington, New York (Amsterdam House CCRC, Inc.)


Opened 8/10

The Boulders at RiverWoods Exeter, New Hampshire (The RiverWoods Company, at Exeter, New Hampshire, Inc.)

76 Independent Living Apartments 24 Independent Living Cottages 24 Assisted Living Apartments 16 Nursing Home Beds

Opened 3/10

Skyline at First Hill Seattle, Washington (Presbyterian Retirement Communities Northwest)

199 Independent Living Apartments 60 Assisted Living Apartments 16 Memory Support Apartments 34 Nursing

Opened 10/09

Edgewater West Des Moines, Iowa (Wesley Retirement Services, Inc.)

137 Independent Living Apartments 14 Independent Living Cottages 32 Assisted Living Apartments 16 Memory Support Apartments 40 Nursing Home Beds

Opened 8/09

The Terraces at San Joaquin Gardens Fresno, California (American Baptist Homes of the West, an affiliate of Cornerstone Affiliates)

Phase I 47 Independent Living Apartments

Opened 7/09

The Village Gainesville, Florida

(North Florida Retirement Village, Inc., an affiliate of Santa Fe HealthCare, Inc.)

Existing Units 289 Independent Living Apartments 45 Independent Living Cottages 46 Assisted Living Apartments 20 Memory Support Apartments

Expansion 170 Independent Living Apartments 60 Assisted Living Apartments

Opened 7/09


Phase III 32 Memory Support Apartments

Opened 7/09

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Sponsor Project Status Newcastle Place Mequon, Wisconsin (Newcastle Place, Inc., an affiliate of Milwaukee Protestant Home, Inc.)

Phase II 50 Independent Living Apartments 19 Independent Living Cottages

Opened 6/09

The Woodlands at Furman Greenville, South Carolina (Upstate Senior Living, Inc.)


Opened 4/09

Brethren Village Lancaster, Pennsylvania (Brethren Village Retirement Community)

Phase I 135 Independent Living Apartments 36 Assisted Living Apartments 25 Memory Support Apartments

120 Nursing Home Beds

Opened 1/09

The Clare at Water Tower Chicago, Illinois (The Clare at Water Tower, Inc., an affiliate of Franciscan Sisters of Chicago Service Corporation)


Opened 12/08


Phase II 3 Independent Living Apartments 5 Independent Cottages

10 Assisted Living Apartments

Opened 8/08

The Village at Gleannloch Farms Spring, Texas (The Village at Gleannloch Farms, Inc., an affiliate of Lutheran Social Services of the South)

103 Independent Living Apartments 20 Independent Living Cottages 30 Assisted Living Apartments 18 Memory Support Apartments 35 Nursing Home Beds

Opened 6/08

The Legacy at Willow Bend Plano, Texas (The Legacy Senior Communities, Inc., an affiliate of Dallas Home for Jewish Aged, Inc.)

103 Independent Living Apartments 12 Independent Living Villas 40 Assisted Living Apartments 18 Memory Support Apartments 60 Nursing Home Beds

Opened 4/08

The Terraces of Phoenix Phoenix, Arizona (American Baptist Estates, an affiliate of Cornerstone Affiliates)

Phase II and III 50 Independent Living Apartments

Opened 2/08

Greystone Corporate Officers

The senior corporate officers of Greystone include the following individuals:

Michael B. Lanahan, Co-Chairman. Mr. Lanahan founded Greystone in 1982. Formerly, he was Senior Vice President at Blyth Eastman Paine Webber Health Care Funding, Inc., where in addition to financing hospitals, he initiated the firm’s activities financing senior living communities and long-term care facilities using conventional debt, tax-exempt and taxable revenue bonds and FHA programs. Before joining Blyth, Mr. Lanahan was in the commercial real estate division of Citibank in New York. He has authored numerous articles on senior housing and is a frequent speaker at national conferences. Mr. Lanahan received a B.A. from Syracuse University and an M.B.A. from the University of Virginia.

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Paul F. Steinhoff, Jr., Co-Chairman. Mr. Steinhoff joined Greystone in 1984. He has responsibility for overseeing the planning, finance, marketing, development and management divisions of Greystone. Prior to joining Greystone, Mr. Steinhoff was a Partner at Touche Ross & Co. (now Deloitte & Touche) where he specialized in financial consulting to a wide range of industries including health care, senior housing, and real estate. Mr. Steinhoff was National Director of Touche Ross’ Life Care Consulting Practice and conducted the feasibility study for the first life care community financed with tax-exempt debt in 1974. Mr. Steinhoff is a frequent speaker at national conferences. Mr. Steinhoff received his B.B.A. in Business Statistics and his M.B.A. in Accounting and Finance from the University of Texas. Mr. Steinhoff is a Certified Public Accountant.

John C. Spooner, Vice Chairman and Chief Executive Officer. Mr. Spooner joined Greystone in 1986. He has responsibility for the occupancy development of senior living communities developed and managed by Greystone, as well as third-party marketing engagements. Mr. Spooner’s experience includes 25 years in marketing a variety of housing options to seniors involving more than 30,000 units. Mr. Spooner’s responsibilities included sales, marketing, recruitment, advertising and market evaluation. Mr. Spooner received a B.A. in Public Administration/Economics from Drake University, an Advanced Fellowship in Economics from University of London, and completed graduate work in marketing at the University of Pittsburgh.

Mark P. Andrews, President and Chief Operating Officer. Mr. Andrews joined Greystone in 1984. Mr. Andrews is responsible for overseeing the delivery of development services, including planning, finance, development and marketing to Greystone clients; and establishing new business opportunities, and client and lender relationship management. He also provides direction to Greystone’s consulting practice, including strategic planning, financial advisory, mergers and acquisitions and management consulting. He has been involved with the planning, development and financing of more than $3 billion of senior living projects. Prior to joining Greystone Mr. Andrews was with Deloitte & Touche in the management consulting practice. Mr. Andrews received an MBA in finance from the A.B. Freeman School of Business at Tulane University.

Bruce C. Byers, Senior Vice President. Mr. Byers is responsible for the overall marketing efforts of senior living communities developed by Greystone. He coordinates and assists Greystone’s marketing efforts between regional sales team members and clients. He has worked in the senior living industry for twenty years and has been involved with the marketing of over seventy senior living communities from California to Maine. Prior to joining Greystone, Mr. Byers was the Senior Vice President of Sales for a senior living development company. Mr. Byers is a graduate of Indiana University of Pennsylvania.

Richard W. Cumberland, Senior Vice President. Mr. Cumberland has direct responsibility for supervising Greystone’s Management Operations and Financial Services teams. These teams include approximately thirty professionals providing corporate support to Executive Directors who oversee Greystone managed communities. Prior to joining Greystone in 1999, Mr. Cumberland was Regional Executive Director for a Florida CCRC corporation for over 12 years, including oversight of two large CCRC’s of approximately 2,000 residents and

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staff of 1,400. Mr. Cumberland majored in Theology and Music at Nyack College in Nyack, NY.

James D. Knox, Senior Vice President. Mr. Knox is responsible for Greystone Financial Support Services, including oversight of community accounting functions, preparation of monthly financial and operational reports and coordination of the annual budget process. He is also responsible for analysis of operating results, projection of future performance and compliance with regulatory reporting requirements. Prior to his current position, Mr. Knox was part of Greystone’s Planning and Financial Services Department. Prior to joining the company in 1994, Mr. Knox was a Senior Associate with Coopers & Lybrand in Dallas, Texas, where he provided accounting and financial services to clients in several industries. Mr. Knox received a B.S. from Iowa State University and a Masters of Professional Accounting from The University of Texas at Austin. Mr. Knox is a Certified Public Accountant.

David C. McDowell, AIA, Senior Vice President. Mr. McDowell is responsible for overseeing and managing the development activities at Greystone. In addition, he is responsible for reviewing the design efforts of outside consultants to insure consistency of product design with Greystone’s senior living philosophy. Prior to joining Greystone in 1994, Mr. McDowell was a Partner in the architectural firm of Fusch Serold and Partners, Inc. and was the principal architect for the firm’s senior living work. Mr. McDowell is a registered architect with over 25 years of senior living experience. Mr. McDowell received a Bachelor of Architecture from Texas Tech University in 1973.

Janelle E. Wood, Senior Vice President and Chief Financial Officer. Ms. Wood’s primary responsibilities include the financial planning and management functions. She has responsibility for all corporate finance and accounting activities, including customer billing, financial reporting, budgeting and cash management. Prior to joining the company in 2000, Ms. Wood was the Controller for a company in Richardson, Texas, and a consultant with Price Waterhouse where she provided accounting and financial services to clients in several industries. Ms. Wood received a B.B.A. from Baylor University. Ms. Wood is a Certified Public Accountant.

Greystone Development Consulting Agreement

The Corporation entered into a Development Consulting Agreement effective December 21, 2007, as amended, (the “Greystone Development Consulting Agreement”), with GDC on behalf of itself and its permitted assignee GDS, to provide development consulting services for the Community and to be responsible for the marketing of the Community until 90% overall occupancy is achieved. GDC has assigned its rights and duties under the Greystone Development Consulting Agreement to GDS. GDS has agreed to advance funds to and/or on behalf of the Corporation in an estimated amount of approximately $8,600,000 to pay for all such development costs of the Community prior to the issuance of the Series 2014 Bonds, and to allow provision of development services prior to the issuance of the Series 2014 Bonds at no obligation to the Corporation unless and until a closing and funding of the Series 2014 Bonds occurs. See the information under the caption “DEVELOPMENT OF THE COMMUNITY – GCI Boise, L.P.” for a description of the pre-finance capital.

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The Greystone Development Consulting Agreement calls for GDS to provide the following services: (a) all necessary planning to implement the development plan approved by the Corporation, including any revisions thereto; (b) preparation of detailed budgets for each phase of development activity, which are to be submitted for approval by Corporation; (c) assistance in obtaining all necessary governmental approvals required for the development and construction of the Community; (d) assistance with selection of design consultants and a pre-construction consultant, and coordination of submission of plans and specifications to the Corporation for Corporation’s approval; (e) development of a Residential Living Resident services program; (f) development and supervision of the marketing plan for the Community to prospective Residential Living Residents; (g) assistance in securing permanent financing for the Community; (h) assistance in negotiating and awarding a construction contract for the Community, and thereafter monitoring the progress of construction; (i) preparation of monthly cost reports; and (j) funding of $8.6 million of Pre-finance Capital described above (provided by Limited Partnership investors).

Pursuant to the Greystone Development Consulting Agreement, GDS is responsible for the marketing of the Community until 90% occupancy of the aggregate total of Residential Living Units, Assisted Living Units, Special Care Assisted Living Units, and nursing beds in the Health Center is achieved. In connection therewith, GDS will (a) coordinate and manage the marketing staff to implement the overall marketing program for the Community; (b) develop and supervise implementation of a marketing and sales program, including promotional, advertising and media campaigns in conjunction with an advertising firm; (c) recruit, hire, train and monitor the marketing and sales staff; (d) coordinate the design, construction, and equipping of an information center; (e) assist the Corporation in preparing any Residential Living Resident disclosure documents; (f) assist the Corporation in developing Residential Living Resident admission criteria and coordinate the process for the Corporation’s approval of Reservation Agreements and Care and Residence Agreements with prospective Residential Living Residents; and (g) provide administrative support for processing of prospective resident applications for admission, including assisting Corporation to maintain appropriate records, to establish and maintain appropriate escrow accounts and to ascertain compliance with financial admission criteria.

The Corporation will exercise final authority on the following matters: (a) selection of the site for the Community and approval and execution of land purchase agreement and acquisition of land by American Baptist Properties; (b) selection and approval of architect, other design professionals, engineering professionals, pre-construction consultants, and Corporation’s construction representative; (c) approval of final working drawings and specifications; (d) selection and identification of set of finishes and specifications for residential units, including baseline finishes and upgrade options; (e) selection and engagement of an investment banking firm and source of permanent financing, and the execution of all commitments with respect to financing; (f) selection and engagement of feasibility consultant and actuarial consultant; (g) selection and engagement of a general contractor for construction; (h) negotiation, approval and execution of a construction contract; (i) approval of regulatory filings; (j) selection and engagement of media and promotion firm and approval of marketing materials; (k) final approval of all budgets for planning, development, construction and marketing prepared by GDS; (l) approval of revisions to the business plan; (m) approval of all funding requisitions; (n) approval

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of form of Reservation Agreement and Care and Residence Agreement; and (o) approval of the schedule of resident fees and any changes thereto.

As compensation for consulting services rendered pursuant to the Greystone Development Consulting Agreement, the Corporation will pay GDS a fee (the “Consulting Fee”) consisting of a fixed base fee, a variable base fee and an incentive occupancy fee. The fixed base fee is equal to $1,022,727 (the “Fixed Base Fee”). The variable base fee is equal to $3,364,658 (the “Variable Base Fee”). The incentive occupancy fee (the “Incentive Occupancy Fee”) will range from $50,000 to $500,000 and will be paid only if certain Residential Living Unit occupancy milestones are achieved. The Variable Base Fee and the Incentive Occupancy Fee represent a fee for consulting services rendered.

The Fixed Base Fee of $1,022,727 will be paid upon the issuance of the Series 2014 Bonds. The Variable Base Fee has been/will be paid as follows: (i) $354,858 upon commencement of development consulting services, (ii) $414,858 paid pro-rata over 12 months after commencement of development consulting services, (iii) $207,429 paid upon the presale of 25% of the Residential Living Units, (iv) $207,429 paid upon the presale of 50% of the Residential Living Units, (v) $780,834 upon issuance of the Series 2014 Bonds, (vi) $371,421 paid in equal installments during the construction period of the Community, (vii) $308,026 upon obtaining an initial Certificate of Occupancy for resident occupancy, (viii) $287,402 paid on a pro-rata basis upon first occupancy of each Residential Living Unit, (ix) $100,000 paid upon the Community having achieved 25% occupancy of the Residential Living Units, (x) $100,000 paid upon the Community having achieved 50% occupancy of the Residential Living Units, (xi) $77,467 paid upon the Community having achieved 65% occupancy of the Residential Living Units, (xii) $77,467 paid upon the Community having achieved 80% occupancy of the Residential Living Units, and (xiii) $77,467 paid upon the Community having achieved 90% occupancy of the Residential Living Units.

In addition, upon achieving an accelerated fill-up, GDS would be eligible to receive additional compensation of $500,000 if 90% aggregate occupancy of all Residential Living Units is achieved within 15 months of obtaining a certificate of occupancy, $300,000 if 90% occupancy of all Residential Living Units is achieved within 18 months, $250,000 if 90% occupancy of all Residential Living Units is achieved within 21 months, $150,000 if 90% occupancy of all Residential Living Units is achieved within 24 months, $100,000 if 90% occupancy of all Residential Living Units is achieved within 27 months or $50,000 if 90% occupancy of all Residential Living Units is achieved within 30 months as an Incentive Occupancy Fee. Based on the current Community fill-up expectations of an aggregate 90% occupancy of the Residential Living Units within 30 months, $50,000 is assumed to be earned.

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The following table summarizes the payment terms related to Greystone’s Consulting Fee in association with the development of the Community.

Fixed Base Fee $1,022,727

Variable Base Fee and Incentive Occupancy Fee

Fees Paid Prior To Issuance of the Series 2014 Bonds Upon commencement of Development Consulting Services $354,858 During 12 months following commencement of services 414,858 Upon 25% pre-sales 207,429 Upon 50% pre-sales 207,429

Subtotal fees paid prior to issuance of the Series 2014 Bonds $1,184,574

Fees Paid After Issuance of the Series 2014 Bonds Upon Closing of the Series 2014 Bonds $780,834 During construction period 371,421

Subtotal fees paid after issuance of the Series 2014 Bonds $1,152,255

Fees Paid After Opening of the Community Upon obtaining an initial Certificate of Occupancy $308,026 Upon move-in (over fill-up) 287,402 Upon 25% occupancy of the Residential Living Units 100,000 Upon 50% occupancy of the Residential Living Units 100,000 Upon 65% occupancy of the Residential Living Units 77,467 Upon 80% occupancy of the Residential Living Units 77,467 Upon 90% occupancy of the Residential Living Units 77,467 Upon 90% occupancy of the Residential Living Units in 30 months 50,000

Subtotal fees paid after opening of the Community $1,077,829

Total Variable Base Fee & Incentive Occupancy Fee $3,414,658 Source: Corporation and Greystone.

Pursuant to the terms of the Greystone Development Consulting Agreement, the

Community will also reimburse Greystone for all reasonable out-of-pocket travel expenses for personnel employed by Greystone, and a 3.5% administrative fee on the Variable Base Fee and the Incentive Occupancy Fee.

Seniority

General. Seniority, a California for-profit corporation, was founded in 1997 and provides contract management, sales and marketing, and development consulting services to owners and sponsors of senior housing and health care providers across the country. Seniority, a wholly owned subsidiary of ABHOW, has served over 60 senior living communities across the United States during the last 10 years. Its professionals have extensive experience in the daily operations of a sales office and community management. Seniority’s senior professionals have previously served as department managers, executive directors, regional managers and corporate support in senior living communities. The Corporation has engaged Seniority to provide sales management services for the Community pursuant to the terms of the Sales and Marketing

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Oversight Agreement described below. See M. Sloan Bentley’s biography below under “ABHOW Senior Management.”

Seniority Sales and Marketing Oversight Agreement. Under the Sales and Marketing Oversight Agreement effective as of February 1, 2008 (the “Sales and Marketing Oversight Agreement”), as amended, between Seniority and the Corporation, Seniority provides the following services: (a) approve the rates and charges to be paid by prospective residents; (b) advise on and approve marketing strategies for the Community including sales literature, contracts, advertising strategies, brochures and advertisements; (c) review monthly marketing operating and financial statements; (d) advise on pre-opening sales activities; (e) make site visits no less than once every three months, and no less than monthly during the three month period prior to opening of the Community; (f) participate in monthly or quarterly marketing conference calls with the Corporation, bondholders and other interested parties to discuss the status and performance of the Community with respect to sales, response to advertising and acceptance of the Community; and (g) work in concert with GDC with respect to GDC’s performance under the Greystone Development Consulting Agreement.

As compensation for services rendered pursuant to the Sales and Marketing Oversight Agreement, the Corporation will pay Seniority a Marketing Administrative Services Fee and an Incentive Fee (collectively, the “Sales and Marketing Oversight Services Fee”). The Corporation will pay a Marketing Administrative Services Fee of $8,000 per month beginning in the month in which first occupancy of a Residential Living Unit occurs and continuing until achievement of 90% occupancy of the Residential Living Apartments. The Incentive Fee will be equal to $80,000 and will be paid as follows: (i) $5,000 upon completion of the marketing collateral and first ad series, (ii) $30,000 upon achievement of the Priority Member goal, (iii) $35,000 upon achievement of the minimum number of Reservation Deposits necessary to secure financing, and (iv) $10,000 upon obtaining an initial Certificate of Occupancy for resident occupancy.

The Sales and Marketing Oversight Services Fee is to be subject to the provisions of the Master Indenture with respect to Affiliate Related Subordinated Debt. Under the current terms of the Sales and Marketing Oversight Agreement and the Master Indenture, the Sales and Marketing Oversight Services Fee is deferred until stabilization of the Community.

MANAGEMENT OF THE COMMUNITY

Management Agreement

The Corporation entered into a Management and Marketing Services Agreement effective December 21, 2007, as amended, with GMSC Idaho, LLC, a Texas limited liability company and an affiliate of GDC, under which GMSC Idaho, LLC will serve as manager of the Community (the “Manager”) and manage day-to-day operations of the Community. Pursuant to the terms of the Management Agreement, the Manager is required to provide all management services necessary to operate the Community, including but not limited to, financial management, purchasing, public relations, recruitment of personnel, and supervision of the day-to-day operations and programs of the Community.

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The duties of the Manager under the Management and Marketing Services Agreement include, among other things, obtaining and maintaining all licenses, permits and approvals; in consultation with the Corporation, preparing an annual plan and budget for the Community to cover all projected revenues and expenses of the Community for that year, including capital improvements (the “Annual Budget”), and recommending adjustments and/or revisions; making ordinary repairs as necessary, and alterations or capital improvements as may be provided in the Annual Budget; contracting for utilities and other operation and maintenance services; purchasing necessary furniture, fixtures, equipment and supplies; hiring and training of a qualified and experienced Executive Director for the Community; assisting with the identification, recruiting, hiring, and if necessary, discharging personnel to maintain and operate the Community and with the Corporation, providing training and instruction to personnel with respect to the policies and procedures of the Community adopted by the Corporation; overseeing the computer equipment and accounting software provided by the Corporation; assisting Corporation in obtaining necessary technical and professional assistance to meet local, state and federal regulatory requirements; preparing monthly statements of operations; collecting the revenues of the Community; maintaining proper books of account and records; at the direction and expense of the Corporation, overseeing certified public accountants selected by the Corporation to prepare annual audits of the books, records and accounting procedures of the Community; at the direction and expense of the Corporation, assisting the Corporation in engaging counsel and causing such legal proceedings to be instituted as may be necessary to enforce payment of charges or compliance with other terms of Reservation Agreements and Care and Residence Agreements; preparing ongoing marketing programs after reaching 90% occupancy; and, in general, operating the Community in accordance with the comparable senior living communities in Boise, Idaho subject to the direction of the Corporation and to the operating and financial parameters stated in the Annual Budget, and in compliance with financing requirements and applicable laws and regulations.

The Management and Marketing Services Agreement will commence on a date determined by the Manager and agreed upon by the Corporation, which shall be no later than twelve months prior to the first day of scheduled occupancy by the first Residential Living Resident of the Community (the “Commencement Date”). The initial term of the Management and Marketing Services Agreement is 84 months. The Management and Marketing Services Agreement will renew automatically after the initial term for three successive one year terms, unless (a) either party provides written notice to the other party of intent to terminate at least 60 days prior to the expiration of the initial terms or renewal term or (b) the Management and Marketing Services Agreement has been terminated in accordance with other terms and conditions therein.

As compensation for services rendered pursuant to the Management and Marketing Services Agreement, the Corporation will pay the Manager a fee (the “Management Fee”) consisting of an initial base management fee (“Initial Base Management Fee”) and an on-going base management fee (“Ongoing Base Management Fee”). The Corporation will pay the Manager an Initial Base Management Fee of $12,500 per month from the Commencement Date through the month of initial occupancy by a Residential Living Resident. Thereafter, the Corporation will pay the Manager an Ongoing Base Management Fee subsequent to initial occupancy that will be adjusted periodically to be:

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Ongoing Base Management Fee

Occupancy Months

Total Monthly Fee

Months 1-54 $12,500

Months 55-66 $32,500

Months 67 and thereafter $35,000

Additionally, beginning in the first month of the second full fiscal year following the achievement of Stabilized Occupancy (as such term is defined in the Master Trust Indenture), the Corporation will pay the Manager a fee equal to $4,500 for each occupancy and/or reoccupancy of the Residential Living Apartments (the “New Occupant Fee”).

In performance of its obligations under the Management and Marketing Services Agreement, the Manager is an independent contractor and, except as described above, is not subject to any right of control of the Corporation over the methods by which the Manager carries out its delegated duties. In addition to the Management and Marketing Fee, the Corporation will pay the Manager three and one-half percent (3.5%) of the Management and Marketing Fee on a monthly basis as a reimbursement for Manager’s overhead expenses related to the Community, including, without limitation, long distance phone calls, copying, express delivery service, and postage.

Obligation No. 1 and the Series 2014 Bonds are solely the obligation of the Corporation. Neither the Manager nor any of its affiliates is obligated to make payments on Obligation No. 1 or under the Loan Agreement or with respect to the Series 2014 Bonds or the Bond Indenture.

OTHER PROFESSIONAL SERVICES

The General Contractor

The Corporation has selected Petra, Inc. (the “General Contractor”) as the General Contractor for the Community. The General Contractor was founded in 1994 and is a recognized leader in the regional construction industry with over 50 employees. Petra has completed over 350 major projects during its 19 year history and has offices located in Boise, ID, Snoqualmie, WA, and Williston, ND. The General Contractor has provided preconstruction services for the Community including, but not limited to, coordination with the Architect and the other design consultants, construction sequencing and scheduling, value engineering and estimating the cost of work and general conditions.

The General Contractor’s experience includes the following:

Facility and Location Project Size Construction

Cost Completion Year

St. Luke’s Hospital- Boise, ID 124,000 Sq. Ft $22,000,000 2001 St. Luke’s Hospital- Meridian, ID 278,000 Sq. Ft $2,150,000 2001 Northwest Lodge- Boise, ID 35,000 Sq. Ft $2,300,661 2001 BSU Parking Garage- Boise, ID 225,000 Sq. Ft $2,830,705 2003

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Facility and Location Project Size Construction

Cost Completion Year

USPFO Readiness at Gowen Field- Boise, ID 70,370 Sq. Ft $14,073,000 2004 Front 5 Building- Boise, ID 17,000 Sq. Ft $936,981 2005 Title One Building- Nampa, ID 38,000 Sq. Ft $3,400,000 2005 Idaho Industrial Park- Nampa, ID 25,000 Sq. Ft $1,280,000 2006 Michael’s Of Oregon- Meridian, ID 100,000 Sq. Ft $4,600,000 2006 Mission Aviation Fellowship- Nampa, ID 40,000 Sq. Ft $3,907,202 2006 Candlewood Suites- Boise, ID 65,000 Sq. Ft $5,450,805 2006 Bowen Crossing- Boise, ID 30,000 Sq. Ft $7,000,000 2006 Norco Acetylene Plant- Boise, ID 8,612 Sq. Ft $3,400,000 2006 Silverstone Business Park- Meridian, ID 1,100,000 Sq. Ft $96,000,000 2008 Black Eagle Business Park- Boise, ID 564,000 Sq. Ft $48,000,000 2008 Federal Way Industrial Park- Boise, ID 85,000 Sq. Ft $7,000,000 2008 Meridian City Hall- Meridian, ID 105,000 Sq. Ft $22,000,000 2008 Blue Cross Building #4- Meridian, ID 68,000 Sq. Ft $9,400,000 2008 Cityside Lofts Phase II- Boise, ID 38,087 Sq. Ft $4,444,426 2008 Holiday Inn Express- Ontario, OR 58,000 Sq. Ft $5,572,000 2008 Idaho Power Ops Center- Lake Fork, ID 13,800 Sq. Ft $3,500,000 2009 Winco Food Distribution Center- Boise, ID 107,000 Sq. Ft $7,328,000 2009 Palmer Natural Foods- Star, ID 27,000 Sq. Ft $4,670,000 2009 Ontario Readiness Center- Ontario, OR 33,000 Sq. Ft $13,000,000 2010 Norco Cryogenics Plant- Boise, ID 52,500 Sq. Ft $6,800,000 2010

Construction Contract

The Corporation has entered into a guaranteed maximum price construction contract (the “Construction Contract”) with the General Contractor. The sum of the cost of the Work (as defined therein) and the General Contractor’s Fee is guaranteed by the General Contractor not to exceed $52,969,737 subject to additions and deductions by change order as provided in the Construction Contract.

The difference as of the date of final payment between (i) the total aggregate sum of the cost of the construction plus the General Contractor’s Fee and (ii) the Guaranteed Maximum Price upon final completion of the Work (such difference equals the savings) will be shared by the Corporation and the General Contractor as follows: (1) the first $300,000 of savings shall be paid to the General Contractor and (2) any additional savings beyond the $300,000 will be split with fifty percent (50%) inuring to the benefit of the Corporation and fifty percent (50%) paid to the General Contractor.

The Construction Contract requires the General Contractor to substantially complete construction of the Community within 671 calendar days from the date of commencement with substantial completion of Phase I (as described below) not later than 487 days and substantial completion of Phase II (as described below) not later than 671 days. Phase I includes the 12 Residential Living Duplex Apartments; underground parking; ground floor of Wings A, B, C and D of the Residential Living Apartments; all Residential Living commons areas; 68 Residential Living Apartments and all areas in Wings A, B, C and D excluding the 6 Residential Living Apartments in Wing D above the commons areas; and all site work, surface roads, and parking necessary for the Corporation to occupy and utilize Phase I. Phase II includes the balance of the construction work including 81 Residential Living Apartments and all areas in Wings E, F, G

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and H; 6 Residential Living Apartments in Wing D above the commons areas; all remaining site work, surface roads and parking; 40 Assisted Living Apartments, 24 Special Care Assisted Living Suites and Assisted Living Commons; and all of the Health Center including the three cottage-style buildings housing 48 private skilled nursing rooms.

Occupancy Area Days to Deliver Phase I 487 Days

12 Residential Living Duplex Apartments

68 Residential Living Apartments

Residential Living Commons

Underground parking

Site work, surface roads and parking

Phase II 671 Days

81 Residential Living Apartments

40 Assisted Living Apartments

24 Special Care AL Suites

48 Skilled Nursing Rooms

Assisted Living Commons

Health Center Commons

Site work, surface roads and parking

In the event the General Contractor does not substantially complete each construction

component within the specified construction period, the Construction Contract provides for the reimbursement for actual damages incurred by the Corporation, in accordance with the following schedule of actual damages to be paid for each day of delay as measured from the date of required substantial completion to the date of actual substantial completion.

Number of Days of Delay Per Phase of Turnover

Liquidated Damages

Per Day of Delay

Total Liquidated Damages Per Day

of Delay

1 – 30 0% $0 31 – 60 35% of daily debt

service $7,647.50

61 Days and thereafter 100% of daily debt service

$21,850

The Construction Contract requires the General Contractor to execute and deliver to the

Corporation a Performance Bond and a Labor and Material Payment Bond, each written in the amount of 100% of the guaranteed maximum price under the Construction Contract, and showing the Finance Authority, Lender, and the Bond Trustee as additional obligees. The General Contractor shall furnish performance and payment bonds with a surety qualified to do business in Idaho.

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The Architect

AG Architecture has been involved with the design of, and focused particular attention on, senior living communities throughout the United States since 1967. Design responsibilities have ranged from master planning to complete design of new communities, subsidized housing, renovations and additions to existing facilities. Ongoing and recently completed continuing care retirement community projects include:

Facility Location Year Construction

Completed The Barrington of Carmel Carmel, IN Under Construction The Terraces at Bonita Springs Bonita Springs, FL Under Construction Miralea Louisville, KY 2013 Aberdeen Heights Kirkwood, MO 2011 The Waterford Juno Beach, FL 1978/2006 Stoneridge Mystic, CT 2005 Luther Oaks Bloomington, IL 2005 Edgewater Des Moines, IA 2005 New Castle Place Mequon, WI 2005 Three Crowns Park Evanston, IL 2003 Milwaukee Protestant Home Milwaukee, WI 2003 Santa Marta Olathe, KS 1998/2002 Washington and Jane Smith Community Chicago, IL 2002 Smith Crossing Orland Park, IL 2002 St. Mary of the Woods Avon, OH 2002 Blakeford at Green Hills Nashville, TN 1994 Oakbrook Commons Dearborn, MI 1990 Construction Consultant

The construction consulting firm of zumBrunnen, Inc. (“zumBrunnen”), a full-service national construction consulting company founded in 1989 that specializes in the senior living industry, has been selected and retained by the Corporation to review construction progress, quality, and contractor requisition requests on a monthly basis for the Community during the construction period. In addition, zumBrunnen has provided the pre-construction consulting services described in the next paragraph. zumBrunnen has developed unique and proprietary, industry-specific due-diligence, construction consulting and facility assessment services to fulfill financial institutions’ requirements for start-up, expansion and renovation projects.

Prior to construction, zumBrunnen’s responsibilities include conducting a review of the project’s scope, including engineering designs, project budgets, drawings, specifications, permits, construction contracts and fees, including a meeting with the project team at the project site to verify current site conditions, review outstanding issues and documents, and establish an action list, and issue a final pre-closing report.

During the construction process, zumBrunnen will be responsible for the following actions in connection with the construction of the project that are included in the construction contract: (i) reviewing and certifying all disbursement requests for the payment of expenses incurred by the Corporation for work, labor, materials and equipment furnished by or on behalf

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of the general contractor under the construction contract; and (ii) monitoring such items as change orders, budget amendments, updates to the construction schedule, releases of liens, governmental approvals and the final as-built survey.

COMPETITION AND SERVICE AREA

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

APPENDIX B

FINANCIAL FEASIBILITY STUDY

Boise Retirement Community

d/b/a The Terraces of Boise

Financial Feasibility Study

Six Years Ending September 30, 2019

Boise Retirement Community Financial Feasibility Study Six Years Ending September 30, 2019 TABLE OF CONTENTS Independent Accountants’ Examination Report ......................................................................... B-1

Forecasted Financial Statements:

Forecasted Statements of Operations and Changes in Net (Deficit) ................................ B-5 Forecasted Statements of Cash Flows .............................................................................. B-6

Forecasted Balance Sheets ............................................................................................... B-7

Forecasted Financial Ratios .............................................................................................. B-8

Summary of Significant Forecast Assumptions and Accounting Policies

Basis of Presentation ........................................................................................................ B-9

Background of the Corporation ........................................................................................ B-9

Description of the Community. ...................................................................................... B-10

Development and Management of the Community ....................................................... B-13

Land Acquisition ............................................................................................................ B-20

Liquidity Support Agreements ....................................................................................... B-20

Summary of Financing ................................................................................................... B-21

Description of the Residency Agreement ....................................................................... B-25

Characteristics of the Market Area ................................................................................. B-31

Marketing the Community ............................................................................................. B-55

Assumed Independent Living Utilization ....................................................................... B-74

Assumed Assisted Living, Memory Support and Health Center Utilization ................. B-78

Summary of Significant Accounting Policies ................................................................ B-80

Revenue .......................................................................................................................... B-82

Operating Expenses ........................................................................................................ B-83

Assets Limited as to Use ................................................................................................ B-85

Property and Equipment and Depreciation Expense ...................................................... B-86

Long-Term Debt and Interest Expense .......................................................................... B-87

Subordinated Note .......................................................................................................... B-88

Termination of Ground Lease ........................................................................................ B-88

Forgiveness of Debt ........................................................................................................ B-89

Current Assets and Current Liabilities ........................................................................... B-89

Independent Accountants’ Report on Supplemental Information ............................................ B-90

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INDEPENDENT ACCOUNTANTS’ EXAMINATION REPORT

Board of Directors Boise Retirement Community Boise, Idaho We have prepared a financial feasibility study of the plans of Boise Retirement Community, a California nonprofit public benefit corporation (the “Corporation”), to undertake the development of a senior living community to be known as “The Terraces of Boise” to be located on a 12.6 acre site in Boise, Ada County, Idaho (the “Community”). The Community is expected to include 149 new independent living apartments, 12 independent living duplex apartments, 40 traditional assisted living apartments, 24 memory support assisted living suites and 48 private skilled nursing beds, as well as administrative support and common areas. The sole member of the Corporation, Cornerstone Affiliates (“Cornerstone”), is also a California nonprofit public benefit corporation. Cornerstone was established to support the operations and activities of its tax-exempt affiliates and to develop and expand the retirement communities owned by its affiliates including American Baptist Homes of the West (“ABHOW”), a California nonprofit public benefit tax-exempt corporation. ABHOW directly owns and operates seven continuing care retirement communities (“CCRCs”) in California and provides management services to four affiliated CCRCs and eighteen unrelated low and moderate-income senior rental housing communities. Among other commitments, ABHOW agreed to provide funding for certain costs related to the development of the Community. ABHOW is also to provide liquidity support to the Corporation of $1,250,000 (the “ABHOW Liquidity Support Fund”) under a liquidity support agreement. American Baptist Properties, Inc. (“ABP”), an affiliate of ABHOW, will also provide funding for certain costs related to the development of the Community and liquidity support to the Corporation through a deposit of $1,000,000 into a special trust fund (the “ABP Liquidity Support Fund”) held in the custody of U.S Bank, N.A. (as the master trustee). The Corporation has retained ABHOW to provide development services for the Community. The Corporation has also retained Greystone Development Company II, LP (“GDC”) including affiliated entity Greystone Development Services XX, LLC (“GDS”) to provide development consulting services for the Community, including marketing of the Community, as more fully described herein. GDC and GDS are collectively referred to herein as “Greystone”. GMSC Idaho, LLC (“GMSC”), an affiliate of GDC, will be providing management services at the Community. Management of the Corporation and GMSC are collectively referred to as “Management.” GCI Boise, LP, an affiliate of Greystone, will provide liquidity support to the Corporation through a deposit of $2,250,000 into a special trust fund (the “Supplemental Liquidity Support Fund”) held in the custody of U.S Bank, N.A. (as the master trustee) under a liquidity support agreement.

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The 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 issuance of $103,185,000 Idaho Health Facilities Authority, Revenue Bonds, Series 2014 (The Terraces of Boise Retirement Community), Series 2014 (the “Series 2014 Bonds”). The Corporation’s underwriter, B.C. Ziegler and Company, (the “Underwriter”), has provided the assumed structure and terms for the Series 2014 Bonds as follows:

� $80,685,000 of non-rated tax-exempt fixed rate bonds (the “Series 2014A Bonds”), assumed to be issued at a discount, consisting of term maturities to October 1, 2049, with average interest rates ranging from 7.00 to 8.125 percent per annum;

� $20,750,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities (TEMPSSM) (the “Series 2014B Bonds”):

o $4,875,000 of non-rated fixed rate tax exempt Series 2014B-1 Bonds (TEMPS-75SM) anticipated to be redeemed in full by approximately 75 percent initial occupancy of the Independent Living Units by January 1, 2018, with an average interest rate of 6.50 percent per annum;

o $7,375,000 of non-rated fixed rate tax exempt Series 2014B-2 Bonds (TEMPS-65SM) anticipated to be redeemed in full by approximately 65 percent initial occupancy of the Independent Living Units by July 1, 2017, with an average interest rate of 6.00 percent per annum; and

o $8,500,000 of non-rated fixed rate tax exempt Series 2014B-3 Bonds (TEMPS-50SM) anticipated to be redeemed in full by approximately 50 percent initial occupancy of the Independent Living Units by January 1, 2017, with an average interest rate of 5.25 percent per annum.

� $1,750,000 of fixed rate Taxable Mandatory Paydown Securities (Taxable MPS) (the “Series 2014C Bonds”), anticipated to be redeemed in full by July 1, 2016 at approximately 35 percent initial occupancy of the Independent Living Units, and bearing interest at an average interest rate of 7.00 percent per annum.

Principal on the Series 2014B Bonds and the Series 2014C Bonds is to be repaid from a portion of the entrance fees assumed to be available from initial residents moving into the Community. The Corporation is solely responsible for the payment of debt service on the Series 2014 Bonds. Neither Cornerstone, nor ABHOW, nor ABP, nor any of their affiliated entities (other than the Corporation) is liable for payment of interest, principal and premium, if any, on the Series 2014 Bonds. ABHOW and ABP are only obligated with respect to commitments related to the ABHOW Liquidity Support Fund and the ABP Liquidity Support Fund. The proceeds from the sale of the Series 2014 Bonds, a portion of the entrance fees, a contribution from ABHOW, a subordinate note to ABP, and interest earnings on trustee-held funds are to be used as follows:

� To pay all costs for construction of the Community, including development, construction, and architectural costs;

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� To fund debt service reserve funds for the Series 2014 Bonds;

� To fund an Entrance Fee Fund, a Working Capital Fund and an Operating Reserve Fund;

� To fund interest for the portion of the Series 2014 Bonds related to the Community for a period of 22 months;

� To pay costs associated with the issuance of the Series 2014 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 Community’s defined primary market area (“PMA”);

� Locations, capacities and competitive information pertaining to other existing and planned facilities in the PMA; and

� Forecasted occupancy and utilization levels;

� Debt service requirements and estimated financing costs;

� Staffing requirements, salaries and wages, related fringe benefits and other operating expenses;

� Anticipated entrance fees, monthly fees and per diem charges for the Community’s residents;

� Sources of other operating and non-operating revenues;

� Revenue/expense/volume relationships; and

� Depositor files. The accompanying financial forecast for each of the years in the six year period ending September 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 (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

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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 2014 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. Management’s forecast was originally prepared October 25, 2013. Management’s forecast and this feasibility study report were updated on January 14, 2014 to reflect changes in the project budget, financing structure for the Series 2014 Bonds, including the amount of and interest rates on the Series 2014 Bonds; the liquidity support agreement, and the timing of construction and opening of the Community. Our conclusions are presented below:

� In our opinion, the accompanying financial forecast is presented in conformity with guidelines for presentation of a financial forecast established by the American Institute of Certified Public Accountants.

� In our opinion, the underlying assumptions provide a reasonable basis for Management’s forecast. However, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material.

� The accompanying financial forecast indicates that sufficient funds could be generated to meet the Corporation’s operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed Series 2014 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 January 14, 2014


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 (Deficit) For the Years Ending September 30,

(In Thousands)

2014 2015 2016 2017 2018 2019Revenue:

Independent living monthly service fees -$ 17$ 2,556$ 4,593$ 6,300$ 6,963$

Assisted living monthly service fees - - 1,213 3,671 4,589 4,692

Nursing service fees - - 785 3,445 5,585 5,728

Other revenue - 4 239 492 634 673

Entrance fee amortization - 47 419 832 1,001 1,122

Investment income - 82 378 434 547 774

Total revenue - 150 5,590 13,467 18,656 19,952

Expenses:Administration - 282 880 967 1,168 1,209

Activities services - 26 136 230 291 301

Assisted living services - - 632 1,004 1,195 1,237

Health care center - - 834 1,902 3,071 3,258

Building and maintenance - 121 384 488 554 574

Dining services - 226 922 1,591 2,168 2,261

Emergency systems - 24 75 143 148 153

Housekeeping and laundry - 78 258 357 622 646

Transportation - 29 90 93 134 139

Utilities - 150 743 808 837 866

Insurance - 63 195 202 209 216

Property taxes - 142 438 451 464 478

Marketing 213 109 366 779 980 535

Management fees 60 170 170 171 172 173

Interest expense 30 3,350 7,763 7,056 6,543 6,523

Depreciation - 618 2,244 2,268 2,291 2,317

Amortization - 103 312 576 498 414

Total expenses 303 5,491 16,442 19,086 21,345 21,300

(Decrease) in unrestricted net assets (deficit) (303) (5,341) (10,852) (5,619) (2,689) (1,348)

Contribution from affiliate 3,000 - - - - -

Loss on disposal of fixed assets (2,685) - - - - -

Forgiveness of debt 2,685 - - - - -

Change in obligation to provide future services - (20,672) (1,228) (3,089) (1,818) -

Increase (decrease) in net assets (deficit) 2,697 (26,013) (12,080) (8,708) (4,507) (1,348)

Net assets (deficit), beginning of year (1,003) 1,694 (24,319) (36,399) (45,107) (49,614)

Net assets (deficit), ending of year 1,694$ (24,319)$ (36,399)$ (45,107)$ (49,614)$ (50,962)$



B-6

Forecasted Statements of Cash Flows For the Years Ending September 30,

(In Thousands)

2014 2015 2016 2017 2018 2019

Cash flows from operating activities:Change in net assets (deficit) 2,697$ (26,013)$ (12,080)$ (8,708)$ (4,507)$ (1,348)$

Adjustments to reconcile change in net assets (deficit)

to net cash provided by (used in) operating activities:

Depreciation - 618 2,244 2,268 2,291 2,317

Amortization - 103 312 576 498 414

Amortization of earned entrance fees - (47) (419) (832) (1,001) (1,122)

Loss on disposal of fixed assets 2,685 - - - - -

(Decrease) increase in accrued interest 3,945 22 (102) (401) (181) -

Net change in other current assets and liabilities (1,646) 182 164 (69) 15 (36)

Change in future service obligation - 20,672 1,228 3,089 1,818 -

Increase in interest payable 30 80 80 80 80 80

Entrance fees received from reoccupancy (non-refundable) - 31 214 500 771 1,011

Net cash provided by (used in) operating activities 7,711 (4,352) (8,359) (3,497) (216) 1,316

Cash flows from investing activities:Purchase of property and equipment (22,743) (34,917) (13,568) (475) (325) (275)

Interest cost capitalized during construction period (5,223) (4,193) - - - -

(Increase) decrease in assets limited as to use (72,298) 33,030 18,227 8,164 8,804 -

(Increase) decrease in bond fund - - (3,393) 71 100 (697)

(Increase) decrease in investments - (302) 215 (1,567) (11,660) (1,821)

Deferred marketing costs (1,503) (981) (512) (109) (81) -

Net cash provided by (used in) investing activities (101,767) (7,363) 969 6,084 (3,162) (2,793)

Cash flows from financing activities:Initial entrance fees received - 12,418 14,342 10,655 7,088 -

Entrance fees received from reoccupancy (refundable) - 94 642 1,500 2,314 3,033

Entrance fees refunded - (236) (613) (941) (1,273) (1,553)

Issuance of long term debt 103,185 - - - - -

Deferred financing costs (2,378) - - - - -

Original issue discount (1,057) - - - - -

Principal payments on Series 2014 Bonds - - (5,805) (12,785) (3,910) -

Issuance of Subordinate ABP note 2,000 - - - - -

Increase (decrease) in accounts payable - related party 170 262 300 300 100 -

Forgiveness of debt (2,685) - - - - -

Payments to GCI (5,739) - - - - -

(Decrease) increase in resident deposits 559 (706) (1,090) (1,064) (709) -

Net cash provided by (used in) financing activities 94,055 11,832 7,776 (2,335) 3,610 1,480

Change in cash and cash equivalents (1)$ 117$ 386$ 252$ 232$ 3$

Beginning balance of cash and cash equivalents 1 - 117 503 755 987

Ending balance of cash and cash equivalents -$ 117$ 503$ 755$ 987$ 990$



B-7

Forecasted Balance Sheets For the Years Ending September 30,

(In Thousands)

2014 2015 2016 2017 2018 2019Assets

Current assets:

Cash and cash equivalents -$ 117$ 503$ 755$ 987$ 990$

Bond fund - Series 2014 Bonds - - 3,393 3,322 3,222 3,919

Accounts receivable, net - 1 197 501 703 742

Prepaid expenses and other assets 74 58 252 378 494 495

Inventory - 4 17 25 33 33

Total current assets 74 180 4,362 4,981 5,439 6,179

Investments - 302 87 1,654 13,314 15,135

Assets limited as to use:

Project Fund 50,995 15,526 1,517 650 - -

Funded Interest Fund 12,332 4,939 - - - -

Debt Service Reserve Fund - Series A 7,100 7,100 7,100 7,100 7,100 7,100

Debt Service Reserve Fund - Series B-1 317 317 317 317 - -

Debt Service Reserve Fund - Series B-2 443 443 443 - - -

Debt Service Reserve Fund - Series B-3 446 446 446 - - -

Debt Service Reserve Fund - Series C 123 123 - - - -

Entrance Fee Fund - 3,478 6,210 4,128 - -

Operating Reserve Fund - - 3,000 3,000 - -

Working Capital Fund - 7,060 3,262 - - -

Resident deposits 3,569 2,863 1,773 709 - -

Total assets limited as to use 75,325 42,295 24,068 15,904 7,100 7,100

Property and equipment 31,817 70,927 84,495 84,970 85,295 85,570

less accumulated depreciation (363) (981) (3,225) (5,493) (7,784) (10,101)

Net property and equipment 31,454 69,946 81,270 79,477 77,511 75,469

Other assets

Deferred marketing costs, net 7,565 8,546 9,058 8,902 8,711 8,439

Deferred financing costs, net 2,436 2,348 2,082 1,817 1,637 1,541

Total assets 116,854$ 123,617$ 120,927$ 112,735$ 113,712$ 113,863$

Liabilities and Net Assets (Deficit)

Current liabilities:

Accounts payable -$ 117$ 503$ 755$ 987$ 990$

Accrued expenses - 54 235 352 461 462

Accrued interest - Series 2014 Bonds 3,945 3,967 3,865 3,464 3,283 3,283

Current maturities of long-term debt - - - - - 710

Resident deposits 3,569 2,863 1,773 709 - -

Total current liabilities 7,514 7,001 6,376 5,280 4,731 5,445

Accounts payable - related party 488 750 1,050 1,350 1,450 1,450

Subordinate ABP note 2,000 2,000 2,000 2,000 2,000 2,000

Due to GCI 3,000 3,000 3,000 3,000 3,000 3,000

Long-term debt, less current maturities 103,185 103,185 97,380 84,595 80,685 79,975

Original issue discount (1,057) (1,042) (996) (950) (904) (858)

Interest payable - Note Payable 30 110 190 270 350 430

Obligation to provide future services and use of facilities - 20,672 21,900 24,989 26,807 26,807

Deferred revenue - 1,063 8,222 9,489 10,322 10,211

Refundable entrance fees - 11,197 18,204 27,819 34,885 36,365

Total liabilities 115,160 147,936 157,326 157,842 163,326 164,825

Net assets (deficit):

Undesignated 1,694 (24,319) (36,399) (45,107) (49,614) (50,962)

Net assets (deficit) 1,694 (24,319) (36,399) (45,107) (49,614) (50,962)

Total liabilities and net assets (deficit) 116,854$ 123,617$ 120,927$ 112,735$ 113,712$ 113,863$



B-8

Forecasted Financial Ratios For the Year Ending September 30, (In Thousands, Except for Ratios)

Long-Term Debt Service Coverage Ratio 2019

Increase in net deficit (1,348)$

Deduct:

Entrance fee amortization (1,122)

Add:

Depreciation 2,317

Amortization 414

Interest expense 6,523

Entrance fees received from reoccupancy (non-refundable) 1,011

Entrance fees received from reoccupancy (refundable) 3,033

Entrance fees refunded (1,553)

Income Available for Debt Service 9,275$

Maximum Annual Debt Service (a)

7,072$

Maximum Annual Debt Service Coverage Ratio 1.31x

Annual Debt Service 6,386$

Annual Debt Service Coverage Ratio 1.45x

Days Cash on Hand 2019

Cash and cash equivalents 990$

Investments 15,135

Cash on hand 16,125$

Total expenses 21,300

Less:

Depreciation (2,317)

Amortization (414)

Total expenses less depreciation and amortization 18,569

Daily operating expenses (b)

51

Days cash on hand 316

Cash to Indebtedness Ratio 2019

Cash and cash equivalents 990$

Investments 15,135

Debt Service Reserve Fund - Series A 7,100

Funds Available for Debt Service 23,225$

Long-Term Indebtedness Outstanding(c)

79,975$

Cash to Debt Ratio 29%

(a) The Maximum Annual Debt Service is equal to the greatest debt service requirement in the then current or any future fiscal year,

other than the debt service requirements on the Series 2014B-1, Series 2014B-2, Series 2014B-3, and Series 2014C Bonds.

The Maximum Annual Debt Service based on the bond year is $7,100,000 as shown in the forepart of the offering statement.

(b) Daily operating expenses are equal to total operating expenses less depreciation and amortization divided by 365 days.

(c) Long-term indebtedness outstanding includes the Series 2014 bonds only.


Summary of Significant Forecast Assumptions and Accounting Policies

See Independent Accountants’ Examination Report B-9

Basis of Presentation The accompanying financial forecast presents, to the best knowledge and belief of management of Boise Retirement Community (the “Corporation”) and GMSC Idaho, LLC (collectively, “Management”), the Corporation’s results of activities, cash flows and financial position as of and for each of the six years ending September 30, 2019. Accordingly, the accompanying financial forecast reflects the judgment of Management as of January 14, 2014, the date of this forecast, based on present circumstances and the expected course of action. The assumptions disclosed herein are those that Management believes are significant to the forecast. 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. Management’s forecast was originally prepared October 25, 2013. Management’s forecast and this feasibility study report were updated on January 14, 2014 to reflect changes in the project budget, financing structure for the Series 2014 Bonds, including the amount of and interest rates on the Series 2014 Bonds; the liquidity support agreement, and the timing of construction and opening of the Community. Background of the Corporation The Corporation is a California nonprofit public benefit corporation that is qualified to do business in the State of Idaho. The Corporation is a not-for-profit corporation as described in Section 501(c)(3) of the Internal Revenue Code (the “Code”) and is exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. The Corporation was organized for the purpose of owning and operating The Terraces of Boise, a new continuing care retirement community to be located in Boise, Idaho (the “Community”). The sole member of the Corporation is Cornerstone Affiliates (“Cornerstone”), a California nonprofit public benefit corporation established in 1999. Cornerstone was established to support the operations and activities of its tax-exempt affiliates and to develop and expand the retirement communities owned by its affiliates including American Baptist Homes of the West (“ABHOW”). Cornerstone and each of its nonprofit affiliates have all received determination letters from the IRS that they are exempt from federal income taxation under Section 501(a) of the Code as organizations described in Section 501(c)(3) of the Code.

Summary of Significant Forecast Assumptions Boise Retirement Community and Accounting Policies, Continued


ABHOW, a California nonprofit public benefit corporation, was established in 1949. ABHOW directly owns and operates seven continuing care retirement communities (“CCRCs”) in California. In addition to these seven CCRCs, ABHOW provides management services to its affiliated senior housing corporations and limited partnerships, to four affiliated CCRCs and eighteen unrelated low and moderate-income senior rental housing communities. ABHOW also owns a 100% interest in Seniority, Inc., a for-profit California corporation that provides sales, marketing, consulting and management services to ABHOW’s owned and managed CCRCs, as well as a number of unrelated corporations. The Corporation has retained ABHOW to provide development services for the Community.

The business affairs of the Corporation are governed by a voluntary Board of Directors (the “Directors” or the “Board”) who serve without compensation. The Board of the Corporation currently consists of seven Directors.

Among other commitments, ABHOW agreed to provide funding for certain costs related to the development of the Community. ABHOW is also to provide liquidity support to the Corporation of $1,250,000 (the “ABHOW Liquidity Support Fund”) under a liquidity support agreement. American Baptist Properties, Inc. (“ABP”), an affiliate of ABHOW, will also provide funding for certain costs related to the development of the Community and liquidity support to the Corporation through a deposit of $1,000,000 into a special trust fund (the “ABP Liquidity Support Fund”) held in the custody of U.S Bank, N.A. (as the master trustee).

The Corporation is solely responsible for the payment of debt service on the Series 2014 Bonds. Neither Cornerstone, nor ABHOW, nor ABP, nor any of their affiliated entities (other than the Corporation) is liable for payment of interest, principal and premium, if any, on the Series 2014 Bonds. ABHOW and ABP are only obligated with respect to commitments related to the ABHOW Liquidity Support Fund and the ABP Liquidity Support Fund.

Description of the Community

The Corporation is developing a CCRC to be known as “The Terraces of Boise” on a 12.6-acre site in Boise, Idaho to include 149 independent living apartments and 12 independent living duplex apartments (collectively, the “Independent Living Units”), 40 assisted living apartments (the “Assisted Living Units”), 24 memory support assisted living suites (the “Memory Support Units”) and 48 private nursing rooms (the “Skilled Nursing Beds”), as well as administrative support and common areas. An underground parking structure will provide controlled access for the residents and surface parking will be available on site.

The Independent Living Units are to be located in a residential building with a four-story configuration. Common areas at the Community are planned to include a central gathering space, multi-purpose room, living room, main dining room, café/bistro, private dining room, fitness center, business center/library, beauty salon/barber shop, card lounge/game room, creative arts center, television room, residential storage, mail alcove and administrative offices. The gross square footage of the Community is anticipated to approximate 345,000 square feet.

The following table summarizes the type, number, approximate square footage, monthly fees (“Monthly Fees”), and entrance fees (“Entrance Fees”) for the proposed residences at the Community.



Source: Management and Greystone

Table 1 Proposed Configuration – The Community

Number of Units Square Footage

Monthly Fees Entrance Fees

Independent Living Units:

One-Bedroom Apartments:

Falcon’s Cove 8 700 $1,995 $199,900

Golden Eagle 17 700 $1,995 $199,900

Eagles Perch 2 797 $2,395 $239,900

Foothills 3 812 $2,495 $199,900

Table Rock 3 860 $1,995 $189,900

Quail 1 861 $2,495 $229,900

Blue Heron (1.5 bath, den) 21 923 $2,595 $249,900

The Rockies 7 1,066 $2,995 $259,900

Two-Bedroom Apartments:

Heron’s Cove A 19 923 $2,795 $249,900

Heron’s Cove B 3 923 $2,795 $209,900

The Highlands A 14 1,098 $3,195 $289,900

The Highlands B 4 1,098 $3,195 $249,900

The McCall A 14 1,243 $3,495 $299,900

The McCall B 3 1,243 $3,495 $299,900

The McCall C 4 1,243 $3,495 $259,900

The Mesa 11 1,364 $3,695 $369,900

The Mesa Plus 5 1,510-1,595 $3,795 $389,900

The Sun Valley 10 1,364 $3,695 $389,900

Duplex Apartments Rivers Edge 12 1,456 $3,895 $439,900

Total/Wtd Avg – Independent Living 161 1,067 $2,993 $283,937

Assisted Living Units One Bedroom Standard A 6 454 $4,995 –

One Bedroom Standard B 14 473 $4,995 –

One Bedroom Deluxe A 4 565 $5,495 –

One Bedroom Deluxe B 14 587 $5,495 –

Two Bedroom Deluxe C 2 895 $5,995 –

Total/Wtd Avg – Assisted Living 40 540 $5,270 –

Memory Support Units Standard Suite A 10 330 $6,195 –

Standard Suite B 1 338 $6,195 –

Standard Suite C 1 346 $6,195 –

Accessible Suite 12 346 $6,195 –

Total/Wtd Avg – Memory Support 24 339 $6,195 –

Skilled Nursing Beds Per Diem Rates Private Room 48 293 – 410 $285 - 295 –

Total/Wtd Avg – Nursing 48 349 $290 –



Notes to Table: (1) The Monthly Fees and Entrance Fees shown reflect the rates for preferred benefit residents (“Preferred

Members”) under the 90% (singles)/80% (couples) Refundable Plan (“Plan I”) assumed to be in effect

through opening in 2015. Preferred Members (i.e. residents who have made an Entrance Fee deposit prior to

commencement of construction) receive a package of benefits that include guaranteed monthly fees until

approximately December 2013 and a 10% discount on the Entrance Fee from Standard Pricing. Entrance Fees

are 90% refundable for a single occupant and 80% refundable for couples.

(2) After commencement of construction of the Community, Management intends to end the Preferred Member

Benefit Program. Management intends to implement a five percent Entrance Fee price increase upon

commencement of construction, and a six percent Entrance Fee price increase after opening of the

Community (“Standard Pricing”).

(3) Second person fee of $695 is for Preferred Members. The standard second person fee is $995. There are eight

units that do not require a second person fee (four McCall Cs and four Highland Bs).

(4) Management also offers Plan II and Plan III Entrance Fee options. Plan II Entrance Fees are 40% refundable

for a single occupant and 30% for couples while Plan III Entrance Fees are 10% refundable for a single

occupant and non-refundable for couples. Entrance Fees for Plan II and Plan III decrease at two percent per

month. In addition, various entrance fee plans with different refundable amounts, benefits and health care

benefit were historically offered.

(5) Three additional levels of care will be offered in the Assisted Living Units for the following fees monthly:

$500 for Level I, $900 for Level II and $1,300 for Level III (in 2015 dollars).

(6) All nursing beds at the Community are expected to be Medicare certified. For purposes of the forecast, 16

nursing beds are expected to be utilized by Medicare residents at an assumed average Medicare

reimbursement rate of $480 daily to be in effect through opening in 2015. The Community does not

anticipate accepting Medicaid residents.

Construction of the Community is expected to commence in February 2014. Management anticipates the Independent Living Units to begin to be available for occupancy in June 2015, the Assisted Living Units and Memory Support Units to be available in November 2015, and the Skilled Nursing Beds to begin to be available for occupancy in December 2015. The anticipated timeline for the Community is shown below:

Table 2 Development Timeline

Permanent financing January 2014

Construction commences February 2014

Independent Living Units begin to be available for occupancy June 2015

Assisted Living Units available for occupancy November 2015

Memory Support Units available for occupancy November 2015

Skilled Nursing beds available for occupancy December 2015

Memory Support Units achieve stabilized occupancy of 93% April 2017

Assisted Living Units achieve stabilized occupancy of 93% October 2017

Skilled Nursing Beds achieve stabilized occupancy of 93% May 2018

Independent Living Units achieve stabilized occupancy of 95% May 2018




Development and Management of the Community

The Corporation has entered into separate development services agreements with ABHOW and Greystone Development Company II, LP (“GDC”) and a Sales and Marketing Oversight Agreement with Seniority, Inc. GMSC Idaho, LLC (“GMSC”), an affiliate of GDC, will be providing management services at the Community. ABHOW – Development Administrative Services Agreement

The Corporation entered into a Development Administrative Services Agreement with ABHOW, dated February 1, 2008, as amended, to provide certain support services in connection with development of the Community (the “Development Administrative Services Agreement”). The responsibilities of ABHOW are to (a) review and assess components of the business plan or budgets, schedules, or strategies contained therein as prepared by GDC; (b) review proposed revisions to the concepts, schedules, or strategies described in the business plan; (c) provide information necessary for the Corporation’s agents to prepare applications for any federal, state and local licenses, permits or approvals necessary for development and construction; (d) assist in the selection and engagement of architects, engineers, and other design professionals; (e) assist in review of the development requests for proposal and identifying firms to present their qualification to the Corporation; (f) review the work of the design consultants and determine that all such design and architectural work is consistent with the business plan for the Community; (g) meet with the Corporation’s project coordinator and design consultant to discuss the concept and goals of the Community as reflected in the business plan; (h) review the selection of a preconstruction consultant; and (i) provide oversight of the work of GDC in the preparation of a resident program, marketing plan, and pricing. ABHOW is to be paid a development administrative support services fee equal to $17,000 per month for each month that GDC is compensated. Fees earned and due to ABHOW under the Development Administrative Services Agreement during the forecast period are assumed to accrue and would be paid once certain financial tests are met for the Community. Greystone

The Corporation entered into a Development Consulting Agreement (the “Greystone Development Consulting Agreement”) effective December 21, 2007, as amended, with GDC including affiliated entity Greystone Development Services XX, LLC (“GDS”). GDC, GDS and GMSC are collectively referred to herein as “Greystone.” GDC, a Delaware limited partnership, was engaged to provide development consulting services during the planning and development of the Community. GDC specializes in providing planning, development, marketing, management and strategic consulting services related to all areas critical to the senior housing and services business. GDC currently has a staff of approximately 150. GDC is responsible for planning, coordinating and implementing a development plan relating to the construction and financing of the Community, and for the services and activities of the residents. GDC will also employ, train and supervise the marketing and sales staff for the



Community, on behalf of the Corporation, and will be responsible for the payroll-related expenses, sales commissions and payroll tax liabilities for these staff. These personnel costs are billed monthly and are to be reimbursed to GDC by the Corporation. Greystone is currently, or has been, responsible for more than 110 senior living community development and expansion projects. Greystone’s management experience encompasses more than 48 communities, including 8,000 housing and supportive care units. GCI Boise, L.P.

Greystone is responsible for the development of the Community under the direction of the Corporation. GDS is a Delaware limited liability company whose members are comprised of GCI Boise, L.P. (the “Limited Partnership”) and GDC. The Limited Partnership’s role is to fund the pre-finance development costs (the “Pre-finance Capital”) associated with providing pre-finance development services under the Greystone Development Consulting Agreement. GDC’s role is to provide all services, on behalf of Greystone, which are required to be performed pursuant to the Greystone Development Consulting Agreement. Neither the Limited Partnership nor Greystone is obligated to make payments under the Loan Agreement or on Obligation No. 1 or for payment on the Series 2014 Bonds. The Limited Partnership was formed to fund the Pre-finance Capital. Pre-finance Capital in the amount of $6,250,000 was funded in December 2007; $650,000 was funded in April 2011; $600,000 was funded in January 2012; $750,000 was funded in July 2012 and $350,000 was funded in March 2013. The general partner (the “General Partner”) of the Limited Partnership is GDC Boise, LLC, a Delaware limited liability company. The General Partner is a wholly-owned subsidiary of Greystone Partners, Ltd. (“Greystone Partners”), which is controlled by principals of Greystone. Limited Partners currently include The Ziegler Companies, Inc., Ziegler Equity Funding IV, LLC, Ziegler Equity Funding V, LLC and Greystone Senior Living Investors LP (“GSLI”). The Ziegler Companies, Inc. is the parent of B.C. Ziegler and Company, the underwriter of the Series 2014 Bonds. GSLI is also controlled by principals of Greystone. The Pre-finance Capital will be repaid as follows: (i) $5,600,000 upon delivery of the Series 2014 Bonds along with the Fixed Base Fee (as hereinafter defined) and (ii) a maximum of $650,000 to be paid in three annual installments which amounts of such installments are determined by calculating the amount equal to 25% of the excess of Income Available for Debt Service (as defined in the Master Trust Indenture) above the amount necessary to satisfy a Debt Service Coverage Ratio (as defined in the Master Trust Indenture) of 1.30 until the earlier of the date on which the $650,000 has been repaid in full or the third payment has occurred. The Corporation has no obligation to reimburse advances made by the Limited Partnership unless and until the closing of the Series 2014 Bonds. All risk for such advances associated with the failure to achieve closing on the financing will be borne by the Limited Partnership. GCI Boise, LP will provide liquidity support to the Corporation through a deposit of $2,250,000 into a special trust fund (the “Supplemental Liquidity Support Fund”) held in the custody of U.S Bank, N.A. (as the master trustee) under a liquidity support agreement.




The Corporation entered into the Greystone Development Consulting Agreement effective December 21, 2007, as amended, with GDC on behalf of itself and its permitted assignee GDS, to provide development consulting services for the Community and to be responsible for the marketing of the Community until ninety percent (90%) overall occupancy is achieved. GDS is a joint venture comprised of a limited partnership organized and existing under the laws of the State of Delaware. GDC has assigned its rights and duties under the Greystone Development Consulting Agreement to GDS. GDS has agreed to advance funds to and/or on behalf of the Corporation in an estimated amount of approximately $8,600,000 to pay for all such development costs of the Community prior to the issuance of the Series 2014 Bonds, and to allow provision of development services prior to the issuance of the Series 2014 Bonds at no obligation to the Corporation unless and until a closing and funding of the Series 2014 Bonds for the Community occurs. The Greystone Development Consulting Agreement calls for GDS to provide the following services: (a) all necessary planning to implement the development plan approved by the Corporation, including any revisions thereto; (b) preparation of detailed budgets for each phase of development activity, which are to be submitted for approval by Corporation; (c) assistance in obtaining all necessary governmental approvals required for the development and construction of the Community; (d) assistance with selection of design consultants and a pre-construction consultant, and coordination of submission of plans and specifications to the Corporation for Corporation’s approval; (e) development of a resident services program; (f) development and supervision of the marketing plan for the Community to prospective residents; (g) assistance in securing permanent financing for the Community; (h) assistance in negotiating and awarding a construction contract for the Community, and thereafter monitoring the progress of construction; (i) preparation of monthly cost reports; and (j) funding of $8.6 million of Pre-finance Capital (provided by Limited Partnership investors). GDS is responsible for the marketing of the Community until 90% occupancy of the aggregate total of Independent Living Units, Assisted Living Units, Memory Support Units, and Skilled Nursing Beds is achieved. As compensation for consulting services rendered, the Corporation will pay GDS a fee (the “Consulting Fee”) consisting of a fixed base fee, a variable base fee and an incentive occupancy fee. The fixed base fee is equal to $1,022,727 (the “Fixed Base Fee”). The variable base fee is equal to $3,364,658 (the “Variable Base Fee”). The incentive occupancy fee (the “Incentive Occupancy Fee”) will range from $50,000 to $500,000 and will be paid only if certain Independent Living Unit occupancy milestones are achieved. The Variable Base Fee and the Incentive Occupancy Fee represent a fee for consulting services rendered. The Fixed Base Fee of $1,022,727 will be paid upon the issuance of the Series 2014 Bonds. The Variable Base Fee has been/will be paid as follows: (i) $354,858 upon commencement of development consulting services, (ii) $414,858 paid pro-rata over 12 months after commencement of development consulting services, (iii) $207,429 paid upon the presale of twenty-five percent (25%) of the Independent Living Units, (iv) $207,429 paid upon the presale



of fifty percent (50%) of the Independent Living Units, (v) $780,834 upon issuance of the Series 2014 Bonds, (vi) $371,421 paid in equal installments during the construction period of the Community, (vii) $308,026 upon obtaining an initial Certificate of Occupancy for resident occupancy, (viii) $287,402 paid on a pro-rata basis upon first occupancy of each Independent Living Unit, (ix) $100,000 paid upon the Community having achieved 25% occupancy of the Independent Living Units, (x) $100,000 paid upon the Community having achieved 50% occupancy of the Independent Living Units, (xi) $77,467 paid upon the Community having achieved 65% occupancy of the Independent Living Units, (xii) $77,467 paid upon the Community having achieved 80% occupancy of the Independent Living Units, and (xiii) $77,467 paid upon the Community having achieved 90% occupancy of the Independent Living Units. In addition, upon achieving an accelerated fill-up, GDS would be eligible to receive additional compensation of $500,000 if 90% aggregate occupancy of all Independent Living Units is achieved within 15 months of obtaining a certificate of occupancy, $300,000 if 90% occupancy of all Independent Living Units is achieved within 18 months, $250,000 if 90% occupancy of all Independent Living Units is achieved within 21 months, $150,000 if 90% occupancy of all Independent Living Units is achieved within 24 months, $100,000 if 90% occupancy of all Independent Living Units is achieved within 27 months or $50,000 if 90% occupancy of all Independent Living Units is achieved within 30 months as an Incentive Occupancy Fee. Based on the current Community fill-up expectations of an aggregate 90% occupancy of the Independent Living Units within 30 months, $50,000 is assumed to be earned.



An overview of the total development fees assumed to be paid to GDC in association with the development of the Community is presented in the following table.

Table 3 Schedule of Development Fees


Fixed Base Fee $ 1,022,727

Variable Base Fee, and Incentive Occupancy Fee

Fees Paid Prior to Issuance of the Series 2014 Bonds

Upon commencement of Development Consulting Services $ 354,858

During 12 months following commencement of services 414,858

Upon 25% pre-sales 207,429

Upon 50% pre-sales 207,429

Subtotal fees paid prior to issuance of the Series 2014 Bonds $ 1,184,574

Fees Paid After Issuance of the Series 2014 Bonds

Upon Closing of the Series 2014 Bonds $ 780,834

During construction period 371,421

Subtotal fees paid after issuance of the Series 2014 Bonds $ 1,152,255

Fees Paid After Opening of the Community

Upon obtaining a Certificate of Occupancy $ 308,026

Upon move-in (over fill-up) 287,402

Upon 25% occupancy of the Independent Living Units 100,000





Upon 90% occupancy of the Independent Living Units in 30 months 50,000

Subtotal fees paid after opening of the Community $ 1,077,829

Total Variable Base Fee & Incentive Occupancy Fee $ 3,414,658


The Corporation is also expected to reimburse GDC for all reasonable out-of-pocket travel expenses for personnel employed by GDC and a 3.5% administrative fee on the Variable Base Fee and the Incentive Occupancy Fee. Seniority, Inc. - Sales and Marketing Oversight Services Agreement Seniority, Inc. (“Seniority”), a California for-profit corporation, was founded in 1997 and provides contract management, sales and marketing, and development consulting services to



owners and sponsors of senior housing and health care providers across the country. Seniority, a wholly owned subsidiary of ABHOW, has served over 60 senior living communities across the United States during the last 10 years. Its professionals have extensive experience in the daily operations of a sales office and community management. The Corporation has engaged Seniority to provide sales management services for the Community pursuant to the terms of a Sales and Marketing Oversight Services Agreement (the “Sales and Marketing Oversight Agreement”). Under the terms of the Sales and Marketing Oversight Agreement effective as of February 1, 2008, as amended, Seniority provides the following services: (a) approve the rates and charges to be paid by prospective residents; (b) advise on and approve marketing strategies for the Community including sales literature, contracts, advertising strategies, brochures and advertisements; (c) review monthly marketing operating and financial statements; (d) advise on pre-opening, sales activities; (e) make site visits no less than once every three months, and no less than monthly during the three month period prior to opening; (f) participate in monthly or quarterly marketing conference calls with the Corporation, bondholders and other interest parties to discuss the status and performance of the Community with respect to sales, response to advertising and acceptance of the Community; and (g) work in concert with GDC with respect to GDC’s performance under the Greystone Development Consulting Agreement. As compensation for services rendered pursuant to the Sales and Marketing Oversight Agreement, the Corporation will pay Seniority a Marketing Administrative Services Fee and an Incentive Fee (collectively, the “Sales and Marketing Oversight Services Fee”). The Corporation will pay a Marketing Administrative Services Fee of $8,000 per month beginning in the month in which first occupancy of an Independent Living Unit occurs and continuing until achievement of 90% occupancy of the Independent Living Units. The Incentive Fee will be equal to $80,000 and will be paid as follows: (i) $5,000 upon completion of the marketing collateral and first ad series, (ii) $30,000 upon achievement of the Priority Member goal, (iii) $35,000 upon achievement of the minimum number of Reservation Deposits necessary to secure financing, and (iv) $10,000 upon obtaining an initial Certificate of Occupancy for resident occupancy. The Sales and Marketing Oversight Services Fee is to be subject to the provisions of the Master Indenture with respect to Affiliate Related Subordinated Debt. Under the current terms of the Sales and Marketing Oversight Agreement and the Master Indenture, the Sales and Marketing Oversight Services Fee is deferred until stabilization of the Community. Management Agreement The Corporation entered into a Management and Marketing Services Agreement effective December 21, 2007, as amended, with GMSC, a Texas limited liability company and an affiliate of GDC, under which GMSC will serve as manager of the Community (the “Manager”) and manage day-to-day operations of the Community. Pursuant to the terms of the Management Agreement, the Manager is required to provide all management services necessary to operate the Community, including but not limited to, financial management, purchasing, public relations, recruitment of personnel, and supervision of the day-to-day operations and programs of the Community.



The Management and Marketing Services Agreement will commence on a date determined by the Manager and agreed upon by the Corporation, which shall be no later than twelve months prior to the first day of scheduled occupancy by the first Independent Living Resident of the Community (the “Commencement Date”). The initial term of the Management and Marketing Services Agreement is 84 months (the “Initial Term”). The Management and Marketing Services Agreement will renew automatically after the Initial Term for three successive one year terms, unless (a) either party provides written notice to the other party of intent to terminate at least 60 days prior to the expiration of the initial terms or renewal term or (b) the Management and Marketing Services Agreement has been terminated in accordance with other terms and conditions therein. As compensation for services rendered pursuant to the Management and Marketing Services Agreement, the Corporation will pay the Manager a fee (the “Management Fee”) consisting of an initial base management fee (“Initial Base Management Fee”) and an on-going base management fee (“Ongoing Base Management Fee”). The Corporation will pay the Manager an Initial Base Management Fee of $12,500 per month from the Commencement Date through the month of initial occupancy by an Independent Living Resident. Thereafter, the Corporation will pay the Manager an Ongoing Base Management Fee subsequent to initial occupancy.

Additionally, beginning in the first month of the second full fiscal year following the achievement of Stabilized Occupancy (as such term is defined in the Master Trust Indenture), the Corporation will pay the Manager a fee equal to $4,500 for each occupancy and/or reoccupancy of the Independent Living Units (the “New Occupant Fee”). The Ongoing Base Management Fee due after the initial occupancy date is expected to be as follows:

Table 4 Ongoing Base Management Fee

Occupancy Months Total Monthly

Fee Months 1-54 $12,500

Months 55-66 $32,500

Months 67 and on $35,000

Source: Management

In performance of its obligations under the Management and Marketing Services Agreement, GMSC is an independent contractor and, except as described above, is not subject to any right of control of the Corporation over the methods by which GMSC carries out its delegated duties. In addition to the Management and Marketing Fee, the Corporation will reimburse Greystone for all reasonable out-of-pocket travel expenses for personnel employed by Greystone and will pay the Manager three and one-half percent (3.5%) of the Management and Marketing Fee on a monthly basis as a reimbursement for Manager’s overhead expenses related to the Community, including, without limitation, long distance phone calls, copying, express delivery service, and postage.



Land Acquisition The ground on which the Community will be located is owned by ABP, an affiliate of ABHOW. The Corporation entered into a ground lease (the “Lease”) with ABP for the property, on March 24, 2008 (the “Commencement Date”). Upon closing of the Series 2014 Bonds, the Corporation will buy the real property from ABP for $5,000,000 in proceeds of the Series 2014 Bonds by using $3,000,000 of the proceeds of the Series 2014 Bonds and issuing a $2,000,000 subordinated 4 percent fixed rate note to ABP.

Liquidity Support Agreements ABHOW, ABP, the Corporation, and U.S Bank, N.A. (the “Master Trustee”) will enter into a liquidity support agreement, expected to be executed upon closing of the Series 2014 Bonds, to provide liquidity support to the Corporation. ABHOW and ABP are to provide liquidity support for the Corporation in an amount of $1,250,000 and $1,000,000, respectively (ABHOW’s commitment will be unfunded and ABP’s will be funded). GCI Boise, LP, will similarly provide an additional $2,250,000 of liquidity support to the Corporation under a separate a liquidity support agreement with the Corporation and the Master Trustee, expected to be executed upon closing of the Series 2014 Bonds (collectively, the “Liquidity Support Agreements”) The moneys available under the Liquidity Support Agreements may be drawn by the Master Trustee or the Corporation to pay for certain project costs, interest on the Series 2014 Bonds, or certain operating expenses in conjunction with the Community, if no other funds are available for those purposes in any trustee-held fund held by the Bond Trustee (other than the Debt Service Reserve Fund) or Master Trustee subject to provisions in the Liquidity Support Agreements. The Liquidity Support Agreements 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 Agreements.



Summary of Financing Total financial requirements for the Project are assumed to approximate $127,109,000. The Corporation proposes to fund these financial requirements primarily through the issuance of $103,185,000 Idaho Health Facilities Authority, Revenue Bonds, Series 2014 (The Terraces of Boise Retirement Community), Series 2014 (the “Series 2014 Bonds”). The Corporation is solely responsible for the payment of debt service on the Series 2014 Bonds.



Management has assumed the following sources and uses of funds in preparing the financial forecast based upon information provided by the Corporation’s managing underwriter, B.C. Ziegler and Company (the “Underwriter”):

Table 5 Sources and Uses of Funds

(In Thousands) Sources of Funds:

Series 2014A Bonds (A) $ 80,685

Series 2014B Bonds (A) 20,750

Series 2014C Bonds (A) 1,750

Original Issue Discount (B) (1,057)

Total Series 2014 Bonds proceeds $ 102,128

Initial Entrance Fees (C) 15,000

Contribution (D) 3,000

Subordinate ABP note (E) 2,000

Deferred Pre-finance Capital (R) 3,000

Deferred Fees(G) 1,448

Interest Earnings on Trustee Held Funds (H) 533

Total Sources of Funds $ 127,109

Uses of Funds:

Direct construction costs (I) $ 55,817

Design and engineering costs (J) 3,000

Contingency (K) 2,000

Indirect construction costs (L) 3,130

Development Consulting Fee (M) 3,415

Deferred Fees to Affiliate (N) 1,448

Marketing costs (O) 11,250

Prefinance capital return (P) 1,023

Miscellaneous costs (Q) 1,493

Land (R) 5,094

Total Project Related Costs $ 87,670

Working Capital Fund (S) 11,430

Operating Reserve Fund (S) 3,000

Funded Interest (T) 14,144

Series 2014A Bonds Debt Service Reserve Fund (U) 7,100

Series 2014B-1 Bonds Debt Service Reserve Fund (U) 317



Series 2014C Bonds Debt Service Reserve Fund (U) 123

Cost of issuance and other costs (V) 2,436

Total Estimated Financing and Other Costs $ 39,439

Total Uses of Funds $ 127,109Sources: Management, Greystone and the Underwriter



(A) According to the Underwriter, the following series of bonds are assumed to be issued:

� $80,685,000 of non-rated tax-exempt fixed rate term bonds (the “Series 2014A Bonds”);

� $20,750,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities (TEMPSSM) (the “Series 2014B Bonds”); and

� $1,750,000 of non-rated Taxable Mandatory Paydown Securities (Taxable MPS) (the “Series 2014C Bonds”)

(B) The Series 2014A Bonds are assumed to be issued at a discount of approximately $1,057,000.

(C) Management assumes that approximately $15,000,000 of initial resident Entrance Fees are to be used to fund start-up losses, operating reserves and a portion of the development fees related to the Community.

(D) A contribution of approximately $3,000,000 is to be provided by ABHOW and ABP to the Community to fund project costs not eligible for tax-exempt financing.

(E) A subordinated note in the approximate amount of $2,000,000 is assumed to be provided by ABP to fund project costs not eligible for tax-exempt financing.

(F) Approximately $3,000,000 of Pre-finance Capital used to fund certain marketing and other pre-finance expenditures not eligible for tax-exempt financing, is assumed to be deferred until the Community achieves certain financial tests, assumed to occur outside of the forecast period.

(G) Approximately $1,448,000 of development fees due to Seniority and ABHOW are assumed to be deferred and paid once the Community achieves certain financial tests, assumed to occur outside of the forecast period.

(H) Interest earnings in the approximate amount of $533,000 are assumed to be earned on the Project Fund at 0.45 percent, on the Funded Interest Fund at 0.37 percent, on the Series 2014A Bonds Debt Service Reserve Fund ranging from 0.75 to 3.00 percent, on the Series 2014B-1 Bonds Debt Service Reserve Fund at 1.06 percent, on the Series 2014B-2 Bonds Debt Service Reserve Fund at 0.84 percent, on the Series 2014B-3 Bonds Debt Service Reserve Fund at 0.52 percent, and on the Series 2014C Bonds Debt Service Reserve Fund at 0.31 percent, based upon information provided by the Underwriter.

(I) Construction, site work, and other costs related to the construction of the Community are assumed to approximate $55,817,000, inclusive of construction costs, based on a guaranteed maximum price (“GMP”) contract totaling $52,969,737 provided by the Corporation’s general contractor, Petra, Inc..

(J) Design and engineering costs are assumed to approximate $3,000,000 based on a contractual agreement with the Corporation’s architect, AG Architecture, in addition to contractual agreements with the Corporation’s interior designer and civil engineer.

(K) A project contingency of $2,000,000 is included on the overall project related costs of the Community.

(L) Indirect construction costs for the Community are assumed to approximate $3,130,000, and include procurement fees, furniture and equipment costs (based on contractual arrangements and comparable projects), as well as the costs of an owner’s representative, tap fees, and other preconstruction services.

(M) The Development Fee is assumed to approximate $3,415,000; $570,000 of this fee will be deferred and paid from the Working Capital Fund.

(N) ABHOW and Seniority are assumed to defer approximately $1,448,000 of development fees.

(O) Marketing costs related to the initial marketing of the Community (to 95 percent occupancy) are assumed to approximate $11,250,000 and include direct marketing costs, salaries and other promotional materials. Marketing costs are assumed to be funded through stabilized occupancy.

(P) The Pre-finance capital return is assumed to approximate $1,023,000.

(Q) Miscellaneous costs related to the Community approximate $1,493,000 and include expenses related to travel, legal and other professional fees, deferred Administrative Services fees, title insurance and other administrative costs as provided by Management.

(R) Land and land related costs approximate $5,094,000 and include costs for purchasing the land, engineering reports, permitting and legal fees.

(S) Subsequent to the issuance of the Series 2014 Bonds and after completion of the Community, initial entrance fees of $15,000,000 are assumed to be available to fund approximately $570,000 of Development Fees, $11,430,000 of Working Capital and the Operating Reserve Fund in the amount of $3,000,000 (prior to any replenishment).



(T) Interest costs of approximately $14,144,000 (approximately 22 months) are assumed to be funded from the proceeds of the Series 2014 Funds.

(U) The deposits to the Series 2014 Debt Service Reserve Funds are assumed to approximate $8,429,000.

(V) Costs of issuance related to the Series 2014 Bonds approximate $2,436,000 and include 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.



Description of the Residency Agreement

In order to reserve an Independent Living Unit at the Community, a prospective resident must execute a Reservation Agreement (the “Reservation Agreement”), submit (on forms provided by the Corporation) a completed Personal Health History and Personal Financial Statement, and place a deposit equal to 10 percent of the Entrance Fee (the “Entrance Fee 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 Care and Residence Agreement (the “Residency Agreement”) upon opening of the Community. The Reservation Agreement also provides Residents guaranteed admission, upon payment of the full Entrance Fee due, directly to the Assisted Living Units, Memory Support Units or Health Center under the Life Care Benefit should their health needs change prior to opening of the Community. As of October 17, 2013, there were 112 Depositors reserving 113 Independent Living Units (one Depositor has reserved two units). One of these Depositors has placed a deposit in the amount $5,000 (or approximately 2 percent of the Entrance Fee) to reserve an Independent Living Unit. The Corporation accepts persons at least 62 years of age at the time of occupancy, who demonstrate the ability to live independently, and as to all levels at the Community, to meet the financial obligations as a resident of the Community (the “Resident”). Upon occupancy, Residents are expected to pay any unpaid portion of the Entrance Fee and an ongoing Monthly Fee. Payment of the Entrance Fee and Monthly Fee entitles the Resident to occupy the selected Independent Living Unit and receive a Life Care Benefit, as described hereinafter, in addition to the following services and amenities:

� Twenty (20) meal credits per person per month;

� All utilities, except telephone, internet services and premium cable television services;

� Housekeeping service for Residents of the Independent Living Units two times per month;

� Scheduled cleaning and changing of bed linens two times per month;

� Maintenance of all common areas and equipment;

� Regularly scheduled local transportation;

� 24-hour monitoring of the emergency call system;

� A variety of recreational, religious, educational, cultural, and social programs;

� Use of the fitness and wellness center, dining rooms, lounges, social and recreational rooms and other common activity facilities;

� Use of one designated underground parking space;

� Use of one individual storage locker per apartment; and



� Priority access to services in the Assisted Living Units, Memory Support Units, and Skilled Nursing Beds.

In addition to the items included in the Monthly Fee, certain services are available to Residents at an additional cost including, but not limited to, additional housekeeping, laundry services for personal items, catering for special occasions, tray service, guest meals, barber and beauty services, and reservation of additional underground parking spaces and guest apartment. Life Care Benefit Under the Residency Agreement, the Corporation provides Residents priority access and routine care in the Assisted Living Units, Memory Support Units and Skilled Nursing Beds (collectively, the “Health Care Center”) for residents permanently transferring to the Health Care Center. For the current pricing offered, single occupant Residents needing to vacate their Independent Living Unit and permanently transfer to the Health Care Center are charged the then published Monthly Fee for the two bedroom/two-bath apartment called “The Highlands” plus the cost of two additional meals per day (the “Life Care Benefit”). In the case of double occupancy, if one occupant is making a permanent transfer to the Health Care Center, the Monthly Fee for the transferred Resident changes to the Life Care Benefit. Should both Residents transfer to the Health Care Center, the cost is expected to be equal to the Life Care Benefit for both Residents plus the cost of two additional meals per day per person. Residents permanently transferring to the Health Care Center will be billed for non-routine care and ancillary services at the then-current rates for such items. Residents needing temporary care in the Health Care Center continue to pay the current Monthly Fee for their Independent Living Unit in addition to the applicable monthly or per diem rate in the Health Care Center. A transfer is considered temporary when the determination is made that the condition that requires the Resident’s transfer has the potential to be resolved in a manner which may allow the Resident to return to his/her Independent Living Unit within 90 days. Persons who have not paid an Entrance Fee may be admitted to the Health Care Center (“Direct Admit Residents”) if beds are available in excess of those needed to satisfy the needs of Residents. Residents requiring care in the Health Care Center will have priority access to the Health Care Center over Direct Admit Residents. The Resident is expected to obtain and maintain Medicare Parts A and B (or an equivalent substitute policy approved by the Corporation).



Current Entrance Fee Options The Corporation currently offers a package of certain benefits (“Preferred Resident Benefits”) to prospective first-generation residents for the Independent Living Units (the “Preferred Residents”) under three Entrance Fee plans. The current Preferred Resident Entrance Fee options, related amortization schedules and refunds upon termination of the Residency Agreement are as follows:

Entrance Fee Options – First Generation Residents Amortization Schedule

Plan I – 90%/80% Refundable Plan(1) (2) Upon termination of the Residency Agreement, 90 percent of the total Entrance Fee paid is to be refunded to single occupants upon reoccupancy of the Residence and 80 percent of the total Entrance Fee paid is to be refunded to couples upon reoccupancy of the Residence.

Plan II – 40%/30% Refundable Plan(2) Entrance Fee amortizes two percent per month from the Occupancy Date to the date of termination. The Entrance Fee will not amortize below 30 and 40 percent of the Entrance Fee.

Plan III – 10%/0% Refundable Plan(2)

Entrance Fee amortizes two percent per month from the Occupancy Date to the date of termination until the Entrance Fee is 10 percent refundable or no longer refundable.

(1) Refundability for single occupants is higher than for couples. Refunds under Plan II and III reduce monthly over time (2% per month).

The plans described above are available to the remaining first-generation Residents of the Community. Second-generation Residents of the Community will only be offered New Plan I – 80%/70% Refundable Plan. Termination of the Residency Agreement prior to Occupancy Date If the Residency Agreement is voluntarily terminated prior to assuming occupancy at the Community within the seven day rescission period (“Rescission Period”), the Resident is expected to receive a 100 percent refund of all monies paid, plus interest. If the Residency agreement is voluntarily terminated prior to assuming occupancy at the Community and after the Rescission Period, the Resident is due a 100 percent refund of all monies paid, with interest, less a forfeiture penalty of $250 processing fee. Termination of the Residency Agreement prior to occupancy at the Community due to death, a change in health status, or other circumstances beyond the Resident’s control, results in a full refund of all monies paid with interest. Termination of the Residency Agreement after Occupancy Date If the Residency Agreement is terminated after assuming occupancy at the Community, the Resident is entitled to reimbursement of ninety percent (90%) of the Entrance Fee for the selected Independent Living Unit, without interest, less any costs incurred by the Corporation on the



Resident’s behalf, by providing advance written notification of at least 30 days. The Corporation is expected to refund the remaining refundable portion of the Entrance Fee, without interest, on the later of termination of the Residency Agreement or the date an Entrance Fee and executed Residency Agreement have been received from a new resident. Preferred Resident Benefits The current Entrance Fee options entitle Preferred Residents receive the Preferred Resident Benefits upon execution of the Residency Agreement:

� A 10% discount on the Entrance Fee;

� No increase in Monthly Fees through December 31, 2013;

� A $300 discount on the second person Monthly Fee;

� Interest paid at such rate as is earned on the escrow account on the Entrance Fee deposit until the date the Independent Living Unit is ready for occupancy;

� One month of complimentary Monthly Fees from available occupancy date;

� A one-time credit against Monthly Fees for every six months a full Entrance Fee Deposit was maintained from the date of deposit to the available occupancy date;

� Opportunity to customize and/or personalize Independent Living Unit; and

� Pre-qualification regardless of changes in health between signing of the Reservation Agreement and occupancy, as long as the Corporation is able to provide the care needed in a safe environment.

Historical Entrance Fee Options

Prior to May 2012, the Corporation previously offered five different Entrance Fee plans (Plan A, B, C, D and E). Each plan had various refundable Entrance Fees, life care benefits and discounts from the original Plan A/I offered. The following table summarizes the refundability provisions, discounts and lifecare benefit related to the current and historical Entrance Fee plans offered.



Table 6 Description of Current and Historical of Entrance Fee Options

First-Generation Residents

Plan Refundability(1)

Entrance Fee Discount off of

Plan A/I Pricing

Monthly Fee Discount off of

Plan A/I Pricing Lifecare BenefitPrevious Contracts

Plan A 95% n/a n/a Rockies Unit

Plan B 50% 0% 20% Rockies Unit

Plan C 0% 30% 0% Rockies Unit

Plan D 90% 20% $250 N/A-Fee-for-Service

Plan E 70% 20% 0% Rockies Unit

Current Contracts(2)

Plan I (3) 90%/80% n/a n/a Highlands Unit

Plan II 40%/30% 0% 20% Highlands Unit

Plan III 10%/0% 30% 0% Highlands Unit

Source: Management and Greystone (1) Refunds under previous contracts Plan B, C and E and current contracts Plan II and III reduce monthly over time (2%

per month) to the minimum refundability. (2) Refundability under Plans I, II and III for single occupants is higher than for couples. (3) The plans described above are available to the first-generation Residents of the Community. Second-generation

Residents of the Community will only be offered New Plan I – 80%/70% Refundable Plan.

As of October 17, 2013, the Corporation currently has 112 Depositors (113 reserved Independent Living Units). The following table summarizes the number of Depositors who have chosen each plan as of October 17, 2013, based on Depositor information provided by Management.

Table 7 The Community

Utilization of Entrance Fee Options – First Generation Residents

Plan

As of October 17,

2013Percentage of

Deposits

Management’s Forecast

Assumption

Percent of Management’s

AssumptionPrevious Contracts

Plan A – 95%/90% Refundable Plan 45 40% 37 24%

Plan B – 50% Refundable Plan 18 16% 13 8%

Plan C – 0% Refundable Plan 4 4% 5 3%

Plan D – 90% Refundable Plan 2 2% 2 1%

Plan E – 70% Refundable Plan 5 4% 4 3%

Current Contracts

Plan I – 90%/80% Refundable Plan 16 14% 72 47%

Plan II – 40%/30% Refundable Plan 15 14% 10 7%

Plan III – 10%/0% Refundable Plan 7 6% 10 7%

Total 112(1) 100.0% 153 100.0% Source: Management and Greystone

(1) Represents the total number of Depositors (113 Independent Living Units) as of October 17, 2013.



Combination Apartments According to Management, one Depositor has reserved two Independent Living Units (a “Combination Apartment”). Upon vacancy, the Combination Apartment could be separated and remarketed as their original floor plans. The Entrance Fee for the Combination Apartment approximates the combined Entrance Fee of each floor plan selected from Plan I. The Entrance Fee for the Combination Apartment is 95 percent refundable. Monthly Fees for the Combination Apartment approximates the combined Monthly Fee of each floor plan selected, less the second person fee of $695.



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 primary market areas for the Community;

� Demographic and socioeconomic characteristics of the defined primary market areas;

� Estimated age- and income-qualified households within the primary market areas;

� Description and utilization of existing and proposed comparable retirement communities within and near the primary market areas;

� Management’s ability to market the Independent Living Units, Assisted Living Units, Memory Support Units and Health Center; and

� Penetration rates for independent and assisted living (including memory care) 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 to be located on 12.6 acres of land (the “Site”) located at the southeast corner of Warm Springs Avenue and East Mill Station Drive in Boise, Ada County, Idaho. The Site, approximately 10 miles southeast of downtown Boise, is located in the Harris Ranch neighborhood, a housing development that once fully developed will contain 2,800 homes. General Area Analysis Highways

The Community is planned to be located five miles east of Interstate 84 (“I-84”), between Warm Springs Avenue and Eckert Road. I-84 connects the suburban areas of Boise with Portland, Oregon to the west and Salt Lake City, Utah to the southeast. In addition Interstate 184 (“the Connector”) is a five mile highway located seven miles north of the Community, connecting I-84 to downtown Boise. Public Transportation ValleyRide is the transit services division of Valley Regional Transit (“VRT”) which provides bus services throughout Ada and Canyon County via 14 bus routes in Boise, four routes in Nampa/Caldwell and five inter-county routes between Ada and Canyon County. The nearest bus stop is located approximately two and one-half miles west of the Community at the intersection of South Eckert Road and East Boise Avenue. In addition, ValleyRide provides on demand door-to-door Paratransit bus services (“ACCESS”) for disabled and elderly people traveling to the cities of Boise, Garden City, Nampa and Caldwell.



Airports Boise Airport (“BOI”) is located approximately seven miles east of the Community and is a joint civil-military, commercial and general aviation airport. BOI is served by Alaska Airlines, Delta Airlines, Southwest Airlines, United Airlines, United Express and US Airways and provided service to approximately 2.6 million passengers in 2012. Hospitals

The following table shows the hospitals and medical centers located near the Community.

Table 8 Hospitals Near The Community

Hospital Name Location Driving Miles

from the Community Type Number of

Beds Saint Luke’s Boise Medical Center Boise - 83712 5.5 Short Term Acute Care 532

Saint Alphonsus Regional Medical Boise - 83706 9.1 Short Term Acute Care 368

Southwest Idaho Advanced Care Hospital Boise - 83709 11.5 Long Term 40

Treasure Valley Hospital Boise - 83704 12.1 Short Term Acute Care 10

Source: American Hospital Directory

Shopping/Cultural

Idaho’s largest shopping center, Boise Towne Square Mall, is located 11 miles from the Community and is anchored by Macy’s, Dillard’s, JCPenney, Kohl’s and Sears. The Boise Factory Outlets is located approximately five miles from the Community and offers over 15 retail options. Downtown Boise features several shopping districts including BoDo, The Linen District, Old Boise and Hyde Park. The Boise Art Museum, the Idaho Historical Museum, Zoo Boise, the Rose Gardens and Discovery Center of Boise are all located downtown near the Julia Davis Municipal Park approximately eight miles from the Community. The park also contains access to the Boise River, playgrounds, tennis courts, and pedestrian bridges. Warm Springs Golf Course is an 18-hole championship public course located three and one-half miles north of the Community. Hillcrest Country Club is an 18-hole private course located nine miles west of the Community.



Primary Market Area of the Community The primary market area for providers of senior living services is typically defined as the geographic area from which a majority of prospective residents reside prior to assuming occupancy at the Community. As of October 17, 2013, there were 113 Independent Living Units reserved by 112 Depositors out of the 161 available Independent Living Units, representing 70 percent of the total Independent Living Units at the Community. Based on the zip code origin of the Depositors, discussions with existing senior living providers in the area and experience with similar communities, the primary market area has been defined to be an 10 zip code area surrounding the Community located within Ada County, spanning approximately 24 miles from north to south, and 18 miles from east to west at the widest points (the “IL PMA”). The boundaries of three extended zip codes to the north and south were modified based on discussions with Management. Zip codes 83714 and 83616 to the north were cut off to the north and east in order to follow the Ada County lines. Zip code 83716 to the south was cut off to assimilate an extension of Kuna More Road because of its otherwise long extension to the south. The following table lists the 10 zip codes (as modified) that comprise the IL PMA.

Table 9 Independent Living Depositor Origin Data

Zip Code Town Number of Depositors(1) Percentage

of Total 83706 Boise 20 17.9%

83716(2)

Boise/Atlanta 14 12.5%

83702 Boise 8 7.1%

83712 Boise 7 6.2%

83704 Boise 6 5.4%

83714 Boise/Hidden Springs 6 5.4%

83703 Boise/Garden City 5 4.5%

83616 Eagle 5 4.5%

83705 Boise 4 3.5%

83709 Boise 4 3.5%

Total from IL PMA Zip Codes 79 70.5% Other areas in Idaho 16 14.3%

Out of state 17 15.2%

Total 112 100.0% Source: Management

(1) Depositor information as of October 17, 2013. According to Management, one Depositor has reserved two adjacent Independent Living Units at the Community, for a total of 113 units reserved. One Depositor has placed a deposit in the amount of $5,000 (or approximately 2 percent of the Entrance Fee) to reserve an Independent Living Unit.

(2) The Community is to be located in zip code 83716.



The following map depicts the Community, other existing communities and the IL PMA.

Legend The IL PMA

The Community

Existing Communities Within the IL PMA 1 – Villas/Wynwood at River Place

2 – Garden Plaza of Valley View

3 – Willow Park

Existing Communities Near the IL PMA 4 – Bonaventure

5 – Meadow Lake Village

6 – Spring Creek

�

Idaho

Source: Microsoft MapPoint

IL PMA



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, a firm that specializes in the analysis of demographic data, 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 compounded percentage change between 2000 and 2013 and 2013 and 2018 in the IL PMA, the State of Idaho, and the United States.

Table 10 Historical, Estimated and Projected IL PMA,

Idaho and United States Populations

2000 Population (Census)(1)

2013 Population (Estimated)

2018 Population (Projected)

Compounded Annual

Percentage Change

2000 – 2013

Compounded Annual

Percentage Change

2013 – 2018 IL PMA

Total Population 218,366 256,137 269,460 1.2% 1.0%

Age 65 to 74 Population 10,783 18,489 24,187 4.2% 5.5%


Age 85 Plus Population 2,970 4,597 4,635 3.4% 0.2%

Total 65 Plus 21,923 32,110 39,179 3.0% 4.1%

Total 75 Plus 11,140 13,621 14,992 1.6% 1.9%

Idaho

Total Population 1,293,956 1,605,119 1,669,915 1.7% 0.8%



Age 85 Plus Population 18,059 26,612 27,990 3.0% 1.0%

Total 65 Plus 145,915 211,706 244,903 2.9% 3.0%

Total 75 Plus 69,945 88,428 97,556 1.8% 2.0%

United States

Total Population 281,421,942 314,861,807 325,322,277 0.9% 0.7%

Age 65 to 74 Population 18,390,870 24,703,850 30,124,562 2.3% 4.0%

Age 75 to 84 Population 12,361,442 13,281,401 14,594,994 0.6% 1.9%

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 (1) Nielsen Claritas plans to release the 2010 population historical census data in Fall 2013.



The following table presents the percentage of total population by age group for the targeted age population in the IL PMA, Idaho, and the United States.

Table 11 Percentage of Total Population by Age Cohort

2000 (Census)(1) IL PMA Idaho United States Age Groupings

65 plus 10.0% 11.3% 12.4%

75 plus 5.1% 5.4% 5.9%

85 plus 1.4% 1.4% 1.5%

2013 (Estimated) IL PMA Idaho United States Age Groupings

65 plus 12.5% 13.2% 13.9%

75 plus 5.3% 5.5% 6.1%

85 plus 1.8% 1.7% 1.9%

2018 (Projected) IL PMA Idaho United States Age Groupings

65 plus 14.5% 14.7% 15.7%

75 plus 5.6% 5.8% 6.4%

85 plus 1.7% 1.7% 1.9%

Source: Nielsen Claritas (1) Nielsen Claritas plans to release the 2010 population census historical data in Fall 2013.



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 Entrance Fee, required Monthly Fee and other expenses related to independent living services not provided for in the Residency Agreement. Accordingly, Management has established certain criteria to identify potential residents who are eligible to reside in an Independent Living Unit. Management estimates that prospective independent living residents should have a minimum monthly income of approximately 1.6 times the Monthly Fee and an asset level approximately 2.0 times the Entrance Fee required to become a Depositor. For purposes of quantifying the number of income-qualified households in the PMA, households with the head of household aged 75 or older are considered to be the most likely to establish residency in an Independent Living Unit. The composition of Depositors as of October 17, 2013 is described in the table below:

Table 12 The Community

Depositor Composition

Age Group of Primary Depositors Number of Depositors Percentage

Under 75 23 20.5%

75 and older 89 79.5%

Total Primary Depositors on entry into the Community(1) 112 100.0%

Source: Management (1) Represents the age of primary Depositors upon entry into the Community in 2015.

In addition, the following two annual household income scenarios are presented for estimating the number of income-qualified households in the IL PMA:

� Annual household income approximately $35,000 or more based on the Monthly Fee of the largest number of smallest one bedroom (Golden Eagle) Independent Living Unit ($1,995) at the Community assuming a 1.6 factor; and

� Annual household income approximately $50,000 or more based on the weighted average Monthly Fee of all Independent Living Units ($2,993) at the Community assuming a 1.6 factor.

Of the Depositors, the median annual income is approximately $95,000 and the median net worth is approximately $1,840,000, based on self-reported Depositor information provided by Management as of October 17, 2013. The average age of Depositors (first persons) upon entry to the Community approximates 82 years of age when the Community is scheduled to open in 2015.



The following table illustrates the 2013 estimated and the 2018 projected household income distribution for householders age 65 to 74 and 75 or over in the IL PMA.

Table 13 Income Eligible Households for Independent Living Services

Within the IL Primary Market Area

2013 (Estimated) 65 – 74 75+ Total Total Households: 12,023 9,419 21,442

Household Income

Under $35,000 5,465 6,178 11,643

$35,000 and over

$35,000 – 49,999 2,146 1,369 3,515

$50,000 – 59,999 2,097 953 3,050

$75,000 – 99,999 1,046 439 1,485

$100,000 – 149,999 732 245 977

$150,000 plus 537 235 772

Total $35,000 and over 6,558 3,241 9,799

Percentage of Income Eligible Households to Total Households – $35,000 and over

54.5% 34.4% 45.7%

Total $50,000 and over 4,412 1,872 6,284


36.7% 19.9% 29.3%

2018 (Projected) 65 – 74 75+ Total Total Households: 15,791 10,387 26,178

Household Income

Under $35,000 7,803 7,122 14,925

$35,000 and over

$35,000 – 49,999 2,690 1,327 4,017

$50,000 – 59,999 2,574 986 3,560

$75,000 – 99,999 1,242 447 1,689

$100,000 – 149,999 892 285 1,177

$150,000 plus 590 220 810

Total $35,000 and over 7,988 3,265 11,253


50.6% 31.4% 43.0%

Total $50,000 and over 5,298 1,938 7,236


33.6% 18.7% 27.6%

Source: Nielsen Claritas



The following table compares the percentage of income-qualified households to total households for the $35,000 and $50,000 income qualification level for age 75 and above households within the IL PMA, Idaho, and the United States, projected in 2018 based on the 2010 Census.

Table 14 Comparison of Income-Qualified Households – 2018

IL PMA Idaho United States Percentage of Income Qualified Households to Total Households – $35,000

31.4% 31.6% 39.3%

Percentage of Income Qualified Households to Total Households – $50,000

18.7% 17.9% 25.2%

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 and projected in 2018 based on the 2010 Census.

Table 15 Income Eligible Households for Independent Living Services

Within the IL Primary Market Area

Age 75 and Above 2013 2015 2018 Total $35,000 and over 3,241 3,250 3,265


34.4% 33.1% 31.4%

Total $50,000 and over 1,872 1,898 1,938


19.9% 19.4% 18.7%

Source: Nielsen Claritas



Market Area Real Estate The ability of potential residents to sell their home prior to assuming occupancy at a senior living community may have an impact on the ability of residents to pay the required fees. Often, entrance fees are paid with funds received through the sale of a prospective resident’s home. The Multiple Listing Service (“MLS”) for Ada County reports real estate statistics by area rather than by zip code (the “MLS Area”). Each MLS Area may have one or more zip codes associated with that MLS Area number. The following tables present real estate information for the PMA by MLS Area. The MLS Areas presented in the tables below contain all of the zip codes located in the PMA. MLS Area 500, however, includes one zip code (83634) which is not included in the PMA.

Table 16 Market Area Real Estate Trends for IL PMA

2011 2012 2013(1)

Zip Code Areas

Number of Homes

Sold

Average Sales Price

Average Days

on Market

Number of Homes

Sold

Average Sales Price

Average Days

on Market

Number of

Homes Sold

Average Sales Price

Average Days

on Market

100 – North Boise 404 $239,586 57 473 $272,467 46 347 $296,917 55

200 – North East Boise 199 $318,479 55 238 $328,610 45 203 $365,391 39

300 – Southeast Boise 519 $183,386 76 615 $198,916 59 437 $235,604 43

400 – Boise Bench 538 $101,799 75 528 $126,698 62 375 $154,133 46

500 – South Boise(2) 211 $145,425 83 204 $156,548 65 165 $195,844 48

550- S.W. Boise- Meridian Dist.

588 $145,053 62 680 $168,186 48 580 $197,728 47

600- West Boise 410 $112,161 63 439 $130,792 42 325 $157,678 49

700 – Garden City 38 $116,031 59 40 $140,988 50 23 $195,486 83

800 – Northwest Boise-Garden City

475 $181,051 66 536

$200,601 50 435 $233,596 47

900 - Eagle 456 $290,271 75 531 $307,499 59 523 $368,476 63

Total/Weighted Avg. 3,838 $181,045 68 4,284 $204,594 53 3,413 $244,661 50 Source: Group One – Boise Office and Intermountain Multiple Listing Service Inc., September 2013

(1) Reflects data through September 30, 2013. (2) Area 500 includes zip code 83634 which is not included in the IL PMA.



The following table summarizes the real estate statistics for residential homes for the IL PMA broken down by home sale price category.

Table 17 Residential Sales Within the IL PMA(1)

Sale Price $149,999 and Under $150,000 - $199,999 $200,000 - $349,000 $350,000 and Above Total

Zip Code Areas 2011 2012 2013(1) 2011 2012 2013(1) 2011 2012 2013(1) 2011 2012 2013(1) 2011 2012 2013(1)

100 – North Boise 135 118 59 59 87 58 142 159 134 68 109 96 404 473 347

200 – North East Boise 14 9 5 18 16 5 112 139 89 55 74 104 199 238 203

300 – Southeast Boise 239 232 80 114 165 111 135 168 190 31 50 56 519 615 437

400 – Boise Bench 459 411 237 49 72 91 27 39 37 3 6 10 538 528 375

500 – South Boise(2) 126 108 39 55 56 74 28 38 50 2 2 2 211 204 165

550- S.W. Boise- Meridian Dist. 353 296 135 151 221 238 83 156 196 1 7 11 588 680 580

600- West Boise 340 316 188 50 87 91 19 33 42 1 3 4 410 439 325

700 – Garden City 25 29 9 10 2 4 3 9 8 0 0 2 38 40 23

800 – Northwest Boise-Garden City 239 200 92 89 121 126 113 175 155 34 40 62 475 536 435

900 - Eagle 92 64 30 67 91 63 161 199 240 136 177 190 456 531 523

Totals 2,022 1,783 874 662 918 861 823 1,115 1,141 331 468 537 3,838 4,284 3,413

Percentage of Total 52.7% 41.6% 25.6% 17.2% 21.4% 25.2% 21.4% 26.0% 33.4% 8.6% 10.9% 15.7% 100% 100% 100% Source: Group One – Boise Office, September 2013

(1) Data for 2013 is through September 30, 2013. (2) Area 500 includes zip code 83634 which is not included in the IL PMA.

Unemployment Trends

The unemployment trends for the City of Boise, the Boise MSA, Ada County, Idaho and the United States are shown in the following table.

Table 18 Unemployment Trends

2010 2011 2012 2013(1) City of Boise 8.4 7.6 6.4 5.8

Boise MSA 9.0 8.4 6.9 6.2

Ada County (2) 8.3 7.6 7.6 5.7

Idaho 8.7 8.3 7.1 6.6

United States 9.6 8.9 8.1 7.7

Source: U.S. Department of Labor, Bureau of Labor Statistics Data (1) Unemployment data for 2013 is through July for the City of Boise, Boise MSA, and Ada County. Unemployment data

for 2013 for the state of Idaho and United States is through August. (2) The Community is to be located in Ada County.

Ada County is supported by major employers such as Amalgamated Sugar Company, Blue Cross of Idaho, BMC West Corp, Boise Cascade, LLC, Boise Independent School District and Boise State University.



Continuing Care Regulatory Requirements

In Idaho, continuing care retirement communities (“CCRCs”) are licensed and regulated by the Idaho Department of Finance, Banking Division (the “Division”) under Title 26 Chapter 37: Idaho Continuing Care Disclosure Act. The Division defines a continuing care contract as “an agreement by a provider to furnish to an individual, in return for payment of an entrance fee and periodic charges, accommodations in a living unit, meals, nursing care services, medical services, other health related services, or any combination of these services for the life of the resident of for a period of time exceeding one month.”

The Idaho Continuing Care Disclosure Act was enacted in 1988 and regulates entities that offer to provide long-term care and lodging after an advance fee payment often called an “entrance fee.” Retirement communities seeking to offer this type of program would be required to register with the Securities Bureau of the Department of Finance, provide detailed disclosure to purchasers, and adhere to certain other requirements. The Community would be the first full service CCRC to offer an entrance fee contract in Idaho and be regulated by the Division.

A CCRC must be licensed with the Division prior to entering into continuing care contracts. Licensing must include providing audited financial statements, residency contracts, entrance fee escrow and other information required by the Division. Audited financial statements and an annual report are required each year subsequent to initial licensure. In addition, a continuing care provider must establish an interest-bearing escrow account with a bank or trust company located in Idaho. Any entrance fee received by the provider prior to the date the resident is permitted to occupy the unit is required to be placed in the escrow account. The entrance fee and any earned income becomes available to the provider once the unit is occupied by the Resident.



Comparable Retirement Communities

Comparable communities include those offering independent living units and at least one level of health care services, such as assisted living and/or nursing care for age restricted seniors. Independent living units may be apartments, cottages, and/or free-standing homes where residents have access to on-site amenities, which typically include a choice of dining venues, library, lounge areas, fitness facilities, banking, game room, multi-purpose room, arts and crafts area, hair salon, a chapel, and more. Services typically include one meal per resident per day, weekly or bi-weekly housekeeping, all utilities except telephone, scheduled transportation, activities program, emergency call system in each residence, 24-hour security, interior and exterior maintenance, maintenance of grounds, and discounted health care services in on-site assisted living and nursing care facilities.

Comparable facilities are defined as those facilities that: (i) include independent living services; (ii) provide one or more other levels of care such as assisted living, dementia care and/or nursing care services; (iii) offer similar services and amenities within the IL PMA of the Community; 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. The Community would offer a Type A contract.

Modified Contract (“Type B”) - Under a Type B contract, the resident also generally pays an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under a Type B contract, the CCRC typically provides assisted living or skilled nursing care to residents either (a) at a discounted rate on the per diem, e.g., 20 percent discount; (b) a certain number of days per year or per lifetime, e.g., 60-90 days; or (c) a combination of the two.

Fee-for-Service Contract (“Type C”) - A Type C contract also generally requires an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under the Type C contract, residents who require assisted living or nursing care do not receive any discount on assisted living or skilled nursing services.



Rental Communities (“Rental”) – Under a Rental contract, a resident signs a lease for the independent living unit selected and pays for various additional services utilized (including assisted living, memory care or nursing) on a monthly or per diem basis at prevailing market rates. The resident is not required to pay an entrance fee and the contract term is typically on a month-to-month basis. It should be noted that the comparable retirement communities profiled in the table following offer a Rental contract and the Community would be the first community in Idaho to offer an entrance fee contract as a licensed CCRC.

The following tables profile the Community, the three existing comparable retirement communities within the IL PMA and three existing comparable retirement communities near the IL PMA. Based on discussions with management at the locations of the three comparable retirement communities located near the IL PMA, approximately 50 percent of the residents at those communities originated from the IL PMA. Therefore, half of the independent living units associated with the comparable communities located near the IL PMA are included in the penetration rate analysis following. The weighted average occupancy of the six communities profiled is 91 percent.



Table 19 Comparable Communities Within and Near the Primary Market Area

Within the PMA

The Community Villas/Wynwood at River Place

Garden Plaza at Valley View Willow Park

Location Boise – 83716 Boise – 83706 Boise – 83704 Boise – 83704

Miles from the Community – 4.1 9.7 12.7

Sponsor/Developer Boise Retirement Community

Brookdale Senior Living

Century Park Associates

Willow Park Senior Living

Year Opened – 1992/1997 1986 1994

Type of Contract Type A Rental Rental Rental

For Profit/Not-for-profit Not-for-profit For-profit For-profit For-profit

Unit Configuration

Independent Living Units (ILUs)

Studio apartments – 22 60 –

One-bedroom apartments 62 25 60 –

Two-bedroom apartments 87 11 23 –

Homes/Duplexes/Cottages 12 20 – 10

Total ILUs 161 78 143 10

Assisted Living Units 40 AL/24 MC 80 51 90 AL/31 MC

Nursing Care Beds 48 – 153 –

Independent Living

Square Footage

Studio apartments – 355 – 414 440 –

One-bedroom apartments 700 – 923 565 550 –

Two-bedroom apartments 923 – 1,510 771 – 817 770 –

Homes/Duplexes/Cottages 1,456 1,030 – 1,435 – 970

Entrance Fees

Studio apartments – – – –

One-bedroom apartments $188,425 – 244,981 – – –

Two-bedroom apartments $197,851 –367,518 – – –

Homes/Duplexes/Cottages $414,648 – – –

2nd Person Entrance Fee – – – –

Monthly Fees

Studio apartments – $2,300 $2,375 –

One-bedroom apartments $1,880 – 2,446 $2,980 $2,887 –

Two-bedroom apartments $2,635 – 3,577 $3,750 $3,758 –

Homes/Duplexes/Cottages $3,671 $4,200 – $2,550

2nd Person Monthly Fee $655 $600 $400 –

Refund Options 90% Refund (shown) – – –

Assisted Living

Monthly Fee $4,708 – 5,651 $3,000 – 4,200 $3,738 – 4,074 $2,850 - 5,100

Nursing Care

Daily Rate $269 – 278 – $277-467 –

Occupancy Rate

Independent Living – 100% 95% 100%

Assisted Living – 100% 95% 97%

Nursing Care – – 85% –

Source: Management, surveys and site visits conducted by Dixon Hughes Goodman LLP through October 2013.



Table 19 (continued) Comparable Communities Within and Near the Primary Market Area

Near the PMA Bonaventure Meadow Lake Village Spring Creek

Location Boise – 83713 Meridian - 83642 Boise – 83642

Miles from the Community 13.1 15.5 15.9

Sponsor/Developer Bonaventure Senior Living Touchmark Edgewood Management

Group

Year Opened 2008 2003/2007 2006

Type of Contract Rental Rental/Equity Rental

For Profit/Not-for-profit For-profit For-profit For-profit

Unit Configuration

Independent Living Units (ILUs)

Studio apartments – – –

One-bedroom apartments 80 33 13

Two-bedroom apartments 51 30 10

Homes/Duplexes/Cottages – 72 –

Total ILUs 131 135 23

Assisted Living Units 75 110 51

Nursing Care Beds – – –

Independent Living

Square Footage


One-bedroom apartments 616 - 800 729 – 1,111 1,045

Two-bedroom apartments 934 – 1,150 1,279 – 1,562 1,386

Homes/Duplexes/Cottages – 1,346 – 2,200 –

Entrance Fees

Studio apartments – – – One-bedroom apartments – – – Two-bedroom apartments – – – Homes/Duplexes/Cottages – $230,000 – 300,000 – 2nd Person Entrance Fee – –

Monthly Fees


One-bedroom apartments $2,500 – 2,650 $3,605 – 4,150 $1,875

Two-bedroom apartments $2,700 – 3,200 $4,295 – 5,680 $2,175

Homes/Duplexes/Cottages – $1,500 – 2,500 –

2nd Person Monthly Fee $300 $500 $500

Refund Options – 90% of Re-sale –

Assisted Living

Monthly Fee $2,600 – 3,350 $3,355 – 7,300 $2,150 – 3,225

Nursing Care

Daily Rate – –

Occupancy Rate

Independent Living 70% 99% 100%

Assisted Living 80% 80% 100%

Nursing Care – – –

Source: Surveys and site visits conducted by Dixon Hughes Goodman LLP through October 2013.



Notes to the Table: The Community (1) Of the 64 assisted living units planned at the Community, 24 are designated for memory support with a monthly

rate of $5,839 (deflated to 2013, three percent annually).

(2) The Entrance Fees shown for the Community reflect the Entrance Fees for Preferred Members and are currently being marketed through construction of the Community. The Entrance Fees, Monthly Fees and Daily Fees shown have been deflated from the 2015 rates currently being marketed to potential residents as deflated three percent annually to 2013 and are shown for comparative purposes only. The Community’s Standard Entrance Fees are 10 percent higher than the Preferred Member Entrance Fees shown and would be effective. Entrance Fees are 90 percent refundable for single occupancy and 80 percent refundable for double occupancy.

(3) The second person Monthly Fee shown is for Preferred Members. The Standard Resident second person fee is $938 (deflated to 2013, three percent annually).

(4) Preferred Members receive a 10 percent discount on Standard Entrance Fees at the Community and guaranteed Monthly Fees until approximately December 2013.

(5) Rates are for Direct Admit Residents into the Health Care Center. Three levels of care will be offered in the Assisted Living Units at the Community. Level I is an additional $471 per month, Level II is an additional $848 per month and Level III is an additional $1,225 per month deflated to 2013, three percent annually).

(6) The second person fee in an Assisted Living Unit at the Community is $2,122 (deflated to 2013, three percent annually).

Villas/Wynwood at River Place (1) Independent living apartments are housed in a building called The Villas at River Place, which opened in 1997,

and the assisted living units are in a building that opened in 1992 called Wynwood.

(2) Assisted living monthly fees reflect basic level of care rates depending on type of unit selected. Wynwood also offers two higher levels of care that vary depending upon unit size and range between $420 and $975 per month for Level 1 and between $650 and $1,213 per month for Level 2. The second person monthly fee is $600 plus additional levels of care required.

(3) Management of Villas/Wynwood at River Place indicated that Brookdale has preliminary plans to build a 27-bed memory care unit to be called “Clarebridge” that is proposed to be constructed on property located adjacent to the community. These plans have not been submitted to the local planning department yet and timing is uncertain.

Garden Plaza of Valley View (“Valley View”) (1) There is a $1,000 one-time non-refundable community fee for all residents at Valley View.

(2) In addition to the basic rates shown for assisted living, Valley View offers two higher levels of care for additional monthly fees of $357 and $714, respectively. The second person fee in assisted living is $600 per month.

(3) The skilled nursing beds on the campus of Valley View is owned and operated by Life Care Center of Boise, originally constructed in 1967. In addition to the private room daily fees shown for nursing care, Life Care Center of Boise also offers a companion daily rate of $246 for a shared room.

Willow Park (1) The 108 assisted living units include 31 units dedicated for memory care services offered for monthly fees of

$4,200 for a companion room and $5,100 for a private room.

(2) The second person fee in assisted living is $950 per month.



Notes to the Table (Continued): Bonaventure (1) The range of rates shown for assisted living services reflects the monthly fees for basic care. Higher levels of

care begin at $425 per month and are based on time required for assistance. The second person monthly fee in assisted living is $500.

(2) Bonaventure has not achieved stabilized occupancy since it opened in 2008 due to turnover in management positions.

Meadow Lake Village (1) The 72 cottages at Meadow Lake Village were built in 2003 and the existing 63 independent living apartments

and 62 assisted living units as well as the “Grand Lodge” clubhouse. The 48-bed memory care unit opened the first week of April 2013 and a 68-unit independent living apartment building opened in September 2013.

(2) The 110 assisted living units include a 48-bed memory care unit opened the first week of April 2013. The 62 assisted living units are 100 percent occupied and the new memory care unit is 60 percent occupied.

(3) The independent living apartments (including the expansion units) are available under a monthly rental option while the homes are available under an entrance fee contract. Apartment residents receive two meals per day included in their monthly fee and the monthly fees for the homes do not include meals but may be purchased ala carte by the resident.

(4) Meadow Lake Village offers six higher levels of care in assisted living based on a points system for the following monthly fees: Level 1 - $420; Level 2 - $770; Level 3 - $1,120; Level 4 - $1,459; Level 5 - $1,820; and Level 6 - $2,101.

(5) Memory care services are offered for $4,625 per month for basic care. Three higher levels of care are offered in memory care based on a points system for the following additional monthly fees: Level 1 - $650; Level 2 - $1,300; and Level 3 - $1,950.

Spring Creek (1) There is a $1,000 one-time non-refundable community fee for all residents at Spring Creek.

(2) Of the 51 assisted living units at Spring Creek, 20 are designated for memory support with a monthly rates ranging between $4,075 and $4,825. Spring Creek offers three higher levels of care in assisted living for $300, $750 and $1,500, respectively, and two additional levels of care in memory support for monthly rates of $500 and $900, respectively. The second person fee in assisted living is $1,000 per month.



Comparable Retirement Communities Planned or Under Development in or Near the PMA Based on discussions with representatives of the local planning and permitting agencies and interviews with management at existing retirement communities, there are no current proposed independent living units located within the IL PMA; however one existing retirement community (Meadow Lake Village) recently expanded near the IL PMA. Meadow Lake Village, which is located near the PMA approximately 15 driving miles from the Community, recently completed a 68-unit independent living building expansion that opened for occupancy in September 2013. The independent living units are available for monthly rental rates ranging between $3,325 and $5,680 for one and two-bedroom apartments. Management of Meadow Lake Village indicated they anticipate to have 44 new units occupied (65 percent occupancy) or moved into by October 31, 2013. Although Meadow Lake Village is located outside the IL PMA, 50 percent or half of the 68 recently completed independent living units will be included in the penetration rate analysis following because Management considers it to be competitive with the Community. Non-Comparable Communities

Based on site visits conducted, there are two existing communities within the IL PMA that are not considered comparable to the Project due to their lower fee structures, small size of units and limited services and amenities offered. Heatherwood consists of 110 independent living units and opened in 1972 and Chateau de Boise consists of 96 independent living units and opened in 1984. These older communities offer independent living services only in smaller studio and one-bedroom units with limited common spaces for with non-comparable fee structures. Because these communities do not provide a continuum of care, and do not compete for similar age- and income-qualified residents as the Project, the 206 independent living units associated with these senior living properties are not being included in the comparable retirement community tables or the penetration rate calculations that follow.



Summary of Independent Living Units

There are 588 existing and recently opened independent living units at the six aforementioned retirement communities located within or near the IL PMA. Including the 161 planned units at the Community, the total number of existing and planned independent living units within or near the IL PMA is 749. The weighted average occupancy of the independent living units located within the IL PMA is 94 percent and within and near the IL PMA is 91 percent. Based on discussions with management at the locations of comparable retirement communities located near the IL PMA, 50 percent of the independent living units located near the IL PMA are included in the penetration rate analysis following. Considering the 50 percent resident draw percentage for the independent living units located near the IL PMA, there are 410 comparable existing units as calculated. Including the 161 planned units at the Community, the total number of existing and planned comparable independent living units is 571. The following table summarizes the existing and planned units at comparable retirement communities located within and near the IL PMA considering the applicable resident draw percentage.

Source: Surveys and site visits conducted by Dixon Hughes Goodman LLP through October 2013.

Table 20 Summary of Existing and Planned Comparable Independent Living Units

Within and Near the PMA

Comparable Communities Existing Units

PercentageComparable

Comparable Existing

Units

Planned Units

Percentage Comparable

Comparable Planned

Units Within the PMA:

Villas/Wynwood at River Place 78 100% 78 – 100% –

Garden Plaza at Valley View 143 100% 143 – 100% –

Willow Park 10 100% 10 – 100% –

Total Comparable Units Within the PMA

231 100% 231 – 100% –

Near the PMA: Bonaventure 131 50% 65.5 – 50% –

Meadow Lake Village 203 50% 101.5 – 50% –

Spring Creek 23 50% 11.5 – 50% –

Total Comparable Units Near the PMA 357 50% 179 – 50% –

The Community – 100% – 161 100% 161

Total Existing and Planned Comparable Independent Living Units

588 73% 410 161 85% 161



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 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 Community by the number of age- and income-qualified households in the IL PMA. Seniors currently living in competitive independent living units in the IL PMA are subtracted from the pool of age- and income-qualified households. Calculations are based on demographics interpolated for the year the Community is expected to be available for occupancy (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 PMA by the number of age- and income-qualified households in the IL PMA. Available units include planned units of the Community, proposed units at other communities and units becoming available due to attrition. This calculation is of particular significance when more than one project is entering the market during the same timeframe. Calculations are based on demographics interpolated for the year the Community is expected to be available for occupancy (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 the demographics projected for the current year and the year the Community is expected to achieve stabilized occupancy (assuming the Community represents the “newest” units in the market). In all three calculations, the total independent living units are adjusted to reflect assumptions about the percentage of units expected to be filled from qualified households in the IL PMA and occupancy. These rates should be considered in conjunction with each other and other market factors such as occupancy levels at existing communities within and near the 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 marketing plans and efforts of Management.



The following table represents the Project Penetration Rates which represent the percentage of age- and income-qualified households in the IL PMA the Community is expected to capture upon opening in order to achieve stabilized occupancy, assuming annual household incomes of $35,000 and over and $50,000 and over, based upon demographic projections for 2015.

Table 21 Project Penetration Rate – 2015

Age 75 and Above with

Income $35,000

and Above

Age 75 and Above with

Income $50,000

and Above

Planned units at the Community 161 161

Percentage of units to be filled from the PMA(1) 70% 70%

Planned units to be filled from the PMA 113 113

Percentage of units to be filled by age 75 and older(1) 80% 80%

Planned units to be filled by age 75 and older 90 90

Total units at the Community to be filled at 95% occupancy (a) 86 86

Number of age- and income-qualified households(2) 3,250 1,898

Less: Existing inventory of comparable units available in 2013(3) (369) (369)

Net number of age- and income-qualified households (b) 2,881 1,529

Project Penetration Rate (a/b) 3.0% 5.6% Source: Management and Nielsen Claritas

(1) Based upon Depositor information provided by Management as of October 17, 2013.

(2) Interpolated using 2013 estimated and 2018 projected population statistics as provided by Nielsen Claritas.

(3) Reflects the 410 existing comparable units (as calculated) within and near the PMA, including the 34 new comparable

units at Meadow Lake Village that were completed in September 2013, based on approximately 90 percent current

weighted average occupancy in the IL PMA (369 units).



The following table presents the Net Market Penetration Rate for the year of the Community’s planned opening, and indicates the percentage of the age- and income-qualified households in the IL PMA that must be absorbed in order to fill the available units during that year, based upon demographic projections for 2015.

Table 22 Net Market Penetration Rate – 2015

Age 75 and Above

with Income $35,000

and Above

Age 75 and Above

with Income $50,000

and Above Planned units in the IL PMA:

The Community 161 161

Other planned units(1) – –

Total planned units 161 161

Percent of units to be occupied by age 75 and older(2) 80% 80%

Total planned units to be occupied by age 75 and older 129 129

Total planned units to be filled from the IL PMA at 95% occupancy 123 123

Unoccupied existing comparable units to be filled within the IL PMA(3) 21 21

Total existing units available due to attrition(4) 75 75

Total units to be occupied 219 219

Percent of units to be occupied from the IL PMA(2) 70% 70%

Total units to be occupied from within the IL PMA by 75 and older (a) 153 153 Estimated number of age- and income-qualified households(5) 3,250 1,898

Less: Existing inventory of available comparable units(6) (369) (369)

Estimated number of age- and income-qualified households (b) 2,881 1,529

Net Market Penetration Rate (a/b) 5.3% 10.0% Source: Management and Nielsen Claritas

(1) There are no planned independent living units located within the PMA. (2) Based upon Depositor information provided by Management as of October 17, 2013. (3) Based on the weighted average occupancy of approximately 90 percent within and near the IL PMA, approximately 21

additional existing units would need to be filled to achieve 95 percent occupancy at comparable existing communities in the IL PMA.

(4) Reflects the 102 existing comparable entrance fee units, including the 34 new comparable units (as calculated) at Meadow Lake Village near the IL PMA that were completed in September 2013, at 90 percent occupancy, assuming 13.1 percent attrition (12 units) and the 308 existing comparable rental units (as calculated) located within or near the IL PMA at 90 percent occupancy, assuming 22.9 percent attrition (63 units) for a total of 75 units available due to attrition. (Source: The State of Seniors Housing 2012)

(5) Interpolated using 2013 estimated and 2018 projected population statistics as provided by Nielsen Claritas. (6) Reflects the 410 existing comparable units (as calculated) that include the 34 new comparable units at Meadow Lake

Village that were completed in September 2013 located within or near the IL PMA based on a 90 percent current weighted average occupancy in the IL PMA (369 units).



The following table presents the Gross Market Penetration Rate, which represents the percentage of age- and income-qualified households in the IL PMA that the entire market is expected to capture when the entire market has reached stabilized occupancy, based upon demographic projections for 2013 and 2018.

Table 23 Gross Market Penetration Rate

Age 75 and Above Income $35,000

and Above Income $50,000

and Above 2013 2018 2013 2018 Market inventory of retirement communities:

The Community – 161 – 161

Comparable retirement communities

Existing units(1) 410 410 410 410

Proposed units(2) – – – –

Total units in the IL PMA 410 571 410 571

Percent of units to be occupied from the IL PMA(3) 70% 70% 70% 70%

Total units to be occupied from the IL PMA 287 400 287 400

Total units to be filled at 95% occupancy (a) 273 380 273 380

Number of age- and income-eligible households (b) 3,241 3,265 1,872 1,938

Market Penetration Rate (a/b) 8.4% 11.6% 14.6% 19.6% Source: Management and Nielsen Claritas

(1) Reflects the 410 existing comparable units (as calculated) that include the 34 new comparable units at Meadow Lake Village that were completed in September 2013 located within and near the IL PMA.

(2) There were no other planned independent living units identified within the PMA. (3) Based upon Depositor information provided by Management as of October 17, 2013.



Marketing the Community The success of the Community is dependent, in part, on Management’s ability to achieve specified pre-sales, fill-up rates and turnover rates for Independent Living Units. Management began accepting non-binding priority deposit agreements on Independent Living Units in 2008 and began converting priority deposits to Reservation Deposits on September 14, 2009. Reservation Deposits are being held in an interest-bearing escrow account. If a Depositor cancels the Reservation Agreement prior to occupancy, all money is expected to be refunded to the Depositor, including the Reservation Deposit and accumulated interest on the Reservation Deposit for Charter Residents, but less a processing fee of $250 of the entire Entrance Fee. As of October 17, 2013, 112 Depositors have reserved 113 Independent Living Units (net of cancellations) out of a total of 161 Independent Living Units at the Community, or 70 percent of the total Independent Living Units. Of the 112 Depositors collected as of October 17, 2013, one Depositor has placed a deposit in the amount of $5,000 to reserve an Independent Living Unit.



The following table presents the total number of Independent Living Units reserved by year and month out of the 161 Independent Living Units available as reported by Management, as of October 17, 2013.

Table 24 Marketing of the Community

Year

Number of Units

Reserved

Number of Cancellations/

Refunds

Net Reservations

for Month

Cumulative Units

Reserved

Cumulative Percentage of Total

Units 2009(1) 27 (1) 26 26 16.1%

2010 34 (5) 29 55 34.2%

2011 24 (5) 19 74 46.0%

2012:

January 5 – 5 79 49.1%

February 1 – 1 80 49.7%

March 3 – 3 83 51.5%

April 7 (1) 6 89 55.3%

May – (1) (1) 88 54.7%

June 6 (2) 4 92 57.1%

July 1 – 1 93 57.8%

August 4 (1) 3 96 59.6%

September 5 – 5 101 62.7%

October 2 (1) 1 102 63.4%

November 3 (3) – 102 63.4%

December 2 (1) 1 103 64.0%

2013:

January 1 (1) – 103 64.0%

February 2 (1) 1 104 64.6%

March 4 – 4 108 67.1%

April 6 (3) 3 111 68.9%

May 3 (2) 1 112 69.6%

June 2 – 2 114 70.8%

July 4 (1) 3 117 72.3%

August – (4) (4) 113 70.2%

September 2 (2) – 113 70.2%

October(2) 1 (1) – 113 70.2%

Total 149 (36) 113 113 70.2% Source: Management

(1) Conversion to Depositors began September 14, 2009. (2) Information through October 17, 2013.



The following table presents the total number and type of Independent Living Units available at the Community in relation to the Independent Living Units reserved with a Reservation Deposit as of October 17, 2013.

Table 25 Inventory of Independent Living Units at the Community

Unit Type Square Footage

Total Units

Number of Units Sold

Percentage of Available Units Sold

One Bedroom Apartments: Falcon’s Cove 700 8 7 87.5%

Golden Eagle 700 17 13 76.5%

Eagles Perch 797 2 2 100.0%

Foothills 812 3 - 0.0%

Table Rock 860 3 1 33.3%

Quail 861 1 - 0.0%

Blue Heron 923 21 14 66.7%

The Rockies 1,066 7 4 57.1%

Two Bedroom Apartments Heron’s Cove 923 22 18 81.8%

The Highlands 1,098 18 12 66.7%

The McCall 1,243 21 15 71.4%

The Mesa 1,364 11 7 63.6%

The Mesa Plus 1,510-1,595 5 2 40.0%

The Sun Valley 1,364 10 6 60.0%

Duplex Apartments

Rivers Edge 1,456 12 12 100.0%

Total Independent Living Units 161 113 70.2% Source: Management



Independent Depositor Confirmation An independent confirmation process was performed by Dixon Hughes Goodman LLP through the mailing of a questionnaire and telephone calls to the 112 Depositors as of October 17, 2013. Of the 112 Depositors, one Depositor has placed a deposit in the amount of $5,000 (or approximately 2 percent of the Entrance Fee) to reserve an Independent Living Unit. As of October 25, 2013, 106 of the 112 Depositors (95 percent) had completed the questionnaire. The following information was compiled for the 106 completed questionnaires.

� 106 (100 percent) of the respondents indicated that they had paid a deposit for their Independent Living Unit.

� 100 (94 percent) indicated that they intend to reside at the Community and six (six percent) were unsure.

� 41 (39 percent) indicated that they expect to reside alone, 64 (60 percent) indicated that they expect to reside with a spouse, relative or friend and one (one percent) did not respond to the question.

� 95 (90 percent) indicated that they currently own their home.

� 71 of the 95 respondents who own their home (75 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.

� Four (four 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 two indicated that they were unsure where they would reside.

Respondents indicated the following as to how soon they intended to move into their Independent Living Unit after it becomes available:

Source: Questionnaire responses

Table 26 Move-ins After Unit Becomes Available

Number of

Respondents Percentage of Respondents

1 – 30 days 40 37.8%

31 – 60 days 5 4.7%

61 – 90 days 4 3.8%

Upon the sale of home 46 43.4%

Other/did not respond 11 10.3%

Total 106 100.0%



Respondents indicated their primary reason(s) for choosing the Community were as follows:

Table 27 Community Suitability

Number of

Respondents(1) Percentage of Respondents

Access to health care 79 74.5%

Geographic location 60 56.6%

Proximity to friends and relatives 59 55.7%

Social activities and fellowship 54 50.9%

Reputation of ABHOW 47 44.3%

Other 25 23.6%

Source: Questionnaire responses (1) Respondents were given the option of choosing more than one reason for choosing the Community.

The following table presents information regarding the self-reported net worth (including home values) before payment of the Entrance Fee and estimated annual income of the 112 Depositors as of October 17, 2013.

Table 28 Reported Annual Income and Net Worth of Depositors

Annual Income

Net Worth

Less than $500,000

$500,000 to $1,000,000

$1,000,000 to $2,000,000

$2,000,000 and

greater

Total

Percent

of Total

Less than $50,000 15 8 6 5 34 30.3%

$50,000 to $74,999 3 10 5 1 19 17.0%

$75,000 to $99,999 3 4 9 4 20 17.9%

$100,000 to $149,999 – 5 9 10 24 21.4%

$150,000 and greater – 1 4 10 15 13.4%

Total(1) 21 28 33 30 112

Percent of Total 18.7% 25.0% 29.5% 26.8% 100.0%

Source: Depositor applications

(1) The median net asset amount of the 112 Depositors (113 Independent Living Units) who reported their financial

information is approximately $1,840,000 and the median annual income amount is approximately $95,000.



Depositor File Vouching Dixon Hughes Goodman 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 112 Depositors (113 Independent Living Units) for the Community through October 17, 2013:

� 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 September 30, 2013.



Description and Utilization of Assisted Living

Assisted living services are defined as any activity or care provided by the facility that assists the resident with meals, dressing, movement, bathing or other personal needs or maintenance; the administration of medication or the assistance with or supervision of medication; or general supervision or oversight of the physical and mental well-being of a person who needs assistance to maintain a private and independent residence in the facility or who needs assistance to manage his personal life, regardless of whether a guardian has been appointed for the person.

In Idaho, residential care or assisted living facilities are licensed under IDAPA 16, Title 3 Chapter 22 of the Idaho Administrative Rules, Department of Health and Welfare. The Idaho Department of Health and Welfare (the “Department”) licenses and regulates residential care or assisted living facilities (“RALF”) and a RALF must have a minimum of three beds to be eligible for licensure.

According to the Department, RALFs or any individual or legal entity providing care and supervision to the elderly in a residential facility must obtain a current valid license by the Department. An RALF is defined as “a facility or residence, however named, operated on either a profit or nonprofit basis for the purpose of providing necessary supervision, personal assistance, meals, and lodging to three or more adults not related to the owner.” The purpose of a RALF in Idaho is to “provide choice, dignity and independence to residents while maintaining a safe, humane and home-like living arrangement for individuals needing assistance with daily activities and personal care.” Distinct segments of a RALF may be licensed separately, provided each segment functions independently and meets all applicable rules. There are no separate regulations for dementia care; however, there are special requirements within those rules for facilities that admit or retain residents with dementia.

Currently, there is no Certificate of Need (“CON”) requirement for facilities offering assisted living services in Idaho. The Assisted Living Units of the Community are assumed to be licensed as a RALF under the guidelines of the Department. Management does not consider assisted living facilities with less than 24 beds or lower fee structures comparable to the Community.



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. Absent the availability of prospective resident origin data, Management has defined an eight zip code area surrounding the Community located within Ada County, spanning approximately 18 miles from north to south, and 18 miles from east to west at the widest points as the primary area of origin for health care, including both assisted living and nursing care services (the “HC PMA”). The HC PMA varies from the IL PMA in that the two zip codes to the north, 83714 and 83616, are absent. Similar to the IL PMA, zip code 83716 to the south was cut off to assimilate an extension of Kuna More Road because of its otherwise long extension to the south. The following table lists the eight zip codes (as modified) that comprise the HC PMA.

Table 29 Health Care Primary Market Area Zip Codes

Zip Code Town Zip Code Town 83706 Boise 83704 Boise

83716(2)

Boise/Atlanta 83705 Boise

83712 Boise 83703 Boise/Garden City

83702 Boise 83709 Boise

Source: Management



Legend The HC PMA

The Community

Existing Communities within the HC PMA 1 – Regency Columbia Village 2 – Wynwood at River Place 3 – Hillcrest 4 – Heritage Retirement Center 5 – Grace at Englefield Green Assisted Living 6 – Garden Plaza at Valley View 7 – Plantation Place 8 – Spring Creek Overland 9 – Overland Court Senior Living 10 – Emeritus at Summer Wind 11 – AarenBrooke Place 12 – Willow Park

The following map depicts the Community and the 12 existing assisted living facilities within the HC PMA.

Idaho

Source: Microsoft MapPoint and MapInfo

HC PMA



Existing Comparable Assisted Living Facilities The following table identifies the 12 comparable existing assisted living facilities located within the HC PMA and summarizes the number of units, square footage, occupancy and current monthly fees of the comparable facilities based on surveys conducted through July 2013.

Table 30

Comparable Assisted Living Facilities Within the Health Care PMA

Facility Name

Miles from the

Community Year

Opened

Number of Assisted

Living Units

Number of Memory Support

Units

Square Footage

Occupancy Percentage

Assisted Living

Monthly Fees Memory Support

Monthly Fees Level of

Care Fees

The Community(1) – – 40 24 454 - 895 – $4,708 – 5,651 $5,839 I $471 II $848 III $1,225

Regency Columbia Village

3.4 2004 56 – 450 95% $2,995 – 3,895 – –

Wynwood at River Place

4.2 1992 80 – 350 - 750 100% $3,000 – 4,200 – I $420 II $885 III $1,213

Hillcrest 8.2 1984 115 – 443 - 655 80% $2,400 – 3,000 – I $250 II $595 III $1,950

Heritage Retirement Community

8.3 1972 64 16 220 - 330 86% $1,795 – 2,195 $3,995 I $800 II $1,050 III $1,300

Grace at Englefield Green Assisted Living

9.7 2010 89 – 300 - 700 97% $2,195 – 4,395 – –

Garden Plaza at Valley View

9.7 1986 51 – 330 - 565 92% $3,738 – 4,074 – I $357 II $714

Plantation Place 10.5 1998 49 – 350 - 500 94% $2,975 – 4,150 – I $300 II $750 III $1,500

Spring Creek Overland

11.1 2010 48 – 250 - 900 86% $1,500 – 3,100 – I $300

Overland Court Senior Living

11.3 2003 61 54 350 - 450 90% $1,695 – 2,395 $2,395

I $400 II $600 III $900 IV $1,200 V $1,500

Emeritus at Summer Wind

11.4 1998 57 – 335 - 475 80% $2,595 – 3,775 –

I $425 II $850 III $1,275 IV $1,700 V $2,225

AarenBrooke Place 11.4 2002 48 – 288 - 456 86% $2,700 – 5,100 – –

Willow Park 12.7 1994 77 31 345 - 783 97% $2,850 – 4,600 $5,171 – Total Number of Units

(excluding the Community) 795 101 Weighted average occupancy 89%

Source: Management and surveys conducted by Dixon Hughes Goodman LLP through October 2013.



Notes to Table: (1) The Community

(a) The monthly fees shown for the Community are for Residents who are directly admitted into an Assisted Living Unit or Memory Support Unit and have been deflated three percent annually from 2015 rates to reflect deflated to 2013, three percent annually dollars for purposes of comparison.

(b) The second person monthly fee for the Assisted Living Units is $2,122 (deflated to 2013 dollars).

(2) Regency Columbia Village (a) Monthly rates are all inclusive based on level of care.

(b) All accommodations are private studios.

(c) Regency Columbia Village offers a Wonder Guard bracelet available for $100 per month.

(3) Wynwood at River Place (a) Assisted living monthly fees reflect basic level of care rates depending on type of unit selected. Wynwood

also offers two higher levels of care that vary depending upon unit size and range between $420 and $975 per month for Level 1 and between $650 and $1,213 per month for Level 2.

(b) Management of Wynwood at River Place indicated that they have preliminary plans to build a 27-bed memory care unit called “Clarebridge” to be constructed on property adjacent to the existing community. These plans have not been submitted to the local planning department yet and timing is uncertain.

(c) The second person monthly fee is $600 plus additional levels of care.

(4) Hillcrest (a) The second person monthly fee is $500 plus the basic level of care monthly fee of $250 as the minimum.

(b) Management of Hillcrest indicated lower occupancy due to a recent change in ownership.

(5) Heritage Retirement Community (a) Heritage Retirement Community requires a one-time non-refundable community fee of $500.

(b) The second person fee at Heritage is $500.

(6) Grace at Englefield Green Assisted Living (a) A one-time community fee of $600 is required and non-refundable upon move-in.

(b) The second person fee is dependent upon care level required.

(7) Garden Plaza at Valley View (a) The second person monthly fee at Garden Plaza is $600 plus additional levels of care.

(8) Plantation Place (a) The second person monthly fee is $500 plus the basic level of care monthly fee of $300 as the minimum.

(9) Spring Creek Overland (a) Spring Creek Overland requires a one-time non-refundable community fee of $1,000.

(b) The second person fee monthly fee is $1,000 plus additional level of care fees as necessary.

(c) Higher levels of care are based on a points system and begin at $300 per month.

(10) Overland Court Senior Living (a) Overland Court requires a one-time non-refundable community fee of $2,000.

(b) The second person fee at Overland Court is $1,000.

(c) The monthly fee shown for memory care is for private accommodations. Companion suites are available for $1,895 per month.

(d) Memory care level of care monthly fees range from $500 for Level 1; $700 for Level 2; $1,000 for Level 3; $1,300 for Level 4; and $1,600 for Level 5.

(11) Emeritus at Summer Wind (a) Emeritus at Summer Wind requires a one-time non-refundable community fee of $1,250.

(b) The monthly rates shown are for private accommodations. Companion suites are available for 65 percent of the monthly rent depending on room size.

(c) Monthly fees for higher levels of care are based on a point system and range between $425 and $2,225.

(12) AarenBrooke Place (a) AarenBrooke Place requires a one-time non-refundable community fee of $1,000.

(13) Willow Park (a) The second person monthly fee at Willow Park is $950.

(b) Willow Park also offers a companion rate of $4,258 for shared accommodations.



Planned Assisted Living Developments

Based on discussions with representatives of the local planning agencies and interviews with existing assisted living facilities and retirement communities, other than the Community, there are no planned assisted living units or memory care units in the HC PMA. However, management of Wynwood at River Place indicated that Brookdale has preliminary plans to build a 27-bed memory care unit to be called “Clarebridge” proposed to be developed on property located adjacent to the existing community. Plans have not been submitted to the local planning department yet and timing of the project is uncertain. Based on this, the memory care units associated with the preliminary proposed development Clarebridge will not be included in the penetration rate analysis following.

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 Enhanced Living 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 an annual income of at least $25,000, or have an annual income between $15,000 and $24,999, and own their home. The following table presents the income eligible households for assisted living services within the HC PMA.

Table 31 Income Eligible Households for Assisted Living Services Within the HC PMA

75+ 2013 (Estimated) 2018 (Projected) Total Households: 7,572 8,235

Household Income

Under $15,000 2,009 4,260

Renters $15,000 – $24,999 647 525

Homeowners $15,000 – $24,999 1,049 848

Total Under $25,000 3,705 5,633

$25,000 – $34,999 1,251 1,373

$35,000 – $49,999 1,119 1,077

$50,000 – $74,999 761 776

$75,000 – $99,999 341 348

$100,000+ 394 401

Total $35,000+ 3,866 3,975

Total Assisted Living Income Eligible Households

(1)

4,915 5,149

Percentage of Assisted Living Income Eligible Households 64.9% 62.5%

Source: Nielsen Claritas (1) Age and income eligible households include households (age 75 and over) with income over $25,000 and homeowners

(age 75 and over) with income between $15,000 and $24,999 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 32 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) 7,572 20.1% 49.2% 749

Age- and Income-Qualified(5) 4,915 20.1% 49.2% 486

2015 Age-Qualified(4) 7,838 20.1% 49.2% 775


2018 Age-Qualified(4) 8,235 20.1% 49.2% 814


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 PMA.

(3) Based on Nielsen Claritas demographic estimates. (4) Age-qualified households are those households age 75 and over. (5) Age- and income-qualified households include households age 75 and over with annual incomes of at least $25,000 and

homeowners age 75 and over with income between $15,000 and $24,999.



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.

Based on the experience of the existing assisted living providers profiled, the penetration rate analysis assumes a 75 percent resident draw from the HC PMA. In addition, the weighted average occupancy of the existing assisted living and memory care providers located in the HC PMA with a combined total of 896 units was 89 percent. The assumed stabilized occupancy rate of the Community is 93 percent.

The following table presents Project Penetration Rates for assisted living services based on the assumptions described above in 2015, the year the Assisted Living Units are expected to open for occupancy.

Table 33 Assisted Living Project Penetration Rate – 2015

Age-Qualified Individuals

Age- and Income- Qualified Individuals

Number of Qualified Individuals 775 495

Number of Individuals in Existing Comparable Units (1)

605 605

Total Qualified Individuals (b) 1,380 1,100

Number of Planned Units at the Community(2)

(a) 45 45

Project Penetration Rate for the HC PMA (a/b) 3.3% 4.1% Source: Management and Nielsen Claritas

(1) Reflects the 896 existing assisted living and memory care units within the HC PMA (excluding the Community) assuming that approximately 75 percent (672 units) have originated from the HC PMA and a weighted average occupancy rate of approximately 90 percent (605 units).

(2) Reflects the 64 Assisted Living Units and Memory Support Units at the Community, assuming 75 percent (48 units) originate from the HC PMA and assuming a stabilized occupancy rate of 93 percent (45 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 (including memory care) 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 (including memory care) services.

Table 34 Assisted Living Market Penetration Rates

Age-Qualified Individuals

Age- and Income- Qualified

Individuals 2013 2018 2013 2018

Number of Qualified Individuals 749 814 486 509

Number of Individuals in Existing Comparable Units(1)

605 605 605 605

Total Qualified Individuals (b) 1,354 1,419 1,091 1,114 Number of Individuals in Existing Comparable Units

(1) 605 605 605 605

Number of Planned Units at the Project(2)

0 45 0 45

Number of Planned/Construction Units in the HC PMA(3)

0 0 0 0

Total Units, Including the Community (a) 605 650 605 650

Market Penetration Rate for the HC PMA (a/b) 44.7% 45.8% 55.5% 58.3% Source: Management and Nielsen Claritas

(1) Reflects the 896 existing assisted living units within and near the HC PMA (excluding the Community) assuming that approximately 75 percent (672 units) have originated from the HC PMA and the stabilized occupancy rate of 90 percent (605 units).

(2) Reflects the Assisted Living Units and Memory Support Units at the Community, assuming 75 percent (48 units) originate from the HC PMA and assuming 93 percent occupancy (45 units).

(3) There are no planned assisted living or memory care units located within the HC PMA.



Skilled Nursing Care

The Department also licenses and regulates skilled nursing facilities (“SNF”), which is defined as “a facility designed to provide area, space and equipment to meet the health needs of two or more individuals who, at a minimum, require inpatient care and services for 24 or more consecutive hours for unstable chronic health problems requiring daily professional nursing supervision and licensed nursing care on a 24 hour basis, restorative, rehabilitative care and assistance in meeting daily living needs. Medical supervision is necessary on a regular, but not daily, basis. An intermediate care facility (“ICF”) is “a facility that is designed to provide area, space, and equipment to meet the restorative, rehabilitative, recreational, intermittent health needs, and daily living needs of two or more individuals who require in-residence care and services for 24 or more consecutive hours; and designed to provide for regular but less than daily medical and skilled nursing care.” Idaho does not administer a certificate of need (“CON”) process or employ a specific bed need determination to regulate the construction of new for nursing beds. There are 40 nursing beds planned for the Community. Management has defined the primary market area for nursing services as the same Health Care PMA utilized for assisted living services.



Legend

The HC PMA

The Community

Existing Nursing Facilities in the PMA

1 – Marquis Care at Shaw Mountain 2 – Kindred Transitional 3 – Life Care Center of Boise 4 – Valley View Retirement 5 – Capitol Care 6 – Life Care Center Treasure Valley

The following map depicts the Community and the six skilled nursing facilities within the HC PMA.


Health Care PMA

Idaho


Health Care PMA



The following table identifies the Community and six skilled nursing facilities located within the HC PMA and summarizes the number of units, the percentage occupied and lowest daily rate based on surveys conducted through October 2013.

Table 35 Comparable Nursing Facilities Within the Health Care PMA

Driving Miles

from the Community

Year Licensed

Number of Nursing

Beds Private

Beds

Semi-Private

Beds

Percent

Occupied Private

Rate

Semi- Private

Rate The Community – – 48 48 – – $269 - 278 – Marquis Care at Shaw Mountain 5.9 1981 98 16 82 80% $272 $248

Kindred Transitional 8.2 1979 127 22 105 85% $237 $215

Life Care Center of Boise (1) 9.0 1967 153 24 129 80% $277-467 $246

Valley View Retirement 9.6 1986 106 26 80 85% $312 $225

Capitol Care 11.3 1980 148 21 127 80% $213-226 $208

Life Care Center Treasure Valley 12.3 1996 120 25 95 90% $272-333 $247-257

Total number of beds (excluding the Community) 752 134 618

Weighted average occupancy 83%

Source: Management, surveys through October 2013. (1) Life Care Center of Boise is affiliated with the retirement community Garden Plaza at Valley View.

Planned Nursing Developments Based on discussions with representatives of the local planning agencies and interviews with existing nursing facilities and retirement communities, other than the Community, there are no planned nursing beds in the HC PMA.



Assumed Independent Living Units Utilization The Independent Living Units are assumed to achieve and maintain a 95 percent occupancy level in May 2018 and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Independent Living Units.

Table 36 Utilization of Independent Living Units

Year Ending September 30,

Average Units Occupied

Average Units Available

Average Occupancy Percentage

2015(1)

7.0 161.0 4.35%

2016 70.9 161.0 44.1%

2017 111.0 161.0 68.9%

2018 145.0 161.0 90.1%

2019 153.0 161.0 95.0%

Source: Management (1) The Independent Living Units are expected to become available for occupancy in June 2015 and fill to a 95.0 percent

occupancy level over a 36-month period at an average of approximately 4.35 units per month.



Residents are assumed to begin moving into the Independent Living Units beginning in June 2015. The assumed monthly move-in pattern is summarized below.

Table 37 Assumed Monthly Move-in for the Independent Living Units (Net of Move-Outs)

Fiscal Year/Month Monthly Total Cumulative Total Cumulative Percentage

2015 June 11.0 11.0 6.8%

July 10.0 21.0 13.0%

August 10.0 31.0 19.3%

September 9.0 40.0 24.8%

2016

October 7.0 47.0 29.2%

November 6.0 53.0 32.9%

December 6.0 59.0 36.6%

January 5.0 64.0 39.8%

February 5.0 69.0 42.9%

March 4.0 73.0 45.3%

April 4.0 77.0 47.8%

May 4.0 81.0 50.3%

June 3.0 84.0 52.2%

July 3.0 87.0 54.0%

August 3.0 90.0 55.9%

September 3.0 93.0 57.8%

2017

October 3.0 96.0 59.6%

November 3.0 99.0 61.5%

December 3.0 102.0 63.4%

January 3.0 105.0 65.2%

February 3.0 108.0 67.1%

March 3.0 111.0 68.9%

April 3.0 114.0 70.8%

May 3.0 117.0 72.7%

June 3.0 120.0 74.5%

July 3.0 123.0 76.4%

August 3.0 126.0 78.3%

September 3.0 129.0 80.1%

2018

October 3.0 132.0 82.0%

November 3.0 135.0 83.9%

December 3.0 138.0 85.7%

January 3.0 141.0 87.6%

February 3.0 144.0 89.4%

March 3.0 147.0 91.3%

April 3.0 150.0 93.2%

May 3.0 153.0 95.0%

Total 153.0 95.0% Source: Management



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, and double occupancy of the Independent Living Units has been based on the report of the Corporation’s actuary, CCRC Actuaries, LLC (the “Actuary”). Refunds of Entrance Fees are generated upon death or termination of the Residency Agreement and withdrawal from the Community, subject to the re-occupancy of the vacated Independent Living Units. Entrance Fees may be generated from Independent Living Units turning over without a corresponding refund because the Resident has not withdrawn from the Community, but has permanently transferred to the Assisted Living Units, Memory Support Units or Health Center. The assumed number of and amount 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 38 Initial and Turnover Entrance Fees Receipts and Total Entrance Fee Refunds

(In Thousands)

For the Year Ending September 30, 2015 2016 2017 2018 2019

Number of Entrance Fees Received (Initial) 40.0 53.0 36.0 24.0 -

Entrance Fees Received (Initial) $12,418 $14,342 $10,655 $7,088 $ -

Number of Entrance Fees Received (Attrition) 0.4 2.6 5.9 8.7 10.9

Entrance Fees Received (Attrition) $125 $856 $2,000 $3,085 $4,044

Total Number of Entrance Fees Refunded: 0.9 2.5 4.3 5.9 7.2

Total Entrance Fees Refunded: ($236) ($613) ($941) ($1,273) ($1,553)

Entrance Fees Received, Net of Refunds

$12,307 $14,585 $11,714 $8,900 $2,491

Source: Management and the Actuary



A Preferred Resident Benefit program is currently being offered to Depositors for the Independent Living Units. Management intends to offer the Preferred Resident Benefit program until commencement of construction of the Community. For purposes of Management’s forecast, Management has assumed that 70 percent of first generation residents would utilize the Charter Benefit Program due to cancellations and re-sales at higher, post-construction pricing. Additional details pertaining to the Preferred Resident Benefit program are located in the “Description of the Residency Agreement” section of this report. After commencement of construction of the Community, Management intends to end the Preferred Benefit Program. Management intends to implement a five percent Entrance Fee price increase upon commencement of construction, and a six percent Entrance Fee price increase after opening of the Community (“Standard Pricing”). Based upon the aforementioned utilization of the Preferred Resident Benefit program and the Entrance Fee price increases, Management has assumed an average entrance fee of approximately $292,000 for the first generation of the independent living Residents of the Community. Management has offered and is currently offering several Entrance Fee plans, described earlier in the “Description of the Residency Agreement” of this report, which are to be offered to first generation residents of the Community. Second-generation Residents of the Community will only be offered New Plan I – 80%/70% Refundable Plan. The average double occupancy percentage in the Independent Living Units is assumed to be 50 percent in fiscal year 2015, declining to 41 percent in fiscal year 2019 based upon Management’s assumptions and information provided by the Actuary.



Assumed Assisted Living, Memory Support and Health Center Utilization The Community is planned to have accommodations, equipment, staffing, programs, services, and supervision necessary for Assisted Living Units, Memory Support Units and Health Center and are available to residents of the Community on a priority basis. However, the Corporation cannot guarantee access to these areas. In the event that space is not available in the Health Care Center, the Corporation can arrange for temporary care in the Independent Living Unit by a certified home health agency until space becomes available. If home health care is not reasonably possible, the Corporation can attempt to arrange for temporary care in another facility that can provide the same care that may have otherwise been provided at the Community. The Assisted Living Units and Memory Support Units are assumed to achieve and maintain a 93.0 percent occupancy level in October 2017 and April 2017, respectively, and remain constant at that level throughout the forecast period. The following table summarizes the assumed utilization of the Assisted Living Units and Memory Support Units during the forecast period.

Table 39 Utilization of Assisted Living Units and Memory Support Units

Average Number of Units Occupied

Average Number of

Year Ending September

30, Permanent Transfer Direct Admit

Assisted Living and Memory Support Units Occupied

Assisted Living and Memory Support Units

Available


2016 (1) (2) 0.9 16.9 17.7 64.0 27.6%

2017 2.9 47.2 50.1 64.0 78.3%

2018 6.2 53.3 59.5 64.0 93.0%

2019 9.9 49.6 59.5 64.0 93.0%

Source: Management and the Actuary

(1) The Assisted Living Units are assumed to be available for occupancy in November 2015 and fill to a 93.0 percent

occupancy level over a 24-month period at an average of 1.55 units per month.

(2) The Memory Support Units are assumed to be available for occupancy in November 2015 and fill to a 93.0 percent

occupancy level over an 18-month period at an average of 1.24 units per month.

The double occupancy percentage in the Assisted Living Units is assumed to be five percent in fiscal year 2015, and remain at that level through the forecast period.



The Health Center is assumed to achieve and maintain a 93.0 percent occupancy level in May 2018 and remain at that level throughout the forecast period. The following table summarizes the assumed utilization of the Health Center’s nursing beds.

Table 40

Health Center Utilization Average Number of Residents Average Number of

Year Ending September

30,

Permanent Residents

Direct Admit

Private Pay Medicare(2)Temp.

Residents

Beds Occupied

Beds Available


2016(1) 0.8 5.1 0.0 1.7 7.7 48.0 16.0%

2017 2.8 19.8 4.2 2.8 29.6 48.0 61.7%

2018 6.0 20.1 13.6 3.7 43.3 48.0 90.2%

2019 9.6 16.0 14.9 4.2 44.6 48.0 92.9%

Source: Management

(1) The Health Center is assumed to be available for occupancy in December 2015 and fill to stabilized occupancy of 93.0

percent over a 30-month period at an average of approximately 1.5 beds per month.

(2) All beds in the Health Center are assumed to be certified for Medicare. No Medicaid utilization has been assumed

during the forecast period



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 entrance fee contracts are capitalized and amortized on a straight-line basis over a period approximating the average life expectancy of the initial Residents occupying the Independent Living Units.

Costs associated with the issuance of the Series 2014 Bonds are assumed to be capitalized and amortized over the expected life of the Series 2014 Bonds using the effective interest method.

(c) Property, Equipment and Depreciation Expense Property and equipment are recorded at cost. Depreciation expense is calculated on the straight-line method over the estimated useful lives of depreciable assets. The cost of maintenance and repairs is charged to operations as incurred, whereas significant renewals and betterments are capitalized.

(d) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts on deposit in banks and highly liquid securities with an original maturity of 90 days or less when purchased, excluding amounts whose use is limited.

(e) Investments Investments include cash and cash equivalents, mutual funds, and fixed income funds in the form of U.S. Government and corporate obligations. Management assumes no material changes in fair values that result in material net realized or unrealized gains or losses during the forecast period.

(f) Assets Limited as to Use Assets limited as to use are assumed to be carried at fair value, which, based on the nature of the underlying securities (assumed to be high-grade debt securities), is assumed to approximate historical cost. Management assumes no material changes in fair values that result in material net realized or unrealized gains or losses during the forecast period.

(g) Investment Income Investment income, other than that capitalized as part of project costs, is reported as operating revenue unless restricted by donor or law. Management does not forecast any unrealized gains or losses on investments.

(h) Costs of Borrowing Net interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets.



(i) Deferred Revenue from Entrance Fees The non-refundable portion of an Entrance Fee is amortized into income over the estimated remaining life expectancy of the Resident in the Independent Living Units.

(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 Services The Corporation annually 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 Agreement 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.

(l) Taxes Management has included a provision for property taxes in its forecast.



Revenue

Independent living monthly service fees

Resident service revenue is based upon the Monthly Fees for services provided to residents of the Independent Living Units and the assumed occupancy of the respective units. Management assumes the Monthly Fees for the Independent Living Units to increase 3.50% percent in 2016 and annually thereafter. Management intends to implement an annual Entrance Fee price increase for the Independent Living Units of four percent beginning October 2015 and annually thereafter. Assisted living monthly service fees

Assisted Living Units and Memory Support Units monthly service fees are based on the assumed occupancy of the respective units and are assumed to be generated from services provided to Residents transferring from the Independent Living Units, as well as direct admissions from the local surrounding area. Residents permanently transferring from the Independent Living Units to the Assisted Living Units and Memory Support Units are assumed to pay the then-current Monthly Fee for a Golden Eagle, The Rockies, or The Highlands Independent Living Unit, depending on the Resident’s contract, plus the cost of two additional meals daily. Management assumes the Assisted Living Units and Memory Support Units Monthly Fees for direct admit residents to increase 3.5 percent in October 2015 and annually thereafter. Nursing service fees

Nursing service fees are based on the assumed occupancy of the Health Center beds and are assumed to be generated from services provided to residents transferring from the Independent Living Units, Assisted Living Units, Memory Support Units, and Direct Admit Residents. Residents permanently transferring from the Independent Living Units, Assisted Living Units, or Memory Support Units to the Health Center are to pay the then-current daily fee for a Golden Eagle, The Rockies, or The Highlands Independent Living Unit, depending on the Resident’s contract, plus the cost of two additional meals daily. In addition to the transferred residents, the Health Center is assumed to provide services to Medicare recipients and Direct Admit Residents. Management assumes Health Center fees to increase 3.5 percent in October 2015 and annually thereafter. 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. The refundable portion of the Entrance Fee is not amortized into income, and is maintained as a liability on the Corporation’s balance sheet. Turnover of the Independent Living Units has been estimated by Management from information provided by the Actuary and based upon its experience with comparable facilities and the



Community’s existing market and Depositor information. Entrance Fees for the Independent Living Units are assumed to increase 4.0 percent annually beginning October 2015.

Investment Income

Management assumes a 1.50 percent average annual rate of return on the Corporation’s unrestricted cash in 2013, 2014 and 2015, 2.00 percent in 2016, 2.50 percent in 2017, 3.00 percent in 2018, and 3.50 percent in 2019, and on the Operating Reserve Fund at 2.00 percent through the forecast period. Based upon information provided by the Underwriter, Management has estimated interest to be earned annually on the Project Fund at 0.45 percent, on the Funded Interest Fund at 0.37 percent, on the Series 2014A Bonds Debt Service Reserve Fund ranging from 0.75 to 3.00 percent, on the Series 2014B-1 Bonds Debt Service Reserve Fund at 1.06 percent, on the Series 2014B-2 Bonds Debt Service Reserve Fund at 0.84 percent, on the Series 2014B-3 Bonds Debt Service Reserve Fund at 0.52 percent, and on the Series 2014C Bonds Debt Service Reserve Fund at 0.31 percent. Other Income

Other revenue consists of revenues from additional Resident meals and snacks, guest meals, guest apartment rentals, barber and beauty fees, and other miscellaneous sources. These revenues are based upon the assumed occupancies at the Community. Charges for other revenues are assumed to increase 3.5 percent annually beginning October 2015. Operating Expenses

Operating expenses are estimated by Management based on its experience with the development and operation of other similar retirement communities. Staff salaries and benefits are estimated based on prevailing local salary and wage rates and are assumed to increase 3.5 percent annually throughout the forecast period. The costs of employee fringe benefits are assumed to approximate 24 percent of salaries and wages. The following table summarizes the assumed staffing levels for all departments.



Other non-salary operating expenses are assumed to include ongoing marketing costs, raw food costs, utilities, supplies, maintenance and security contracts, building and general liability insurance, legal and accounting fees, property taxes and other miscellaneous expenses. The cost of these non-salary operating expenses is assumed by Management to increase 3.5 percent annually throughout the forecast period.

Table 41 Schedule of Assumed Staffing Levels– FY 2019

Department FTE Totals

Administrative 8.3

Activities services 5.9

Assisted living services 39.0

Health care center 52.8

Building and maintenance 5.0

Dining services 34.2

Emergency system 2.3

Housekeeping & laundry 10.6

Transportation 1.8

Marketing 3.0

Total FTEs 162.9

Source: Management



Assets Limited as to Use Permanent financing for the Community is assumed by Management to be obtained from the issuance of the Series 2014 Bonds. The Bond Trustee is assumed to maintain the following funds and accounts for the Series 2014 Bonds in the name of the Corporation under the terms of the Master Indenture and the Bond Trust Indenture: (1) Project Fund, to be gross funded at closing from Series 2014 Bonds proceeds to be used to

pay construction costs to complete the Community.

(2) Funded Interest Fund, net funded from Series 2014 Bonds proceeds, to be used to fund interest costs for 22 months.

(3) Debt Service Reserve Funds, to be established at closing from Series 2014 Bonds proceeds. According to the Underwriter, each account in the Debt Service Reserve Fund established for each series of the Series 2014 Bonds is to be released and available to pay debt service in the year that the respective series of the Series 2014 Bonds is repaid in full.

(4) Bond Fund, which contains the bond principal and interest payments to be used for payment of debt service on the Series 2014 Bonds.

(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; reimburse any pre-opening draws on any of the Liquidity Support Funds, redeem the Series 2014 Bonds; and reimburse any amounts advanced for Project costs.

(6) Working Capital Fund, to be funded with $12,000,000 from initial Entrance Fees received, to pay for certain development fees, debt service payments, project costs, operating expenses, or capital expenditures as needed.

(7) Operating Reserve Fund, to be initially funded with $3,000,000 from initial Entrance Fees received, and subject to replenishment. The Operating Reserve Fund is to be available to pay debt service, additional project costs, operating expenses, development fees or capital expenditures as needed.



Property and Equipment and Depreciation Expense Management anticipates that the Corporation is to incur routine capital additions during the

forecast period that are to be capitalized as property and equipment. Depreciation expense for all

capital assets is computed based on the straight-line method for buildings and equipment over

estimated average useful lives of 40 and 10 years, respectively. Construction-related costs as

well as routine capital additions during the forecast period are summarized in the table below.

Source: Management

Table 42 Schedule of Property and Equipment

(In Thousands)

Years Ending September 30,

2014 2015 2016

2017 2018 2019 Property and equipment, gross Beginning balance $ 6,536 $ 31,817 $ 70,927 $ 84,495 $ 84,970 $ 85,295

Project costs 22,743 34,867 13,443 300 100 -

Capitalized interest 5,223 4,193 - - - -

Routine capital additions - 50 125 175 225 275

Disposal of fixed asset (2,685) - - - - -

Property and equipment, gross 31,817 70,927 84,495 84,970 85,295 85,570

Accumulated depreciation (363) (981) (3,225) (5,493) (7,784) (10,101)

Property and equipment, net Ending balance $ 31,454 $ 69,946 $ 81,270 $ 79,477 $ 77,511 $ 75,469



Long-Term Debt and Interest Expense

The Idaho Health Facilities Authority plans to issue $103,185,000 of tax-exempt bonds, the proceeds of which are to be lent to the Corporation to pay for the Community construction and other project-related costs. The Series 2014 Bonds are assumed to consist of:

� $80,685,000 of non-rated tax-exempt fixed rate Series 2014A Bonds;

� $20,750,000 of non-rated fixed rate Tax Exempt Mandatory Paydown Securities Series 2014B Bonds (TEMPSSM); and

� $1,750,000 of non-rated fixed rate Taxable Mandatory Paydown Securities Series 2014C Bonds (Taxable MPS).

The Series 2014A Bonds are assumed to consist of $80,685,000 of non-rated, tax-exempt fixed rate term bonds, issued at a discount, with average interest rates ranging from 7.00 to 8.125 percent per annum. Interest on the Series 2014A Bonds is to be payable April 1 and October 1 of each year beginning April 1, 2014. Principal on the Series 2014A Bonds is to be paid annually commencing October 1, 2019 with a final maturity on October 1, 2049.

The Series 2014B Bonds are assumed to consist of $20,750,000 of non-rated, tax-exempt fixed

rate TEMPSSM, which are assumed to be issued with average interest rates ranging from 5.25

percent to 6.50 percent per annum. Interest on the Series 2014B Bonds is to be payable April 1

and October 1 of each year beginning April 1, 2014. The Series 2014B Bonds consist of

$4,875,000 of Series 2014B-1 Bonds (TEMPS-75SM) anticipated to be redeemed in full by

approximately 75 percent initial occupancy of the Independent Living Units by approximately

January 1, 2018, $7,375,000 of Series 2014B-2 Bonds (TEMPS-65SM) anticipated to be

redeemed in full by approximately 65 percent initial occupancy of the Independent Living Units

by approximately July 1, 2017, and $8,500,000 of Series 2014B-3 Bonds (TEMPS-50SM)

anticipated to be redeemed in full by approximately 50 percent initial occupancy of the

Independent Living Units by approximately January 1, 2017.

The Series 2014C Bonds are assumed to consist of $1,750,000 of nonrated, taxable fixed rate

Taxable MPS, which are assumed to be issued with an average interest rate of 7.00 percent per

annum. Interest on the Series 2014C Bonds is to be payable April 1 and October 1 of each year

beginning April 1, 2014. The Series 2014C Bonds are assumed to be redeemed in full by July 1,

2016 at approximately 35 percent initial occupancy of the Independent Living Units.

Principal on the Series 2014B Bonds and the Series 2014C Bonds is anticipated to be repaid from a portion of the Entrance Fees assumed to be available from initial residents moving into the Community.

The following table presents the assumed annual debt service for the Series 2014 Bonds during the forecast period.



Table 43 Schedule of Series 2014 Bonds Annual Debt Service

(In Thousands)

Year Ending September 30,

Principal Interest Payment (1)

Total Debt Service

2014 $ - $ 1,350 $ 1,350

2015 - 7,763 7,763

2016 5,805 7,785 13,590

2017 12,785 7,377 20,162

2018 3,910 6,644 10,554

2019 - 6,443 6,443

(1) Includes Idaho Health Facilities Authority Annual Fee

Source: Management and the Underwriter

Subordinated Note ABP will loan $2,000,000 to the Corporation to pay for certain project-related costs, including the land. The loan from ABP to the Corporation will be an affiliate obligation evidenced by a Subordinated Promissory Note (the “ABP Subordinated Note”) executed by the Corporation in favor of ABP at the closing of the Series 2014 Bonds. Interest is to accrue on the unpaid principal balance of the ABP Subordinated Note at a rate of 4.00 percent per annum. Repayment of the ABP Subordinated Note and accrued interest is subject to the restrictions in the Master Indenture concerning payments on Affiliate Subordinate Indebtedness. For purposes of the Management’s forecast, Management has assumed that no payment of principal or interest on the ABP Subordinated Note is made during the forecast period. Termination of Ground Lease As described earlier, the ground on which the Community will be located is owned by ABP. The Corporation entered into the Lease with ABP for the property on March 24, 2008. Upon closing of the Series 2014 Bonds, the Corporation intends to enter into a purchase and sale agreement with ABP whereby it will purchase the land on which the Community is to be located for $5,000,000, and will subsequently terminate the ground lease agreement with ABP and forgive the unpaid accrued ground lease payments through permanent financing.



Forgiveness of Debt Upon closing of the Series 2014 Bonds, certain payables from the Corporation to ABP and other consultants for accrued ground lease payments and preconstruction services are assumed to be forgiven and the fixed asset written off, resulting in an extraordinary loss on the Corporation’s statement of activities in fiscal year 2014. The payables write off will result in an extraordinary loss of $2,685,000 in fiscal year 2014. Current Assets and Current Liabilities Operating expenses exclude amortization, depreciation, other non-cash expenses and interest expense. Operating revenues include Independent Living Unit Monthly Fees, Assisted Living Unit and Memory Support Unit Monthly Fees, and Health Center service fees. Working capital components have been estimated based on industry standards and Management’s historical experience as follows:

Table 44

Working Capital – Days on Hand

Cash 30 days operating expenses

Accounts receivable 15 days operating revenues

Inventory 1 days operating expenses

Prepaid expenses 15 days operating expenses

Accounts payable 30 days operating expenses

Other accrued liabilities 14 days operating expenses

Source: Management

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INDEPENDENT ACCOUNTANTS’ REPORT ON SUPPLEMENTAL INFORMATION

Board of Directors Boise Retirement Community Boise, Idaho Our examination of the financial forecast presented in the preceding section of this document was made for the purpose of forming an opinion on whether the financial forecast is presented in conformity with AICPA guidelines for the presentation of a forecast and that the underlying assumptions provide a reasonable basis for the forecast. The study was undertaken to evaluate the Corporation’s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed Series 2014 Bonds based on Management’s assumptions of future operations of the Corporation. However, future events could occur which could adversely affect the financial forecast of the Corporation and its ability to meet debt service requirements. These factors include, among others, legislation and regulatory action, changes in assumptions concerning occupancy, the rate of entrance fee producing unit turnover, per diem rates, financing and operating costs. The accompanying sensitivity analysis is presented for purposes of additional analysis and is not a required part of the financial forecast. Such information has not been subjected to procedures applied in the examination of the financial forecast and, accordingly, we express no opinion or any other form of assurance on it. The following supplemental analyses are presented for the purpose of demonstrating the significance of certain assumptions and are not to be considered an all-inclusive list.

Atlanta, Georgia January 14, 2014

Boise Retirement Community Supplemental Disclosure

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Sensitivity Analysis I – Occupancy

Occupancy rates can vary depending upon economic conditions, the competitive environment, and Management’s ability to execute the marketing and sales plan. The Community’s residents are to begin moving into the Independent Living Units in June 2015. Management expects the Independent Living Units to achieve a 95 percent occupancy level in May 2018 and remain at that level through the forecast period. Sensitivity Analysis IA The period of time it takes to achieve and maintain stabilized occupancy could be longer than assumed in Management’s forecast. The data presented in the table below demonstrate the impact of an extension in the assumed move-in period of the Independent Living Units from 36 months to 60 months. Sensitivity Analysis IB The data presented in the table below also provide a “Breakeven Analysis” assuming that the Independent Living Unit stabilized occupancy percentage decreased to a breakeven point such that the Corporation’s Maximum Annual Debt Service Coverage Ratio would approximate near 1.00x. In this analysis, the Independent Living Unit stabilized occupancy was reduced to “Breakeven” while occupancy in the Assisted Living Units, Memory Support Units, and the Health Center remained as originally forecasted. For purposes of this analysis, certain fixed operating expenses, staffing expenses and forecasted repayment of the Series 2014 Bonds 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 a lower stabilized occupancy of the Health Care Center, to include the Assisted Living Units, Memory Support Units, and the Health Center nursing beds at the Community, such that a 1.00x Maximum Annual Debt Service Coverage Ratio or zero Days Cash on Hand is achieved in 2019. For purposes of this analysis, certain fixed operating expenses, staffing expenses and forecasted repayment of the Series 2019 Bonds have not been adjusted for reductions of the occupancy of the Community’s residential units.


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(1) For purposes of the sensitivity analysis, occupancy of the Independent Living Units was reduced without a corresponding adjustment to certain fixed operating expenses, staffing expenses or an adjustment to the repayment of the Series 2014 Bonds.

(2) For purposes of Sensitivity IA, the Independent Living Units are estimated to reach stabilized occupancy of 95.0 percent in May 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.

Table 45 Sensitivity Analysis – I

Estimated Financial Information For the Year Ending September 30, 2019

As Forecasted Sensitivity IA(1) Sensitivity IB (1) Sensitivity IC

Independent Living Units:

Months of Move-in Period 36 months 60 months 36 months 36 months

Stable Occupancy Achieved May 2018 May 2020 (2) May 2018 May 2018

Occupancy at September 30, 2019 95.0% 90.0% 77.0% 95.0%

Average Move-ins per Month 4.2 2.5 3.4 4.2

Health Care Center

Occupancy at September 30, 2019 93.0% 93.0% 93.0% 74.9%

Max. Annual Debt Service Coverage Ratio 1.31x 1.16x 1.00x 1.00x

Annual Debt Service Coverage Ratio 1.45x 1.28x 1.11x 1.11x

Days Cash on Hand 316 189 51 208

Cash to Debt Ratio 29% 21% 12% 22%

Source: Management


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Sensitivity Analysis IIB Pursuant to the Residency Agreement, refunds of Entrance Fees upon death or withdrawal of a Resident are subject to re-occupancy of the Resident’s vacated Independent Living Unit. Independent Living Units that are re-occupied as a result of the prior occupant(s) transferring to an Assisted Living Unit, Memory Support Unit or Health Center nursing bed do not generate a corresponding Entrance Fee refund until the prior occupant(s) died or withdrew from the Community, thereby terminating the Residency 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 September 30, 2019.

(1) The sensitivity in the Maximum Annual Debt Service Coverage Ratio and the Annual Debt Service Coverage Ratio reflects the number of turnover Residents paying Entrance Fees upon entering the Independent Living Units (10.9) matching the number of refunds paid to Residents vacating those units (10.9) without a corresponding adjustment to certain fixed operating expenses, staffing expenses or an adjustment to the repayment of the Series 2014 Bonds for the fiscal year ending September 30, 2019.

(2) The sensitivity in the liquidity ratios reflects the cumulative effect of the number of turnover Residents paying Entrance Fees upon entering the Community’s Independent Living Units matching the number of refunds paid to Residents vacating those units without a corresponding adjustment to certain fixed operating, staffing expenses or an adjustment to the repayment of the Series 2014 Bonds during the seven-year forecast period ending September 30, 2019.

Table 46 Sensitivity Analysis – II


(In Thousands)

As Forecasted

Sensitivity IIA

Sensitivity IIB

Turnover Entrance Fee Received $4,044 - $4,044

Entrance Fee Refunds Paid $(1,553) - $(2,423)

Net Entrance Fees Received $2,491 - $1,621

Maximum Annual Debt Service Coverage Ratio 1.31x 0.96x 1.18x (1)

Annual Debt Service Coverage Ratio 1.45x 1.06x 1.31x (1)

Days Cash on Hand 316 267 282 (2)

Cash to Debt Ratio 29% 26% 27% (2)

Source: Management


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Sensitivity Analysis III – Expense and Revenue Control Management assumes operating expenses increase over time, with a corresponding ability to increase per diem rates and charges. Management’s ability to raise revenues may vary from the forecast assumptions. Management has assumed that operating revenues and expenses at the Community would increase 3.5 percent annually once the Community opens, and throughout the forecast period. The data presented in the table below are provided to demonstrate the impact on the overall financial performance of the Corporation assuming the operating expense inflation increases from 3.5 percent to 4.5 percent while maintaining the assumed 3.5 percent operating revenue inflation increase.

(1) For purposes of the sensitivity analysis, the assumed schedule for the repayment of debt remains as originally forecasted.

Table 47 Sensitivity Analysis – III


As Forecasted Sensitivity III

Inflation Percentage:

Revenues Inflation 3.5% 3.5%

Expenses Inflation 3.5% 4.5%

Maximum Annual Debt Service Coverage Ratio 1.31x 1.24x

Annual Debt Service Coverage Ratio 1.45x 1.37x

Days Cash on Hand 316 289

Cash to Debt Ratio 29% 28%

Source: Management

APPENDIX C

SUMMARY OF MASTER INDENTURE AND DEED OF TRUST

TABLE OF CONTENTS Page

-i-

DEFINITIONS OF CERTAIN TERMS ............................................................................................... C-1

SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE .......................................... C-21

General ..................................................................................................................................... C-21

Authorization of Obligations .................................................................................................... C-21

Payment of Principal and Interest ............................................................................................. C-21

Pledge of Gross Revenues ........................................................................................................ C-21

The Obligated Group ................................................................................................................ C-22

Covenants as to Maintenance of Properties, Etc ....................................................................... C-25

Limitations on Encumbrances ................................................................................................... C-26

Limitations on Additional Indebtedness ................................................................................... C-26

Limitations on Guaranties ......................................................................................................... C-29

Rate Covenant ........................................................................................................................... C-29

Sale, Lease or Other Disposition of Property ........................................................................... C-32

Consolidation, Merger, Sale or Conveyance ............................................................................ C-33

Insurance ................................................................................................................................... C-35

Financial Reporting ................................................................................................................... C-35

Liquidity Covenant ................................................................................................................... C-35

Marketing Covenant.................................................................................................................. C-37

Occupancy Covenant ................................................................................................................ C-38

Cumulative Cash Operating Loss Covenant ............................................................................. C-40

Approval of Consultants ........................................................................................................... C-41

Entrance Fee Fund .................................................................................................................... C-42

Working Capital Fund............................................................................................................... C-43

Operating Reserve Fund ........................................................................................................... C-44

Investment of Funds .................................................................................................................. C-45

American Baptist Properties Liquidity Support Fund ............................................................... C-45

American Baptist Homes of the West Liquidity Support Fund ................................................ C-46

Supplemental Liquidity Support Fund ...................................................................................... C-47

Notices and Reports Following Draws on Liquidity Support Funds; Consultant Recommendations; Valuations .................................................................................... C-48

Payments on Affiliate Related Subordinated Indebtedness and Management Fees to Affiliates and Liquidity Support Repayment Obligations ........................................... C-49

Application for Rating .............................................................................................................. C-50

Insurance and Condemnation Proceeds .................................................................................... C-50

TABLE OF CONTENTS (continued)

Page

-ii-

Designation of Principal Property ............................................................................................. C-50

Additions to Excluded Property ................................................................................................ C-51

Defaults and Remedies ............................................................................................................. C-51

Related Bond Trustee or Bondholders Deemed to be Obligation Holders ............................... C-54

Removal and Resignation of the Master Trustee ...................................................................... C-55

Supplements and Amendments ................................................................................................. C-56

Satisfaction and Discharge of Master Indenture ....................................................................... C-57

SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST .................................................. C-57

General ..................................................................................................................................... C-57

Representations and Warranties ................................................................................................ C-58

Transfer of Interest .................................................................................................................... C-58

Maintenance of Lien ................................................................................................................. C-59

Event of Default ........................................................................................................................ C-59

Remedies ................................................................................................................................... C-59

Assignment of Leases and Rents .............................................................................................. C-61

Receiver .................................................................................................................................... C-61

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APPENDIX C

SUMMARY OF MASTER INDENTURE AND DEED OF TRUST

Brief descriptions of the Master Indenture and the Deed of Trust are included hereafter in this Appendix C to the Official Statement. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Master Indenture and the Deed of Trust are qualified in their entirety by reference to each such document, copies of which are available for review prior to the issuance and delivery of the Bonds as described in the Official Statement.

DEFINITIONS OF CERTAIN TERMS

“ABHOW” means American Baptist Homes of the West, a California nonprofit public benefit corporation or any successor thereto.

“ABHOW Development Agreement” means the Development Administrative Services Agreement dated February 1, 2008, as amended, between the Corporation and ABHOW.

“ABHOW Development Fees” means the fees payable to ABHOW under the ABHOW Development Agreement.

“ABHOW Liquidity Support Fund” means the fund created pursuant to the Master Indenture as described under the heading “AMERICAN BAPTIST HOMES OF THE WEST LIQUIDITY SUPPORT FUND” below.

“Accountant” means any firm of regionally-recognized independent certified public accountants selected by the Obligated Group Representative.

“Additional Indebtedness” means any Indebtedness incurred subsequent to the execution and delivery of the original Master Indenture other than Obligation No. 1.

“Affiliate” means a corporation, partnership, joint venture, association, limited liability company, business trust or similar entity (a) which controls, is controlled by or is under common control with, directly or indirectly, a Member; or (b) a majority of the members of the Directing Body of which are members of the Directing Body of a Member. For the purposes of this definition, control means with respect to: (a) a corporation having stock, the ownership, directly or indirectly, of more than 50% of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the directors of such corporation; (b) a not for profit corporation not having stock, having the power to elect or appoint, directly or indirectly, a majority of the members of the Directing Body of such corporation; or (c) any other entity, the power to direct the management of such entity through the ownership of at least a majority of its voting securities or the right to designate or elect at least a majority of the members of its Directing Body, by contract or otherwise. For the purposes of this definition, “Directing Body” means with respect to: (a) a corporation having stock, such corporation’s board of directors and the owners, directly or indirectly, of more than 50% of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporation’s directors (both of which groups shall be considered a Directing Body); (b) a not for profit corporation not having stock, such corporation’s members if the members have complete discretion to elect the corporation’s directors, or the corporation’s directors if the corporation’s members do not have such discretion; and (c) any other entity, its governing

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board or body. For the purposes of this definition, all references to directors and members shall be deemed to include all entities performing the function of directors or members however denominated.

“Affiliate Related Subordinated Indebtedness” means (a) the American Baptist Properties Subordinated Debt, (b) the ABHOW Development Fees, (c) the Seniority Fees, (d) the Liquidity Support Repayment Obligations of the Corporation to ABHOW and American Baptist Properties under the Sponsor Liquidity Support Agreement and (e) fees and other amounts due to an Affiliate of a Member for money borrowed, credit extended or services rendered, the payment of which are deferred or not yet payable at the time of calculation and which are subordinate to payments due on all Obligations issued under the Master Indenture in accordance with written agreements between such Affiliates and a Member.

“American Baptist Properties” means American Baptist Properties or any successor thereto.

“American Baptist Properties Liquidity Support Agreement” means that Liquidity Support Agreement dated as of January 1, 2014 among the Corporation, the Master Trustee, the Bond Trustee and American Baptist Properties.

“American Baptist Properties Liquidity Support Fund” means the fund created pursuant to the Master Indenture as described under the caption “AMERICAN BAPTIST PROPERTIES LIQUIDITY SUPPORT FUND” below.

“American Baptist Properties Subordinated Debt” means the Corporation’s obligation to repay American Baptist Properties for the purchase of the real estate on which the Project is located.

“Annual Debt Service” means for each Fiscal Year the aggregate amount (without duplication) of principal and interest scheduled to become due (either by maturity or by mandatory redemption) and sinking fund payments required to be paid in that Fiscal Year on all Long-Term Indebtedness, less any amounts on irrevocable deposit in escrow to be applied during that Fiscal Year to pay principal or interest on Long-Term Indebtedness; provided that (i) any annual fees payable in respect of a credit or liquidity facility issued to secure any series of Related Bonds, if any (other than annual fees to be paid from proceeds of a bond issue escrowed for such purpose) shall be included in the determination of Annual Debt Service; (ii) 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 included in the determination of Annual Debt Service; (iii) all payments on Subordinated Indebtedness shall be excluded from Annual Debt Service; (iv) interest shall be excluded from Annual Debt Service to the extent that amounts have been irrevocably deposited in an escrow or other trust account to pay interest on Long-Term Indebtedness and (v) principal shall be excluded from Annual Debt Service to the extent moneys were initially deposited and are on deposit as of the date of calculation in a debt service reserve fund which requires that moneys on deposit in the debt service reserve fund be used to pay a principal payment in the final year of such indebtedness. Whenever the term “Annual Debt Service” is used in the calculation of a Debt Service Coverage Ratio, any Guaranties shall be included only to the extent there was an actual payment on the Guaranty in such Fiscal Year.

“Assisted Living Units” means the assisted living units that are part of the Project.

“Authorized Representative” means with respect to each Member, the chairperson of its Governing Body or its chief executive officer or its chief financial officer or any other person designated an authorized representative of such Member by a certificate of such Member signed by the chairperson of its Governing Body or its chief executive officer or chief financial officer and filed with the Master Trustee.

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“Balloon Indebtedness” means Long-Term Indebtedness of a Member, 25% or more of the principal of which becomes due (either by maturity or mandatory redemption) during any period of 12 consecutive months, which portion of the principal is not required by the documents governing such Indebtedness to be amortized by redemption prior to such date.

“Book Value” means, when used in connection with Principal Property or other Property of any Member, the value of such property, net of accumulated depreciation, as it is carried on the books of such person and in conformity with GAAP, and when used in connection with Principal Property or other Property of the Obligated Group, means the aggregate of the values so determined with respect to such Property of each Member determined in such a way that no portion of such value of Property of any Member is included more than once.

“Building” means, for purposes of the Deed of Trust, all existing and future buildings, structures, improvements, fixtures, additions, enlargements, extensions, modifications, repairs, and replacements now or hereafter located on the Land, and all equipment, appliances, machinery, furnishings and other articles (whether constituting real, personal or mixed property) now or hereafter located on, attached to or used or acquired for use in connection with the Land, including, but not limited to, gas, electric, cooling, air conditioning, heating and incinerating systems, apparatus and equipment, boilers, engines, pumps, motors, condensers, dynamos, generating equipment, computer equipment, conduits, switchboards, telephone and other communication systems, electronic monitoring equipment, plumbing, piping and plumbing fixtures, ranges, cooking apparatus and mechanical kitchen equipment, refrigerators, laundry equipment, cooling, ventilating, sprinkling and vacuum cleaning systems, life, fire and safety systems, fire extinguishing apparatus and alarm systems, gas and electric fixtures, irrigation equipment, carpeting, underpadding, elevators and elevator fixtures, compressors and all parts and accessories therefore, including any computers and software necessary or used in connection with the operation of same, escalators, partitions, mantles, built-in mirrors, shelves, lockers, cabinets, wall safes, window shades, blinds, draperies, screens, storm sashes, awnings, entertainment and recreational equipment, furnishings of public spaces, halls and lobbies and shrubbery and plants; and together with all additions, accessions, replacements, substitutions and proceeds thereto or thereof.

“Business Day” means a day of the year which is not (a) a Saturday, Sunday or legal holiday on which banking institutions located in the city of the Corporate Trust Office are authorized by law to close or (b) a day on which the New York Stock Exchange is closed.

“Capital Addition” means any improvements, extensions, alterations, relocations, enlargements, expansions, modifications or replacement of or to the Facilities.

“Capital Addition Start-Up Period” shall have the meaning summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – RATE COVENANT” herein.

“Cash and Liquid Investments” means all unrestricted cash and liquid investment balances, including, without limitation, such amounts constituting board designated funds, whether classified as current or noncurrent assets, held by the Obligated Group for any of its corporate purposes, but excluding amounts available under lines of credit and excluding amounts held by the Master Trustee, all as set forth in the most recent financial statements delivered under the Master Indenture. For purposes of calculations under the Master Indenture, (i) an unrestricted contribution from an Affiliate of a Member shall be treated as being made during the period of such calculation so long as the unrestricted contribution is made prior to the date the applicable Officer’s Certificate is required to be delivered with respect to such calculation, (ii) any amounts on deposit in the Entrance Fee Fund, Operating Reserve Fund and Working Capital Fund shall be included in the calculation of Cash and Liquid Investments and (iii) any amounts on deposit in the Debt Service Reserve Fund created under the Series 2014 Bond Indenture and any other debt service

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reserve fund created under a Related Bond Indenture shall be excluded from the calculation of Cash and Liquid Investments for the purposes of determining the number of Days Cash on Hand of the Obligated Group but may be included in the calculation of Cash and Liquid Investments for the purposes of calculating the Cash to Indebtedness Ratio of the Obligated Group.

“Cash to Indebtedness Ratio” means, as of any date of calculation, the number obtained by dividing (a) Cash and Liquid Investments, by (b) the aggregate principal amount of Long-Term Indebtedness Outstanding but excluding the then current portion of the Annual Debt Service on Long-Term Indebtedness; provided, however, that for the purposes of calculating Cash to Indebtedness Ratio, the principal amount of any Subordinated Indebtedness will be excluded from Annual Debt Service.

“Certificate,” “Statement,” “Request,” “Consent” or “Order” of any Member or of the Master Trustee means, respectively, a written certificate, statement, request, consent or order signed in the name of such Member by its respective Authorized Representative or in the name of the Master Trustee by its Responsible Officer. Any such instrument and supporting opinions or certificates, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or certificate and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by the Master Indenture, each such instrument shall include the statements provided for in the Master Indenture.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. Each reference to a Section of the Code herein shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations, relating to such Section.

“Completion Indebtedness” means any Long-Term Indebtedness incurred by any Member for the purpose of financing the completion of acquiring, constructing, renovating, refurbishing, equipping or improving any project for which Long-Term Indebtedness has previously been incurred in accordance with the provisions of the Master Indenture.

“Construction Consultant” means the architects, engineers, development consultant, supervising contractors or other qualified consultant selected by the Obligated Group or any Member in connection with the acquisition, installation, improvement or construction of a project or a portion thereof for which Long-Term Indebtedness has previously been incurred in accordance with the provisions of the Master Indenture, delivered to the Master Trustee in connection with the issuance of Completion Indebtedness.

“Corporate Trust Office” means the office of the Master Trustee at which its principal corporate trust business is conducted, which, at the date hereof, is located at 555 SW Oak Street, PD-OR-P6TP, Portland, Oregon, 97204, Attention: Corporate Trust Services.

“Corporation” means Boise Retirement Community, d/b/a The Terraces of Boise, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California, or any corporation which is the surviving, resulting or transferee corporation in any merger, consolidation or transfer of assets permitted under the Master Indenture.

“Cumulative Cash Operating Loss” means, commencing with the earliest date a resident has taken physical possession of one of the units included in the Project, (a) the sum on a cumulative basis of (i) resident service revenues (excluding amortization of Entrance Fees), (ii) other operating revenues, (iii) non-operating revenues, (iv) Entrance Fees (excluding Initial Entrance Fees), and (v) investment earnings (including realized gains and losses, but excluding unrealized gains and losses and temporary or other than temporary impairments) minus (b) the sum of (i) Entrance Fees refunded to residents and (ii) the aggregate of all operating expenses, including Annual Debt Service on Indebtedness, Development Fees and capital expenditures paid from the Working Capital Fund or the Operating Reserve Fund; excluding

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(x) depreciation and amortization and other non-cash expenses, (y) letter of credit fees or any remarketing agent fees, if any, which are paid from the proceeds of Series 2014 Bonds and (z) any funded interest or expenses which are paid from amounts held under the Series 2014 Bond Indenture.

“Current Value” means the aggregate sum of the Book Value of personal property plus the fair market value of the real property. The fair market value of real property shall be as reflected in the most recent written report of an appraiser selected by the Corporation, which shall be an appraiser who is a member of the American Institute of Real Estate Appraisers (MAI), and the report shall be 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).

“Days Cash on Hand” means the amount determined by dividing (1) the Cash and Liquid Investments of the Obligated Group as of a particular date by (2) the quotient derived by dividing (a) the Obligated Group’s total operating expenses (less depreciation and amortization and other non-cash items, including, without limitation, losses on refinancing of debt, non-cash termination value of any hedging derivative, interest rate exchange or similar contract, and any one-time charges in connection with development projects that have been abandoned by the Obligated Group) for the most recent preceding Fiscal Year for which audited financial statements have been delivered under the Master Indenture by (b) the number of days in such Fiscal Year.

“Debt Service Coverage Ratio” means, for any period of time, the ratio determined by dividing Income Available for Debt Service by Annual Debt Service.

“Deed of Trust” means the Deed of Trust and Security Agreement dated as of January 28, 2014, as the same may be supplemented and amended from time to time, under which the Corporation has granted a lien on and security interest in its Facilities to First American Title Insurance Company, as trustee, to be held for the benefit of the Master Trustee.

“Development Agreement” means the Development Consulting Agreement dated December 21, 2007, as amended, between the Corporation and the Development Consultant.

“Development Consultant” means Greystone Development Company II, LP or any successor thereto.

“Development Fees” means the fees payable to the Development Consultant under the Development Agreement.

“EMMA” means the Electronic Municipal Market Access system as described in the Securities Exchange Act of 1934, as amended by Release No. 59062, and maintained by the Municipal Securities Rulemaking Board for purposes of Rule 15c2-12 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended, or any similar system that is acceptable to the Securities and Exchange Commission.

“Entrance Fee Fund” means the Entrance Fee Fund created by the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – ENTRANCE FEE FUND” herein.

“Entrance Fees” means fees other than security deposits, monthly rentals or monthly service charges, paid to a Member by residents of living units for the purpose of obtaining the right to reside in those living units or to obtain a parking space including any refundable resident deposits described in any lease, residency agreement or similar agreement with respect to those living units or parking spaces, but

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shall not include any such amounts held in escrow or otherwise set aside pursuant to the requirements of any such agreement or a reservation agreement prior to the occupancy of the living unit or parking space covered by such lease, residency agreement or similar agreement (which amounts shall be included if and when occupancy occurs).

“Escrow Obligations” means: (1) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or obligations the timely payment of the principal of and interest on which are fully guaranteed by the United States of America; (2) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following: Banks for Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Bank System, Export-Import Bank of the United States, Federal Financing Bank, Federal Land Banks, Government National Mortgage Association, Farmer’s Home Administration, Small Business Administration, Federal Home Loan Mortgage Corporation or Federal Housing Administration, (3) certificates which evidence ownership of the right to the payment of the principal of and interest on obligations described in clauses (1) and (2), provided that such obligations are held in the custody of a bank or trust company in a special account separate from the general assets of such custodian, and (4) obligations the interest on which is excluded from gross income for purposes of federal income taxation pursuant to Section 103 of the Code, and the timely payment of the principal of and interest on which is fully provided for by the deposit in trust or escrow of cash or obligations described in clauses (1), (2) or (3).

“Excluded Property” means any assets of “employee pension benefit plans” as defined in the Employee Retirement Income Security Act of 1974, as amended, maintained by or for the benefit of the Obligated Group, any moneys and securities held as an Entrance Fee or security deposit, or in a resident trust fund, for any resident of any Facility of a Member, any real estate parcels the Corporation may hold temporarily as a convenience to its Affiliates, and the real estate described in Exhibit C to the Master Indenture, as amended as provided in the Master Indenture from time to time, and all improvements, fixtures, tangible personal property and equipment located thereon and used in connection therewith. Except where explicitly set forth in the Master Indenture, neither Principal Property nor Property include Excluded Property.

“Extendable Indebtedness” means indebtedness which is repayable or subject to purchase at the option of the holder thereof prior to its stated maturity, but only to the extent of money available for the repayment or purchase therefor and not more frequently than once every year.

“Facilities” means all land, leasehold interests and buildings and all fixtures and equipment (as defined in the Uniform Commercial Code or equivalent statute in effect in the state where such fixtures or equipment are located) of a Member. Facilities shall not include the land, leasehold interests, buildings, fixtures or equipment constituting Excluded Property.

“Fair Market Value”, when used in connection with Property, means the fair market value of such Property as determined by either (1) an appraisal of the portion of such Property which is real property made within three years of the date of determination by a member of the American Institute of Real Estate Appraisers and by an appraisal of the portion of such Property which is not real property made within three years of the date of determination by any expert, provided that any such appraisal shall be performed by a person or firm which (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in any Member and (c) is not connected with any Member as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions or (2) a bona fide offer for the purchase of such Property made on an arm’s length basis within six months of the date of determination as established by an Officer’s Certificate.

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“Financing” means a borrowing pursuant to any Obligation authorized by the Master Indenture.

“First Supplemental Master Indenture” means the First Supplemental Master Trust Indenture dated as of January 1, 2014, pursuant to which Obligation No. 1 will be issued.

“Fiscal Year” means that period adopted by the Obligated Group Representative as its annual accounting period. Initially, the Fiscal Year is the period from October 1 of a year to September 30 of the next year.

“Fitch” means Fitch Ratings Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative.

“Funding Event” shall have the meaning set forth in the Sponsor Liquidity Support Agreement.

“GAAP” means accounting principles generally accepted in the United States as of the date of any calculation under the Master Indenture.

“Governing Body” means, when used with respect to any Member, its board of directors, board of trustees, or other board or group of individuals in which all of the powers of such Member are vested except for those powers reserved to the corporate membership thereof by the articles of incorporation or bylaws of such Member.

“Government Issuer” means any municipal corporation, political subdivision, state, territory or possession within the United States, or any constituted authority or agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof, which obligations would constitute Related Bonds under the Master Indenture.

“Government Obligations” means securities which consist of (a) United States Government Obligations or (b) evidences of a direct ownership in future interest or principal payments on United States Government Obligations, which obligations are held in a custody account by a custodian pursuant to the terms of a custody agreement.

“Greystone Liquidity Provider” means GCI Boise, LP, a limited partnership organized and existing under the laws of the State of Delaware.

“Greystone Liquidity Support Agreement” means that Liquidity Support Agreement dated as of January 1, 2014 among the Corporation, the Master Trustee, the Bond Trustee and the Greystone Liquidity Provider.

“Gross Revenue Fund” means the fund by that name created by the Master Indenture as described under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – PLEDGE OF GROSS REVENUES” herein.

“Gross Revenues” means (i) all receipts, revenues, payments, income and other moneys received by or on behalf of a Member from any source, excluding donor restricted funds, whether or not in connection with the ownership or the operation of all or any part of a Member’s facilities, including, without limitation, all Entrance Fees (earned and unearned), monthly service fees and all other operating and non-operating revenues, and (ii) all rights to receive the same whether in the form of accounts receivable, contract rights, chattel paper, instruments, general intangibles of a Member and the proceeds

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thereof, the proceeds of any insurance coverage on and condemnation awards in respect of a Member’s facilities or any gain on the sale or other disposition of property by a Member; and (iii) all of the foregoing, whether now existing or hereafter coming into existence and whether now owned or hereafter acquired by a Member.

“Guaranty” means all loan commitments and all obligations of any Member guaranteeing in any manner whatever, whether directly or indirectly, any obligation of any other Person which would, if such other Person were a Member, constitute Indebtedness.

“Holder” means the registered owner of any Obligation in registered form or the bearer of any Obligation in coupon form which is not registered or is registered to bearer.

“Income Available for Debt Service” means, with respect to the Obligated Group, as to any period of time, the excess of revenues over expenses (or, in the case of for-profit Members, net income after taxes) of the Obligated Group for such period, to which shall be added depreciation, amortization and interest, all as determined in accordance with GAAP, provided that no such determination shall include any gain or loss resulting from (i) the extinguishment of Indebtedness, (ii) any disposition of capital assets not made in the ordinary course of business or any revenue of an Affiliate which is not a Member, (iii) any one-time charge in connection with a development project that has been abandoned by the Obligated Group, (iv) any gain or loss resulting from changes in the valuation of Indebtedness, investment securities or any Interest Rate Agreement and any non-cash termination value of any Interest Rate Agreement, (v) the application of changes in accounting principles, (vi) any other extraordinary or non-recurring losses or gains, or (vii) any other non-cash revenue or expense items. For purposes of this definition, revenues shall include (1) resident service revenues, (2) other operating revenues, (3) non-operating revenues or contributions (other than restricted contributions, income derived from the sale or other disposition of assets not in the ordinary course of business or any gain from the extinguishment of debt or other extraordinary item or earnings which constitute funded interest or earnings on amounts which are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness), and (4) Entrance Fees received minus (a) Entrance Fees amortized during such Fiscal Year, (b) Entrance Fees refunded to residents and (c) Initial Entrance Fees.

“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 GAAP, and (c) all obligations for the payment of money incurred or assumed by such Person (i) due and payable in all events or (ii) if incurred or assumed primarily to assure the repayment of money borrowed or credit extended, due and payable upon the occurrence of a condition precedent or upon the performance of work, possession of Property as lessee, rendering of services by others or otherwise; provided that Indebtedness shall not include Indebtedness of one Member to another Member, any Guaranty by any Member of Indebtedness of any other Member, the joint and several liability of any Member on Indebtedness issued by another Member, Interest Rate Agreements or any obligation to repay moneys deposited by patients or others with a Member as security for or as prepayment of the cost of patient care or any rights of residents of life care, elderly housing or similar facilities to Entrance Fees (whether amortized into income or not), endowment or similar funds deposited by or on behalf of such residents including, but not limited to, any deferred obligations for the refund or repayment of Entrance Fees, any rent, development, marketing, operating or other fees that have been deferred from the year in which they were originally due as a result of deferral or subordination.

“Independent Consultant” or “Consultant” means a firm (but not an individual) which (1) is in fact independent of and has no relationship with the Corporation or a Member other than as provided within the scope of a consulting engagement including, but not limited to, subparagraphs (2) and (3)

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below, (2) does not have any direct financial interest or any material indirect financial interest in any Member or any Affiliate and (3) is not connected with any Member or any Affiliate as an officer, employee, trustee, partner, director or person performing similar functions, and designated by the Obligated Group Representative, qualified to pass upon questions relating to the financial affairs of facilities of the type or types operated by the Obligated Group and having a favorable reputation for skill and experience in the financial affairs of such facilities it being understood that an arm’s length contract between Greystone Development Company II, LP or its successor or any other firm and any Member for the performance of consulting, accounting, investment banking or financial analysis or other services is not regarded as creating any such disqualifying interest or employee relationship.

“Independent Living Units” means the newly-constructed independent living units (excluding units designated “catered living units” which have reduced Entrance Fee levels) that are part of the Project.

“Industry Restrictions” means federal, state or other applicable governmental laws or regulations or general industry standards or general industry conditions placing restrictions and limitations on the rates, fees and charges to be fixed, charged and collected by the Members.

“Initial Entrance Fees” means Entrance Fees received upon the initial occupancy of any Independent Living Units (including any such fees collected for the purpose of obtaining a parking space) not previously occupied.

“Initial Manager” means GMSC Idaho, LLC or any successor thereto.

“Initial Testing Date” means the earlier of (a) the last day of the first full Fiscal Year after Stable Occupancy for the Project has been achieved, or (b)September 30, 2020.

“Insurance Consultant” means a person or firm (which may be an insurance broker or agent of a Member) who is not, and no member, director, officer or employee of which is, an officer or employee of any Member or any Affiliate, designated by the Obligated Group Representative and qualified to survey risks and to recommend insurance coverage for hospitals, health-related facilities and services and organizations engaged in such operations.

“Interest Rate Agreement” means an interest rate exchange, hedge or similar agreement, expressly identified in an Officer’s Certificate of the Corporation 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 under the Master Indenture.

“Interim Indebtedness” means Long-Term Indebtedness with a final maturity 60 months or less from the date of incurrence, certified in an Officer’s Certificate filed with the Master Trustee to have been incurred in anticipation of refinancing with the proceeds of other Long-Term Indebtedness other than Interim Indebtedness prior to the final maturity thereof.

“Land” means, for purposes of the Deed of Trust, all of the real property located in the County of Ada, State of Idaho, described in the Deed of Trust, together with all of the Corporation’s right, title and interest in and to minerals, oil, gas and other hydrocarbon substances on, in or under such real property, and all easements and other rights now or hereafter made appurtenant thereto and all additions and accretions thereto.

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“Leases” means, for purposes of the Deed of Trust, all existing and future leases, Residency Agreements, and/or agreements for use and occupancy of and other agreements affecting the use, enjoyment or occupancy of all or any portion of the Land and/or the Building, now or hereafter entered into, whether written or oral, including without limitation any security deposits, advance rentals and other deposits or payments of a similar nature, including all extensions, renewals and subleases and all existing or future guaranties of lessees’ payment or performance under the leases and agreements.

“Lien” means any mortgage or pledge of, or security interest in, or lien or encumbrance on, any Property, excluding Liens applicable to Property in which any Member has only a leasehold interest unless the Lien is with respect to such leasehold interest.

“Liquidity Requirement” shall have the meaning summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIQUIDITY COVENANT” herein.

“Liquidity Support Agreements” means the Sponsor Liquidity Support Agreement and the Greystone Liquidity Support Agreement.

“Liquidity Support Funds” means the American Baptist Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund.

“Liquidity Support Repayment Obligations” means any amounts which the Corporation is obligated, on a subordinated basis, to repay to ABHOW or American Baptist Properties under the Sponsor Liquidity Support Agreement or to the Greystone Liquidity Provider under the Greystone Liquidity Support Agreement.

“Long-Term Debt Service Coverage Ratio” means, for any period of time, the ratio determined by dividing Income Available for Debt Service by Maximum Annual Debt Service.

“Long-Term Indebtedness” means Indebtedness having an original maturity greater than one year or renewable at the option of a Member for a period greater than one year from the date of original incurrence or issuance thereof unless, by the terms of such Indebtedness, no Indebtedness is permitted to be outstanding thereunder for a period of at least 30 consecutive days during each calendar year; provided, however, that fees and other amounts due to an Affiliate of a Member for money borrowed, credit extended or services rendered, the payment of which are deferred or not yet payable at the time of calculation and which are subordinate to payments due on all Obligations issued under the Master Indenture in accordance with written agreements between such Affiliate and a Member shall not be considered Long-Term Indebtedness.

“Management Agreement” means the Amended and Restated Management and Marketing Services Agreement dated as of October 25, 2013, as amended, between the Corporation and the Initial Manager.

“Management Fees” means all fees payable to a manager of the Project or any other continuing care retirement or senior living community owned by the Corporation for services performed for managing the day-to-day operations of such community.

“Marketing Requirements” shall have the meaning summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – MARKETING COVENANT” herein.

“Master Indenture” means the Master Trust Indenture dated as of January 1, 2014, by and between the Corporation, as the initial Member of the Obligated Group, and the Master Trustee, as

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supplemented and amended by the First Supplemental Master Indenture, and as it may from time to time be further amended or supplemented in accordance with the terms thereof.

“Master Trustee” means U.S. Bank National Association, a national banking association organized and existing under and by virtue of the laws of the United States of America and, subject to the limitations contained in the Master Indenture, any other corporation or association which may be co-trustee with the Master Trustee and any successor or successors to said trustee or co-trustee in the trusts created under the Master Indenture.

“Maximum Annual Debt Service” means the greatest amount of Annual Debt Service becoming due and payable in any Fiscal Year including the Fiscal Year in which the calculation is made or any subsequent Fiscal Year; provided, however, that for the purposes of computing Maximum Annual Debt Service:

(a) There shall be included in the Long-Term Indebtedness of any Member, 20% of the annual principal and interest requirements with respect to the debt of any Person subject to a Guaranty by such Member. If any Member has been required by reason of its Guaranty to make a payment in respect of another Person’s Indebtedness within the immediately preceding two Fiscal Years, all of the annual principal and interest requirements with respect to the debt subject to the Guaranty shall be included in Long-Term Indebtedness.

(b) For any Long-Term Indebtedness for which a binding commitment, letter of credit or other credit arrangement providing for the extension of such Indebtedness beyond its original maturity date exists, the computation of Maximum Annual Debt Service shall, at the option of the Obligated Group Representative, be made on the assumption that such Long-Term Indebtedness will be amortized in accordance with such credit arrangement.

(c) For any Balloon Indebtedness, Put Indebtedness and Interim Indebtedness, the computation of Maximum Annual Debt Service shall, at the option of the Obligated Group Representative, assume that such Long-Term Indebtedness is to be amortized over a period specified by the Obligated Group Representative up to 30 years in duration, beginning on the date of issuance or such earlier date as may be specified by the Obligated Group Representative, assuming level debt service and a rate of interest equal to the Projected Rate; provided, however, that if the Projected Rate cannot be determined the rate shall be assumed to be a fixed rate of interest equal to the most recently published Bond Buyer 30-year Revenue Bond Index plus 100 basis points (1.0% per annum) or a similar index.

(d) For any Extendable Indebtedness, the computation of Maximum Annual Debt Service shall, at the option of the Obligated Group Representative, assume that such Extendable Indebtedness is to be amortized over the period until its stated maturity, assuming level debt service and a fixed rate of interest equal to the current rate of interest on such Extendable Indebtedness.

(e) If interest on Long-Term Indebtedness is payable pursuant to a variable interest rate formula (including Balloon Indebtedness, Put Indebtedness and Interim Indebtedness, if the Obligated Group Representative does not choose to use paragraph (c) above, and including Extendable Indebtedness, if the Obligated Group Representative does not choose to use paragraph (d) above), the interest rate on such Long-Term Indebtedness for periods when the actual interest rate cannot yet be determined shall be assumed to be a fixed rate of interest equal to the most recently published average of the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index over the preceding ten years (or a similar index if unavailable), plus the cost of any credit enhancement fees and remarketing fees, if any.

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(f) Anything in the Master Indenture to the contrary notwithstanding, any portion of any Indebtedness of any Member for which an Interest Rate Agreement has been obtained by such Member shall be deemed to bear interest for the period of time that such Interest Rate Agreement is in effect at a net rate which takes into account the interest payments made by such Member on such Indebtedness and the payments made or received by such Member on such Interest Rate Agreement; provided that the long-term credit rating of the provider of such Interest Rate Agreement (or any guarantor thereof) is in one of the three highest rating categories of any Rating Agency (without regard to any refinements of gradation of rating category by numerical modifier or otherwise) or is at least as high as that of the Obligated Group.

“Member” or “Member of the Obligated Group” means any Person who is designated as a Member of the Obligated Group pursuant to the terms and conditions of the Master Indenture.

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative.

“Mortgaged Property” means the Property subject to the Deed of Trust from time to time, including the Land, the Building, the Leases, the Rents and the other Property described in the Deed of Trust, including after-acquired Property.

“Non-Recourse Indebtedness” means any Indebtedness the liability for which is effectively limited to Property, Plant and Equipment (other than the land) and the income therefrom, with no recourse, directly or indirectly, to any other Property of any Member.

“Obligated Group” means all Members.

“Obligated Group Representative” means the Corporation or such other Member as may have been designated pursuant to written notice to the Master Trustee executed by all of the Members.

“Obligation” means any obligation of the Obligated Group issued under the Master Indenture, as a joint and several obligation of each Member, which may be in any form set forth in a Related Supplement, including, but not limited to, bonds, obligations, debentures, reimbursement agreements, loan agreements or leases. Reference to a “Series of Obligations” or to “Obligations of a Series” means Obligations or series of Obligations issued pursuant to a single Related Supplement.

“Obligation No. 1” means Direct Note Obligation No. 1 dated January 28, 2014 issued to the Idaho Health Facilities Authority under the First Supplemental Master Indenture to secure the Series 2014 Bonds.

“Occupancy Certificate” means the initial, temporary or final certificate of occupancy issued by the appropriate governmental entities having jurisdiction over the Project permitting occupancy of the Project.

“Occupancy Requirements” shall have the meaning summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OCCUPANCY COVENANT” herein.

“Occupied” means (i) with respect to any Independent Living Unit, any unit for which a Residency Agreement has been executed, and related Entrance Fee has been paid or a promissory note for

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such Entrance Fee has been executed and the occupant of such Independent Living Unit continues to reside therein or (ii) with respect to any other type of unit/bed, physical possession of such unit/bed by a resident (other than a resident temporarily transferred from another unit/bed within the community). If two or more units have been combined into a single unit, all such units shall continue to be considered separate units for the purpose of calculating the percentage of units occupied.

“Officer’s Certificate” means a certificate signed by the Authorized Representative of the Obligated Group Representative.

“Operating Reserve Fund” means the fund by that name established pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OPERATING RESERVE FUND” herein.

“Opinion of Bond Counsel” means an opinion of nationally recognized municipal bond counsel, which opinion may be based upon a ruling or rulings of the Internal Revenue Service.

“Opinion of Independent Counsel” means an opinion in writing signed by an attorney or firm of attorneys, duly admitted to practice law before the highest court of any state and, without limitation, may include independent legal counsel for the Obligated Group Representative.

“Outstanding,” when used with reference to Indebtedness, means, as of any date of determination, all Indebtedness theretofore issued or incurred and not paid and discharged other than (a) Obligations theretofore cancelled by the Master Trustee or delivered to the Master Trustee for cancellation, (b) Obligations in lieu of which other Obligations have been authenticated and delivered or have been paid pursuant to the provisions of a Related Supplement regarding mutilated, destroyed, lost or stolen Obligations unless proof satisfactory to the Master Trustee has been received that any such Obligation is held by a bona fide purchaser, (c) any Obligation held by any Member, and (d) Indebtedness deemed paid and no longer outstanding pursuant to the terms thereof; provided, however, that if two or more obligations which constitute Indebtedness represent the same underlying obligation (as when an Obligation secures an issue of Related Bonds and another Obligation secures repayment obligations to a bank under a letter of credit which secures such Related Bonds) for purposes of the various financial covenants contained in the Master Indenture, but only for such purposes, only one of such Obligations shall be deemed Outstanding. Interest Rate Agreements shall not be deemed Outstanding as they are not deemed Indebtedness.

“Permitted Encumbrances” shall have the meaning and include:

(a) any Lien on the Property of any Member permitted under the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ENCUMBRANCES” herein;

(b) the Deed of Trust and any other security agreement or document securing the Master Trustee or in connection with the issuance of the Series 2014 Bonds, and any other Lien on Property if such Lien equally and ratably secures all of the Obligations and only the Obligations;

(c) sale/saleback or lease/leaseback or similar arrangements in connection with the issuance of Related Bonds; and any leases, licenses or similar rights to use Property whereunder a Member is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would be obtained in a comparable arm’s-length transaction;

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(d) Residency Agreements and leases, licenses or similar use agreements which relate to Property of the Obligated Group which is of a type that is customarily the subject of such leases, licenses or use agreements such as office space for physicians and educational institutions, food service facilities, gift shops, commercial, beauty shop, banking, parking for residents, other similar specialty services, pharmacy and similar departments or employee rental apartments;

(e) Liens arising by reason of good faith deposits by any Member in the ordinary course of business (for other than borrowed money), deposits by any Member to secure public or statutory obligations or deposits to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges;

(f) any Lien arising by reason of deposits with, or the giving of any form of security to, any 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 worker’s compensation, unemployment insurance, pension or profit-sharing plans or other similar social security plans, or to share in the privileges or benefits required for companies participating in such arrangements;

(g) any judgment Lien against any Member so long as such judgment is being contested in good faith and execution thereon is stayed;

(h) rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law affecting any Property, to:

(1) terminate such right , power, franchise, grant, license, or permit, provided, that the exercise of such right would not materially impair the use of such Property or materially and adversely affect the value thereof, or

(2) purchase, condemn appropriate or recapture, or designate a purchaser of, the Property or any portion thereof;

(i) any Liens on any of the Property for taxes, assessments, levies, fees, water and sewer rents, and other governmental and similar charges and any Liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or materials furnished in connection with such Property, which are not due and payable or which are not delinquent or which, the amount or validity of which, are being contested and execution thereon is stayed or, with respect to Liens of mechanics, materialmen, laborers, suppliers or vendors, have been due for less than 90 days;

(j) utility, access and other easements, rights-of-way, servitudes, restrictions, oil, gas, or other mineral reservations and other minor defects, encumbrances, and irregularities in the title to any of the Property which do not materially impair the use of such Property or materially and adversely affect the value thereof;

(k) rights reserved to or vested in any municipality or public authority to control or regulate any of the Property or to use such Property in any manner, which rights do not materially impair the use of such Property or materially and adversely affect the value thereof, to the extent that it affects title to any Property;

(l) landlord’s Liens;

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(m) Liens on moneys deposited with any Member as security for or as prepayment for the cost of patient care;

(n) Liens on Property received by any Member through gifts, grants or bequests, such Liens being due to restrictions on such gifts, grants or bequests or the income thereon;

(o) Liens on Property due to rights of third-party payors for recoupment of amounts paid to any Member;

(p) purchase money security interest; security interest existing on any of the Property prior to the time of its acquisition through purchase, merger, consolidation or otherwise, or placed upon Property to secure a portion of the purchase price thereof; or lessee’s interest in leases required to be capitalized in accordance with GAAP;

(q) any Lien described in Exhibit A to the Master Indenture which is existing on the date of execution thereof provided that no such Lien (or the amount of Indebtedness secured thereby) may be increased, extended, renewed or modified to apply to any Property of any Member not subject to such Lien on such date, unless such Lien as so extended, renewed or modified otherwise qualifies as a Permitted Encumbrance under the Master Indenture;

(r) Liens on funds or securities posted in a collateral account held by a counterparty to an Interest Rate Agreement, or by a third party custodian therefor; and

(s) Liens on Excluded Property.

“Person” means any natural person, firm, joint venture, association, partnership, business trust, corporation, limited liability company, public body, agency or political subdivision thereof or any other similar entity.

“Primary Obligor” means that Member or those Members primarily obligated to make Required Payments with respect to any particular Obligation as set forth in a Related Supplement.

“Principal Property” means that portion of the Property, Plant and Equipment, wherever situated and whether now owned or hereafter acquired that: (a) is material and integral to or a material and integral part of the primary operations of a Member, and (b) is so designated pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – DESIGNATION OF PRINCIPAL PROPERTY” below.

“Project” means the acquisition, construction, expansion, remodeling, renovation, furnishing and equipping of the Obligated Group’s facilities financed, directly or indirectly, with the proceeds of the Series 2014 Bonds.

“Projected Rate” means the projected yield at par of an obligation as set forth in the report of an Independent Consultant. Such report shall state that in determining the Projected Rate such Independent Consultant reviewed the yield evaluations at par of no fewer than three obligations selected by such Independent Consultant, the interest on which is entitled to the exemption from federal income tax afforded by Section 103(a) of the Code or any successor thereto (or, if it is not expected that it will be reasonably possible to issue such tax-exempt obligations, then obligations the interest on which is subject to federal income taxation) which obligations such Independent Consultant states in its report are reasonable comparators for utilizing in developing such Projected Rate and which obligations: (i) were outstanding on a date selected by the Independent Consultant which date so selected occurred during the

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90-day period preceding the date of the calculation utilizing the Projected Rate in question, (ii) to the extent practicable, are obligations of Persons engaged in operations similar to those of the Obligated Group and having a credit rating similar to that of the Obligated Group, (iii) are not entitled to the benefits of any credit enhancement, including, without limitation, any letter or line of credit or insurance policy, and (iv) to the extent practicable, have a remaining term and amortization schedule substantially the same as the obligation with respect to which such Projected Rate is being developed.

“Property” means any and all rights, titles and interests in and to any and all assets of the Obligated Group, whether real or personal, tangible or intangible and wherever situated, as shown on the most recent audited financial statements for the Obligated Group for the most recent Fiscal Year for which they are available. Property shall not include the land, leasehold interests, buildings, fixtures or equipment constituting Excluded Property.

“Property, Plant and Equipment” means any Property of the Obligated Group which constitutes property, plant and equipment in accordance with GAAP.

“Put Indebtedness” means Long-Term Indebtedness which is (a) payable or required to be purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner thereof, prior to its stated maturity date or (b) payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund, other than by reason of an event of taxability with respect to any Related Bond or other than by reason of acceleration upon the occurrence of an Event of Default.

“Qualified Investments” means and includes any of the following:

(a) Government Obligations;

(b) debt obligations which are (i) issued by any state or political subdivision thereof or any agency or instrumentality of such state or political subdivision, and (ii) at the time of purchase, rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency;

(c) any bond, debenture, note, participation certificate or other similar obligation issued by a government sponsored agency (such as the Federal National Mortgage Association, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation 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 its affiliates, which have a rating on their short-term certificates of deposit on the date of purchase in one of the two highest short-term rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency, and which mature not more than 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;

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(f) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by a corporation which are, at the time of purchase, rated by any Rating Agency in any of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise);

(g) investment agreements with banks that at the time such agreement is executed are rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) assigned by any Rating Agency or investment agreements with non-bank financial institutions, provided that (1) all of the unsecured, direct long-term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency at the time such agreement is executed in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for obligations of that nature; or (2) if such non-bank financial institution and any related guarantor have no outstanding long-term debt that is rated, all of the short-term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency in one of the two highest rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) assigned to short term indebtedness by any Rating Agency. If such non-bank financial institution and any guarantor do not have any short-term or long-term debt, but do have a rating in one of the two highest rating categories assigned by any Rating Agency (without regard to any refinement or gradation of rating category by numerical modifier or otherwise), then investment agreements with such non-bank financial institutions will be permitted;

(h) asset-backed securities, commercial mortgage-backed securities, or mortgage-backed securities which are, at the time of purchase, rated by any Rating Agency in any of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise);

(i) repurchase agreements with respect to and secured by Government Obligations or by obligations described in clauses (b) and (c) above, which agreements may be entered into with a bank (including without limitation a Related Bond Trustee or the Master Trustee or their affiliates), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Master Trustee or a custodial agent of the Master Trustee has possession of the collateral and that the collateral is, to the knowledge of the Master Trustee, free and clear of third party claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are valued no less frequently than monthly, (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 (as applicable) in the custody of the Master Trustee or Master Trustee’s agent;

(j) investments in a money market fund, which may be funds of a Related Bond Trustee or the Master Trustee or an affiliate thereof, rated (at the time of purchase) in the highest rating category for this type of investment by any Rating Agency; and

(k) 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 whose investments consist solely of Qualified Investments as defined in paragraphs (a) through (j) above, including money market mutual funds from which the Master Trustee, Related Bond Trustee or its affiliates derive a fee for investment advisory or other services to the fund.

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The Master Trustee shall be entitled to assume that any investment which at the time of purchase is a Qualified Investment remains a Qualified Investment thereafter, absent receipt of written notice or information to the contrary.

For the purposes of this definition, obligations issued or held in the name of the Master Trustee (or in the name of a Government Issuer and payable to 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, as applicable.

“Rating Agency” means Moody’s, Standard & Poor’s or Fitch and their respective successors and assigns.

“Related Bond Indenture” means any indenture, trust agreement, bond resolution or other comparable instrument pursuant to which a series of Related Bonds are issued or executed and delivered.

“Related Bond Issuer” means the Government Issuer of any issue of Related Bonds, including the Idaho Health Facilities Authority.

“Related Bond Trustee” means the trustee and its successors in the trusts created under any Related Bond Indenture, and if there is no such trustee, means the Related Bond Issuer.

“Related Bonds” means any revenue bonds, certificates of participation or other obligations issued or executed and delivered by any Government Issuer, pursuant to a single Related Bond Indenture, the proceeds of which are loaned or otherwise made available to the Corporation or a Member in consideration of the execution, authentication and delivery of an Obligation or Obligations to or for the order of such Government Issuer.

“Related Loan Document” means any document or documents (including, without limitation, any loan agreement, lease, sublease or installment sales contract) pursuant to which any proceeds of any Related Bonds are advanced to any Member (or any Property financed or refinanced with such proceeds is loaned, leased, subleased or sold to a Member).

“Related Supplement” means an indenture supplemental to, and authorized and executed pursuant to the terms of, the Master Indenture.

“Rents” means, for purposes of the Deed of Trust, all present and future rents, issues, profits, royalties, income and other benefits derived from the Leases, the Land and/or the Building (in any form, including cash, notes, contracts, contract rights, chattel paper, instruments or documents), including: all security deposits, fixed, base, minimum, advance, additional, percentage and/or deficiency rents; all payments in respect of parking, maintenance, tax, insurance and other property expense contributions or payments; and all proceeds from the sale or other disposition of the Leases; liquidated damages following default in any Lease including all payments resulting from the rejection of any Lease in a bankruptcy or other insolvency proceeding; all proceeds payable to the Corporation under any policy of insurance covering loss of rents; and all other rights and claims which the Corporation may have against any lessee or occupant of the Land and/or the Building.

“Required Information Recipients” means the Master Trustee, B.C. Ziegler and Company, as the initial purchaser of the Series 2014 Bonds, the Idaho Health Facilities Authority (for so long as the Series 2014 Bonds are outstanding), each Related Bond Trustee, EMMA or any other nationally recognized municipal securities information repositories identified by the Securities and Exchange Commission.

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“Required Payment” means any payment whether at maturity, by acceleration, upon proceeding for redemption or otherwise, required to be made by any Member under the Master Indenture, the First Supplemental Master Indenture, any Related Supplement, any Obligation or otherwise in connection with a Financing, including, but not limited to, the payment of principal, interest and premium and lease payments.

“Reserved” means an Independent Living Unit (a) which is Occupied or (b) for which a Member of the Obligated Group has received a deposit equal to not less than ten percent (10%) of the Entrance Fee related to such Independent Living Unit or some other amount required by the Corporation in order to hold such Independent Living Unit for a prospective resident. If two or more units have been combined into a single unit, all such units continue to be considered separate units for the purpose of determining the percentage of units Reserved.

“Residency Agreement” means any written agreement or contract, as amended from time to time, between a Member and a resident or potential resident of a Facility giving the resident certain rights of occupancy in the Facility, including without limitation, independent living units, assisted living units, memory support units, nursing beds or specialty care beds and providing for certain services to such resident including any reservation agreement or other agreement or contract reserving rights of occupancy.

“Responsible Officer” means, with respect to the Master Trustee, the chairman and vice chairman of the board of directors, the chairman of the executive committee of the board of directors, the vice chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, any assistant vice president, the cashier, any assistant cashier, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer, any assistant trust officer or any other officer of the Master Trustee customarily performing functions similar to those performed by the persons above-designated or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject. With respect to the Corporation, “Responsible Officer” means the president, chief executive officer, chief financial officer or any executive vice president of the Corporation.

“Rule 15c2-12” means Rule 15c2-12 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended, or any subsequent rule replacing such Rule.

“Seniority” means Seniority, Inc., a California corporation, or any successor thereto.

“Seniority Agreement” means the Sales and Marketing Oversight Services Agreement dated February 1, 2008, as amended, between the Corporation and Seniority.

“Seniority Fees” means the fees payable to Seniority under the Seniority Agreement.

“Series 2014 Bond Indenture” means the Bond Indenture of Trust dated as of January 1, 2014 between the Idaho Health Facilities Authority and the Series 2014 Bond Trustee.

“Series 2014 Bond Trustee” means U.S. Bank National Association.

“Series 2014 Bonds” or the “Bonds” means, collectively, the Series 2014A Bonds, the Series 2014B-1 Bonds, the Series 2014B-2 Bonds, the Series 2014B-3 Bonds and the Series 2014C Bonds.

“Series 2014A Bonds” means the $80,685,000 Revenue Bonds, Series 2014A (The Terraces of Boise Project).

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“Series 2014B-1 Bonds” means the $4,875,000 Revenue Bonds, Series 2014B-1 (Tax Exempt Mandatory Paydown Securities (TEMPS-75SM)) (The Terraces of Boise Project).



“Series 2014C Bonds” means the $1,750,000 Revenue Bonds, Series 2014C (Taxable Mandatory Paydown Securities (Taxable MPS) (The Terraces of Boise Project).

“Short-Term Indebtedness” means all Indebtedness having an original maturity less than or equal to one year and not renewable at the option of a Member for a term greater than one year.

“Sponsor Liquidity Support Agreement” means that Liquidity Support Agreement dated as of January 1, 2014 among the Corporation, the Master Trustee, the Bond Trustee, ABHOW and American Baptist Properties.

“Stable Occupancy” means, (i) with respect to the Independent Living Units financed with the proceeds of the Series 2014 Bonds and included in the Project, the date on which the total percentage of such Independent Living Units which are Occupied is equal to or greater than 95%, calculated as of the last day of any fiscal quarter, (ii) with respect to all living units financed with the proceeds of the Series 2014 Bonds and included in the Project, the date on which the total percentage of all such living units Occupied is equal to or greater than 94%, calculated as of the last day of any fiscal quarter, and (iii) with respect to any Capital Addition financed with Indebtedness for which the Master Trustee was furnished an Independent Consultant’s report pursuant to the Master Indenture (or, if no Independent Consultant’s report was required by the Master Indenture, an Officer’s Certificate), the percentage of Occupied units in that Capital Addition at the level reflected as substantially at the sustainable capacity for which such Capital Addition was designed or “stabilized occupancy” for that Capital Addition in the Independent Consultant’s report or the Officer’s Certificate.

“Standard & Poor’s” or “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Standard & Poor’s” or “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative.

“Subordinated Indebtedness” means (i) Affiliate Related Subordinated Indebtedness, (ii) the Liquidity Support Repayment Obligations, and (iii) Indebtedness incurred by a Member which by its terms is specifically subordinated with respect to any security therefor and with respect to right of payment to all Outstanding Obligations and to all other obligations of a Member not containing such subordination provisions.

“Supplemental Liquidity Support Fund” means the fund created pursuant to the Master Indenture as described under the heading “SUPPLEMENTAL LIQUIDITY SUPPORT FUND” below.

“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code and

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exempt from federal income taxation under Section 501(a) of the Code or corresponding provisions of federal income tax laws from time to time in effect.

“Total Operating Revenues” means the sum of total unrestricted operating revenues as shown on the consolidated or combined financial statements of the Obligated Group, determined in accordance with GAAP.

“United States Government Obligations” means non-callable direct obligations of, or obligations the timely payment of the principal of and interest on which is fully guaranteed by, the United States of America, including obligations issued or held in book entry form on the books of the Department of Treasury of the United States of America.

“Working Capital Fund” means the fund by that name established pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – WORKING CAPITAL FUND” herein.

“Written Request” means a request, in writing, executed by an Authorized Representative of the Obligated Group Representative.

SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE

GENERAL

The Master Indenture authorizes the Corporation, as Obligated Group Representative, and each Member to issue Obligations which are full and unlimited obligations of the Obligated Group. The Obligations are joint and several obligations of the current and future Members of the Obligated Group.

Set forth below is a summary of certain provisions of the Master Indenture. The summary is not comprehensive and reference is made to the Master Indenture for a complete recital of its terms.

AUTHORIZATION OF OBLIGATIONS

Each Member authorizes to be issued from time to time Obligations or series of Obligations, without limitation as to amount, except as provided in the Master Indenture or as may be limited by law, and subject to the terms, conditions and limitations established under the Master Indenture and in any Related Supplement.

PAYMENT OF PRINCIPAL AND INTEREST

Each Member jointly and severally covenants and agrees to pay or cause to be paid promptly all Required Payments at the place, on the dates and in the manner provided in the Master Indenture, in any Related Supplement and in the Obligations whether at maturity, upon proceedings for redemption, by acceleration or otherwise, and that each Member shall faithfully observe and perform all of the conditions, covenants and requirements of the Master Indenture, any Related Supplement and any Obligation, and that the time of such payment and performance is of the essence concerning the obligations under the Master Indenture.

PLEDGE OF GROSS REVENUES

Each Member covenants in the Master Indenture that, so long as any Obligation remains Outstanding, all of the Gross Revenues of the Obligated Group shall be deposited as soon as practicable

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upon receipt in a fund (in one or more accounts at such banking institution or institutions as the Obligated Group Representative shall from time to time designate in writing to the Master Trustee for such purpose (the “Depository Bank(s)”)) designated as the “Gross Revenue Fund” which the Members shall establish and maintain, subject to the provisions of the Master Indenture summarized in the next paragraph. Subject only to the provisions of the Master Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Master Indenture, each Member pledges, and to the extent permitted by law, grants a security interest to the Master Trustee in, the Gross Revenue Fund and all of the Gross Revenues of the Obligated Group to secure the payment of Required Payments and the performance by the Members of their other obligations under the Master Indenture; provided, however, that each Member may create, assume or suffer to exist Permitted Encumbrances. Each Member shall execute a depository account control agreement with each Depository Bank, and shall execute and deliver such other documents as may be necessary or reasonably requested by the Master Trustee in order to perfect or maintain as perfected such security interest or give public notice thereof.

Amounts in the Gross Revenue Fund may be used and withdrawn by any Member at any time for any lawful purpose, except as provided in the Master Indenture. If any Member is delinquent for more than one Business Day in the payment of any Required Payment with respect to any Obligation issued pursuant to a Related Supplement, the Master Trustee shall notify the Obligated Group Representative and the Depository Bank(s) of such delinquency, and, unless such Required Payment is paid, or provision for payment is duly made in a manner satisfactory to the Master Trustee in its sole discretion, within five days after receipt of such notice, the Obligated Group Representative or the appropriate Member shall cause the Depository Bank(s) to transfer the Gross Revenue Fund to the name and credit of the Master Trustee. The Master Trustee shall continue to hold the Gross Revenue Fund until amounts on deposit in said fund are sufficient to pay in full, or have been used to pay in full, all Required Payments in default and all other Events of Default actually known to a Responsible Officer of the Master Trustee shall have been made good or cured to the satisfaction of the Master Trustee in its sole discretion or provision deemed by the Master Trustee in its sole discretion to be adequate shall have been made therefor, whereupon the Gross Revenue Fund (except for the Gross Revenues required to make such payments or cure such defaults) shall be returned to the name and credit of the appropriate Members. During any period that the Gross Revenue Fund is held in the name and to the credit of the Master Trustee, the Master Trustee shall use and withdraw amounts in said fund from time to time to make Required Payments as such payments become due (whether by maturity, redemption, acceleration or otherwise), and, if such amounts shall not be sufficient to pay in full all such payments due on any date, then to the payment of debt service on Obligations ratably, without any discrimination or preference, and to such other payments in the order which the Master Trustee, in its discretion, shall determine to be in the best interests of the Holders, without discrimination or preference. During any period that the Gross Revenue Fund is held in the name and to the credit of the Master Trustee, the Members shall not be entitled to use or withdraw any of the Gross Revenues of the Obligated Group unless and to the extent that the Master Trustee at its sole discretion so directs for the payment of current or past due operating expenses of the Members; provided, however, that the Members shall be entitled to use or withdraw any amounts in the Gross Revenue Fund which do not constitute Gross Revenues of the Obligated Group. Each Member agrees to execute and deliver all instruments as may be required to implement the provisions of the Master Indenture summarized under this subheading. Each Member further agrees that a failure to comply with the terms of the Master Indenture summarized under this subheading shall cause irreparable harm to the Holders and shall entitle the Master Trustee, with or without notice, to take immediate action to compel the specific performance of the obligations of the Members as provided in the Master Indenture.

THE OBLIGATED GROUP

Membership in the Obligated Group. Additional Members may be added to the Obligated Group from time to time, provided that prior to such addition, the Master Trustee receives:

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(a) a copy of a resolution of the proposed new Member which authorizes the execution and delivery of the Master Indenture or a Related Supplement and compliance with the terms of the Master Indenture;

(b) a Related Supplement pursuant to which the proposed new Member: (1) agrees to become a Member; (2) agrees to be bound by the terms and restrictions imposed by the Master Indenture and Indebtedness represented by the Obligations; (3) irrevocably appoints the Obligated Group Representative as its agent and attorney-in-fact and grants to the Obligated Group Representative full power to execute Related Supplements authorizing the issuance of Obligations or series of Obligations; (4) designates any or all of its Property as Principal Property consistent with the determination of the Governing Body of the Obligated Group Representative that such Property is Principal Property, pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – DESIGNATION OF PRINCIPAL PROPERTY” below; and (5) designates any Property as Excluded Property pursuant to the provisions of the Master Indenture summarized under the heading “ADDITIONS TO EXCLUDED PROPERTY” below;

(c) an Opinion of Independent Counsel to the proposed new Member, which opinion states that the proposed new Member has taken all necessary action to become a Member, and upon execution of a Related Supplement, such proposed new Member will be bound by the terms of the Master Indenture and to the effect that (x) the instrument described in paragraph (b) above has been duly authorized, executed and delivered and constitutes a legal, valid and binding agreement of proposed new Member, 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 proposed new Member to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status;

(d) a description of any existing Long-Term Indebtedness of the proposed new Member and any Indebtedness which the proposed new Member plans to incur simultaneously with the execution of the Related Supplement;

(e) an Officer’s Certificate (i) showing that the Obligated Group could issue at least one dollar of Long-Term Indebtedness pursuant to the provisions of the Master Indenture summarized in clauses (a)(2), (a)(3) or (a)(4) under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ADDITIONAL INDEBTEDNESS” above, immediately following the addition of such Member to the Obligated Group, or (ii) (a) demonstrating that an Event of Default under the Master Indenture will be cured if the new Member becomes a Member of the Obligated Group; or (b) demonstrating that the Long-Term Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which audited financial statements are available would have been equal to or greater than 1.20:1 assuming entry of the new Member occurred at the beginning of the first of such two most recent Fiscal Years; and (iii) demonstrating that immediately after the addition of such Member to the Obligated Group, the Obligated Group (a) would be in compliance with the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIQUIDITY COVENANT” or (b) would have a greater number of Days Cash on Hand or a greater Cash to Indebtedness Ratio (whichever is applicable) than immediately prior to the addition of such Member to the Obligated Group based on the most recently quarterly financial statements delivered to the Master Trustee;

(f) an Opinion of Bond Counsel to the effect that the addition of such Member: (1) under then existing law, would not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable on such Bond otherwise entitled to such exemption; and (2) will not cause the Master Indenture or the Obligations issued under the Master Indenture to be

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subject to registration under federal securities laws or the Trust Indenture Act of 1939, as amended (or, that any such registration, if required, has occurred);

(g) an Officer’s Certificate to the effect that no Member, immediately after the addition of such new Member, would be in default in the performance or observance of any covenant or condition of the Master Indenture;

(h) if any Related Bonds were rated by a Rating Agency prior to the proposed new Member becoming a Member of the Obligated Group, written evidence from such Rating Agency that, after such proposed new Member becomes a Member, all Related Bonds will have a rating of at least “BBB-” (or an equivalent rating) from at least one Rating Agency; and

(i) such additional documentation as may be required by the Related Supplements.

Withdrawal from the Obligated Group. Any Member may withdraw from the Obligated Group, and be released from further liability or obligation under the provisions of the Master Indenture, provided that prior to such withdrawal, the Master Trustee receives:

(a) an Officer’s Certificate stating that immediately following withdrawal of such Member, no Member would be in default in the performance or observance of any covenant or condition of the Master Indenture;

(b) an Officer’s Certificate stating that such Member is not a party to any Related Loan Documents with respect to Related Bonds which remain outstanding;

(c) an Officer’s Certificate (i) showing that the Obligated Group could issue at least one dollar of Long-Term Indebtedness under clauses (a)(2), (3) or (4) under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ADDITIONAL INDEBTEDNESS” immediately following the withdrawal of such Member from the Obligated Group, or (ii)(a) demonstrating that an Event of Default under the Master Indenture will be cured if the Member withdraws from the Obligated Group, or (b) demonstrating that the Long-Term Debt Service Coverage Ratio of the Obligated Group for the most recent Fiscal Year for which audited financial statements are available would have been equal to or greater than 1.20:1 assuming withdrawal of such Member occurred at the beginning of the first of such two most recent Fiscal Years, and (iii) demonstrating that immediately after the withdrawal of such Member from the Obligated Group, the Obligated Group would (a) be in compliance with the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIQUIDITY COVENANT” or (b) have a greater number of Days Cash on Hand or a greater Cash to Indebtedness Ratio (whichever is applicable) than immediately prior to the withdrawal of such Member, based on the most recently quarterly financial statements delivered to the Master Trustee;

(d) an Opinion of Bond Counsel to the effect that the withdrawal of such Member, under then existing law, would not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable on such Bond to which such Bond would otherwise be entitled; and

(e) prior to such cessation there is delivered to the Master Trustee an opinion of Independent Counsel (which Counsel and opinion are not objected to by the Master Trustee) to the effect that the cessation by such Member of its status as a Member will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status; and

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(f) if any Related Bonds were rated by a Rating Agency prior to the Member withdrawing from the Obligated Group, evidence from such Rating Agency that after such Member withdraws from the Obligated Group all Related Bonds will have a rating of at least “BBB-” (or an equivalent rating) from at least one Rating Agency.

COVENANTS AS TO MAINTENANCE OF PROPERTIES, ETC.

Each Member, respectively, covenants and agrees:

(a) That it will operate and maintain its Principal Property in accordance with all valid and applicable governmental laws, ordinances, approvals and regulations including, without limitation, such zoning, sanitary, pollution and safety ordinances and laws and such rules and regulations thereunder as may be binding upon it; provided, however, that no Member shall be required to comply with any law, ordinance, approval or regulation as long as it shall in good faith contest the validity thereof. Each Member, respectively, further covenants and agrees that it will maintain and operate its Principal Property and all engines, boilers, pumps, machinery, apparatus, fixtures, fittings and equipment of any kind in or that shall be placed in any building or structure now or thereafter at any time constituting part of its Principal Property in good repair, working order and condition, and that it will from time to time make or cause to be made all needful and proper replacements, repairs, renewals and improvements so that the operations of such Member will not be materially impaired.

(b) That it will pay and discharge all applicable taxes, assessments, governmental charges of any kind whatsoever, water rates, meter charges and other utility charges which may be or have been assessed or which may have become liens upon the Principal Property and will make such payments or cause such payments to be made, respectively, in due time to prevent any delinquency thereon or any forfeiture or sale of the Principal Property or any part thereof, and, upon request, will furnish to the Master Trustee receipts for all such payments, or other evidences satisfactory to the Master Trustee; provided, however, that no Member shall be required to pay any tax, assessment, rate or charge as provided in the Master Indenture as long as it shall in good faith contest the validity thereof, provided that such Member shall have set aside reserves with respect thereto that, in the opinion of the Governing Body of the Obligated Group Representative, are adequate.

(c) That it will pay or otherwise satisfy and discharge all of its obligations and Indebtedness and all demands and claims against it as and when the same become due and payable, other than any thereof (exclusive of the Obligations issued and Outstanding under the Master Indenture) whose validity, amount or collectability is being contested in good faith.

(d) That it will at all times comply with all terms, covenants and provisions of any Lien at such time existing upon its Property or any part thereof or securing any of its Indebtedness noncompliance with which would have a material adverse effect on the operations of the Obligated Group or its Property.

(e) That it will use its best efforts (as long as it is in its best interest and will not materially adversely affect the interests of the holders) to procure and maintain all permits, licenses and other governmental approvals necessary for the operation of its Property and to maintain its qualification for participation in and payment under private insurance programs having broad application and federal, state and local governmental programs providing for payment or reimbursement for services rendered.

(f) That it will take no action or suffer any action to be taken by others which would result in the interest on any Related Bonds issued as tax-exempt bonds becoming subject to federal income taxation.

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LIMITATIONS ON ENCUMBRANCES

Each Member, respectively, covenants not to create, assume or suffer to exist any Lien upon the Gross Revenues or the Principal Property other than Permitted Encumbrances. Each Member, respectively, further covenants and agrees that if such a Lien is created or assumed by any Member, it will make or cause to be made effective a provision whereby all Obligations will be secured prior to any such Indebtedness or other obligation secured by such Lien. Nothing in the Master Indenture is intended to create an equitable or legal lien or interest on or in the Property, though the Deed of Trust creates a lien on certain Property to the Master Trustee for the benefit of the holders of the Obligations.

The provisions summarized in the preceding paragraph notwithstanding, a Lien on Property of any Member securing Indebtedness or an Interest Rate Agreement shall be classified a Permitted Encumbrance (as provided in clause (a) of the definition thereof) and therefore be permitted if:

(1) such Lien secures Non-Recourse Indebtedness; or

(2) (a) after giving effect to such Lien and all other Liens classified as Permitted Encumbrances under this subparagraph (2), 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 10% of the value of all of the Property of the Obligated Group (calculated on the same basis as the value of the encumbered Property) and (b) the Obligated Group Representative delivers an Officer’s Certificate stating that the conditions described in subparagraph (a) under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – LIMITATIONS ON ADDITIONAL INDEBTEDNESS” are met for allowing the incurrence of one dollar of additional Long-Term Indebtedness.

LIMITATIONS ON ADDITIONAL INDEBTEDNESS

Each Member, respectively, agrees not to incur any Additional Indebtedness except as follows:

(a) Long-Term Indebtedness, provided that:

(1) the aggregate principal amount of such Long-Term Indebtedness and all other Outstanding Long-Term Indebtedness incurred pursuant to the provisions of the Master Indenture summarized in this paragraph (1) does not exceed 10% of the Total Operating Revenues of the Obligated Group for the most recent Fiscal Year for which audited financial statements are available immediately preceding the issuance of such Long-Term Indebtedness (provided that to the extent Long-Term Indebtedness initially incurred pursuant to this clause subsequently complies with any other incurrence requirement, such Long-Term Indebtedness shall, at the option of the Obligated Group Representative, thereafter not be deemed to be incurred pursuant to this clause); or

(2) the Master Trustee receives an Officer’s Certificate certifying the Long-Term Debt Service Coverage Ratio, taking into account all Outstanding Long-Term Indebtedness and the Long-Term Indebtedness proposed to be incurred as if such Long-Term Indebtedness has been issued at the beginning of the most recent complete Fiscal Year for which audited financial statements are available, which Long-Term Debt Service Coverage Ratio is not less than 1.20:1; or

(3) the Master Trustee receives: (A) an Officer’s Certificate certifying that, taking into account all Outstanding Long-Term Indebtedness but not the Long-Term Indebtedness

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proposed to be incurred, for the most recent Fiscal Year for which audited financial statements are available, the Long-Term Debt Service Coverage Ratio is not less than 1.20:1; and (B) an Officer’s Certificate, accompanied by the written report of an Independent Consultant, stating the forecasted Long-Term Debt Service Coverage Ratio, taking into account the Long-Term Indebtedness proposed to be incurred, for (x) in the case of Long-Term Indebtedness to finance capital improvements, the Fiscal Year succeeding the date on which such capital improvements are expected to be in operation or (y) the first full Fiscal Year following Stable Occupancy in the case of construction, renovation or replacement of elderly housing facilities being financed with the proceeds of such Long-Term Indebtedness, which Stable Occupancy shall be projected to occur no later than during the fifth full Fiscal Year following the incurrence of such Long-Term Indebtedness or (z) in the case of Long-Term Indebtedness issued for other purposes than are described in (x) or (y), the Fiscal Year succeeding the date on which the proposed Long-Term Indebtedness is to be incurred, is not less than 1.25:1, as shown by forecasted statements of revenues and expenses for such Fiscal Year, accompanied by a statement of the relevant assumptions upon which such forecasted statements are based.

(b) Completion Indebtedness in an amount up to 10% of the principal amount of the Long-Term Indebtedness incurred for the subject project, if there is delivered to the Master Trustee a Construction Consultant’s certificate to the effect that the Completion Indebtedness proposed to be incurred is (i) necessary to provide a completed and fully equipped facility of the type and scope contemplated at the time the original Long-Term Indebtedness was incurred, and (ii) necessary to complete the acquisition, construction and/or equipping in accordance with the general plans and specifications for such facility as originally prepared and approved in connection with the incurrence of the Long-Term Indebtedness, and (iii) in an amount estimated to be sufficient, together with other identified funds of the relevant Member, to complete the facility within the parameters described in clauses (i) and (ii) above.

(c) Long-Term Indebtedness incurred for the purpose of refunding, refinancing or replacing any Outstanding Long-Term Indebtedness so as to render it no longer Outstanding if the Master Trustee receives an Officer’s Certificate to the effect that Maximum Annual Debt Service, taking into account the Long-Term Indebtedness proposed to be incurred, will not be increased by more than 10% as a result of such refunding, refinancing or replacement.

(d) Short-Term Indebtedness provided that: (1) such Short-Term Indebtedness is incurred in compliance with the provisions of the Master Indenture summarized in subparagraph (a) above, treating such Short-Term Indebtedness for such purposes only as if it were Long-Term Indebtedness; or (2) (i) the total amount of such Short-Term Indebtedness does not exceed 15% of Total Operating Revenues of the Obligated Group for the most recent Fiscal Year for which audited financial statements are available; and (ii) in every Fiscal Year, there shall be at least a 30-day period when the balance of such Short-Term Indebtedness is reduced to an amount which shall not exceed 5% of Total Operating Revenues of the Obligated Group for the most recent Fiscal Year for which audited financial statements of the Obligated Group are available.

(e) Subordinated Indebtedness without limitation.

(f) Balloon Indebtedness or Interim Indebtedness provided that the conditions described in subparagraph (a) above are satisfied with respect to the incurrence of such Balloon Indebtedness, Put Indebtedness or Interim Indebtedness utilizing the assumptions specified in clause (c) of the definition of “Maximum Annual Debt Service.”

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(g) Extendable Indebtedness provided that the conditions described in the Master Indenture summarized in subparagraph (a) above are satisfied with respect to the incurrence of such Extendable Indebtedness utilizing the assumptions specified in clause (d) of the definition of “Maximum Annual Debt Service.”

(h) Reimbursement and other obligations arising under reimbursement agreements relating to letters of credit or similar credit facilities used to secure Indebtedness otherwise permitted under this heading.

(i) Non-Recourse Indebtedness without limitation.

(j) Indebtedness to fund a Capital Addition if, prior to incurrence thereof, there is delivered to the Master Trustee (i) an Officer’s Certificate certifying that, taking into account all Outstanding Long-Term Indebtedness but not the Long-Term Indebtedness proposed to be incurred, for the most recent Fiscal Year for which audited financial statements are available, the Long-Term Debt Service Coverage Ratio is not less than 1.20:1; and (ii) a written report of an Independent Consultant (prepared in accordance with industry standards) to the effect that the estimated projected Long-Term 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 the Capital Addition, or (B) the first full Fiscal Year following achievement of Stable Occupancy of the Capital Addition, provided that the achievement of Stable Occupancy is projected to occur no later than during the fifth full Fiscal Year following the incurrence of such Capital Addition 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.

(k) Indebtedness, to finance or refinance the cost of acquiring or constructing an Expansion Project (as defined below) if the following conditions are satisfied: (i) the project to be finance or refinanced consists of all or a portion of the construction and equipping of independent living units, assisted living units and nursing beds and the total number of units and/or beds of all such projects financed or refinanced with the proceeds of debt incurred pursuant to the provisions summarized under this subparagraph (k) shall not exceed 20 units and/or beds (an “Expansion Project”), (ii) the debt incurred pursuant to the subparagraph (k) to finance or refinance Expansion Projects shall not exceed $15,000,000 in aggregate principal amount, (iii) not less than 75% of the Independent Living Units included in the Project are Occupied, (iv) not less than 50% of the independent living units in the Expansion Project are Reserved, (v) the facilities constituting the Expansion Project will be constructed on Mortgaged Property, and (vi) the Obligated Group Representative shall have delivered an Officer’s Certificate to the Master Trustee which Officer’s Certificate shall include: (A) a financial forecast showing that the Obligated Group will be in compliance with the provisions of the Master Indenture described under the caption “RATE COVENANT” and “LIQUIDITY COVENANT” below for each Fiscal Year through the second Fiscal Year following the Fiscal Year in which Stable Occupancy of such Expansion Project occurs, assuming the incurrence of such debt, (B) an executed guaranteed maximum price construction contract, stipulated sum construction contract or such other construction contract that establishes the complete construction cost of the Expansion Project, a construction budget which the Obligated Group certifies to be a reasonable estimate of all of the costs necessary to construct prior to incurrence thereof; and, (C) a certification that no event of default, or event which, with the passage of time, or the giving of notice, or both, would constitute an event of default, has occurred and is continuing under the Master Indenture.

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LIMITATIONS ON GUARANTIES

Each Member covenants and agrees that it will not enter into, or become liable with respect to, any Guaranty except:

(a) Guaranties of Indebtedness of another Member;

(b) Guaranties of Obligations issued under the Master Indenture; and

(c) Any other Guaranty provided that the conditions summarized in subsection (a) above under “Limitations on Additional Indebtedness” are satisfied with respect to the issuance of such Guaranty utilizing the assumptions specified in clause (a) of the definition of “Maximum Annual Debt Service.”

RATE COVENANT

Each Member covenants and agrees to operate all of its Principal Property in the aggregate 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 facilities 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 it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of the Master Indenture described under this heading.

Within 150 days after the end of each Fiscal Year (commencing with the Fiscal Year ending on the Initial Testing Date) the Obligated Group Representative shall compute Income Available For Debt Service and Annual Debt Service and promptly furnish to the Required Information Recipients a Certificate setting forth the results of such computation.

If the Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year with respect to which the Initial Testing Date relates is less than 1.10:1, the Master Trustee shall require the Obligated Group, at the Obligated Group’s expense, to retain an Independent Consultant within 30 days following the calculation described in the immediately preceding paragraph 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 such Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

The Obligated Group shall not be required to engage an Independent Consultant more than one time in any one year period.

If the Debt Service Coverage Ratio of the Obligated Group for the Fiscal Year following the Fiscal Year with respect to which the Initial Testing Date relates is less than 1.20:1, the Master Trustee shall require the Obligated Group, at the Obligated Group’s expense, to select an Independent Consultant within 30 days following the calculation described in the second preceding paragraph to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase such Debt Service Coverage Ratio to at least 1.20:1 for the following Fiscal Year.

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For purposes of calculations made pursuant to the provisions of the Master Indenture summarized under this heading, an unrestricted contribution from any Affiliate of any Member of the Obligated Group may, at the sole discretion of the Obligated Group Representative, be treated as Income Available for Debt Service being earned during the period of such calculation so long as the unrestricted contribution is made prior to the date the applicable Officer’s Certificate is required to be delivered with respect to such calculation. If the unrestricted contribution is counted in a period prior to the date of such transfer in accordance with the previous sentence, it shall not be included in the calculation for the period in which such contribution was actually made.

The provisions of the Master Indenture summarized in the preceding paragraphs are subject to the provisions of the Master Indenture summarized in the following paragraphs.

A copy of the Independent Consultant’s report and recommendations, if any, shall be filed with each of the Required Information Recipients within 60 days of retaining the Independent Consultant. Each Member shall follow each recommendation of the Independent Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The provisions of the Master Indenture summarized under this caption shall not be construed to prohibit any Member from serving indigent patients 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 under this caption.

The foregoing provisions notwithstanding, if the Debt Service Coverage Ratio of the Obligated Group for any Fiscal Year does not meet the levels required above, the Master Trustee shall not be obligated to require the Obligated Group to retain an Independent 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 an Independent Consultant (which Independent Consultant and report, including without limitation the scope, form, substance and other aspects of such report, are not objected to by the Master Trustee) which contains an opinion of such Independent 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 summarized under this caption, and, if requested by the Master Trustee, such report is accompanied by a concurring Opinion of Independent Counsel (which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not objected to by the Master Trustee) as to any conclusions of law supporting the opinion of such Independent Consultant; (b) the report of such Independent 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 Total Operating Revenues reasonably practicable given such laws or regulations; and (c) the 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 Independent Consultant’s report referred to in the preceding sentence to be prepared more frequently than once every two Fiscal Years if at the end of the first of such two Fiscal Years the Obligated Group provides to the Master Trustee (who shall provide a copy to each Related Bond Trustee) an Opinion of Independent Counsel (which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof, are not objected to by the Master Trustee) to the effect that the applicable laws and regulations underlying the Independent Consultant’s report delivered in respect of the previous Fiscal Year have not changed in any material way.

Notwithstanding any other provisions of the Master Indenture, an Event of Default arising from the Debt Service Coverage Ratio shall only occur under the Master Indenture if one or more of the following conditions applies: (i) the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.20:1 and fails to take all necessary action to comply with the procedures summarized under this

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caption for preparing a report, adopting a plan, and following all recommendations contained in such report or plan to the extent feasible (as determined by the Governing Body of the Obligated Group Representative) and permitted by law; or (ii) the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.00:1 for any Fiscal Year.

Notwithstanding any other provisions of the Master Indenture, in the event that any Member of the Obligated Group incurs any Additional Indebtedness for any acquisition, construction, renovation or replacement project or Capital Addition, the Debt Service Requirements on such Additional Indebtedness and the revenues and expenses relating to the project or Capital Addition financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Debt Service Coverage Ratio of the Obligated Group for the purposes of complying with the provisions summarized under this caption until the first full Fiscal Year following the later of (i) the estimated completion of the acquisition, construction, renovation or replacement project being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such project set forth in the Independent Consultant’s report described in (1) 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 Independent Consultant referred to in paragraph (1) 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 fourth full Fiscal Year after the incurrence of such Additional Indebtedness (the period commencing on the date of the incurrence of such Additional Indebtedness and ending on the later of (i), (ii) or (iii) above is hereinafter referred to as the “Capital Addition Start-Up Period”), if the following conditions are met:

(1) there is delivered to the Master Trustee a report or opinion of an Independent 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 full Fiscal Year following the incurrence of such Additional Indebtedness, will be not less than 1.25:1 after giving effect to the incurrence of such Additional Indebtedness and the application of the proceeds thereof; provided, however, that in the event that an Independent Consultant shall deliver a report to the Master Trustee to the effect that Industry Restrictions do not permit or by their application make it impracticable for Members to produce the required ratio, then such ratio shall be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less than 1.00:1; provided further, however, that in the event an Independent 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 Independent Consultant’s report described in this subparagraph (1);

(2) there is delivered to the Master Trustee an Officer’s Certificate on the date on which financial statements are required to be delivered to the Master Trustee pursuant to the Master Indenture until the end of the Capital Addition Start-Up Period at which time the first Fiscal Year in which the exclusion from the calculation of the Debt Service Coverage Ratio no longer applies, calculating the Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year, and demonstrating that such Debt Service Coverage Ratio is not less than 1.00:1, such Debt Service Coverage Ratio to be computed without taking into account (A) the Additional Indebtedness to be incurred if the conditions in (3) and (4) below are satisfied, and (B) the revenues to be derived from and the expenses attributable to the Capital Addition to be financed from the proceeds of such Additional Indebtedness;

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(3) the interest on such Additional Indebtedness and any projected start-up losses during the Capital Addition Start-Up Period is funded from the proceeds of Additional Indebtedness or other funds designated by the Obligated Group, and continues to be available for such purposes during the Capital Addition Start-Up Period; and

(4) no principal of such Additional Indebtedness shall be payable during the Capital Addition Start-Up Period, excluding any Additional Indebtedness which may become due as the result of the collection of Entrance Fees during the Capital Addition Start-Up Period.

If the conditions of subparagraph (3) or (4) are not satisfied because interest is not funded through the end of the Capital Addition Start-Up Period or because principal is due by maturity or bond sinking fund redemption prior to the end of the Capital Addition Start-Up Period, the provisions of the preceding paragraphs shall apply only during the portion of Capital Addition Start-Up Period for which interest has been funded and no principal payments are due.

SALE, LEASE OR OTHER DISPOSITION OF PROPERTY

Each Member agrees that it will not transfer any Property except as permitted by the provisions of the Master Indenture summarized below.

(a) Each Member may sell, lease or otherwise dispose (including, without limitation, any involuntary disposition) of Property (either real or personal, including cash and investments) to another Member, except that none of the Property financed with the proceeds of any Related Bonds issued as tax-exempt bonds shall be transferred by the Corporation to any other Member unless the Related Bond Trustee has received an Opinion of Bond Counsel to the effect that such transfer shall not adversely affect the validity of the Related Bonds or any exemption from federal income taxation to which such Related Bonds would otherwise be entitled.

(b) A Member may transfer Property, including but not limited to cash or cash equivalents, if the amount of such Property sold, leased or otherwise disposed of does not, for any consecutive 12-month period, exceed 1% of the total Book Value or Current Value of all Property of the Obligated Group.

(c) A Member may transfer Property, including but not limited to cash or cash equivalents, to an Affiliate if the Property sold, leased or otherwise disposed of, together with transfers pursuant to the provisions of the Master Indenture summarized in subparagraph (b) above, does not, for any consecutive 12-month period, exceed 3% of the total Book Value or the total Current Value of all Property of the Obligated Group (as shown on the most recent audited financial statements of the Obligated Group) and the 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 (i) in calculating the Debt Service Coverage Ratio for purposes of this payment, the Income Available for Debt Service will be reduced by one year’s estimated interest earnings attributable to the moneys to be used for the payment using, at the option of the Obligated Group Representative, either (1) the current budgeted investment rate, as certified in an Officer’s Certificate, or (2) the actual average investment rate on the transferred funds, as certified in a report of an Independent Consultant as of the end of the last fiscal quarter for which financial statements have been delivered to the Master Trustee as required under the Master Indenture, and (ii) the Obligated Group had not less than 200 Days Cash on Hand after giving effect to the transaction. If the Debt Service Coverage Ratio is not less than 1.30:1, the foregoing percentage of the total Book Value or Current Value may be increased as follows under the following conditions:

(1) to 5%, if Days Cash on Hand would not be less than 300 after the effect of such sale, lease or disposition of assets; or

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(2) to 7.5%, if Days Cash on Hand would not be less than 400 after the effect of such sale, lease or disposition of assets; or

(3) to 10%, if Days Cash on Hand would not be less than 500 after the effect of such sale, lease or disposition of assets;

(d) A Member may transfer Property, including cash or cash equivalents, to a Person other than a Member or an Affiliate without limitation if:

(1) the transfer is: (i) in return for other Property of equal or greater value and usefulness; or (ii) in the ordinary course of business upon fair and reasonable terms; or

(2) 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; or

(3) 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; or

(4) such Property consists of ABHOW Development Fees or Seniority Fees.

(e) If any Property to be disposed of in accordance with the provisions of the Master Indenture summarized under this heading is subject to a Lien, including the Deed of Trust, the Master Trustee shall, upon the request of the Obligated Group Representative, release such Property from the Lien pursuant to the terms of any documentation creating the Lien.

Nothing in the Master Indenture shall prohibit any Member from making secured or unsecured loans provided that (1) any such loan is evidenced in writing, (2) the Obligated Group Representative reasonably expects such loan to be repaid and (3) such loan bears interest at a reasonable rate of interest as determined in good faith by the Obligated Group Representative.

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

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:

(1) Any successor corporation to such Member (including, without limitation, any purchaser of all or substantially all the Property of such Member) is a Person (other than a natural person) organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument containing the agreement of such successor to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on all Obligations according to their tenor and the due and punctual performance and observance of all the covenants and conditions of the Master Indenture to be kept and performed by such Member;

(2) Immediately after such merger or consolidation, or such sale or conveyance, no Member would be in default in the performance or observance of any covenant or condition of any Related Loan Document or the Master Indenture;

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(3) 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 Long-Term 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, if calculated on a pro forma basis including the effect of such merger or consolidation, sale or conveyance, would have been not less than 1.20:1, or that such pro forma Long-Term Debt Service Coverage Ratio of the Obligated Group is not less than the Long-Term Debt Service Coverage Ratio of the Obligated Group 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 Cash to Indebtedness Ratio or the Days Cash on Hand of the Obligated Group as set forth on the most recent quarterly financial statements delivered to the Master Trustee would be not less than the Liquidity Requirement or that such calculation of the Cash to Indebtedness Ratio or the 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;

(4) If all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or fully provided for, there shall be delivered to the Master Trustee an Opinion of Bond Counsel to the effect that under then existing law the consummation of such merger, consolidation, sale or conveyance would not adversely affect the validity of such Related Bonds or the exemption otherwise available from federal or state income taxation of interest payable on such Related Bonds; and

(5) If any Related Bonds were rated by a Rating Agency prior to such merger, consolidation, sale or conveyance, written evidence that, after such merger, consolidation, sale or conveyance, all Related Bonds will have a rating of at least “BBB-” (or an equivalent rating) from at least one Rating Agency.

In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named in the Master Indenture as such Member. Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the conditions of the Master Indenture described under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – THE OBLIGATED GROUP – Membership in the Obligated Group” prior to becoming, a Member of the Obligated Group prior to any such succession, assignment or other change in such Member’s corporate status. Any successor corporation to such Member thereupon may cause to be signed and may issue in its own name Obligations under the Master Indenture and the predecessor corporation shall be released from its obligations under the Master Indenture and under any Obligations, if such predecessor corporation shall have conveyed all Property owned by it (or all such Property shall be deemed conveyed by operation of law) to such successor corporation. All Obligations so issued by such successor corporation under the Master Indenture shall in all respects have the same legal rank and benefit under the Master Indenture as Obligations theretofore or thereafter issued in accordance with the terms of the Master Indenture as though all of such Obligations had been issued under the Master Indenture by such prior Member without any such consolidation, merger, sale or conveyance having occurred.

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.

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INSURANCE

Each Member covenants and agrees that it will keep its Property and all of its operations adequately insured at all times and carry and maintain such insurance in amounts which are commercially feasible, customarily carried, subject to customary deductibles, and against such risks as are customarily insured against by other corporations in connection with the ownership and operation of facilities of similar character and size. The Master Indenture provides that for the purpose of this provision, the term Property shall be deemed to include Excluded Property.

The Obligated Group Representative shall employ an Insurance Consultant at least every two years to review the insurance requirements of the Members, unless the Obligated Group is self-insured, in which case an Insurance Consultant must be retained at least annually to review the insurance requirements of the Members. If the Insurance Consultant makes recommendations for the increase of any Members’ insurance coverage, the Obligated Group Representative shall increase or cause to be increased such coverage in accordance with such recommendations, subject to a good faith determination of the Governing Body of the Obligated Group Representative that such recommendations, in whole or in part, are in the best interests of the Obligated Group. In lieu of maintaining insurance coverage that the Governing Body of the Obligated Group Representative deems necessary, the Members shall have the right to adopt alternative risk management programs that the Governing Body of the Obligated Group Representative determines to be reasonable and that shall not have a material adverse impact on reimbursement from third party payors; including, without limitation, the right to self-insure in whole or in part individually or in connection with other institutions, to participate in programs of captive insurance companies, to participate with other health care institutions in mutual or other cooperative insurance or other risk management programs, to participate in state or federal insurance programs, to take advantage of state or federal laws now or hereafter in existence limiting medical and malpractice liability, or to establish or participate in other alternative risk management programs; all as may be approved, in writing, as reasonable and appropriate risk management by the Insurance Consultant and reviewed each year thereafter.

The Obligated Group Representative shall cause to be delivered to the Master Trustee on the date the Master Indenture is executed and at least biannually (annually with respect to self insurance) thereafter, no later than within 120 days following the date audited financial statements are required to be furnished pursuant to the Master Indenture, an Officer’s Certificate stating that the Obligated Group is in compliance with the provisions of the Master Indenture summarized under this heading, together with a certificate of an Insurance Consultant which certificate indicates that the insurance then being maintained by the Members is customary in the case of corporations that own and operate facilities of similar character and size.

FINANCIAL REPORTING

As described in the forepart of this Official Statement under the heading, “FINANCIAL REPORTING,” the Obligated Group has agreed to provide certain information to the Required Information Recipients.

LIQUIDITY COVENANT

The Obligated Group covenants that it will calculate the Days Cash on Hand or the Cash to Indebtedness Ratio of the Obligated Group as of March 31 and September 30 of each Fiscal Year (each such date being a “Liquidity Testing Date”), commencing with the Initial Testing Date. The Obligated Group shall include such calculations in the quarterly Officer’s Certificate delivered pursuant to the

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provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING.”

Each Obligated Group Member is required to conduct its business so that on each Liquidity Testing Date the Obligated Group shall have a Cash to Indebtedness Ratio of (a) no less than 0.25 for the first two Liquidity Testing Dates, starting with the Initial Testing Date, (b) no less than 0.275 for the next year (the next two Liquidity Testing Dates), and (c) no less than 0.30 thereafter (the “Liquidity Requirement”). At the option of the Obligated Group Representative, the Liquidity Requirement can be converted to a covenant to maintain no less than 180 Days Cash on Hand on each Liquidity Testing Date if for three consecutive Fiscal Years the Obligated Group has reported (a) a Debt Service Coverage Ratio of 1.40:1 or more, and (b) a Cash to Indebtedness Ratio of 0.30 or more on each Liquidity Testing Date. The Obligated Group Representative may elect to convert the Liquidity Requirement as of a specified date (the “Liquidity Requirement Conversion Date”) in an Officer’s Certificate, demonstrating compliance with the test in the preceding sentence. After the Liquidity Requirement Conversion Date, the Liquidity Requirement will be a covenant to maintain no less than 180 Days Cash on Hand on each March 31 and September 30.


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 Liquidity Testing Date following delivery of the Officer’s Certificate required by the provisions summarized in the preceding paragraph, the Obligated Group Representative shall, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, select an Independent Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable, to the Liquidity Requirement for future periods. A copy of the Independent Consultant’s report and recommendations, if any, shall be filed with each of the Required Information Recipients within 60 days of the date such Independent Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Independent 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 engage a Consultant more than one time in any one year period.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Liquidity Requirement for any Liquidity 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 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.

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MARKETING COVENANT

Beginning with the fiscal quarter ending March 31, 2014, and ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project, the Obligated Group will use its best efforts to maintain the percentage of Independent Living Units which are Reserved (the “Percentage of Reserved Independent Living Units”) at or above the applicable levels set forth below (the “Marketing Requirements”), which determinations shall be measured as of the last day of the applicable quarter.


03/31/14 67.7% 06/30/14 69.5 09/30/14 72.6 12/31/14 76.3 03/31/15 73.9 06/30/15 70.8 09/30/15 70.1 12/31/15 71.4 03/31/16 72.6 06/30/16 74.5 09/30/16 77.0 12/31/16 78.8 03/31/17 80.7 06/30/17 81.9 09/30/17 84.4 12/31/17 86.9 03/31/18 88.8


In lieu of satisfying the Marketing Requirements set forth in the preceding paragraph, the applicable Marketing Requirements for the applicable Occupancy Quarter (as defined below under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OCCUPANCY COVENANT”) shall be the Adjusted Level I Marketing Requirements summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OCCUPANCY COVENANT” if the Adjusted Level I Occupancy Requirements summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OCCUPANCY COVENANT” have been satisfied.

Percentage of Reserved Independent Living Units (%)

Occupancy Quarter Adjusted Level I 1 62.1% 2 61.4 3 63.3 4 65.2 5 67.7

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (b)(1) under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING” states that the Percentage of Reserved Independent Living Units for any fiscal quarter is less than the Marketing Requirement for that fiscal quarter, the Obligated Group Representative

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shall submit to the Master Trustee, within 45 days after the end of such fiscal quarter, a marketing corrective action plan (a “Marketing Corrective Action Plan”) which includes the following information: (a) the Percentage of Reserved Independent Living Units, including the number of reservations and cancellations during such fiscal quarter and on an aggregate basis, (b) a forecast, prepared by management of the Corporation, of the number of reservations expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Marketing Corrective Action Plan is being prepared; and (c) a detailed description of the reasons for the Obligated Group’s failure to satisfy the Marketing Requirements and management’s plan to increase the Percentage of Reserved Independent Living Units to at least the level required by the Marketing Requirements summarized herein by the end of the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Officer’s Certificate is being submitted.

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (b)(1) under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING” states that the Obligated Group has failed to meet the Marketing Requirements for any two consecutive fiscal quarters, the Obligated Group Representative shall select an Independent Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to at least the Marketing Requirement summarized herein on the earliest date practicable. Such Independent Consultant selected in the manner summarized under this caption shall be retained as required under the provisions of the Master Indenture summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – APPROVAL OF CONSULTANTS” (a “Marketing Consultant Engagement”). Within 60 days of retaining any such Independent Consultant, the Obligated Group Representative shall cause a copy of the Independent Consultant’s report and recommendations, if any, to be filed with each Member, the Master Trustee and each Required Information Recipient. Each Member shall follow each recommendation of the Independent Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The Obligated Group shall not be required to obtain an Independent Consultant’s report after failing to meet a Marketing Requirement if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in a Marketing Consultant Engagement.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Marketing Requirement for any fiscal quarter shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Marketing Corrective Action Plan or obtaining an Independent Consultant’s report 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.

OCCUPANCY COVENANT

Within 30 days of receipt of the initial Occupancy of the Independent Living Units included in the Project, the Corporation shall notify the Master Trustee and deliver a copy of the Occupancy Certificate with such notice. The Obligated Group covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the date of the initial resident occupancy of any of the Independent Living Units included in the Project and (b) ending at the end of the first full fiscal quarter following the date on which Stable Occupancy with respect to the Independent Living Units included in the Project has been achieved (an “Occupancy Quarter”), the Obligated Group will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units included in the Project (the “Percentage of Units Occupied”) at or above the Level I Occupancy Requirements set

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forth below which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

Occupancy Level I Adjusted Level I

Quarter Occupancy Requirements Occupancy Requirements* 1 9.3% 21.7% 2 21.1 37.3 3 30.4 50.3 4 37.8 65.2 5 43.4 75.2 6 49.0 7 54.6 8 60.2 9 65.8 10 71.4 11 77.0 12 83.0 13 84.0 14 86.0 15 88.0


*Adjusted Level I Occupancy Requirements are used only for the purposes of the provisions of the Master Indenture summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – MARKETING COVENANT.”

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (b)(1) under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING” states that the Percentage of Units Occupied for any Occupancy Quarter is less than the Level I Occupancy Requirement set forth above for that Occupancy Quarter, the Obligated Group Representative shall within 45 days after the end of such Occupancy Quarter submit an occupancy corrective action plan prepared by management to the Master Trustee setting forth in detail the reasons therefor and the plan to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above by the Occupancy Quarter immediately succeeding the Occupancy Quarter with respect to which the corrective action plan is being submitted (a “Corrective Occupancy Action Plan”).

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (b)(1) under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING” states that the Percentage of Units Occupied for any two consecutive Occupancy Quarters is less than the Level I Occupancy Requirement set forth above for those Occupancy Quarters, the Obligated Group Representative shall select an Independent Consultant within 45 days of the end of such second fiscal quarter to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to at least the Level I Occupancy Requirement set forth above on the earliest date practicable. Such Independent Consultant selected in the manner summarized under this caption shall be retained as required under the provisions of the Master Indenture summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – APPROVAL OF CONSULTANTS” (an “Occupancy Consultant Engagement”). Within 60 days after retaining any such Independent Consultant, the Obligated Group Representative shall cause a copy of the Independent Consultant’s report and recommendations, if any, to be filed with each Member, the Master Trustee and

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each Required Information Recipient. Each Member shall follow each recommendation of the Independent Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law. The Obligated Group shall not be required to obtain an Independent Consultant’s report after failing to meet an Occupancy Requirement, if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in an Occupancy Consultant Engagement.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the Occupancy Requirement for any Occupancy Quarter shall not constitute an Event of Default under the Master Indenture if the Obligated Group takes all action necessary to comply with the procedures set forth above for preparing a Corrective Occupancy Action Plan or obtaining an Independent Consultant’s report 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.

CUMULATIVE CASH OPERATING LOSS COVENANT

The Obligated Group covenants that commencing with (a) the first fiscal quarter ending after the earliest date a resident has taken physical possession of one of the Independent Living Units included in the Project (the “Initial Occupancy Date”) if such date is more than 30 days prior to the end of such fiscal quarter or (b) the first full fiscal quarter ending after the Initial Occupancy Date if such Initial Occupancy Date is less than 30 days prior to the end of a fiscal quarter, it will calculate its Cumulative Cash Operating Loss as of the last day of each such fiscal quarter (an “Operating Loss Testing Date”). The requirement to test Cumulative Cash Operating Loss shall end on the Initial Testing Date. Each Member is required to conduct its business so that as of each such Operating Loss Testing Date the Obligated Group will have a Cumulative Cash Operating Loss no greater than the amount described below.

Quarter Cumulative Cash Operating Loss ($)

1 (2,300,000) 2 (4,000,000) 3 (6,100,000) 4 (7,900,000) 5 (9,200,000) 6 (10,700,000) 7 (11,700,000)

8 and thereafter (12,000,000)

If the report submitted pursuant to the provisions of the Master Indenture summarized in subparagraph (b)(1) under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING” states that, as of any Operating Loss Testing Date, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels set forth above, the Obligated Group Representative shall, within 45 days of such Operating Loss Testing Date, submit an Officer’s Certificate to each Required Information Recipient setting forth in reasonable detail the reasons for such noncompliance and adopting a specific plan setting forth steps to be taken designed to achieve compliance for future periods.

If, as of any two consecutive Operating Loss Testing Dates, the Cumulative Cash Operating Loss of the Obligated Group is greater than the required levels set forth above, the Obligated Group Representative shall select, within 45 days of the second such Operating Loss Testing Date, an Independent Consultant to make recommendations. Such Independent Consultant selected in the manner

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summarized under this caption shall be retained as required under the provisions of the Master Indenture summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – APPROVAL OF CONSULTANTS” (an “Operating Loss Consultant Engagement”). The Independent Consultant shall make recommendations with respect to the Obligated Group’s methods of operation and other factors affecting its financial condition in order to decrease the Cumulative Cash Operating Loss to the required level for future periods. A copy of the Independent Consultant’s report and recommendations, if any, shall be filed with each Member, the Master Trustee and each Required Information Recipient within 60 days of the date the Independent Consultant is retained. Each Member of the Obligated Group shall follow each recommendation of the Independent 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 an Independent Consultant’s report after failing to meet a covenant described under this caption if such failure occurs during the two successive fiscal quarters after a covenant violation which resulted in an Operating Loss Consultant Engagement.

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

APPROVAL OF CONSULTANTS

(a) If at any time the Members of the Obligated Group are required to engage an Independent Consultant under the provisions of the Master Indenture, such Independent Consultant shall be engaged in the manner summarized under this caption.

(b) Upon selecting an Independent Consultant as required by the provisions of the Master 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 of such selection, and the Obligated Group Representative will post a copy of such notice (or cause a copy of such notice to be posted) on EMMA. Such notice shall (i) include the name of the Independent Consultant and a brief description of the Independent Consultant, (ii) state the reason that the Independent Consultant is being engaged including a description of the covenant(s) of the Master Indenture that require the Independent Consultant to be engaged, and (iii) state that the holder of the Obligation will be deemed to have consented to the selection of the Independent Consultant named in such notice unless such Obligation holder submits an objection to the selected Independent Consultant in writing (in a manner acceptable to the Master Trustee) to the Master Trustee within 15 days of the date that the notice is sent to the Obligation holders. No later than two Business Days after the end of the 15-day objection period, the Master Trustee shall notify the Obligated Group of the number of objections. If two-thirds (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 Independent Consultant, the Obligated Group Representative may engage the Independent Consultant within five days of receiving notice of that consent. If more than one-third (33.3%) in aggregate principal amount of the owners of the Obligations outstanding have objected to the Independent Consultant selected, the Obligated Group Representative shall select another Independent Consultant within 14 days after receiving notice of such objection which may be engaged upon compliance with the procedures summarized under this caption.

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The Master Indenture further provides that all Independent Consultant reports required thereunder shall be prepared in accordance with then-effective industry-appropriate standards.

(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 Independent Consultant in accordance with the response of the owners of such Related Bonds. If two-thirds (66.6%) or more in aggregate principal amount of the Related Bonds have been deemed to have consented to the selection of the Independent Consultant, the Bond Trustee shall approve the Independent Consultant within five days of receiving notice of that consent. If more than one-third (33.3%) in aggregate principal amount of the owners of the Related Bonds have objected to the Independent Consultant selected, the Bond Trustee shall reject the Independent Consultant within 14 days after receiving notice of such objection.

The 15-day notice period described in (b) above may be extended by the Master Trustee in order to permit each Related Bond Trustee to give the owners of the Related Bonds 15 days to respond to the notice given by the Related Bond Trustee. By acceptance of an Obligation securing any Related Bonds, the Related Bond Trustee agrees to comply with the provisions of the Master Indenture summarized under this caption.

ENTRANCE FEE FUND

Initial Entrance Fees. The Obligated Group agrees that all Initial Entrance Fees received by the Obligated Group shall be transferred to the Master Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fee Fund created by the Master Indenture, to be used as described in the next paragraph.

Entrance Fee Fund. The Master Trustee shall establish and maintain a separate account to be known as the “Entrance Fee Fund – Series 2014 Bonds” (the “Entrance Fee Fund”). All moneys received by the Master Trustee and held in the Entrance Fee Fund pursuant to the provisions of the Master Indenture summarized under this heading shall be trust funds under the terms of the Master Indenture for the benefit of Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture, but are not bond proceeds (within the meaning of the Code), and are not, except as specifically described under this heading, pledged to payment of principal and interest on the Series 2014 Bonds.

Moneys in the Entrance Fee Fund on the first Business Day of each month shall be disbursed by the Master Trustee as follows:

FIRST, to the Obligated Group to pay refunds of Initial Entrance Fees as required by residency agreements with respect to the residential living apartments in the Project. Such disbursements shall be made upon receipt by the Master Trustee of an Officer’s Certificate of the Obligated Group Representative certifying that the Obligated Group is required by a residency agreement to pay refunds within the next 15 days and the amount of such refunds.

SECOND, to the Working Capital Fund, until the total principal amount deposited into the Working Capital Fund equals $12,000,000. The Master Trustee shall not replenish funds withdrawn from the Working Capital Fund.

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THIRD, to the Operating Reserve Fund, until the amount on deposit in the Operating Reserve Fund equals $3,000,000 (the “Operating Reserve Fund Requirement”). On the first Business Day of each month, the Master Trustee shall disburse the amount needed, if any, to increase the amount on deposit in the Operating Reserve Fund to the Operating Reserve Fund Requirement, provided, however that the Master Trustee shall replenish no more than $3,000,000 of any funds withdrawn from the Operating Reserve Fund from funds deposited in the Entrance Fee Fund so that the aggregate deposits to the Operating Reserve Fund do not exceed $6,000,000. Notwithstanding the foregoing limitations on the amount of Entrance Fees deposited in the Operating Reserve Fund, if a transfer of moneys from the Liquidity Support Funds to the Operating Reserve Fund has occurred, the Master Trustee shall deposit to the Operating Reserve Fund the amount, if any, needed to increase the amount on deposit in the Operating Reserve Fund to $1,000,000.

FOURTH: to the Supplemental Liquidity Support Fund, the American Baptist Properties Liquidity Support Fund and the ABHOW Liquidity Support Fund (in that order), any amount necessary to replenish any amounts advanced under the Sponsor Liquidity Support Agreement and the Greystone Liquidity Support Agreement to pay costs prior to the issuance of the initial Occupancy Certificate for the Project.

FIFTH, if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund created under the Series 2014 Bond Indenture for optional redemption of Series 2014C Bonds. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

SIXTH, after all the Series 2014C Bonds have been redeemed, if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund created under the Series 2014 Bond Indenture for optional redemption of Series 2014B-3 Bonds. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

SEVENTH, after all the Series 2014C Bonds and the Series 2014B-3 Bonds have been redeemed, if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund created under the Series 2014 Bond Indenture for optional redemption of Series 2014B-2 Bonds. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

EIGHTH, after all the Series 2014C Bonds, the Series 2014B-3 Bonds and the Series 2014B-2 Bonds have been redeemed, if the amount remaining in the Entrance Fee Fund is equal to $100,000 or more, into the Optional Redemption Fund created under the Series 2014 Bond Indenture for optional redemption of Series 2014B-1 Bonds. If the amount remaining in the Entrance Fee Fund is less than $100,000, the Master Trustee shall retain such amounts in the Entrance Fee Fund until the next month.

After the Series 2014B-1 Bonds, Series 2014B-2 Bonds, Series 2014B-3 Bonds and Series 2014C Bonds have been redeemed, 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 Obligated Group and the Entrance Fee Fund shall be closed.

WORKING CAPITAL FUND

The Master Trustee shall establish and maintain a separate account to be known as the “Working Capital Fund – Series 2014 Bonds” (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

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for the benefit of Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor 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 Obligated Group within seven days after receipt by the Master Trustee of an Officer’s Certificate to the Master Trustee certifying that (i) the withdrawal is made to pay (A) development and marketing fees and expenses related to the Project, (B) operating expenses of the Obligated Group, (C) the costs of needed repairs to the Obligated Group’s Facilities, (D) routine capital expenditures of the Obligated Group, (E) judgments against the Obligated Group, (F) refunds of any Entrance Fees as required by residency agreements with respect to residential living apartments in the Project, (G) amounts required to restore funds on deposit in the Debt Service Reserve Fund to the required level, or (H) amounts due on any Obligations (other than optional prepayment or redemption), other than funds advanced by an Affiliate of the Obligated Group, (ii) such moneys have been expended or are anticipated to be expended in the calendar month following the month in which such Officer’s Certificate is submitted, together with a budget describing the uses for which such moneys are needed and the amount needed for each such use, and (iii) no other funds are available or will reasonably be available to make such payments.

All amounts on deposit in the Working Capital Fund shall be released to the Obligated Group, and the Working Capital Fund shall be closed when all the Series 2014B Bonds and Series 2014C Bonds have been redeemed and if 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 – Series 2014 Bonds” (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 Obligation No. 1 (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Obligated Group. Such moneys shall be held in trust and applied in accordance with the provisions of the Master Indenture.


All amounts on deposit in the Operating Reserve Fund shall be released to the Obligated Group and the Operating Reserve Fund shall be closed when all the Series 2014B Bonds and Series 2014C Bonds have been redeemed and if no Event of Default has occurred and is continuing under the Master Indenture.

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INVESTMENT OF FUNDS

Moneys in the Entrance Fee Fund, the Operating Reserve Fund and the Working Capital Fund shall be invested in Qualified Investments upon an Officer’s Certificate of the Obligated Group Representative filed with the Master Trustee. In the absence of written investment instructions, the Master Trustee is directed to invest available funds in Qualified Investments described in paragraph (i) of the definition thereof. The Master Trustee, when authorized by the Obligated Group Representative, may purchase or sell securities authorized by the Master Indenture through itself or a related subsidiary as principal or agent, in the purchase and sale of securities for such investments; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained in the Master Indenture. The Master Trustee shall not be liable or responsible for any loss resulting from any such investments. Any investment income or other gain from any investment of moneys on deposit in the Entrance Fee Fund, the Operating Reserve Fund and the Working Capital Fund shall be retained in such funds. Any loss resulting from such investments shall be charged to the Operating Reserve Fund, the Entrance Fee Fund or the Working Capital Fund, as the case may be.

AMERICAN BAPTIST PROPERTIES LIQUIDITY SUPPORT FUND

The Master Trustee will establish and maintain a separate fund to be known as the “American Baptist Properties Liquidity Support Fund-Boise Retirement Community” (the “American Baptist Properties Liquidity Support Fund”). On the date of issuance of the Series 2014 Bonds, the Master Trustee shall deposit $1,000,000 received from American Baptist Properties in the American Baptist Properties Liquidity Support Fund. The Master Trustee shall deposit other moneys it receives from American Baptist Properties pursuant to the Sponsor Liquidity Support Agreement in the American Baptist Properties Liquidity Support Fund. The American Baptist Properties Liquidity Support Fund shall be the property of American Baptist Properties, but shall be pledged to fund and secure American Baptist Properties’ obligations under the Sponsor Liquidity Support Agreement. The American Baptist Properties Liquidity Support Fund is excluded from the trust estate established under the Master Indenture.

The Master Trustee shall transfer to the Series 2014 Bond Trustee moneys from the American Baptist Properties Liquidity Support Fund for deposit in the Project Fund to the extent necessary to pay Costs of Construction (as defined in the Series 2014 Bond Indenture) in accordance with the Sponsor Liquidity Support Agreement. The Corporation may withdraw moneys from the American Baptist Properties Liquidity Support Fund for other purposes in accordance with the Sponsor Liquidity Support Agreement. Withdrawals made from the American Baptist Properties Liquidity Support Fund shall be made in the order of priority as set forth in the Sponsor Liquidity Support Agreement.

The Master Trustee shall determine the value of the Qualified Investments on deposit in the American Baptist Properties Liquidity Support Fund as soon as practicable as of each March 31 and September 30 and upon any withdrawal from the Liquidity Support Funds (each a “Liquidity Support Valuation Date”). If on any Liquidity Support Valuation Date the amount on deposit in the American Baptist Properties Liquidity Support Fund is less than the ABP Support Obligation (as defined in the Sponsor Liquidity Support Agreement), the Sponsor Liquidity Support Agreement requires American Baptist Properties to replenish the amounts on deposit in the American Baptist Properties Liquidity Support Fund up to the ABP Support Obligation within 120 days of such Liquidity Support Valuation Date. If at any time after a Funding Event, (i) the total amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OPERATING RESERVE FUND”, (ii) no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund created under the Master Indenture and (iii) the ABP Support

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Obligation (as defined in the Sponsor Liquidity Support Agreement) has not been reduced to zero as provided in the Sponsor Liquidity Support Agreement, then the Master Trustee shall transfer the remaining moneys in the American Baptist Properties Liquidity Support Fund to the Operating Reserve Fund.

Any moneys held by the Master Trustee in the American Baptist Properties Liquidity Support Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Representative, in Qualified Investments. If the Master Trustee has not received written direction from the Obligated Group Representative regarding the investment of the American Baptist Properties Liquidity Support Fund, moneys held in the American Baptist Properties Liquidity Support Fund shall be invested or reinvested by the Master Trustee in Qualified Investments described in paragraph (a) of the definition of Qualified Investments. All investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Representative in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Investment income on the amounts on deposit in the American Baptist Properties Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the American Baptist Properties Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the American Baptist Properties Liquidity Support Fund in excess of the ABP Support Obligation shall be transferred as provided in the Sponsor Liquidity Support Agreement.

When the Master Trustee is notified that the ABP Support Obligation is reduced pursuant to the provisions of the Sponsor Liquidity Support Agreement, the Master Trustee shall release the funds on deposit in the American Baptist Properties Liquidity Support Fund to American Baptist Properties and, if the ABP Support Obligation is reduced to zero, close the American Baptist Properties Liquidity Support Fund.

AMERICAN BAPTIST HOMES OF THE WEST LIQUIDITY SUPPORT FUND

The Master Trustee will establish and maintain a separate fund to be known as the “American Baptist Homes of the West Liquidity Support Fund-Boise Retirement Community” (the “ABHOW Liquidity Support Fund”). No deposit shall be made to the ABHOW Liquidity Support Fund upon the issuance of the Series 2014 Bonds. The Master Trustee shall deposit the moneys it receives from ABHOW pursuant to the Sponsor Liquidity Support Agreement in the ABHOW Liquidity Support Fund. The ABHOW Liquidity Support Fund shall be the property of ABHOW, but shall be pledged to fund and secure ABHOW’s obligations under the Sponsor Liquidity Support Agreement. The ABHOW Liquidity Support Fund is excluded from the trust estate established under the Master Indenture.

The Master Trustee shall transfer to the Series 2014 Bond Trustee moneys from the ABHOW Liquidity Support Fund for deposit in the Project Fund to the extent necessary to pay Costs of Construction in accordance with the Sponsor Liquidity Support Agreement. The Corporation may withdraw moneys from the ABHOW Liquidity Support Fund for other purposes in accordance with the Sponsor Liquidity Support Agreement. Withdrawals made from the ABHOW Liquidity Support Fund shall be made in the order of priority as set forth in the Sponsor Liquidity Support Agreement.

The Master Trustee shall determine the value of the Qualified Investments on deposit in the ABHOW Liquidity Support Fund as soon as practicable as of each March 31 and September 30 and upon any withdrawal from the Liquidity Support Funds (each a “Liquidity Support Valuation Date”). If on any Liquidity Support Valuation Date the amount on deposit in the ABHOW Liquidity Support Fund is less than the ABHOW Support Obligation (as defined in the Sponsor Liquidity Support Agreement), the

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Sponsor Liquidity Support Agreement requires ABHOW to replenish the amounts on deposit in the ABHOW Liquidity Support Fund up to the ABHOW Support Obligation within 120 days of such Liquidity Support Valuation Date. If at any time after a Funding Event, (i) the total amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OPERATING RESERVE FUND”, (ii) no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund created under the Master Indenture and (iii) the ABHOW Support Obligation (as defined in the Sponsor Liquidity Support Agreement) has not been reduced to zero as provided in the Sponsor Liquidity Support Agreement, then the Master Trustee shall transfer the remaining moneys in the ABHOW Liquidity Support Fund to the Operating Reserve Fund.

Any moneys held by the Master Trustee in the ABHOW Liquidity Support Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Representative, in Qualified Investments. If the Master Trustee has not received written direction from the Obligated Group Representative regarding the investment of the ABHOW Liquidity Support Fund, moneys held in the ABHOW Liquidity Support Fund shall be invested or reinvested by the Master Trustee in Qualified Investments described in paragraph (a) of the definition of Qualified Investments. All investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Representative in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Investment income on the amounts on deposit in the ABHOW Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the ABHOW Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the ABHOW Liquidity Support Fund in excess of the ABHOW Support Obligation shall be transferred as provided in the Sponsor Liquidity Support Agreement.

When the Master Trustee is notified that the ABHOW Support Obligation is reduced pursuant to the provisions of the Sponsor Liquidity Support Agreement, the Master Trustee shall release the funds on deposit in the ABHOW Liquidity Support Fund to ABHOW and, if the ABHOW Support Obligation is reduced to zero, close the ABHOW Liquidity Support Fund.

SUPPLEMENTAL LIQUIDITY SUPPORT FUND

The Master Trustee will establish and maintain a separate fund to be known as the “Supplemental Liquidity Support Fund- Boise Retirement Community” (the “Supplemental Liquidity Support Fund”). On the date of issuance of the Series 2014 Bonds, the Master Trustee shall deposit $2,250,000 received from the Greystone Liquidity Provider in the Supplemental Liquidity Support Fund. The Master Trustee shall deposit the moneys it receives from the Greystone Liquidity Provider pursuant to the Greystone Liquidity Support Agreement in the Supplemental Liquidity Support Fund. The Supplemental Liquidity Support Fund shall be the property of the Development Consultant, but shall be pledged to fund and secure the Development Consultant’s obligations under the Greystone Support Agreement. The Supplemental Liquidity Support Fund is excluded from the trust estate created under the Master Indenture.

The Master Trustee shall transfer to the Series 2014 Bond Trustee moneys from the Supplemental Liquidity Support Fund for deposit in the Project Fund to the extent necessary to pay Costs of Construction in accordance with the Greystone Liquidity Support Agreement. The Corporation may withdraw moneys from the Supplemental Liquidity Support Fund for other purposes in accordance with the Greystone Liquidity Support Agreement. Withdrawals made from the Supplemental Liquidity

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Support Fund shall be made in the order of priority set forth in the Greystone Liquidity Support Agreement.

The Master Trustee shall determine the value of the Qualified Investments on deposit in the Supplemental Liquidity Support Fund as soon as practicable as of each March 31 and September 30 and upon any withdrawal from the Liquidity Support Funds (each a “Liquidity Support Valuation Date”). If at any time after a Funding Event, (i) the total amount in the Liquidity Support Funds drops below $1,000,000 before the Operating Reserve Fund is closed pursuant to the provisions of the Master Indenture summarized under the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – OPERATING RESERVE FUND”, (ii) no moneys are then on deposit in the Working Capital Fund or the Operating Reserve Fund created under the Master Indenture and (iii) the Greystone Support Obligation (as defined in the Greystone Liquidity Support Agreement) has not been reduced to zero as provided in the Greystone Liquidity Support Agreement, then the Master Trustee shall transfer the remaining moneys in the Supplemental Liquidity Support Fund to the Operating Reserve Fund.

Any moneys held by the Master Trustee in the Supplemental Liquidity Support Fund shall be invested by the Master Trustee, upon the written direction of the Obligated Group Representative, in Qualified Investments. If the Master Trustee has not received written direction from the Obligated Group Representative regarding the investment of the Supplemental Liquidity Support Fund, moneys held in the Supplemental Liquidity Support Fund shall be invested or reinvested by the Master Trustee in Qualified Investments described in paragraph (a) of the definition of Qualified Investments. All investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Master Trustee, unless specifically prohibited by the Obligated Group Representative in writing may trade with itself, or any bank affiliated with it, in the purchase and sale of such investments. The Master Trustee shall not be liable or responsible for any loss resulting from such investments. Investment income on the amounts on deposit in the Supplemental Liquidity Support Fund shall be retained therein until each Liquidity Support Valuation Date. Any investment losses shall be charged to the Supplemental Liquidity Support Fund. On each Liquidity Support Valuation Date any amounts on deposit in the Supplemental Liquidity Support Fund in excess of the Supplemental Support Obligation shall be transferred as provided in the Greystone Liquidity Support Agreement.

When the Master Trustee is notified that the Greystone Support Obligation is reduced pursuant to the provisions of the Greystone Liquidity Support Agreement, the Master Trustee shall release the funds on deposit in the Supplemental Liquidity Support Fund to the Greystone Liquidity Provider and, if the Greystone Support Obligation is reduced to zero, close the Supplemental Liquidity Support Fund.

NOTICES AND REPORTS FOLLOWING DRAWS ON LIQUIDITY SUPPORT FUNDS; CONSULTANT RECOMMENDATIONS; VALUATIONS

If there is an initial withdrawal from the Liquidity Support Funds, (i) within five days of the initial withdrawal, the Master Trustee shall notify the Required Information Recipient of the withdrawal and (ii) within 30 days of the initial withdrawal, the Obligated Group Representative shall submit an Officer’s Certificate to each Required Information Recipient containing a management report setting forth (A) the expected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Project costs and debt service until management expects to achieve a Debt Service Coverage Ratio of 1.0:1, (B) whether management expects that the Liquidity Support Funds, together with other moneys expected to be available, will be sufficient for that purpose, (C) a revised fill-up schedule for the Project, and (D) the expected schedule for the redemption of the Series 2014B Bonds and the Series 2014C Bonds.

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If funds in the Liquidity Support Funds are transferred to the Operating Reserve Fund pursuant to the provisions of the Master Indenture summarized under the headings “American Baptist Homes of the West Liquidity Support Fund,” “American Baptist Properties Liquidity Support Fund” and “Supplemental Liquidity Support Fund” (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 select an Independent Consultant to make recommendations regarding (A) an overall corrective action plan, (B) the projected amount needed to be sufficient, along with revenues and other available moneys, to pay expenses, Project costs and debt service until the Obligated Group is projected to achieve a 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 2014B 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 Independent Consultant in accordance with the Master Indenture. The Obligated Group shall not be required to obtain an Independent Consultant’s report more than one time in any nine-month period.

If at any time the aggregate amount on deposit in the American Baptist Properties Liquidity Support Fund and the Supplemental Liquidity Support Fund is less than $500,000, a Funding Event shall occur and the Master Trustee will, as soon as practicable, notify the Corporation, ABHOW, American Baptist Properties and the Development Consultant.

PAYMENTS ON AFFILIATE RELATED SUBORDINATED INDEBTEDNESS AND MANAGEMENT FEES TO AFFILIATES AND LIQUIDITY SUPPORT REPAYMENT OBLIGATIONS

A Member will not make payments on (i) Affiliate Related Subordinated Indebtedness or other Management Fees to Affiliates or (ii) Liquidity Support Repayment Obligations to the Greystone Liquidity Provider, unless the Obligated Group Representative delivers an Officer’s Certificate to the Master Trustee prior to any such payment certifying that the following conditions are satisfied:

(a) 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 nursing beds included in the Project was, in the aggregate, at least 90% and the average occupancy for the independent living units was at least 88% occupied;

(b) If the proposed payment had occurred as of the last day of the most recent fiscal quarter for which financial statements have been delivered pursuant to the provisions of the Master Indenture summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING”, the Obligated Group would have had a Cash to Debt Indebtedness ratio of at least 0.30 after that payment;

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

(d) No Series 2014B Bonds or Series 2014C Bonds remain Outstanding; and

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

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APPLICATION FOR RATING

Not later than 150 days after receipt by the Obligated Group Representative of audited financial statements delivered pursuant to the provisions of the Master Indenture summarized under the caption “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – FINANCIAL REPORTING” for the first full Fiscal Year following the achievement of Stable Occupancy with respect to the Project, and each Fiscal Year thereafter, the Obligated Group will approach any Rating Agency to obtain a credit rating until the Obligated Group obtains a credit rating of “BBB-” (or an equivalent rating) or better from any Rating Agency (an “Investment Grade Credit Rating”). Notwithstanding the foregoing, the requirement to annually approach a Rating Agency shall be suspended for so long as the Obligated Group maintains an Investment Grade Credit Rating. Notwithstanding the foregoing, the Obligated Group shall not be required to approach a Rating Agency to obtain a credit rating if the Obligated Group 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.

ACTUARIAL STUDY

During the Fiscal Year following the second 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 the amount, if any, by which the Obligated Group’s obligations to provide services under the Residency Agreements are anticipated to be in excess of those that could be satisfied using the rates, fees and charges for the Obligated Group then in effect.

INSURANCE AND CONDEMNATION PROCEEDS

Subject to the following paragraph, any insurance proceeds, condemnation award or payment in lieu of condemnation in an amount more than $1,000,000 or 3% of the Obligated Group’s assets, whichever is greater, shall, at the option of the Obligated Group Representative, (a) be deposited with the Master Trustee to apply to the prepayment or redemption of Obligations outstanding, on a pro rata basis, (b) be applied by the Obligated Group to repair, renovate or rebuild the facilities subject to the payment or, (c) for any other legitimate purpose, in the sole discretion of the Obligated Group Representative, or (d) be applied in any combination of (a), (b) or (c) above; provided, however, that notwithstanding the foregoing, in the case of the destruction of the Obligated Group’s 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, any related proceeds in an amount more than $1,000,000 or 3% of the Obligated Group’s assets, whichever is greater, shall be applied pursuant to the Deed of Trust in accordance with clause (b) in this paragraph.

Any Member may make agreements and covenants with the holder of any Indebtedness which is incurred in compliance with the provisions of the Master Indenture and which is secured by a Permitted Encumbrance with respect to the application or use to be made of insurance proceeds or condemnation awards which may be received in connection with Property which is subject to such Permitted Encumbrance.

DESIGNATION OF PRINCIPAL PROPERTY

The Obligated Group Representative (a) shall monitor the Property of the Members at least annually to determine whether such Property meets the qualifications contained in clause (a) of the

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definition of Principal Property; and (b) shall determine, at the time a Member is added to the Obligated Group, whether any property of the Member (that will constitute Property upon such Member joining the Obligated Group) satisfies the description contained in clause (a) of the definition of Principal Property. Upon such determination, the Governing Body of the Obligated Group Representative shall designate by resolution such Property as Principal Property under the Master Indenture, and, pursuant to the provisions of the Master Indenture summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – THE OBLIGATED GROUP – MEMBERSHIP IN THE OBLIGATED GROUP” above, each Member, upon joining the Obligated Group, shall designate such Property as Principal Property. Any such designation by the Obligated Group Representative is conclusive and binding upon the Members.

ADDITIONS TO EXCLUDED PROPERTY

Exhibit C to the Master Indenture (Description of Excluded Property) may be amended to include additional real property acquired by a Member subsequent to the effective date of the Master Indenture and all improvements, fixtures, tangible personal property and equipment located thereon and used in connection therewith upon the receipt by the Master Trustee of an Officer’s Certificate of such Member stating that (1) such Property is not Principal Property and (2) the total value of such Property included on Exhibit C does not exceed 10% of the total value of Property of the Obligated Group (calculated on the basis of the Book Value of the assets shown on the asset side of the balance sheet in the combined financial statements of the Obligated Group for the most recent Fiscal Year next preceding the date of such amendment to Exhibit C thereto for which combined financial statements reported on by independent certified public accountants are available or, if the Obligated Group Representative so elects, on the basis of Current Value).

DEFAULTS AND REMEDIES

Events of Default. Each of the following events is an Event of Default under the Master Indenture:

(a) Failure on the part of the Obligated Group to make due and punctual payment of the principal of, redemption premium, if any, or interest on an Obligation.

(b) Failure of any Member to duly observe and perform any other covenant or agreement under the Master Indenture (including covenants or agreements contained in any Obligation) for a period of 60 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 25% in aggregate principal amount of Outstanding Obligations; provided that, if in the judgment of the Master Trustee, such default cannot with due diligence and dispatch be wholly cured so that such failure no longer constitutes an “Event of Default” under the Master Indenture within 60 days but can be wholly cured, the failure of the Member to remedy such default within such 60 day period shall not constitute a default under the Master Indenture if the Member shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default, and, having so commenced the curing of such default shall thereafter prosecute and complete the same with due diligence and dispatch.

(c) Default by any Member in the payment of any Indebtedness for borrowed moneys (other than an Obligation), whether such Indebtedness now exists or shall hereafter be created, and any period of grace with respect thereto shall have expired, or an Event of Default, as defined in any mortgage, indenture or instrument, under which there may be secured or evidenced any Indebtedness, whether such Indebtedness now exists or shall hereafter be created, shall occur; provided, however, that such default shall not constitute an Event of Default within the meaning described under this heading if within 60

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days, or within the time allowed for service of a responsive pleading if any proceeding to enforce payment of the Indebtedness is commenced (1) any Member in good faith commences proceedings to contest the existence or payment of such Indebtedness, and (2) sufficient moneys are escrowed with a bank or trust company or a bond acceptable to the Master Trustee is posted for the payment of such Indebtedness.

(d) Entry by a court having jurisdiction of a decree or order for (1) relief with respect to any Member in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or (2) appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) for any Member or for any substantial part of the property of any Member, or (3) winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days.

(e) Occurrence of the following actions of any Member: (1) commencement of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, (2) consent to the entry of an order for relief in an involuntary case under any such law, or (3) consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official) of any Member or for any substantial part of its property, or (4) making any general assignment for the benefit of creditors, or (5) failure to generally pay its debts as they become due, or (6) taking any corporate action in furtherance of the foregoing.

(f) An Event of Default shall exist under any Related Bond Indenture or under any Deed of Trust.

Acceleration; Annulment of Acceleration. Upon the occurrence and during the continuation of an Event of Default, the Master Trustee may and, upon (1) the written request of the Holders of not less than 25% in aggregate principal amount of Outstanding Obligations or of any Holder if an Event of Default under the Master Indenture as described in clause (a) under the subheading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – DEFAULTS AND REMEDIES – Events of Default” above has occurred or (2) the acceleration of any Obligation pursuant to the terms of the Related Supplement under which such Obligation was issued, shall, by notice to the Members, declare all Outstanding Obligations immediately due and payable. Upon such declaration of acceleration, all Outstanding Obligations shall become and be immediately due and payable. If the terms of any Related Supplement give a Person the right to consent to acceleration of the Obligations issued pursuant to such Related Supplement, the Obligations issued pursuant to such Related Supplement may not be accelerated by the Master Trustee unless such consent is properly obtained pursuant to the terms of such Related Supplement. In the event of acceleration, an amount equal to the aggregate principal amount of all Outstanding Obligations, plus all interest accrued thereon and, to the extent permitted by applicable law, which accrues on such principal and interest to the date of payment, shall be due and payable on the Obligations.

At any time after the Master Trustee has declared the principal of the Obligations to be due and payable, and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of an Event of Default, the Master Trustee may annul such declaration and its consequences if: (1) the Obligated Group has paid or caused to be paid (or deposited with the Master Trustee moneys sufficient to pay) all payments then due on all Outstanding Obligations (other than the principal or other payments then due only because of such declaration); (2) the Obligated Group has paid (or caused to be paid or deposited with the Master Trustee) moneys sufficient to pay the charges, compensation, expenses, disbursements, advances and liabilities of the Master Trustee and any paying agents; (3) the Obligated Group has paid all other amounts then payable by the Obligated Group under the Master Indenture (or a sum sufficient to pay the same shall have been deposited with the Master Trustee); and (4) every Event of

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Default (other than a default in the payment of the principal or other payments of such Obligations then due only because of such declaration) shall have been remedied.

Application of Revenues and Other Moneys After Default. During the continuance of an Event of Default, all moneys received by the Master Trustee pursuant to any right given or action taken under the provisions of the Master Indenture, after payment of the costs and expenses of any action, proceeding or the like resulting in the collection of such moneys and payment of the fees, costs, expenses, advances and all other amounts owed to the Master Trustee, shall be applied as follows:

(a) If the Master Trustee has not declared the principal of all Outstanding Obligations due and payable:

FIRST: To the payment of all installments of interest then due on the Obligations in the order of their due dates, and, if the amount available is not sufficient to pay in full all installments due on the same date, then to the payment thereof ratably, according to the amounts of interest due on such date, without any discrimination or preference; and

SECOND: To the payment of the unpaid installments of principal then due on the Obligations, whether at maturity or by call for redemption, in the order of their due dates, and, if the amount available is not sufficient to pay in full all installments due on the same date, then to the payment thereof ratably, according to the amounts of principal due on such date, to the Persons entitled thereto, without any discrimination or preference.

(b) If the Master Trustee has declared all Outstanding Obligations due and payable (and has not annulled such declaration under the terms of the Master Indenture relating to Events of Default), to the payment of the principal and interest then due and unpaid upon the Obligations and, if the amount available is not sufficient to pay in full the whole amount then due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, of interest over principal, of any installment over any other installment, or of any Obligation over any other Obligation, according to the amounts due, without any discrimination or preference.

Such moneys shall be applied by the Master Trustee as it shall determine, having due regard for the amount of moneys available for application and the likelihood of additional moneys becoming available in the future. Whenever the Master Trustee shall apply such moneys, it shall fix the date upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Master Trustee shall give such notices as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date. The Master Trustee shall not be required to make payment to the Holder of any unpaid Obligation until such Obligation (and all unmatured coupons, if any) is presented to the Master Trustee for appropriate endorsement of any partial payment or for cancellation if fully paid.

Whenever all Obligations have been paid under the terms described under this subheading and all expenses and charges of the Master Trustee have been paid, any balance remaining shall be paid to the Person entitled to receive such balance. If no other Person shall be entitled thereto, then the balance shall be paid to the Members, their successors, or as a court of competent jurisdiction may direct.

Master Trustee to Represent Holders. The Master Trustee is irrevocably appointed (and the successive respective Holders of the Obligations, by taking and holding the same, shall be conclusively deemed to have so appointed the Master Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the Obligations for the purpose of exercising and prosecuting on their behalf such rights and

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remedies as may be available to such Holders under the provisions of the Master Indenture, the Obligations, any Related Supplement and applicable provisions of any other law.

Holders’ Control of Proceedings. If an Event of Default shall have occurred and be continuing, notwithstanding anything in the Master Indenture to the contrary, the Holders of at least a majority in aggregate principal amount of Obligations then Outstanding shall have the right, at any time, by any instrument in writing executed and delivered to the Master Trustee, to direct the method and place of conducting any proceeding to be taken in connection with the enforcement of the terms and conditions of the Master Indenture or for the appointment of a receiver or any other proceedings under the Master Indenture. However, the Master Trustee shall not follow any such direction that is in conflict with any applicable law or the provisions of the Master Indenture or, in the sole judgment of the Master Trustee, is unduly prejudicial to the interest of Holders not joining in such direction. Nothing in this paragraph shall impair the right of the Master Trustee in its discretion to take any other action authorized by the Master Indenture that it may deem proper and which is not inconsistent with such direction by Holders. Nothing in the Master Indenture shall affect or impair the rights of any Holder to enforce the payment of principal of, interest on and other amounts due under the Obligation held by such Holder or any agreement or instrument secured by such Obligation, by suit or other action available pursuant thereto or in law or in equity.

Termination of Proceedings. In case any proceeding taken by the Master Trustee on account of an Event of Default is discontinued or abandoned for any reason or is determined adversely to the Master Trustee or to the Holders, then the Members, the Master Trustee and the Holders shall be restored to their former positions and rights under the Master Indenture, and all rights, remedies and powers of the Master Trustee and the Holders shall continue as if no such proceeding had been taken.

Waiver of Event of Default. No delay or omission of the Master Trustee or of any Holder to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of or acquiescence to any such Event of Default. Every power and remedy given to the Master Trustee and the Holders under the Master Indenture relating to Events of Defaults may be exercised from time to time and as often as may be deemed expedient by them. The Master Trustee may waive any Event of Default which in its opinion shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions of the Master Indenture, or before the completion of the enforcement of any other remedy thereunder. Notwithstanding anything contained in the Master Indenture to the contrary, upon the written request of the Holders of at least a majority of the aggregate principal amount of Obligations then Outstanding, the Master Trustee shall waive any Event of Default under the Master Indenture and its consequences; provided, however, that, except under the circumstances set forth in the Master Indenture described in the second paragraph under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – DEFAULTS AND REMEDIES – Acceleration; Annulment of Acceleration” above, a default in the payment of the principal of, premium, if any, or interest on any Obligation when due may not be waived without the written consent of the Holders of all Outstanding Obligations.

Notice of Default. Within ten days after the Master Trustee has actual knowledge or has received written notice of the occurrence of an Event of Default, the Master Trustee shall mail to all Holders notice of such Event of Default, unless such Event of Default shall have been cured before the giving of such notice, subject to conditions set forth in the Master Indenture.

RELATED BOND TRUSTEE OR BONDHOLDERS DEEMED TO BE OBLIGATION HOLDERS

For the purposes of the Master Indenture, unless a Related Bond Trustee elects to the contrary or contrary provision is made in a Related Bond Indenture, each Related Bond Trustee shall be deemed the

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Holder of the Obligation or Obligations pledged to secure the Related Bonds with respect to which such Related Bond Trustee is acting as trustee. If such a Related Bond Trustee so elects or the Related Bond Indenture so provides, the holders of each series of Related Bonds shall be deemed the Holders of the Obligations to the extent of the principal amount of the Obligations to which their bonds relate.

REMOVAL AND RESIGNATION OF THE MASTER TRUSTEE

The Master Trustee may be removed at any time by an instrument or instruments in writing signed by the Holders of not less than a majority of the principal amount of Obligations then Outstanding or, unless an Event of Default has occurred and is then continuing, the Obligated Group Representative.

The Master Trustee may at any time resign by giving written notice of such resignation to the Obligated Group Representative and by giving the Holders of all Obligations then Outstanding notice of such resignation by mail at the addresses shown on the registration books maintained by the Master Trustee.

No such resignation or removal shall become effective unless and until a successor Master Trustee has been appointed and has assumed the trusts created by the Master Indenture. Written notice of removal shall be given to the Members and to each Holder at the address then reflected on the books of the Master Trustee. A successor Master Trustee may be appointed at the direction of the Holders of not less than a majority in aggregate principal amount of Obligations Outstanding, or, if the Master Trustee has resigned or has been removed by the Obligated Group Representative, by the Obligated Group Representative. If a successor Master Trustee has not been appointed and qualified within 60 days of the date notice of resignation is given, the Master Trustee, any Member or any Holder may apply to any court of competent jurisdiction for the appointment of an interim successor Master Trustee to act until such time as a permanent successor is appointed.

Unless otherwise ordered by a court or regulatory body having competent jurisdiction, or unless required by law, any successor Master Trustee shall be a trust company or bank having the powers of a trust company as to trusts, qualified to do and doing trust business in one or more states of the United States of America and having an officially reported combined capital, surplus, undivided profits and reserves (or if the Master Trustee is a subsidiary of such financial institution, the parent institution shall satisfy these requirements) aggregating at least $50,000,000, if there is such an institution willing, qualified and able to accept the trust upon reasonable or customary terms.

Every successor Master Trustee howsoever appointed under the Master Indenture shall execute, acknowledge and deliver to its predecessor and also to each Member an instrument in writing, accepting such appointment. Upon the delivery of such acceptance, such successor Master Trustee shall, without further action, become fully vested with all the rights, immunities, powers, trusts, duties and obligations of its predecessor. The predecessor Master Trustee shall execute and deliver an instrument transferring to such successor Master Trustee all the rights, powers and trusts of such predecessor Master Trustee. The predecessor Master Trustee shall execute any and all documents necessary or appropriate to convey all interest it may have to the successor Master Trustee. The predecessor Master Trustee shall promptly deliver all records relating to the trust or copies thereof and communicate all material information it may have obtained concerning the trust to the successor Master Trustee.

Each successor Master Trustee, not later than 10 days after its assumption of the duties under the Master Indenture, shall mail a notice of such assumption to each Holder.

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SUPPLEMENTS AND AMENDMENTS

Supplements Not Requiring Consent of Holders. The Obligated Group Representative, acting for itself and as agent for each Member, and the Master Trustee may, without the consent of or notice to any of the Holders, enter into one or more Related Supplements or one or more amendments to the Deed of Trust for one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in the Master Indenture or in the Deed of Trust; (b) to correct or supplement any provision of the Master Indenture or the Deed of Trust which may be inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising thereunder and which shall not materially and adversely affect the interests of the Holders; (c) to grant or confer ratably upon all of the Holders any additional rights, remedies, powers or authority, or to add to the covenants of and restrictions on the Members; (d) to qualify the Master Indenture under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect; (e) to create and provide for the issuance of an Obligation or series of Obligations as permitted under the Master Indenture; (f) to obligate a successor to any Member as permitted by the provisions of the Master Indenture described under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – CONSOLIDATION, MERGER, SALE OR CONVEYANCE” above; (g) to add a new Member or have a Member withdraw as permitted by the provisions of the Master Indenture described under the headings “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – THE OBLIGATED GROUP – Membership in the Obligated Group” and “– Withdrawal from the Obligated Group” above; (h) to provide for the release in accordance with the provisions of the Deed of Trust of any Property subject to the lien of such Deed of Trust; or (i) to amend any provision of the Master Indenture after a change in GAAP as permitted by the provisions of the Master Indenture such that the Master Indenture and the provisions of the Master Indenture, including any definitions included therein, will equitably reflect such change in GAAP, with the desired result that the criteria for calculating such covenant shall be the same after such change as if such change in GAAP had not been made.

Supplements Requiring Consent of Holders. (a) Other than Related Supplements and amendments to the Deed of Trust referred to in the preceding paragraph, and subject to the terms and provisions and limitations contained in the Master Indenture, the Holders of not less a majority in aggregate principal amount of the Outstanding Obligations shall have the right to consent to and approve the execution by the Obligated Group Representative, acting for itself and as agent for each Member, and the Master Trustee of such Related Supplements and amendments to the Deed of Trust as shall be deemed necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained therein. No Related Supplement shall be permitted however, that would: (1) extend the stated maturity of or time for paying interest on any Obligation or reduce the principal amount of or the redemption premium or rate of interest or method of calculating interest payable on any Obligation without the consent of the Holder of such Obligation; (2) modify, alter, amend, add to or rescind any of the terms or provisions under the Master Indenture relating to Events of Default so as to affect the right of the Holders of any Obligations in default as to payment to compel the Master Trustee to declare the principal of all Obligations to be due and payable, without the consent of the Holders of all Obligations then Outstanding; or (3) reduce the aggregate principal amount of Obligations then Outstanding the consent of the Holders of which is required to authorize such Related Supplement without the consent of the Holders of all Obligations then Outstanding.

(b) The Master Trustee may execute a Related Supplement or amendment to the Deed of Trust (in substantially the form delivered to it as described in this paragraph) without liability or responsibility to any Holder (whether or not such Holder has consented to the execution of such Related Supplement or amendment to the Deed of Trust) if the Master Trustee receives: (1) a Request of the Obligated Group Representative to enter into such Related Supplement or amendment to the Deed of Trust; (2) a certified copy of the resolution of the Governing Body of the Obligated Group Representative

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approving the execution of such Related Supplement or amendment to the Deed of Trust; (3) the proposed Related Supplement or amendment to the Deed of Trust; and (4) an instrument or instruments executed by the Holders of not less than the aggregate principal amount or number of Obligations specified in subsection (a) for the Related Supplement or amendment to the Deed of Trust in question which instrument or instruments shall refer to the proposed Related Supplement or amendment to the Deed of Trust and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof as on file with the Master Trustee.

SATISFACTION AND DISCHARGE OF MASTER INDENTURE

If (1) the Members shall deliver to the Master Trustee for cancellation all Obligations previously authenticated (other than any Obligations which shall have been mutilated, destroyed, lost or stolen and which shall have been replaced or paid as provided in any Related Supplement) and not cancelled, or (2) upon payment of all Obligations not previously cancelled or delivered to the Master Trustee for cancellation, (3) all Obligations that have not become due and payable and have not been cancelled or delivered to the Master Trustee for cancellation shall be deemed to have been paid and discharged pursuant to the terms of the Supplement under which such Obligations were issued or (4) the Members shall deposit with the Master Trustee (or with a bank or trust company pursuant to an agreement between a Member and such bank or trust company) as cash or Escrow Obligations or both, sufficient to pay at maturity or upon redemption all Obligations not previously cancelled or delivered to the Master Trustee for cancellation, including, without limitation, principal and interest due or to become due to such date of maturity or redemption date, as the case may be, and if in any case the Members shall also pay or cause to be paid all other sums payable under the Master Indenture by the Members, then the Master Indenture shall cease to be of further effect, and the Master Trustee, on demand of the Members and at the cost and expense of the Members, shall execute proper instruments acknowledging satisfaction of and discharging the Master Indenture. The Members shall cause a report to be prepared by a firm nationally recognized for providing verification services regarding the sufficiency of funds for such discharge and satisfaction, upon which report the Master Trustee may rely.

SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST

The following information summarizes certain provisions of the Deed of Trust. Reference is made to the Deed of Trust for a full and complete statement of its provisions.

GENERAL

Under the Deed of Trust, the Corporation grants a lien on and security interest in the Mortgaged Property to First American Title Insurance Company (“First American”), to be held for the benefit of the Master Trustee.

The grant, assignment and transfer made in the Deed of Trust are given for the purpose of securing:

(a) Payment when due of indebtedness, currently in the total outstanding principal amount of up to Three Hundred Million Dollars ($300,000,000), with interest thereon, evidenced by the Obligations issued pursuant to the Master Indenture, which Master Indenture has been delivered to and which provides for repayment of the Obligations.

(b) Payment when due of all other indebtedness, with interest thereon, which may be incurred in the future by the Corporation evidenced by an Obligation.

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(c) Payment of all sums advanced or paid out by the Master Trustee under any provision of the Deed of Trust or any other Loan Documents (as defined below) or to protect the Mortgaged Property or to enforce the Master Trustee’s rights under any Loan Documents with interest on such sums at the highest applicable rate as provided in the Loan Documents.

(d) Payment of all other sums, with interest thereon, which may be loaned by the Master Trustee to the Corporation when the promissory note or other writing evidencing the loan recites that it is secured by the Deed of Trust.

(e) Full and timely performance by the Corporation of the provisions of the Deed of Trust and the Master Indenture and payment of each other fee, cost and expense by the Corporation as set forth in the Deed of Trust.

The indebtedness, obligations and liabilities of the Corporation described in paragraphs (a) through (e) above are referred to herein as the “Secured Indebtedness.” The Deed of Trust, the Master Indenture and all other instruments or documents executed in connection with, or given to evidence or further secure the payment and performance of, the Secured Indebtedness are referred to as the “Loan Documents.”

REPRESENTATIONS AND WARRANTIES

The Corporation warrants and represents to the Master Trustee that: (i) the Corporation holds title to the Mortgaged Property, free and clear of any interests or claims of any person whatsoever except as expressly provided in the Deed of Trust and except for Permitted Encumbrances, and (ii) the Corporation has the right and authority to convey the Mortgaged Property as security for the obligations of the Corporation secured thereby.

TRANSFER OF INTEREST

Except to the extent expressly permitted in the Master Indenture, the Corporation shall not sell, convey, transfer, assign, lease, encumber, or in any other manner, dispose of the Mortgaged Property or enter into a binding agreement to do the same, without the prior written consent of the Master Trustee in its sole discretion. Should the Corporation sell, convey, transfer, assign, lease, encumber, or in any other manner, dispose of the Mortgaged Property or any part thereof, or turn over to another the possession, management or operation of the Mortgaged Property or any part thereof, or sell, convey, transfer, encumber, or enter into a binding agreement to do the same, outside the transfers permitted by the Master Indenture and without the prior written consent of the Master Trustee, then the Master Trustee shall have the right at its option to declare all Secured Indebtedness secured by the Deed of Trust immediately due and payable. Consent to any such transaction shall not be deemed to be consent or waiver of the necessity of consent to any other transactions. If the Master Trustee consents to any such transaction and/or to the assumption of the Secured Indebtedness secured by the Deed of Trust, the Corporation shall not thereby be released from any Secured Indebtedness secured by the Deed of Trust except as otherwise provided in the Master Indenture. Upon the occurrence of any sale, conveyance, or transfer of the Mortgaged Property or any part thereof, in addition to the consent required aforesaid, the Master Trustee shall be paid a reasonable service charge for changing its records to reflect such transaction. The Corporation may enter into joint ventures or similar agreements that relate to the Mortgaged Property, provided that the lien of the Deed of Trust upon any portion of the Mortgaged Property shall not be released without prior written consent of the Master Trustee.

The foregoing provisions shall not apply to actions or transactions constituting Permitted Encumbrances.

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MAINTENANCE OF LIEN

The Corporation will, from time to time, within fifteen (15) days after request by the Master Trustee, execute, acknowledge (if requested) and deliver any financing statement, renewal, affidavit, certificate, continuation statement, assignment, instrument or other document reasonably requested by the Master Trustee in order to perfect, preserve, continue, evidence, extend or maintain the priority of the lien and/or security interest created by or granted under the Deed of Trust.

EVENT OF DEFAULT

The Corporation shall be in default under the Deed of Trust (i) if there shall be an “event of default” as defined in the Master Indenture, (ii) if the Corporation violates the provisions of the Deed of Trust summarized under the heading “SUMMARY OF CERTAIN PROVISIONS OF THE DEED OF TRUST – TRANSFER OF INTEREST” herein, or (iii) subject to any contrary provision in the Master Indenture, if there has occurred a breach of or Event of Default under any term, covenant, agreement, condition, provision, representation or warranty in the Deed of Trust or other Loan Documents other than as referred to in clause (ii) above, and the failure of the Corporation to cure the same following thirty (30) days written notice to the Corporation.

REMEDIES

Immediately upon or any time after the occurrence of any Event of Default, the Master Trustee may exercise any remedy available at law or in equity, including but not limited to those listed below and those listed in the Master Indenture and other Loan Documents, in such sequence or combination as the Master Trustee may determine in the Master Trustee’s sole discretion.

In the event of any Event of Default, the Master Trustee (as and to the extent that the Master Trustee may exercise remedies under the Master Indenture) may declare all Obligations to be immediately due and payable and the same shall be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Corporation.

The Master Trustee may elect to foreclose by exercise of the power of sale granted in the Deed of Trust and, in doing so, to deliver to First American Title Insurance Company a written declaration of default and demand for sale, and a written notice of default and election to cause the Corporation’s interest in the Land and the Building to be sold (the “Notice of Default”), together with a copy of the Deed of Trust and the Master Indenture and such receipts or other evidence of expenditures made by the Master Trustee and secured by the Deed of Trust as First American may require. The Master Trustee may elect to realize on the Collateral in accordance with its remedies under real property law and, accordingly, may assign its security interest in the Collateral to First American and request that it sell the Collateral in the same manner as for real estate. Upon the filing of such notice of election and demand for sale, First American shall promptly comply with all applicable notice and other requirements of law then in force with respect to such sales, and, unless otherwise provided under applicable law, shall give four consecutive weeks’ public notice of the time and place of such sale by advertisement weekly in some newspaper of general circulation then published in the District, County or City in which the Land is located. Any sale conducted by First American pursuant to the provisions of the Master Indenture summarized in this paragraph shall be held at the front door of the county courthouse for such District, County or City, or on the Land, or at such other place as similar sales are then customarily held in such District, County or City, provided that the actual place of sale shall be specified in the notice of sale. The sale or sales by First American of less than the whole of the Mortgaged Property shall not exhaust the power of sale granted in the Deed of Trust, and First American is specifically empowered to make successive sale or sales under such power until the whole of the Mortgaged Property shall be sold; and if

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the proceeds of such sale or sales of less than the whole of the Mortgaged Property shall be less than the aggregate of the Secured Indebtedness and the expenses thereof, the Deed of Trust and the lien, security interest and assignment thereof shall remain in full force and effect as to the unsold portion of the Mortgaged Property; provided, however, that the Corporation shall never have any right to require the sale or sales of less than the whole of the Mortgaged Property, but the Master Trustee shall have the right at its sole election, to request First American to sell less than the whole of the Mortgaged Property.

The Master Trustee may commence an action to judicially foreclose the Deed of Trust as a mortgage. The Mortgaged Property may be sold at one or more sales, as a whole or in such parcels or lots, with such elements of real and/or personal property, and in such manner or order as the Master Trustee, in its sole discretion, may elect in accordance with applicable law. The foreclosure, sale or sales of less than the whole of the Mortgaged Property shall not exhaust the judicial foreclosure rights granted in the Deed of Trust, and First American is specifically empowered to bring successive foreclosures and/or cause additional sale or sales until the whole of the Mortgaged Property shall be sold; and if the proceeds of such sale or sales of less than the whole of the Mortgaged Property shall be less than the aggregate of the Secured Indebtedness and the expenses thereof, the Deed of Trust and the lien, security interest and assignment thereof shall remain in full force and effect as to the unsold portion of the Mortgaged Property; provided, however, that the Corporation shall never have any right to require the sale or sales of less than the whole of the Mortgaged Property. The Master Trustee will be entitled to possession of the Mortgaged Property during any redemption period allowed under the laws of the State of Idaho. However, if the Corporation remains in possession of the Mortgaged Property after it has been sold, the Corporation will become a tenant at will of the purchaser of the Mortgaged Property and will pay a reasonable rental for the use thereof while the same is in the Corporation’s possession. During any redemption period, the purchaser may make such repairs and alterations to the Mortgaged Property as may be reasonably necessary for its proper operation, care, preservation or protection; pay any taxes or other charges which become due; insure the Building and Collateral against loss by casualty and itself against liability arising from its ownership and use of the Mortgaged Property; pay liens not extinguished by the foreclosure; and pay any other amounts relating to the Mortgaged Property as they become due. Any sums so paid, together with interest thereon from the date of the expenditure until paid at the Default Rate, will be included in the amount required to be paid to redeem the Mortgaged Property.

The Master Trustee may exercise any or all of the rights and remedies available to a secured party under the Uniform Commercial Code as in effect in the State of Idaho. Upon request, the Corporation, at the Corporation’s sole cost and expense, will assemble and make the Collateral available to the Master Trustee or its agent at a place to be designated by the Master Trustee which is reasonably convenient to both parties. The Master Trustee may sell (at public or private sale), lease or otherwise dispose of the Collateral in accordance with the Uniform Commercial Code of Idaho. Unless the Collateral is perishable or threatens to decline rapidly in value or is of a type customarily sold on a recognized market, the Master Trustee will give the Corporation prior written notice of the time and place of any public sale of the Collateral or of the time after which any other intended disposition of the Collateral will occur, and notice will be deemed reasonably and properly given if mailed at least ten (10) days prior to such sale or other disposition. The Master Trustee also may elect to have the Collateral sold at a trustee’s sale as part of the real property or to judicially foreclose its security interest. The Master Trustee and its agents will have the right to enter upon the Land and Building to exercise the Master Trustee’s rights with regard to the Collateral. Alternatively, the Master Trustee or First American may sell or otherwise dispose of the Collateral separately and apart from the Land and Building in the time and manner provided by the Uniform Commercial Code of Idaho. The Master Trustee also may sell the Collateral or any part thereof at public or private sale for cash or credit or for future delivery, and at such price or prices and upon such other terms as the Master Trustee or First American may deem commercially reasonable.

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Notwithstanding the availability of legal remedies, the Master Trustee may institute an action, suit or proceeding in equity for the specific performance of any of the provisions contained in the Loan Documents and/or seeking mandatory or prohibitory injunctive relief, or other equitable relief requiring the Corporation to cure or refrain from repeating any default.

ASSIGNMENT OF LEASES AND RENTS

The Corporation presently, absolutely, unconditionally and irrevocably assigns and transfers to the Master Trustee the Leases and Rents, together with the immediate and continuing right, power and authority to collect the Rents and administer the Leases, subject only to a revocable license to collect the Rents and administer the Leases given to the Corporation in the Deed of Trust. The Master Trustee may notify the lessees or occupants under any Lease of this assignment. The assignment of the Leases and Rents is intended to be an absolute present assignment from the Corporation to the Master Trustee and not merely the creation of a lien or security interest. The assignment will be subject to and, to the extent of any conflict, governed by the provisions of any existing or future separate assignment of the Leases and/or Rents from the Corporation to the Master Trustee.

RECEIVER

The Master Trustee may apply for the appointment of a receiver of the Mortgaged Property, as a matter of absolute right and without notice, without bond and without regard to the adequacy of the security for the Secured Indebtedness or the solvency of the Corporation or any other person liable on the Secured Indebtedness upon ex parte application to any court of competent jurisdiction. The Corporation and each other person so liable waives, or is deemed to have waived, any right to any hearing or notice of hearing prior to the appointment of a receiver. Such receiver and his agents shall be empowered (a) to take possession of the Mortgaged Property and any businesses conducted by the Corporation or any other person thereon and any business assets used in connection therewith, (b) to exclude the Corporation and the Corporation’s agents, servants, and employees from the Mortgaged Property, (c) to collect the rents, issues, profits, and income therefrom, (d) to complete any construction which may be in progress, (e) to do such maintenance and make such repairs and alterations as the receiver deems necessary, (f) to use all stores of materials, supplies, and maintenance equipment on the Mortgaged Property and replace such items at the expense of the receivership estate, (g) to pay all taxes and assessments against the Mortgaged Property, all premiums for insurance thereon, all utility and other operating expenses, and all sums due under any prior or subsequent encumbrance, and (h) generally to do anything which the Corporation could legally do if the Corporation were in possession of the Mortgaged Property. The Corporation and each other person so liable waives, or is deemed to have waived, notice and the necessity to disprove adequacy of security or solvency and consents to, or is deemed to have consented to, such appointment. The risk of accidental loss or damage to the Mortgaged Property is undertaken by the Corporation and the Master Trustee shall have no liability whatsoever for decline in value of the Mortgaged Property, for failure to obtain or maintain insurance, or for failure to determine whether any insurance ever in force is adequate as to amount or as to the risks insured. The receiver will be vested with the fullest powers permitted under applicable law and all rights and powers granted to Master Trustee by the Loan Documents.

APPENDIX D

SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE

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APPENDIX D

SUMMARY OF LOAN AGREEMENT AND BOND INDENTURE

Brief descriptions of the Loan Agreement and the Bond Indenture are included hereafter in this Appendix D. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Loan Agreement and the Bond Indenture are qualified in their entirety by reference to each such document, copies of which are available for review at the designated corporate trust office of the Bond Trustee. All references to the Bonds are qualified in their entirety by reference to the definitive form thereof and the information with respect thereto included in the Bond Indenture.

DEFINITIONS

The following are definitions of certain terms used in the Loan Agreement and the Bond Indenture. Certain terms used in this Appendix D shall have the meanings given to them in the Master Indenture. See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST – Definitions of Certain Terms.”

“Accountant” means any independent certified public accountant or firm of independent certified public accountants licensed to practice in the State (who may be the accountant or the firm of accountants who regularly audit the books and accounts of the Corporation or other Members of the Obligated Group) from time to time selected by the Corporation with the approval of the Authority.

“Act” means the Idaho Health Facilities Authority Act, constituting Sections 39-1441 et seq. of the Idaho Code, as amended.

“Authorized Denomination” means (i) $100,000 and integral multiples of $5,000 in excess thereof and (ii) if the outstanding aggregate principal amount of any series of the Bonds is less than $100,000, with respect to such series of the Bonds, $5,000 and any integral multiple thereof.

“Bond Financed Property” means all of the property of the Corporation financed with the proceeds of the Bonds.

“Bond Register” means the registration records of the Authority kept by the Bond Trustee to evidence the registration and transfer of Bonds.

“Buildings” means those certain buildings and all other structures and facilities (excluding any equipment and any other personal property but including all fixtures, heating and air conditioning equipment and all other equipment and machinery affixed to the Land and the Buildings) required or permitted to be acquired and constructed on the Land with a portion of the proceeds of the Bonds, generally described in the Loan Agreement, forming a part of the Project, as they may from time to time exist.

“Business Day” means any day other than (i) a Saturday, Sunday or legal holiday or a day on which banks in the State, the State of New York or in any city in which the

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designated corporate trust office of the Bond Trustee is located are required or authorized by law to remain closed or (ii) a day on which the New York Stock Exchange is closed.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. Each reference to a Section of the Code shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations.

“Construction Monitoring Agreement” means the Construction Disbursement and Monitoring Agreement, dated as of January 1, 2014, among the Corporation, the Bond Trustee and the Construction Consultant.

“Construction Consultant” means zumBrunnen, Inc.

“Consulting Architect” means an architect, engineer or firm of architects or engineers licensed by, or permitted to practice in, the State selected by the Corporation and acceptable to the Authority as being of recognized standing for skill and experience with respect to construction of health care facilities and who or which may be an employee of the Corporation or other Members of the Obligated Group.

“Debt Service Reserve Fund Requirement” means, with respect to the Series 2014A Account of the Debt Service Reserve Fund, the lesser of (i) $7,099,950 or (ii) the lesser of (A) the maximum amount of principal and interest which shall be payable during the current or any succeeding 12 month period starting on October 1 of a year and ending on September 30 of the next year for the Series 2014A Bonds, (B) an amount equal to 10% of the outstanding principal amount of the Series 2014A Bonds or (C) an amount equal to 125% of the average annual debt service with respect to the Series 2014A Bonds.

“Debt Service Reserve Fund Requirement” means (i) with respect to the Series 2014B-1 Account of the Debt Service Reserve Fund, $316,875, (ii) with respect to the Series 2014B-2 Account of the Debt Service Reserve Fund, $442,500, (iii) with respect to the Series 2014B-3 Account of the Debt Service Reserve Fund, $446,250 and (iv) with respect to the Series 2014C Account of the Debt Service Reserve Fund, $122,500.

“Deed of Trust” means the Deed of Trust and Security Agreement, dated as of January 1, 2014, as it may be supplemented and amended from time to time, under which the Corporation has granted a lien and security interest on its Facilities to First American Title Insurance Company, to be held for the benefit of the Master Trustee.

“Defaulted Interest” means interest on any Bond which is payable but not duly paid on the date due.

“Environmental Regulations” means any federal, state or local law, statute, code, ordinance, regulation, requirement or rule relating to dangerous, toxic or hazardous pollutants, Hazardous Substances, chemical waste, materials or substances presently in effect or that may be promulgated in the future as such laws, statutes, codes, ordinances, regulations, requirements or rules may be amended from time to time, including but not limited to the statutes listed below:

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(a) Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq.,

(b) Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9601, et seq.,

(c) Clean Air Act, 42 U.S.C. § 7401, et seq.,

(d) Federal Water Pollution Control Act (Clean Water Act of 1977), 33 U.S.C. § 1251, et seq.,

(e) Federal Insecticide, Fungicide, and Rodenticide Act (Federal Pesticide Act of 1978), 7 U.S.C. § 136, et seq.,

(f) Toxic Substances Control Act, 15 U.S.C. § 2601, et seq., and

(g) Safe Drinking Water Act, 42 U.S.C. § 300f, et seq.

“Equipment” means the equipment, machinery, furnishings and other personal property generally described in the Loan Agreement required or permitted to be acquired and installed in the Buildings or on the Land with a portion of the proceeds from the sale of the Bonds forming a part of the Project and any substitutions therefor or additions thereto, all as they may at any time exist.

“Fiscal Year” means that period adopted by the Corporation as its annual accounting period. Initially, the Fiscal Year is the period from October 1 of a year to September 30 of the next year.

“Fitch” means Fitch Ratings Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative.

“Funds” means any of the funds established pursuant to the Bond Indenture (other than the Rebate Fund).

“Government Obligations” means securities which consist of (i) United States Government Obligations or (ii) evidences of a direct ownership in future interest or principal payments on United States Government Obligations, which obligations are held in a custody account by a custodian pursuant to the terms of a custody agreement.

“Hazardous Substances” means (i) any oil, flammable substance, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other wastes, materials or pollutants which (A) pose a hazard to the Project or to persons on or about the Project or (B) cause the Project to be in violation of any Environmental Regulations; (ii) asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of

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polychlorinated biphenyls, or radon gas; (iii) any chemical, material or substance defined as or included in the definition of “waste,” “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous waste,” “restricted hazardous waste,” or “toxic substances” or words of similar import under any Environmental Regulations; (iv) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or agency or may or could pose a hazard to the health and safety of the occupants of the Project or the owners and/or occupants of property adjacent to or surrounding the Project, or any other person coming upon the Project or adjacent property; or (v) any other chemical, materials or substance which may or could pose a hazard to the environment.

“Independent Counsel” means an attorney, duly admitted to practice law before the highest court of any state and, without limitation, may include independent legal counsel for the Authority, the Corporation, any other Member of the Obligated Group or the Bond Trustee.

“Land” means the real estate, interests in real estate and other real property rights located in Ada County, Idaho, described in the Loan Agreement, on which the Buildings and the Equipment will be acquired, constructed and installed, together with all additions to and substitutions for the Land, less such real estate, interests in real estate and other rights taken by the exercise of the power of eminent domain.

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Representative.

“Opinion of Bond Counsel” means an opinion of nationally recognized municipal bond counsel, which opinion may be based upon a ruling or rulings of the Internal Revenue Service, and which counsel and opinion, including the scope, form, substance and other aspects thereof, are acceptable to the Authority.

“Outstanding,” “Bonds outstanding” or “outstanding Bonds,” when used with respect to the Bond Indenture and the Bonds, means all Bonds which have been duly authenticated and delivered under the Bond Indenture, except: (i) Bonds cancelled after purchase in the open market or because of payment at or redemption prior to maturity; (ii) Bonds for the payment or redemption of which cash or Government Obligations shall have been theretofore deposited with the Bond Trustee (whether upon or prior to the maturity or redemption date of any such Bonds) in accordance with the Bond Indenture; provided that if such Bonds are to be redeemed prior to 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 (iii) Bonds in lieu of which other Bonds have been authenticated under the Bond Indenture.

For the purpose of determining whether the owners of a requisite aggregate principal amount of outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the Bond Indenture, Bonds which are owned or held by a Member shall not be deemed to be outstanding. In determining whether the Bond Trustee

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shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver only Bonds (i) which are registered in the name of a Member or (ii) which the Bond Trustee knows to be so owned shall be disregarded.

“Outstanding Obligations” means the indebtedness described in the Loan Agreement.

“Person” means any natural person, firm, joint venture, association, partnership, business trust, corporation, limited liability company, public body, agency or political subdivision thereof or any other similar entity.

“Project” means the Land, Buildings and Equipment.

“Project Gifts” means gifts, grants, donations, bequests or other charitable contributions or below market rate loans regardless of form or source thereof, the proceeds of which when received will be restricted to be used for payment of the costs directly related to all or a portion of the Project or were raised to pay the costs related directly to all or a portion of the Project; excluding, however, proceeds intended to be ancillary to the Project.

“Qualified Investments” means, if and to the extent the same are at the time legal for investment of funds held under the Bond 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;

(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 the Bond 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;

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(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) asset-backed securities, commercial mortgage-backed securities, or mortgage-backed securities which are, 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 rating category by numerical modifier or otherwise);

(h) investment agreements with banks that at the time the agreement is executed are rated by any Rating Agency in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) 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; (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 the agreement is executed rated by any Rating Agency in one of the two highest short-term rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) or (iii) if such non-bank financial institution and any guarantor do not have any short-term or long-term debt, such non-bank financial institution or any guarantor has a rating in one of the two highest rating categories by any Rating Agency (without regard to any refinement or gradation of rating category by numerical modifier or otherwise);

(i) repurchase agreements with respect to and secured by Government Obligations or by obligations described in clauses (b) and (c) above, which agreements may be entered into with a bank (including the Bond Trustee, the Master Trustee or their affiliates), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Bond Trustee or a custodial agent of the Bond 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, and (iv) the fair market value of the collateral securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%, and (v) such obligations are held in the custody of the Bond Trustee or the Bond Trustee’s agent;

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(j) investments in a money market fund, including funds of the Bond Trustee, the Master Trustee or their affiliates, rated (at the time of purchase) in the highest rating category for this type of investment by any Rating Agency; and

(k) 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 whose investments consist solely of Qualified Investments as defined in paragraphs (a) through (j) above, including money market mutual funds from which the Bond Trustee, the Master Trustee or their affiliates derive a fee for investment advisory or other services to the fund.

The Bond Trustee shall be entitled to assume that any investment which at the time of purchase is a Qualified Investment remains a Qualified Investment thereafter, absent receipt of written notice or information to the contrary.

For the purposes of this definition, obligations issued or held in the name of the Bond Trustee (or in the name of the Authority and payable to the Bond Trustee) in book-entry form on the books of the Department of Treasury of the United States shall be deemed to be deposited with the Bond Trustee.

“Rating Agency” means Moody’s, Standard & Poor’s or Fitch and their respective successors and assigns.

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business organized and existing under the laws of the State of Delaware, its successors and its 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.

“State” means the State of Idaho.

“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code and exempt from federal income taxes under Section 501(a) of the Code, and which is not a “private foundation” within the meaning of Section 509(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

“Trust Estate” means the property pledged, assigned and conveyed to the Bond Trustee pursuant to the granting clauses of the Bond Indenture.

“Unassigned Rights” means the right of the Authority to receive payment of its fees and expenses and certain of the Authority’s rights, powers and privileges which are not assigned to the Bond Trustee pursuant to the Bond Indenture.

“United States Government Obligations” means noncallable direct obligations of, or obligations the timely payment of the principal of and interest on which is fully guaranteed by,

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the United States of America including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America.

“Valuation Date” means any date on which the Bond Trustee values the investments on deposit in the Debt Service Reserve Fund pursuant to the Bond Indenture.

THE LOAN AGREEMENT

The following summarizes certain provisions of the Loan Agreement. Such summary does not purport to be complete and reference is made to the Loan Agreement for full and complete statements of all such provisions.

General

The Authority will issue the Bonds to provide funds to finance the Project. The Authority will make a Loan to the Corporation of the proceeds of the sale of the Bonds by depositing a portion of the net proceeds of the Bonds into the Project Fund.

Concurrently with the delivery of the Bonds, the Corporation, as Obligated Group Representative, will execute and deliver to the Authority Obligation No. 1 in the principal amount equal to the aggregate principal amount of the Bonds, which shall be assigned by the Authority to the Bond Trustee. The payments due under the Loan Agreement and on Obligation No. 1 are required to be sufficient to pay the principal of and interest on the Bonds. See APPENDIX C - “SUMMARY OF THE MASTER INDENTURE AND DEED OF TRUST.”

The Corporation will have the option to prepay Obligation No. 1 at any time. Prepayments shall be used for payment, redemption or defeasance of outstanding Bonds in the manner and to the extent provided by the Bond Indenture.

Other Obligations

If at any time the amount on deposit in any of the accounts of the Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement for such account as a result of such account of the Debt Service Reserve Fund having been drawn upon, the Bond Trustee shall notify the Authority and the Corporation of such transfer and the Corporation agrees to restore the amount on deposit in such account of the Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement for such account by the deposit with the Bond Trustee of an amount equal to such deficiency in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred. If on any Valuation Date the amount on deposit in any of the accounts of the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement for such account as a result of a decline in the market value of investments on deposit in such account of the Debt Service Reserve Fund, the Corporation agrees to pay an amount equal to the deficiency in such account of the Debt Service Reserve Fund in order to restore the amount on deposit in such account of the Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement for such account within not more than 120 days following the date the Corporation receives notice of such deficiency.

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In the event of a failure of the Corporation to make any of the foregoing payments into the Debt Service Reserve Fund required above, the Master Trustee shall, pursuant to the Master Indenture, deposit moneys from the American Baptist Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund to cure such failure and if such deposit is made within 5 days of such failure by the Corporation, such failure of the Corporation shall not constitute a default under the Loan Agreement.

The Corporation will agree to pay the reasonable fees, charges and expenses of the Bond Trustee. The Corporation also will agree to pay the fees and expenses of the Authority and will indemnify the Authority against certain liabilities with respect to the Project, any other Property of the Members of the Obligated Group and the Bonds.

Obligations of the Corporation Unconditional

The obligation of the Corporation to make the payments under the Loan Agreement and on Obligation No. 1 is absolute and unconditional. Until such time as the principal of and interest on the Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Bond Indenture, the Corporation will not suspend or discontinue any payments on Obligation No. 1 or under the Loan Agreement for any cause.

Maintenance and Insurance

During the term of the Loan Agreement, the Corporation shall keep, or cause to be kept, at its own cost and expense the Project in good repair and order, reasonable wear and tear excepted, and in as reasonably safe condition as the operations thereof will permit and shall make, or cause to be made, all necessary repairs thereto, and all necessary replacements or renewals, subject in all respects to the receipt of all necessary governmental permits and approvals therefor, and subject further to the provisions of the Master Indenture. Compliance by the Corporation with the provisions of the Master Indenture shall constitute compliance with such covenant i.e. See APPENDIX C - “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST—Summary of Certain Provisions of the Master Indenture—Covenants as to Maintenance of Properties, Etc.” The Corporation shall not sell, lease or otherwise dispose of, or permit the other Members of the Obligated Group to sell, lease or otherwise dispose of, all or substantially all of any major project component of the Project unless (i) such major project component is replaced with property having equal or greater value and utility, but not necessarily having the same function, (ii) such disposition results from damage, destruction, condemnation or sale under threat of condemnation and the Corporation complies with the provisions described under “Damage, Destruction and Condemnation” or (iii) the Corporation prepays Obligation No. 1 in whole or in part by depositing with the Bond Trustee an amount equal to the fair market value of the major project component to be disposed of, together with interest on a corresponding principal amount of the Bonds then outstanding, so that a principal amount of Bonds in Authorized Denominations equal to the fair market value of the major project component to be disposed of shall no longer be outstanding under the Bond Indenture. The Corporation shall also maintain, or cause the other Members of the Obligated Group to maintain, such insurance as is reasonably required by the Authority and in any event shall keep the Property of the Members of the Obligated Group and their operations continuously insured in accordance with the Master

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Indenture. See APPENDIX C - “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST—Summary of Certain Provisions of the Master Indenture—Insurance.”

Damage, Destruction and Condemnation

In the event of damage, destruction, condemnation or sale under the threat of condemnation of any part of the Project, to the extent the net proceeds therefrom equal or exceed 10% of the Book Value of the Property, Plant and Equipment of the Obligated Group, the Corporation shall promptly give written notice to the Authority and the Bond Trustee and any repair, restoration, modification or improvement thereof shall be approved by the Authority.

Other Covenants

The Corporation covenants that it will remain a Member of the Obligated Group so long as the Bonds remain outstanding.

The Corporation agrees at all times and in all respects to comply, and cause the other Members of the Obligated Group to comply, with all Environmental Regulations with respect to the Property of the Members of the Obligated Group.

The covenants contained in the Master Indenture with respect to liens, transfers of Property, the incurrence of Additional Indebtedness and the Liquidity Requirement are incorporated by reference in the Loan Agreement. Such provisions may not be modified or amended without the written consent of the Authority.

Failure to Perform Covenants; Remedies

The occurrence and continuance of any of the following events shall constitute an “event of default” under the Loan Agreement:

(a) failure of the Corporation to pay any installment of principal of or interest on Obligation No. 1 or any other payment when the same shall become due and payable, whether upon a scheduled Interest Payment Date, at maturity, upon any date fixed for prepayment, by acceleration or otherwise, and the continuance of such failure for five days; or

(b) failure of the Corporation or the other Members of the Obligated Group to perform or comply with any of the covenants, conditions or provisions of the Loan Agreement, other than as referred to in subsection (a) above, and to remedy such default within 30 days after notice thereof to the Corporation from the Authority or the Bond Trustee; provided, however, that if failure to comply with or perform such covenants, conditions or provisions cannot be remedied within 30 days, but can be remedied, no “event of default” shall be deemed to have occurred or to exist if the Authority or the Bond Trustee, in its discretion, shall consent to the Corporation commencing corrective action and the Corporation diligently pursues such corrective action until it shall have complied with or performed such covenants, conditions or provisions; or

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(c) if any representation or warranty made by the Corporation in the Loan Agreement or in any statement or certificate furnished to the Authority or the Bond Trustee or the purchaser of any Bonds in connection with the sale of the Bonds or furnished by the Corporation pursuant to the Loan Agreement proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within 60 days after notice thereof to the Corporation by the Authority or the Bond Trustee; provided, however, that if such default cannot be remedied within 60 days, but can be remedied, no “event of default” shall be deemed to have occurred or to exist if the Authority or the Bond Trustee, in its sole discretion, shall consent to the Corporation commencing corrective action and the Corporation diligently pursues such corrective action until such default has been cured; or

(d) any event of default shall occur under the Bond Indenture or the Master Indenture which would permit the acceleration of any Obligation; or

(e) if the Corporation admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for the Corporation or for the major part of its Facilities; or

(f) if a trustee, custodian or receiver is appointed for the Corporation or for the major part of its Facilities and is not discharged within 60 days after such appointment; or

(g) if bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against the Corporation (other than bankruptcy proceedings instituted by the Corporation against third parties), and if instituted against the Corporation are allowed against the Corporation or are consented to or are not dismissed, stayed or otherwise nullified within 60 days after such institution; or

(h) if payment of any installment of interest or principal on any Bond shall not be made when the same shall become due and payable under the provisions of the Bond Indenture; or

(i) any event of default shall occur under the Deed of Trust.

The Corporation will give notice by telephone, telex, telecopier or electronic mail, promptly followed by written notice by first class mail, postage prepaid (or, if the Authority or the Bond Trustee has not provided the necessary information as to its telephone, telex or telecopier number or electronic mail address, only written notice by first class mail, postage prepaid), to the Authority and the Bond Trustee of any event of default under subsection (d) or (i) above with respect to the Master Indenture or the Deed of Trust.

Upon the occurrence and during the continuance of any event of default under the Loan Agreement, the Authority or the Bond Trustee, subject to its rights and protections under

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the Bond Indenture, and as assignee of the Authority, shall have the following rights and remedies, in addition to any other remedies:

(i) Acceleration of Maturity. The Authority may at its discretion request that the Bond Trustee declare the principal due under the Loan Agreement and request that the Master Trustee declare the principal due on Obligation No. 1 (if not then due and payable) to be due and payable immediately and such principal shall thereupon become immediately due and payable. The Authority shall request that the Bond Trustee declare the principal due under the Loan Agreement and request that the Master Trustee declare the principal due on Obligation No. 1 due and payable immediately upon the occurrence of any of the defaults described in subsections (a), (e), (f), (g), or (h) above. This provision, however, is subject to the condition that if, at any time after the principal due under the Loan Agreement and on Obligation No. 1 shall have been so declared and become due and payable, all arrears of interest, if any, upon the amounts due under the Loan Agreement and Obligation No. 1 and the expenses of the Authority shall be paid by the Corporation, and every other default in the observance or performance of any covenant, condition or agreement in the Loan Agreement or in Obligation No. 1 contained shall be made good, or be secured, to the satisfaction of the Authority and the Master Trustee, or provision deemed by the Authority and the Master Trustee to be adequate shall be made therefor, then and in every such case the Authority, by written notice to the Corporation shall waive the event of default by reason of which the principal due under the Loan Agreement and on Obligation No. 1 shall have been so declared and become due and payable and shall rescind and annul such declaration and its consequences; provided, however, that there shall not be waived any event of default in the payment of the principal payable on the Bonds when due whether by mandatory or optional redemption or at the date of maturity specified therein; and provided further that no such waiver, rescission or annulment shall extend to or affect any subsequent event of default or impair any right consequent thereon.

(ii) Right to Bring Suit, Etc. The Authority, personally or by attorney, may in its discretion proceed to protect and enforce its rights by pursuing any available remedy including a suit or suits in equity or at law, whether for damages or for the specific performance of any obligation, covenant or agreement contained in Obligation No. 1, the Loan Agreement or the Bond Indenture, or in aid of the execution of any power granted in the Loan Agreement, or for the enforcement of any other appropriate legal or equitable remedy, as the Authority shall deem most effectual to collect the payments then due and thereafter to become due on Obligation No. 1, to enforce performance and observance of any obligation, agreement or covenant of the Corporation under the Loan Agreement, under Obligation No. 1 or under the Bond Indenture or to protect and enforce any of the Authority’s rights or duties under the Loan Agreement or the Bond Indenture.

Amendments, Changes and Modifications

Pursuant to the provisions of the Bond Indenture, the Authority and the Corporation with the consent of the Bond Trustee may, without the consent of or notice to the Bondholders, enter into any amendment, change or modification of the Loan Agreement as may

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be required (i) to cure any ambiguity or formal defect in the Loan Agreement; (ii) to grant to or confer upon the Authority or Bond Trustee, for the benefit of the Bondholders, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Authority or the Bond Trustee; (iii) to amend or modify the Loan 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 any of the Bonds; (iv) to modify, amend or supplement the Loan Agreement, or any part thereof, or any supplement thereto, in such manner as the Bond Trustee and the Corporation deem necessary in order to comply with any statute, regulation, judicial decision or other law relating to secondary market disclosure requirements with respect to tax-exempt obligations of the type that includes the Bonds; (v) to provide that Bonds may be secured by additional security not otherwise provided for in the Bond Indenture or the Loan Agreement; (vi) to provide for the appointment of a successor securities depository; (vii) to provide for the availability of certificated Bonds; (viii) to provide for the addition of any interest rate mode or to provide for the modification or deletion of any interest rate mode so long as no Bonds will be operating in the interest rate mode when it is to be so modified or deleted, or to amend, modify or alter the interest rate setting provisions, tender provision or conversion provisions for any then existing interest rate mode so long as no Bonds will be operating in the interest mode when such provisions are to be so amended, modified or altered; provided that, in each case, there is delivered to the Bond Trustee an Opinion of Bond Counsel stating that any such addition, deletion, amendment, modification or alteration will not adversely affect the validity of the Bonds or any exemption from federal income taxation to which interest on the Bonds would otherwise be entitled; and (ix) to make any other change which does not, in the opinion of the Bond Trustee, have a material adverse effect upon the interests of the Bondholders. In addition, subject to the terms and provisions contained in the Bond Indenture, the Bond Trustee, with the prior written consent of the Authority, may grant such waivers of compliance by the Corporation with the provisions of the Loan Agreement as to which the Bond Trustee may deem necessary or desirable to effectuate the intent of the Loan Agreement and which, in the opinion of the Bond Trustee, do not have a material adverse effect upon the interests of the Bondholders. For purposes of clause (ix) above and the immediately preceding sentence, an amendment, change, modification or waiver shall not be deemed to materially adversely affect the interests of any Bondholder if there shall have been delivered to the Bond Trustee an opinion of Independent Counsel to the effect that such amendment, change, modification or waiver will not legally impair the obligations of the Authority or materially adversely affect the interests of the Bondholders.

Except for the amendments, changes or modifications as provided in the immediately preceding paragraph, the Bond Trustee shall not consent to any other amendment, change or modification of the Loan Agreement without the prior written approval or consent of the owners of not less than a majority in aggregate principal amount of the Bonds which are outstanding at the time of execution of any such amendment, change or modification.

Under no circumstances shall any amendment to the Loan Agreement affect the obligation of the Corporation to make payments on Obligation No. 1 as they become due and payable without the consent of the owners of all the Bonds outstanding.

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THE BOND INDENTURE

The following summarizes certain provisions of the Bond Indenture. Such summary does not purport to be complete and reference is made to the Bond Indenture for full and complete statements of all such provisions.

General

By the Bond Indenture, the Authority pledges, conveys and assigns to the Bond Trustee all of its right, title, and interest in and to the Loan Agreement (except for certain rights to payment of expenses and indemnification and the other Unassigned Rights) and in Obligation No. 1, including all sums payable thereunder, and all Funds created by the Bond Indenture and the moneys and securities held by the Bond Trustee in such Funds (other than the Rebate Fund) as security for the payment of the Bonds. The Bond Indenture designates the Bond Trustee as the holder of Obligation No. 1.

Establishment of Funds

The Bond Indenture creates the Project Fund, the Interest Fund, the Bond Sinking Fund, the Optional Redemption Fund, the Debt Service Reserve Fund, the Expense Fund and the Rebate Fund, all of which are to be held by the Bond Trustee. Moneys in the Rebate Fund are not pledged to the holders of the Bonds.

Project Fund

Pursuant to the Bond Indenture, $77,653,240.45 of net proceeds received from the sale of the Bonds will be deposited in the Project Fund. See “ESTIMATED SOURCES AND USES OF FUNDS.” On the date of issuance of the Bonds, the aggregate amount of $3,000,000 will be deposited in the Project Fund by ABHOW and American Baptist Properties. Deposits may also be made to the Project Fund by the Master Trustee from the American Baptist Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund held under the Master Indenture in accordance with the provisions of the Master Indenture. Moneys in the Project Fund shall be used to pay the cost of acquiring, constructing and installing the Project. The Bond Trustee is authorized to issue its checks on or otherwise make payments from the Project Fund for each payment only if certain procedural requirements enumerated in the Loan Agreement, the Bond Indenture and the Construction Monitoring Agreement are met.

Interest Fund

$13,610,117.10 of net proceeds received from the sale of the Bonds will be deposited in the Special Interest Accounts of the Interest Fund and used to pay interest on the Bonds until November 20, 2015 or, upon receipt of an Opinion of Bond Counsel, to pay costs of constructing and installing the Project. Deposits may also be made to the Interest Fund by the Master Trustee from the American Baptist Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund held under the Master Indenture in accordance with the provisions of the Master Indenture. Moneys on deposit in the Interest Fund are to be used to pay interest on the Bonds.

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Bond Sinking Fund

Moneys on deposit in the Bond Sinking Fund are to be used to pay the principal of the Bonds when they become due and payable at maturity or mandatory sinking fund redemption.

Optional Redemption Fund

In the event of (i) prepayment by or on behalf of the Corporation of amounts payable on Obligation No. 1, (ii) deposit of Entrance Fees into the Entrance Fee Fund and transfer by the Master Trustee to the Optional Redemption Fund in accordance with the provisions of the Master Indenture (See APPENDIX C – “SUMMARY OF MASTER INDENTURE AND DEED OF TRUST—Entrance Fee Fund”), (iii) receipt by the Bond Trustee of condemnation awards, or insurance proceeds or sale proceeds for purposes of redeeming Bonds, or (iv) deposit with the Bond Trustee by the Corporation or any other Member of the Obligated Group or the Authority of moneys from any other source for redeeming Bonds, such moneys shall be deposited in the Optional Redemption Fund.

Moneys on deposit in the Optional Redemption Fund shall be used first to make up any deficiencies in the Interest Fund, the Bond Sinking Fund and the Debt Service Reserve Fund (in the order listed) and second for the redemption or purchase of Bonds in accordance with the Bond Indenture.

Debt Service Reserve Fund

$7,099,950, $316,875, $442,500, $446,250 and $122,500 of the net proceeds received from the sale of the Bonds will be deposited in the Series 2014A Account, Series 2014B-1 Account, Series 2014B-2 Account, Series 2014B-3 Account and Series 2014C Account of the Debt Service Reserve Fund, respectively. Deposits may also be made to the Debt Service Reserve Fund by the Master Trustee from the ABP Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund in accordance with the provisions of the Master Indenture. Except as provided herein, moneys on deposit in the Series 2014A Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2014A Account of the Interest Fund and the Series 2014A Account of the Bond Sinking Fund (in that order), moneys on deposit in the Series 2014B-1 Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2014B-1 Account of the Interest Fund and the Series 2014B-1 Account of the Bond Sinking Fund (in that order), moneys on deposit in the Series 2014B-2 Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2014B-2 Account of the Interest Fund and the Series 2014B-2 Account of the Bond Sinking Fund (in that order), moneys on deposit in the Series 2014B-3 Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2014B-3 Account of the Interest Fund and the Series 2014B-3 Account of the Bond Sinking Fund (in that order) and moneys on deposit in the Series 2014C Account of the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Series 2014C Account of the Interest Fund and the Series 2014C Account of the Bond Sinking Fund (in that order). Moneys transferred by the Master Trustee to the Interest Fund or the Bond Sinking Fund from the Working Capital Fund, the Operating Reserve Fund, the American Baptist

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Properties Liquidity Support Fund, the ABHOW Liquidity Support Fund and the Supplemental Liquidity Support Fund in accordance with the provisions of the Master Indenture shall be used to make up any deficiencies in the Interest Fund and the Bond Sinking Fund prior to the use of moneys in the Debt Service Reserve Fund.

Qualified Investments in each of the accounts of the Debt Service Reserve Fund shall be valued by the Bond Trustee during the first month of each Fiscal Year as of the first Business Day of each Fiscal Year (the “Valuation Date”), on the basis of fair market value (which valuation shall take into account any accrued and unpaid interest). If on any Valuation Date the amount on deposit in any account of the Debt Service Reserve Fund is less than 90% of the Debt Service Reserve Fund Requirement for such account as a result of a decline in the market value of investments on deposit in the account, the Loan Agreement requires the Corporation to deposit in such account the amount necessary to restore the amount on deposit in such account to an amount equal to the Debt Service Reserve Fund Requirement for such account 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 account of the Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement for such account as a result of such account of the Debt Service Reserve Fund having been drawn upon, the Loan Agreement requires the Corporation to restore the amount on deposit in such account to an amount equal to the Debt Service Reserve Fund Requirement for such account by the deposit with the Bond Trustee of an amount equal to such deficiency in not more than 12 substantially equal monthly installments beginning with the first day of the seventh month after the month in which such draw occurred.

The Bond Trustee shall calculate each Debt Service Reserve Fund Requirement in October of each year and if the amount on deposit in any account of the Debt Service Reserve Fund is greater than the applicable Debt Service Reserve Fund Requirement, the Bond Trustee shall transfer such excess to the corresponding account of the Interest Fund. On the final maturity date of a series of the Bonds, any moneys in the applicable account of the Debt Service Reserve Fund may be used to pay the principal of and interest on the applicable series of the Bonds on such final maturity date. Upon the occurrence of an event of default under the Bond Indenture and the acceleration of the Bonds under the Bond Indenture, any moneys in the Debt Service Reserve Fund, after any transfer to the Rebate Fund so as to enable the Authority to comply with its tax covenant (see “Tax Covenant”), shall be transferred to the Bond Sinking Fund and applied in accordance with the Bond Indenture.

Expense Fund

$1,050,000 of net proceeds received from the sale of the Bonds will be deposited in Expense Fund and used to pay the costs of issuance of the Bonds.

Rebate Fund

Amounts paid by the Corporation pursuant to the Loan Agreement as required to comply with Section 148(f) of the Code shall be deposited in the Rebate Fund. In addition, notwithstanding any other provision of the Bond Indenture, upon the written direction of the Corporation, any investment income or other gain on moneys in any of the Funds may be

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transferred to the Rebate Fund to enable the Authority to satisfy the requirements of Section 148(f) of the Code. Moneys in the Rebate Fund shall be paid to the United States in the amounts and at the times required by the Code at the written direction of the Corporation. Any excess moneys contained in the Rebate Fund shall, at the written direction of the Corporation and the Authority, be transferred to the Interest Fund or the Bond Sinking Fund. Moneys in the Rebate Fund are not available to pay the principal of or interest on the Bonds and the Bondholders have no right or interest in such moneys.

Investment of Funds

The moneys held by the Bond Trustee in the Funds and the Rebate Fund shall be invested by the Bond Trustee only in Qualified Investments upon the written direction of the Corporation.

The investment earnings on funds on deposit in the Project Fund shall be transferred to the Special Interest Account of the Interest Fund.

The investment earnings on funds on deposit in an account of the Debt Service Reserve Fund in excess of the applicable Debt Service Reserve Fund Requirement shall be transferred to the related account within the Interest Fund.

Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Rebate Fund shall be credited to the Rebate Fund.

All income in excess of the requirements of the other funds held under the Bond Indenture derived from the investment of moneys on deposit in any such funds shall be deposited in:

(a) The Debt Service Reserve Fund, to the extent necessary to maintain the amount required to be on deposit therein;

(b) The Bond Sinking Fund to the extent of the amount required to be deposited therein to make the next required principal payment on the Bonds occurring within 13 months of the date of deposit;

(c) The Interest Fund to the extent of the estimated amount required to be deposited therein to make any interest payment on the Bonds occurring within 13 months of the date of deposit; and

(d) The balance, if any, in the Optional Redemption Fund.

Tax Covenant

The Corporation covenants and agrees in the Loan Agreement, and in reliance upon such covenants the Authority covenants and agrees in the Bond Indenture, for the benefit of each owner of the Series 2014A Bonds, Series 2014B-1 Bonds, Series 2014B-2 Bonds and Series 2014B-3 Bonds that it will not take any action or omit to take any action with respect to such Bonds, the proceeds thereof, any other funds of the Authority or the Corporation or any Bond

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Financed Property if such action or omission (i) would cause the interest on any of the Series 2014A Bonds, Series 2014B-1 Bonds, Series 2014B-2 Bonds or Series 2014B-3 Bonds to lose its exclusion from gross income for federal income tax purposes under Section 103 of the Code or (ii) would cause interest on any of the Series 2014A Bonds, Series 2014B-1 Bonds, Series 2014B-2 Bonds or Series 2014B-3 Bonds to lose its exclusion from alternative minimum taxable income as defined in Section 55(b)(2) of the Code except to the extent such interest is required to be included in the adjusted current earnings adjustment applicable to corporations under Section 56 of the Code in calculating corporate alternative minimum taxable income. The foregoing covenant shall remain in full force and effect notwithstanding the payment in full or defeasance of the Bonds until the date on which all obligations of the Corporation in fulfilling the above covenant under the Code have been met.

Events of Default

Each of the following events is an “event of default” under the Bond Indenture:

(a) payment of any installment of interest payable on any of the Bonds shall not be made when the same shall become due and payable; or

(b) payment of the principal of any of the Bonds shall not be made when the same shall become due and payable, whether such payment is at maturity or by proceedings for redemption, and whether such payment is expected to be paid from any Fund held under the Bond Indenture or otherwise; or

(c) the occurrence of an event of default as defined in the Loan Agreement; or

(d) the Authority shall for any reason be rendered incapable of fulfilling its obligations under the Bond Indenture; or

(e) the Authority shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in the Bond Indenture to be performed on the part of the Authority, and such default shall continue for 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority and the Corporation by the Bond Trustee; provided that the Bond Trustee may give such notice in its discretion and shall give such notice at the written request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding; or

(f) any event of default as defined in the Master Indenture shall occur and such event of default shall be continuing from and after the date the Bond Trustee is entitled to request that the Master Trustee declare Obligation No. 1 to be immediately due and payable, or such event of default shall be continuing from and after the date on which the Master Trustee is entitled under the Master Indenture to declare any Obligation immediately due and payable, or the Master Trustee shall declare any Obligation immediately due and payable.

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Acceleration

Upon the occurrence of an event of default specified in paragraphs (c), (d), (e) or (f) above and the continuance of the same for the period, if any, specified above, the Bond Trustee may, without any action on the part of Bondholders, or (ii) upon the happening of an event of default specified in paragraphs (a) or (b) above, the Bond Trustee shall, or (iii) upon the happening and continuance of an event of default specified in paragraphs (c), (d), (e) or (f) above and the written request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding exclusive of Bonds then owned by the Authority, the Bond Trustee shall, by notice to the Authority and the Corporation, declare the entire principal amount of the Bonds then outstanding and the interest accrued thereon immediately due and payable, and the entire principal and interest shall thereupon become and be immediately due and payable, subject, however, to the provisions of the Bond Indenture with respect to waivers of events of default. The Bonds shall cease to accrue interest on the date of acceleration.

Other Remedies

Upon the occurrence and continuance of any event of default described above, the Bond Trustee may pursue any available remedy including a suit at law or in equity to enforce the payment of the principal of and interest on the Bonds outstanding under the Bond Indenture, but any such judgment against the Authority shall be enforceable only against the Trust Estate and no recovery of any judgment by the Bond Trustee shall in any manner or to any extent affect the lien of the Bond Indenture or any rights, powers or remedies of the Bond Trustee, or any lien, rights, powers or remedies of the owners of the Bonds, but such lien, rights, powers and remedies of the Bond Trustee and of the Bondholders shall continue unimpaired as before.

If an event of default under the Bond Indenture shall have occurred, and if it shall have been requested so to do by the holders of not less than 25% in aggregate principal amount of the Bonds outstanding and shall have been indemnified as provided in the Bond Indenture, the Bond Trustee shall be obligated to exercise such one or more of the rights and powers conferred by the Bond Indenture as the Bond Trustee shall deem most expedient in the interests of the holders of the Bonds; provided, however, that the Bond Trustee shall have the right to decline to comply with any such request if the Bond Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Bond Trustee in good faith shall determine that such action would be unjustly prejudicial to the owners of Bonds not parties to such request.

The owners of a majority in aggregate principal amount of Bonds then outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Bond Indenture, including enforcement of the rights of the Authority under the Loan Agreement and the rights of the Bond Trustee as the holder of Obligation No. 1 or for the appointment of a receiver or any other proceedings; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of the Bond Indenture and shall not be unduly prejudicial to the owners of the Bonds not joining therein.

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Restrictions on 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 the Bond Indenture or the execution of any trust thereof or for the appointment of a receiver or any other remedy under the Bond Indenture, unless an event of default shall have occurred and the owners of not less than 25% in aggregate principal amount of Bonds outstanding have made written request to the Bond Trustee and offered the Bond Trustee reasonable opportunity to proceed to exercise the powers granted or to institute such action, suit or proceeding in its own name and unless also the Bondholders have offered to the Bond Trustee indemnity as provided in the Bond Indenture and unless the Bond Trustee thereafter shall fail or refuse to exercise the powers granted or to institute such action, suit or proceeding in its own name.

Waivers with Respect to Events of Default

The Bond Trustee may, in its discretion (but with Authority approval), but without any action on the part of the Bondholders, waive any event of default under the Bond Indenture and rescind any declaration of acceleration and shall do so (without a requirement of Authority approval) upon the written request of the owners (i) at least a majority in aggregate principal amount of all Bonds outstanding in respect of which default in the payment of principal and/or interest exists or (ii) at least a majority in aggregate principal amount of all Bonds outstanding in the case of any other event of default; provided there shall not be waived (A) any event of default in the payment of the principal of any outstanding Bonds when due, or (B) any default in the payment when due of interest on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with interest thereon (to the extent permitted by law) at the rate borne by the Bonds in respect of which such default shall have occurred or all arrears of payments of principal when due, as the case may be, and all expenses of the Bond Trustee, in connection with such default, shall have been paid or provided for.

Supplemental Indentures Not Requiring Consent of Owners of Bonds

The Authority and the Bond Trustee may, without the consent of, or notice to, any of the owners of the Bonds, enter into an indenture or indentures supplemental to the Bond Indenture, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in the Bond Indenture; (b) to grant to or confer upon the Bond Trustee for the benefit of the owners of the Bonds any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon such owners or the Bond Trustee; (c) to subject to the Bond Indenture additional revenues, properties or collateral; (d) to evidence the appointment of a separate bond trustee or the succession of a new bond trustee; (e) to permit the qualification thereof under the Trust Indenture Act of 1939 or any similar federal statute hereafter in effect or under any state securities law; (f) to permit the issuance of coupon bonds and to permit the exchange of Bonds from fully registered form to coupon form and vice versa; (g) to permit continued compliance with the tax compliance certificates; (h) to provide for certificated Bonds; (i) to provide for the refunding or advance refunding of any Bonds, including the right to establish and administer an escrow fund and to take related action in connection therewith; (j) to appoint a successor securities depository; or (k) to make any other changes that do not materially adversely affect the rights of any Bondholders.

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Supplemental Indentures Requiring Consent of Owners of Bonds

In addition to supplemental indentures described under “Supplemental Indentures Not Requiring Consent of Owners of Bonds” and subject to the following terms and provisions, and not otherwise, the owners of a majority in aggregate principal amount of the Bonds then outstanding shall have the right, from time to time, to consent to and approve the execution by the Authority and the Bond Trustee of such other indenture or indentures supplemental to the Bond Indenture as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms and provisions contained in the Bond Indenture or in any supplemental indenture; provided, however, that the foregoing shall not permit or be construed as permitting (i) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying of interest on, any Bonds, without the consent of the holder of such Bonds; (ii) a reduction in the amount or extension of the time of any payment required to be made to or from the Interest Fund or the Bond Sinking Fund without the consent of the owners of all the Bonds at the time outstanding; (iii) the creation of any lien prior to or on a parity with the lien of the Bond Indenture on the Trust Estate, without the consent of the owners of all the Bonds at the time outstanding; (iv) a reduction in the aforesaid aggregate principal amount of Bonds the owners of which are required to consent to any such supplemental indenture, without the consent of the owners of all the Bonds at the time outstanding; or (v) the modification of the rights, duties or immunities of the Bond Trustee, without the written consent of the Bond Trustee which would adversely affect the rights of any owner of Bonds, without the consent of the owners of all Bonds at the time outstanding.

Anything contained in the Bond Indenture to the contrary notwithstanding, a supplemental indenture that affects any rights of the Corporation under the Loan Agreement or the Corporation or any other Members of the Obligated Group under the Master Indenture shall not become effective, so long as no event of default shall have occurred and be continuing under the Master Indenture or the Loan Agreement, until the Corporation shall have consented in writing to the execution and delivery of such supplemental indenture.

Defeasance

If the Authority shall pay or provide for the payment of the entire indebtedness on all Bonds outstanding in any one or more of the following ways:

(a) by paying or causing to be paid the principal of and interest on all Bonds outstanding, as and when the same become due and payable;

(b) by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Bonds outstanding (including the payment of interest payable on such Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Government Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding at or before their respective

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maturity dates, it being understood that the investment income on such Government Obligations may be used for any other purpose under the Act;

(c) by delivering to the Bond Trustee, for cancellation, all Bonds outstanding; or

(d) by depositing with the Bond Trustee, in trust, Government Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in such amount as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and with any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds at or before their respective maturity dates;

and if the Authority shall pay or cause to be paid all other sums payable under the Bond Indenture, then and in that case the Bond Indenture and the estate and rights granted thereunder shall cease, determine and become null and void.

Upon the deposit with the Bond Trustee, in trust, at or before maturity, of moneys or Government Obligations in the necessary amount to pay or redeem all outstanding Bonds (whether upon or prior to maturity or the redemption date of 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 provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, the Bond Indenture may be discharged but the liability of the Authority in respect of the Bonds shall continue, provided that the owners thereof shall thereafter be entitled to payment only out of the moneys or the Government Obligations deposited with the Bond Trustee.

If the Authority shall pay or provide for the payment of the entire indebtedness on any portion of the Bonds outstanding, in one or more of the following ways:

(a) by paying or causing to be paid the principal of and interest on such portion of the Bonds as and when the same shall become due and payable;

(b) by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) such portion of the Bonds (including the payment of interest payable on such portion of the Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Government Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Bonds at or before their respective maturity dates, it being understood that the investment income on such Government Obligations may be used for any other purpose under the Act;

(c) by delivering to the Bond Trustee, for cancellation, any such portion of the Bonds outstanding; or

(d) by depositing with the Bond Trustee, in trust, Government Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated

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to be required in such amount as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and with any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Bonds at or before their respective maturity dates;

and if the Authority shall also pay or cause to be paid all other sums payable under the Bond Indenture by the Authority with respect to such portion of the Bonds, and, if such portion of the Bonds is to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in the Bond Indenture provided, or provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, such portion of the Bonds shall cease to be entitled to any lien, benefit or security under the Bond Indenture.

None of the Bonds may be refunded as aforesaid nor may the Bond Indenture be discharged if under any circumstances such refunding would result in the loss of any exemption from federal income taxation to which interest on the Bonds would otherwise be entitled. As a condition precedent to the refunding of any Bonds, the Bond Trustee shall receive an Opinion of Bond Counsel to the effect that such Bonds would not, by reason of such refunding, be made subject to additional federal income taxation to which such interest would not otherwise be subject.

APPENDIX E

FORMS OF APPROVING OPINIONS OF BOND COUNSEL

[Closing Date]

Idaho Health Facilities Authority 1087 West River Street, Suite 250 Boise, Idaho 83702

Idaho Health Facilities Authority Revenue Bonds

Series 2014A, 2014B-1, 2014B-2 and 2014B-3 (The Terraces of Boise Project)

Ladies and Gentlemen:

We have acted as bond counsel to the Idaho Health Facilities Authority (the “Authority”) in connection with the issuance of its (i) Idaho Health Facilities Authority Revenue Bonds, Series 2014A (The Terraces of Boise Project) in the aggregate principal amount of $80,685,000 (the “Series 2014A Bonds”), (ii) Idaho Health Facilities Authority Revenue Bonds, Series 2014B-1 (Tax Exempt Mandatory Paydown Securities (TEMPS-75SM)) (The Terraces of Boise Project) in the aggregate principal amount of $4,875,000 (the “Series 2014B-1 Bonds”), (iii) Idaho Health Facilities Authority Revenue Bonds, Series 2014B-2 (Tax Exempt Mandatory Paydown Securities (TEMPS-65SM)) (The Terraces of Boise Project) in the aggregate principal amount of $7,375,000 (the “Series 2014B-2 Bonds”) and (iv) Idaho Health Facilities Authority Revenue Bonds, Series 2014B-3 (Tax Exempt Mandatory Paydown Securities (TEMPS-50SM)) (The Terraces of Boise Project) in the aggregate principal amount of $8,500,000 (the “Series 2014B-3 Bonds” and together with the Series 2014A Bonds, the Series 2014B-1 Bonds and the Series 2014B-2, the “Bonds”) pursuant to a Bond Indenture of Trust dated as of January 1, 2014 (the “Bond Indenture”) between the Authority and U.S. Bank National Association, as trustee (the “Bond Trustee”). In such capacity, we have examined the Authority’s certified proceedings and such other documents and such law of the State of Idaho and of the United States of America as we have deemed necessary to render this opinion letter. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Bond Indenture.

The Bonds are dated, mature on the dates and bear interest at the rates provided in the Bond Indenture. The Bonds are subject to redemption and repurchase prior to maturity and are transferable and payable in the manner and subject to the conditions and limitations provided in the Bond Indenture.

The proceeds of the Bonds will be loaned by the Authority to Boise Retirement Community, a California nonprofit public benefit corporation (the “Corporation”), pursuant to a Loan Agreement dated as of January 1, 2014 (the “Loan Agreement”) between the Authority and the Corporation and used by the Corporation to finance, or reimburse, a portion of the costs of

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the acquisition of a parcel of land located in Boise, Idaho, and the acquisition, construction and installation of buildings and other structures and furnishings and equipment, which will be used by the Corporation as health care facilities (the “Project”), to refinance outstanding indebtedness of an affiliate of the Corporation incurred in connection with the acquisition of the parcel of land referred to above, to fund a debt service reserve fund for the Bonds, to pay a portion of the interest on the Bonds during the construction of the Project and to pay certain costs of issuance associated with the Bonds.

In order to provide security for the repayment of the Bonds, there will be issued to the Bond Trustee Direct Note Obligation No. 1 (“Obligation No. 1”) in the principal amount of $103,185,000 pursuant to the Master Trust Indenture dated as of January 1, 2014 (the “Master Trust Indenture”) between the Corporation, on behalf of itself as a Member of the Obligated Group and as Obligated Group Representative, and U.S. Bank National Association, as master trustee (in such capacity, the “Master Trustee”), as supplemented and amended by the First Supplemental Master Trust Indenture dated as of January 1, 2014 (the “First Supplement”) between the Corporation, as Obligated Group Representative, and the Master Trustee. In addition, the Corporation has entered into a Deed of Trust and Security Agreement dated as of January 1, 2014 (the “Deed of Trust”) under which the Corporation has granted a mortgage lien and security interest on its Facilities to First American Title Insurance Company, to be held for the benefit of the Master Trustee.

Regarding questions of fact material to our opinions, we have relied upon the Authority’s certified proceedings, representations and certifications of the Corporation, and other representations and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

Based upon such examination, it is our opinion as bond counsel that:

1. The Authority has been duly created and is an independent public body politic and corporate, validly organized and existing under the laws and Constitution of the State of Idaho.

2. The Bonds have been duly authorized by the Authority, duly executed and delivered by authorized officers of the Authority and (assuming due authentication by the Bond Trustee) are valid and binding special obligations of the Authority enforceable against the Authority in accordance with their terms, except as may be limited by insolvency, bankruptcy, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights and remedies generally or against municipal corporations such as the Authority from time to time in effect and by the application of general principles of equity.

3. The Loan Agreement and the Bond Indenture have been duly authorized by the Authority, duly executed and delivered by authorized officers of the Authority and (assuming valid authorization, execution and delivery by the other parties thereto) constitute valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except as may be limited by insolvency, bankruptcy, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights and remedies generally

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or against municipal corporations such as the Authority from time to time in effect and by the application of general principles of equity.

4. Interest on the Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date hereof (the “Code”), and interest on the Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Code except that such interest is required to be included in calculating the adjusted current earnings adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. The opinions expressed in this paragraph assume continuous compliance with the covenants and representations contained in the certified proceedings of the Authority and the Corporation, respectively, and in certain other documents and certain other certifications furnished to us. In rendering the opinions stated in this paragraph, we are relying on the opinion of Stamper Rubens, P.S., counsel to the Obligated Group, as to the status of the Corporation as qualifying as exempt from federal income taxation under Section 501(c)(3) of the Code.

5. Interest on the Bonds is exempt from all State of Idaho income taxes under Idaho income tax laws in effect as of the date hereof.

The opinions expressed in this opinion letter are subject to the following:

The obligations of the Authority pursuant to the Bonds, the Loan Agreement and the Bond Indenture are subject to the reasonable exercise in the future by the State of Idaho and its governmental bodies of the police power inherent in the sovereignty of the State of Idaho, and to the exercise by the United States of the powers delegated to it by the Federal Constitution, including, without limitation, bankruptcy powers.

In rendering the foregoing opinions, we are not passing upon the matters of (i) the corporate status of the Corporation, (ii) the power of the Corporation to execute and deliver the Loan Agreement, the Master Trust Indenture, the First Supplement, Obligation No. 1 or the Deed of Trust or the power of the Corporation to perform its obligations under any such documents or instruments, (iii) the validity or enforceability of the Loan Agreement, the Master Trust Indenture, the First Supplement, Obligation No. 1 or the Deed of Trust against the Corporation, or (iv) the security afforded by the Master Trust Indenture, the First Supplement or the Deed of Trust.

In this opinion letter issued in our capacity as bond counsel, we are opining only upon those matters set forth herein, and we are not passing upon the accuracy, adequacy or completeness of the Official Statement dated January 14, 2014 or any other statements made in connection with any offer or sale of the Bonds or upon any federal or state tax consequences arising from the receipt or accrual of interest on or the ownership or disposition of the Bonds, except those specifically addressed herein.

This opinion letter is issued as of the date hereof and we assume no obligation to revise or supplement this opinion letter to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,

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[Closing Date]

Idaho Health Facilities Authority 1087 West River Street, Suite 250 Boise, Idaho 83702

Idaho Health Facilities Authority Revenue Bonds Series 2014C

(The Terraces of Boise Project) Ladies and Gentlemen:

We have acted as bond counsel to the Idaho Health Facilities Authority (the “Authority”) in connection with the issuance of its Idaho Health Facilities Authority Revenue Bonds, Series 2014C (Taxable Mandatory Paydown Securities (Taxable MPS)) (The Terraces of Boise Project) in the aggregate principal amount of $1,750,000 (the “Bonds”) pursuant to a Bond Indenture of Trust dated as of January 1, 2014 (the “Bond Indenture”) between the Authority and U.S. Bank National Association, as trustee (the “Bond Trustee”). In such capacity, we have examined the Authority’s certified proceedings and such other documents and such law of the State of Idaho and of the United States of America as we have deemed necessary to render this opinion letter. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Bond Indenture.

The Bonds are dated, mature on the date and bear interest at the rate provided in the Bond Indenture. The Bonds are subject to redemption and repurchase prior to maturity and are transferable and payable in the manner and subject to the conditions and limitations provided in the Bond Indenture.

The proceeds of the Bonds will be loaned by the Authority to Boise Retirement Community, a California nonprofit public benefit corporation (the “Corporation”), pursuant to a Loan Agreement dated as of January 1, 2014 (the “Loan Agreement”) between the Authority and the Corporation and used by the Corporation to finance, or reimburse, a portion of the costs of the acquisition of a parcel of land located in Boise, Idaho, and the acquisition, construction and installation of buildings and other structures and furnishings and equipment, which will be used by the Corporation as health care facilities (the “Project”), to refinance outstanding indebtedness of an affiliate of the Corporation incurred in connection with the acquisition of the parcel of land referred to above, to fund a debt service reserve fund for the Bonds, to pay a portion of the interest on the Bonds during the construction of the Project and to pay certain costs of issuance associated with the Bonds.

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In order to provide security for the repayment of the Bonds, there will be issued to the Bond Trustee Direct Note Obligation No. 1 (“Obligation No. 1”) in the principal amount of $103,185,000 pursuant to the Master Trust Indenture dated as of January 1, 2014 (the “Master Trust Indenture”) between the Corporation, on behalf of itself as a Member of the Obligated Group and as Obligated Group Representative, and U.S. Bank National Association, as master trustee (in such capacity, the “Master Trustee”), as supplemented and amended by the First Supplemental Master Trust Indenture dated as of January 1, 2014 (the “First Supplement”) between the Corporation, as Obligated Group Representative, and the Master Trustee. In addition, the Corporation has entered into a Deed of Trust and Security Agreement dated as of January 1, 2014 (the “Deed of Trust”) under which the Corporation has granted a mortgage lien and security interest on its Facilities to First American Title Insurance Company, to be held for the benefit of the Master Trustee.

Regarding questions of fact material to our opinions, we have relied upon the Authority’s certified proceedings, representations and certifications of the Corporation, and other representations and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

Based upon such examination, it is our opinion as bond counsel that:

1. The Authority has been duly created and is an independent public body politic and corporate, validly organized and existing under the laws and Constitution of the State of Idaho.

2. The Bonds have been duly authorized by the Authority, duly executed and delivered by authorized officers of the Authority and (assuming due authentication by the Bond Trustee) are valid and binding special obligations of the Authority enforceable against the Authority in accordance with their terms, except as may be limited by insolvency, bankruptcy, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights and remedies generally or against municipal corporations such as the Authority from time to time in effect and by the application of general principles of equity.

3. The Loan Agreement and the Bond Indenture have been duly authorized by the Authority, duly executed and delivered by authorized officers of the Authority and (assuming valid authorization, execution and delivery by the other parties thereto) constitute valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except as may be limited by insolvency, bankruptcy, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights and remedies generally or against municipal corporations such as the Authority from time to time in effect and by the application of general principles of equity.

4. Interest on the Bonds is included in gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended to the date hereof.

5. Interest on the Bonds is exempt from all State of Idaho income taxes under Idaho income tax laws in effect as of the date hereof.

The opinions expressed in this opinion letter are subject to the following:

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The obligations of the Authority pursuant to the Bonds, the Loan Agreement and the Bond Indenture are subject to the reasonable exercise in the future by the State of Idaho and its governmental bodies of the police power inherent in the sovereignty of the State of Idaho, and to the exercise by the United States of the powers delegated to it by the Federal Constitution, including, without limitation, bankruptcy powers.

The provisions of this opinion letter concerning federal tax issues are not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on any taxpayer by the Internal Revenue Service. This writing supports the promotion or marketing of the transactions or matters addressed herein. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

In rendering the foregoing opinions, we are not passing upon the matters of (i) the corporate status of the Corporation, (ii) the power of the Corporation to execute and deliver the Loan Agreement, the Master Trust Indenture, the First Supplement, Obligation No. 1 or the Deed of Trust or the power of the Corporation to perform its obligations under any such documents or instruments, (iii) the validity or enforceability of the Loan Agreement, the Master Trust Indenture, the First Supplement, Obligation No. 1 or the Deed of Trust against the Corporation, or (iv) the security afforded by the Master Trust Indenture, the First Supplement or the Deed of Trust.

In this opinion letter issued in our capacity as bond counsel, we are opining only upon those matters set forth herein, and we are not passing upon the accuracy, adequacy or completeness of the Official Statement dated January 14, 2014 or any other statements made in connection with any offer or sale of the Bonds or upon any federal or state tax consequences arising from the receipt or accrual of interest on or the ownership or disposition of the Bonds, except those specifically addressed herein.

This opinion letter is issued as of the date hereof and we assume no obligation to revise or supplement this opinion letter to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,

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APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT

CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by Boise Retirement Community d/b/a The Terraces of Boise, a nonprofit public benefit corporation incorporated under the laws of the State of California (the “Borrower”), on behalf of itself and the Obligated Group, as of January 28, 2014. As of the date of this Disclosure Agreement, the Borrower is the sole Member of the Obligated Group. The Borrower covenants and agrees as follows:

Section 1. Definitions. Any capitalized terms used herein but not defined herein shall have the meanings assigned to them in the hereinafter described Master Indenture, and the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Obligated Group pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Authority” shall mean the Idaho Health Facilities Authority.

“Bond Indenture” shall mean the Bond Indenture of Trust dated as of January 1, 2014 between the Authority and the Bond Trustee, pursuant to which the Series 2014 Bonds are issued.

“Bond Trustee” shall mean U.S. Bank National Association, as bond trustee.

“Bondholders” shall mean the owners and beneficial owners from time to time of the Series 2014 Bonds.

“Borrower” shall mean Boise Retirement Community d/b/a The Terraces of Boise, a nonprofit public benefit corporation incorporated under the laws of the State of California.

“Budget Summary” shall mean any Budget Summary provided by the Obligated Group pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Business Day” shall have the meaning set forth in the Bond Indenture.

“Cash to Indebtedness Ratio” shall have the meaning set forth in the Master Indenture.

“Days Cash on Hand” shall have the meaning set forth in the Master Indenture.

“Debt Service Coverage Ratio” shall have the meaning set forth in the Master Indenture.

“Disclosure Agreement” shall mean this agreement.

“EMMA” shall mean the Electronic Municipal Market Access system of the MSRB accessible at http://emma.msrb.org or such other information repository as may be determined by the SEC from time to time.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

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“Loan Agreement” shall mean the Loan Agreement dated as of January 1, 2014 between the Borrower and the Authority relating to the Series 2014 Bonds.

“Master Indenture” shall mean the Master Trust Indenture dated as of January 1, 2014 between the Borrower and the Master Trustee, as amended and supplemented from time to time.

“Master Trustee” shall mean U.S. Bank National Association, as master trustee.

“Member” shall have the meaning set forth in the Master Indenture.

“Monthly Report” shall mean any Monthly Report provided by the Borrower pursuant to Sections 3 and 4 of this Disclosure Agreement.

“MSRB” shall mean the Municipal Securities Rulemaking Board or any successor entity as described in the Rule.

“Obligated Group” shall have the meaning set forth in the Master Indenture.

“Obligated Group Representative” shall have the same meaning set forth in the Master Indenture.

“Obligated Person” shall have the meaning set forth in the Rule.

“Offering Document” shall mean the Official Statement dated January 14, 2014 describing the Series 2014 Bonds.

“Project” shall mean the Land, Buildings and Equipment, each as defined in the Bond Indenture.

“Quarterly Report” shall mean any quarterly report provided by the Borrower pursuant to Sections 3 and 4 of this Disclosure Agreement.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“SEC” shall mean the United States Securities and Exchange Commission.

“Series 2014 Bonds” means, collectively, the Authority’s Revenue Bonds, Series 2014A (The Terraces of Boise Project), its Revenue Bonds, Series 2014B-1 (Tax-Exempt Mandatory Paydown Securities (TEMPS-75SM)) (The Terraces of Boise Project), its Revenue Bonds, Series 2014B-2 (Tax-Exempt Mandatory Paydown Securities (TEMPS-65SM)) (The Terraces of Boise Project), its Revenue Bonds, Series 2014B-3 (Tax-Exempt Mandatory Paydown Securities (TEMPS-50SM)) (The Terraces of Boise Project) and its Revenue Bonds, Series 2014C (Taxable Mandatory Paydown Securities (Taxable MPS)) (The Terraces of Boise Project).

“Stable Occupancy” shall have the meaning set forth in the Master Indenture.

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“Underwriter” shall mean B.C. Ziegler and Company, or any additional purchaser of the Series 2014 Bonds required to comply with the Rule in connection with an offering of the Series 2014 Bonds.

Section 2. Purpose of the Disclosure Agreement. The purpose of this Disclosure Agreement is to assist the Underwriter in complying with the Rule in connection with the Series 2014 Bonds. The Borrower represents that the Borrower is the only Obligated Person with respect to the Series 2014 Bonds at the time the Series 2014 Bonds are delivered to the Underwriter.

Section 3. Provision of Annual Reports, Quarterly Reports, Monthly Reports and Budget Summaries.

(a) The Obligated Group Representative shall, not later than 150 days after the completion of each fiscal year of the Borrower (beginning with the fiscal year ending September 30, 2014), provide or cause to be provided to the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB) an Annual Report that is consistent with the requirements of Section 4(a) of this Disclosure Agreement.

(b) Beginning with the first full fiscal quarter following the date that Stable Occupancy with respect to the Project is achieved, the Obligated Group Representative shall, not later than 45 days after the completion of each fiscal quarter of the Borrower, provide or cause to be provided to the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB) a Quarterly Report that is consistent with the requirements of Section 4(b) of this Disclosure Agreement.

(c) The Obligated Group Representative shall, not later than 45 days after the end of each month (beginning with the month ending January 31, 2014 and continuing until the end of the fiscal quarter in which the Obligated Group achieves Stable Occupancy with respect to the Project), provide or cause to be provided to the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB) a Monthly Report that is consistent with the requirements of Section 4(c) of this Disclosure Agreement.

(d) The Obligated Group Representative shall, not later than 45 days after the end of each month, during the period of time any Monthly Report is required under Section 4(d) hereof, provide or cause to be provided to the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB), a Monthly Report that is consistent with the requirements of Section 4(d) of this Disclosure Agreement.

(e) The Obligated Group Representative shall, not later than 45 days after the end of each Fiscal Year, provide or cause to be provided to the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB), a Budget Summary that is consistent with the requirements of Section 4(e) of this Disclosure Agreement.

(f) If the Obligated Group Representative is unable to provide to the MSRB an Annual Report, Quarterly Report, Monthly Report or Budget Summary by the dates required in

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this Section 3, the Obligated Group Representative shall send or cause to be sent a notice of such fact to the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB).

(g) In each case the Annual Report, the Quarterly Report, the Monthly Report and the Budget Summary may be submitted as a single document or as a package comprising separate documents. Any or all of the items constituting the Annual Report, the Quarterly Report, the Monthly Report or the Budget Summary may be incorporated by reference from other documents that have been submitted to the MSRB or the SEC. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Obligated Group Representative shall clearly identify each such other document so incorporated by reference.

Section 4. Content of Annual Reports, Quarterly Reports, Monthly Reports and Budget Summaries.

(a) The Annual Report to be delivered under Section 3(a) shall provide the following financial and operating data:

(1) Audited financial statements of the Borrower and consolidated affiliates for the fiscal year immediately preceding the due date of the Annual Report. Such financial statements shall be prepared in accordance with generally accepted accounting principles and shall be audited by an independent certified public accountant, and shall include a balance sheet as of the end of such fiscal year and a statement of changes in fund balances for such fiscal year and a statement of revenues and expenses for such fiscal year, showing in each case in comparative form the financial figures for the preceding fiscal year (the annual financial report may include combined or combining schedules as required by GAAP), prepared in accordance with generally accepted accounting principles; provided, however, that if such audited financial statements are not available by the deadline for filing the Annual Report, they shall be provided when and if available, and unaudited financial statements shall be included in the Annual Report.

(2) A separate written statement of the accountants preparing the financial statements described in subparagraph (1) above containing (A) if required under the terms of the Master Indenture, calculations of the Obligated Group’s Debt Service Coverage Ratio for such fiscal year and of the Obligated Group’s Cash to Indebtedness Ratio or Days Cash on Hand, as applicable under the Master Indenture, as of the last day of such fiscal year and (B) a statement that such accountants have no knowledge of any default related to certain financial covenants under the Master Indenture, or if such accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof.

(3) An Officer’s Certificate of the Obligated Group Agent (A) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of the Master Indenture or if not, specify all such defaults and the nature thereof, (B) if required under the terms of the Master Indenture, calculating and certifying the marketing and occupancy percentages, Cumulative Cash Operating Loss, Days Cash on Hand or Cash to

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Indebtedness Ratio, as applicable under the Master Indenture, and Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by the Master Indenture, as of the end of such fiscal period or Fiscal Year, as appropriate, (C) commencing with the Fiscal Year ending September 30, 2019, a comparison of the audited financial statements with the operating budget for the preceding Fiscal Year and (D) an executive summary of any actuarial reports received by the Obligated Group during the preceding Fiscal Year as required by the Master Indenture.

(b) The Quarterly Report to be delivered under Section 3(b) shall contain the following financial and operating data:

(1) Management-prepared financial statements, including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period and a combined or combining balance sheet as of the end of each such fiscal quarter with a comparison to the operating budget, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative, with a management’s discussion and analysis of results.

(2) A calculation of the Days Cash on Hand or Cash to Indebtedness Ratio, as applicable under the Master Indenture, as of the last day of such quarter, a calculation of the Debt Service Coverage Ratio for such fiscal quarter, and a calculation of the Cumulative Cash Operating Loss, if required by the Master Indenture to be calculated or submitted for such fiscal quarter.

(3) Information with respect to the payor mix for the health center portion of the Project.

(4) A calculation of the marketing/reservation levels for the Project as of the end of each month in the quarter, including the number of units that have been reserved or cancelled during that month and on an aggregate basis and occupancy levels of the Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis.

(c) The Monthly Report to be delivered under Section 3(c) shall provide the following financial and operating data:

(1) Prior to the issuance of the initial Occupancy Certificate for any portion of the Project, (A) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (B) a summary statement as to the status of construction; (C) unaudited financial reports on the development costs of the Project incurred during that month and on an aggregate basis; and (D) statements of the balances for each fund and account required to be held under the Master Indenture or any Related Bond Indenture as of the end of such month (to the extent available from the applicable trustee), all in reasonable detail.

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(2) After the issuance of the initial Occupancy Certificate for any portion of the Project, (A) a calculation of the marketing/reservation levels for the Project as of the end of such month, including the number of units that have been Reserved or cancelled during that month and on an aggregate basis; (B) information with respect to the payor mix for the health center portion of the Project; (C) occupancy levels of the Project as of the end of such month including the number of units that were Occupied and vacated during that month and on an aggregate basis; (D) a summary statement on the status of construction until the issuance of the last Occupancy Certificate for the Project; (E) unaudited financial reports on the development costs incurred during that month and on an aggregate basis until the issuance of the last Occupancy Certificate for the Project; (F) an unaudited statement of revenues and expenses and statement of cash flows of the Obligated Group for such month with a comparison to the operating budget and an unaudited balance sheet of the Obligated Group as of the end of such month; (G) a calculation of the Cumulative Cash Operating Loss as of the end of such month, (H) statements of the balances in each fund and account required to be held under the Master Indenture or any Related Bond Indenture as of the end of such month (obtained from the applicable trustee), and (I) a statement showing the amount of the Series 2014 Bonds that have been redeemed in the aggregate and during that calendar month, all in reasonable detail.

(d) A Monthly Report to be delivered under this Section 4(d) shall be required in any month in which the Debt Service Coverage Ratio for any Fiscal Year is less than 1.00:1 or the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable under the Master Indenture, is less than the Liquidity Requirement for any Liquidity Testing Date, and shall be required for each month thereafter until the Debt Service Coverage Ratio is at least 1.00:1 and the Cash to Indebtedness Ratio or the Days Cash on Hand, as applicable under the Master Indenture, is at least equal to the Liquidity Requirement. The Monthly Report to be delivered under Section 3(d) shall contain the following financial and operating data:

(1) Monthly unaudited financial statements of the Obligated Group, including a combined or combining statement of revenues and expenses and a statement of cash flows of the Obligated Group during such period, and a combined or combining balance sheet as of the end of each such month with a comparison to the operating budget, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group Representative, with a management’s discussion and analysis of results.

(2) A calculation of Days Cash on Hand or Cash to Indebtedness Ratio, as applicable under the Master Indenture, as of the last day of such month (calculated on a year-to-date basis each month), the Debt Service Coverage Ratio of the Obligated Group for such month, and the Cumulative Cash Operating Loss, if required by the Master Indenture to be calculated or submitted for such month.

(3) Information with respect to the payor mix for the health center portion of the Project.

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(4) A calculation of the marketing/reservation levels for the Project as of the end of each month, including the number of units that have been reserved or cancelled during that month and on an aggregate basis; and occupancy levels of the Project as of the end of each such month including the number of units that were Occupied and vacated during that month and on an aggregate basis.

(e) The Budget Summary delivered pursuant to Section 3(e) shall consist of a summary of the operating and capital budgets for the Fiscal Year then started.

Section 5. Reporting of Listed Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events with respect to the Series 2014 Bonds:

(1) principal and interest payment delinquencies;

(2) non-payment related defaults, if material;

(3) unscheduled draws on debt service reserves reflecting financial difficulties;

(4) unscheduled draws on credit enhancements reflecting financial difficulties;

(5) substitution of credit or liquidity providers, 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 2014 Bonds, or other material events affecting the tax status of the Series 2014 Bonds;

(7) modifications to rights of security holders, if material;

(8) bond calls, if material, and tender offers (except for mandatory scheduled redemptions not otherwise contingent upon the occurrence of an event);

(9) defeasances;

(10) release, substitution, or sale of property securing repayment of the Series 2014 Bonds, if material;

(11) rating changes;

(12) bankruptcy, insolvency, receivership or similar event of an Obligated Group Member;

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(13) the consummation of a merger, consolidation, or acquisition involving an Obligated Group Member or the sale of all or substantially all of the assets of an Obligated Group Member, 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 actions, other than pursuant to its terms, if material; and

(14) appointment of a successor or additional trustee or the change of name of a trustee, if material.

(b) In the occurrence of a Listed Event, the Obligated Group Representative shall promptly file a notice of such occurrence with the MSRB (in an electronic format by transmission to EMMA and accompanied by identifying information as prescribed by the MSRB). Such notice shall be filed within 10 Business Days after the occurrence of the Listed Event. If the Obligated Group Representative determines that it failed to give notice as required by this Section, it shall promptly file a notice of such occurrence in the same manner.

Section 6. Termination of Reporting Obligation. The Obligated Group’s obligations under this Disclosure Agreement with respect to the Series 2014 Bonds shall terminate upon the defeasance, prior redemption or payment in full of all the Series 2014 Bonds or if the Rule shall be revoked or rescinded by the SEC or declared invalid by a final decision of a court of competent jurisdiction.

Section 7. Amendment; Waiver; Modification. The Obligated Group may amend or waive any provision of this Disclosure Agreement, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule or adjudication of the Rule by a final decision of a court of competent jurisdiction. The Obligated Group may modify from time to time the specific types of information provided in an Annual Report to the extent necessary as a result of a change in legal requirements, change in law or change in the nature of any Member of the Obligated Group or its businesses, provided that any such modification will be done in a manner consistent with the Rule and will not, in the opinion of the Master Trustee or another party unaffiliated with the Authority or the Obligated Group Members, materially impair the interests of the Bondholders.

Section 8. Additional Information. The Obligated Group Members may from time to time choose to disseminate other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or include other information in any Annual Report, Quarterly Report, Monthly Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If such Member of the Obligated Group chooses to include any information in any Annual Report, Quarterly Report, Monthly Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, such Member shall have no obligation under this

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Disclosure Agreement to update such information or include it in any future Annual Report, Quarterly Report, Monthly Report or notice of occurrence of a Listed Event.

Section 9. Default. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Master Indenture, the Bond Indenture or the Loan Agreement, and the sole remedy of Bondholders under this Disclosure Agreement in the event of any failure of the Obligated Group or the Obligated Group Representative, on behalf of the Obligated Group, to comply with this Disclosure Agreement shall be an action to compel performance.

Section 10. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Borrower, the Underwriter and the Bondholders, and shall create no rights in any other person or entity.

Section 11. Responsible Officer. The Obligated Group Representative’s Chief Financial Officer shall be the officer, agency, or agent of the Obligated Group Representative responsible for providing Annual Reports, Quarterly Reports and Monthly Reports and giving notice of Listed Events, to the extent required hereunder, and any inquiries regarding this Disclosure Agreement should be directed to the Obligated Group Representative, to the attention of its Chief Financial Officer.

[Signature appears on the following page]

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[Signature Page to Continuing Disclosure Agreement]

IN WITNESS WHEREOF, the Borrower caused this Disclosure Agreement to be executed by its duly authorized officer as of the date first set forth above.


By: Pamela S. Claassen Chief Financial Officer

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APPENDIX G

BOOK-ENTRY ONLY SYSTEM

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BOOK-ENTRY SYSTEM

THE INFORMATION PROVIDED IN THIS APPENDIX G HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE AUTHORITY, THE CORPORATION, THE UNDERWRITER OR THE BOND TRUSTEE AS TO THE ACCURACY OR ADEQUACY OF SUCH INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE OF THIS OFFICIAL STATEMENT.

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities 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. One fully-registered Bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such Bonds, and will be deposited with DTC.

DTC, the world’s largest securities 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 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & 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. Neither the information on this website, nor on any links from it, is part of this Official Statement, and such information cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon to make investment decisions regarding the Bonds.

Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. BENEFICIAL OWNERS WILL NOT RECEIVE CERTIFICATES REPRESENTING THEIR OWNERSHIP INTERESTS IN THE BONDS, EXCEPT IN THE EVENT THAT USE OF THE BOOK-ENTRY SYSTEM FOR THE BONDS IS DISCONTINUED.

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To facilitate subsequent transfers, all 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 the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the 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 the notices be provided directly to them. THE AUTHORITY, THE CORPORATION, THE UNDERWRITER AND THE BOND TRUSTEE WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH DIRECT OR INDIRECT PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE BONDS.

Redemption notices shall be sent to DTC. If less than all of the Bonds 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 such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the 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 Authority or the Bond Trustee on payment dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is 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 redemption proceeds, distributions and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Authority or the Bond Trustee, 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.

DTC may discontinue providing its services as depository with respect to any Bonds at any time by giving reasonable notice to the Authority or the Bond Trustee. Under such circumstances, in the event

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that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered as described in the Bond Indenture.

The Authority may decide to discontinue use of the system of book-entry-only transfers of Bonds through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC as described in the Bond Indenture.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof.

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Idaho Health Facilities Authority

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Transcript of Idaho Health Facilities Authority