New Hampshire Health and Education Facilities ... - HJ Sims · The New Hampshire Health and Education Facilities Authority (the “Authority”) is issuing its Revenue Bonds, Hillside

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PRELIMINARY OFFICIAL STATEMENT DATED MAY 12, 2017

NEW ISSUE RATING: Not RatedBook-Entry Only

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the Authority, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the Series 2017A Bonds, the Series 2017B Bonds and the Series 2017C Bonds (collectively, the “Series 2017 Tax-Exempt Bonds”) is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series 2017 Tax-Exempt Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. Interest on the Series 2017D Bonds is included in gross income for Federal income tax purposes pursuant to the Code. In addition, in the opinion of Bond Counsel to the Authority, under existing statutes, the Series 2017 Bonds, their transfer and the income therefrom, including any profit made on the sale thereof, will be exempt from taxes directly imposed thereon by The State of New Hampshire and the municipalities and other political subdivisions of The State of New Hampshire. See “TAX MATTERS” herein.

$93,600,000*NEW HAMPSHIRE HEALTH AND EDUCATION

FACILITIES AUTHORITYRevenue Bonds, Hillside Village Issue, Series 2017

Consisting of

$55,975,000*Series 2017A BondsSM

$18,005,000*Series 2017B Entrance Fee

Principal Redemption BondsSM

$17,620,000*Series 2017C Entrance Fee

Principal Redemption BondsSM

$2,000,000*Series 2017D Federally Taxable

Entrance Fee Principal Redemption BondsSM

Dated: Date of Delivery Due: July 1, as shown on the inside cover hereof

The New Hampshire Health and Education Facilities Authority (the “Authority”) is issuing its Revenue Bonds, Hillside Village Issue, Series 2017 (the “Series 2017 Bonds”), consisting of $55,975,000* Series 2017A Bonds (the “Series 2017A Bonds”), $18,005,000* Series 2017B Entrance Fee Principal Redemption BondsSM (the “Series 2017B Bonds”), $17,620,000* Series 2017C Entrance Fee Principal Redemption BondsSM (the “Series 2017C Bonds”) and $2,000,000* Series 2017D Federally Taxable Entrance Fee Principal Redemption BondsSM (the “Series 2017D Bonds”). The Series 2017 Bonds are special obligations of the Authority payable solely out of the revenues or other receipts, funds or moneys of the Authority pledged therefor or otherwise available to U.S. Bank National Association, as trustee (the “Trustee”), for the payment thereof, including those derived under a Bond Indenture, dated as of June 1, 2017 (the “Indenture”), by and between the Authority and the Trustee, and a Loan Agreement and Mortgage (Security Agreement), dated as of June 1, 2017 (the “Loan Agreement”), between the Authority and The Prospect-Woodward Home (the “Institution”).

The Series 2017 Bonds will bear interest from the date of delivery, payable on each January 1 and July 1, commencing January 1, 2018. The Series 2017 Bonds are subject to optional, mandatory and extraordinary redemption prior to maturity as described herein. See “THE SERIES 2017 BONDS” herein.

The Series 2017 Bonds will be issued initially under a Book-Entry Only System, registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), which will act as securities depository for the Series 2017 Bonds. Individual purchases of beneficial interests in the Series 2017 Bonds will be made in book-entry form and will be made in denominations of $100,000 and increments of $5,000 in excess thereof. Purchasers of beneficial interests in the Series 2017 Bonds will not receive certificates representing interests in the Series 2017 Bonds that they purchase. So long as Cede & Co., as nominee of DTC, is the registered owner of the Series 2017 Bonds, references herein to the Bondholders or registered owners shall mean Cede & Co., rather than the beneficial owners of the Series 2017 Bonds. So long as DTC or its nominee is the registered owner of the Series 2017 Bonds, payments of principal and premium, if any, and interest on the Series 2017 Bonds shall be made to DTC or its nominee. Disbursement of such payments to DTC participants is the responsibility of DTC and disbursement of such payments to the beneficial owners is the responsibility of DTC participants and indirect participants.

The purchase of Series 2017 Bonds involves a significant degree of risk. See “RISK FACTORS” herein. Until such time (if any) as the Series 2017 Bonds shall receive an investment grade rating from any nationally recognized rating agency, the transfer of beneficial ownership of the Series 2017 Bonds shall be restricted solely to “qualified institutional buyers” or “accredited investors” within the meaning of the Securities Act of 1933, as amended, in denominations of $100,000 and increments of $5,000 in excess thereof.

NEITHER THE STATE OF NEW HAMPSHIRE NOR ANY MUNICIPALITY OR POLITICAL SUBDIVISION THEREOF SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS EXCEPT FROM THE SOURCES DESCRIBED HEREIN, AND NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF NEW HAMPSHIRE OR OF ANY MUNICIPALITY OR POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE SERIES 2017 BONDS. THE AUTHORITY HAS NO TAXING POWER.

AMOUNTS, MATURITIES, INTEREST RATES AND PRICES OR YIELDSAS SHOWN ON THE INSIDE FRONT COVER

The Series 2017 Bonds are offered when, as and if issued and received by Herbert J. Sims & Co., Inc. (the “Underwriter”), subject to prior sale, withdrawal or modification of the offer without notice and subject to the approving opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel to the Authority. Certain legal matters will be passed upon for the Authority by its counsel, Wadleigh, Starr & Peters PLLC, Manchester, New Hampshire; for the Institution by its counsel, Hinckley, Allen & Snyder LLP, Concord, New Hampshire; and for the Underwriter by its counsel, Ballard Spahr LLP, Philadelphia, Pennsylvania. It is expected that the Series 2017 Bonds will be available for delivery in definitive form through the facilities of DTC on or about June __, 2017.

Dated: June __, 2017

* Preliminary, subject to change.

$93,600,000* NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY

Revenue Bonds, Hillside Village Issue, Series 2017

$55,975,000* Series 2017A Bonds

$_________ Serial Bonds

Due (July 1)

Amount

Interest Rate

Price

Yield

CUSIP†

$________ ___% Term Bonds due July 1, 20__ Price___ Yield ___% CUSIP† _________ $________ ___% Term Bonds due July 1, 20__ Price___ Yield ___% CUSIP† _________ $________ ___% Term Bonds due July 1, 20__ Price___ Yield ___% CUSIP† _________

Series 2017B Entrance Fee Principal Redemption BondsSM

$18,005,000* ___% Term Bonds due July 1, 20__ Price___ Yield ___% CUSIP† _________

Series 2017C Entrance Fee Principal Redemption BondsSM


Series 2017D Federally Taxable Entrance Fee Principal Redemption BondsSM


* Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association (“ABA”). CUSIP data herein are provided by CUSIP

Global Services, operated on behalf of the ABA by S&P Capital IQ, a division of McGraw-Hill Financial, Inc. The CUSIP numbers listed above are being provided solely for the convenience of Bondholders only at the time of issuance of the Series 2017 Bonds and none of the Authority, the Institution or the Underwriter makes any representation with respect to such numbers or undertakes any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2017 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2017 Bonds.

Meadow View

Wyman Road View

The renderings on the following two pages are preliminary and subject to change.

Front Entrance

Woodside Building

Site Plan

Location Map

[THIS PAGE INTENTIONALLY LEFT BLANK]

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SUMMARY STATEMENT

The information set forth in this short statement is subject in all respects to more complete information set forth elsewhere in this Official Statement, which should be read in its entirety including the assumptions, methodology and rationale underlying Management’s forecast and the Feasibility Study appearing as Appendix C to this Official Statement. The Feasibility Study included herein as Appendix C should be read in its entirety.

This Official Statement was prepared in connection with the initial offering of the Series 2017 Bonds described below. The offering of Series 2017 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. For the definitions of certain words and terms used in this Summary Statement, see Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Definitions” hereto.

NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY (the “Authority”), a public body corporate and agency of the State of New Hampshire, proposes to issue $93,600,000∗ aggregate principal amount of its Revenue Bonds, Hillside Village Issue, Series 2017 (the “Series 2017 Bonds”), consisting of $55,975,000* Series 2017A Bonds (the “Series 2017A Bonds”), $18,005,000* Series 2017B Entrance Fee Principal Redemption BondsSM (the “Series 2017B Bonds”), $17,620,000* Series 2017C Entrance Fee Principal Redemption BondsSM (the “Series 2017C Bonds”) and $2,000,000* Series 2017D Federally Taxable Entrance Fee Principal Redemption BondsSM (the “Series 2017D Bonds”). The Series 2017A Bonds, the Series 2017B Bonds and the Series 2017C Bonds are referred to herein collectively as the “Series 2017 Tax-Exempt Bonds.” The Series 2017 Bonds shall be issued by the Authority pursuant to a Bond Indenture, dated as of June 1, 2017 (the “Indenture”), between the Authority and U.S. Bank National Association, as trustee (the “Trustee”). The Series 2017 Bonds are being issued for the purpose of financing and refinancing the acquisition, construction, equipping and furnishing of the new continuing care retirement community to be known as Hillside Village (the “Facility”) to be located in Keene, New Hampshire, as more particularly described in this Official Statement.

THE PROSPECT-WOODWARD HOME (the “Institution”) is a New Hampshire nonprofit voluntary corporation that presently operates a 24-bed supported residential care facility (the “Existing Community”) of the same name located in Keene, New Hampshire. The Institution is the result of a merger in July 2016 between two long-standing New Hampshire nonprofit organizations, Prospect Hill Home (“Prospect Hill Home”) and The Woodward Home (“The Woodward Home”), with Prospect Hill Home serving as the surviving entity under the legal name “The Prospect-Woodward Home.” The Institution has been determined by the Internal Revenue Service to be exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). See Appendix A – “INFORMATION CONCERNING THE INSTITUTION AND THE FACILITY” hereto and Appendix C hereto – “FINANCIAL FEASIBILITY STUDY” for further information. The Feasibility Study included herein as Appendix C should be read in its entirety.

SECURITY. The Series 2017 Bonds will be issued pursuant to the Indenture, and the proceeds of the Series 2017 Bonds will be loaned by the Authority to the Institution pursuant to a Loan Agreement and Mortgage (Security Agreement), dated as of June 1, 2017 (the “Loan Agreement”), between the Authority and the Institution. Pursuant to the Indenture, the Authority will assign its rights under the ∗ Preliminary, subject to change.

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Loan Agreement to the Trustee for the benefit of the holders of the Series 2017 Bonds, except the right to receive payment of its fees and expenses, to receive indemnity against claims, to receive notices and to grant consents or waivers. In addition, pursuant to the terms of the Loan Agreement, the Institution will grant to the Authority, and the Authority, pursuant to the Indenture, will assign to the Trustee, for the benefit of the holders of the Series 2017 Bonds: (i) a mortgage lien on the Facility and, until such time as it is sold by the Institution, on the “Original Facility” (as defined in Appendix D hereto), which includes the Existing Community and a facility owned by the Institution and formerly known as Prospect Hill Home, which is currently vacant and listed for sale; (ii) a security interest in the Institution’s Equipment; (iii) a security interest in the “Gross Receipts” of the Institution, including, but not limited to, accounts receivable and Entrance Fees; and (iv) a collateral assignment of the Institution’s rights under certain Assigned Project Documents. Under the Loan Agreement, the Institution will make payments sufficient to pay the principal, sinking fund payments, purchase price or redemption price of and interest on the Series 2017 Bonds when due. The Loan Agreement is a general obligation of the Institution.

See “SECURITY FOR THE SERIES 2017 BONDS” herein and Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS.”

DEBT SERVICE RESERVE FUND. A Debt Service Reserve Fund and within such Fund, a Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account and a Series 2017D Bonds Debt Service Reserve Fund Account, will be established under the Indenture. The Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account will be funded upon the issuance of the Series 2017 Bonds in an amount equal to the maximum annual debt service requirement on the Series 2017 A Bonds and one year of interest on the Series 2017B Bonds and the Series 2017C Bonds. The Series 2017D Bonds Debt Service Reserve Fund Account will be funded upon the issuance of the Series 2017 Bonds in an amount equal to one year of interest on the Series 2017D Bonds. The Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account will be held for the benefit of the Series 2017 Tax-Exempt Bondholders and is available for payment of the principal of and interest on the Series 2017 Tax-Exempt Bonds if payments by the Institution are insufficient therefor. The Series 2017D Bonds Debt Service Reserve Fund Account will be held for the benefit of the Series 2017D Bondholders and is available for payment of the principal of and interest on the Series 2017D Bonds if payments by the Institution are insufficient therefor. See “SECURITY FOR THE SERIES 2017 BONDS – Debt Service Reserve Fund” herein and Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS” for a further description of the Debt Service Reserve Fund.

CUMULATIVE CASH LOSS COVENANT. The Institution covenants to maintain a maximum Cumulative Cash Loss (as defined in Appendix D hereto) for each fiscal quarter commencing with the first full fiscal quarter ending after initial occupancy of the Facility of no greater than certain specified amounts set forth in the Loan Agreement. See “SECURITY FOR THE SERIES 2017 BONDS – Cumulative Cash Loss Covenant” herein and Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS” for a further description, including a description of the actions required to be taken if such covenant is not met.

DEBT SERVICE COVERAGE RATIO COVENANT. The Institution agrees that it will calculate the Debt Service Coverage Ratio of the Institution (i) as of the end of each fiscal quarter on a rolling 12-month basis, commencing with the first full fiscal quarter following Stabilization (as defined in Appendix D hereto), and (ii) as of the end of each Fiscal Year, based on audited financial statements, commencing with the first Fiscal Year during which the Debt Service Coverage Ratio is required to be computed for each fiscal quarter. If the Debt Service Coverage Ratio of the Institution for any calculation date is less than 1.10 during the first Fiscal Year for which the Debt Service Coverage Ratio is required to be calculated, and thereafter if the Debt Service Coverage Ratio is less than 1.20, the Institution is required to prepare a report and plan and, under the circumstances described in the Loan Agreement, to

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retain a Consultant to prepare a report and plan, detailing the reasons for such deficiency and the proposed actions to increase the Debt Service Coverage Ratio to the required level on the earliest practicable date. See “SECURITY FOR THE SERIES 2017 BONDS – Debt Service Coverage Ratio Covenant” herein and Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS” for a further description of the Debt Service Coverage Ratio covenant, including a description of the actions required to be taken if such covenant is not met.

LIQUIDITY COVENANT. The Institution covenants that it will calculate the Days’ Cash on Hand of the Institution semiannually on each June 30 and December 31, commencing with the first semiannual testing date that follows Stabilization. The Institution is required to conduct its business so that on each semiannual testing date the Institution shall have no less than 180 Days’ Cash on Hand (the “Days’ Cash on Hand Requirement”). See “SECURITY FOR THE SERIES 2017 BONDS –Liquidity Covenant” herein and Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS” for a further description, including a description of the actions required to be taken if such covenant is not met.

MARKETING AND OCCUPANCY TARGETS. The Loan Agreement requires that the Institution use its best efforts to execute Residency Agreements and collect deposits payable upon execution of the Residency Agreements so that the percentage of the total Independent Living Units which are the subject of a Residency Agreement with a 10% deposit, including occupied Independent Living Units, shall be in compliance with certain Marketing Target requirements. Commencing with the fiscal quarter that ends not less than 60 days following the issuance of the first certificate of occupancy for the first building in the Facility containing Independent Living Units, the Institution will use its best efforts to execute Residency Agreements and collect Entrance Fees so that the percentage of the total of number of all Independent Living Units in the Facility for which a Residency Agreement has been executed and all related Entrance Fees and Monthly Fees have been paid shall be in compliance with certain Occupancy Target requirements. See “SECURITY FOR THE SERIES 2017 BONDS – Marketing Targets” and “– Occupancy Targets” for a further description of the Marketing and Occupancy Targets, including a description of the actions required to be taken if such covenants are not met.

FINANCIAL FEASIBILITY STUDY. CliftonLarsonAllen LLP, independent auditors, has prepared a Financial Feasibility Study dated May 12, 2017 (the “Feasibility Study”) which is included in Appendix C hereto. The Feasibility Study includes the financial forecast by the Institution’s management (“Management”) for the six years ending December 31, 2022. As stated in the Feasibility Study, there will usually be differences between the forecasted and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The Feasibility Study should be read in its entirety, including all notes and assumptions set forth therein.

The tables below reflect the forecasted Debt Service Coverage Ratio and the forecasted Days Cash on Hand for the years ending December 31, 2021 and December 31, 2022. The tables below have been extracted from the Feasibility Study included in Appendix C hereto.

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Notes: (1) Calculations are presented based upon the assumed terms of the Series 2017 Bonds. (2) Maximum annual debt service for the years ending December 31, 2021 and 2022 is equal to the forecasted maximum annual debt service on the Series 2017 Bonds as determined by the Underwriter. (3) Operating expenses are equal to total operating expenses less depreciation expense and less amortization of finance fees included with interest expense.

The above tables should be considered in conjunction with the entire Feasibility Study, included in Appendix C hereto, to understand the Institution’s financial requirements and the assumptions upon which the Feasibility Study is based. The achievement of any financial forecast is dependent upon future events the occurrence of which cannot be assured. Therefore, the actual results achieved may vary from Management’s forecast. Such variation could be material. See the Feasibility Study in Appendix C hereto.

CERTAIN BONDHOLDERS’ RISKS. AN INVESTMENT IN THE SERIES 2017 BONDS INVOLVES A SIGNIFICANT DEGREE OF RISK. A PROSPECTIVE HOLDER OF THE SERIES 2017 BONDS IS ADVISED TO READ THE SECTIONS “SECURITY FOR THE SERIES 2017 BONDS” AND “RISK FACTORS” HEREIN FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SERIES 2017 BONDS. Careful consideration should be given to these risks and other risks described elsewhere in this Official Statement. Among other things, because the Series 2017 Bonds are payable solely from the revenues of the Institution and other moneys pledged to such payment, careful evaluation should be

DEBT SERVICE COVERAGE RATIO 2021 2022

CHANGE IN NET ASSETS (DEFICITS) 3,147$ 4,053$

NON-CASH ITEMS AND ADD-BACKS:Amortization of Entrance Fees (4,559) (4,821) Depreciation 2,050 2,050 Interest Expense 4,214 3,771 Net Cash Received from Turnover Entrance Fees 1,020 1,161

NET INCOME AVAILABLE FOR DEBT SERVICE 5,872$ 6,214$

MAXIMUM ANNUAL DEBT SERVICE - SERIES 2017A BONDS(2) 4,314$ 4,314$

MAXIMUM ANNUAL DEBT SERVICE COVERAGE RATIO(1) 1.36 1.44

DAYS CASH ON HAND 2021 2022

CASH AND CASH EQUIVALENTS 3,000$ 3,000$

INVESTMENTS 6,268 7,813

STATE RESERVE REQUIREMENT 1,616 1,628

RENEWAL AND REPLACEMENT FUND 270 450

AVAILABLE RESERVES 11,154$ 12,891$

OPERATING EXPENSES (3) 13,825$ 13,457$

DAILY OPERATING EXPENSES 38$ 37$

NUMBER OF DAYS OF CASH ON HAND(1) 294 348

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made of Management’s assumptions and the rationale described in the Feasibility Study, and certain factors (including, but not limited to, the ability of the Institution to attract residents and enter into Residency Agreements and manage the Facility in a manner which maintains high occupancy levels), that may adversely affect the ability of the Institution to generate sufficient revenues to pay its expenses of operation, including the principal or redemption price of and interest on the Series 2017 Bonds.

TRANSFER RESTRICTION. Until such time (if any) as the Series 2017 Bonds shall receive an investment grade rating from any nationally recognized rating agency, the transfer of beneficial ownership of the Series 2017 Bonds shall be restricted solely to “qualified institutional buyers” or “accredited investors” within the meaning of the Securities Act of 1933, as amended, in denominations of $100,000 and increments of $5,000 in excess thereof.

_____________________

No dealer, broker, salesman or other person has been authorized by the Authority, the Institution, DTC or the Underwriter to give any information or to make any representations with respect to this offering, 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 Series 2017 Bonds by any person in any state in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinions contained 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 or the Institution since the date hereof.

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 a part of, its responsibilities 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, and this Official Statement is not to be construed as the promise or guarantee of the Underwriter.

The Authority makes no representation with respect to the information in this Official Statement, other than under the heading “THE AUTHORITY” and information concerning the Authority under the headings “SUMMARY STATEMENT,” “INTRODUCTION” and “LITIGATION.”

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2017 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE SERIES 2017 BONDS TO CERTAIN DEALERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

THE SERIES 2017 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.


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TABLE OF CONTENTS Page

INTRODUCTION ........................................................................................................................................ 1 THE AUTHORITY ...................................................................................................................................... 3

Authority Membership and Organization ................................................................................................. 3 Powers of the Authority ............................................................................................................................ 4 Procedure Before Issuance of Bonds ........................................................................................................ 5 Bond Financing Program of the Authority ............................................................................................... 5

THE INSTITUTION AND THE FACILITY ............................................................................................... 5 SECURITY FOR THE SERIES 2017 BONDS ............................................................................................ 6

General ..................................................................................................................................................... 6 The Indenture ............................................................................................................................................ 6 Debt Service Reserve Fund ...................................................................................................................... 7 Entrance Fees Fund .................................................................................................................................. 8 Working Capital Fund ............................................................................................................................ 10 The Loan Agreement and the Series 2017 Notes ................................................................................... 10 Additional Bonds and Additional Indebtedness ..................................................................................... 11 Loan Agreement Covenants ................................................................................................................... 11 Rating Application .................................................................................................................................. 16 Certain Amendments to Indenture or Loan Agreement; Certain Amendments to Payment Provisions after an Event of Default With Consent of 80% of Holders ................................................................... 16 Mortgage Lien ........................................................................................................................................ 16

THE SERIES 2017 BONDS ....................................................................................................................... 17 General ................................................................................................................................................... 17 Transfer Restriction ................................................................................................................................ 18 Transfer, Registration and Exchange ...................................................................................................... 18 Book-Entry System ................................................................................................................................. 19 Redemption of the Series 2017 Bonds .................................................................................................... 21 Effect of Call for Redemption ................................................................................................................ 24 Notice of Redemption ............................................................................................................................. 25 Indenture Events of Default .................................................................................................................... 25 Acceleration; Annulment of Acceleration .............................................................................................. 26

ESTIMATED SOURCES AND USES OF FUNDS .................................................................................. 27 DEBT SERVICE SCHEDULE ................................................................................................................... 28 RISK FACTORS ........................................................................................................................................ 29

Uncertainty of Revenues ........................................................................................................................ 29 Failure to Achieve or Maintain Occupancy or Turnover ........................................................................ 30 Competition ............................................................................................................................................ 30 Forecast ................................................................................................................................................... 30 Construction Risks .................................................................................................................................. 31 Nature of the Income of the Elderly ....................................................................................................... 31 Sale of Personal Residences ................................................................................................................... 31 Staffing Shortages................................................................................................................................... 31 New Hampshire Regulation of Continuing Care Retirement Communities ........................................... 32 Increases in Medical Costs ..................................................................................................................... 33 Third Party Reimbursement .................................................................................................................... 34 Professional Liability Claims and Losses ............................................................................................... 34 Possible Changes in Tax Status .............................................................................................................. 34 Factors Affecting Real Estate Taxes ....................................................................................................... 35 Lien for Clean-up of Hazardous Materials ............................................................................................. 35

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Bankruptcy ............................................................................................................................................. 36 Possible Limitations on Lien .................................................................................................................. 37 Limited Use Facility ............................................................................................................................... 37 Additional Debt; Future Borrowing ........................................................................................................ 37 Prepayment Risks ................................................................................................................................... 37 Enforceability of Remedies .................................................................................................................... 38 No Obligation of The State ..................................................................................................................... 38 Treatment of the Residency Agreements as Leases................................................................................ 38 Failure to Provide Ongoing Disclosure .................................................................................................. 38 Lack of Marketability for the Series 2017 Bonds ................................................................................... 38 Certain Amendments to Indenture or Loan Agreement; Certain Amendments to Payment Provisions after an Event of Default With Consent of 80% of Holders ................................................................... 38 Other Possible Risk Factors .................................................................................................................... 39

TAX MATTERS – TAX-EXEMPT BONDS ............................................................................................. 40 Opinion of Bond Counsel to the Authority ............................................................................................. 40 Certain Ongoing Federal Tax Requirements and Covenants .................................................................. 40 Certain Collateral Federal Tax Consequences ........................................................................................ 41 Original Issue Discount .......................................................................................................................... 41 Bond Premium ........................................................................................................................................ 42 Information Reporting and Backup Withholding ................................................................................... 42 Miscellaneous ......................................................................................................................................... 42

TAX MATTERS - FEDERALLY TAXABLE BONDS ............................................................................ 43 U.S. Holders – Interest Income .............................................................................................................. 43 Original Issue Discount .......................................................................................................................... 43 Series 2017D Bond Premium ................................................................................................................. 45 U.S. Holders – Disposition of Series 2017D Bonds ............................................................................... 45 U.S. Holders – Defeasance ..................................................................................................................... 46 U.S. Holders – Backup Withholding and Information Reporting .......................................................... 46 Miscellaneous ......................................................................................................................................... 46

INSTITUTION’S BALANCE SHEET ....................................................................................................... 46 LEGAL MATTERS .................................................................................................................................... 46 UNDERWRITING ..................................................................................................................................... 47 CONTINUING DISCLOSURE .................................................................................................................. 47 NO RATING ............................................................................................................................................... 47 LITIGATION .............................................................................................................................................. 47 FEASIBILITY CONSULTANT ................................................................................................................. 48 LEGALITY OF SERIES 2017 BONDS FOR INVESTMENT AND DEPOSIT ....................................... 48 STATE NOT LIABLE ON SERIES 2017 BONDS ................................................................................... 49 COVENANT BY THE STATE .................................................................................................................. 49 OTHER MATTERS .................................................................................................................................... 49 AUTHORITY NOT RESPONSIBLE FOR OFFICIAL STATEMENT .................................................... 49 APPENDIX A Information Concerning the Institution and the Facility APPENDIX B Institution’s Balance Sheet as of December 31, 2016 APPENDIX C Financial Feasibility Study APPENDIX D Certain Provisions of Principal Documents APPENDIX E Forms of Approving Opinions of Bond Counsel APPENDIX F Form of Continuing Disclosure Agreement

OFFICIAL STATEMENT

Relating To

$93,600,000∗ NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY

Revenue Bonds, Hillside Village Issue, Series 2017

Consisting of

$55,975,000* $18,005,000* Series 2017A Bonds Series 2017B Entrance Fee Principal Redemption BondsSM $17,620,000* $2,000,000* Series 2017C Entrance Fee Series 2017D Federally Taxable Principal Redemption BondsSM Entrance Fee Principal Redemption BondsSM

INTRODUCTION

This Official Statement, including the cover page and appendices, sets forth certain information in connection with the issuance and sale of the Revenue Bonds, Hillside Village Issue, Series 2017 in the aggregate principal amount of $93,600,000* (the “Series 2017 Bonds”), consisting of $55,975,000* Series 2017A (the “2017A Bonds”), $18,005,000* Series 2017B Entrance Fee Principal Redemption BondsSM (the “2017B Bonds”), $17,620,000* Series 2017C Entrance Fee Principal Redemption BondsSM (the “2017C Bonds”) and $2,000,000* Series 2017D Federally Taxable Entrance Fee Principal Redemption BondsSM (the “2017D Bonds”) of the New Hampshire Health and Education Facilities Authority (the “Authority”), a public body corporate and agency of the State of New Hampshire (the “State”), created and existing under the Constitution and laws of the State with the powers, among others, set forth in the New Hampshire Health and Education Facilities Authority Act, Chapter 195-D of the New Hampshire Revised Statutes Annotated, as amended (the “Act”). The Series 2017 Bonds will be issued under and be secured by a Bond Indenture, dated as of June 1, 2017 (the “Indenture”), by and between the Authority and U.S. Bank National Association, as trustee (the “Trustee”). The Trustee is also Registrar and Paying Agent for the Series 2017 Bonds.

Proceeds of the Series 2017 Bonds will be loaned by the Authority to The Prospect-Woodward Home (the “Institution”) pursuant to a Loan Agreement and Mortgage (Security Agreement), dated as of June 1, 2017 (the “Loan Agreement”) between the Authority and the Institution for the purposes of: (1) financing and refinancing the construction, acquisition and equipping of a new, 48-acre continuing care retirement community facility to be known as Hillside Village (the “Facility”), including approximately 116 independent living apartments, 24 independent living villas, 42 assisted living units, 18 memory care assisted living units, 20 nursing beds and typical common amenities; (2) funding a debt service reserve fund with respect to the Series 2017 Bonds; (3) funding initial working capital needs directly related to the Facility and funding capitalized interest with respect to the Series 2017 Bonds; and (4) paying certain costs of issuing the Series 2017 Bonds. See “THE INSTITUTION AND THE FACILITY” herein.

∗ Preliminary, subject to change.

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As security for the Series 2017 Bonds, pursuant to the Indenture, the Authority will assign its rights under the Loan Agreement to the Trustee for the benefit of the holders of the Series 2017 Bonds, except the right to receive payment of its fees and expenses, to receive indemnity against claims, to receive notices and to grant consents or waivers. In addition, pursuant to the terms of the Loan Agreement, the Institution will grant to the Authority, and the Authority, pursuant to the Indenture, will assign to the Trustee, for the benefit of the holders of the Series 2017 Bonds: (i) a mortgage lien on the Facility and, until such time as it is sold by the Institution, on the “Original Facility” (as defined in Appendix D hereto), which includes the Existing Community (as defined below under “THE INSTITUTION AND THE FACILITY”) and a facility owned by the Institution and formerly known as Prospect Hill Home, which is currently vacant and listed for sale; (ii) a security interest in its Equipment; (iii) a security interest in the “Gross Receipts” of the Institution, including, but not limited to, accounts receivable and Entrance Fees; and (iv) a collateral assignment of the Institution’s rights under certain Assigned Project Documents (as defined in Appendix D hereto). Such mortgage and security interests referred to in the previous sentence will be subject to Permitted Encumbrances (as defined in Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Definitions”).

The obligations of the Institution to make payments under the Loan Agreement are general obligations of the Institution to which the full faith and credit of the Institution are pledged.

THE SERIES 2017 BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE AUTHORITY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE AUTHORITY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF NEW HAMPSHIRE OR ANY POLITICAL SUBDIVISION THEREOF. THE PRINCIPAL OF, PURCHASE PRICE, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2017 BONDS ARE PAYABLE SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR THEIR PAYMENT IN ACCORDANCE WITH THE INDENTURE AND THE LOAN AGREEMENT. THE AUTHORITY HAS NO TAXING POWER.

The Series 2017 Bonds are limited, special obligations of the Authority payable solely from payments made by the Institution under the Loan Agreement and moneys and securities held by the Trustee under the Indenture.

The Series 2017 Bonds are subject to optional, extraordinary and mandatory redemption prior to maturity, as described under the caption “THE SERIES 2017 BONDS.”

The purchase of the Series 2017 Bonds involves a significant degree of risk. Prospective purchasers should carefully consider the material under the caption “RISK FACTORS” herein.

Summaries of certain provisions of the Indenture and the Loan Agreement are included in Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS.” Such summaries are not comprehensive or definitive. All references to the Series 2017 Bonds, the Indenture and the Loan Agreement are qualified in their entirety by the definitive forms thereof. Copies of the documents will be made available by the Underwriter to any prospective purchasers upon request.

Unless otherwise defined herein, capitalized terms used in this Official Statement shall have the meanings specified in Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Definitions” attached hereto. Terms not otherwise defined in this Official Statement have the meanings provided in the specific documents.

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THE AUTHORITY

The Authority has been created as a public body corporate and agency of the State of New Hampshire for the purpose of exercising the powers conferred on it by virtue of the Act. The purpose of the Authority is to assist certain New Hampshire nonprofit educational institutions and nonprofit health care institutions in the construction, financing and refinancing of projects to be undertaken in relation to educational and health care and related facilities, and to assist qualified entities in the financing of student loan programs. The Authority achieves these purposes by the issuance of its bonds and by making available through its Capital Loan Program and Direct Loan Program monies to its qualified borrowers at below-market rates of interest.

Authority Membership and Organization

The Act provides that the Authority shall be comprised of a Board of Directors consisting of seven members who shall be appointed by the Governor and Council of the State. All members of the Authority’s Board of Directors serve without compensation but are entitled to reimbursement for necessary expenses incurred in the performance of their duties under the Act. The Authority annually elects one member to serve as Chairman.

The Board of Directors of the Authority is as follows:

Peter F. Imse, Chairman, term expires June 30, 2021. Mr. Imse, a resident of Bow, has been a member of the Board of the Authority since 1981. Mr. Imse is a member of the law firm of Sulloway & Hollis, P.L.L.C., Concord, New Hampshire and his practice includes the representation of businesses and non-profit organizations in the areas of real estate law, business law, and commercial and tax-advantaged financing. The clients of Sulloway & Hollis include the New Hampshire Higher Education Assistance Foundation and Granite State Management & Resources, as well as numerous health care institutions and health care providers. Mr. Imse is also a member of the Board of Corporators of New Hampshire Mutual Bancorp.

Bruce R. Burns, Vice Chairman; term expires June 30, 2019. Mr. Burns, a resident of Hopkinton, was the former Senior Vice President of Finance, Chief Financial Officer and Treasurer for Concord Hospital and its parent corporation, Capital Region Health Care. Prior to joining the Hospital in 1993, Mr. Burns held various finance and accounting positions at Danbury Hospital, Danbury, Connecticut. Mr. Burns is President of Granite Shield Insurance Exchange, a Vermont-domiciled captive insurance company providing hospital and physician liability coverages and Medical Stop-Loss coverage; the Treasurer and a Board member of Capitol Center for the Arts in Concord and former Finance Chair, Treasurer and Board member of University of New Hampshire School of Law.

Jill A. Duncan, term expires June 30, 2018. Ms. Duncan, a resident of Meredith, is Director of Finance for New Hampton School, New Hampton and also has a background in hospital finance. Ms. Duncan is a current member of the Board of Directors for the National Business Officers Association (NBOA) and serves on the National Advisory Council for Teachers Insurance and Annuity Association. She is actively involved with the Independent School Association of Northern New England (ISANNE), most recently serving as Treasurer and on the Executive Board of Directors.

Todd C. Emmons, term expires June 30, 2021. Mr. Emmons, a resident of New London, is the Chief Financial Officer at the Spaulding Youth Center in Northfield, N.H. Mr. Emmons has been involved in education administration for over 30 years, and has previously worked in New Hampshire at Saint Anselm College, Daniel Webster College, and Colby-Sawyer College. He is a board member of the

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New Hampshire Higher Education Assistance Foundation (NHHEAF) where he also serves on the Investment Committee.

Deanna S. Howard, term expires June 30, 2020. Ms. Howard, a resident of Etna, most recently was the Vice President of Regional Development for Dartmouth-Hitchcock, Lebanon, N.H. and is currently providing healthcare consulting services. Additionally, Ms. Howard is the past Chairman of the New Hampshire Hospital Association, is a current member of the Board of Trustees of Mt. Ascutney Hospital, Crotched Mountain Foundation and Valley Regional Hospital. Deanna is the former Chief Executive Officer of Upper Connecticut Valley Hospital, Colebrook, New Hampshire.

Mary W. McLaughlin, term expires June 30, 2017. Ms. McLaughlin, a resident of Bedford, was the former Senior Vice President–Healthcare Finance for TD Bank, N.A. Additionally, she is a Trustee of the Havenwood-Heritage Heights Trust Fund Board, a Council member of the NH State Council on the Arts, a Board Member of the Capital Regional Development Council, the Board Chair of the American Masters Furniture Institute (formerly the New Hampshire Institute of Furniture Making) and Co-Chair of Creative Concord, a committee of the Greater Concord Chamber of Commerce.

Allan M. Moses, term expires June 30, 2020. Mr. Moses, a resident of Bow, is the Senior Vice President and Chief Financial Officer for Riverbend Community Mental Health, Inc. in Concord, NH. He has served in that position for the previous 35 years. Mr. Moses is also the President of the Board of the John H. Whitaker Place Assisted Care Community in Penacook, NH and has served in that capacity for the last 16 years. Mr. Moses has also served as the former President for four terms of the NH Assisted Living Association (ARCH) and the former Treasurer and Vice-President of the Temple Beth Jacob.

Senior management of the Authority is as follows:

David C. Bliss is the Executive Director and Secretary of the Authority and is responsible for the general management of the Authority’s affairs. Mr. Bliss worked for two large New Hampshire trust departments prior to joining the Authority. Mr. Bliss is also a member of the bars of New Hampshire and Massachusetts.

Bonnie Payette is the Director of Operations and Finance of the Authority. Ms. Payette is a graduate of the University of New Hampshire.

Wadleigh, Starr & Peters PLLC, Manchester, New Hampshire, is serving as counsel to the Authority. Hawkins Delafield & Wood LLP, New York, New York, is serving as Bond Counsel to the Authority. The Act provides that the Authority may employ such other consulting engineers, architects, attorneys, accountants, construction and financial experts, superintendents, managers and such other employees and agents as are necessary in its judgment and fix their compensation.

Powers of the Authority

Under the Act, the Authority is authorized and empowered, among other things: to issue bonds, bond anticipation notes and other obligations and to refund the same; to charge and collect rates, rents, fees and charges for the use of projects or for services furnished by a project; to construct, reconstruct, maintain, repair, operate, lease or regulate projects for participating educational institutions and participating health care institutions; to enter into contracts for the management or operation of projects; to establish rules and regulations for the use of projects; to receive, in relation to projects, loans or grants from any public agency or other source; to make loans to participating educational institutions and participating health care institutions for the cost of projects, including the refinancing of existing indebtedness incurred for projects; to mortgage any projects for the benefit of the holders of bonds issued

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to finance such projects; to provide working capital loans to participating institutions; and to do all things necessary or convenient to carry out the purposes of the Act.

Procedure Before Issuance of Bonds

The Act provides that the Authority is not empowered to undertake any projects unless, prior to the issuance of any bonds, the Governor and Council of the State, or their designee, after public hearing, has found, among other things, that: (a) such project will be owned by a financially responsible participating institution, (b) adequate provision has been made for the payments of the cost of such project and all costs of its operation, maintenance and upkeep so that in no circumstances will the State be obligated, directly or indirectly, for such costs, (c) the construction of such project and its financing are within the authority conferred by the Act, and (d) such construction serves a need presently not fulfilled in providing health care or educational facilities in the State and is of public use and benefit. The Act provides further that, in the case of refinancing of existing indebtedness, it must be found that such refinancing will assist in reducing the cost of providing such facilities within the State or is in connection with a project being provided by the participating institution. The hearing as required under the Act with respect to the Series 2017 Bonds was held on March 7, 2017, and the findings as required by the Act were made. Such findings were ratified by the Governor and Council at a meeting held on April 5, 2017.

Bond Financing Program of the Authority

The Authority has heretofore authorized and issued various series of its revenue bonds for nonprofit colleges, universities, hospitals and other qualified entities in the State. As of December 31, 2016, the Authority had issued 552 different series of bonds and notes in the aggregate principal amount of $10,663,645,290. As of December 31, 2016, bonds and notes had been issued on behalf of 24 hospitals, 15 nursing homes, 1 health maintenance organization, 3 home health care providers, 2 ambulatory care clinics, 13 colleges and universities, 18 secondary schools, 4 student loan programs, 11 institutions providing educational programs and 9 institutions providing healthcare programs.

The Authority intends to enter into separate agreements in the future with educational institutions, health care institutions and qualified entities in the State for the purpose of financing additional projects or student loan programs for such institutions or entities through the issuance of other series of bonds and notes. Each such series of bonds and notes, other than any Additional Bonds issued under the Indenture, have been and will be issued and secured pursuant to resolutions, indentures and agreements separate and apart from the Indenture and the Loan Agreement.

THE INSTITUTION AND THE FACILITY

The Institution is a New Hampshire nonprofit voluntary corporation that presently operates a 24-bed supported residential care facility named The Prospect-Woodward Home located in Keene, New Hampshire (the “Existing Community”). The Institution is the result of a July 2016 merger between two long-standing New Hampshire nonprofit organizations, Prospect Hill Home (“Prospect Hill Home”) and The Woodward Home (“The Woodward Home”), with Prospect Hill Home serving as the surviving entity under the legal name “The Prospect-Woodward Home.” The Institution has been determined by the Internal Revenue Service to be exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Facility to be constructed with proceeds of the Series 2017 Bonds consists of a continuing care retirement community to be known as Hillside Village, located in Keene, New Hampshire, which is anticipated to include approximately 140 independent living units (comprised of 116 apartments and 24 villas), a health center containing 60 assisted living units and 20 long-term nursing care rooms and a

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community center. Once construction of the Facility is completed, residents of the Existing Community are expected to move into the Facility and the Existing Community will be closed and sold by the Institution. See Appendix A – “INFORMATION CONCERNING THE INSTITUTION AND THE FACILITY” hereto and Appendix C hereto – “FINANCIAL FEASIBILITY STUDY” for further information. The Feasibility Study included herein as Appendix C should be read in its entirety.

SECURITY FOR THE SERIES 2017 BONDS

General

The Series 2017 Bonds will be issued by Authority pursuant to the Indenture to be secured on a parity with any Additional Bonds as provided in the Indenture. The Indenture provides that the Series 2017 Bonds shall be special obligations of the Authority, payable solely from and secured by a pledge of the Pledged Revenues and funds provided therefore under the Indenture. As security for its obligation under the Indenture, the Authority will pledge and assign to the Trustee for the benefit of the holders of the Series 2017 Bonds (i) all of the Authority’s rights under the Loan Agreement, including, but not limited to, the payments due from the Institution (but excluding the right to receive payment of the Authority’s fees and expenses, to receive indemnity against claims, to receive notices and to grant consents or waivers); (ii) all amounts on deposit in the funds and accounts under the Indenture including the earnings thereon, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions of the Indenture; (iii) the right and title of the Authority in the Facility which is subject to the mortgage lien on the Facility and, until such time as it is sold by the Institution, on the Original Facility, granted by the Institution to the Authority pursuant to the Loan Agreement; (iv) the right and title of the Authority in the Equipment which is subject to the security interest in Equipment granted by the Institution to the Authority pursuant to the Loan Agreement; (v) the right and title of the Authority in the Gross Receipts which is subject to the security interest in the Institution’s Gross Receipts granted by the Institution to the Authority pursuant to the Loan Agreement, including, but not limited to, accounts receivable and Entrance Fees; and (iv) the right and title of the Authority in the Assigned Project Documents. The mortgage lien and security interests described above which are created by the Loan Agreement will be subject to certain “Permitted Encumbrances” as defined in Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Definitions.”

Pursuant to the Loan Agreement, the Institution, in consideration of the Authority’s loan of the proceeds of the Series 2017 Bonds, agrees to pay amounts sufficient, together with available funds held under the Indenture, to provide for the timely payment of all debt service requirements on the Series 2017 Bonds and to perform certain other obligations set forth therein. The Loan Agreement constitutes a general obligation of the Institution to pay the amounts due under a certain note for each series of Series 2017 Bonds created and issued pursuant to the Loan Agreement (the “Series 2017 Notes”). The Series 2017 Notes shall be issued to the Trustee as assignee of the Authority by the Institution to evidence the loan to the Institution from the Authority of the proceeds of the Series 2017 Bonds. The amount of each of the Series 2017 Notes will be in the same face amount as the Series 2017 Bonds or the corresponding series and will have terms and conditions to provide payments thereon sufficient to pay all amounts due on the Series 2017 Bonds of such series.

The Indenture

The Series 2017 Bonds are to be issued pursuant to the Indenture and, together with any Additional Bonds that may be issued from time to time under the Indenture, will be equally and ratably secured thereby. The Indenture provides that the Series 2017 Bonds, and any Additional Bonds issued thereunder (collectively, the “Bonds”) shall be limited obligations of the Authority, payable solely from and secured solely by the payments made by the Institution pursuant to the Loan Agreement and the funds

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established under the Indenture. As security for its obligations under the Indenture, the Authority will pledge to the Trustee for the benefit of the holders of the Series 2017 Bonds (i) all of the Authority’s rights under the Loan Agreement, including, but not limited to, the payments due from the Institution (but excluding the right to receive payment of the Authority’s fees and expenses, to receive indemnity against claims, to receive notices and to grant consents or waivers); (ii) all amounts on deposit in the funds and accounts under the Indenture, including the earnings thereon, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions of the Indenture; (iii) the right and title of the Authority in the Facility and the Original Facility which is subject to the mortgage lien thereon granted by the Institution to the Authority pursuant to the Loan Agreement; (iv) the right and title of the Authority in the Equipment which is subject to the security interest in Equipment granted by the Institution to the Authority pursuant to the Loan Agreement; (v) the right and title of the Authority in the Gross Receipts which is subject to the security interest in the Institution’s Gross Receipts granted by the Institution to the Authority pursuant to the Loan Agreement, including, but not limited to, accounts receivable and Entrance Fees; and (vi) the right and title of the Authority in the Assigned Project Documents.

Debt Service Reserve Fund

A Debt Service Reserve Fund and within such Fund, a Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account and a Series 2017D Bonds Debt Service Reserve Fund Account, will be established under the Indenture. The Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account will be funded upon the issuance of the Series 2017 Bonds in an amount equal to the maximum annual debt service requirement on the Series 2017 A Bonds and one year of interest on the Series 2017B Bonds and the Series 2017C Bonds. The Series 2017D Bonds Debt Service Reserve Fund Account will be funded upon the issuance of the Series 2017 Bonds in an amount equal to one year of interest on the Series 2017D Bonds. The Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account will be held for the benefit of the Series 2017 Tax-Exempt Bondholders and is available for payment of the principal of and interest on the Series 2017 Tax-Exempt Bonds if payments by the Institution are insufficient therefor. The Series 2017D Bonds Debt Service Reserve Fund Account will be held for the benefit of the Series 2017D Bondholders and is available for payment of the principal of and interest on the Series 2017D Bonds if payments by the Institution are insufficient therefor.

When moneys in the Bond Fund created under the Indenture are insufficient to pay principal of or interest on Bonds when due, moneys in the applicable account of the Debt Service Reserve Fund shall be applied to cure any deficiency in the Bond Fund. Moneys in the Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account shall be applied solely to pay debt service on the Series 2017 Tax-Exempt Bonds and moneys in the Series 2017D Debt Service Reserve Fund Account shall be applied solely to pay debt service on the Series 2017D Bonds. Prior to applying moneys in the Debt Service Reserve Fund to cure any deficiency in the Bond Fund, the Trustee shall apply amounts available from first, the Entrance Fees Working Capital Account of the Working Capital Fund, and second, moneys in the Renewal and Replacement Fund. When moneys in the Debt Service Reserve Fund are so used, the Trustee shall forthwith give notice to the Authority. If at any time the Debt Service Reserve Fund Value of the applicable account of the Debt Service Reserve Fund exceeds one hundred percent (100%) of the Debt Service Reserve Fund Requirement (as defined in Appendix D hereto), such excess may be transferred, at the direction of the Institution and applied as set forth in the Indenture. The Trustee is directed under the Indenture to make such deposits into the Debt Service Reserve Fund as are required to be made under the Indenture or the Loan Agreement, including, but not limited to any payments received by the Trustee from the Institution pursuant to the Loan Agreement following any withdrawal from or shortfall in the Debt Service Reserve Fund. On the final payment date of any series of Bonds (whether by maturity or earlier redemption), if the Reserve Fund Value of the applicable account of the Debt Service Reserve Fund exceeds one hundred percent (100%) of the applicable Debt Service Reserve Fund Requirement

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after giving effect to such final payment, such excess moneys in the applicable account of the Debt Service Reserve Fund shall be used to pay the principal or redemption price of, and interest on, such series of Bonds on such final payment date.

Entrance Fees Fund

Pursuant to the Agreement, the Institution has agreed that all Initial Entrance Fees received by the Institution with respect to the Facility shall be transferred to the Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fees Fund.

Moneys in the Entrance Fees Fund shall be disbursed by the Trustee on the first Business Day of each month (or as otherwise described under “THIRD” below) as follows in the following order of priority:

FIRST: to the Institution to pay refunds required by Residency Agreements. Such disbursements shall be made upon receipt by the Trustee of a written certificate of an Authorized Officer of the Institution certifying that it is required by a Residency Agreement to pay refunds within the next 30 days and the amount of such refunds.

SECOND: to the Entrance Fees Account of the Working Capital Fund, until the total principal amount deposited into the Entrance Fees Account of the Working Capital Fund equals $6,000,000. The Trustee shall not transfer Entrance Fees from the Entrance Fees Fund into the Working Capital Fund once a total amount of $6,000,000 from Entrance Fees has been transferred to the Working Capital Fund.

THIRD: after the transfers pursuant to the preceding numbered paragraphs have been made, the Trustee shall transfer the remaining amount in the Entrance Fees Fund to the Entrance Fee Redemption Account. Amounts on deposit in the Entrance Fee Redemption Account shall be applied by the Trustee, on each Entrance Fee Redemption Date to the redemption of the Series 2017B Bonds, the Series 2017C Bonds and the Series 2017D Bonds as described under “THE SERIES 2017 BONDS – Entrance Fee Redemption of Series 2017B Bonds, Series 2017C Bonds and Series 2017D Bonds.” Without further direction from the Authority or the Institution, the amount on deposit on the Entrance Fees Fund on each Entrance Fee Redemption Date shall be applied by the Trustee to the redemption, as applicable, of the Series 2017B, the Series 2017C Bonds or the Series 2017D Bonds.

When the Institution delivers an Officer’s Certificate to the Trustee stating that (A) the Series 2017B, Series 2017C and Series 2017D Bonds are no longer Outstanding, (B) no Event of Default has occurred and is continuing under this Bond Indenture, and (C) requesting that any funds remaining on deposit in the Entrance Fees Fund be transferred to the Institution, thereafter the Institution need not deposit any Entrance Fees into the Entrance Fees Fund, any amounts on deposit in the Entrance Fees Fund shall be remitted to the Institution by the Trustee, and the Entrance Fees Fund shall be closed.

The diagram on the following page sets forth the flow of funds from the Entrance Fees Fund as described above.

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Application of Initial Entrance Fees

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Working Capital Fund

On the date of issuance of the Series 2017 Bonds, $2,000,000 of proceeds of the Series 2017 Bonds shall be deposited in the Bond Proceeds Working Capital Account within the Working Capital Fund. All amounts received from Entrance Fees as provided above under “Entrance Fees Fund” shall be deposited in the Entrance Fees Working Capital Account within the Working Capital Fund. Moneys in the Working Capital Fund shall be disbursed by the Trustee to or for the account of the Institution within seven days after receipt by the Trustee of a written request certifying that the withdrawal is made as permitted by the Indenture to pay any of the following: (A) costs of the initial construction and equipping of the Facility, (B) development and marketing fees and expenses related to the Facility, (C) operating expenses relating to the Facility, (D) the costs of needed repairs to the Facility, (E) routine capital expenditures relating to the Facility, (F) judgments against the Institution (such payments shall be made solely from amounts on deposit in the Entrance Fees Working Capital Account), (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which those Entrance Fees were received (such payments shall be made solely from amounts on deposit in the Entrance Fees Working Capital Account), or (H) amounts due on any Bonds (other than optional prepayment or redemption) (such payments shall be made solely from amounts on deposit in the Entrance Fees Working Capital Account). Withdrawals to be made for the purposes set forth in clauses (A), (B), (C), (D) or (E) of the prior sentence shall be made first from the Bond Proceeds Working Capital Account to the extent funds are on deposit therein.

Any surplus amounts on deposit in the Bond Proceeds Working Capital Account not needed to pay working capital after the final redemption of the Series 2017B Bonds and after Stabilization has been achieved shall be applied (a) to pay costs of the Project or routine capital expenditures at the Facility, (b) to redeem the Bonds in accordance with the Indenture, or (c) to such other purposes as shall be permitted by the Authority and Bond Counsel.

All amounts on deposit in the Entrance Fees Account of the Working Capital Fund may be released, and the Working Capital Fund shall be closed, upon receipt by the Trustee of an Officer’s Certificate of the Institution requesting such release which Officer’s Certificate shall state that (a) the Series 2017B, Series 2017C and Series 2017D Bonds are no longer Outstanding, (b) Stabilization (as defined in Appendix D hereto) with respect to the Facility has been achieved, and (c) no Bond Indenture Event of Default has occurred and is continuing.

The Loan Agreement and the Series 2017 Notes

Pursuant to the Loan Agreement, the Authority will lend the proceeds of the Series 2017 Bonds to the Institution and the Institution will agree: (i) to make payments in amounts sufficient, together with investment earnings on the funds held under the Indenture, to provide the Trustee with funds sufficient for the timely payment of the principal, redemption price and purchase price of, and interest on, all Bonds Outstanding under the Indenture; and (ii) to perform certain other obligations set forth therein. As described above under the caption, “The Indenture”, the Authority will assign its rights under the Loan Agreement, including, but not limited to, its right to receive payments of principal and interest thereunder (but excluding the right to receive payment of its fees and expenses, to receive indemnity against claims, to receive notices and to grant consents or waivers), to the Trustee for the benefit of the holders of the Series 2017 Bonds.

Pursuant to the Loan Agreement, the Series 2017 Notes shall be issued to the Trustee as assignee of the Authority by the Institution to evidence the loan to the Institution from the Authority of the proceeds of the Series 2017 Bonds. The Institution agrees that it will promptly pay the principal of, redemption premium, if any, and interest on the Series 2017 Notes in the manner and at the places

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required by the Series 2017 Notes. The Loan Agreement requires that payments with respect to the Series 2017 Notes be made to the Trustee.

THE SERIES 2017 BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE AUTHORITY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE AUTHORITY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF. THE PRINCIPAL OF, PURCHASE PRICE, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2017 BONDS ARE PAYABLE SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR THEIR PAYMENT IN ACCORDANCE WITH THE INDENTURE AND THE LOAN AGREEMENT. THE AUTHORITY HAS NO TAXING POWER.

Additional Bonds and Additional Indebtedness

One or more series of Additional Bonds may be issued under the Indenture to complete or make additions or improvements to the Facility, to provide extensions, additions, improvements or repairs to the Facility or other property of the Institution, to refund any or all Outstanding Bonds issued under the Indenture or to provide additional funds for the Debt Service Reserve Fund. Additional Bonds will be ratably and equally secured with the Series 2017 Bonds to the extent provided in the Indenture. Prior to the issuance of any Additional Bonds, the Institution must demonstrate satisfaction of the Permitted Debt provisions of the Loan Agreement and the Authority and the Institution are required to enter into an amendment to the Loan Agreement or a supplemental agreement to provide that the payments under the Loan Agreement will be increased and computed so as to amortize in full the principal of and interest on such Additional Bonds. See Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Bond Indenture – Authorization and Terms of Bonds – Additional Bonds” and Appendix D “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Loan Agreement – Particular Covenants – Permitted Debt.”

Under certain circumstances under the Loan Agreement, the Institution may incur Additional Indebtedness on a parity with the Series 2017 Notes and, additionally, the Institution may incur Indebtedness not evidenced by Notes and not issued pursuant to the Loan Agreement. In either case, the type and the aggregate amount of such Additional Indebtedness must be within the limitations contained in the Loan Agreement. The terms of such Indebtedness, including the remedies granted to the holders of such Additional Indebtedness, may be different from the terms of the Series 2017 Notes. See Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Loan Agreement – Particular Covenants – Permitted Debt.”

Loan Agreement Covenants

The Loan Agreement contains covenants of the Institution with respect to the cumulative cash loss prior to Stabilization, debt service coverage, liquidity, marketing and occupancy, restrictions on additional indebtedness, liens and certain other matters, including the covenants summarized below. For the definitions of certain words and terms used under this heading “Loan Agreement Covenants,” see Appendix D hereto – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Definitions.”

Cumulative Cash Loss Covenant. The Institution covenants to maintain a maximum Cumulative Cash Loss for each fiscal quarter commencing with the first full fiscal quarter ending after the Initial Occupancy Date of no greater than the maximum Cumulative Cash Loss shown below for such fiscal quarter.

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Fiscal Quarter Following Initial Occupancy Date

Maximum Cumulative Cash Loss

1 $1,500,000 2 3,100,000 3 4,600,000 4 6,300,000 5 6,800,000 6 7,000,000 7 7,200,000

8 and thereafter 7,300,000

Compliance with the Cumulative Cash Loss covenant shall be tested by the Institution quarterly commencing with the first full fiscal quarter ending after the Initial Occupancy Date and ending with the fiscal quarter in which Stabilization has been achieved, as shown on the unaudited financial reports required pursuant to the Loan Agreement.

If the Institution exceeds the Cumulative Cash Loss amount set forth above for any one quarter, the Institution shall prepare and deliver to the Required Information Recipients a report and plan within thirty (30) days of delivery of the unaudited quarterly financial statements for such quarter, describing in detail the reasons for the failure to meet such Cumulative Cash Loss covenant, and the proposed actions to be undertaken to achieve compliance with the Cumulative Cash Loss covenant on the earliest practicable date.

If the Institution again exceeds the Cumulative Cash Loss amount set forth above at any time after the delivery of the Institution’s report and plan required by the preceding paragraph, the Institution shall cause to be prepared and delivered to the Required Information Recipients a report and plan of a Consultant (which Consultant may be Life Care Services LLC or other qualified Consultant) within sixty (60) days of the delivery of the unaudited quarterly financial statements for the applicable quarter, describing in detail the reasons for the failure to meet such covenant and recommending actions to be undertaken to achieve compliance on the earliest practicable date.

Except as described below under “Failure to Maintain Ratios or Covenants Not a Default,” failure to comply with the Cumulative Cash Loss covenant shall not constitute an Event of Default under the Loan Agreement.

Debt Service Coverage Ratio. The Institution agrees that it will calculate the Debt Service Coverage Ratio of the Institution (i) as of the end of each fiscal quarter on a rolling 12-month basis, commencing with the first full fiscal quarter following Stabilization (provided that for the first nine-months that the Debt Service Coverage Ratio is required to be computed, the Debt Service Coverage Ratio may be calculated on an annualized basis from the first day of the first fiscal quarter for which such ratio is required to be computed), and (ii) as of the end of each Fiscal Year, based on audited financial statements, commencing with the first Fiscal Year during which the Debt Service Coverage Ratio is required to be computed for each fiscal quarter.

If the Debt Service Coverage Ratio of the Institution for any calculation date is less than 1.10 during the first Fiscal Year for which the Debt Service Coverage Ratio is required to be calculated, and thereafter if the Debt Service Coverage Ratio is less than 1.20, the Institution, shall, within thirty (30) days of such calculation, prepare a report and plan detailing the reasons for such deficiency and the proposed actions to increase the Debt Service Coverage Ratio to the required level on the earliest practicable date. If the Debt Service Coverage Ratio is again below the required level on any testing date thereafter, the Institution shall retain a Consultant (which may be Life Care Services LLC) within sixty

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(60) days following the calculation of any such deficiency to make recommendations with respect to the rates, fees and charges of the Institution and the Institution’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 for the following Fiscal Year. Notwithstanding anything in the Loan Agreement to the contrary, for the first Fiscal Year in which the Debt Service Coverage Ratio is to be calculated pursuant as described above, the Debt Service Coverage Ratio for such fiscal year shall be not less than 1.10.

Except as described below under “Failure to Maintain Ratios or Covenants Not a Default,” failure to comply with the Debt Service Coverage Ratio covenant shall not constitute an Event of Default under the Loan Agreement; provided that the failure to achieve a Debt Service Coverage Ratio of at least 1.00 at the end of any Fiscal Year following Stabilization shall constitute an Event of Default under the Loan Agreement.

Liquidity Covenant. The Institution covenants that it will calculate the Days’ Cash on Hand of the Institution semiannually on each June 30 and December 31, commencing with the first semiannual testing date that follows Stabilization. The Institution is required to conduct its business so that on each semiannual testing date the Institution shall have no less than 180 Days’ Cash on Hand (the “Days’ Cash on Hand Requirement”).

If the amount of Days’ Cash on Hand as of any testing date is less than the Day’s Cash on Hand Requirement, the Institution shall, within thirty (30) days after delivery of the Officer’s Certificate disclosing such deficiency, prepare and deliver a report and plan describing in detail the reasons for the failure to satisfy the Days’ Cash on Hand Requirement and the proposed actions to be undertaken to achieve compliance with the Days’ Cash on Hand Requirement on the earliest practicable date.

If on any testing date thereafter the Institution shall again fail to satisfy the Days’ Cash on Hand Requirement, the Institution shall, within sixty (60) days after delivery of the Officer’s Certificate disclosing such deficiency, retain a Consultant (which may be Life Care Services LLC or other qualified Consultant) to make recommendations with respect to the rates, fees and charges of the Institution and the Institution’s methods of operation and other factors affecting its financial condition in order to increase the Days’ Cash on Hand to the Days’ Cash on Hand Requirement for future periods. A copy of the reports and recommendations required by this paragraph and the preceding paragraph shall be filed with each Required Information Recipient. The Institution shall follow each recommendation in such reports applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law.

Except as described below under “Failure to Maintain Ratios or Covenants Not a Default,” failure to comply with the Liquidity covenant shall not constitute an Event of Default under the Loan Agreement.

Marketing Covenant. Beginning with the first full fiscal quarter following the fiscal quarter in which the Series 2017 Bonds are issued, and ending with the first full fiscal quarter following Stabilization, the Institution will use its best efforts to maintain the percentage of Independent Living Units that are part of the Facility which are Reserved at or above the applicable levels set forth below, which determinations shall be measured as of the last day of the applicable quarter (the “Marketing Requirements”). The applicable Marketing Requirements are as follows:

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Reserved Independent Living Units Quarter Ending No. of Units Percent

09/30/17 104 74.3% 12/31/17 110 78.6 03/31/18 114 81.4 06/30/18 118 84.3 09/30/18 122 87.1

12/31/18 and thereafter

126 90.0

If the percentage of Reserved Independent Living Units for any fiscal quarter is less than the applicable Marketing Requirement set forth above for that fiscal quarter, the Institution is required to prepare and submit to the Required Information Recipients, within thirty (30) days of the end of such fiscal quarter, a marketing report (a “Management Marketing Report”) that includes the following information: (a) the Percentage of Reserved Independent Living Units, including the number of reservations and cancellations of Independent Living Units during the immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared by management of the Institution, of the number of reservations of Independent Living Units expected in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Management Marketing Report is being prepared; and (c) a description of the sales and marketing plan of the Institution.

If the Percentage of Reserved Independent Living units is less than the Marketing Requirement for two successive fiscal quarters, the Institution is required to retain a Consultant within thirty (30) days thereafter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to the Marketing Requirements set forth herein for future periods. Notwithstanding anything herein to the contrary, Bluespire, Inc. may provide the recommendations provided for in the previous sentence upon the first covenant breach described herein. Within sixty (60) days of retaining any such Consultant, the Institution is required to cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Required Information Recipient. The Institution is required to follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of the Institution) and permitted by law. The Institution will not be required to obtain a Consultant’s report in any two consecutive fiscal quarters.

Except as described below under “Failure to Maintain Ratios or Covenants Not a Default,” failure to comply with the Marketing covenant shall not constitute an Event of Default under the Loan Agreement.

Occupancy Covenant. The Institution covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than sixty (60) days following the issuance of the first certificate of occupancy for the first building containing Independent Living Units that are part of the Facility, and (b) ending with the first full fiscal quarter following Stabilization (each an “Occupancy Quarter”), the Institution will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units that are part of the Facility (the “Percentage of Units Occupied”) at or above the requirements set forth below, which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

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Occupancy Requirements Occupancy Quarter No. of Units Percent

1 15 10.7% 2 35 25.0 3 50 35.7 4 65 46.4 5 75 53.6 6 85 60.7 7 92 65.7 8 99 70.7 9 106 75.7

10 113 80.7 11 120 85.7

12 and thereafter 126 90.0

If the Percentage of Units Occupied for any Occupancy Quarter is less than the Occupancy Requirement set forth above for that Occupancy Quarter, the Institution is required to prepare and submit to the Required Information Recipients, within thirty (30) days of the end of such fiscal quarter, (a) an occupancy report (a “Management Occupancy Report”) that includes the following information: (i) the Percentage of Units Occupied and (ii) the number of reservations and cancellations of Independent Living Units that are part of the Facility during the immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared by management of the Institution, of the number of Independent Living Units that are part of the Facility expected to be Occupied in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Management Occupancy Report is being prepared; and (c) a description of the sales and marketing plan of the Institution.

If the Percentage of Units Occupied for any two consecutive fiscal quarters is less than the Occupancy Requirement set forth above for those fiscal quarters, the Institution is required to retain a Consultant within thirty (30) days thereafter to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to the Occupancy Requirement set forth above for future periods. Bluespire, Inc. may provide the recommendations provided for in the previous sentence upon the first covenant breach described herein. Within 60 days of retaining any such Consultant, the Institution is required to cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Required Information Recipient. The Institution is required to follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law. The Institution will not be required to obtain a Consultant’s report in any two consecutive fiscal quarters.

Except as described below under “Failure to Maintain Ratios or Covenants Not a Default,” failure to comply with the Occupancy covenant shall not constitute an Event of Default under the Loan Agreement.

Failure to Maintain Ratios or Covenants Not a Default. Notwithstanding any other provision of the Loan Agreement to the contrary, failure of the Institution to achieve the required Cumulative Cash Flow Covenant, Debt Service Coverage Ratio, Liquidity Covenant, Marketing Covenant or Occupancy Covenant for any Fiscal Year shall not constitute an Event of Default under the Loan Agreement if the Institution takes all action necessary to comply with the procedures set forth in the Loan Agreement with respect to retaining a Consultant and follows each recommendation contained in such Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law; provided that the failure to achieve a Debt Service Coverage Ratio of at least 1.00

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at the end of any Fiscal Year following Stabilization shall constitute an Event of Default under the Loan Agreement.

See Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Loan Agreement – Particular Covenants” for a further description of the Cumulative Cash Flow Covenant, Debt Service Coverage Ratio, Liquidity Covenant, Marketing Covenant and Occupancy Covenant, including a description of the actions required to be taken if such covenants are not met.

Rating Application

The Institution covenants that it will seek at its expense a rating of the Series 2017 Bonds from at least one Rating Agency each year after a determination is made by the Institution Representative in consultation with the Original Purchaser that an investment grade rating is reasonably obtainable, until achievement of an investment grade rating; provided that if during any such year the Institution receives a preliminary indication from such Rating Agency that the Series 2017 Bonds will not be assigned an investment grade rating, the Institution shall withdraw any request for such year to have such Rating Agency assign a rating to the Series 2017 Bonds.

Certain Amendments to Indenture or Loan Agreement; Certain Amendments to Payment Provisions after an Event of Default With Consent of 80% of Holders

In general, the Indenture permits amendments to be made thereto or to the Loan Agreement (except for certain amendments that do not require Bondholder consent) only with the consent of the Holders of a majority in aggregate principal amount of the Bonds Outstanding. Except as described in the following sentence, the Indenture further provides that so long as no Event of Default shall have occurred and be continuing, no amendment shall be made to the Indenture or Loan Agreement, without the consent of the Holders of 100% of the Bonds Outstanding which are affected by such amendment, that (i) affects the payment provisions of the Bonds, including extending the time for payment or reducing or modifying the amount of principal, interest or redemption price payable on the Bonds, (ii) gives preference or priority of one Bond over another, or (iii) reduces the percentages of Holders of the Bonds required to consent to an amendment to the Indenture or the Loan Agreement. The Indenture further provides that during any period of time in which an Event of Default has occurred and is continuing, an amendment of the type described in clause (i) above may be made with the consent of the Holders of not less than 80% of the principal amount of the Bonds Outstanding which are affected by such amendment; provided, however, that no such amendment made during the continuance of an Event of Default shall result in any preference or priority of any Bond over any other Bond and no such amendment shall result in a disproportionate change, reduction or modification with respect to any Bond. See Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Bond Indenture – Supplements.”

Mortgage Lien

Under the Loan Agreement, the Institution has granted to the Authority a mortgage lien on the Facility and on the Original Facility and a security interest in its Equipment. Such mortgage lien and security interest will be subject to certain “Permitted Encumbrances” as defined in Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Definitions.” The Loan Agreement allows for the sale of the Original Facility by the Institution and the release of the mortgage lien thereon in connection with such sale without restriction or further conditions.

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THE SERIES 2017 BONDS

The following is a summary of certain provisions of the Series 2017 Bonds. Reference is made to the Series 2017 Bonds themselves for the complete text thereof and to the Indenture, and the discussion herein is qualified by such reference.

General

The Series 2017 Bonds shall be issued in fully registered form as provided in the Indenture, and shall be payable as to interest on January 1, 2018 and thereafter on January 1 and July 1 of each year during the term of the Series 2017 Bonds. Interest on the Series 2017 Bonds shall be calculated based on a 360 day year of twelve 30-day months. The Series 2017 Bonds shall be dated their date of issuance, except with respect to Series 2017 Bonds authenticated and delivered on and after the first Bond Payment Date (i.e., upon an exchange or transfer of Series 2017 Bonds), which Series 2017 Bonds shall be dated (i) as of the Bond Payment Date next preceding the date of their authentication or as of the date of their authentication if authenticated on a Bond Payment Date, or (ii) if on the date of their authentication payment of interest thereon is in default, as of the date to which interest has been paid. Interest on all Series 2017 Bonds initially delivered shall accrue from their date of issuance.

The Series 2017 Bonds are issuable in the form of fully registered bonds in denominations of $100,000 and increments of $5,000 in excess thereof. The Series 2017 Bonds will be issued initially under a Book-Entry Only System, registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), which will act as securities depository for the Series 2017 Bonds. Individual purchases of beneficial interests in the Series 2017 Bonds will be made in book-entry form. Purchasers of beneficial interests in the Series 2017 Bonds will not receive certificates representing their interest in the Series 2017 Bonds that they purchase. Except as provided in the Indenture, all of the Series 2017 Bonds shall be registered by the Trustee in the name of Cede & Co., as nominee of DTC. So long as Cede & Co., as nominee of DTC, is the registered owner of the Series 2017 Bonds, references herein to the Bondholders or registered owners shall mean Cede & Co. rather than the beneficial owners of the Series 2017 Bonds. See “Book-Entry System” below.

Both principal of, premium, if any, and interest on the Series 2017 Bonds shall be payable in any coin or currency of the United States of America which, on the respective dates of payment of principal and interest, is tender for the payment of public and private debts. Interest on the Series 2017 Bonds shall be payable by check drawn upon the Paying Agent and mailed to the registered Holders of such Bonds at the addresses of such Holders as they appear on the books of the Registrar on June 15 and December 15 (each, a “Record Date”), provided, however, that interest may be paid by wire transfer to the Holder of at least $500,000 aggregate principal amount of Series 2017 Bonds to the address designated by such Holder to the Paying Agent at or prior to the Record Date for such payment. Principal of and premium, if any, on the Series 2017 Bonds shall be paid when due upon presentation and surrender of such Bonds at the Corporate Trust Office of the Paying Agent. In the event of a default by the Authority in the payment of interest due on a Series 2017 Bond on a Bond Payment Date, such defaulted interest will be payable to the Person in whose name such Series 2017 Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Registrar to the registered owners of Series 2017 Bonds not less than ten (10) days preceding such special record date.

So long as DTC or its nominee is the registered owner of the Series 2017 Bonds, such payments shall be made to DTC or its nominee by wire or bank transfer in immediately available funds. Disbursement of such payments to DTC participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC participants and indirect participants.

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Transfer Restriction

Until such time (if any) as the Series 2017 Bonds shall receive an investment grade rating from any nationally recognized rating agency, the transfer of beneficial ownership of the Series 2017 Bonds shall be restricted solely to “qualified institutional buyers” or “accredited investors” within the meaning of the Securities Act of 1933, as amended, in denominations of $100,000 and increments of $5,000 in excess thereof.

Transfer, Registration and Exchange

Series 2017 Bonds, upon presentation and surrender thereof to the Registrar together with written instructions satisfactory to the Registrar, duly executed by the registered Holder or its attorney duly authorized in writing, may be exchanged for an equal aggregate face amount of fully registered Series 2017 Bonds with the same interest rate and maturity of any other authorized denominations. All Series 2017 Bonds issued under the Indenture shall be negotiable, subject to the provisions for registration and transfer thereof contained in the Indenture or in the Series 2017 Bonds. So long as any Series 2017 Bonds are Outstanding, the Authority shall cause to be maintained at the offices of the Registrar books for the registration and transfer of Series 2017 Bonds, and shall provide for the registration and transfer of any Series 2017 Bond under such reasonable regulations as the Authority or the Registrar may prescribe. The Registrar shall act as bond registrar for purposes of exchanging and registering Series 2017 Bonds in accordance with the provisions of the Indenture.

Each Series 2017 Bond shall be transferable only upon the registration books maintained by the Registrar, by the Holder thereof in person or by his attorney duly authorized in writing, upon presentation and surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered Holder or his duly authorized attorney. Upon surrender for transfer of any such Bond, the Authority shall cause to be executed and upon the written request of the Authority, the Authenticating Agent shall authenticate and deliver, in the name of the transferee, one or more new Series 2017 Bonds of the same aggregate face amount, maturity and rate of interest as the surrendered Series 2017 Bond, as fully registered Series 2017 Bonds only.

As to any Series 2017 Bond, the Person in whose name such Series 2017 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal or interest on any Series 2017 Bond shall be made only to or upon the written order of the registered Holder thereof. Such payment shall be valid and effectual to satisfy and discharge the liability upon such Series 2017 Bond to the extent of the amount so paid.

In connection with any such exchange or transfer of Series 2017 Bonds the Holder requesting such exchange or transfer shall as a condition precedent to the exercise of the privilege of making such exchange or transfer remit to the Registrar an amount sufficient to pay any tax, or other governmental charge required to be paid with respect to such exchange or transfer. Neither the Authority nor the Registrar shall be obligated to (i) issue, exchange or transfer any Series 2017 Bond during the period of fifteen days preceding any Bond Payment Date, or (ii) transfer or exchange any Series 2017 Bond which has been or is being called for redemption in whole or in part.

Notwithstanding the above, so long as the Series 2017 Bonds are held under a book-entry system, transfers and exchanges of beneficial ownership of the Series 2017 Bonds will be effected on the books of DTC pursuant to its rules and procedures.

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Book-Entry System

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.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2017 Bonds. The Series 2017 Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of each series of the Series 2017 Bonds and will be deposited with DTC.

DTC 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 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.

Purchases of Series 2017 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2017 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2017 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2017 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 Series 2017 Bonds, except in the event that use of the book-entry system for the Series 2017 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2017 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2017 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 Series 2017 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2017

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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 Series 2017 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2017 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2017 Bond documents. For example, Beneficial Owners of Series 2017 Bonds may wish to ascertain that the nominee holding the Series 2017 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2017 Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2017 Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures. DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2017 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payments of principal, redemption price and interest on the Series 2017 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 Trustee, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Series 2017 Bonds 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 nor its nominee, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price or interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the 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 the Series 2017 Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series 2017 Bond certificates are required to be printed and delivered.

The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor Series 2017 Bonds depository). In that event, Series 2017 Bond certificates will be printed and delivered.

THE AUTHORITY, THE INSTITUTION, THE TRUSTEE, THE PAYING AGENT AND THE UNDERWRITER CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE TO ITS PARTICIPANTS OR THAT DIRECT PARTICIPANTS OR INDIRECT

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PARTICIPANTS WILL DISTRIBUTE TO BENEFICIAL OWNERS OF THE SERIES 2017 BONDS (I) PAYMENTS OF THE PRINCIPAL OR REDEMPTION PRICE OF, OR INTEREST ON, THE SERIES 2017 BONDS, OR (II) CONFIRMATION OF OWNERSHIP INTERESTS IN THE SERIES 2017 BONDS, OR (III) REDEMPTION OR OTHER NOTICES, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT “RULES” APPLICABLE TO DTC ARE ON FILE WITH THE SEC AND THE CURRENT “PROCEDURES” OF DTC TO BE FOLLOWED IN DEALING WITH ITS PARTICIPANTS ARE ON FILE WITH DTC,

NONE OF THE AUTHORITY, THE INSTITUTION, THE TRUSTEE, THE PAYING AGENT OR THE UNDERWRITER WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC, DIRECT PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OF THE SERIES 2017 BONDS WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT, (II) THE PAYMENT BY DTC TO ANY DIRECT PARTICIPANT OR BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OR REDEMPTION PRICE OF, OR INTEREST ON, ANY SERIES 2017 BONDS, (III) THE DELIVERY OF ANY NOTICE BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT, (IV) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE SERIES 2017 BONDS, OR (V) ANY OTHER ACTION TAKEN BY DTC, ANY DIRECT PARTICIPANT OR ANY INDIRECT PARTICIPANT.

Redemption of the Series 2017 Bonds

Optional Redemption

Optional Redemption of Series 2017A Bonds. All or any number of the Series 2017A Bonds maturing on or after July 1, 2027 are subject to redemption at the option of the Institution prior to maturity on and after July 1, 2024, in whole or in part at any time by payment of a Redemption Price equal to the principal amount of each Series 2017A Bond called for redemption, plus the applicable premium as set forth below, plus interest accrued to the date fixed for redemption.

Redemption Period Redemption Premium

July 1, 2024 to June 30, 2025 3.0% July 1, 2025 to June 30, 2026 2.0% July 1, 2026 to June 30, 2027 1.0% July 1, 2027 and thereafter No Premium

Optional Redemption of Series 2017B Bonds. All or any number of the Series 2017B Bonds are

subject to redemption at the option of the Institution prior to maturity on and after July 1, 2019, in whole or in part at any time by payment of a redemption price equal to the principal amount of each Series 2017B Bond called for redemption plus interest accrued to the date fixed for redemption.

Optional Redemption of Series 2017C Bonds. All or any number of the Series 2017C Bonds are subject to redemption at the option of the Institution prior to maturity on and after July 1, 2019, in whole or in part at any time by payment of a redemption price equal to the principal amount of each Series 2017C Bond called for redemption plus interest accrued to the date fixed for redemption.

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Optional Redemption of Series 2017D Bonds. All or any number of the Series 2017D Bonds are subject to redemption at the option of the Institution prior to maturity on and after July 1, 2019, in whole or in part at any time by payment of a redemption price equal to the principal amount of each Series 2017D Bond called for redemption plus interest accrued to the date fixed for redemption.

Entrance Fee Redemption of Series 2017B Bonds, Series 2017C Bonds and Series 2017D Bonds

The Series 2017B Bonds, the 2017C Bonds and the Series 2017D Bonds are subject to redemption on each January 1, April 1, July 1 and October 1 (each, an “Entrance Fee Redemption Date”) from funds on deposit in the Entrance Fee Redemption Account at a redemption price equal to the principal amount of Series 2017B Bonds, Series 2017C or Series 2017D Bonds being redeemed, plus accrued interest to the date fixed for redemption. Funds on deposit in the Entrance Fee Redemption Account shall be applied first to redeem the Series 2017D Bonds, second to redeem the Series 2017C Bonds and third to redeem the Series 2017B Bonds. Redemption of the Series 2017B and Series 2017C Bonds from funds on deposit in the Entrance Fee Redemption Account shall not begin until the Series 2017D Bonds have been paid in full and redemption of the Series 2017B Bonds from funds on deposit in the Entrance Fee Redemption Account shall not begin until the Series 2017C Bonds have been paid in full. The principal amount of Series 2017B Bonds, Series 2017C Bonds or Series 2017D Bonds to be redeemed on an Entrance Fee Redemption Date shall be equal to the largest authorized denomination of the Series 2017B Bonds, Series 2017C Bonds or Series 2017D Bonds for which the redemption price thereof is on deposit in the Entrance Fee Redemption Account on the date on which notice of Entrance Fee Redemption is given by the Trustee to the holders.

Sinking Fund Account Redemption of Series 2017A Bonds

The Series 2017A Bonds maturing July 1, 20__, July 1, 20__ and July 1, 20__ (the “Term Bonds”) are subject to mandatory redemption and shall be redeemed on July 1 in the years set forth below (the “Sinking Fund Account Retirement Dates”), in the amount of the unsatisfied portion of the corresponding Sinking Fund Account Requirement for Term Bonds of the same maturity by payment from the Sinking Fund Account of a redemption price of the principal amount of such Series 2017A Bonds called for redemption plus payment from the Interest Account of the interest accrued to the date fixed for redemption but without premium, as follows:

Series 2017A Bonds Due July 1, 20__

Year Amount Year Amount

_____________ * Maturity



_____________ * Maturity

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_____________ * Maturity Extraordinary Optional Redemption

All or any number of the Series 2017 Bonds are subject to redemption prior to maturity at the option of the Institution in whole or in part at any time by payment of a redemption price of the principal amount of each Series 2017 Bond so called for redemption plus interest accrued to the date fixed for redemption paid from insurance proceeds, at any time, with respect to casualty losses or condemnation awards where the amount of such proceeds or awards exceeds ten percent (10%) of the aggregate Value of the Property, Plant and Equipment. Redemption of Series 2017 Bonds pursuant to this paragraph may be made from proceeds of insurance or condemnation awards if (a) such proceeds shall be sufficient to redeem all Outstanding Series 2017 Bonds, or (b) the Institution shall furnish a certificate of an Architect stating that (i) the portion of the Property, Plant and Equipment damaged or condemned is not essential to the Institution’s use or occupancy of the Property, Plant and Equipment or (ii) the damaged or condemned Property, Plant and Equipment has been restored to a condition substantially equivalent to its previous condition.

Mandatory Redemption Upon Determination of Taxability

The Series 2017A Bonds, 2017B Bonds and 2017C Bonds (collectively, the “Series 2017 Tax-Exempt Bonds”) are subject to mandatory redemption in the event of a Determination of Taxability (as defined in Appendix D hereto), on a date determined by the Trustee which is within one hundred twenty (120) days after such Determination of Taxability, as a whole, or in part if such partial redemption will preserve the exclusion from gross income for federal income tax purposes of interest on the Series 2017 Tax-Exempt Bonds not being redeemed, at a redemption price equal to: (a) if such Determination of Taxability was the result of any action or inaction on the part of the Institution, the higher of (i) 105% of the principal amount of the Bonds to be redeemed, and (ii) the sum of 100% of the principal amount of the Bonds to be redeemed and the unamortized bond premium thereon, or (b) if the Determination of Taxability was not the result of any action or inaction by the Institution, 100% of the principal amount of the Bonds to be redeemed, in each case plus accrued interest to the redemption date.

Mandatory Redemption Upon Completion of the Project

The Series 2017 Tax-Exempt Bonds are subject to mandatory redemption in whole or in part at any time following the completion of the Project as certified in writing by the Institution pursuant to the Indenture and pursuant to the Disbursement Agreement at a redemption price equal to the aggregate principal amount of the Series 2017 Tax-Exempt Bonds to be redeemed, plus accrued interest to the redemption date, without premium, to the extent surplus Construction Fund moneys are transferred to the Redemption Account of the Bond Fund pursuant to the Disbursement Agreement and the Indenture. Any redemption of the Series 2017 Tax-Exempt Bonds from excess monies in the Construction Fund shall be made pro rata among all maturities of the Outstanding Series 2017 Tax-Exempt Bonds or in inverse order of maturity, as shall be directed in writing by the Institution.

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Purchase in Lieu of Redemption of Series 2017 Bonds

All or any number of the Series 2017 Bonds are subject to call for purchase in lieu of redemption at the option of the Institution prior to maturity, in whole or in part on any date on which such Series 2017 Bond would be subject to optional redemption as described above under “Optional Redemption,” by payment of a purchase price equal to the applicable redemption price of such Series 2017 Bond if such Bonds had been called for redemption on such purchase date, and if so purchased, such Series 2017 Bonds shall, except as otherwise provided in the Indenture, continue to be Outstanding under the Indenture for all purposes and shall continue to be subject to optional redemption as provided in the Indenture.

Selection of Series 2017 Bonds to be Redeemed

In the event of any redemption or purchase of less than all Outstanding Bonds of a series, any maturity or maturities and amounts within maturities of Bonds of such series to be redeemed or purchased shall be selected by the Trustee at the written direction of the Institution. If less than all of the Bonds of the same maturity are to be redeemed or purchased upon any redemption or purchase of Bonds under the Indenture, the Trustee shall select the Bonds to be redeemed or purchased by lot in such manner as the Trustee may determine, provided that for so long as the Book-Entry only system is being used, the particular Series 2017 Bonds or portions thereof to be redeemed or purchased within a maturity shall be selected by lot by DTC in such manner as DTC and the participants may determine. In making such selection, the Trustee (or DTC) shall treat each Bond as representing that number of Bonds of the lowest authorized denomination as is obtained by dividing the principal amount of such Bond by such denomination.

Partial Redemption of Series 2017 Bonds

Upon the selection and call for redemption or purchase of, and the surrender of, any Series 2017 Bond for redemption or purchase in part only, the Authority shall cause to be executed and upon written request by the Authority, the Authenticating Agent shall authenticate and deliver to or upon the written order of the Holder thereof, at the expense of the Institution, a new Series 2017 Bond or Series 2017 Bonds of authorized denominations in an aggregate face amount equal to the unredeemed or unpurchased portion of the Series 2017 Bond surrendered, which new Series 2017 Bond or Series 2017 Bonds shall be a fully registered Series 2017 Bond or Series 2017 Bonds without coupons, in authorized denominations.

The Authority and the Trustee may agree with any Holder of any such Series 2017 Bond that such Holder may, in lieu of surrendering the same for a new Series 2017 Bond, endorse on such Series 2017 Bond a notice of such partial redemption or purchase, which notice shall set forth, over the signature of such Holder, the redemption or purchase date, the principal amount redeemed or purchased and the principal amount remaining unpaid. Such partial redemption or purchase shall be valid upon payment of the amount thereof to the registered owner of any such Series 2017 Bond and the Authority and the Trustee shall be fully released and discharged from all liability to the extent of such payment irrespective of whether such endorsement shall or shall not have been made upon the reverse of such Series 2017 Bond by the owner thereof and irrespective of any error or omission in such endorsement.

Effect of Call for Redemption

On the date designated for redemption by notice given as provided in the Indenture, the Series 2017 Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Series 2017 Bonds on such date. If on the date fixed for redemption moneys for payment of the redemption price and accrued interest are held by the Trustee or paying agents

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as provided in the Indenture, interest on such Series 2017 Bonds so called for redemption shall cease to accrue, such Series 2017 Bonds shall cease to be entitled to any benefit or security under the Indenture except the right to receive payment from the moneys held by the Trustee or the paying agents and the amount of such Series 2017 Bonds so called for redemption shall be deemed paid and no longer Outstanding.

Any optional or extraordinary optional redemption of Series 2017A Bonds shall be credited against mandatory sinking fund requirements, if applicable, in such manner and order as may be directed by the Institution.

Notice of Redemption

If less than all the Bonds are to be redeemed or purchased, the Bonds to be redeemed or purchased shall be identified by reference to the issue and series designation, date of issue, serial numbers and maturity dates. Notice of redemption or purchase of any Bonds shall be mailed by the Trustee not less than twenty (20) nor more than forty-five (45) days prior to the date set for redemption or purchase, to each registered Holder of a Bond to be so redeemed or purchased at the address shown on the books of the Registrar but failure to so mail or any defect in any such notice with respect to any Bond shall not affect the validity of the proceedings for the redemption or purchase of any other Bond with respect to which notice was so mailed or with respect to which no such defect occurred, respectively. If on the date of mailing of the notice of redemption or purchase, the Trustee shall not have received the funds to pay the redemption or purchase price for any Bonds called for redemption or purchase, such notice shall state that it is conditional and that the redemption or purchase of such Bonds is subject to receipt by the Trustee on or prior to the redemption date or purchase date of funds sufficient to pay the redemption price or purchase price of such Bonds.

In addition to the notice required by the prior paragraph, further notice of any redemption of Bonds under the Indenture shall be given by the Trustee, concurrently with the notice to Bondholders by publication on the Electronic Municipal Market Access website; or, in accordance with then-current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other services, as the Authority may designate in a certificate of the Authority delivered to the Trustee. Failure to give all or any portion of such further notice shall not in any manner defeat the effectiveness of a call for redemption if notice thereof is given to the Bondholders as prescribed in the preceding paragraph.

Indenture Events of Default

Each of the following is a “Bond Indenture Event of Default” under the Indenture:

(a) If payment by the Authority in respect of any installment of interest on any Bond shall not be made in full when the same becomes due and payable;

(b) If payment by the Authority in respect of the principal of or redemption premium, if any, on any Bond shall not be made in full when the same becomes due and payable, whether at maturity or by proceedings for redemption or by declaration of acceleration or otherwise;

(c) The Authority shall fail duly to observe or perform any covenant or agreement on its part under the Indenture for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Authority and the Institution by the Trustee, or to the Authority, the Institution, and the Trustee by the holders of at least twenty-five percent (25%) in aggregate principal amount of Bonds then Outstanding. If the breach of covenant or agreement is one which is capable of cure but cannot be completely remedied within the thirty (30) days after written

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notice has been given, it shall not be a Bond Indenture Event of Default as long as the Authority has taken active steps within the thirty (30) days after written notice has been given to remedy the failure and is diligently pursuing such remedy provided it shall be cured within ninety (90) days of such written notice;

(d) The entry of a decree or order by a court having jurisdiction in the premises adjudging the Authority a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Authority under the Federal Bankruptcy Code or any other applicable Federal or state law, or appointing a receiver, liquidator, assignee, or sequestrator (or other similar official) of the Authority or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of ninety (90) consecutive days;

(e) The institution by the Authority of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other similar applicable Federal or state law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Authority or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due;

(f) If there occurs an Agreement Event of Default.

Acceleration; Annulment of Acceleration

Upon the occurrence of a Bond Indenture Event of Default described in clause (a) or (b) above under the subheading “- Indenture Events of Default”, then, without any further action, the Trustee may, and shall at the written direction of the Holders of 25% in aggregate principal amount of the Bonds Outstanding, declare all Bonds Outstanding immediately due and payable, anything in the Bonds or in the Indenture to the contrary notwithstanding. Upon the occurrence of a Bond Indenture Event of Default described in clause (c), (d), (e) or (f) above under the subheading “- Indenture Events of Default” then, without any further action, the Trustee may, and shall at the written direction of the holders of a majority in aggregate principal amount of the Bonds Outstanding, declare all Bonds Outstanding immediately due and payable, anything in the Bonds or in the Indenture to the contrary notwithstanding. In the event of an acceleration, there shall be due and payable on the Bonds an amount equal to the total principal amount of all such Bonds, plus all interest accrued thereon and which accrues to the date of payment. The Trustee shall give prompt written notice of such acceleration to the Authority, the Paying Agent, the Registrar, and the Institution, and the Registrar shall give notice thereof to the Bondholders in the manner provided in the Indenture, stating the accelerated date on which the Bonds shall be due and payable.

At any time after the principal of the Bonds shall have been so declared to be due and payable as a result of a Bond Indenture Event of Default, and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of such default, or before the completion of the enforcement of any other remedy under the Indenture, moneys shall have accumulated in the appropriate Funds and Accounts created under the Indenture sufficient to pay the principal of all matured Bonds and all arrears of interest, if any, upon all Bonds then Outstanding (except the principal of any Bonds not then due and payable by their terms and the interest accrued on such Bonds since the last Bond Payment Date), and the charges, compensation, expenses, disbursements, advances and liabilities of the Trustee and all other amounts then payable by the Institution under the Indenture shall have been paid or a sum sufficient to pay the same shall have been deposited with the Trustee, and every other default known to the Trustee in the observance or performance of any covenant, condition, agreement or provision contained in the Bonds or in the Indenture (other than a default in the payment of the principal of such Bonds then due and

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payable only because of the declaration under the paragraph immediately above) shall have been remedied to the satisfaction of the Trustee, then and in every such case the Trustee shall, by written notice to the Authority and the Institution, rescind and annul such declaration and its consequences, and the Registrar shall promptly give notice of such annulment in the same manner as provided in the paragraph immediately above for giving notice of acceleration. No such annulment shall extend to or affect any subsequent Bond Indenture Event of Default or impair any right consequent thereon.

ESTIMATED SOURCES AND USES OF FUNDS

SOURCES OF FUNDS Series 2017 Bonds Initial Entrance Fees Total Sources of Funds USES OF FUNDS Construction Fund Deposit Debt Service Reserve Fund Deposit Working Capital Fund Deposit Capitalized Interest on Series 2017 Bonds Costs of Issuance(1) Total Uses of Funds

_____________________ (1) Includes legal fees, accounting fees, underwriter’s discount, feasibility consultant fee, trustee

fees, and other costs associated with the issuance of the Series 2017 Bonds.

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DEBT SERVICE SCHEDULE

The following table sets forth the debt service schedule for the Series 2017 Bonds, including the principal of the Series 2017A Bonds to be redeemed by mandatory sinking fund redemption and principal of the Series 2017B, Series 2017C and Series 2017D Bonds expected to be redeemed from Initial Entrance Fees as described herein under “THE SERIES 2017 BONDS – Entrance Fee Redemption of Series 2017B Bonds, Series 2017C Bonds and Series 2017D Bonds.”

Period Ending July 1

Series 2017A Bonds

Debt Service

Series 2017B Bonds

Debt Service

Series 20016CBonds

Debt Service

Series 20016D Bonds

Debt Service Total Debt

Service

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 Total:

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RISK FACTORS

Purchase of the Series 2017 Bonds involves a significant degree of risk. In order to identify risk factors and make an informed investment decision as to whether the Series 2017 Bonds are an appropriate investment, potential investors should be thoroughly familiar with this entire Official Statement (including the Appendices hereto). Certain of the risks associated with the purchase of the Series 2017 Bonds are described below. The following list of possible factors, while not setting forth all the factors which must be considered, contains some of the factors which should be considered prior to purchasing the Series 2017 Bonds. This discussion of risk factors is not, and is not intended to be, comprehensive or exhaustive. Prospective purchasers of the Series 2017 Bonds should give careful consideration to the matters referred to in the following summary. Such summary should not be considered exhaustive, but rather informational only.

Uncertainty of Revenues

The Series 2017 Bonds are payable solely from the revenues of the Authority derived from the Institution under the Loan Agreement (including the Gross Receipts derived from the operation of the Facility) and from the funds established under the Indenture and the investment income thereon. Under certain circumstances, the Series 2017 Bonds may be payable from net proceeds of casualty insurance or condemnation awards. The availability of revenues from the Facility in the amounts necessary to pay the principal or redemption price of and interest on the Series 2017 Bonds will be dependent on the maintenance of occupancy levels at the Facility by eligible residents who will be able to pay the Facility’s Entrance Fee and monthly service fee (both of which are projected to increase on a regular basis in subsequent years) and the hiring and retention of competent administrative and operating personnel to conduct the day-to-day operations of the Facility. The realization of future revenues and control of expenses is also dependent upon, among other things, successful marketing by the Institution and future economic and other conditions which are unpredictable. Any of these factors may affect revenues and payment of debt service on the Series 2017 Bonds. No representation or assurance can be made that revenues will be realized by the Institution from the Facility in amounts sufficient to make the required payments with respect to debt service on the Series 2017 Bonds.

The Institution may fail to meet the Cumulative Cash Loss Covenant, the Debt Service Coverage Ratio Covenant, the Liquidity Covenant, the Marketing Covenant or the Occupancy Covenant described above under “SECURITY FOR THE SERIES 2017 BONDS – Loan Agreement Covenants.” Failure to meet such requirements under certain circumstances will require the Institution to retain a Consultant to prepare a plan and recommendations as described under “SECURITY FOR THE SERIES 2017 BONDS – Loan Agreement Covenants.” While these covenants are intended to require the Institution to take corrective action in order to avert a payment default, no assurance can be given that such corrective actions, if required, will be successful.

If an Event of Default occurs under the Indenture (which includes a cross-default to Events of Default under the Loan Agreement), the Trustee may declare an acceleration or take any of the remedies provided in such documents, as described under “THE SERIES 2017 BONDS – Acceleration; Annulment of Acceleration.” Following an acceleration there may be no moneys in the funds held by the Trustee under the Indenture for payment of the Series 2017 Bonds. See “THE SERIES 2017 BONDS – Indenture Events of Default” and Appendix D hereto for a description of the events of default and the remedies available to the Trustee under the Indenture and the Loan Agreement.

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Failure to Achieve or Maintain Occupancy or Turnover

The economic feasibility of the Facility depends in large part upon the ability of the Institution to attract sufficient numbers of residents to the Facility to maintain substantial occupancy and turnover of occupancy at the Facility throughout the term of the Series 2017 Bonds. The Institution’s ability to maintain a high level of occupancy depends to some extent on factors outside its control, such as the residents’ right to terminate their Residency Agreements at any time, subject to the conditions provided in the Residency Agreements. If the Facility fails to maintain a high level of occupancy, there may be insufficient funds to pay debt service on the Series 2017 Bonds once the funds in the Bond Fund available to pay debt service have been spent. Moreover, if a substantial number of Independent Living Unit residents live beyond the anticipated life expectancies assumed by management, or if permanent transfers to the health center are substantially less than assumed by management, or if market changes require a reduction (or limit the rate of increase) in the amount of the Entrance Fees payable by new residents of the Facility, the amount of additional Entrance Fees would be reduced, with a consequent impairment of the Institution’s revenues. Such impairment would also result if the Institution is unable to remarket independent living units becoming available when residents die, withdraw, or are permanently transferred to the health center.

Demand for services of the Facility could also be affected by many factors, including: (1) advances in scientific and medical technology; (2) increased or more effective competition from nursing home and long-term care facilities, assisted living facilities, and apartment complexes which target elderly residents now or hereafter located in the service area of the Facility; and (3) the effects of managed care.

Competition

The Facility may face competition in the future as a result of changing demographic conditions and the construction of new, or the renovation or expansion of existing continuing care facilities in the geographic area served by the Facility. The Institution will also face competition from other forms of retirement living, including condominiums, apartment buildings and facilities not specifically designed for the elderly, some of which may be designed to offer similar facilities but not necessary similar services, at lower prices, and continuing care at home contracts. In addition, there are few entry barriers to new competitors under New Hampshire law. The effect of these future competing facilities on the Facility may be material. See the Feasibility Study in Appendix C for additional detail on the Facility’s competitors.

Forecast

The Institution’s financial forecast contained in the Feasibility Study attached hereto as Appendix C is based upon assumptions made by Management of the Institution. As stated in such financial forecast, events and circumstances frequently do not occur as expected, and there will usually be differences between the forecasted and actual results, and those differences may be material. In addition, the financial forecast only covers the six years ending December 31, 2022 and consequently does not cover the entire period during which the Series 2017 Bonds are expected to be outstanding. See the Feasibility Study included herein as Appendix C, which should be read in its entirety.

BECAUSE THERE IS NO ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND WITH THE ASSUMPTIONS MADE, NO GUARANTEE CAN BE MADE THAT THE FINANCIAL FORECAST IN THE FEASIBILITY STUDY WILL CORRESPOND WITH THE RESULTS ACTUALLY ACHIEVED IN THE FUTURE. ACTUAL OPERATING RESULTS MAY BE AFFECTED BY MANY UNCONTROLLABLE FACTORS, INCLUDING BUT NOT LIMITED TO,

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INCREASED COSTS, FAILURE BY MANAGEMENT OF THE INSTITUTION TO EXECUTE ITS PLANS, LOWER THAN ANTICIPATED REVENUES, EMPLOYEE REGULATIONS, TAXES, GOVERNMENTAL CONTROLS, CHANGES IN APPLICABLE GOVERNMENTAL REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, CHANGES IN THE RETIREMENT LIVING AND HEALTH CARE INDUSTRIES AND GENERAL ECONOMIC CONDITIONS.

Construction Risks

Construction of the Facility is subject to the usual risks associated with construction projects including but not limited to delays in issuance of required building permits for the Facility or other necessary approvals or permits, strikes, shortages of materials and adverse weather conditions. Such events could result in delaying occupancy of the Facility and thus adversely impact the revenue of the Institution. It is anticipated that the proceeds from the sale of the Series 2017 Bonds, together with anticipated investment earnings thereon, will be sufficient to complete the construction and equipping of the Facility based upon the guaranteed maximum price obtained from the construction manager. However, cost overruns for a project of this magnitude may occur due to change orders and other factors. In addition, under the construction contracts, the date of substantial completion may be extended by reason of changes authorized by the Institution, delays due to strikes, fire or other casualty or orders or regulations of governmental authorities or other causes beyond the control of the construction manager. If the period of substantial completion is extended for any of the above designated reasons, the construction manager will not be responsible for liquidated damages for the period of excusable delays.

Nature of the Income of the Elderly

A large percentage of the monthly income of the prospective residents of the Facility is fixed income derived from pensions, investments and social security. In addition, some future residents will be liquidating assets in order to pay the Entrance Fees, monthly fee and other fees. If, due to inflation or otherwise, substantial increases in fees are required to cover increases in operating costs, wages, benefits and other expenses, some residents may have difficulty paying or may be unable to pay such increased fees. The Institution’s inability to collect from residents the full amount of their payment obligations may jeopardize the Institution’s ability to pay amounts due under the Loan Agreement.

Sale of Personal Residences

It is anticipated that a number of prospective residents of the Facility will be required to sell their current homes to pay the Entrance Fee prior to occupancy or to meet other financial obligations under their residency agreements. If prospective residents encounter difficulties in selling their current homes due to local or national economic conditions affecting the sale of residential real estate, such prospective residents may not have sufficient funds to pay the Entrance Fee or to meet other financial obligations under their residency agreements, thereby causing a delay in scheduled occupancy of the Facility or the remarketing of vacated units, either of which would have an adverse impact on the revenues of the Institution and the ability of the Institution to pay amounts due under the Loan Agreement.

Staffing Shortages

The Facility is located in an area with low unemployment. As such, it may be difficult for the Institution to attract and retain entry-level, nursing or other staff. Difficulties attracting and retaining staff may negatively impact the Institution and the Facility and therefor the ability of the Institution to pay amounts due under the Loan Agreement.

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New Hampshire Regulation of Continuing Care Retirement Communities

Continuing care communities in the State are regulated by the Commissioner of Insurance (the “Commissioner”) under the provisions of RSA 420-D of New Hampshire Revised Statutes Annotated (“RSA 420-D”), which was enacted in 1988 and became effective on January 1, 1989. On December 7, 2015, the Institution received a Certificate of Authority (license) from the New Hampshire Insurance Department to establish and operate a continuing care community in accordance with NH RSA 420-D. This Certificate of Authority enables the Institution to enter into binding Residency Agreements and to accept Entrance Fee Deposits.

New Hampshire Nursing Home Bed Fee. New Hampshire has implemented a fee, known as the “Granny Tax,” on all nursing home beds. The fee is intended to provide additional income to facilities with large Medicaid populations and is returned to nursing homes based on their Medicaid mix. Continuing care retirement communities in New Hampshire are prohibited from admitting Medicaid recipients to their nursing home beds and, thus, have no Medicaid population. This means that continuing care retirement communities pay the fee, but receive no revenue offset. The Institution’s annual cost for this tax is forecasted to range from approximately $56,000 to approximately $76,000 in the fiscal years ending December 31, 2020 through December 31, 2022.

Regulating and Reporting Requirements. New continuing care contracts with residents must comply with the requirements of RSA 420-D. Before any new agreement may be signed with a prospective resident, the provider must provide each prospective resident with a disclosure statement approved by the Commissioner which contains financial and other information concerning the Facility and the provider. In addition, the provider must submit an annual report to the Commissioner concerning its financial condition. The Institution must also procure and maintain certain facilities licenses under Chapter 151 of New Hampshire Revised Statutes Annotated (“RSA 151”).

Entrance Fee deposits paid by prospective residents before occupancy of a living unit and which total over $1,000 shall be deposited in an escrow account. These escrowed amounts can be released only upon certain conditions set forth in RSA 420-D:10. The Entrance Fee escrow requirement does not apply to any non-refundable application fee which is less than one month’s periodic payment. In compliance with RSA 420-D, the Institution has established an escrow account in which to hold these Entrance Fee deposits received from prospective residents of the Facility at Savings Bank of Walpole, a New Hampshire mutual savings bank and such amounts are not required to be deposited in the Entrance Fee Fund under the Indenture until such time as the statutory conditions for release of such funds to the Institution have been satisfied.

Liquid reserves must be maintained equal to 12 months’ principal and interest payments plus that portion of two months’ operating expenses which relate to continuing care residents. The Commissioner may require liquid reserves to be placed in an escrow account if he finds the provider is in financial difficulty, for example, if the provider’s average accounts payable exceed 45 days, a major supplier has placed the provider on a C.O.D. status, a tax lien is filed against the provider, 50% of accounts receivable average more than 45 days, or expenses exceed revenues for three or more consecutive months. To the extent permitted by law, the Institution will treat amounts on deposit in the Debt Service Reserve as “liquid reserves” for purposes of compliance with the liquid reserves requirement.

Termination of Residence and Care Agreements. RSA 420-D provides prospective residents with certain termination rights prior to occupancy, including a 10-day rescission period following the execution of a residence and care agreement. The New Hampshire Insurance Department has promulgated regulations under RSA 420-D, including Ins 1808.02(d), which requires continuing care retirement communities to refund the refundable portion of the Entrance Fee if a resident terminates the

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residence and care agreement because of hardship, regardless of any provision in the agreement stating that the refund is not payable until a new resident has signed a residence and care agreement for the unit being vacated. “Hardship” is defined as a change in circumstances making the resident unable to obtain acceptable living accommodations or health care services at the community and thus necessitating the termination of the agreement, and the resident cannot otherwise pay for necessary room, board or health care services outside of the community without a return of the Entrance Fee. Ins 1808.02 requires the return of the refundable portion of an Entrance Fee in the event of a hardship no later than 12 months from the date of termination if the community is at 80% or greater occupancy, or no later than 24 months from the date of termination if the community is at less than 80% occupancy. The application of this hardship provision may impair the cash flow of the Institution.

Enforcement; Lien of the Commissioner. The Commissioner may revoke, deny or suspend a Certificate of Authority for any number of reasons, including fraud or misrepresentation of a material statement in the disclosure statement to be filed with the Commissioner, a demonstrated lack of fitness or trustworthiness or such unsound financial condition or any other practice which may be hazardous or injurious to the residents of the Facility or to the general public.

A provider is liable for damages and attorney’s fees if: (a) it enters into a contract for continuing care for a facility that does not have a temporary or permanent Certificate of Authority; (b) it fails to deliver a disclosure document before entering into a contract; or (c) a disclosure document is misleading.

The Commissioner shall file a lien on all real and personal property of a provider if he deems it necessary to protect the interests of the residents of the Facility. A lien established by the Commissioner shall not have priority over certain mortgages, security agreements or other security documents (such as the Loan Agreement) on property not otherwise encumbered which were recorded at least four months prior to the institution by the Commissioner of rehabilitation or liquidation proceedings. In the event of foreclosure of the Commissioner’s lien, he shall prepare a plan for distribution of any proceeds thereof in a manner which will best permit the satisfaction of any continuing care contracts in effect at that time. Copies of such plan are required to be sent to contract holders for comment. Even as a subordinate lienholder, however, the Commissioner may petition the appropriate court to appoint a trustee to liquidate the facility if it is in the best interests of the residents, using proceeds of such liquidation, after payment of prior liens, to pay for care of residents at other facilities.

The Commissioner may petition the appropriate court for rehabilitation or liquidation of a continuing care provider if the Commissioner finds after notice and hearing that a provider is insolvent, has failed to maintain the required reserves, is about to become unable to meet its cash flow or income projections, has had its Certificate of Authority suspended or revoked or has sold its interest in the facility without the approval of the Commissioner. A rehabilitation order shall authorize the Commissioner or a court-appointed trustee to take possession of and operate the Facility, including the employment or discharge of employees and to take such other measures as the court may direct. If attempts to rehabilitate the Facility fail, the Commissioner may apply to the court for an order to liquidate.

Nursing License. Under RSA 151, the Institution is required to procure, maintain and renew (on a yearly basis) a license for operation of its nursing beds. Such license is not transferable or assignable.

Increases in Medical Costs

Because the Institution is obligated to provide residents of the Facility with certain medical care without additional charge, increases in the medical care requirements of the resident population, due to unanticipated increases in life span or any other cause, or substantial unanticipated increases in the cost of medical care, could have an adverse impact on the operations of the Institution. The undertaking to

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provide such medical care is a general obligation of the Institution, and although the Institution believes that it will have sufficient funds to meet all of its future obligations, no assurance can be given that such funds will be sufficient to meet all future obligations of the Institution. Residents are required to obtain Medicare Part A, Medicare Part B and supplemental insurance satisfactory to the Institution; however, Medicare does not cover the cost of nursing home care except under certain limited circumstances (up to 100 days of skilled nursing care following a 3-day hospital stay). Under RSA 151-C and the regulations promulgated thereunder, the Institution is not eligible to participate in the Medicaid program and the Institution does not expect to participate in the Medicare reimbursement program.

Third Party Reimbursement

The health care industry, in general, is subject to regulation by a number of governmental agencies, including those which administer the Medicaid and Medicare programs, and other federal, state and local governmental agencies. As a result, the industry is sensitive to legislative changes in such programs and is affected by reductions in governmental spending for such programs. Congress has in the past enacted a number of provisions which affect health care providers, and additional legislative changes can be expected. Previous legislative actions have included limitation of payments to nursing homes under the Medicare and Medicaid programs. Additional legislation dealing with nursing home revenues could be introduced, and if enacted, such legislation might have an adverse impact upon the revenues of the Facility.

While the Institution is currently certified as a provider of services under Title XVIII of the federal Social Security Act (Medicare) with respect to the Existing Community, it does not expect to participate in the Medicare program with respect to the Facility. The Institution is not certified as a provider of services under Title XIX of the Social Security Act (Medicaid) as it is prohibited under State law from participation in the Medicaid program.

Professional Liability Claims and Losses

The operations of the Institution, and thereby of the Facility, may also be affected by increases in the incidence of professional liability lawsuits against healthcare facilities in general, and increases in the dollar amount of patient damage recoveries, resulting in increased insurance premiums and an increased difficulty in obtaining malpractice insurance. It is not possible at this time to determine either the extent to which professional liability insurance coverage will be available to the Institution or the premiums at which such coverage can be obtained.

Possible Changes in Tax Status

The possible modification or repeal of certain existing federal income or state tax laws or other loss by the Institution of the present advantages of certain provisions of the federal income or state tax laws could materially and adversely affect the status of the Institution, and thereby the revenues of the Facility. The Institution has obtained a letter from the Internal Revenue Service determining it is an exempt organization under Section 501(c)(3) of the Code. As an exempt organization, the Institution is subject to a number of requirements affecting its operation. The failure of the Institution to remain qualified as an exempt organization could affect the funds available to the Institution for payments under the Loan Agreement. Also, loss of exempt status as a Section 501(c)(3) organization may adversely affect the status of the Series 2017 Bonds for federal income tax purposes. Failure of the Institution to comply with certain requirements of the Code, or adoption of amendments to the Code to restrict the use of tax-exempt bonds for facilities such as the Facility, could cause interest on the Series 2017 Tax-Exempt Bonds to be included in the gross income of holders of the Series 2017 Tax-Exempt Bonds or

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former holders of the Series 2017 Tax-Exempt Bonds for federal income tax purposes. See “TAX MATTERS – TAX-EXEMPT BONDS” herein.

The Series 2017 Bonds are subject to mandatory redemption in the event of a Determination of Taxability as described herein under “THE SERIES 2017 BONDS – Mandatory Redemption Upon Determination of Taxability” but no assurance can be given that the Institution would have sufficient funds available to pay the applicable redemption price of the Series 2017 Bonds in the event of such a mandatory redemption.

Factors Affecting Real Estate Taxes

In recent years, various State of New Hampshire and local legislative, regulatory and judicial bodies have reviewed the exemption of nonprofit corporations from real estate taxes. Various State of New Hampshire and local government bodies have challenged with increasing frequency and success the property tax-exempt status of such institution and have sought to remove the exemption of property from real estate taxes of part or all of the property of various nonprofit institutions on the grounds that a portion of such property was not being used to further the charitable purposes of the institution. Some of these disputes have been determined in favor of the taxing authorities or have resulted in settlements.

Lien for Clean-up of Hazardous Materials

The State of New Hampshire has a lien upon the business revenues and all real and personal property of any person subject to strict liability under New Hampshire RSA 147-B:10(I). Subject to limited defenses, the New Hampshire statute renders strictly liable any person who owns or operates a facility at the time hazardous waste or hazardous materials are disposed there. A facility is defined as “any site, area or location where hazardous waste or hazardous materials are or have been treated, stored, generated, disposed of, or otherwise come to be located.” The lien is effective to the extent that the State of New Hampshire has incurred or will incur costs related to containment, cleanup or removal of the hazardous waste or hazardous materials. In order for the lien to be effective against real property and business revenues, the Division of Waste Management of the State of New Hampshire must record a “Notice of Lien” in the registry of deeds of each county in which the person owns or holds an interest in real property, and with the New Hampshire Secretary of State, respectively.

The priority of the State of New Hampshire’s lien depends on the nature of the property attached. The priority of the State of New Hampshire’s lien is determined as follows. As to the real property on which the hazardous waste or hazardous material is located, the lien takes priority over all encumbrances, whether of record or inchoate, when the Notice of Lien is recorded in the registry of deeds for the county in which the real property is located. This “superpriority” position of the lien applies to all such real property upon which hazardous waste or hazardous material is located except that which is used as, or being constructed primarily for, residential purposes (it is not clear whether the Facility would qualify for this exception). As to the business revenues generated from the facility on which the hazardous waste or hazardous material is located and as to the personal property located at the facility on which hazardous waste or hazardous material is located, the lien constitutes a first priority lien against such business revenues or personal property, prior to all encumbrances whether of record or inchoate, when the Notice of Lien is filed with the New Hampshire Secretary of State. As to all other real or personal property or business revenues (including all residential property, even if it contains hazardous waste or hazardous materials) the lien is effective as of the date and time of recording in the appropriate office(s) but does not take priority over prior encumbrances of record. The Notice of Lien may have priority over the mortgage lien and security interests created by the Loan Agreement.

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The federal Comprehensive Environmental Response, Compensation and Liability Act (the “Federal Superfund Act”) provides authority to the United States Environmental Protection Agency (the “EPA”) to arrange for response actions in the event of a release or substantial threat of release of hazardous substances and also imposes liability for certain response costs and damages on the present owner (among other parties) of a site of such release or threat of release. The Federal Superfund Act provides that all costs and damages for which a person is liable to the United States shall constitute a lien upon all real property belonging to such person which is subject to or affected by the response action. The federal lien is subject to the normal rules of priority.

Bankruptcy

The filing by, or against, the Institution or the Authority for relief under the United States Bankruptcy Code (the “Bankruptcy Code”) would have an adverse effect on the ability of the Trustee and Bondholders to enforce their claim or claims to the security granted by the Loan Agreement, and their claim or claims to moneys owed them as unsecured claimants, if any. The filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Institution or the Authority, as applicable, and their respective property and as an automatic stay of any act or proceeding to enforce a lien against such property. Moreover, following such a filing the revenues and accounts receivable and other property of the Institution or the Authority, as applicable, acquired after the filing (and under some conditions prior to the filing) would not be subject to the liens and security interests created under the Loan Agreement. In addition, the bankruptcy court has the power to issue any order, process or judgment that is necessary or appropriate to carry out the provisions of the Bankruptcy Code; such a court order could require that the property of the Institution or the Authority, as applicable, including the Gross Receipts of the Institution and proceeds thereof, be used for the benefit of the Institution or the Authority, as applicable, despite the lien and security interest of the Trustee therein.

In a bankruptcy proceeding, the debtor could file a plan of reorganization which modifies the rights of creditors generally, or any class of creditors, secured or unsecured. The holders of the Series 2017 Bonds may only receive post-petition interest on the Series 2017 Bonds to the extent the value of their security exceeds their claim. The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan.

No plan may be confirmed unless, among other conditions, the plan is in the best interests of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly in favor of junior creditors. More particularly, the Bankruptcy Code would permit the liquidation of the Institution or the adoption of a reorganization plan for the Institution or the Authority, as applicable, even though such plan had not been accepted by (i) the holders of a majority in aggregate principal amount of the Series 2017 Bonds, if the plan is “fair and equitable” and does not discriminate unfairly against the holders of the Series 2017 Bonds as a class and is in the “best interest of the creditors,” which may mean that the holders of the Series 2017 Bonds are provided with the benefit of their original lien or the “indubitable equivalent”; or (ii) any holder of the Series 2017 Bonds if the holders of the Series 2017 Bonds, as a class, are deemed unimpaired under the plan.

In addition, if the bankruptcy court concludes that the holders of the Series 2017 Bonds have “adequate protection,” it may (1) substitute other security for the security subject to the lien of the Loan Agreement or (2) subordinate the lien of the holders of the Series 2017 Bonds to persons who supply credit to the Institution after commencement of the case. In the event of the bankruptcy of the Institution

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or the Authority, any amount realized by the Trustee or holders of the Series 2017 Bonds may depend on the bankruptcy court’s interpretation of “indubitable equivalent” and “adequate protection” under the then existing circumstances. Any transfers made to the holders of the Series 2017 Bonds or the Trustee at or prior to the commencement of the case may be avoided and recaptured if such transfers are (a) avoidable by a judicial lien creditor who obtained its lien on the date the case commenced (regardless of whether such a creditor actually exists), (b) preferential or fraudulent or (c) voidable under applicable law by any actual unsecured creditor. The holders of the Series 2017 Bonds may also be subject to avoidance and recapture of post-petition transfers, turnover of property of the debtor which they, the Trustee or a custodian hold and assumption, assignment or rejection of executory contracts.

Possible Limitations on Lien

The pledge of and security interest in the Institution’s Gross Receipts derived from or in connection with the Mortgaged Property, and the lien on the land and buildings of the Mortgaged Property and security interest in the Equipment created under the Loan Agreement may be limited by the following: (i) statutory liens; (ii) rights arising in favor of the United States of America or any agency thereof; (iii) present or future prohibitions against assignment contained in any federal statutes or regulations, which in the case of amounts payable under the Medicare program (should the Institution become a participant in the Medicare reimbursement program in the future), prevents the collection of such amounts directly from the payor by the holder of a security interest; (iv) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction; (v) federal bankruptcy or state insolvency laws affecting assignments of revenues earned after any effective institution of bankruptcy or insolvency proceedings by or against the Institution; (vi) rights of third parties in any revenues, including revenues converted to cash, not in possession of the Trustee; and (vii) the requirement that appropriate financing statements be filed in accordance with the New Hampshire Uniform Commercial Code.

Limited Use Facility

The Facility has been specially designed as a continuing care retirement community. As a result, in the event of default and removal of the Institution from the Facility, the Trustee’s remedies and the number of entities which would be interested in purchasing or leasing the Facility might be limited, and the sales price or fees generated by the Facility might thus be adversely affected.

Additional Debt; Future Borrowing

The Loan Agreement permits the Institution to incur additional indebtedness upon satisfaction of certain conditions set forth therein and such indebtedness may be equally and ratably secured with the Series 2017 Bonds. See Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Loan Agreement – Particular Covenants” under the headings “– Permitted Debt” and “– Permitted Encumbrances.” Any such additional parity indebtedness would be entitled to share ratably with the holders of the Series 2017 Bonds in any moneys realized from the exercise of remedies in the event of a default by the Institution and in the proceeds of certain insurance and condemnation awards.

Prepayment Risks

The Series 2017 Bonds may be required to be paid prior to their stated maturity upon redemption (as described under “THE SERIES 2017 BONDS – Redemption of the Series 2017 Bonds” herein) and upon an acceleration following the occurrence of certain events of default under the Indenture. If the Series 2017 Bonds become due upon an acceleration, interest on the Series 2017 Bonds shall cease to

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accrue on the date of the accelerated payment and no premium would be payable. There can be no assurance that there would be sufficient funds available to pay the principal of and interest on the Series 2017 Bonds.

Enforceability of Remedies

The remedies available to the Trustee, the Authority and the Bondholders upon an Event of Default under the Indenture and the Loan Agreement are in many respects dependent upon judicial actions which are, in turn, often subject to discretion and delay. Under existing constitutional and statutory laws and judicial decisions, including specifically the Federal Bankruptcy Code, a particular remedy specified by the Indenture and the Loan Agreement may not be readily available or, if available, may be limited or subject to substantial delay. The various legal opinions to be delivered concurrently with the issuance and delivery of the Series 2017 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by principles of equity and by bankruptcy, reorganization, insolvency, moratorium and similar laws affecting the rights of creditors generally.

No Obligation of The State

THE SERIES 2017 BONDS ARE NOT OBLIGATIONS OF OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON. THE SERIES 2017 BONDS ARE SPECIAL OBLIGATIONS PAYABLE SOLELY FROM THE SOURCES DESCRIBED IN THIS OFFICIAL STATEMENT. THE AUTHORITY HAS NO TAXING POWER.

Treatment of the Residency Agreements as Leases

There is a possibility that the Residency Agreements for the Facility would be deemed to constitute leases of real property under the laws of the State of New Hampshire and as such the residents would be entitled to certain protection available to tenants under the laws of the State of New Hampshire.

Failure to Provide Ongoing Disclosure

The Institution will enter into a Continuing Disclosure Agreement, pursuant to Securities and Exchange Commission rule 15c2-12 (17 CFR Part 240, § 240.15c2-12) (the “Rule”) in connection with the issuance of the Series 2017 Bonds. Failure to comply with the Continuing Disclosure Agreement and the Rule in the future may adversely affect the liquidity of the Series 2017 Bonds and their market price in the secondary market. See “CONTINUING DISCLOSURE.”

Lack of Marketability for the Series 2017 Bonds

The Underwriter is not obligated to make a market for the Series 2017 Bonds and there can be no assurance that there will be a secondary market for the Series 2017 Bonds. The absence of such a market for the Series 2017 Bonds could result in investors not being able to resell the Series 2017 Bonds should they need or wish to do so.

Certain Amendments to Indenture or Loan Agreement; Certain Amendments to Payment Provisions after an Event of Default With Consent of 80% of Holders

In general, the Indenture permits amendments to be made thereto or to the Loan Agreement (except for certain amendments that do not require Bondholder consent) only with the consent of the

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Holders of a majority in aggregate principal amount of the Bonds Outstanding. Except as described in the following sentence, the Indenture further provides that so long as no Event of Default shall have occurred and be continuing, no amendment shall be made to the Indenture or Loan Agreement, without the consent of the Holders of 100% of the Bonds Outstanding which are affected by such amendment, that (i) affects the payment provisions of the Bonds, including extending the time for payment or reducing or modifying the amount of principal, interest or redemption price payable on the Bonds, (ii) gives preference or priority of one Bond over another, or (iii) reduces the percentages of Holders of the Bonds required to consent to an amendment to the Indenture or the Loan Agreement. The Indenture further provides that during any period of time in which an Event of Default has occurred and is continuing, an amendment of the type described in clause (i) above may be made with the consent of the Holders of not less than 80% of the principal amount of the Bonds Outstanding which are affected by such amendment; provided, however, that no such amendment made during the continuance of an Event of Default shall result in any preference or priority of any Bond over any other Bond and no such amendment shall result in a disproportionate change, reduction or modification with respect to any Bond. See Appendix D – “CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS – Certain Provisions of the Bond Indenture – Supplements.”

This provision is intended to provide the Institution flexibility if the need arises to restructure its indebtedness, including the Series 2017 Bonds, if an Event of Default has occurred and is continuing. In the absence of a provision such as this in the Indenture, such a change in payment terms on the Series 2017 Bonds could likely only be made under a plan of reorganization approved by a Bankruptcy Court or with the consent of the Holders of 100% of the Series 2017 Bonds Outstanding affected by the amendment and such 100% consent would be extremely difficult to obtain. A bankruptcy filing, if one were made, would likely involve delay and expense which could affect the ability of the Institution to accomplish a successful reorganization.

Prospective purchasers of the Series 2017 Bonds are advised that there is a risk that if an Event of Default occurs and is continuing, there could be an amendment made to the Indenture which affects the payment provisions of the Series 2017 Bonds such purchaser holds as described above and that such an amendment would be made without the consent of such purchasers, if the Holders of not less than eighty percent (80%) in aggregate principal amount of the Series 2017 Bonds affected by the amendment consent to such amendment.

No assurance can be given that even if such amendments are made, the Institution will not file for bankruptcy under the Federal Bankruptcy Code.

Other Possible Risk Factors

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

(a) Establishment of mandatory governmental wage, rent or price controls;

(b) 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;

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

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(d) Adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Institution.

TAX MATTERS – TAX-EXEMPT BONDS

Opinion of Bond Counsel to the Authority

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the Authority, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the Series 2017 Tax-Exempt Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Code, and (ii) interest on the Series 2017 Tax-Exempt Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the Authority, the Institution, and others in connection with the Series 2017 Tax-Exempt Bonds, and Bond Counsel has assumed compliance by the Authority and the Institution with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the Series 2017 Tax-Exempt Bonds from gross income under Section 103 of the Code. In addition, in rendering its opinion, Bond Counsel has relied on the opinion of counsel to the Institution regarding, among other matters, the current qualification of the Institution as an organization described in Section 501(c)(3) of the Code.

In addition, in the opinion of Bond Counsel to the Authority, under existing statutes, the Series 2017 Tax-Exempt Bonds, their transfer and the income therefrom, including any profit made on the sale thereof, will be exempt from taxes directly imposed thereon by The State of New Hampshire and the municipalities and other political subdivisions of The State of New Hampshire.

The form of Bond Counsel’s opinion in connection with the issuance of the Series 2017 Tax-Exempt Bonds is attached hereto as Appendix E.

Bond Counsel expresses no opinion regarding any other Federal or state tax consequences with respect to the Series 2017 Tax-Exempt Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update, revise or supplement its opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to its attention, or changes in law or in interpretation thereof that may hereafter occur, or for any other reason. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the Series Tax-Exempt 2017 Bonds, or under state or local tax law.

Certain Ongoing Federal Tax Requirements and Covenants

The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the Series 2017 Bonds in order that interest on the Series 2017 Tax-Exempt Bonds be and remain excluded from gross income under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the Series 2017 Tax-Exempt Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the Federal government. Noncompliance with such requirements may cause interest on the Series 2017 Tax-Exempt Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The Authority and the

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Institution have covenanted to comply with certain applicable requirements of the Code to assure the exclusion of interest on the Series 2017 Tax-Exempt Bonds from gross income under Section 103 of the Code.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral Federal income tax matters with respect to the Series 2017 Tax-Exempt Bonds. It does not purport to address all aspects of Federal taxation that may be relevant to a particular owner of a Series 2017 Tax-Exempt Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing of the Series 2017 Tax-Exempt Bonds.

Prospective owners of the Series 2017 Tax-Exempt Bonds should be aware that the ownership of such obligations may result in collateral Federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, property and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from gross income for Federal income tax purposes. Interest on the Series 2017 Tax-Exempt Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code.

Original Issue Discount

“Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a Series 2017 Tax-Exempt Bond (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates) over the issue price of that maturity. In general, the “issue price” of a maturity means the first price at which a substantial amount of the Series 2017 Tax-Exempt Bonds of that maturity was sold (excluding sales to bond houses, brokers, or similar persons acting in the capacity as underwriters, placement agents, or wholesalers). In general, the issue price for each maturity of Series 2017 Tax-Exempt Bonds is expected to be the initial public offering price set forth on the inside cover page of this Official Statement. Bond Counsel further is of the opinion that, for any Series 2017 Tax-Exempt Bonds having OID (a “Tax-Exempt Discount Bond”), OID that has accrued and is properly allocable to the owners of the Tax-Exempt Discount Bonds under Section 1288 of the Code is excludable from gross income for Federal income tax purposes to the same extent as other interest on the Series 2017 Tax-Exempt Bonds.

In general, under Section 1288 of the Code, OID on a Tax-Exempt Discount Bond accrues under a constant yield method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yield on that Tax-Exempt Discount Bond. An owner’s adjusted basis in a Tax-Exempt Discount Bond is increased by accrued OID for purposes of determining gain or loss on sale, exchange, or other disposition of such Series 2017 Tax-Exempt Bond. Accrued OID may be taken into account as an increase in the amount of tax-exempt income received or deemed to have been received for purposes of determining various other tax consequences of owning a Tax-Exempt Discount Bond even though there will not be a corresponding cash payment.

Owners of Tax-Exempt Discount Bonds should consult their own tax advisors with respect to the treatment of original issue discount for Federal income tax purposes, including various special rules relating thereto, and the state and local tax consequences of acquiring, holding, and disposing of Tax-Exempt Discount Bonds.

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Bond Premium

In general, if an owner acquires a Series 2017 Tax-Exempt Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the Series 2017 Tax-Exempt Bond after the acquisition date (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium” on that Series 2017 Tax-Exempt Bond (a “Tax-Exempt Premium Bond”). In general, under Section 171 of the Code, an owner of a Tax-Exempt Premium Bond must amortize the bond premium over the remaining term of the Tax-Exempt Premium Bond, based on the owner’s yield over the remaining term of the Tax-Exempt Premium Bond, determined based on constant yield principles (in certain cases involving a Tax-Exempt Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such bond). An owner of a Tax-Exempt Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner’s regular method of accounting against the bond premium allocable to that period. In the case of a Tax-Exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Tax-Exempt Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner’s original acquisition cost. Owners of any Tax-Exempt Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of Tax-Exempt Premium Bonds.

Information Reporting and Backup Withholding

Information reporting requirements will apply to interest paid on tax-exempt obligations, including the Series 2017 Tax-Exempt Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, “Request for Taxpayer Identification Number and Certification”, or if the recipient is one of a limited class of exempt recipients. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to “backup withholding”, which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a “payor” generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient.

If an owner purchasing a Series 2017 Tax-Exempt Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the Series 2017 Tax-Exempt Bonds from gross income for Federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner’s Federal income tax once the required information is furnished to the Internal Revenue Service.

Miscellaneous

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Series 2017 Tax-Exempt Bonds under Federal or state law or otherwise prevent beneficial owners of the Series 2017 Tax-Exempt Bonds from realizing the full current benefit of the tax status of such interest. In addition, such

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legislation or actions (whether currently proposed, proposed in the future, or enacted) and such decisions could affect the market price or marketability of the Series 2017 Tax-Exempt Bonds.

Prospective purchasers of the Series 2017 Tax-Exempt Bonds should consult their own tax advisors regarding the foregoing matters.

TAX MATTERS - FEDERALLY TAXABLE BONDS

The following discussion is a summary of the principal United States Federal income tax consequences of the acquisition, ownership and disposition of Series 2017D Bonds by original purchasers of the Series 2017D Bonds who are U.S. Holders (as defined below). This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, revenue rulings and court decisions, all as now in effect and all subject to change at any time, possibly with retroactive effect. This summary assumes that the Series 2017D Bonds will be held as “capital assets” under the Code, and it does not discuss all of the United States Federal income tax consequences that may be relevant to a holder in light of its particular circumstances or to holders subject to special rules, such as insurance companies, financial institutions, tax-exempt organizations, dealers in securities or foreign currencies, persons holding the Series 2017D Bonds as a position in a “hedge” or “straddle” for United States Federal income tax purposes, holders whose functional currency (as defined in Section 985 of the Code) is not the United States dollar, holders who acquire Series 2017D Bonds in the secondary market, or individuals, estates and trusts subject to the tax on unearned income imposed by Section 1411 of the Code. Each prospective purchaser of the Series 2017D Bonds should consult with its own tax advisor concerning the United States Federal income tax and other tax consequences to it of the acquisition, ownership and disposition of the Series 2017D Bonds as well as any tax consequences that may arise under the laws of any state, local or foreign tax jurisdiction.

As used herein, the term “U.S. Holder” means a beneficial owner of a Series 2017D Bond that is for United States Federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to United States Federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust.

U.S. Holders – Interest Income

Interest and original issue discount (as defined below) on the Series 2017D Bonds are not excludable from gross income for United States Federal income tax purposes.

Original Issue Discount

For United States Federal income tax purposes, a Series 2017D Bond will be treated as issued with original issue discount (“OID”) if the excess of a Series 2017D Bond’s “stated redemption price at maturity” over its “issue price” equals or exceeds a statutorily determined de minimis amount. The “issue price” of each Series 2017D Bond in a particular issue equals the first price at which a substantial amount of such issue is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The “stated redemption price at maturity” of a Series 2017D Bond is the sum of all payments provided by such Series 2017D Bond other than “qualified stated interest” payments. The term “qualified stated interest” generally means stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at a single fixed rate. In general, if the excess of a Series 2017D Bond’s stated redemption

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price at maturity over its issue price is less than .25 percent of the Series 2017D Bond’s stated redemption price at maturity multiplied by the number of complete years to its maturity (the “de minimis amount”), then such excess, if any, constitutes de minimis OID, and the Series 2017D Bond is not treated as being issued with OID and all payments of stated interest (including stated interest that would otherwise be characterized as OID) is treated as qualified stated interest, as described below.

Payments of qualified stated interest on a Series 2017D Bond are taxable to a U.S. Holder as ordinary interest income at the time such payments are accrued or are received in accordance with the U.S. Holder’s regular method of tax accounting. A U.S. Holder of a Series 2017D Bond having a maturity of more than one year from its date of issue generally must include OID in income as ordinary interest as it accrues on a constant-yield method in advance of receipt of the cash payments attributable to such income, regardless of such U.S. Holder’s regular method of tax accounting. The amount of OID included in income by the U.S. Holder of a Series 2017D Bond is the sum of the daily portions of OID with respect to such Series 2017D Bond for each day during the taxable year (or portion of the taxable year) on which such U.S. Holder held such Series 2017D Bond. The daily portion of OID on any Series 2017D Bond is determined by allocating to each day in any “accrual period” a ratable portion of the OID allocable to the accrual period. All accrual periods with respect to a Series 2017D Bond may be of any length and the accrual periods may vary in length over the term of the Series 2017D Bond, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the first or final day of an accrual period. The amount of OID allocable to an accrual period is generally equal to the difference between (i) the product of the Series 2017D Bond’s “adjusted issue price” at the beginning of such accrual period and such Series 2017D Bond’s yield to maturity (determined on the basis of compounding at the close of each accrual period and appropriately adjusted to take into account the length of the particular accrual period) and (ii) the amount of any qualified stated interest payments allocable to such accrual period. The “adjusted issue price” of a Series 2017D Bond at the beginning of any accrual period is the issue price of the Series 2017D Bond plus the amount of accrued OID includable in income for all prior accrual periods minus the amount of any prior payments on the Series 2017D Bond other than qualified stated interest payments. The amount of OID allocable to an initial short accrual period may be computed using any reasonable method if all other accrual periods other than a final short accrual period are of equal length. The amount of OID allocable to the final accrual period is the difference between (i) the amount payable at the maturity of the Series 2017D Bond (other than a payment of qualified stated interest) and (ii) the Series 2017D Bond’s adjusted issue price as of the beginning of the final accrual period. Under the OID rules, U.S. Holders generally will have to include in income increasingly greater amounts of OID in successive accrual periods.

A U.S. Holder may elect to include in gross income all interest that accrues on a Series 2017D Bond using the constant-yield method described above under the heading “Original Issue Discount,” with the modifications described below. For purposes of this election, interest includes, among other things, stated interest, OID and de minimis OID, as adjusted by any amortizable bond premium described below under the heading “Series 2017D Bond Premium”. In applying the constant-yield method to a Series 2017D Bond with respect to which this election has been made, the issue price of the Series 2017D Bond will equal its cost to the electing U.S. Holder, the issue date of the Series 2017D Bond will be the date of its acquisition by the electing U.S. Holder, and no payments on the Series 2017D Bond will be treated as payments of qualified stated interest. The election will generally apply only to the Series 2017D Bond with respect to which it is made and may not be revoked without the consent of the Internal Revenue Service. If this election is made with respect to a Series 2017D Bond with amortizable bond premium, then the electing U.S. Holder will be deemed to have elected to apply amortizable bond premium against interest with respect to all debt instruments with amortizable bond premium (other than debt instruments the interest on which is excludable from gross income) held by the electing U.S. Holder as of the beginning of the taxable year in which the Series 2017D Bond with respect to which the election is made

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is acquired or thereafter acquired. The deemed election with respect to amortizable bond premium may not be revoked without the consent of the Internal Revenue Service.

U.S. Holders of any Series 2017D Bonds issued with OID should consult their own tax advisors with respect to the treatment of OID for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, and disposition of Series 2017D Bonds.

Series 2017D Bond Premium

In general, if a U.S. Holder acquires a Series 2017D Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the Series 2017D Bond after the acquisition date (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium” on that Series 2017D Bond (a “Taxable Premium Bond”). In general, if a U.S. Holder of a Taxable Premium Bond elects to amortize the premium as “amortizable bond premium” over the remaining term of the Taxable Premium Bond, determined based on constant yield principles (in certain cases involving a Taxable Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the highest yield on such bond), the amortizable premium is treated as an offset to interest income; the U.S. Holder will make a corresponding adjustment to such holder’s basis in the Taxable Premium Bond. Any such election applies to all debt instruments of the U.S. Holder (other than tax-exempt bonds) held at the beginning of the first taxable year to which the election applies and to all such debt instruments thereafter acquired, and is irrevocable without the Internal Revenue Service's consent. A U.S. Holder of a Taxable Premium Bond that so elects to amortize bond premium does so by offsetting the qualified stated interest allocable to each interest accrual period under the U.S. Holder’s regular method of Federal tax accounting against the bond premium allocable to that period. If the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is treated as a bond premium deduction under Section 171(a)(1) of the Code, subject to certain limitations. If a Taxable Premium Bond is optionally callable before maturity at a price in excess of its stated redemption price at maturity, special rules may apply with respect to the amortization of bond premium. Under certain circumstances, the U.S. Holder of a Taxable Premium Bond may realize a taxable gain upon disposition of the Taxable Premium Bond even though it is sold or redeemed for an amount less than or equal to the U.S. Holder's original acquisition cost.

U.S. Holders of any Taxable Premium Bonds should consult their own tax advisors with respect to the treatment of bond premium for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, and disposition of Taxable Premium Bonds.

U.S. Holders – Disposition of Series 2017D Bonds

Except as discussed above, upon the sale, exchange, redemption, or other disposition (which would include a legal defeasance) of a Series 2017D Bond, a U.S. Holder generally will recognize taxable gain or loss in an amount equal to the difference between the amount realized (other than amounts attributable to accrued interest not previously includable in income) and such U.S. Holder’s adjusted tax basis in the Series 2017D Bond. A U.S. Holder’s adjusted tax basis in a Series 2017D Bond generally will equal such U.S. Holder’s initial investment in the Series 2017D Bond, increased by any OID included in the U.S. Holder’s income with respect to the Series 2017D Bond and decreased by the amount of any payments, other than qualified stated interest payments, received and bond premium amortized

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with respect to such Series 2017D Bond. Such gain or loss generally will be long-term capital gain or loss if the Series 2017D Bond was held for more than one year.

U.S. Holders – Defeasance

U.S. Holders of the Series 2017D Bonds should be aware that, for Federal income tax purposes, the deposit of moneys or securities in escrow in such amount and manner as to cause the Series 2017D Bonds to be deemed to be no longer outstanding under the resolution of the Series 2017D Bonds (a “defeasance”), could result in a deemed exchange under Section 1001 of the Code and a recognition by such owner of taxable income or loss, without any corresponding receipt of moneys. In addition, for Federal income tax purposes, the character and timing of receipt of payments on the Series 2017D Bonds subsequent to any such defeasance could also be affected. U.S. Holders of the Series 2017D Bonds are advised to consult with their own tax advisors regarding the consequences of a defeasance for Federal income tax purposes, and for state and local tax purposes.

U.S. Holders – Backup Withholding and Information Reporting

In general, information reporting requirements will apply to non-corporate U.S. Holders with respect to payments of principal, payments of interest, and the accrual of OID on a Series 2017D Bond and the proceeds of the sale of a Series 2017D Bond before maturity within the United States. Backup withholding at the rate provided under Section 3406 of the Code will apply to such payments and to payments of OID unless the U.S. Holder (i) is a corporation or other exempt recipient and, when required, demonstrates that fact, or (ii) provides a correct taxpayer identification number, certifies under penalties of perjury, when required, that such U.S. Holder is not subject to backup withholding and has not been notified by the Internal Revenue Service that it has failed to report all interest and dividends required to be shown on its United States Federal income tax returns.

Any amounts withheld under the backup withholding rules from a payment to a beneficial owner, and which constitutes over-withholding, would be allowed as a refund or a credit against such beneficial owner’s United States Federal income tax provided the required information is furnished to the Internal Revenue Service.

Miscellaneous

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Series 2017D Bonds under state law and could affect the market price or marketability of the Series 2017D Bonds.

Prospective purchasers of the Series 2017D Bonds should consult their own tax advisors regarding the foregoing matters.

INSTITUTION’S BALANCE SHEET

Management of the Institution has prepared the balance sheet of the Institution as of December 31, 2016 included in Appendix B to this Official Statement.

LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the Series 2017 Bonds are subject to the approving opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel to the Authority, whose approving opinions, in substantially the forms attached hereto as Appendix E, will

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be delivered with the Series 2017 Bonds. Certain legal matters will be passed upon for the Authority by its counsel, Wadleigh, Starr & Peters PLLC, Manchester, New Hampshire; for the Institution by its counsel, Hinckley, Allen & Snyder LLP, Concord, New Hampshire; and for the Underwriter by its counsel, Ballard Spahr LLP, Philadelphia, Pennsylvania.

UNDERWRITING

The Series 2017 Bonds are being purchased by Herbert J. Sims & Co., Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Series 2017 Bonds from the Authority at an aggregate purchase price of $________ (the principal amount of the Series 2017 Bonds, less an Underwriter’s discount of $__________). The obligations of the Underwriter to accept delivery of the Series 2017 Bonds are subject to various conditions contained in the Contract of Purchase. The Underwriter will be obligated to purchase all Series 2017 Bonds if any Series 2017 Bonds are purchased. The Series 2017 Bonds may be offered and sold to certain dealers (including dealers depositing the Series 2017 Bonds into investment trusts) at prices lower than the public offering price set forth on the cover page of this Official Statement, and such public offering price may be changed, from time to time, by the Underwriter. The Contract of Purchase will provide for the Institution to indemnify the Underwriter and the Authority against certain liabilities.

CONTINUING DISCLOSURE

No financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the Series 2017 Bonds and the Authority will not provide any such information. The Institution has undertaken all responsibilities for any continuing disclosure to owners of the Series 2017 Bonds as described below, and the Authority shall have no liability to the owners of the Series 2017 Bonds or any other person with respect to such disclosures.

The Institution has covenanted for the benefit of owners of the Series 2017 Bonds to provide certain financial information and operating data relating to the Institution by not later than ___ days following the end of the Institution’s fiscal year beginning with the fiscal year ending December 31, 2017 (the “Annual Report”), to provide certain quarterly financial and operating data relating to the Institution and to provide notices of the occurrence of certain enumerated events, in accordance with the requirements of Rule 15c2-12, as amended (the “Rule”), under the Securities Exchange Act of 1934. The Annual Report, the quarterly reports and notices of material events, if any, will be filed on behalf of the Institution with the Municipal Securities Rulemaking Board (the “MSRB”) in an electronic format as prescribed by the MSRB. The specific nature of the information to be contained in the Annual Report, the quarterly reports and the notices of material events is set forth in Appendix F hereto – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”

NO RATING

The Series 2017 Bonds are not rated; neither the Authority nor the Institution has applied to any rating service for a rating of the Series 2017 Bonds.

LITIGATION

There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body for which service of process has been effected on the Authority or, to the knowledge of the Authority, threatened against or affecting the Authority, or to its knowledge, any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by the Official Statement, the validity or enforceability of the Series 2017 Bonds, the

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exclusion of interest on the Series 2017 Bonds from the gross income of the owners of the Series 2017 Bonds for federal income tax purposes or the validity or enforceability of the Series 2017 Bonds, the Indenture, the Loan Agreement or any other agreement or instrument to which the Authority is a party and which is used or contemplated for use in the transactions contemplated by this Official Statement.

There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body for which service of process has been effected on the Institution or, to the knowledge of the Institution, threatened against or affecting the Institution, or to its knowledge, any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Official Statement, the exclusion of interest on the Series 2017 Bonds from the gross income for federal income tax purposes of the owners of the Series 2017 Bonds or the validity or enforceability of the Series 2017 Bonds, the Indenture, the Loan Agreement or any other agreement or instrument to which the Institution is a party and which is used or contemplated for use in the transactions contemplated by this Official Statement.

FEASIBILITY CONSULTANT

The Financial Feasibility Study dated May 12, 2017 included in Appendix C hereto (the “Feasibility Study”) has been prepared by CliftonLarsonAllen LLP to evaluate the ability of the Institution to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements during the six years ending December 31, 2022. The Institution’s forecasted financial statements included in the study have been examined by CliftonLarsonAllen LLP, as stated in their Examination Report. The Feasibility Study should be read in its entirety. The Feasibility Study is based on assumptions that were provided by, or reviewed with and approved by management of the Institution, Kelly Real Estate Investment Properties, Inc., which has served as the development consultant for the Project, and Life Care Services LLC, which has been retained by the Institution to provide for management of the operations of the Facility. 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.

LEGALITY OF SERIES 2017 BONDS FOR INVESTMENT AND DEPOSIT

The Act provides that bonds of the Authority are securities in which all public officers and public bodies of the State and its political subdivisions, all insurance companies, trust companies, banking associations, credit unions, building and loan associations, investment companies, executors, administrators, trustees and other fiduciaries, pension, profit-sharing and retirement funds may properly invest funds, including capital in their control or belonging to them. The Act further provides that bonds of the Authority are securities which may properly be deposited with and received by any State or municipal officer or any agency or political subdivision of the State for any purpose for which the deposit of bonds or other obligations of the State is now or may hereafter be authorized by law.

Notwithstanding the foregoing provisions of the Act, other provisions of New Hampshire law limit permissible investments by certain investors, including some or all of the persons, organizations and entities listed in the preceding paragraph, to eligible investments for savings banks. New Hampshire statutes of the State currently provide that bonds of the Authority rated in the four highest rating categories by a nationally recognized bond rating service are eligible investments for New Hampshire savings banks.

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STATE NOT LIABLE ON SERIES 2017 BONDS

The State is not liable for the payment of the principal of or premium, if any, or interest on the Series 2017 Bonds, or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever which may be undertaken by the Authority, and none of the Series 2017 Bonds nor any of the Authority’s agreements or obligations shall be construed to constitute an indebtedness of the State within the meaning of any constitutional or statutory provision whatsoever, nor shall the Series 2017 Bonds directly or indirectly or contingently obligate the State or any municipality or political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment.

COVENANT BY THE STATE

Under the Act, the State pledges and agrees with the holders of any obligations of the Authority that the State will not limit or alter the rights vested in the Authority until such obligations, together with the interest thereon, are fully met and discharged, provided that nothing in the Act shall preclude such limitation or alteration if and when adequate provision shall be made by law for the protection of the holders of such obligations.

OTHER MATTERS

The references to the Act, the Indenture and the Loan Agreement are brief summaries of certain provisions thereof. Such summaries do not purport to be complete, and reference is made to the Act, the Indenture and the Loan Agreement for full and complete statements of such and all provisions. The agreements of the Authority with the owners of the Series 2017 Bonds are fully set forth in the Indenture and the Loan Agreement, and neither any advertisement of the Series 2017 Bonds nor this Official Statement is to be construed as constituting an agreement with the owners of the Series 2017 Bonds. Copies of the Indenture and the Loan Agreement may be obtained from the Trustee or the Underwriter. This Official Statement is not to be construed as a contract or agreement among the Authority, the Institution or the Underwriter and the purchasers or Holders of any Series 2017 Bonds.

Information relating to DTC and the book-entry-only system described under the heading “THE SERIES 2017 BONDS – Book-Entry System” has been furnished by DTC and is believed to be reliable. However, none of the Authority, the Institution or the Underwriter makes any representations or warranties whatsoever with respect to the information contained therein.

AUTHORITY NOT RESPONSIBLE FOR OFFICIAL STATEMENT

The Authority has consented to the use of this Official Statement. The Authority neither has nor assumes any responsibility as to the accuracy or completeness of the information contained in this Official Statement, other than that appearing under the heading “THE AUTHORITY” and information concerning the Authority under the headings “SUMMARY STATEMENT,” “INTRODUCTION” and “LITIGATION.”

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The Authority and the Institution have authorized the execution and distribution of this Official Statement.

NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY By: Executive Director and Secretary

Approved: THE PROSPECT-WOODWARD HOME By Title:

APPENDIX A

INFORMATION CONCERNING THE INSTITUTION AND THE FACILITY


TABLE OF CONTENTS

THE PROSPECT-WOODWARD HOME ................................................................................. A-1

Organizational History and Background ........................................................................ A-1

Governance of the Corporation ....................................................................................... A-2

Conflict of Interest Policy ............................................................................................... A-6

Management of Hillside Village ..................................................................................... A-6

HILLSIDE VILLAGE ................................................................................................................ A-6

General ............................................................................................................................ A-6

Site Location ................................................................................................................... A-7

Demographic Summary .................................................................................................. A-9

Land Acquisition ........................................................................................................... A-10

Resident Fee Model ...................................................................................................... A-10

The Health Center ......................................................................................................... A-12

Assisted Living Units and Memory Support Units ....................................................... A-12

Long-Term Care Nursing Beds ..................................................................................... A-12

Services to Residents .................................................................................................... A-12

Additional Services Available to Residents .................................................................. A-14

RESIDENCE AND CARE AGREEMENTS ........................................................................... A-15

General .......................................................................................................................... A-15

Admission Standards .................................................................................................... A-15

Reservation Deposits .................................................................................................... A-15

Fees ............................................................................................................................... A-15

Policy Regarding Financial Support to Residents ........................................................ A-16

Termination of the Residence and Care Agreement ..................................................... A-16

Entrance Fee Refunds ................................................................................................... A-18

Nature of Resident Rights ............................................................................................. A-19

Health Care Benefits ..................................................................................................... A-19

DEVELOPMENT, MARKETING AND MANAGEMENT OF THE PROJECT ................... A-20

The Development Consultant ....................................................................................... A-20

Development Consulting Services Agreement ............................................................. A-21

The Marketing Consultant ............................................................................................ A-22

Marketing Agreement ................................................................................................... A-22

The Management Company .......................................................................................... A-23

Management Agreement ............................................................................................... A-24

PRE-DEVELOPMENT RESERVATIONS ............................................................................. A-26

DESIGN AND CONSTRUCTION OF HILLSIDE VILLAGE ............................................... A-27

The Architect and the Architect Services Agreement ................................................... A-27

The General Contractor ................................................................................................. A-29

The Construction Contract ............................................................................................ A-30

Construction Monitor .................................................................................................... A-32

Owner’s Representative ................................................................................................ A-33

Regulatory Permits and Approvals ............................................................................... A-33

Property Taxes .............................................................................................................. A-35

Completion of the Project ............................................................................................. A-36

Environmental Site Assessment .................................................................................... A-36

INSURANCE ............................................................................................................................ A-36

A-1

THE PROSPECT-WOODWARD HOME

Organizational History and Background

The Prospect-Woodward Home (the “Corporation”) is a New Hampshire nonprofit voluntary corporation which presently operates a 24-bed supported residential care facility of the same name located at 194-202 Court Street in Keene, New Hampshire (the “Existing Facility”). The Corporation has been determined by the Internal Revenue Service to be exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Corporation is the result of a merger in July 2016 between two long-standing New Hampshire nonprofit organizations, Prospect Hill Home (“Prospect Hill Home”) and The Woodward Home (“The Woodward Home”), with Prospect Hill Home serving as the surviving entity under the legal name “The Prospect-Woodward Home” (for convenience, references to the “Corporation” include Prospect Hill Home pre-merger, as the context requires). Incorporated in 1874, Prospect Hill Home moved its facilities to a Court Street property in 1884 where it operated a 20-bed assisted living facility which became known as “Prospect Place.” Prospect Hill Home has maintained a strong reputation for offering a caring assisted living environment to its residents throughout its 140 years of operations. The Woodward Home, also a New Hampshire nonprofit voluntary corporation, was established in 1932 to own and operate the Existing Facility, just a few blocks from Prospect Place. The Woodward Home also maintained a strong reputation for continuously offering a caring assisted living environment to its residents. Given the shared missions and circumstances of these organizations and their proximity, The Woodward Home merged into Prospect Hill Home and they consolidated operations. As a result of the merger, the Corporation moved the remaining residents of Prospect Place into the Existing Facility, and entered into a conditional purchase and sale agreement for the sale of Prospect Place.

The desire to establish a new continuing care retirement community (“CCRC”) arose from years of market research and analysis spawned by dramatic marketplace changes in New Hampshire in the last two decades and a significant shift in the needs and desires of elderly citizens. In 2011, the Prospect Hill Home’s Board engaged an outside consultant, Kelly Real Estate Investment Properties, LLC (“KRI”), to research this changing landscape and its implications for Prospect Hill Home’s mission. The resulting study revealed that a new CCRC project in Keene, New Hampshire was a viable senior living option. Following the Corporation’s receipt of approvals from the New Hampshire Director of Charitable Trusts and the Cheshire County Probate Court to expand its charitable mission to include the development and operation of a CCRC, and to use its restricted funds for that expanded purpose, the Corporation’s Board voted to pursue the CCRC project known as “Hillside Village” and located at 99 Wyman Road in Keene, New Hampshire (the “Project”). Upon completion and occupancy of the Project, the Corporation intends to close and sell the Existing Facility and move its remaining residents into Hillside Village.

A-2

Governance of the Corporation

The Corporation is governed by a Board of Trustees (the “Board”). Oversight of the affairs and resources of the Corporation is vested in the Board, which is bound by principles of fiduciary duties and the provisions of the Corporation’s Articles of Agreement, Bylaws, and applicable New Hampshire law. Under these provisions, no Trustee or other individual may have an equitable, beneficial or other pecuniary interest in the Corporation or its assets, including without limitation the Project. No member of the Board is paid any remuneration for his or her services as a Trustee, except for the reimbursement at cost of Board-related expenditures.

Under its Plan of Merger with The Woodward Home, the Corporation established a two-year integration period beginning July 1, 2016 (the “Integration Period”). During the Integration Period, the Board will be comprised of up to twenty-two (22) trustees; thereafter, the Board will be comprised of up to fifteen (15) trustees. The Board is self-perpetuating, and the election of Trustees is governed by the Corporation’s bylaws. To focus on the development of the Project, the Board delegated to a six-member “Facility Operations Committee” responsibility for supervising the Executive Director in the management and operation of the Existing Facility.

The Corporation has four principal officers under its bylaws: Chair, Vice-Chair, Treasurer and Secretary. The current Trustees and Officers of the Corporation include the following individuals:

Chair

Dr. Kimball Temple is the Board Chair. Dr. Temple practiced internal medicine and cardiology at Cheshire Medical Center and Dartmouth-Hitchcock Clinic until his retirement in 1998. Dr. Temple subsequently worked with the Indian Health Service on a reservation in Devils Lake, North Dakota and later returned to part-time work at Dartmouth-Hitchcock Clinic from 2001-2003 and again in 2005-2006. Dr. Temple has served as a trustee at RiverMead Continuing Care Retirement Community, Stonewall Farm, and the Historical Society of Cheshire County. He served as a trustee of the City of Keene Trust Funds. Dr. Temple is a graduate of Amherst College and the University of Rochester School of Medicine, and resides in Keene, New Hampshire.

Vice Chair

Nancy Thompson is the Board Vice Chair and is a real estate agent for Masiello-Better Homes & Garden in its Keene office. Ms. Thompson brings to Hillside Village her years of experience in sales, marketing and publishing. She has deep roots in Cheshire County dating back six generations. Ms. Thompson has served on both local and state boards including the following: Multiple Sclerosis Society, United Way, and as a coach for Special Olympics downhill skiers. She resides in Keene, New Hampshire.

A-3

Secretary

Rand Burnett, Esq. is the Board Secretary. Mr. Burnett is a partner in the law firm of Bradley & Faulkner, having joined as an associate in 1978. His practice includes business, real estate and trust and estate matters. Mr. Burnett has been a director of the Greater Keene Chamber of Commerce, a director of the Southwest New Hampshire Chapter of the American Red Cross, Chairman of the Board of the Keene Racquet Club, and President of the Westmoreland PTA. He is a graduate of Dartmouth College and Stanford Law School and resides in Westmoreland, New Hampshire.

Treasurer

Greg McConahey is the Board Treasurer and the Co-Founder and Co-President of The New Hampshire Trust Company and is responsible for the portfolio management of the firm’s clients. From 1988 to 2002, Mr. McConahey worked for Fleet Investment Advisors and its predecessor, Indian Head Bank. He is a long-time member of the Keene Lions Club. Greg is a past Board Chair and Treasurer for the Monadnock United Way and has served on the boards of Cheshire Health Foundation/Cheshire Medical Center, Endowment for Health, Friends of the Ashuelot Park and Keene Senior Center. Mr. McConahey currently serves on the Endowment for Health’s Investment Committee and is a board member of the Monadnock Regional Foundation for Family Services. He received a bachelor of science in business from Miami University and lives in Keene, New Hampshire.

Additional Trustees

Marcy Buckman is a Physical Therapist who has worked for New Rochelle Medical Center, North Cheshire County VNA and for Elliot Hospital and Cheshire Hospital as head of the Physical Therapy Department and, most recently, Home Healthcare Hospice and Community Services for over 23 years. She is a past member of the HCS Professional Advisory Committee and a past Secretary of The Woodward Home Board of Directors. She recently retired and is currently a volunteer for Home Healthcare Hospice and Community Services in the Healthy Starts program. Ms. Buckman is a graduate of Ithaca College and a long-time resident of Alstead, NH.

Nancy Crawford is a nurse who has worked in both critical care and cardiology, and most recently has served as a clinical instructor in the associate’s degree nursing program at River Valley Community College. Ms. Crawford earned a bachelor’s degree in biology from Cornell College, a bachelor’s degree in nursing from Regents College and a master’s degree in nursing from the University of Massachusetts Graduate School of Nursing. She is a long-time resident of Spofford, New Hampshire.

David Doll is a financial advisor with Financial Solutions Group and Signator Investors. Mr. Doll holds multiple securities licenses through the Financial Industry Regulatory Authority (FINRA) and is currently in the process of attaining the Certified Financial Planner (CFP) designation. Prior to being a financial advisor he worked in the Transamerica home office in St. Petersburg, Florida. He is a member of the Greater Keene Chamber of Commerce and is

A-4

currently participating in the 2016-2017 cohort of Leadership Monadnock. Mr. Doll is an active member of the Keene Lions Club. He holds a bachelor's degree from Appalachian State University and lives in Keene, New Hampshire.

Jay Eason is a retired bank executive having served Granite and Ocean Bank as Vice President. Mr. Eason also worked for several years with Exxon and Medtronic Corp. before moving to Keene where he managed Goodnow’s Department Store. He has been active in the Keene community serving on the Boards of the Keene Chamber of Commerce, Cheshire Medical Center and Cedarcrest Center for Children with Disabilities. Mr. Eason is a graduate of the University of Virginia and Officer’s Candidate School, after which he served with the U.S. Army in Germany. He is a longtime resident of Spofford, New Hampshire.

Ceil Goff is a financial advisor with Edward Jones Investments. Ms. Goff serves with Rotary International Club and is a past president of Prospect Hill Home and the Keene State Endowment Association. Ms. Goff earned her bachelor’s degree from Boston University, her master’s degree in education from Keene State College and certificate of advanced graduate study from the University of Massachusetts. She is a longtime resident of Westmoreland, New Hampshire.

Julie Green is the Vice President, Human Resources at Cheshire Medical Center. Ms. Green moved to Keene in 1987 and has worked in the field of Human Resources for 35 years, mostly in non-profit health care and for profit high tech companies. She is a graduate of John Marshall Law School and resides in Keene, New Hampshire.

Sally Hansel moved to Keene 28 years ago where she enjoys community involvement. She has served in the following capacities: Board member of The Colonial Theater, Past Chair of Board for Monadnock Children’s Museum; Past President of Friends of the Thorne Sagendorph Art Gallery; Past Board member of Stonewall Farm; and past member of the Keene Racquet Club. Ms. Hansel resides in Keene, New Hampshire.

Elaine Landry taught English at Keene High School for 27 years, where she developed a course in women’s literature that remains in the school’s curriculum. Ms. Landry serves on the board of the Keene High School Academy Fund, is an officer of Delta Kappa Gamma, an international educational society, and volunteers with the RISE program, a daycare center for young children. She was raised in Chesterfield, graduated from Brattleboro High School and Keene State College, and currently resides in Keene, New Hampshire.

Anne Meddaugh was an art teacher in the public schools for 34 years and retired in 2014. Ms. Meddaugh is a volunteer for Hospice in the greater Keene area and serves on the Board of the New Hampshire Small Dog Rescue. She served on The Woodward Home Board of Directors and is now a trustee of The Prospect-Woodward Home Board of Trustees. She received bachelor of science and master of science degrees from Southern Connecticut State University in New Haven and resides in Keene, NH.

Douglas Nelson retired in 2006 as Professor Emeritus of Music Education, having taught for 35 years at Keene State College. He was Chairman of the Music Department for 21 of those years. Since his retirement, he has served on the board of The Woodward Home and now the Prospect-

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Woodward Home. Mr. Nelson is actively involved with Lions Club activities and assists at the Keene Community Kitchen, making food deliveries to homes in Keene and Swanzey. He holds bachelor of music and master of music degrees from the Eastman School of Music and a certificate of advanced graduate studies from the Hartt School of Music, University of Hartford.

Belinda Oster is a Certified public Accountant and owner of Oster & Wheeler, a local accounting firm located in Keene, New Hampshire. She is a graduate of Keene High School and Keene State College, and received her Masters’ degree in taxation from Bentley College. Ms. Oster resides in Keene, New Hampshire.

Jeanie Sy is a Board member and Scholarship Committee member for the Ladies Charitable Society of Keene, and Incorporator of Monadnock Family Services, chair of Property Ministry and the Minister Search Committee at the Westmoreland United Church, and a Volunteer at the Friendly Meals site in Westmoreland. Ms. Sy has a bachelor of science in nursing and, after relocating to Keene in the late 1970s, worked as a nurse for 10 years at Occupational Health Management. She has served actively in numerous volunteer capacities, including: Board member of the Keene Visiting Nurse Service during the time it joined with Cheshire Health & Social Services to become Home Healthcare Hospice & Community Services; Board member and chair of Home Healthcare & Community Services; Keene City Councilor; Keene Health Alliance Board Member; Dental Health Works Board Member; Intake Committee member of the Congregate Housing Program.

Jane Warner is the Director of the Office of Disability Services at Keene State College, a position she has held since 1994. Ms. Warner has experience as a Rehabilitation Consultant for the Farnum Rehabilitation Center at the Cheshire Medical Center, where she provided rehabilitation counseling for inpatient, outpatient and industrial rehab patients who experienced closed head injuries, stroke and work trauma. She currently is associated with Monadnock Collaborative and Service link. Ms. Warner obtained her bachelor’s, master’s, and certificate of advanced graduate studies in rehabilitation counseling from Springfield College in Springfield Massachusetts. She resides in Keene, New Hampshire.

John (Chip) Woodbury taught in the Technology Department at Keene High School for 32 years, where he led construction trade students in the building of fifteen houses. He is a past Board President, an active member of the Sullivan Conservation Committee, a Trustee of the Sullivan Congregational Church, and a board member of the Apple Hill Center for Chamber Music. Mr. Woodbury was born and raised in Keene, New Hampshire, attended Keene Public Schools, graduated from Wentworth Institute and Keene State College and resides in Sullivan, New Hampshire.

Marcia Zurick-Thompson has been a Board member and proponent of senior living issues since her father was a Woodward resident in 2011. Since 1974, Ms. Zurick-Thompson has been a school-based Speech Language Pathologist, first in the Somerville, Massachusetts school district and, for the past 30 years, in the Keene New Hampshire area public schools. She has been an advocate for heathy living as a campaign representative for the Monadnock United Way, school district Wellness Committee building representative, and a member of Healthy

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Monadnock/Vision2020, a local effort to create the country’s healthiest community by 2020. Ms. Zurick-Thompson graduated from Ithaca College and holds graduate degrees from University of Massachusetts - Boston and the University of New Hampshire. She resides in Fitzwilliam, New Hampshire.

Charlton MacVeagh served as the Chief Executive Office of RiverMead Lifecare Community in Peterborough from 1990 to 1999. Prior to that, Mr. MacVeagh was President of Granite State Bankshares, Chairman of First National Bank of Peterborough, and a partner at Touche Ross & Co. in New York City. He was also Managing Director of Marine Midland Bank of New York, Managing Director at Western American Bank Europe, and Vice President of JP Morgan in New York and London. Mr. MacVeagh has served on several local Boards including Director and Treasurer of The MacDowell Colony, Director of NH Land and Community Heritage Investment Program, Treasure and Director of Trust for NH Lands, Trustee for the Society for the Protection of NH Forests, Trustee and Board Chair at Franklin Pierce College, President of Raylynmor Opera Company, Director and Treasurer of NH Business Finance Agency, Trustee and Chair of Antioch University of New England, Trustee for Crotched Mountain Rehabilitation Center, and Chair of the NH State Pension Board of Trustees. Mr. MacVeagh is a current resident of Marlborough, NH, and is a graduate of Harvard College.

Conflict of Interest Policy

The Corporation’s trustees, officers, and committee members are established members of the Keene, New Hampshire community, with strong ties to local businesses and other organizations. Accordingly, from time to time, the Corporation may conduct business transactions with entities with which a trustee, officer, or committee member of the Corporation may have a financial or personal interest. The Corporation has a conflict of interest policy and procedures which require that any such possible conflict of interest be disclosed, recorded, and published if required by applicable New Hampshire law. Additionally, the conflict of interest procedures require the Corporation’s trustees, officers, and committee members to take specific steps to ensure that the conflict does not affect objective deliberation or prevent them from exercising their judgment for the benefit of and in the best interests of the Corporation.

Management of Hillside Village

The Corporation has engaged Life Care Services, LLC (the “Manager”) to manage Hillside Village. A description of the Manager is included below under the heading “DEVELOPMENT, MARKETING AND MANAGEMENT OF THE PROJECT – Management.”

HILLSIDE VILLAGE

General

In 2011, the Corporation’s Board identified the need to modernize its traditional assisted living services and structure on Court Street to respond to changes in the market, including the

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enhanced needs and desires of seniors in the Keene, New Hampshire area. The Corporation hired KRI, well-respected CCRC development consultants who have experience in developing CCRCs in New Hampshire. KRI ultimately determined that the Project was viable because there are no CCRC facilities in Cheshire County where Keene is located, and there was an unmet need for a CCRC in Keene to serve the medical, housing, and lifestyle needs of local seniors.

During this time, the Corporation also assembled a project team experienced in the development and financing of CCRCs, and located an appropriate site on which to construct a CCRC to be known as “Hillside Village.” Hillside Village is a registered trade name of the Corporation.

Hillside Village plans to offer a broad range of housing options, amenities, and healthcare services to its residents. It is anticipated to include approximately 140 independent residential units (the “Independent Living Units”), as well as 60 assisted living units (the “Assisted Living Units”) and 20 long-term nursing care rooms (the “Nursing Care Rooms”) for residents requiring higher levels of care. The Independent Living Units are planned to include 116 apartments that will be located in the wings off the Community Center, and 24 villas located in a separate Villa Building that will be connected to the Community Center by a covered walkway. It is planned that the Assisted Living Units will consist of 42 suites and 18 memory care rooms. All of the Assisted Living Units and the Nursing Care Rooms are planned to be private units contained within the Health Center and connected to the Community Center by a covered walkway.

Hillside Village’s Community Center is expected to offer a long list of amenities including a full service restaurant, an informal bistro dining venue, a performing arts center, multiple resident lounges, classrooms for ongoing educational programs, an exercise room, an indoor pool, card and game rooms, a greenhouse, a beauty spa, a country store, and a library with a computer lab. Likewise, the grounds of Hillside Village will be attractive and well-designed for the enjoyment of residents, and will include amenities such as ample parking, manicured gardens and landscaping, and resident garden plots for the growing of vegetables and flowers.

The gross square footage of Hillside Village upon completion is projected to be approximately 357,000 square feet, including nearly 44,000 square feet of lighted covered or underground parking. The Corporation anticipates having approximately 280 residents at Hillside Village upon full occupancy.

Site Location

Hillside Village will be constructed on approximately 48 acres of land at 99 Wyman Road in Keene, New Hampshire, approximately half a mile from New Hampshire Route 12 (the “Project Site”). The Project Site is partially wooded and has views of the surrounding and mostly undeveloped countryside, including meadows, a brook, and nearby Mount Monadnock.

Although Hillside Village will have a private, rural feel, the Project Site is less than 5 miles from downtown Keene, New Hampshire, which boasts restaurants, shops, movie theaters, and art galleries. Attractions such as the Hannah Grimes Marketplace, the Thorne-Sagendorph Art Gallery, and the Colonial Theatre in the downtown area offer a wide variety of artistic and

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cultural events. While the downtown area is host to many churches of Christian denominations, the Congregation Ahavas Achim Jewish Center is also within minutes of the Project Site. Outside of the downtown area, but within minutes of the Project Site, are the 36-hole public Bretwood Golf Course, the private Keene Country Club, the Keene Racquet Club, and a diverse array of outdoor parks and walking trails. The Project Site is also less than 4 miles from Cheshire Medical Center, a 169-bed acute care hospital which is a member of the Dartmouth-Hitchcock Health System.

Although Hillside Village is expected to provide residents with local transportation to shopping centers, banks, and other points of common interest on a scheduled basis, as well as individual transportation to physicians, dentists, and hospitals, there also are a variety of public transportation options available to help seniors navigate the City of Keene and the surrounding areas. The City Express Bus Service provides transportation within Keene via a route easily accessible from the Project Site, while Greyhound buses provide access to cities such as Brattleboro, Vermont; Springfield, Massachusetts; Hartford, Connecticut; and New York City. The Home Healthcare Hospice and Community Services of Keene also offers a Friendly Bus pickup service for seniors, a Medical Transportation service to Mary Hitchcock Memorial Hospital in Lebanon, New Hampshire, and a Para Express bus for those with transit disabilities.

The Project Site is located approximately 10 miles from Interstate 91. It is approximately one hour from the Manchester Airport in Manchester, New Hampshire, and within two hours of both Logan Airport in Boston, Massachusetts and Bradley International Airport in Hartford, Connecticut.

Based on the geographic area from which the majority of prospective residents who have signed a Residence and Care Agreement for Hillside Village presently reside, the Corporation has defined the primary marketplace (“Primary Marketplace”) for Hillside Village to include an area approximately 10 to 17 miles to the north, 17 miles to the south, 8 to 14 miles to the east, and 14 to 25 miles to the west, encompassing portions of Cheshire County in New Hampshire and Windham County in Vermont. The Primary Marketplace includes the City of Keene, and Towns of Fitzwilliam, Marlborough, Troy, Winchester, Sullivan, Gilsum, Marlow, West Chesterfield, Alstead, Ashuelot, Swanzey, Hinsdale, Spofford, Westmoreland, and Walpole in New Hampshire, and the Towns Westminster, Putney, Brattleboro, Vernon and Marlboro in Vermont, as shown on the map below:

[The Remainder of this Page Intentionally is Left Blank]

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Demographic Summary

The Financial Feasibility Study prepared by the Corporation’s consultant, CliftonLarsonAllen LLP (“CLA”), projects that approximately 75% of the residents of Hillside Village will come from within the Primary Marketplace. CLA’s demographic analysis estimates that the number of income eligible households within the Primary Marketplace for calendar year 2017 are as follows:


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Land Acquisition

On June 6, 2014, the Corporation entered into a Site Purchase Agreement (the “Site Purchase Agreement”) with Kendall W. Lane and Molly B. Lane (the “Sellers”) for the acquisition of the Project Site. The Corporation will pay the Sellers a purchase price of $1,500,000.00 for the Project Site, of which $20,000 has been paid in escrow as a deposit and the balance will be due in cash at closing. The Corporation has satisfied all conditions identified in the Site Purchase Agreement; therefore, the Corporation and the Sellers have signed all of the transfer documents required thereunder and they are being held in escrow pending closing on the bond issue and funding of the purchase price.

Resident Fee Model

Hillside Village will pay for its operating expenses by utilizing an entrance fee model supplemented by monthly service fees. Each resident’s one-time entrance fee (“Entrance Fee”) will be based upon the size of the living unit chosen and the terms of the Entrance Fee Plan selected by the resident, and must be paid upon admission to Hillside Village. Residents also will pay a monthly service fee (“Monthly Service Fee”) intended to cover the cost of housing, services, and amenities provided by Hillside Village. The amount of the Monthly Service Fee will depend on the type of Independent Living Unit chosen by the resident. An additional Monthly Service Fee is payable for a second resident living in an Independent Living Unit as described in the Section entitled “RESIDENCE AND CARE AGREEMENTS –Fees”.

The Corporation expects to offer prospective residents three Entrance Fee plans (each an “Entrance Fee Plan”), consisting of a Traditional Plan, a Guaranteed 90% Refundable Plan, and a 90% Refundable Shared Cost Plan described as follows:

(1) The Traditional Plan offers a lower Entrance Fee with a declining refund over time. Under the Traditional Plan, assisted living and nursing care services are included in the Monthly Service Fee.

(2) The Guaranteed 90% Refundable Plan requires a higher Entrance Fee, but it

obligates the Corporation to refund 90% of the Entrance Fee without further

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reduction. Under this plan, assisted living and nursing care services are included in the Monthly Service Fee.

(3) The 90% Refundable Shared Cost Plan is tailored to residents with long-term health

care insurance. It offers up to a 90% refund of the Entrance Fee, but the resident shares the cost of health services through a reduction of the Entrance Fee Refund. The Entrance Fee Refund will be reduced by the difference between the Monthly Service Fee and the cost of assisted living and nursing care services provided to the resident, less any amounts reimbursed to Hillside Village by the resident’s long-term health care insurance policy. If the resident’s Entrance Fee Refund is reduced to zero, the resident will continue to pay only the Monthly Service Fee.

The Entrance Fee deposit is 100% refundable if the Residence and Care Agreement is rescinded by the resident for any reason within 10 days after the Residence and Care Agreement is executed, as required by New Hampshire law. After the initial 10-day period, Entrance Fee refunds will be made according to the terms of the Residence and Care Agreement signed by the resident and Hillside Village. See “RESIDENCE AND CARE AGREEMENTS” for additional information.

The table below shows the planned number and approximate size of the Independent Residential Units, anticipated Entrance Fees, and estimated Monthly Service Fees:

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The Health Center

Hillside Village will provide residents with medically-necessary assisted living and long-term nursing care services in its on-site Health Center, as described below. Such services are included within the Monthly Service Fee, and for many residents, the use of such services will not result in any additional costs above the normal Monthly Service Fee. As described in the section entitled “Entrance Fees and Monthly Service Fees” above, however, residents who choose the 90% Refundable Shared Cost Plan will be responsible for the difference between the Monthly Service Fee and the actual cost of assisted living and nursing care services provided to the resident, less any cost that is reimbursed to Hillside Village by the resident’s long-term health care insurance policy.

If a Hillside Village resident requires long-term nursing care at a time when all of Hillside Village’s Nursing Care Rooms are occupied, Hillside Village will transfer the resident to a similar long-term care facility until a Hillside Village Nursing Care Room becomes available, and Hillside Village will pay all costs associated with such care, as described in the Residence and Care Agreements.

If Hillside Village residents require short-term rehabilitative or other skilled nursing care that is subject to reimbursement through Medicare, Hillside Village will arrange for these services to be provided by an inpatient rehabilitative nursing facility that accepts Medicare. If residents need continued care after the Medicare covered days of service have been utilized, then they will enter the on-site Health Center if an Assisted Living Unit or a Long-Term Nursing Care Room is available. See the section entitled “RESIDENCE AND CARE AGREEMENT – Health Care Benefit” below for additional information.

Assisted Living Units and Memory Support Units

The Health Center will include 60 Assisted Living Units for those residents who require assistance with activities of daily living in addition to the amenities provided to residents of independent living. Such assistance includes medication management, bathing, dressing and personal care. The Assisted Living Units will be comprised of 42 private Assisted Living Unit suites and 18 private memory care rooms specifically designed to assist those residents who suffer from memory loss and related disorders. The Assisted Living Units will be located in four residential “neighborhoods” of units with spacious common activity areas and country kitchens.

Long-Term Care Nursing Beds

The Health Center also will include 20 Nursing Care Rooms for residents who require long-term custodial care. In addition to assistance with activities of daily living, residents of the Long-Term Nursing Care Rooms may receive care for chronic medical conditions or disabilities and full-time supervision.

Services to Residents

Upon payment of an Entrance Fee and Monthly Service Fees, Hillside Village residents will be provided with a living unit and a wide array of services including health and personal

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care, food services, housekeeping, transportation, and entertainment and activity programming. Specifically, the services proposed to be provided under the Residence and Care Agreements that are included in the Monthly Service Fee include the following:

Living Unit and Common Areas. Hillside Village will provide each resident with the living unit chosen by the resident, subject to the provisions for direct admission into an Assisted Living Unit or changes in accommodations as described in the Residence and Care Agreement between the resident and Hillside Village (each a “Living Unit”). Each Living Unit will be equipped with a complete kitchen including a refrigerator, a range with an oven, any additional appliances as may be offered in the living unit selected, an emergency call system, a fire detector and sprinkler system, a master television connection, carpeting (except in the kitchen and bathroom), and window coverings. Any additional amenities or substitutions to the items normally offered in the Living Unit will be at the resident’s expense. Structural changes to Living Units can only be made with Hillside Village’s written approval, with materials and workers approved by Hillside Village. Unless otherwise agreed in writing by Hillside Village, the resident will be responsible for the cost of requested structural changes, as well as the cost to restore the unit to its original condition at a later date.

Hillside Village also will provide residents with access to common areas including dining rooms, lounges, lobbies, a library, social and recreational facilities, and other public areas of the Community Center.

Health Care Services. As described in the sections entitled “THE HEALTH CENTER” above and “RESIDENCE AND CARE AGREEMENT – Health Care Benefit” below, the Corporation will provide residents with assisted living or long-term nursing care in its on-site Health Center, in either an Assisted Living Unit or a Nursing Care Room.

Food and Meal Services. Three meals per day will be available in the Community Center. For residents living in Independent Living Units, the Monthly Service Fee includes one meal per day, and additional meals will require an extra meal charge. Up to 25% of the meals provided each month may be delivered to a resident’s Living Unit upon request at no extra charge. For residents living in Assisted Living Units or Nursing Care Rooms in the Health Center on either a temporary or permanent basis, three meals per day will be included in the Monthly Service Fee. A private dining room and catering services are available for residents’ private gatherings or special occasions.

Housekeeping Services. Light housekeeping services are included in the Monthly Service Fee and will be provided every other week in residents’ Living Units. Annually, heavy housekeeping services, including cleaning windows and moving furniture, will also be provided.

Maintenance Services. Furnishings, appliances, and other property and equipment supplied by Hillside Village will be repaired, maintained, or replaced by Hillside Village as needed. If, however, property damage results from a resident’s negligent or intentional act or omission, the resident will be responsible for such damage.

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Utilities. Sewer, water, electricity, heat and air conditioning, and trash removal will be supplied by Hillside Village. Residents are responsible for the costs of telephones, cable television, and internet services in their living accommodations.

Grounds. Hillside Village will provide groundskeeping services, including snow removal, lawn service, and common area gardening.

Gardens. Residents will be permitted to plant flowers and other non-food bearing plants in the patio areas near their living accommodations. In other areas of the Hillside Village grounds, garden plots will be available to residents who wish to grow flowers or vegetables.

Local Transportation. Hillside Village will provide residents with scheduled group transportation to shopping centers, banks, and other points of common interest, as well as individual transportation to local medical and dental appointments.

Activities and Social Programs. Hillside Village will coordinate a planned schedule of social, recreational, religious, educational, and cultural programs for residents’ enjoyment. If programs require special materials, admission fees, charter bus services, or other outside expenses, such costs may be passed to the resident with advance notice.

Emergency Services. Each living accommodation will be equipped with a fire detector and sprinkler system, as well as an emergency call system. Emergency calls will be answered twenty-four hours a day, seven days a week.

Property Taxes. Hillside Village is responsible for any real estate taxes assessed to the Hillside Village property. It is expected to negotiate a payment in lieu of taxes agreement as described below under the heading “DESIGN AND CONSTRUCTION OF HILLSIDE VILLAGE – Property Taxes.”

Parking. Lighted and well-maintained parking areas will be available to all residents. Each resident will be assigned a single covered or underground parking space at no additional charge.

Additional Services Available to Residents

Certain additional services are available to residents at an extra charge in addition to the Monthly Service Fee. Such additional services include extra parking spaces; additional food services, including extra meals, extra home-delivered meals, guest meals, holiday meals, private dining rooms, and catering services in private dining rooms; additional housekeeping services; additional maintenance services; additional transportation services; beauty, barber, and spa services; guest suites; home care or home maker services; laundry services, including dry cleaning, pickup and delivery, and washing and folding; and special activities and programs outside of those included in the Monthly Service Fee.

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RESIDENCE AND CARE AGREEMENTS

General

Prior to occupancy, residents and Hillside Village will enter into a “Residence and Care Agreement” which sets forth the rights and obligations of Hillside Village and the resident during the resident’s occupancy, as detailed below. The form of the Corporation’s Residence and Care Agreements has been approved by the New Hampshire Insurance Department, as required by New Hampshire law.

Admission Standards

A prospective resident of Hillside Village must be at least 62 years of age and demonstrate that he or she is in good health, able to live independently, and is capable of meeting all financial responsibilities under the Residence and Care Agreement, including but not limited to the payment of the Entrance Fee and the Monthly Service Fees. Residents also must demonstrate that they are enrolled in Medicare Parts A and B and a Medicare supplemental insurance policy acceptable to the Corporation and which covers acute medical care and skilled nursing care services. As mandated by New Hampshire’s CCRC statute, residents will not be admitted directly into Hillside Village’s Nursing Care Rooms.

Reservation Deposits

To reserve a Living Unit, a prospective resident must execute a Residence and Care Agreement and pay a deposit equal to 10% of the Entrance Fee (the “Entrance Fee Deposit”). The balance of the Entrance Fee is due upon occupancy of the Living Unit, and in no event later than 60 days following the date on which the resident’s Living Unit is available for occupancy. The Corporation has received a Certificate of Authority from the New Hampshire Insurance Department to enter into Residence and Care Agreements and accept Entrance Fee Deposits from prospective residents. For the protection of prospective residences in accordance with New Hampshire law, Hillside Village has established an escrow account in which to hold Entrance Fee deposits at Savings Bank of Walpole, a New Hampshire mutual savings bank. Circumstances under which a resident or Hillside Village may terminate a Residence and Care Agreement and the extent of any refund is described below in the section entitled: “Termination of the Residence and Care Agreement; Refunds.”

Fees

Residents can choose from three different Entrance Fee Plans: the Traditional Plan, the Guaranteed 90% Refundable Plan, and the 90% Refundable Shared Cost Plan (as further described in the Section entitled “Entrance Fees and Monthly Service Fees” above).

Each resident will pay an Entrance Fee prior to occupancy in an amount described in the Residence and Care Agreement between the resident and Hillside Village (the “First Person Entrance Fee”). If the Living Unit will be occupied by two people, the second resident will pay an additional Entrance Fee (the “Second Person Entrance Fee”).

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Beginning on the date of residency, each resident will pay a Monthly Service Fee in an amount determined by Hillside Village based on the size of the living unit chosen, and the number of people who reside in the living unit. A late payment service charge of 2% will be added to any payment not received by the fifth of each month. The Monthly Service Fee will be prorated for any partial month in which the resident begins or ends occupancy. In addition, Hillside Village can adjust the Monthly Service Fee from time to time to reflect changes in the cost to Hillside Village in operating the CCRC and providing resident amenities.

Hillside Village will establish a schedule of fees for services in the Health Center, which will vary depending on the level of care provided, and will reflect the costs to Hillside Village of providing long-term care services. Residents who select the 90% Refundable Shared Cost Plan will be responsible for the difference between the then current Monthly Service Fee and the Health Center fees charged for services provided to the resident to the extent that the difference is not paid by the proceeds of the resident’s long term care insurance coverage. Such amount will be deducted from the refundable portion of the Entrance Fee paid by the resident. If the refundable portion of the Entrance Fee is reduced to zero, the resident will continue to pay only the then current Monthly Service Fee, and he or she will not be obligated to pay for ongoing Health Center service fees. Health Center fees will not be charged to residents who select the Traditional Plan or the Guaranteed 90% Refundable Plan. Residents, however, may engage Hillside Village’s Medical Director to provide non-emergency physician services at the resident’s option and expense. Hillside Village will not provide, nor be responsible for the cost of, physician services (beyond emergency call services), hospital or other acute care services, private duty nursing, skilled or short-term rehabilitative nursing services, medicine, drugs, durable medical equipment, prescribed therapy, or similar services.

Policy Regarding Financial Support to Residents

The Residence and Care Agreements set forth Hillside Village’s policy and requirements regarding a resident’s inability to pay its Monthly Service Fee obligations. If a resident becomes unable to pay the Monthly Service Fee, the resident must liquidate personal assets to meet payment obligations under the Residence and Care Agreement. The resident also must provide Hillside Village with financial information which demonstrates that the resident is unable to pay the Monthly Service Fee. If a resident establishes the need for financial assistance, the resident’s Monthly Service Fee will be subsidized by Hillside Village if and only to the extent that it is not likely to impair the sound financial operation of Hillside Village, as determined by the Corporation’s Board. The resident will be responsible for the full amount of the subsidy, which will be charged against the resident’s refundable portion of the Entrance Fee unless otherwise repaid by the resident. Hillside Village also can require the resident to transfer to a smaller living accommodation to reduce the Monthly Service Fee.

Termination of the Residence and Care Agreement

Rescission by the Resident

As required by New Hampshire law, a resident may rescind the Residence and Care Agreement without cause and without penalty by providing written notice to Hillside Village

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within ten (10) days of the date of execution of the Agreement by the resident. The Entrance Fee Deposit will be refunded in full, without interest, within ten (10) days of Hillside Village’s receipt of a timely written notice of rescission.

Termination by the Resident Prior to Occupancy Due to Death or Incapacity

If, prior to occupancy, a resident (i) dies or (ii) becomes unable to occupy a Living Unit due to injury, illness, or other incapacity, the Residence and Care Agreement will terminate and Hillside Village will refund the Entrance Fee Deposit within 60 days of receipt of written notice of such circumstance. If a second person who is party to the Agreement becomes unable to occupy a Living Unit because of death, injury, illness or other incapacity, the primary resident has the option to terminate the Agreement or to move to Hillside Village as a single person, in which case Hillside Village will refund the Second Person Entrance Fee deposit within 60 days of its receipt of written notice.

Termination by the Resident Prior to Occupancy for Other Cause

After the expiration of the 10-day rescission period and before the Living Unit that has been selected by a resident is available for occupancy, the resident may terminate the Residence and Care Agreement for cause other than death or incapacity and receive a refund of the Entrance Fee Deposit paid by the resident. The refund of the Entrance Fee Deposit is payable by Hillside Village no later than 60 days after a new resident has signed a Residence and Care Agreement to occupy the same Living Unit and has paid the applicable Entrance Fee Deposit.

Termination Resulting from Transfer of Resident to Another Facility

If a resident who has taken occupancy of a Living Unit subsequently is transferred to another facility, the resident or the resident’s representative may terminate the Residence and Care Agreement by providing a 30-day written notice of termination. The resident must continue to pay the Monthly Service Fee until the expiration of the 30-day notice period, and the Entrance Fee will be refunded as described below under the heading “Entrance Fee Refunds.”

Termination by the Resident After Occupancy for Other Cause

After a resident occupies a Living Unit, he or she may terminate the Residence and Care Agreement for cause other than a transfer to another facility by providing Hillside Village with a 120-day written notice of termination. The resident must continue to pay the Monthly Service Fee until the expiration of the 120-day notice period, and the Entrance Fee will be refunded as described below under the heading “Entrance Fee Refunds.”

Termination by Hillside Village for Resident Default

Hillside Village can terminate a Residence and Care Agreement upon a default by the resident, including failure by the resident to take occupancy of a Living Unit or pay the Monthly Service Fee, upon 60 days’ written notice to the resident to cure such default. In addition, if a resident develops a psychiatric, contagious, or dangerous disease such that the resident’s continued presence at Hillside Village is dangerous or detrimental to the health or peace of the afflicted resident or of other residents, and if the resident has refused to transfer to an appropriate

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facility of Hillside Village’s choosing, Hillside Village can terminate the Residence and Care Agreement upon less than sixty (60) days’ notice by written determination made by at least two (2) doctors that a resident is a danger to him/herself or to others. The Entrance Fee will be refunded as described below under the heading “Entrance Fee Refunds.”

Entrance Fee Refunds

Refunds following Residency Terminations

If, after occupancy of a Living Unit, a resident dies or terminates residency as described above, or if Hillside Village terminates residency because of the resident’s default under the Residence and Care Agreement, then the resident or his or her estate or other designee will be entitled to a refund of the Entrance Fee based on the terms of the Entrance Fee Plan, as follows:

(1) Traditional Plan. Under the Traditional Plan, the refund will be equal to the First Person Entrance Fee paid, less 4% of the First Person Entrance Fee after the first month of residency, and then less an additional 2% per month for each additional month of residency in the community until the refund is reduced to zero, less any amounts due to Hillside Village for Health Center services, any amounts due for unpaid Monthly Service Fees, any late payment charges, advances made by Hillside Village, or any other amounts due to Hillside Village. No portion of the Second Person Entrance Fee is refundable. No refund will be made upon transfer of a resident to the Health Center on a temporary or permanent basis.

(2) Guaranteed 90% Refundable Plan. Under the Guaranteed 90% Refundable Plan, the refund will equal 90% of the First Person Entrance Fee paid, less any amounts due for unpaid Monthly Service Fees, any late payment charges, advances made by Hillside Village, or any other amounts due to Hillside Village. No portion of the Second Person Entrance Fee is refundable. No refund will be made upon transfer of a resident to the Health Center on a temporary or permanent basis.

(3) 90% Refundable Shared Cost Plan. Under the 90% Refundable Shared Cost Plan, the refund will equal 90% of the First Person Entrance Fee paid, less any amounts due to Hillside Village for Health Center services, any amounts due for unpaid Monthly Service Fees, any late payment charges, advances made by Hillside Village, or any other amounts due to Hillside Village. No portion of the Second Person Entrance Fee is refundable. No refund will be made upon transfer of a resident to the Health Center on a temporary or permanent basis.

Under each of the Entrance Fee Plans and except in the event of hardship as described below, the refund of the Entrance Fee (if any) is not required to be paid by the Corporation until 30 days after it receives payment of the full Entrance Fee by a new resident of the Living Unit being vacated.

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Timing of Refund if Residency Termination is Due to Hardship

New Hampshire’s CCRC law mandates certain timing of Entrance Fee refunds if the resident terminates the Residence and Care Agreement as a result of hardship. “Hardship” is defined in the Residence and Care Agreements as “a change in circumstances that has necessitated the termination of this Agreement, and which has made it so that Resident cannot obtain Acceptable Living Accommodations or health care services from the [Hillside Village], but cannot otherwise pay for necessary room, board, or health care services outside of [Hillside Village] without the refund. ‘Acceptable Living Accommodations’ are those which are within the financial means of the Resident, provide for needed health care services, including mental health services, and which respect and reflect the right of the Resident to self-determination, dignity, religious affiliations, freedom of association, and other personal interests as described in New Hampshire’s Patients’ and Senior Citizens’ Bill of Rights laws.” If the resident experiences a hardship and terminates the Residence and Care Agreement, then the Entrance Fee refund described above must be paid to the resident (i) no later than twelve (12) months from the date of termination if Hillside Village is at eighty percent (80%) or greater occupancy, or (ii) no later than twenty-four (24) months from the date of termination if Hillside Village is at less than eighty percent (80%) occupancy.

Nature of Resident Rights

All residents must occupy their Living Unit in accordance with the Residence and Care Agreement. The Residence and Care Agreement is not a lease or conveyance of property interest, and residents do not have any rights, title, or interest in any of the land, buildings, or improvements at Hillside Village, or any of the personal property of Hillside Village. Repairs, maintenance, and replacement of residents’ personal property will be the responsibility of the resident.

Health Care Benefits

Under the terms of each Entrance Fee Plan, residents are entitled to long-term care in the on-site Health Center as needed without an increase in the then current Monthly Service Fee, except for other expenses not covered under the Residence and Care Agreement. If residents require short-term rehabilitative or other skilled nursing care that is subject to reimbursement through Medicare, Hillside Village will arrange for these services to be provided by an inpatient rehabilitative nursing facility that accepts Medicare. If residents need continued care after the Medicare covered days of service have expired, residents will enter the on-site Health Center if an Assisted Living Unit or a Long-Term Nursing Care Room is available. If such accommodations are not immediately available in the on-site Health Center, Hillside Village will be responsible for paying for similar services at an off-site long-term care facility in the greater Keene area until accommodations become available on-site. Residents must maintain at their own cost Medicare Parts A and B, and one Medicare supplemental insurance plan which is acceptable to Hillside Village and that will be sufficient to cover the cost of most acute medical care and the co-payment portion of Medicare A skilled nursing days, other medical treatment,

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and medicine, drugs, prescribed therapy and the like. Residents will be responsible for the cost of the above items that are not covered by insurance.

Under the 90% Refundable Shared Cost Plan, the refundable portion of the Entrance Fee will be reduced by the difference between the then current Monthly Service Fee and the monthly fees charged by Hillside Village for the Health Center living unit to the extent that the difference is not paid by the proceeds of any long-term care insurance coverage procured by the resident. If the refundable portion of the Entrance Fee is reduced to zero, the resident will continue to pay only the then current Monthly Service Fee, and he or she will not have an obligation to pay for ongoing Health Center service fees.

DEVELOPMENT, MARKETING AND MANAGEMENT OF THE PROJECT

The Development Consultant

KRI was engaged by the Corporation to provide development, advisory and consulting services for Hillside Village and to provide other financial, design and promotion planning and implementation, administrative support and overall supervision of all phases of the Project. The principals of KRI are Edward J. Kelly and John Gray, each of whom has over 40 years of hands-on experience in marketing, management and development of continuing care retirement communities. For more than twenty years Mr. Kelly previously served as Founder and President and Mr. Gray served as Senior Vice President for Project Development of New Life Management and Development, Inc. where they directed the development, marketing and/or management of over 100 proprietary and nonprofit facilities throughout the United States, including many in New Hampshire. They were responsible for the development, marketing and, for more than 15 years, the management of RiverMead, an established and reputable continuing care retirement community located in Peterborough, New Hampshire and the closest community to Hillside Village.

A list of communities similar to Hillside Village for which Mr. Kelly and Mr. Gray provided project development services is set forth below:

• Cadbury at Lewes, Lewes, DE • Central New Jersey Jewish Home for the Aged, Somerset, NJ • Country Crest, Orville, CA • Crane’s Mill, West Caldwell, NJ • Fox Run at Orchard Park, Orchard Park, NY • Friends Home at Woodstown, Woodstown, NJ • Jefferson’s Ferry Lifecare Retirement Community, South Setauket, NY • Keswick Pines, Whiting, NJ • Norwood Park Home, Chicago, IL • Park Danforth, Portland, ME • RiverMead Retirement Community, Peterborough, NH • Simpson Meadows, Downingtown, PA

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• Smith Village, Chicago, IL • Three Crowns Park, Evanston, IL • Woodland Pond at New Paltz, New Paltz, NY

Development Consulting Services Agreement

The Corporation and KRI entered into a Project Development Consulting Services Agreement dated November 1, 2014 (the “Development Agreement”). Previous to that, KRI had provided strategic planning, market research, financial feasibility and site search consulting services to the Corporation. The Corporation chose KRI as the development consultant after receiving proposals from other organizations for this scope of work.

Duties. The Development Agreement requires KRI to: (a) provide all necessary planning for development of Hillside Village approved by the Corporation, including any revisions thereto; (b) assist with obtaining all necessary regulatory approvals required for development of Hillside Village; (c) select, coordinate with and oversee the architect, contractors, sub-contractors and other professionals and consultants needed to complete the Project; (d) develop a financial plan for the Project, assist in obtaining adequate financing and negotiate financing agreements subject to the approval of the Corporation; (e) assist with negotiating and awarding a construction contract for Hillside Village, and thereafter monitor the progress of construction; (f) develop and implement a general marketing plan for Hillside Village; (g) provide consulting services with the accounting firm or bookkeeping staff hired by the Corporation for the Project; (h) assist with the Corporation’s search for, identification of and engagement of an individual to manage Hillside Village once construction is complete; and (i) assist with compliance with filing and disclosure requirements.

Compensation. As compensation for its services, KRI will be paid a development fee equal to 2½% of the aggregate cost of the entire Project, exclusive of financing fees, construction interest and the development fee itself (the “Development Fee”). The Development Fee will be paid to KRI via a monthly retainer of $8,000 during the term of the Development Agreement. 70% of the Development Fee, minus the amount of monthly retainers paid to KRI up to that point, will be paid to KRI at the start of construction, and 30% of the Development Fee minus the amount of the monthly retainers paid to KRI during the construction of Hillside Village will be paid to KRI upon the completion of the Project.

Other Terms. The Development Agreement may be terminated by either party upon written notice of the un-remedied breach of the other party or in the event that the Project does not proceed or either party becomes incapable of performing its obligations under the Development Agreement. The Development Agreement specifies the timing and amount of compensation to be paid to KRI if the Development Agreement is terminated before and/or after commencement of construction.

The Development Agreement may not be assigned by either party without prior written consent of the other party. Any controversy or claim arising out of or relating to the Development Agreement will be resolved by mediation, or by binding arbitration if mediation is

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unsuccessful. The Development Agreement is governed by the laws of the State of New Hampshire.

The Marketing Consultant

Bluespire, Inc. (“Bluespire”) was engaged by the Corporation to provide sales consulting and advisory services specifically for Hillside Village. Bluespire, formerly known as Martino & Binzer, is a Minnesota corporation with offices located in Minneapolis, MN, Hartford, CT and Montvale, NJ. Bluespire was a pioneer of marketing to the mature population and began specializing in senior living in 1988. It has become a leading provider of marketing, sales and advisory services to retirement communities and senior in-home living service providers through its comprehensive knowledge of the senior audience, sales support from seasoned senior living strategists and sophisticated, customized digital technology. Bluespire works with clients large and small, from coast to coast and urban to suburban and currently has over 160 clients in 36 states.

A representative list of Bluespire’s senior living community and/or continuing care retirement community clients is as follows:

• Covenant Retirement Communities (15 communities across 10 states) • Fleet Landing, Jacksonville, FL • Rose Villa, Portland, OR • Searstone, Cary, NC • MonteCedro, Altadena, CA • Springpoint Senior Living, Wall Township, NJ • The Village at Orchard Ridge, Winchester, VA • Westminster Canterbury Richmond, Richmond, VA

Marketing Agreement

The Corporation and Bluespire entered into a Client Engagement Agreement dated as of August 1, 2015 (the “Marketing Agreement”) for sales consulting and advisory services for Hillside Village.

Duties. The Marketing Agreement specifically provides that Bluespire will work collaboratively with the Corporation’s management and marketing teams and make detailed and actionable recommendations, oversee the development and implementation of the tactical marketing and sales plans and assist with the development of the Corporation’s marketing strategy. Bluespire may undertake and complete additional strategic marketing services, market research, assistance with sales management information technology, media placement, and other projects, at which time said additional services will be documented with an amendment to the Marketing Agreement.

Compensation. Until commencement of the Priority Deposit Program, the Corporation paid Bluespire $3,500 per month for sales consulting and advisory services. Upon commencement of the Priority Deposit Program and through the remainder of the term of the

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Marketing Agreement, the Corporation will pay Bluespire $6,500 per month for sales consulting and advisory services. Additionally, for the term of the Marketing Agreement, the Corporation will pay Bluespire $1,200 per month for marketing account management service which fee covers all time related to day-to-day management of the various marketing projects, status calls, project management and conference call time. The Marketing Agreement includes provisions for reimbursement of expenses and media placement costs.

The performance bonus structure was further clarified by the Performance Based Incentive Agreement that is included as an addendum to the Marketing Agreement (the “Bonus Addendum”). This additional compensation structure includes milestone bonus payment for presale program goals, bonuses for achieving presale velocity objectives, and bonuses for achieving occupancy velocity objectives. The specific terms of the bonuses are set forth in the Bonus Addendum.

Other Terms. Either party may terminate the Marketing Agreement upon 30 days prior written notice in the event the other party breaches a material term and fails to cure such breach within the thirty day notice period. The Corporation may terminate the Marketing Agreement for any reason with at least 60 days prior written notice of its intention to terminate, or immediately upon payment of two (2) months of fees due for Bluespire’s sales consulting and advisory services. Any dispute relating to or arising out of the Marketing Agreement will be resolved by non-binding mediation followed by litigation if necessary.

The Marketing Agreement may not be assigned without prior written consent of the parties.

The Management Company

Management services for Hillside Village are to be provided by Life Care Services LLC (“LCS”). Established in 1971 and based in Des Moines, Iowa, LCS is a wholly-owned subsidiary of Life Care Companies LLC, and is a leading provider of high-quality senior lifestyle products and services.

The LCS family of companies focuses on the development, operations management, marketing and sales management, and strategic planning for not-for-profit and for-profit life plan communities, formerly referred to as continuing care retirement communities, and rental independent living, assisted living, and memory care communities nationwide. The company also provides a full-service real estate private equity enterprise, insurance, national purchasing consulting services and in-home care.

LCS currently manages more than 125 communities, serving more than 31,000 seniors in 30 states, from its home office in Des Moines, Iowa and from its business unit offices in Old Saybrook, Connecticut; Greenwood, Indiana; Memphis, Tennessee; Charlotte, North Carolina; San Diego, California; Saint Louis, Missouri; and Hilton Head, South Carolina. The following is a representative list of LCS’ senior living community and/or continuing care retirement community clients:

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State City Name Independent Living Units

Nursing Beds

Assisted Living

MemoryCare

Arizona Peoria Sierra Winds 234 70 0 0 California San Diego Casa de las Campanas 375 87 46 0 Connecticut Essex Essex Meadows 188 45 0 0 Connecticut Southbury Pomperaug Woods 131 37 8 0 Florida Boca Raton Sinai Residences of Boca Raton 234 60 48 0 Georgia Savannah The Marshes of Skidaway Island 182 21 21 0 Illinois Godfrey The United Methodist Village 108 0 44 0

Indiana Greenwood (Indianapolis) Greenwood Village South 257 135 49 0

Iowa Ames Green Hills Retirement Community 131 42 16 14 Louisiana Covington Christwood 160 30 34 0

Maryland Towson (Baltimore) Blakehurst 275 44 24 0

Maryland Columbia Vantage House 205 44 26 0 Minnesota Plymouth Trillium Woods 209 44 0 0 Missouri Higginsville John Knox Village East 136 56 34 0 New Jersey Lakewood Harrogate 254 68 0 0 North Carolina Chapel Hill The Cedars of Chapel Hill 305 48 0 0 North Carolina Greensboro WhiteStone 161 88 12 0 Oregon Dallas Dallas Retirement Village 157 121 65 0 South Carolina Greenville Rolling Green Village 127 70 28 0 Texas Austin Westminster 328 85 22 0

Management Agreement

The Corporation and LCS entered into a Pre-Opening and Management Services Agreement dated as of December 7, 2015 (the “Management Agreement”). The duties and compensation agreed upon are as follows:

Duties. Pursuant to the terms of the Management Agreement, LCS will serve as the manager of the operations and facilities of Hillside Village. In fulfillment of its responsibility, LCS will: (a) recommend and regularly evaluate the policies and goals of the Corporation; (b) implement the policies, budgets, directives and goals for Hillside Village which were established by the Corporation; (c) manage the day-to-day operations of Hillside Village in accordance with the Corporation’s policies, directives and goals and LCS’s professional judgment; (d) and provide the Corporation with relevant information as to past operations, and make recommendations as to the future operation of Hillside Village.

Compensation. After the first resident moves into Hillside Village (“Commencement of Operations”), the Corporation is expected to pay LCS a Monthly Management Fee (the “Monthly Management Fee”) and a Performance Incentive Fee (the “Performance Incentive Fee” and collectively with the Monthly Management Fee, the “Management Fee”) as compensation for services rendered pursuant to the Management Agreement.

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The initial Monthly Management Fee was $30,000 per month (the “Initial Base Fee”). The Initial Base Fee will be increased each January 1, beginning January 1, 2016 (the year following the Effective Date of the Management Agreement), and on each January 1 thereafter based on the increase in the consumer price index. The Management Agreement is scheduled to terminate 60 months after Commencement of Operations.

The Performance Incentive Fee begins the six-month period following the Commencement of Operations and continues for each six-month period thereafter. It will consist of either an Expense Control Incentive or a Covenant Compliance Incentive, whichever is greater, and the Performance Incentive Fee will not exceed 50% of the Monthly Management Fee earned by LCS for such six-month period. An Expense Control Incentive may be earned by LCS if the operating expenses for such six-month period are less than the Corporation’s approved budget expenses and so long as the budgeted occupancy targets are met for both the independent apartments and the health center. The Expense Control Incentive will equal 75% of the amount, if any, by which operating expenses are less than budgeted operating expenses. LCS may earn a Covenant Compliance Incentive if Hillside Village is in full compliance with all covenants contained in the Corporation’s financing documents for such six-month period. The Covenant Compliance Incentive will be calculated at 75% of the amount, if any, by which operating revenues for such period exceed budgeted revenues. If both an Expense Control Incentive and a Covenant Compliance Incentive are earned during the same six-month period, then the Performance Incentive Fee payable to LCS will equal the higher Incentive amount but not both, and will be subject to the cap of 50% of the Monthly Management Fee described above.

In addition, LCS will be paid an Application Service Provider Fee for the use of LCS’ marketing, sales, accounting, billing and dashboard technology. The Corporation will pay to LCS a one-time installation/activation fee of $35,000 and an annual fee of $15,500. The Corporation will also pay to LCS an installation fee equal to $175 per paid employee and an annual fee in the amount of $50 per paid employee for use of LCS’ payroll processing system. The installation/activation fee will be payable on the first day of the month following the commencement of the Monthly Management Fee and annually on the first day of the anniversary month thereafter. Upon each anniversary, the annual Application Service Provider Fee will be adjusted by the same percentage as that used for the Monthly Management Fee.

LCS was paid $30,000 as a Development Stage Consulting Fee for review of the operating projections and community design and for participation in the financing process for Hillside Village. For the six months immediately prior to the opening of Hillside Village, LCS will be paid a Pre-Opening Service Fee in the amount of $15,000 per month for the development and implementation of the operational plan prior to opening. LCS will also be paid a Management Consulting Fee of $10,000 per month, commencing upon the Corporation obtaining financing for the construction of Hillside Village and will end when the Pre-Opening Service Fee begins six months prior to the scheduled Commencement of Operations.

In addition to the fees described above, LCS will be reimbursed for all reasonable transportation and living expenses for LCS’ employees, officers and agents, its affiliates or

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outside consultants when traveling in connection with Hillside Village, any long-distance telephone charges, data communication charges, express delivery, copying, legal and other costs incurred by LCS, plus all expenses approved by the Corporation and which are incurred by LCS in relation to Hillside Village and in connection with the performance of its services under the Management Agreement.

Other Terms. LCS will maintain insurance policies to insure LCS and its employees for medical professional liability, management errors and omissions liability, workers’ compensation, crime, employment practices liability relating to LCS’ employees, automobile liability, commercial general liability (including personal injury liability and contractual liability insurance) and excess liability for claims emanating from negligence of LCS or its employees, with coverage amounts and limitations that are customary and commercially reasonable.

Both LCS and the Corporation will be permitted to terminate the Management Agreement for cause if certain conditions set forth in the Management Agreement are met, or any time without cause by giving written notice to be effective at the end of the first month following the expiration of six months after delivery of the notice. The Management Agreement provides for early termination compensation to LCS if the Corporation terminates the Management Agreement without cause within 36 months after the effective date.

Any disputes between LCS and the Corporation that relate to or arise out of the Management Agreement will be resolved in accordance with the Dispute Resolution Procedures and Limitations of Monetary Damages as set forth in Exhibit C to the Management Agreement. The parties agree to engage in good faith discussions to resolve any dispute but if resolution by negotiation fails, then either LCS or the Corporation has the right to require that the dispute be decided by arbitration.

The Management Agreement may not be assigned by either party except (a) in the event of a merger or acquisition of a party with, into or by another entity where the resulting or acquiring entity has a net worth at least equal to that of the assigning party and assumes all of the assigning party’s obligations; and (b) where the assignment is to an affiliate of the assigning party.

PRE-DEVELOPMENT RESERVATIONS

The Corporation began entering into Residence and Care Agreements and collecting Entrance Fee Deposits for Living Units in the Woodside Apartments and Community Center in December 2015. As of May 9, 2017, the Corporation has collected 109 Entrance Fee Deposits from prospective residents who have executed a Residence and Care Agreement, representing almost 78% of the total available Living Units at Hillside Village. The following table provides detail of Entrance Fee Deposits received through May 9, 2017:

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New

Deposits

Number of

Cancellations

Net Reservations

for Month

Cumulative Units

Reserved

Cumulative Percentage of

Total Units 2015: December 4 0 4 4 2.9% 2016: January 10 0 10 14 10.0% February 12 0 12 26 18.6% March 7 0 7 33 23.6% April 8 0 8 41 29.3% May 5 0 5 46 32.9% June 3 1 2 48 34.3% July 8 0 8 56 40.0% August 5 0 5 61 43.6% September 3 0 3 64 45.7% October 7 0 7 71 50.7% November 5 1 4 75 53.6% December 4 0 4 79 56.4% 2017: January 12 0 12 91 65.0% February 7 0 7 98 70.0% March 4 0 4 102 72.9% April 5 0 5 107 76.4% Through May 9 3 1 2 109 77.9% TOTAL 112 3 109 109 77.9%

DESIGN AND CONSTRUCTION OF HILLSIDE VILLAGE

The Architect and the Architect Services Agreement

Tsomides Associates Architects Planners (“TAAP”) of Newton Upper Falls, Massachusetts has been selected as the architect (the “Architect”) for Hillside Village. TAAP is a nationally recognized leader in the planning and design of senior living facilities. With more than 30 years of experience in creating innovative continuing care retirement communities, assisted living facilities, nursing care facilities and senior housing, the firm has a keen understanding of the senior adult’s physical, environmental and psychological needs. In addition, it conducts master development site and facilities planning studies. An extensive portfolio of more than 60 senior living projects showcases the firm’s commitment to enhancing quality of life through sensitive and innovative functional planning and design.

TAAC senior living facilities received national design awards and were featured in the semi-annual LeadingAge//AIA’s “Design For Aging Review” and Urban Land Institute publications.

[The Remainder of this Page Intentionally Is Left Blank]

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A representative list of TAAC’s similar projects is set forth below:

• Havenwood Heritage Heights CCRC – Concord, NH

115 Cottages, 30 ALF, 56 SNF 1991

• Newbury Court Retirement Community – Concord, MA

75 ILU, 41 Bed SNF, 22 ALF 1995-1998

• RiverMead at Peterborough CCRC – Peterborough, NH

88 ILU, 26 Cottages, 40 ALF 22 SNF, 17-Bed Memory Care

1996-2002

• Hunt Community – Nashua, NH

Community Center, 64 ILU, 12-ALF

1996

• Volunteers of America – Portland, Saco, Augusta, Thomaston, Belfast and Peaks Island, ME

Total of 215 ILU in 6 facilities 1996-2005

• The Cedars CCRC Community – Portland, ME

102 Bed LTCF, 61 ILU, 30 ALF Rehabilitation Center

2000-2009

• Carleton-Willard Village CCRC – Bedford, MA

100-Bed SNF, Wellness Center/Pool 30 Bed Memory Care Unit

2002

• Cadbury CCRC – Lewes, DE 84 ILU, 48 Cottages, 28 ALF 40-Bed SNF, 15-Bed Memory Care Unit

2007

• Mount St. Vincent Skilled Nursing Facility & ALF – Wellesley Hills, MA

84 Beds SNF and 76 ALF Studio Units 2014

• Zoe Assisted Living Facility – Northampton, MA

90 ALF (20-Bed Memory Care Unit) 2015

• Mount St. Rita Health Centre & Rehabilitation Facility – Cumberland, RI

98-Bed SNF 2017

Duties. The Corporation and TAAP entered into a standard Architect Agreement on January 22, 2015 (the “Architect Agreement”) which requires TAAP to serve as the architect of record for Hillside Village, and to lead the design of Hillside Village from the schematic design phase through to the end of the construction administration phase. The Architect Agreement

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includes architectural services throughout the phases of: schematic design, design development, construction documents, bidding and/or negotiation, and construction administration.

Compensation. Compensation to TAAP for these services will be 4.35% of the total cost to the Corporation to construct all elements of the Project as designed and specified by TAAP and will include contractors’ general conditions costs, overhead and profit but will not include compensation to TAAP, cost of the land, rights-of-way, financing, contingencies for changes in work or other costs that are the responsibility of the Corporation (the “Cost of Work”) (the “Base Fee”).

A schedule of additional services outside of TAAP’s services that are include in the Base Fee are included in an hourly fee schedule within the Architect Agreement.

Other Terms. TAAP must maintain the following insurance for the duration of the Architect Agreement:

Type of Coverage Amount General Liability $1,000,000 per occurrence

$2,000,000 general aggregate Automobile Liability $250,000 bodily injury

$500,000 each accident Workers’ Compensation $1,000,000 per claim

$1,000,000 general aggregate The Architect Agreement includes provisions concerning the use of TAAP’s Drawings and Specifications in the event the Architect Agreement is terminated for cause.

The Corporation and TAAP will endeavor to resolve any claim, dispute or other matter in question arising out of or related to the Architect Agreement by mediation. If they are unable to resolve a dispute through mediation then the method for binding dispute resolution will be arbitration.

Both TAAP and the Corporation will be permitted to terminate the Architect Agreement for cause or for convenience, after 7 days’ notice. In the event termination is not the fault of TAAP, TAAP shall be compensated for services performed prior to termination together with reimbursable expenses then due.

The General Contractor

The general contractor for the Project is The MacMillin Company, LLC (“MacMillin”), an affiliate of DEWMacMillin (“DEW”). DEW is a large, Northern New England privately held construction management firm headquartered in Keene, New Hampshire and serving clients throughout northern New England and New York. MacMillin successfully completed projects with both private and public sectors, including housing, senior housing, acute and non-acute healthcare, kindergarten through grade twelve public and private schools, higher education facilities, mountain resorts and hospitality projects. 80% of their projects are delivered through the construction management process, while the remaining 20% consists of design/build and

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general contracting services. 75% of their work is repeat business. MacMillin’s bonding capacity through DEW is $75 million for a single project and $150 million in the aggregate.

A representative list of the construction management projects specifically for senior housing completed by DEW includes the following:

• RiverMead Retirement Community, Peterborough, NH, a 300,000 square feet (“SF”) community comprised of 88 Independent Living Units, 24 Cottages, Community Building, 30 Unit Assisted Living Facility, and a 15-bed Skilled Nursing Center.

• Eastview at Middlebury, Middlebury, VT, Senior Housing, an 85,000 SF facility comprised of 99 units Assisted Living or Memory Care units.

• Scott Farrar at Peterborough, Peterborough, NH, a 72,000 SF facility comprised of 25 Independent Living Units, 20 Assisted Living Units, and 18 Memory Support Units.

The Construction Contract

Duties. The Corporation and MacMillin entered into a comprehensive Construction Agreement on April 14, 2017 (the “Construction Agreement”) under which MacMillin will serve as the construction manager responsible for the construction of the Project. MacMillin is obligated to provide administrative, management and consultative service for, and ensure the completion of, construction of the Project from the preconstruction phase through the completion of construction and the issuance of occupancy certificates.

Guaranteed Maximum Price; Construction Contingency; Shared Savings. Under the Construction Agreement, MacMillin agrees to provide its construction management services and complete construction of the Project for a price not to exceed $56,488,241 (the “GMP”), which GMP includes a construction contingency of 3% of the cost of the work (the “Construction Contingency”). The GMP does not include changes in scope, systems, kinds and quality of materials, finishes or equipment, all of which, if needed, will be incorporated by change order. The GMP will remain valid provided that construction of the Project commences by June 30, 2017. If there is unspent Construction Contingency at the end of the Project, the remainder will be split equally between MacMillin and the Corporation. Upon completion of the Project, if the Cost of Work (as defined in the Construction Agreement) is less than the GMP, then MacMillin will be entitled to fifty percent (50%) of such savings, less any offsets or other deductions permitted by the Construction Agreement.

Phasing; Early Completion Bonus; Liquidated Damages. The Project will be constructed in the phases described below. The Construction Agreement establishes a per diem for each phase of construction (the “Per Diem Amount”). If a Certificate of Occupancy is issued for any phase before the end of the applicable timeframe in the chart below (measured from the Notice to Proceed to the issuance of a Certificate of Occupancy), then MacMillin will be entitled to an early completion bonus equal to fifty percent (50%) of the Per Diem Amount multiplied by each day of early completion (each an “Early Completion Bonus”). Any Early Completion Bonuses earned by MacMillin will be accumulated until completion of the Project and identified as part of the final payment process, but it will not be payable by the Corporation until the earlier to occur of: (i) the Project has achieved 90% occupancy; or (ii) the Corporation has met all

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operating performance targets identified in the Loan Agreement and Mortgage. The following chart depicts the construction phases, and the duration and Per Diem Amount for each:

Phase Duration Per Diem Amount

Woodside Apartments 16 Months $2,000 Community Center 17 Months $2,300 Independent Units NC 18 Months $1,500 Independent Units SC 18 Months $1,500 Health Center 18 Months $3,000 Independent Units South and Spine

19 Months $2,700

Independent Units North and Spine

20 Months $2,500

If the issuance of the Certificate of Occupancy is delayed beyond the above timeframes, then MacMillin will pay the Corporation liquidated damages in accordance with the following formula set forth in the Construction Agreement: First 7 Days 20% of Per Diem Amount 8-14 Days 40% of Per Diem Amount 15-21 Days 60% of Per Diem Amount 22-28 Days 80% of Per Diem Amount More than 28 Days 100% of Per Diem Amount

MacMillin may use any unused portion of the Construction Contingency, or any Early Completion Bonus, to satisfy in whole or in party its liquidated damages obligations to the Corporation. Other Terms. The Construction Agreement requires MacMillin to provide a payment bond and a performance bond. The amount of each bond shall be equal to 100% of the contract sum. MacMillin shall maintain the following insurance for the duration of the Construction Agreement:

General Liability $1,000,000 per occurrence $2,000,000 general aggregate $1,000,000 personal and advertising injury $2,000,000 products-completed operations aggregate

Automobile Liability $100,000 each accident Property $1,000,000 deductible per occurrence

$1,000,000 aggregate deductible Umbrella Excess Liability $5,000,000 Workers’ Compensation As mandated by state and federal laws

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MacMillin is permitted to terminate the Construction Agreement, after 7 days’ notice, if work on the Project is stopped for a period of 60 consecutive days through no act or fault of MacMillin for any of the following reasons: a court order; an act of government; the architect not issuing a Certificate for Payment (or the Corporation has not made payment on a Certificate for Payment within the specified time period); the Corporation’s failure to furnish MacMillin with evidence that the Corporation has made financial arrangements to fulfill its obligations; or the Corporation has caused repeated suspension, delays or interruptions of the work that constitute the lesser of more than 100% of the total number of days scheduled for completion or 120 days in any 365-day period.

The Corporation may terminate the Construction Agreement for cause or for convenience, after 7 days’ notice. Upon termination for cause, the Corporation must pay to MacMillin any unpaid balance of the contract sum that exceeds the cost of finishing the work under the Construction Agreement and other damages available to the Corporation. Conversely, if the costs and damages exceed the unpaid balance under the Construction Agreement, MacMillin must pay the difference to the Corporation. Upon termination for convenience, MacMillin will be entitled to receive payment for work under the Construction Agreement that has been executed to-date and costs incurred along with reasonable overhead and profit on the work not executed.

The Corporation and MacMillin will endeavor to resolve any claim, dispute or other matter in question arising out of or related to the Construction Agreement by mediation. If they are unable to resolve a dispute through mediation then the method for binding dispute resolution will be arbitration.

Construction Monitor

The Corporation has engaged Alcala Construction Management, Inc. to serve as the construction monitor for the Project (the “Construction Monitor”) and to deliver independent reports to the Bond Trustee. The President and owner of the Construction Monitor, Rick Alcala, is a certified general contractor. Mr. Alcala has 35 years of experience in the construction industry, including general contracting, construction management and construction consulting. He has focused his career in the senior living market, including serving as construction monitor of new projects and renovations for CCRCs, stand-alone assisted living communities, memory support communities, healthcare, rental communities and wellness centers.

Prior to construction of the Project, the Construction Monitor is responsible for a review of the construction contracts and specifications, Project budgets, technical reports, approvals and permits, and insurance coverage. During construction of the Project, the Construction Monitor will make monthly site visits and reports to the Corporation and the Bond Trustee which address: tracking of actual progress of construction versus the Project schedule and potential items of delay; reviewing and certifying all requisitions for payment and supporting documentation, as well as appropriate retainage; monitoring of the construction budget, including change orders, disputed items, the status of allowances, the status of construction contingencies and the sufficiency of funds to complete the Project; compliance with the construction contracts,

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construction quality issues and open items; and reporting of construction duration, any delays, dates of substantial completion, liquidated damages or early completion bonuses, and the release of retainage. Site visits will be conducted at least monthly, and more frequently if necessary.

Owner’s Representative

The Corporation has retained Neil Ackley to serve as the owner’s representative (the “Owner’s Representative”) during the construction of the Project. Mr. Ackley has over 45 years of varied construction industry experience, including service as an estimator, project manager, and development director. His project experience includes Commercial and Residential projects, Retirement Communities and Nursing Homes. Mr. Ackley holds a Bachelor of Science degree in Civil Engineering and a professional engineer license.

The contract between the Corporation and the Owner’s Representative requires the

Owner’s Representative to provide the following services:

• Perform on-site review of the progress and quality of construction of the Project with the Construction Monitor to determine generally if the work being performed is in compliance with the construction plans, specifications and schedule;

• Participate in architect on-site inspections (including final inspection) and review any reports of non-compliant work (including punch-list items) and the measures taken to correct any noncompliance;

• Report to the Corporation on the overall quality of workmanship and materials in the construction of the Project, and alert the Corporation to any non-conformity in the work or conditions that my cause delay in the completion of the Project;

• Coordinate meetings among the Project architect, general contractor and the Corporation to address any construction issues or delays, and review, evaluate and report on any matters in dispute;

• Make recommendations on a change of design or materials from the specifications that would enhance the Project but remain within the construction budget;

• Review Project Site safety measures and procedures; • Attend all weekly and monthly construction meetings on behalf of the

Corporation; • Review, and assist in responding to, any requests for information; • Review resident option and upgrade selection documentation to ensure accuracy,

and coordinate with the Corporation’s marketing consultant; and • Maintain for the Corporation all drawings, specifications, proposal request,

change orders, requests for information, supplemental instructions, submittals, manuals, product data, warranties and similar information related to the construction and equipping of the Project.

Regulatory Permits and Approvals

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

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CCRC Licensure. CCRCs in New Hampshire are regulated by New Hampshire Revised Statutes Annotated Chapter 420-D, Continuing Care Communities. On December 7, 2015, the Corporation received a Certificate of Authority (license) from the New Hampshire Insurance Department to establish and operate a continuing care community in accordance with NH RSA 420-D. This Certificate of Authority enables the Corporation to enter into binding Residence and Care Agreements and to accept Entrance Fee Deposits.

Certificate of Need. On June 17, 2016, the Corporation received a Certificate of Need (“CON”) from the New Hampshire Department of Health and Human Services for Hillside Village pursuant to New Hampshire RSA 151-C:10 and 12. Although the statute was repealed on June 30, 2016 and CONs no longer are required by the State of New Hampshire, the statue was still in effect at the time of the Corporation’s application.

Zoning and Site Plan. Hillside Village obtained a special exception for the use of the Project Site as a CCRC in a rural district from the Keene Zoning Board of Adjustment by Notice of Decision dated September 28, 2015. On November 2, 2016 and January 3, 2017, the Keene Zoning Board of Adjustment approved numerous variances for building heights, building setbacks, pavement setbacks, steep slope alteration, and underground walkway. On November 29, 2016, the Keene Planning Board conditionally approved the Project site plan. The Corporation satisfied these conditions and the Keene Planning Board approved and signed the Project site plan on April 7, 2017. There are no other required land use permits required from the Town of Keene prior to the commencement of construction, other than the procurement of a building permit described below.

Wetlands. A wetlands permit was required by the New Hampshire Department of Environmental Services (“NHDES”) because the construction of Hillside Village would have an impact of greater than 10,000 square feet on designated wetlands areas. NHDES issued the Wetlands Permit on April 21, 2017 with the following stipulations: (1) that Hillside Village grant a conservation easement over 23 acres of the Project Site (of which most is wetlands and environmentally sensitive land) by October 31, 2017 and; (2) that the Corporation make a financial contribution of $77,378.63 to the New Hampshire Aquatic Resources Mitigation Fund within 120 days of the April 21, 2017 issuance date of the Wetland Permit.

Building Permit. The City of Keene requires that architectural plans be reviewed prior to issuing building permits to ensure compliance with all building codes. The City’s building department does not perform formal reviews of large projects but makes available a list of recommended plan review organizations that perform this function and then report back to the City. The Corporation hired Code Consulting Services out of Orlando, Florida (“CCS”) due to their extensive experience reviewing plans for the City of Keene. On April 21, 2017, the City’s Health and Code Director confirmed in writing that, based CCS’ review, a building permit will be issued to the Corporation allowing the commencement of site work for the Project and the construction of foundations upon payment of the applicable permit fee. A separate building permit will be required under this process prior to the commencement of the construction of the buildings and other improvements comprising the Project.

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Alteration of Terrain Permit. The Corporation received Alternation of Terrain Permit No. AoT-1227 on March 27, 2017 from the New Hampshire Department of Environmental Services. This Permit is subject to standard conditions pertaining to soil disturbances and stormwater practices, and expires on March 27, 2022.

Sewer Connection Permit. The Corporation received a Sewer Connection Permit from the New Hampshire Department of Environmental Services allowing the Project to be connected to Keene’s municipal wastewater facilities. The Permit is valid as long as the Project is connected within three years of the issue date of April 3, 2017.

Floodplain Development Permit. The Corporation received Permit No. FL2017-0067 from the City of Keene Code Enforcement Department permitting it or its agents to conduct construction activities in or near the floodplain zone. This Permit will remain valid as long as construction of the Project is commenced within six months of the date of issuance of the Permit.

City Approval of Reconstruction of Wyman Road. The Corporation will make significant improvements to Wyman Road which intersects the site of Hillside Village and separates the Health Center from the Community Center and all of the independent Living Units. The improvements to Wyman Road include road widening, resurfacing and the installation of an underground walkway and utility connector between the Health Center and the Community Center. At its April 6, 2017 meeting, the Keene City Council unanimously approved all actions necessary for the Wyman Road improvements.

National Register of Historic Places. The U.S. Army Corp of Engineers (USACE) determined that the Ellis/Russell/Dodds farm on the Project Site is eligible for listing in the National Register of Historic Places. Subsequently USACE, the New Hampshire State Historical Preservation Officer, and the Keene Heritage Commission agreed through a Memorandum of Agreement (MOA) dated March 21, 2017, that the construction of Hillside Village could proceed provided that, within five (5) years of execution of the MOA, a public display including text, maps, and recent and historic photographs of the Ellis/Russell/Dodds farm buildings on the Project Site be erected at Hillside Village. The content of the display will be overseen by an Architectural Historian.

Property Taxes

New Hampshire RSA 72:23(I)(V) exempts from property tax the buildings, land and personal property of charitable organizations that are owned, used and occupied directly by them for the purposes for which they are established. The definition of “charitable organization” under RSA 72:23-l expressly states that the fact that an organization’s activities are not conducted for profit or that the organization has been recognized as exempt from federal income taxes alone are not sufficient to render the organization “charitable” for purposes of exemption from New Hampshire property taxes. Although the Corporation will assert that it is a charitable organization and that the Project qualifies for a full exemption from property taxes, it is anticipated that the Corporation may negotiate a payment in lieu of taxes agreement (“PILOT Agreement”) with the Town of Keene, New Hampshire prior to occupancy of the Project. Such PILOT Agreements are expressly authorized under New Hampshire RSA 72:23-n. For purposes

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of financial planning and feasibility, the Corporation has assumed that the PILOT Agreement payment for the first year of Project occupancy will be $400,000.

Completion of the Project

In the Loan Agreement, the Corporation has covenanted and agreed to cause Hillside Village to be substantially complete and a final certificate of occupancy therefor to be issued no later than 24 months after the issuance of the Series 2017 Bonds.

Environmental Site Assessment

A Phase I Environmental Site Assessment dated March 24, 2017 was prepared for the Project Site by Brackett Geosciences (the “Phase I Report”). The Phase I Report is based on a review of federal, state and local records and a physical inspection of the Project Site. The review of records revealed no current, historical or de minimus environmental conditions on the Site. During the Site visit, Brackett Geosciences observed an abandoned 55 gallon drum, a truck frame and empty oil cans and recommended the collection of soil and groundwater samples.

A Phase II Environmental Site Assessment dated March 24, 2017 was prepared for the Project Site by Brackett Geosciences (the “Phase II Report”). The Phase II Report is based on six soil borings installed on the Project Site around the 55 gallon drum, truck frame and empty oil cans and three groundwater samples. The soil and groundwater samples then were tested for petroleum contamination and total volatile organic compounds (“VOCs”). None of the samples contained VOCs or Total Petroleum Hydrocarbons, and one soil sample below the drum contained poly aromatic hydrocarbons (PAHs). The concentration of PAH, however, was well below the New Hampshire Soil Remediation Standards for these compounds. Therefore, the Phase II Report concludes that there is no evidence of actionable petroleum release at the Project Site.

INSURANCE

The Loan Agreement requires the Corporation to obtain and maintain insurance in such amounts as are adequate to protect it, its property (including the Project) and its operations. The Corporation presently maintains the following insurance:

Coverage Type Coverage Limits Property and Casualty (Building and Contents) $5,553,813 General Liability $1,000,000 per

occurrence/$3,000,000 aggregate Director and Office Liability $2,000,000 Automobile Liability $1,000,000 Workers Compensation Statutory Employer Liability $500,000/$500,000/$500,000

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Commencing on the last day of the Corporation’s fiscal year ending in 2018, and every two years thereafter, the Corporation will cause an Insurance Consultant to review its coverages and it will follow any recommendations of the Insurance Consultant unless it determines in good faith that such recommendations are unreasonable and delivers an officer’s certificate to the Authority and the Bond Trustees setting forth its reasons. The Corporation currently does not self-insure.



APPENDIX B

INSTITUTION’S BALANCE SHEET AS OF DECEMBER 31, 2016


CURRENT ASSETSCash and Cash Equivalents 187$

Accounts Receivable, Net 4

Other Current Assets 14

Total Current Assets 205

ASSETS LIMITED AS TO USEEntrance Fee Fund 2,587

Donor Restricted Investments 1,142

Total Assets Limited as to Use 3,729

PROPERTY AND EQUIPMENTLand 12

Existing Building 1,662

Furniture and Fixtures 213

Leasehold Improvements 35

Construction in Progress - Project 1,248

Total 3,170

Less: Accumulated Depreciation 1,015

Net Property and Equipment 2,155

OTHER ASSETSInvestments 234

Escrows 20

Security Deposits 6

Total Other Assets 260

Total Assets 6,349$

CURRENT LIABILITIESAccounts Payable 146$

Accrued Payroll and Related Taxes 23

Total Current Liabilities 169

LONG-TERM LIABILITIESResident Refundable Entrance Deposits 2,587

Total Liabilities 2,756

NET ASSETS (DEFICIT)Unrestricted Net Assets (Deficit) 2,451

Temporarily Restricted Net Assets 657

Permanently Restricted Net Assets 485

Total Net Assets (Deficit) 3,593

Total Liabilities and Net Assets (Deficit) 6,349$

LIABILITIES AND NET ASSETS (DEFICIT)

The Prospect-Woodward HomeInternal Balance Sheet

As of December 31, 2016(In Thousands)

ASSETS

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APPENDIX C

FINANCIAL FEASIBILITY STUDY


THE PROSPECT-WOODWARD HOME

HILLSIDE VILLAGE

FINANCIAL FEASIBILITY STUDY

FOR THE YEARS ENDINGDECEMBER 31, 2017 THROUGH 2022

TABLE OF CONTENTS

Independent Accountants’ Report .............................................................................................................C-1

Forecasted Statements of Operations and Changes in Net Assets (Deficit)For the Years Ending December 31, 2017 through 2022 .............................................................C-5

Forecasted Statements of Cash FlowsFor the Years Ending December 31, 2017 through 2022 .............................................................C-6

Forecasted Statements of Financial PositionAt December 31, 2017 through 2022 ...........................................................................................C-7

Forecasted Schedule of Financial RatiosFor the Years Ending December 31, 2020 through 2022 .............................................................C-8

Summary of Significant Forecast Assumptions and Accounting Policies:

Background and Information .......................................................................................................C-9

Plan of Finance ..........................................................................................................................C-18

Market Assessment ....................................................................................................................C-21

Summary of Significant Accounting Policies ............................................................................C-59

Management’s Basis for Forecast of Revenues and Entrance Fees ..........................................C-61

Management’s Basis for Forecast of Expenses .........................................................................C-67

Management’s Basis for Forecast of Other Items ......................................................................C-71

Sensitivity Analyses ...................................................................................................................C-75

CliftonLarsonAllen LLPCLAconnect.com

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INDEPENDENT ACCOUNTANTS’ REPORT

Board of TrusteesThe Prospect-Woodward HomeKeene, New Hampshire

We have prepared a financial feasibility study (the “Study”) of the plans of The Prospect-Woodward Home (the “Corporation”) a New Hampshire nonprofit voluntary corporation which operates a 24-bed supported residential care facility named The Prospect-Woodward Home (the “Existing Community”) to develop a new community to be known as Hillside Village. The Corporation is the result of a business combination treated as an acquisitionwhich occurred in July 2016 between two New Hampshire nonprofit organizations, Prospect Hill Home (“Prospect Hill Home”) and The Woodward Home (“The Woodward Home”). The Prospect Hill Home serves as the surviving entity under the legal name The Prospect-Woodward Home. After the acquisition, the Corporation consolidated all residents into the Existing Community. The Corporation’s management (“Management”) is responsible for the forecast.

The Corporation’s Existing Community consists of 24 assisted living units. The Corporation plans to construct Hillside Village which will consist of 116 independent living apartments, 24 independent living villas, 42 assisted living units, 18 memory care assisted living units, 20 nursing beds as well as common and administrative areas on a 48 acre site in Keene, New Hampshire (the “Project” or the “Community”). Once the Project is completed,residents of the Existing Community are assumed to move into the Project and the Existing Community will be closed.

Kelly Real Estate Investment Properties, LLC (the “Development Consultant” or “KRI”) will serve as the development consultant for the Project pursuant to a development consulting services agreement dated November 1, 2014 (the “Development Agreement”) between the Corporation and the Development Consultant.

Bluespire, Inc. (the “Marketing Consultant”) will serve as the marketing consultant for the Project pursuant to a marketing agreement (the “Marketing Agreement”) dated August 1, 2015 between the Corporation and the Marketing Consultant.

The Corporation has engaged Life Care Services LLC, dba Life Care ServicesTM (the “Operator” or “LCS”), an Iowa limited liability company, for management of the operations of the Project pursuant to a management agreement (the “Management Agreement”) which was entered into as of December 7, 2015.

The development of the Project is planned to be overseen by Management and the Development Consultant.Management has engaged a number of professional firms to assist with the design, planning, development and marketing of the Project’s units.

The Study was undertaken to evaluate the ability of the Corporation to generate sufficient funds to meet itsoperating expenses, working capital needs, and other financial requirements, including the debt service requirements associated with the proposed issuance of the $93,600,000 New Hampshire Health and Education Facilities Authority Revenue Bonds, Hillside Village Issue, Series 2017 (the “Series 2017 Bonds”). The Corporation’s underwriter, Herbert J. Sims & Co., Inc. (the “Underwriter”) has indicated the following structure and terms of the Series 2017 Bonds:

Board of TrusteesThe Prospect-Woodward Home

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� $55,975,000 of tax-exempt bonds (the “Series 2017A Bonds”) consisting of term maturities to July 1, 2052, with annual principal sinking fund payments to begin on July 1, 2021, and bearing interest at interest rates ranging from 5.0 percent to 7.0 percent;

� $18,005,000 of Entrance Fee Principal RedemptionSM Bonds (the “Series 2017B Bonds”) with a stated maturity date of July 1, 2024 and an assumed interest rate of 4.75 percent; and

� $17,620,000 of Entrance Fee Principal RedemptionSM Bonds (the “Series 2017C Bonds”) with a stated maturity date of July 1, 2022 and an assumed interest rate of 4.5 percent.

� $2,000,000 of Federally Taxable Entrance Fee Principal RedemptionSM Bonds (the “Series 2017D Bonds”) with a stated maturity date of July 1, 2022 and an assumed interest rate of 6.50 percent.

Principal on the Series 2017B, Series 2017C and Series 2017D Bonds is forecasted to be paid from a portion of the entrance fee receipts from initial residents of the Project’s independent living units (the “Initial Entrance Fees”).

The proceeds from the Series 2017 Bonds, together with the Initial Entrance Fees, investment earnings on trustee-held funds relating to the Series 2017 Bonds, and other cash and investments of the Corporation are planned to be used, among other things, to:

� Pay Project related costs;

� Fund debt service reserve fund for the Series 2017 Bonds;

� Fund a working capital fund;

� Fund interest costs for a period of approximately 24 months related to the Series 2017 Bonds; and

� Pay costs of issuance related to the Series 2017 Bonds.

Our procedures included analysis of:

� The Corporation’s objectives, timing, and financing;

� Management’s assessment of the current and future demand for the Corporation’s services,including consideration of:

– Economic and demographic characteristics of Management’s defined primary market areafor the Community;

– Locations, capacities, and comparable market information pertaining to other existing and planned facilities in the Community’s primary market area; and

– Forecasted occupancy and utilization levels of the Community.

� Management’s estimated costs associated with the Project, as well as its annual capital budgetsfor the Community;

� Debt service requirements and estimated issuance costs associated with the Series 2017 Bondsand the Corporation’s other obligations;

� Staffing requirements, salaries and wages, related fringe benefits and other operating expenses of the Corporation;

� Third-party reimbursement policy and history;

� Anticipated entrance fees, monthly service fees, and per diem charges for the Corporation’sfacilities;

� Sources of other operating and non-operating revenues; and

� Revenue, expense, and volume/utilization relationships.

Management has set forth its significant forecast assumptions upon which the accompanying forecasted financial statements are based in the Study in the section entitled, “Summary of Significant Forecast Assumptions and Accounting Policies.” These assumptions are integral and essential to an understanding of Management’s forecasted financial statements.


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The accompanying financial forecast as of December 31, 2017, 2018, 2019, 2020, 2021 and 2022, and for each of the six years then ending (the “Forecast Period”), is based upon assumptions provided by, or reviewed with, and approved by Management and in part by KRI and LCS. The financial forecast includes the following forecasted financial statements of the Corporation:

� Forecasted Statements of Operations and Changes in Unrestricted Net Assets (Deficit);

� Forecasted Statements of Cash Flows; and

� Forecasted Statements of Financial Position.

In addition, Management has summarized and included a Forecasted Schedule of Financial Ratios.

We have examined the accompanying forecast of the Corporation, which comprises the forecasted statements of financial position as of December 31, 2017, 2018, 2019, 2020, 2021, and 2022 and the related forecasted statements of operations and changes in net assets and cash flows, based on the guidelines for the presentation of a forecast established by the American Institute of Certified Public Accountants (the “AICPA”). Management is responsible for preparing and presenting the forecast in accordance with the guidelines for the presentation of a forecast established by the AICPA. 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 AICPA. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the forecast is presented in accordance with the guidelines for the presentation of a forecast established by the AICPA, in all material respects. An examination involves preforming procedures to obtain evidence about the forecast. The nature, timing, and extent of the procedures selected depend on our judgement, including an assessment of the risks of material misstatement of the forecast, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

The accompanying forecast does not include the effects of accounting standards that have been issued but are not effective as of the date of the Study.

Legislation and regulations at all levels of government have affected and may continue to affect the operations of long-term care facilities and retirement communities, including revenues and expenses of facilities, such as the Corporation. The financial forecast is based upon legislation and regulations currently in effect. If future legislation or regulations related to the Corporation’s operations are subsequently enacted, such legislation or regulations could have a material effect on future operations.

The Study assumes that a substantial number of prospective residents of the Community’s independent living units are assumed to sell their current homes to pay the entrance fee prior to occupancy or to meet other financial obligations under the residency agreement. If prospective residents encounter difficulties in selling their current home due to local or national economic conditions affecting the sale of residential real estate, there could be a delay in the forecasted fill-up of the Project’s independent living units and/or the remarketing of vacated units, which could have an adverse impact on the liquidity and revenues of the Corporation and the ability to provide for payment of the debt service associated with the Series 2017 Bonds.

Management’s forecast is based on the achievement of occupancy levels as determined by Management. Wehave 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 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, the amount of the Series 2017 Bonds and


C-4

associated debt service requirements would need to be adjusted, accordingly, from those indicated in the forecast. If such interest rates, principal payments, and funding requirements are lower than those assumed, such adjustments would not adversely affect the forecast.

In our opinion, the accompanying financial forecast is presented, in all material respects, in accordance with the guidelines for the presentation of a forecast established by the AICPA, and the underlying assumptions are suitably supported and provide a reasonable basis for Management’s financial forecast. Management has conducted sensitivity analyses on certain significant assumptions which it believes are particularly subject to variation. The sensitivity analysis are presented beginning on page C-75 of Management’s“Summary of Significant Forecast Assumptions and Accounting Policies” and estimate the impact on the Corporation’s forecasted debt service coverage and liquidity ratios as a result of the various sensitivity analyses. These sensitivity analyses have 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.

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. We have no responsibility to update this Study for events and circumstances occurring after the date of this report.

CliftonLarsonAllen LLP

Orlando, FloridaMay 12, 2017

THE PROSPECT-WOODWARD HOMEFORECASTED STATEMENTS OF OPERATIONS AND

CHANGES IN NET ASSETS (DEFICIT)FOR THE YEARS ENDING DECEMBER 31,

(000s Omitted)

See Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants’ ReportC-5

2017 2018 2019 2020 2021 2022

OPERATING REVENUESResident Service Revenue:

Independent Living Units -$ 28$ 3,467$ 6,849$ 7,913$ 8,150$

Assisted Living Units - 49 2,175 4,080 4,978 5,128

Nursing Care Rooms - - 596 1,389 1,222 1,063

Existing Community 868 820 - - - -

Amortization of Entrance Fees - 205 1,908 3,898 4,559 4,821

Other Income 6 6 104 205 237 245

Investment Income 26 61 152 174 195 235

Total Operating Revenues 900 1,169 8,402 16,595 19,104 19,642

OPERATING EXPENSESGeneral and Administration - 277 837 869 948 977

Management Fees 135 186 387 398 410 423

Marketing 1,014 1,821 768 645 452 260

Assisted Living - 36 671 1,321 1,816 1,859

Nursing Care - 94 768 1,029 1,168 1,203

Food Service - 79 1,010 1,497 1,860 1,916

Housekeeping - 13 269 444 536 552

Maintenance and Security - 112 621 787 953 982

Utilities, Insurance, and Real Estate Taxes - 296 1,261 1,380 1,447 1,490

Activities - 7 85 97 103 106

Existing Community 1,110 1,048 - - - -

Depreciation 36 202 2,025 2,035 2,050 2,050

Interest Expense - 423 5,543 5,081 4,214 3,771

Total Operating Expenses 2,295 4,594 14,245 15,583 15,957 15,589

EXCESS (DEFICIT) OF REVENUES OVER EXPENSES (1,395) (3,426) (5,843) 1,012 3,147 4,053

TEMPORARILY RESTRICTED NET ASSETS - - - - - -

PERMANENTLY RESTRICTED NET ASSETS - - - - - -

CHANGE IN NET ASSETS (DEFICIT) (1,395) (3,426) (5,843) 1,012 3,147 4,053

NET ASSETS (DEFICIT), BEGINNING OF YEAR 3,593 2,198 (1,228) (7,071) (6,059) (2,912)

NET ASSETS (DEFICIT), END OF YEAR 2,198$ (1,228)$ (7,071)$ (6,059)$ (2,912)$ 1,141$

THE PROSPECT-WOODWARD HOMEFORECASTED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING DECEMBER 31,(000s Omitted)


2017 2018 2019 2020 2021 2022

CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets (Deficit) (1,395)$ (3,426)$ (5,843)$ 1,012$ 3,147 4,053$

Non-Cash Items and Other Adjustments to Operations:

Depreciation 36 202 2,025 2,035 2,050 2,050

Amortization of Financing Costs - 7 82 82 82 82

Amortization of Entrance Fees - (205) (1,908) (3,898) (4,559) (4,821)

(Increase) Decrease in Operating Assets:

Accounts Receivable (11) (5) (236) (250) (74) (9)

Increase (Decrease) in Operating Liabilities:

Accounts Payable (126) 2 118 52 6 42

Accrued Interest 3,198 (698) (434) (221) (16) (16)

Accrued Expenses (13) 85 2 42 4 29

Net Cash Provided (Used) by Operating Activities 1,689 (4,038) (6,194) (1,146) 640 1,410

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Property and Equipment (22,012) (52,498) - (100) (150) (200)

Increase in Investments - (549) (2,789) - (2,696) (1,545)

(Increase) Decrease in Project Fund (49,629) 49,629 - - - -

(Increase) Decrease in Debt Service Reserve Fund - Series 2017 Bonds (6,092) - 923 855 - -

(Increase) Decrease in Capitalized Interest Fund (7,735) 5,483 2,252 - - -

(Increase) Decrease in Entrance Fee Fund (1,751) (2,017) (3,809) 10,164 - -

(Increase) Decrease in Working Capital Fund (2,000) - - - 2,000 -

(Increase) Decrease in State Reserve Requirement - (487) (626) (298) (205) (12)

(Increase) Decrease in Bond Fund (3,198) 698 434 221 (287) 1

Increase in Renewal and Replacement Fund - - - (90) (180) (180)

Net Cash Provided (Used) by Investing Activities (92,417) 259 (3,615) 10,752 (1,518) (1,936)

CASH FLOWS FROM FINANCING ACTIVITIESFinancing Costs (2,048) - - - - -

Proceeds from Issuance of Series 2017B, Series 2017C, and Series 2017D Bonds 37,625 - - - - -

Proceeds from Issuance of Series 2017A Bonds 55,975 - - - - -

Principal Payments on Series 2017A Bonds - - - - (605) (635)

Principal Payments on Series 2017B, Series 2017C, and Series 2017D Bonds - - (19,620) (18,005) - -

Bank Loan 500 - - - - -

Payment of Bank Loan (500) - - - - -

Change in Refundable Resident Deposits 1,751 (158) (1,161) (3,019) - -

Proceeds from Initial Entrance Fees - 4,175 30,590 10,034 1,846 -

Independent Living Units Turnover Entrance Fees, Net - - - - 1,020 1,161

Net Cash Provided (Used) by Financing Activities 93,303 4,017 9,809 (10,990) 2,261 526

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,575 238 - (1,384) 1,384 -

Beginning Balance of Cash and Cash Equivalents 187 2,762 3,000 3,000 1,616 3,000

ENDING BALANCE OF CASH AND CASH EQUIVALENTS 2,762$ 3,000$ 3,000$ 1,616$ 3,000$ 3,000$

SUPPLEMENTAL DISCLOSUREOF CASH FLOW INFORMATIONCash Paid for Interest -$ 3,198$ 5,461$ 4,999$ 4,132$ 3,689$

THE PROSPECT-WOODWARD HOMEFORECASTED STATEMENTS OF FINANCIAL POSITION

AT DECEMBER 31,(000s Omitted)


2017 2018 2019 2020 2021 2022

ASSETSCURRENT ASSETS

Cash and Cash Equivalents 2,762$ 3,000$ 3,000$ 1,616$ 3,000$ 3,000$

Accounts Receivable, Net 15 20 256 506 580 589

Other Current Assets 14 14 14 14 14 14

Current Portion of Assets Limited as to Use 3,198 2,500 2,066 1,845 2,132 2,131

Total Current Assets 5,989 5,534 5,336 3,981 5,726 5,734

ASSETS LIMITED AS TO USEConstruction Fund 49,629 - - - - -

Debt Service Reserve Fund 6,092 6,092 5,169 4,314 4,314 4,314

Capitalized Interest Fund 7,735 2,252 - - - -

Entrance Fee Fund 4,338 6,355 10,164 - - -

Working Capital Fund 2,000 2,000 2,000 2,000 - -

Bond Fund 3,198 2,500 2,066 1,845 2,132 2,131

State Reserve Requirement - 487 1,113 1,411 1,616 1,628

Donor Restricted Investments 1,142 1,142 1,142 1,142 1,142 1,142

Renewal and Replacement Fund - - - 90 270 450

Total Assets Limited as to Use 74,134 20,828 21,654 10,802 9,474 9,665

Less: Current Portion (3,198) (2,500) (2,066) (1,845) (2,132) (2,131)

Total Assets Limited as to Use (Net of Current Portion) 70,936 18,328 19,588 8,957 7,342 7,534

PROPERTY AND EQUIPMENTLand 1,500 1,500 1,500 1,500 1,500 1,500

Existing Building 907 907 907 907 907 907

Building - 72,618 72,618 72,618 72,618 72,618

Furniture and Fixtures - 1,640 1,640 1,740 1,890 2,090

Construction in Progress - Project 21,760 - - - - -

Total 24,167 76,665 76,665 76,765 76,915 77,115

Less: Accumulated Depreciation 36 238 2,263 4,298 6,348 8,398

Net Property and Equipment 24,131 76,427 74,402 72,467 70,567 68,717

OTHER ASSETSInvestments 234 783 3,572 3,572 6,268 7,813

Escrows 20 20 20 20 20 20

Security Deposits 6 6 6 6 6 6

Total Other Assets 260 809 3,598 3,598 6,294 7,839

Total Assets 101,316$ 101,098$ 102,924$ 89,003$ 89,929$ 89,824$

LIABILITIES AND NET ASSETS (DEFICIT)CURRENT LIABILITIES

Current Maturities of Series 2017A Bonds -$ -$ -$ 605$ 635$ 670$

Accounts Payable 20 22 140 192 198 240

Accrued Interest 3,198 2,500 2,066 1,845 1,829 1,813

Accrued Payroll and Related Taxes 10 95 97 139 143 172

Total Current Liabilities 3,228 2,617 2,303 2,781 2,805 2,895

LONG-TERM LIABILITIESResident Refundable Entrance Deposits 4,338 4,180 3,019 - - -

Resident Refundable Entrance Fees - 253 2,108 2,716 2,288 1,663

Deferred Revenue from Non-Refundable Fees - 3,717 30,545 36,073 34,808 31,773

Series 2017B, Series 2017C, and Series 2017D Bonds 37,625 37,625 18,005 - - -

Series 2017A Bonds, Less Current Portion 55,975 55,975 55,975 55,370 54,735 54,065

Deferred Financing Costs (Net) (2,048) (2,041) (1,960) (1,878) (1,795) (1,713)

Total Liabilities 99,118 102,326 109,995 95,062 92,841 88,683

NET ASSETS (DEFICIT)Unrestricted Net Assets (Deficit) 1,056 (2,370) (8,213) (7,201) (4,054) (1)

Temporarily Restricted Net Assets 657 657 657 657 657 657

Permanently Restricted Net Assets 485 485 485 485 485 485

Total Net Assets (Deficit) 2,198 (1,228) (7,071) (6,059) (2,912) 1,141

Total Liabilities and Net Assets (Deficit) 101,316$ 101,098$ 102,924$ 89,003$ 89,929$ 89,824$

THE PROSPECT-WOODWARD HOMEFORECASTED SCHEDULE OF FINANCIAL RATIOS

FOR THE YEARS ENDING DECEMBER 31,(000s Omitted)


Notes:(1) Calculations are presented based upon the assumed terms of the Series 2017 Bonds.(2) Maximum annual debt service for the years ending December 31, 2021 and 2022 is equal to the forecasted maximum annual debt service on the Series 2017 Bonds as determined by the Underwriter.(3) Operating expenses are equal to total operating expenses less depreciation expense and less amortization of finance fees included with interest expense.

DEBT SERVICE COVERAGE RATIO 2021 2022

CHANGE IN NET ASSETS (DEFICITS) 3,147$ 4,053$

NON-CASH ITEMS AND ADD-BACKS:

Amortization of Entrance Fees (4,559) (4,821)

Depreciation 2,050 2,050

Interest Expense 4,214 3,771

Net Cash Received from Turnover Entrance Fees 1,020 1,161

NET INCOME AVAILABLE FOR DEBT SERVICE 5,872$ 6,214$

MAXIMUM ANNUAL DEBT SERVICE - SERIES 2017A BONDS(2)

4,314$ 4,314$

MAXIMUM ANNUAL DEBT SERVICE COVERAGE RATIO(1)1.36 1.44

DAYS CASH ON HAND 2021 2022

CASH AND CASH EQUIVALENTS 3,000$ 3,000$

INVESTMENTS 6,268 7,813

STATE RESERVE REQUIREMENT 1,616 1,628

RENEWAL AND REPLACEMENT FUND 270 450

AVAILABLE RESERVES 11,154$ 12,891$

OPERATING EXPENSES (3)

13,825$ 13,457$

DAILY OPERATING EXPENSES 38$ 37$

NUMBER OF DAYS OF CASH ON HAND(1)294 348

SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS AND ACCOUNTING POLICIES

See Independent Accountants’ ReportC-9

BACKGROUND AND INFORMATION

Basis of Presentation

The purpose of the financial feasibility study (the “Study”) is to evaluate the ability of the management of The Prospect-Woodward Home (the “Corporation”), to meet the operating requirements, working capital requirements, and other financial requirements associated with its plans to construct and operate a continuing care retirement community (“CCRC”) with the proposed issuance of the $93,600,000 New Hampshire Health and Education Facilities Authority Revenue Bonds, Hillside Village Issue, Series 2017 (the “Series 2017 Bonds”). The Corporation’s management (“Management”) is responsible for the forecast.

The accompanying financial forecast for the years ending December 31, 2017, 2018, 2019, 2020, 2021 and 2022, and for each of the years then ending (the “Forecast Period”), contained herein are estimated by Management. The financial forecast presents, to the best of Management’s knowledge and belief, the Corporation’s expected financial position, results of operations and changes in unrestricted net assets (deficit), and cash flows for the Forecast Period. Accordingly, the financial forecast reflects Management’s judgment as of May 12, 2017, the date of this financial forecast, of its expected conditions and its expected course of action. The assumptions disclosed herein, while not all-inclusive, are those that Management believes are significant to its financial forecast. Furthermore, 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.

Fundamental to the Study is the assumption that the operations of the Corporation will be competently and efficiently managed and its services professionally and consistently marketed. In addition, the validity of the financial forecast will decrease substantially in proportion to the time elapsed since its preparation. Management’s financial forecast has been prepared in connection with the issuance of the Series 2017 Bonds.Management does not intend to update its financial forecast of the Corporation subsequent to the issuance of this financial forecast, and, accordingly, there are risks inherent to referring to, or using, this financial forecast in the future as it may, and most likely will, become outdated.

The assumed interest rates, principal payments, financing assumptions, and assumptions pertaining to the forecasted revenue, expenses, and cash flows are described in the sections entitled, “Summary of Significant Forecast Assumptions and Accounting Policies”. If the actual interest rates, principal payments, funding requirements, or other financing assumptions related to the Series 2017 Bonds are different from those assumed, the principal amount of the Series 2017 Bonds, and associated debt service requirements would need to be adjusted, accordingly, from those indicated in the forecast. If interest rates, principal payments, and funding requirements are lower than those assumed, then such adjustments would not adversely affect the forecast.

The Corporation

The Prospect-Woodward Home is a New Hampshire nonprofit voluntary corporation which presently operates a 24-bed supported residential care facility of the same name (the “Existing Community”), formerly the real property of The Woodward Home. The Corporation has been determined by the Internal Revenue Service to be exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Corporation is the result of a business combination treated as an acquisition in July 2016 between two long-standing New Hampshire nonprofit organizations, Prospect Hill Home (“Prospect Hill Home”) and The Woodward Home (“The Woodward Home”), with Prospect Hill Home serving as the surviving entity under the legal name “The Prospect-Woodward Home”. As a result of the acquisition, the Corporation moved the remaining residents of Prospect Hill Home into the Existing Community.

In 2011, the Prospect Hill Home’s board of trustees engaged an outside consultant, Kelly Real Estate Investment Properties, LLC, to research viable senior living options that were in line with Prospect Hill Home’s mission. The resulting study indicated that a new CCRC project in Keene, New Hampshire could be a possibility. After the



acquisition, the Corporation requested and received the approval from the New Hampshire Director of Charitable Trusts and the Cheshire County Probate Court to expand its charitable mission to include the development and operation of a CCRC, and to use its restricted funds for that expanded purpose, the Corporation’s Board (as definedhereafter) voted to pursue the CCRC project to be known as “Hillside Village” and located at 99 Wyman Road in Keene, New Hampshire. Upon completion and occupancy of Hillside Village, the Corporation intends to close and hold the Existing Community and move its remaining residents into Hillside Village.

The Corporation is governed by a Board of Trustees (the “Board”). Oversight of the affairs and resources of the Corporation is vested in the Board, which is bound by principles of fiduciary duties and the provisions of the Corporation’s Articles of Agreement, Bylaws, and applicable New Hampshire law. Under these provisions, no Trustee or other individual may have an equitable, beneficial or other pecuniary interest in the Corporation or its assets, including without limitation the Project (as defined below). No member of the Board is paid any remuneration for his or her services as a Trustee, except for the reimbursement at cost of Board-related expenditures.

As part of the acquisition of The Woodward Home, the Corporation established a two-year integration period beginning July 1, 2016 (the “Integration Period”). During the Integration Period, the Board will be comprised of up to twenty-two (22) trustees; thereafter, the Board will be comprised of up to fifteen (15) trustees. The Board is self-perpetuating, and the election of Trustees is governed by the Corporation’s bylaws. To focus on the development of the Project, the Board delegated to a six-member “Facility Operations Committee” responsibility for the supervision,management and operation of the Existing Community. The Corporation has four principal officers under its bylaws: Chair, Vice-Chair, Treasurer and Secretary.

The Existing Community

The Corporation currently operates a 24 bed supported residential care facility, called The Prospect-Woodward Home located at 194-202 Court Street in Keene, New Hampshire. Management assumes that the Existing Community will continue to operate in 2017 and 2018 until the opening of the Project. When the Project (defined below) is completed, the Existing Community is expected to be closed and all residents are assumed to be transferred to the Project. Management has assumed that they will continue to own the property throughout the Forecast Period (herein defined).

For clarity, Management has separated the operations of the Existing Community from the Project’s operations onthe Forecasted Statement of Operations and throughout the Study.

Land Acquisition

On June 6, 2014, the Corporation entered into a purchase agreement (the “Site Purchase Agreement”) for the acquisition of the project site.

The Project

The Corporation plans to construct 140 independent living units (the “Independent Living Units”), one guest unit, 60assisted living units (the “Assisted Living Units”) and 20 long-term nursing care rooms (the “Nursing Care Rooms”).The Independent Living Units are expected to be comprised of a four-story building containing 116 apartments (the “Community Center”) and a four-story building containing 24 villas (the “Villas”) which will be connected to the Community Center by a covered walkway. The Assisted Living Units are assumed to consist of 42 assisted living rooms and 18 memory care rooms. The Assisted Living Units and the Nursing Care Rooms (combined the “Health Center”) are planned to be private units within the Health Center and connected to the Community Center by a covered walkway.

Hillside Village’s Community Center is expected to have a full service restaurant, an informal bistro dining venue, a performing arts center, multiple resident lounges, classrooms for ongoing educational programs, an exercise room, an indoor pool, card and game rooms, a greenhouse, a beauty spa, a country store, and a library with a computer lab.



Collectively the Community Center, the Villas, and the Health Center are referred to as the “Project” or the “Community”.

The following table summarizes the anticipated unit mix, square footage and fees of the Independent Living Units at the time of the Community’s opening in 2018.

Table 1Project Independent Living Units

Unit Configuration, Monthly Service Fees, Entrance Fees

Source: ManagementNotes:(1) Management offers three types of resident contracts: Traditional, 90% Refundable with No Lifecare, and 90% Refundable with Lifecare. See the “Resident Admission Criteria – Independent Living Units” section of this Study subsequently herein for a detailed description of each of these contract types. Entrance fees under the 90% Refundable with No Lifecare contract are approximately 24 percent higher than entrance fees under the Traditional plan. Entrance fees under the 90% Refundable with Lifecare contract are approximately 50 percent higher than entrance fees under Traditional plan.(2) The monthly service fees shown on the table are applicable for each of the contract types for 2018.(3) Second person monthly fees are assumed to be $1,236 per month in 2018.(4) Second person entrance fees are assumed to be an average of $30,000 in 2018.

The monthly service fees summarized above are planned to include one meal per day, bi-weekly light housekeeping,linen and towel service, scheduled transportation, utilities, activity programming, in-room emergency call system, additional storage space, an annual health and wellbeing assessment, preventative health services at the Health Center,security, maintenance of the individual unit, covered or underground parking and use of the Community’s grounds.

Health Center

The Health Center is planned to consist of 60 Assisted Living Units and 20 Nursing Care Rooms. The Assisted Living Units will be comprised of 42 units to provide assisted living services and 18 units to provide memory care services. The following table presents a summary of the number of units, square feet, and expected monthly/daily

Unit Type Traditional90% Refund No Lifecare

90% Refund Lifecare

Independent Living

Community Center

Lafayette Apt-One Bedroom 13 672 $3,162 $178,200 $230,625 $273,000

Franklin Apt-One Bedroom Den 32 857 $3,595 $220,000 $276,000 $337,500

Avalon Apt-One Bedroom Large 3 900 $3,770 $249,000 $299,000 $352,000

Lincoln Apt-One Bedroom Large Den 3 1,085 $4,192 $298,000 $368,000 $426,000

Whittier Apt-Two Bedroom Split 33 968 $4,017 $279,200 $320,000 $407,500

Hancock Apt-Two Bedroom Side 4 1,199 $4,120 $280,000 $360,000 $439,000

Monroe Apt-Two Bedroom Den Side 22 1,388 $4,455 $306,167 $400,000 $469,000

Jefferson Apt-Two Bedroom Den 4 1,379 $4,455 $299,500 $404,000 $473,000

Adams Apt-Penthouse - Three Bedroom 2 1,670 $5,835 $391,000 $510,000 $605,000

Community Center Subtotal/Weighted Average 116 1,019 $3,936 $259,025 $321,268 $390,573

Villas

Hale Villa - Two BR 6 1,030 $3,966 $299,000 $363,000 $430,000

Cabot Villa - Two BR Expanded 6 1,166 $4,120 $286,000 $333,000 $395,000

Madison Villa Two BR Den - Corner 4 1,271 $4,475 $304,000 $396,000 $455,000

Washington Super Villa Two BR Den - End 8 1,714 $5,727 $413,000 $513,000 $599,000

Villas Subtotal/Weighted Average 24 1,332 $4,676 $334,583 $411,000 $481,750

Independent Living Total/Weighted Average 140 1,073 $4,063 $271,978 $336,651 $406,204

2018 Entrance Fees (1)Unit Size (Square

Feet)Number of Units

2018 Monthly Service Fees(2)



service fees for direct admissions, by unit type, for the planned Health Center.

Table 2Project Health Center

Unit Configuration and Monthly/Daily Service Fees

Source: Management

Note: (1) The Health Center is anticipated to open in December 2018.(2)Assisted Living Rates presented represent the rate for directly admitted residents. .

In addition to the services provided for residents of the Independent Living Units, monthly fees for the Health Center include three meals per day, laundry and linen service as needed, complete activities program, and three care points for additional care services which may include assistance with bathing, dressing or other activities of daily living.

Residents of the Independent Living Units may be directly admitted to the Assisted Living Units or the Nursing Care Rooms. Individuals from outside of the Community may be admitted to the Assisted Living Units. Non-life care residents of the Assisted Living Units may be admitted to the Nursing Care Rooms should they need additional care.Admissions to the Nursing Care Rooms directly from outside the Community are prohibited. Management and the Operator (defined herein) assume that there will be no Medicaid utilization and that the Community will not be Medicare certified.

Licensure and Certificate of Need

CCRCs in New Hampshire are regulated by New Hampshire Revised Statutes Annotated Chapter 420-D (“NH RSA 420-D”), Continuing Care Communities. On December 7, 2015, the Corporation received a Certificate of Authority (license) from the New Hampshire Insurance Department to establish and operate a continuing care community in accordance with NH RSA 420-D. This Certificate of Authority enables the Corporation to enter into binding Residency Agreements (hereinafter defined) and to accept entrance fee deposits.

On June 17, 2016, the Corporation received a certificate of need (“CON”) from the New Hampshire Department of Health and Human Services for Hillside Village pursuant to New Hampshire RSA 151-C:10 and 12. Although the statute was repealed on June 30, 2016 and CONs no longer are required by the State of New Hampshire, the statutewas still in effect at the time of the Corporation’s application.

Resident Admission Criteria – Independent Living Units

A prospective resident will be accepted for residency in the Independent Living Units only if the applicant is age 62 orolder at the time of occupancy, demonstrates the ability to live independently or with some assistance with activities of daily living as determined by the Corporation, and is able to meet the financial obligations as a resident of the selected Independent Living Units. The Independent Living Units are open to individuals regardless of race, nationality, or religion.

Unit TypeHealth Center

Assisted Living rooms (2)

42 383 $7,575

Memory Care rooms 18 312 $8,886

Total/Average Assisted Living Units 60 362 $7,968

Nursing Care Rooms 20 160

Self Pay $322.49

Number of Units

Unit Size (Square

Feet)

2018 Average Monthly /Daily

Fees(1)



Residency Agreements - Independent Living Units

Execution of the Community’s residency contract (the “Residency Agreement”) and payment of the applicable monthly service fee and the entrance fee will entitle a prospective resident to occupy the selected unit at the Community. Upon entering into a Residency Agreement the resident will be considered a “Life Care Resident”.

Residency Agreement Options

The Corporation offers three Residency Agreement contract options to prospective residents of the Independent Living Units as summarized in the following table:

Table 3Project Independent Living Units

Residency Agreement Options and Refund Percentage

Source: Management

Refundable amounts are to be paid no later than thirty days after a new resident pays the then applicable entrance fee for the unit vacated by the resident.

Life Care Benefit

The Corporation is planning to provide Life Care Residents of the Independent Living Units under the Traditional Plan, 90% Refund Lifecare Plan, or 90% Refund No Lifecare/Shared Cost Plan with priority access to nursing, assisted living or memory care services that will be available in the Health Center when a determination is made that the Life Care Resident needs such care (the “Life Care Benefit”). There is no impact of transferring to the Health Center on the Life Care Residents’ monthly service fee.

Life Care Residents are expected to be entitled to long term care in the Health Center as needed, without an additional increase in the then current monthly service fee except for other expenses not covered in theResidency Agreement. If a Life Care Resident requires short term rehabilitative or other skilled nursing care that is subject to reimbursement through Medicare, the Operator will arrange to have these services provided by a local specialized rehabilitative inpatient nursing facility that accepts Medicare payment. However, the Life Care Resident will retain the right to choose an alternative specialized rehabilitative inpatient nursing facility of his or her choice. If the Life Care Resident needs continued care after the Medicare covered days of service have expired, they will enter the Health Center if either an Assisted Living or a Nursing care accommodation is available, and the terms above will apply. If accommodations are not immediately available in the on-site Health Center, the Corporation will be responsible for paying for similar services at an off-site long term care facility in

Traditional Plan

90% Refund Lifecare Plan

90% Refund No Lifecare/Shared

Cost Plan

Entrance fee refund reduces by 4% after the first month of occupancy and then by 2% per month

for each additional month of residency until the refund is reduced to zero. Under the Traditional

Plan, assisted living and nursing services will be provided for the same monthly service fee.

Entrance fee refunds will equal 90% of the first person entrance fee paid. Under this plan,

assisted living and nursing care services will be provided for the same monthly service fee.

Entrance fee refunds will equal 90% of the first person entrance fee paid. This plan is tailored to

residents with long-term healthcare insurance. The resident shares the cost of health services

through a reduction of the entrance fee refund. The entrance fee refund will be reduced by the

difference between the monthly service fee and the cost of assisted living and nursing services

provided to the resident, less any amounts reimbursed to the Corporation by the resident's long-

term health care insurance policy. If the resident's entrance fee refund is reduced to zero, the

resident will continue to pay only the monthly service fee.



the greater Keene area. The Life Care Resident will be transferred to the Health Center as soon as accommodations become available.

Forecasted Utilization of Residency Agreements

Management and the Marketing Consultant (defined below) have forecasted the following utilization of Residency Agreements of the first generation occupants of the Independent Living Units based on their current experience marketing the Community.

Table 4Utilization of Residency Agreements during the Forecast Period

First Generation Residents of the Independent Living Units

Source: Management and the Marketing Consultant

Management and the Marketing Consultant have forecasted the following utilization of Residency Agreements for turnover residents of the Independent Living Units:

Table 5Utilization of Residency Agreements during the Forecast Period

Turnover Residents of the Independent Living Units

Source: Management and Marketing Consultant

The Development Consultant

The Corporation entered into a project development consulting services agreement on November 1, 2014 (the “Development Agreement”) with Kelly Real Estate Investment Properties, LLC (the “Development Consultant” or “KRI”). For its services in connection with the development of the Project, the Corporation has agreed to pay the Development Consultant a fee (the “Development Consultant Fee”) of 2.5 percent of the aggregate cost of the Project. Aggregate costs are assumed to include land cost, site preparation, construction cost, construction contingency, architectural fees, engineering fees, equipment and furnishings, marketing, and miscellaneous expenses. The Corporation and KRI have agreed on April 19, 2017 that the Development Consultant Fee shall be $1,692,000 for the purposes of the Study and that $244,000 has been paid prior to the issuance of the Series 2017 Bonds.

The terms of the Development Agreement include the following payment schedule:

� A monthly retainer of $8,000 during the term of the agreement;

� 70 percent of the Development Consultant Fee, minus the amount of the monthly retainer payments to date, shall be paid at the commencement of construction (estimated to be $960,000);

AssumedResidency Agreement Options Number Percentage UtilizationTraditional Plan 52 51% 50%

90% Refund Lifecare Plan 37 36% 38%

90% Refund No Lifecare/Shared Cost Plan 13 13% 13%

102 100% 100%

Initial Depositors

Residency Agreement Options UtilizationTraditional Plan 50%

90% Refund Lifecare Plan 38%

90% Refund No Lifecare/Shared Cost Plan 13%

100%



� 30 percent of the Development Consultant Fee, minus the amount of the monthly retainer payments madebetween the payment of the 70 percent noted above and the completion of construction shall be paid at the completion of construction.

Architect

The Corporation and Tsomides Associates Architects Planners (“TAAP”) entered into a standard Architect Agreement on January 22, 2015 (the “Architect Agreement”) which requires TAAP to serve as the architect of record for Hillside Village, and to lead the design of Hillside Village from the schematic design phase through to the end of the construction administration phase. The Architect Agreement includes architectural services throughout the phases of: schematic design, design development, construction documents, bidding and/or negotiation, and construction administration.

Compensation to TAAP for these services will be 4.35% of the total cost to the Corporation to construct all elements of the Project as designed and specified by TAAP and will include contractors’ general conditions costs, overhead and profit but will not include compensation to TAAP, cost of the land, rights-of-way, financing, contingencies for changes in work or other costs that are the responsibility of the Corporation.

The General Contractor

The Corporation and The MacMillan Company, LLC (“MacMillan”) entered into a comprehensive construction agreement on April 14, 2017 (the “Construction Agreement”) under which MacMillan will serve as the construction manager responsible for the construction of the Project. MacMillan is obligated to provide administrative, management and consultative service for, and ensure the completion of, construction of the Project from the preconstruction phase through the completion of construction and the issuance of occupancy certificates.

Under the Construction Agreement, MacMillan agrees to provide its construction management services and complete construction of the Project for a price not to exceed $56,488,241 (the “GMP”), which GMP includes a construction contingency of 3% of the cost of the work (the “Construction Contingency”). The GMP does not include changes in scope, systems, kinds and quality of materials, finishes or equipment, all of which, if needed, will be incorporated by change order. The GMP will remain valid provided that construction of the Project commences by June 30, 2017. If there is unspent Construction Contingency at the end of the Project, the remainder will be split equally between MacMillan and the Corporation. Upon completion of the Project, if the Cost of Work (as defined in the Construction Agreement) is less than the GMP, then MacMillan will be entitled to fifty percent (50%) of such savings, less any offsets or other deductions permitted by the Construction Agreement.

Marketing Consultant

Bluespire, Inc. (“Marketing Consultant”) has been engaged by the Corporation to provide sales consulting and advisory services for the Project. The Corporation and the Marketing Consultant entered into a client engagement agreement (the “Marketing Agreement”) on August 1, 2015 for sales consulting and advisory services.

Pursuant to the teams of the Marketing Agreement, the Marketing Consultant will work collaboratively with the Corporation’s management and marketing teams and make detailed and actionable recommendations, oversee the development and implementation of the tactical marketing and sales plans and assist with the development of the Corporation’s marketing strategy. The Marketing Consultant may undertake and complete additional strategic marketing services, market research, assistance with sales management information technology, media placement, and other projects, at which time said additional services will be documented with an amendment to the Marketing Agreement.

Until commencement of the priority deposit program, the Corporation paid the Marketing Consultant $3,500 per month for sales consulting and advisory services. Upon commencement of the Priority Deposit Program and through the remainder of the term of the Marketing Agreement, the Corporation will pay the Marketing Consultant $6,500 per month for sales consulting and advisory services. Additionally, for the term of the Marketing Agreement, the



Corporation will pay the Marketing Consultant $1,200 per month for marketing account management services which fee covers all time related to day-to-day management of the various marketing projects, status calls, project management and conference call time. The Marketing Agreement includes provisions for reimbursement of expenses and media placement costs.

The performance bonus structure was further clarified by the performance based incentive agreement that is included as an addendum to the Marketing Agreement (the “Bonus Addendum”). This additional compensation structure includes milestone bonus payments for presale program goals, bonuses for achieving presale velocity objectives, and bonuses for achieving occupancy velocity objectives. The specific terms of the bonuses are set forth in the Bonus Addendum.

Either party may terminate the Marketing Agreement upon 30 days prior written notice in the event the other party breaches a material term and fails to cure such breach within the thirty day notice period. The Corporation may terminate the Marketing Agreement for any reason with at least 60 days prior written notice of its intention to terminate, or immediately upon payment of two (2) months of fees due for the Marketing Consultant’s sales consulting and advisory services. Any dispute relating to or arising out of the Marketing Agreement will be resolved by non-binding mediation followed by litigation if necessary.

Management of the Project

The Corporation has engaged Life Care Services LLC dba Life Care ServicesTM (the “Operator”); an Iowa limited liability company, to serve as Operator of the Project pursuant to a pre-opening and management services agreement (the “Management Agreement”) dated December 7, 2015. The Operator and its affiliates currently manage approximately 149 retirement communities serving over 33,000 residents in 31 states. The Operator is based in Des Moines, Iowa and maintains regional offices in Charlotte, North Carolina; Old Saybrook, Connecticut; Indianapolis, Indiana; Memphis, Tennessee; Delray Beach, Florida; San Diego, California; and St. Louis, Missouri. The Operator is wholly owned by Life Care Companies.

Pursuant to the terms of the Management Agreement, the Operator would be required to provide all management services to the Project, including but not limited to financial management, purchasing, public relations, recruitment, training, retaining and termination of personnel, and supervision of the day-to-day operations and programs of the Project. Duties will include polices recommendations, implementation of policies, budgets and directives, and recommendations for future operations.

The term of the Management Agreement commenced on December 7, 2015 and will continue until the completion of 60 months from the initial occupancy, unless sooner terminated in accordance with the terms of the Management Agreement. Either party may terminate the Management Agreement without cause by giving written notice to the other party of its intention to terminate the Management Agreement (a “Without Cause Termination Notice”).

The Operator will establish and maintain a system of financial controls for the Project and will provide the Corporation with monthly financial statements and annual budgets for operating revenue and expense, capital expenditures and cash flow projections, and recommend a schedule of resident monthly services fees and other charges. The Corporation retains ultimate control over the retention of the Operator. The Corporation also evaluates the performance and monitors the operating costs, wages, salaries, expenses and overall fiscal viability of the Project.All staff of the Community, with the exception of the Executive Director and the Administrator, will be employees of the Corporation. The Executive Director and Administrator will be employees of the Operator.

The Operator will be paid as follows:

� Base Monthly Management Fee – a monthly management fee payable in advance, monthly on the first day of each calendar month commencing with the commencement of operations. The monthly management fee will be $30,000 per month (the “Initial Base Fee”).



� Development Stage Consulting Fee – the Operator will receive a one-time Development Stage Consulting Fee of $30,000 for the ongoing review of the operating projections, community design and functionality to be paid upon financing of the construction of the Community (the “Development Stage Consulting Fee”).

� Management Consulting Fee – the Management Consulting Fee of $10,000 per month will commence upon financing and will end when the pre-opening service fee begins six months prior to the commencement of operations (the “Management Consulting Fee”).

� Pre-Opening Service Fee – the Pre-Opening Service Fee of approximately $15,000 per month will commence six months prior to the commencement of operations (the “Pre-Opening Service Fee”).

� Performance Incentive Fee – beginning with the six month period following the date at which the Community accepts its first resident, and continuing for each six month period thereafter the Operator may receive aperformance incentive (the “Performance Incentive Fee”) which will consist of the greater of either anexpense control incentive (the “Expense Control Incentive”) or a covenant compliance incentive (the “Covenant Compliance Incentive”). The Expense Control Incentive will be calculated as 75 percent of the amount, if any, by which actual operating expenses are less than budgeted operating expenses. The Covenant Compliance Incentive shall be calculated as 75 percent of the amount, if any, by which operating revenues,excluding entrance fees, for the period exceed budgeted revenues. The Performance Incentive Fee shall not exceed 50 percent of the total Base Management Fee for any period. Management has not forecasted for the payment of any Performance Incentive Fees during the Forecast Period.

� Application Service Provider Fee – for the use of the Operator’s marketing, sales, accounting, billing and dashboard technology, the Operator will be paid a one-time Operator Application Service Provider Fee of$35,000 prior to opening and an annual fee beginning in 2018 of $15,500 (the “Application Service Provider Fee”).

In addition to the fees described above, the Operator will be reimbursed for the salary and benefit costs of the Executive Director and Administrator and certain other expenses.

Project Timeline

A proposed timeline for the Project, as provided by Management and the Development Consultant, is summarized in the following table:

Table 6Project Timeline

Source: Management

Issuance of the Series 2017 Bonds June-17

Construction commences on the Project June-17

Construction is completed on the Project November-18

Licensure Obtained on Assisted Living Units November-18

Occupancy in Project Units Commences December-18

Nursing Care Rooms achieve occupancy - 85% June-20

Assisted Living Units achieve occupancy - 85% May-21

Independent Living Units achieve occupancy - 95% May-21



PLAN OF FINANCE

A summary of the forecasted sources and uses of funds for the Corporation’s financing for the Project is provided in the following table.

Table 7Series 2017 Bonds

Forecasted Sources and Uses of Funds(In Thousands) Source: Management and Underwriter

Certain summaries, assumptions, rationale, and descriptions included in Management’s financial forecast are more fully described in the offering documents pertaining to the Series 2017 Bonds. For more detailed information regarding the proposed terms, conditions, debt service requirements, and any other requirements of the Series 2017 Bonds, all of the Series 2017 Bonds financing-related documents should be read in their entirety.

Sources of Funds:

Series 2017A Bonds 55,975$ 1

Series 2017B Bonds 18,005 1

Series 2017C Bonds 17,620 1

Series 2017D Bonds 2,000 1

Total Source of Funds 93,600$

Uses of Funds:

Land 1,500$ 2

Construction Costs 56,500 3

Architect & Engineering 3,080 4

Furnishings & Equipment 1,640 5

Development Fees 1,692 6

Marketing 2,700 7

Miscellaneous Development Costs 2,260 8

Project Contingency 3,155 9

Financing Costs 2,048 10

Debt Service Reserve Fund 6,092 11

Working Capital Fund 2,000 12

Capitalized Interest Fund 10,933 13

Total Uses of Funds 93,600$



Notes to Table 7:

1) The Corporation’s underwriter, Herbert J. Sims & Co., Inc. (the “Underwriter”) has indicated that tax-exempt bond proceeds in the amount of $93,600,000 are estimated to be generated from the proposed issuance of the Series 2017 Bonds. The responsibility for payment of the debt service on the Series 2017 Bonds is solely that of the Corporation. The Underwriter has indicated the following structure and terms of the Series 2017Bonds:

� $55,975,000 of tax-exempt bonds (the “Series 2017A Bonds”) consisting of term maturities to July 1, 2052, with annual principal sinking fund payments to begin on July 1, 2021, and bearing interest at interest rates ranging from 5.0 percent to 7.0 percent paid semi-annually beginning in January of 2018;

� $18,005,000 of Entrance Fee Principal RedemptionSM Bonds (the “Series 2017B Bonds”) with a stated maturity date of July 1, 2024 and interest paid semi-annually beginning in January of 2018 at an assumed interest rate of 4.75 percent; and

� $17,620,000 of Entrance Fee Principal RedemptionSM Bonds (the “Series 2017C Bonds”) with a stated maturity date of July 1, 2022 and interest paid semi-annually beginning in January of 2018 at an assumed interest rate of 4.5 percent.

� $2,000,000 of Federally Taxable Entrance Fee Principal RedemptionSM Bonds (the “Series 2017D Bonds”) with a stated maturity date of July 1, 2022 and interest paid semi-annually beginning January 1, 2018 at an assumed interest rate of 6.5 percent.

Principal on the Series 2017B Bonds, 2017C Bonds and the Series 2017D Bonds is forecasted to be paid from a portion of the entrance fee receipts from initial residents of the Project’s Independent Living Units (the “Initial Entrance Fees”). The Series 2017B, Series 2017C and Series 2017D Bonds are anticipated to be redeemed in full by December 31, 2020.

2) Represents the cost of acquiring the land for the Project.

3) Represents construction costs for the Project including a guaranteed maximum price (“GMP”) of $56,488,241which includes a 3% construction contingency.

4) Management has forecasted that the Corporation will pay architectural and other professional services fees of approximately $3,080,000 with bond funds for the Project including architect fees, engineering fees, and other technical consultant fees.

5) Management has forecasted that furniture and equipment costs for the Project would approximate $1,640,000.

6) Management has forecasted that the Corporation will pay development fees of approximately $1,692,000 related to the services to be provided by KRI.

7) Management has forecasted marketing cost of $2,700,000 to be utilized prior to and during the fill up of the Community.

8) Management has forecast approximately $2,260,000 in remaining other costs of developing the Project.

9) Management has estimated a project contingency of approximately $3,155,000 which represents approximately 5 percent of the total direct construction costs of the Project, architectural and engineering fees, furnishing and equipment, miscellaneous development costs and marketing.

10) Management and the Underwriter estimate financing-related costs to approximate $2,048,000 related to the Underwriter’s discount, legal fees, accounting fees, and other costs associated with the proposed issuance of the Series 2017 Bonds.



11) Represents the Debt Service Reserve Funds related to the Series 2017 Bonds as provided by Management and the Underwriter.

12) Represents a Working Capital Fund related to the Series 2017 Bonds. In addition it is forecasted that $6,000,000 of Initial Entrance Fees will be deposited into the Working Capital Fund.

13) Management and the Underwriter estimate funded interest in the amount of $10,933,000 which represents theProject related debt service for approximately 24 months from the issuance date of the Series 2017 Bonds.



MARKET ASSESSMENT

Management and the Marketing Consultant’s assumptions for the future utilization of the Community were developed based on analysis of the following factors, which may affect the demand for the services:

� Site description and general area analysis;

� Defined primary market area (“PMA”) for the Community;

� Demographic and economic characteristics of Management’s defined PMA;

� Estimated age-and income-qualified households within Management’s defined PMA;

� Description and utilization of existing and proposed comparable retirement communities within and in close proximity to Management’s defined PMA;

� Penetration rates for retirement community services within Management’s defined PMA; and

� Management’s ability to market the Community.

Site Analysis

Site Description and Surrounding Land Use

The Community is planned to be constructed on approximately 48 acres of land located on Wyman Road in Keene, New Hampshire (the “Site”). The Site is planned to be located north of the intersection of Wyman Road and New Hampshire Route 12. Topography around the Site is partially wooded with a stream and wetland east of the Site. The area surrounding the Site is rural and largely undeveloped. The Site is approximately 4 miles northwest of downtown Keene and approximately 2 miles from Keene State College. Keene is located approximately 75 miles northwest of Boston, Massachusetts.

Access and Visibility

Primary access to the Community is planned to be from Wyman Road. Wyman Road runs north-south and borders the Site to the West. Wyman Road intersects with New Hampshire Route 12 less than one mile to the south. New Hampshire Route 12 turns into New Hampshire Route 10 which borders the downtown Keene area to the west and north.



Source: Maptitude

Proximity to Retail, Health Care, and Community Services

Retail convenience outlets important to seniors including pharmacies, grocery stores, banks, restaurants and other retail shops are located approximately three miles from the Site along West Street. The Keene Senior Center is located on Court Street in downtown Keene offering a variety of daily activities, educational programs, exercise classes and craft programs.

There are several medical clinics located in Keene near the Site including family practice and specialty services. Cheshire Medical Center is approximately three miles southeast of the Site. The following table summarizes the hospitals within 50 miles of the Community.



Table 8Hospitals Within 50 Miles of the Community

Primary Market Area

Management defines the PMA for the Community as the geographic area from which the majority of prospective residents (“Depositors”) originated prior to occupancy. Based upon an analysis of the origin of the Depositors at the Community, Management has defined the PMA to be an area that encompasses 23 ZIP Codes and extends from the Site approximately 10 to 17 miles to the north, 17 miles to the south, 8 to 14 miles to the east and 14 to 25 miles to the west.

The following table summarizes the ZIP Codes and corresponding cities that make up the PMA.

Table 9PMA ZIP Codes and Cities/Localities

Source: Management

As of May 9, 2017, Depositors had reserved 109 Independent Living Units. The following table summarizes the resident origin information for these 109 Depositors.

Approximate Miles

Location from the Number of

Hospital Name (City/ZIP Code) Community Type Beds

Cheshire Medical Center/Dartmouth-Hitchcock Keene Keene/03431 3 Short Term Acute Care 98

Monadnock Community Hospital Peterborough/03458 26 Critical Access 25

Athol Memorial Hospital Athol/01331 30 Critical Access 25

Springfield Hospital Springfield/05156 34 Critical Access 25

Heywood Hospital Gardner/01440 35 Short Term Acute Care 114

Baystate Franklin Medical Center Greenfield/01301 36 Short Term Acute Care 90

Valley Regional Hospital Claremont/03743 37 Critical Access 25

New London Hospital New London/03257 49 Critical Access 25

Source: DefinitiveHealthcare, www.definitivehc.com, February 2017

ZIP Code City/Locality ZIP Code City/Locality ZIP Code City/Locality03431 Keene 03435 Keene 03441 Ashuelot

03443 Keene 03445 Sullivan 03446 Swanzey

03447 Fitzwilliam 03448 Gilsum 03451 Hinsdale

03455 Marlborough 03456 Marlow 03462 Spofford

03465 Troy 03466 West Chesterfield 03467 Westmoreland

03470 Winchester 03602 Alstead 03608 Walpole

05158 Westminster 05301 Brattleboro 05344 Marlboro

05346 Putney 05354 Vernon



Table 10Depositor Origin - Independent Living Units

Source: Management and Marketing ConsultantNote: (1) Represents the ZIP Code in which the Community is planned to be located.

The PMA includes portions of Cheshire County in New Hampshire and Windham County in Vermont. The Site is located in Cheshire County. The following map depicts the PMA and the location of the Site.

Number of Percentage of

Area of Origin Depositors Depositors

PMA ZIP Codes:

03431 (1)

39 35.8%

03435 0 0.0%

03441 0 0.0%

03443 0 0.0%

03445 1 0.9%

03446 5 4.6%

03447 2 1.8%

03448 0 0.0%

03451 1 0.9%

03455 6 5.5%

03456 1 0.9%

03462 3 2.8%

03465 0 0.0%

03466 1 0.9%

03467 4 3.7%

03470 2 1.8%

03602 2 1.8%

03608 7 6.4%

05158 0 0.0%

05301 7 6.4%

05344 0 0.0%

05346 1 0.9%

05354 0 0.0%

Sub-Total PMA 82 75.2%

Other Areas in New Hampshire 20 18.3%

Outside of New Hampshire 7 6.4%

Total 109 100.0%



Source: Maptitude

PMA Population Data

The age distribution of the population in a geographic area is considered by Management and the Marketing Consultant to be a key factor in the determination of the area’s retirement housing needs. Population data regarding numbers of elderly is presented in the following tables. The 2017 and 2022 data in the following tables are estimates and projections, respectively, provided by The Nielsen Company, a recognized provider of census demographic information.



Table 11Elderly Population Change for the PMA

Sources: The Nielsen Company and U.S. Census Bureau

The following table presents the percentage of total population by age group for the elderly population in the PMA, the State of New Hampshire and the United States.

Table 12Percentage of Total Population by Age Cohort

Sources: The Nielsen Company and U.S. Census Bureau

2000 2010 2017 2022 (Actual) (Actual) (Estimated) (Projected) 2000 to 2010 to 2017 to

Population Population Population Population 2010 2017 2022

Total Population 83,807 86,184 84,171 83,450 0.3% -0.3% -0.2%

Under Age 65 72,130 73,114 68,062 65,459 0.1% -1.0% -0.8%

Age 65 to 74 Population 5,962 6,903 9,590 11,212 1.5% 4.8% 3.2%

Age 75 to 84 Population 4,096 4,273 4,401 4,584 0.4% 0.4% 0.8%

Age 85 & Over Population 1,619 1,894 2,118 2,195 1.6% 1.6% 0.7%

Total 65 & Over 11,677 13,070 16,109 17,991 1.1% 3.0% 2.2%

Total 75 & Over 5,715 6,167 6,519 6,779 0.8% 0.8% 0.8%

Average Compounded Percentage Change

2017 (Estimated)PMA New Hampshire U.S.

Age Cohort

65 & Over 19.1% 17.2% 15.5%

75 & Over 7.7% 6.8% 6.4%

85 & Over 2.5% 2.1% 1.9%

2022 (Projected)PMA New Hampshire U.S.

Age Cohort

65 & Over 21.6% 19.9% 17.5%

75 & Over 8.1% 7.5% 6.9%

85 & Over 2.6% 2.2% 2.0%



Real Estate Trends

Management has assumed that the majority of prospective residents moving into the Independent Living Units will sell their current homes prior to relocating to the Community. The ability of prospective residents to sell their homes in a timely fashion may have an impact on the fill-up period of the Community and may affect the ability of prospective residents to pay the entrance fees, in some cases. The following table summarizes historical data on the number of homes sold, median sales price, and average days on the market for single-family homes sold for the ZIP Codes included in the PMA. See Table 1 for a summary of the forecasted weighted average entrance fees for the Community.

Table 13Single-Family Home Sales Trends in the PMA

2014 through YTD January 31, 2017

Source: Multiple listing service data summary provided by Moving Station, February 22, 2017.Notes: (1) The following ZIP Codes were excluded from the table: ZIP Code 03435 is a University ZIP Code with no real estate data available, ZIP Code 05344 is a PO Box ZIP Code with no real estate data available and ZIP Code 05346 is a remote rural community with limited population, no real estate data was available.(2) Represents the ZIP Code in which the Community is planned to be located.

The following tables summarize the number of single-family homes sold from January 1, 2016 through December 31, 2016 and the one month ended January 31, 2017 within four price ranges for the ZIP Codes in the PMA.

ANNUAL DATA For the Month Ended2014 2015 2016 January 31, 2017

Number of Average Average Number of Average Average Number of Average Average Number of Average Average

Homes Sales Days on Homes Sales Days on Homes Sales Days on Homes Sales Days on

ZIP Code(1) Location Sold Price Market Sold Price Market Sold Price Market Sold Price Market

03431 (2)

Keene 202 $190,172 171 244 $186,394 146 245 $189,042 140 6 $195,775 147

03441 Ashuelot 2 $167,750 86 4 $30,450 94 5 $125,620 176 0 $0 0

03443 Keene 7 $188,286 81 9 $243,888 273 15 $274,767 161 0 $0 0

03445 Sullivan 6 $152,917 215 6 $184,317 80 10 $220,980 173 1 $45,000 73

03446 Swanzey 54 $192,829 142 53 $180,336 140 56 $179,467 123 4 $248,750 89

03447 Fitzwilliam 25 $187,461 236 36 $159,574 145 26 $148,148 196 2 $125,000 150

03448 Gilsum 8 $135,856 114 6 $126,150 376 12 $145,446 183 2 $54,000 164

03451 Hinsdale 26 $126,679 290 25 $122,238 165 25 $122,044 234 3 $124,333 247

03455 Marlborough 11 $154,627 205 21 $178,601 178 18 $167,786 160 0 $0 0

03456 Marlow 4 $75,000 159 11 $171,173 139 11 $151,673 237 1 $32,000 24

03462 Spofford 32 $397,642 162 26 $339,132 197 16 $378,844 168 1 $160,000 225

03465 Troy 11 $107,150 186 11 $107,362 125 21 $137,519 115 1 $99,000 190

03466 W. Chesterfield 13 $316,742 203 19 $216,832 162 17 $273,721 157 0 $0 0

03467 Westmoreland 13 $226,177 121 17 $254,382 204 19 $213,619 122 0 $0 0

03470 Winchester 39 $146,899 192 67 $137,624 163 39 $213,619 149 4 $101,250 82

03602 Alstead 23 $169,785 192 19 $177,597 261 35 $213,619 207 4 $138,666 272

03608 Walpole 31 $322,444 213 38 $269,205 271 29 $213,619 154 3 $240,378 223

05158 Westminster 11 $172,100 247 14 $168,486 306 26 $213,619 184 0 $0 0

05301 Brattleboro 105 $231,060 237 98 $215,044 240 130 $213,619 228 9 $156,722 277

05354 Vernon 18 $171,828 366 19 $182,529 215 16 $213,619 163 0 $0 0

641 $206,403 196 743 $190,875 181 771 $198,532 168 41 $154,340 188Total/ Wtd. Average



Table 14Single-Family Home Sales, by Price, in the PMA

January 1, 2016 through December 31, 2016 and YTD January 31, 2017

Source: Multiple listing service data summary provided by Moving Station, February 22, 2017.Notes:(1) The following ZIP Codes were excluded from the table: ZIP Code 03435 is a University ZIP Code with no real estate data available, ZIP Code 05344 is a PO Box ZIP Code with no real estate data available and ZIP Code 05346 is a remote rural community with limited population, no real estate data was available.(2) Represents the ZIP Code in which the Community is planned to be located.

For the 12 Months ended December 31, 2016 For the 1 Month Ended January 31, 2017

Number of Homes Sold by Closed Sales Price Number of Homes Sold by Closed Sales Price

Under $200,000 to $400,000 to $600,000 Total Under $200,000 to $400,000 to $600,000 TotalZIP Code(1) Location $200,000 $399,999 $599,999 and Over Number $200,000 $399,999 $599,999 and Over Number

03431(2)

Keene 159 75 11 0 245 3 3 0 0 6

03441 Ashuelot 5 0 0 0 5 0 0 0 0 0

03443 Keene 4 9 2 0 15 0 0 0 0 0

03445 Sullivan 7 2 0 1 10 1 0 0 0 1

03446 Swanzey 39 17 0 0 56 2 2 0 0 4

03447 Fitzwilliam 20 6 0 0 26 2 0 0 0 2

03448 Gilsum 9 3 0 0 12 2 0 0 0 2

03451 Hinsdale 23 2 0 0 25 2 1 0 0 3

03455 Marlborough 12 6 0 0 18 0 0 0 0 0

03456 Marlow 9 2 0 0 11 1 0 0 0 1

03462 Spofford 3 7 3 3 16 1 0 0 0 1

03465 Troy 18 3 0 0 21 1 0 0 0 1

03466 W. Chesterfield 5 10 2 0 17 0 0 0 0 0

03467 Westmoreland 11 7 1 0 19 0 0 0 0 0

03470 Winchester 33 6 0 0 39 4 0 0 0 4

03602 Alstead 27 8 0 0 35 4 0 0 0 4

03608 Walpole 13 14 1 1 29 1 2 0 0 3

05158 Westminster 19 7 0 0 26 0 0 0 0 0

05301 Brattleboro 68 51 9 2 130 8 1 0 0 9

05354 Vernon 12 4 0 0 16 0 0 0 0 0

Total 496 239 29 7 771 32 9 0 0 41

Percent 64.3% 31.0% 3.8% 0.9% 100.0% 78.0% 22.0% 0.0% 0.0% 100.0%



Economy and Employment Information

The following table summarizes employment by industry sector for the West Central New Hampshire Nonmetropolitan Area (as defined in Note (1) to the table) and the state of New Hampshire as of May 2015.

Table 15Employment by Industry Sector – May 2015

Source: United States Department of Labor, Bureau of Labor Statistics, May 2015 Occupational Employment and Wage Estimates, www.bls.gov/oes/current, February 2017. Notes: (1) The West Central New Hampshire nonmetropolitan area represents the following towns in New Hampshire: Alstead, Antrim, Bennington, Chesterfield, Dublin, Fitzwilliam, Francestown, Gilsum, Hancock, Harrisville, Hinsdale, Jaffrey, Keene, Marlboro, Marlow, Nelson, New Ipswich, Peterborough, Richmond, Rindge, Roxbury, Sharon, Stoddard, Sullivan, Surry, Swanzey, Troy, Walpole, Westmoreland and Winchester. (2) The sum of the employment for each category may not foot to the total for all occupations due to rounding estimates.

The following table summarizes unemployment rate trends for Keene, NH Micropolitan NECTA (as defined in Note (2) to the table), the State of New Hampshire and the United States for 2013 through February 2017.

Major Occupational Group Number Percentage Number PercentageOffice and Administrative Support Occupations 6,250 15.5% 104,950 16.5%

Sales and Related Occupations 4,770 11.8% 84,070 13.2%

Production Occupations 3,750 9.3% 44,390 7.0%

Education, Training, and Library Occupations 3,460 8.6% 44,360 7.0%

Food Preparation and Serving Related Occupations 3,240 8.0% 55,180 8.7%

Management Occupations 2,220 5.5% 35,650 5.6%

Healthcare Practitioners and Technical Occupations 2,210 5.5% 37,200 5.9%

Transportation and Material Moving Occupations 2,020 5.0% 33,060 5.2%

Construction and Extraction Occupations 1,810 4.5% 19,750 3.1%

Business and Financial Operations Occupations 1,770 4.4% 28,490 4.5%

Installation, Maintenance, and Repair Occupations 1,420 3.5% 24,200 3.8%

Building and Grounds Cleaning and Maintenance Occupations 1,370 3.4% 21,850 3.4%

Personal Care and Service Occupations 1,270 3.2% 18,610 2.9%

Healthcare Support Occupations 1,020 2.5% 17,640 2.8%

Computer and Mathematical Occupations 750 1.9% 18,380 2.9%

Arts, Design, Entertainment, Sports, and Media Occupations 740 1.8% 7,640 1.2%Architecture and Engineering Occupations 680 1.7% 12,470 2.0%Protective Service Occupations 670 1.7% 11,800 1.9%

Community and Social Service Occupations 560 1.4% 7,740 1.2%

Life, Physical, and Social Science Occupations 140 0.3% 4,030 0.6%

Legal Occupations 120 0.3% 3,140 0.5%

Farming, Fishing, and Forestry Occupations 80 0.2% 750 0.1%

All Occupations (2) 40,300 100.0% 635,360 100.0%

West Central New Hampshire

Nonmetropolitan Area (1) New Hampshire



Table 16Unemployment Rate Trends (1)

Source: U.S. Bureau of Labor Statistics, www.bls.gov, April 2017.Notes: (P) = Preliminary.(1) Data reflects rates not seasonally adjusted.(2) The Keene, NH Micropolitan NECTA (New England city and town area) represents the following towns in New Hampshire: Chesterfield, Gilsum, Harrisville, Keene, Marlborough, Marlow, Nelson, Richmond, Roxbury, Sullivan, Surry, Swanzey, Troy, Westmoreland and Winchester.

The following table summarizes the largest employers in Keene, New Hampshire.

Keene, NH Micropolitan NECTA (2) New Hampshire United States

2017February 3.2%

(P)3.4% 4.7%

January 2.9% 3.2% 4.8%

2016Annual 2.7% 2.8% 4.9%December 2.3% 2.5% 4.7%

November 2.5% 2.6% 4.6%

October 2.4% 2.5% 4.8%

September 2.5% 2.6% 4.9%

August 2.7% 2.8% 4.9%

July 2.8% 2.8% 4.9%

June 2.8% 2.9% 4.9%

May 2.6% 2.7% 4.7%

April 2.4% 2.8% 5.0%

March 2.9% 3.2% 5.0%

February 3.0% 3.3% 4.9%

January 2.9% 3.3% 4.9%

2015Annual 3.1% 3.4% 5.3%December 2.4% 2.7% 5.0%

November 2.6% 2.9% 5.0%

October 2.5% 2.8% 5.0%

September 2.7% 2.9% 5.0%

August 2.9% 3.1% 5.1%

July 3.3% 3.3% 5.2%

June 3.4% 3.4% 5.3%

May 3.3% 3.3% 5.5%

April 3.1% 3.5% 5.4%

March 3.6% 4.0% 5.4%

February 3.7% 4.3% 5.5%

January 3.8% 4.3% 5.7%

2014 (Annual Average) 3.9% 4.3% 6.2%

2013 (Annual Average) 4.8% 5.1% 7.4%



Table 17Largest Employers in Keene, New Hampshire

Source: New Hampshire Employment Security, Economic Labor Market Information Bureau, August 2016. http://www.nhes.nh.gov/elmi/products/cp/profiles-htm/keene.htm

Independent Living Units Market Assessment

Comparable Retirement Communities

Comparable retirement communities may include several types of facilities. Continuing care retirement communities (“CCRC”) may offer life care, modified life care, fee-for-service, or rental contracts. Independent living residents generally have access to common area amenities, which often include a central dining room, a library, lounge areas, and other community areas. Various monthly service fee options often cover laundering the resident’s flat linen, housekeeping services, maintenance, scheduled transportation, and one (or more) meals per day.

The life care concept offers independent living housing and various levels of service and healthcare that provides for a resident’s changing needs as he/she ages and begins to require a higher level of care. Life care arrangements typically include an entrance fee and a monthly service fee. In a life care facility, a resident may receive assisted living or nursing care at little or no extra charge beyond the monthly service fee paid in his/her independent living unit (“extensive” contract or “Type A” contract). A modified life care facility typically offers a limited benefit for assisted living and nursing care services (“modified” contract or “Type B” contract). Under Type B contracts, the community is obligated to provide residents with assisted living or nursing care services for a specified number of days at no extra charge and/or at rates that are discounted from those charged to those admitted from outside the CCRC.

The fee-for-service community (“fee-for-service” contract or “Type C” contract) offers a variation of the typical life care concept. The general concept of continuing care is offered at a fee-for-service facility in various forms. For example, at some facilities, residents pay reduced entrance fees and must pay per-diem rates for assisted living and nursing care, while other facilities may offer priority, but not guaranteed admission to assisted living and nursing care services, and/or low or no entrance fees with higher monthly service fees. While healthcare is often provided in the service package for a fee-for-service senior care community, it is funded by the resident on an “as-needed” basis at current per diem rates.

A rental retirement community offers independent living housing and may offer healthcare services, such as assisted living or nursing care. A resident is not required to pay an entrance fee. The resident generally signs a lease for the independent living unit selected and pays for various additional services utilized on a per-diem basis. The resident may enter the community at various levels of care in a rental retirement community.

Retirement communities offering an equity option involve the actual purchase of real estate or membership by the resident. This includes independent living condominiums and cooperatives. Healthcare services may be accessible in this type of senior housing on an optional basis.

Major Employer Product/ServiceCheshire Medical Center/Dartmouth Hitchcock Keene Health care services 1,500

C & S Wholesale Grocers Wholesale foods 1,200

Keene School District Education 1,198

Keene State College Education 933

Smith Industrial Medical Systems Hospital supplies 480

Imaje Corporation Industrial marking equipment 400

Liberty Mutual/Peerless Insurance Company Insurance services 354

National Grange Mutual Insurance Insurance services 347

TimKen Super Precision Mini & precision bearings 262

Janos Technologies Precision infared optics 70

Number of Employees



Management and the Marketing Consultant have defined comparable retirement facilities as certain retirement facilities that include independent living services, offer similar services and amenities, compete for similar age-and-income qualified residents, and are located within the PMA of the planned Community (the “Comparable IL Community”). Table 18 provides a summary of the Comparable IL Community within the PMA. Detailed data on the Community and the Comparable IL Community is provided on Table 19.

Table 18Comparable IL Community in the PMA

Source: Management, telephone interviews, personal visits and other research conducted in February 2017.Notes: N/A = Not applicable to the facility.IL = Independent Living.(1) There a total of 109 units at the community and all of the units are licensed as assisted living. Facility staff estimated that 35 units do not receive assisted living services.(2) Stated occupancy is overall occupancy for independent living and assisted living.

Number ofIL Units Occupancy

The Community 140 N/A

Comparable IL Community:Bentley Commons at Keene 35

(1)97.2%

(2)

Total Comparable IL Community Including the Project 175



The following map depicts the location of the Community and the Comparable IL Community in the PMA.

Source: Maptitude

The following table presents a profile of the Community’s Independent Living Units and the Comparable IL Community in the PMA.



Table 19The Community and the Comparable IL Community in the PMA

The Community Bentley Commons at KeeneStreet Address Wyman Road 197 Water Street

City/State/ZIP Code Keene, NH 03431 Keene, NH 03431

Approximate Miles from the Project N/A 5

Type of Contract Type A Rental

Owner/Sponsor The Corporation Kaplan Development Group, LLC

Profit/Non-Profit Non-Profit Profit

Year Opened Planned December 2018 2008

IL Units:Studio apartments 0 *

One-bedroom apartments 16 *

One-bedroom/den apartments 35 0

Two-bedroom apartments 37 *

Two-bedroom/den or Three-br. apts. 28 0

Villas/Townhomes/Cottages 24 0

Total IL Units 140 35 (1)

AL/MC Beds 42/18 74(1)

SNF Beds 20 0

IL Square Footage:Studio apartments N/A 491

One-bedroom apartments 672 550

One-bedroom/den apartments 857-931 N/A

Two-bedroom apartments 1,085-1,197 772-835

Two-bedroom/den or Three-bedroom 1,388-1,670 N/A

Villas/Townhomes/Cottages 1,030-1,717 N/A

IL Monthly Service Fees:Studio apartments N/A $3,300-3,400

One-bedroom apartments $3,070-3,660 (1)(2)

$3,500-3,700

One-bedroom/den apartments $3,490-4,070 (1)(2)

N/A

Two-bedroom apartments $3,900-4,000 (1)(2)

$4,400-4,600

Two-bedroom/den or Three-bedroom $4,325-5,665 (1)(2)

N/A

Villas/Townhomes/Cottages $3,850-5,560 (1)(2)

N/A

IL second person fee $1,200 (1)(2)

$1,000

IL Entrance Fees:Studio apartments N/A N/A

One-bedroom apartments $173,010-241,748 (1)(2)

N/A

One-bedroom/den apartments $213,592-289,320 (1)(2)

N/A

Two-bedroom apartments $271,068-271,845 (1)(2)

N/A

Two-bedroom/den or Three-bedroom $297,250-379,612 (1)(2)

N/A

Villas/Townhomes/Cottages $290,291-400,971 (1)(2)

N/A

IL second person fee $21,218-31,827 (1)(2)

N/A

IL Reported Occupancy Rate N/A 97.2% (2)

Included in the Monthly Fee:

Meals 1 meal/day 3 meals/day

Housekeeping service Bi-weekly Weekly

Laundry service Washer/dryer in unit Free common laundry

Scheduled transportation Yes Yes

Utilities All included except phone and

cable

All included except phone



Source: Management, telephone interviews, personal visits and other research conducted in February 2017.Notes:* = Unable to obtain information from the facility.N/A = Not applicable to this facility.IL = Independent LivingAL = Assisted LivingMC = Memory CareSNF = Skilled Nursing FacilityThe Community(1) The table reflects monthly service fees and entrance fees that have been deflated by 3.0 percent from the Community’s planned opening date in 2018 to reflect 2017 dollars.(2) The table reflects monthly service fees and entrance fee pricing for residents under the Traditional Plan. Under the Traditional Plan the amount of the entrance fee refund will be reduced by 4% upon initial occupancy and then by another 2% for each subsequent month of occupancy until the entrance fee amount to be refunded is reduced to zero. In addition, there is a 90% Refundable with Lifecare contract with entrance fees that range in 2017 dollars from $265,049 to $587,379 and a 90% Refundable with No Lifecare contract with entrance fees that range from $223,908to $498,058. The monthly service fee is the same for all plans.Bentley Commons at Keene(1) There are a total of 109 units at the community and all of the units are licensed as assisted living. Facility staff estimated 35 units do not receive assisted living services.(2) Stated occupancy is overall occupancy for independent living and assisted living.

The following table presents a profile of Comparable IL Communities located outside of the PMA. These projects are presented for additional analysis and are not included in the penetration rate calculation presented subsequently herein.



Table 20Comparable IL Communities outside of the PMA

Source: Telephone interviews, personal visits and other research conducted in February 2017.

Kendal at Hanover RiverMead The Huntington of NashuaStreet Address 80 Lyme Road 150 RiverMead Road 55 Kent Lane

City/State/ZIP Code Hanover, NH 03755 Peterborough, NH 03458 Nashua, NH 03062

Approximate Miles from the Project 66 26 59

Type of Contract Type A Type A Type A

Owner/Sponsor The Kendal Corporation RiverMead Silverstone Living

Profit/Non-Profit Non-Profit Non-Profit Non-Profit

Year Opened 1991 1995/2013 2004

IL Units:Studio apartments 9 0 0

One-bedroom apartments 49 38 50

One-bedroom/den apartments 74 24 36

Two-bedroom apartments 70 26 28

Two-bedroom/den or Three-br. apts. 10 29 10

Villas/Townhomes/Cottages 38 36 18

Total IL Units 250 153 142AL/MC Beds 92/15 55/17 24/0

SNF Beds 5 27 24 (1)

IL Square Footage:Studio apartments 556-620 N/A N/A

One-bedroom apartments 752 630-873 619-897

One-bedroom/den apartments 1,025 900-950 956-964

Two-bedroom apartments 1,107 950-1,077 1,117-1,233

Two-bedroom/den or Three-bedroom 1,350 1,100-1,237 1,416

Villas/Townhomes/Cottages 1,112-1,350 1,250-1,605 1,792-2,196

IL Monthly Service Fees:Studio apartments $2,975

(1)N/A N/A

One-bedroom apartments $3,755 (1)

$3,469-4,728 (1)

$2,678-3,675 (2)

One-bedroom/den apartments $4,666 (1)

$4,769-5,006 (1)

$3,892 (2)

Two-bedroom apartments $4,832 (1)

$4,945-5,190 (1)

$4,250-4,606 (2)

Two-bedroom/den or Three-bedroom $5,582 (1)

$5,495-5,876 (1)

$5,156 (2)

Villas/Townhomes/Cottages $4,666-5,582 (1)

$6,089-6,879 (1)

$5,508-5,740 (2)

IL second person fee $1,433 $1,560 $1,415

IL Entrance Fees:Studio apartments $151,962

(1)N/A N/A

One-bedroom apartments $258,242 (1)

$180,000-249,000 (1)

$174,000-254,000 (2)

One-bedroom/den apartments $397,139 (1)

$281,000-295,000 (1)

$273,000-279,000 (2)

Two-bedroom apartments $442,725 (1)

$302,000-316,000 (1)

$313,000-342,000 (2)

Two-bedroom/den or Three-bedroom $510,603 (1)

$328,000-345,000 (1)

$393,000 (2)

Villas/Townhomes/Cottages $447,794-525,797 (1)

$376,000-453,000 (1)

$458,000-667,000 (2)

IL second person fee $37,262-53,840 $37,000 $37,000

IL Reported Occupancy Rate 98.4% 99.1% 98.6%

Included in the Monthly Fee:

Meals 1 meal/day 1 meal/day

1 meal/day for apartments, 15

meals/month for cottages

Housekeeping service Weekly Bi-weekly Bi-weekly

Laundry service Free common laundry Washer/dryer in unit Washer/dryer in unit

Scheduled transportation Yes Yes Yes

Utilities All included except phone All included except phone All included except phone



Notes:

N/A = Not applicable to the facility.IL = Independent Living.AL = Assisted Living.MC = Memory Care.SNF = Skilled Nursing Facility.Kendal at Hanover(1) The table reflects monthly service fees and entrance fee pricing for residents under the 2% amortizing entrance fee option. The available refund under this agreement declines by 2% for each month of occupancy. After 50 months, there is no refund of the entry fee. In addition there is a 50% refundable agreement and a modified agreement for those residents with long-term care insurance. Facility staff indicated these entrance fees are approximately 35% higher than the fees reflected in the table.

RiverMead(1) The table reflects monthly service fees and entrance fee pricing for residents under the 2 percent amortizing entrance fee option. The available refund under this agreement declines by 2 percent for each month of occupancy. After four years there is no refund of the entrance fee. In addition, there is a 50% refundable plan with entrance fees that range from $240,800 to $597,700, a 70% refundable plan with entrance fees that range from $273,800 to $681,800 and a 90% refundable plan with entrance fees that range from $313,500 to $783,100. The monthly service fees are the same for all entrance fee plans.The Huntington of Nashua(1) The 24 nursing beds are licensed as custodial care beds.(2) The table reflects monthly service fees and entrance fee pricing for residents under the 2% amortizing entrance fee option. The available refund under this agreement declines by 2% for each month of occupancy. After 50 months, there is no refund of the entrance fee. In addition, there is a 90% refundable entrance fee agreement with entrance fees that range from $217,000 to $557,000. The monthly service fees are the same for both entrance fee plans.

Proposed Independent Living Developments

Based upon telephone interviews with local planning agencies, interviews with management at existing retirement communities, and other research, there is one senior living community being built within the PMA as follows:

� Southwestern Community Services is constructing Westmill Senior Housing, a 26 unit, age 62 and oversenior living community for low to moderate income residents. The project is planned to be located at 110 Railroad Street in Keene and is planned to be completed in Spring 2017. This project has not been includedin the penetration rate calculation presented subsequently herein since it is a low to moderate income project that is not considered a Comparable IL Community.

There were no other independent living communities that were disclosed as being planned in the PMA other than the Community.

Summary of Independent Living Units

As shown on Table 18, there are 35 independent living units at the one Comparable IL Community located in the PMA. Including the 140 units planned at the Community, there are a total of 175 independent living units in the PMA.

Estimated Eligible Households for Independent Living Units

In order to qualify for residency at the Community’s Independent Living Units, a prospective resident generally must be at least 62 years of age and demonstrate sufficient financial resources to pay the initial entrance fee, required monthly fees, and other expenses related to independent living services not provided in the Residency Agreement.Additionally, Management and the Marketing Consultant anticipate that a prospective resident must be able to live



independently. Management has established certain criteria to identify potential residents who would be eligible to reside in one of the Independent Living Units at the Community.

Management reported that an evaluation of the financial profile of a prospective resident is completed by estimating his/her future income and expenditures based on reported assets and pre-tax income in order to assess the prospective resident’s ability to afford the entrance fee and monthly service fee at the Community. Furthermore, Management’s analysis considers, on a case-by-case basis, the available assets of a prospective resident, other variables and the ability of a prospective resident to liquidate and use these assets in order to supplement income sources.

In addition to the services planned to be included in the monthly service fee, Management assumes that a resident would incur certain other basic living expenses. Management evaluates the financial profile of each prospective resident individually, however for purposes of its presentation of the market, Management estimates that a prospective resident of the Independent Living Units would allocate approximately 60% of their annual pre-tax income for independent living monthly service fees and would have an asset level approximately 2.0 times the entrance fee. The following two annual household income scenarios are presented for purposes of estimating the number of income qualified households in the PMA:

� Annual household income of approximately $67,100 or more (in 2019) based upon the monthly fee of the smallest one bedroom apartment of the Independent Living Units at the Community; and

� Annual household income of approximately $96,200 or more (in 2019) based upon the weighted average monthly fee of the Independent Living Units at the Community.

The average age of the Independent Living Units’ Depositors as of May 9, 2017, is estimated at approximately 79.7years upon the planned opening of the Community in December 2018. Management has estimated that approximately 23 percent of the prospective Residents will be under age 75 upon the planned opening of the Community, based upon the Depositors, therefore, Management assumes the majority of prospective Residents would be at least 75 years of age at the time they move into the Community. Management has assumed that households with the following characteristics would be the most likely to consider residing at the Independent Living Units based upon demographic age cohorts available as of the date of this report:

� Householders age 75 or older are assumed to fill approximately 77 percent of the units; and

� Householders with annual household income of $67,100 or more (in 2019), assuming the minimum monthly service fee for the Independent Living Units, or householders with annual household income of $96,200 or more (in 2019) assuming the weighted average monthly service fee for the Independent Living Units.

The following table presents the household income distribution data in the PMA as well as the calculated income eligible households for the Independent Living Units. The 2017 and 2022 data in the table are estimates as provided by The Nielsen Company. The following table also presents data for 2019 that has been interpolated from information provided by The Nielsen Company.



Table 21Income Eligible Households in the PMA(2)

Source: The Nielsen Company and ManagementNote: (1) Interpolated data is based upon the 2017 and 2022 data provided by The Nielsen Company.(2) 2019 data is presented as the Project is only forecasted to be open one month in 2018.

2017 (Estimated)Age Range: 65-74 75-84 85 & Over Total

Total Households 5,923 2,901 1,345 10,169

Median Household Income 48,140$ 34,256$ 25,702$ 41,212$

Household Income:

Less than $25,000 1,318 1,065 657 3,040

$25,000 - 34,999 685 417 216 1,318

$35,000 - 49,999 1,094 554 198 1,846

$50,000 - 74,999 1,148 410 136 1,693

$75,000 - 99,999 655 202 58 916

$100,000 - 149,999 535 127 53 714

$150,000 - 199,999 224 62 13 299

$200,000 or More 265 65 14 343

Households with $63,200 or more of income 2,220 649 202 3,071


2019 (Interpolated) (1)Age Range: 65-74 75-84 85 & Over Total



Household Income:

Less than $25,000 1,342 1,047 654 3,043

$25,000 - 34,999 694 414 217 1,325

$35,000 - 49,999 1,148 564 204 1,916

$50,000 - 74,999 1,196 415 136 1,747

$75,000 - 99,999 706 209 62 977

$100,000 - 149,999 617 142 61 820

$150,000 - 199,999 266 70 15 351

$200,000 or More 328 76 16 420



2022 (Projected)Age Range: 65-74 75-84 85 & Over Total



Household Income:

Less than $25,000 1,379 1,020 649 3,047

$25,000 - 34,999 709 410 218 1,337

$35,000 - 49,999 1,229 578 213 2,020

$50,000 - 74,999 1,270 423 136 1,829

$75,000 - 99,999 781 220 67 1,068

$100,000 - 149,999 741 165 72 978

$150,000 - 199,999 328 82 17 427

$200,000 or More 424 93 19 535





Penetration Analysis – Independent Living Units

Penetration rates are one measure of the degree to which the PMA might be either under-served or saturated. As penetration rates increase, independent living 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 independent living housing options and may support higher penetration rates.

These penetration rates should be considered in conjunction with each other and other market factors such as occupancy levels at existing comparable communities within and near the PMA, the number of proposed facilities in the PMA, the planned design of the units and community spaces at the Community, alternatives for potential Residents, and the proposed marketing plans and efforts of Management and the Marketing Consultant.

Management has presented three penetration rate calculations as follows:

� The Gross Market Penetration rate is calculated by adding the total number of Independent Living Units of the Community to those of the comparable existing and proposed retirement communities within Management’s defined PMA and dividing by the total number of age-and income-qualified households (households headed by individuals 75 years of age or older).

� The Net Market Penetration rate is calculated by adding the total number of Independent Living Units of the Community becoming vacant due to resident attrition as well as the number of units needed to be filled to achieve a 95 percent occupancy of the comparable existing and proposed retirement communities within Management’s defined PMA and dividing by the total number of age-and income-qualified households (households headed by individuals 75 years of age or older).

� The Project Penetration rate is that calculated proportion of eligible households in the PMA that will need to move to the Independent Living Units at the Community to maintain its full occupancy (defined as the point where the occupancy stabilizes, typically, at 95 percent for independent living units).

The following table presents a summary of these penetration rate calculations:



Table 22Independent Living Units Estimated Penetration Analysis – 2019

Source: ManagementNotes:(1) There are 140 independent living units planned at the Community. It is assumed that 77% of the occupied units will be filled by persons age 75 and over based upon the age of the Depositors.(2) Age- and income-qualified households from Table 21.(3) Represents the number of units becoming available (based on occupied comparable units in the PMA) annually from resident attrition (assuming a 13.1% attrition rate for entrance fee communities and a 22.9% attrition rate for rental communities from “State of Seniors Housing 2012” report by the American Association of Homes and Services for the Aging, American Seniors Housing Association, Assisted Living Federation of America, National Center for Assisted Living and National Investment Center).

Marketing the Independent Living Units

The success of the Community is dependent, in part, on Management’s ability to market and achieve specified presales, fill-up rates, and turnover rates for the Independent Living Units. Marketing efforts for the Independent Living Units began in December 2015 with receipt of the priority reservation agreement “PRA” deposits whereby interested seniors made fully-refundable $1,000 deposits in exchange for a priority number, which gave the interested senior the right to be contacted in sequential order according to the priority number to reserve one of the Independent Living Units, and locked in the entrance fee schedule in effect at the time of the PRA deposit. Conversions of PRA deposits to 10% entrance fee deposits (“Entrance Fee Deposit”) began in December 2015. As part of the process to reserve the Independent Living Units at the Community, a prospective resident must sign a Residency Agreement and pay the refundable Entrance Fee Deposit for their selected unit.

Estimated Penetration Rates

Age 75-and-over with Incomes of

$67,100 and above

Age 75-and-over with Incomes of

$96,200 and above

Gross Market Penetration Rate Analysis:Market Inventory of Independent Living Units in the PMA:

The Project (1)

108 108

Existing Comparable Units 35 35

Planned Comparable Units 0 0

Total Units 143 143

Number of units assuming 75% of the residents of the Project originate from within the PMA at 95%

occupancy, and assuming 75% of the residents at existing and planned comparable facilities originate from the

PMA at 95% occupancy [a] 102 102

Number of Age and Income Qualified Households (2)

[b] 825 421

Gross Market Penetration Rate [a/b] 12.4% 24.2%

Net Market Penetration Rate AnalysisTotal Unoccupied Independent Living Units within the PMA:

Number of units at the Project assuming that 77% of the units will be filled by persons age 75 and over and

that stabilized occupancy is achieved at 95.0% 103 103

Number of vacant units at existing comparable projects that need to be filled to achieve a 95% occupancy 0 0

Number of units at planned comparable projects assuming 95% stabilized occupancy 0 0

Total existing units becoming available from resident attrition (3)

8 8

Subtotal of units to be occupied assuming 75% of the Project units and 75.0% of existing and planned

comparable units originate from the PMA [c] 83 83

Number of Age and Income Qualified Households (2)

825 421

Less the number of occupied comparable independent living units -34 -34

Net Number of Age and Income Qualified Households [d] 791 387

Net Market Penetration Rate [c/d] 10.5% 21.4%

Project Penetration Rate Analysis:Number of units at the Project assuming that 77% of the units will be filled by persons age 75 and over,

stabilized occupancy is achieved at 95%, and assuming 75% of the residents originate from the PMA [e]

77 77

Project Penetration Rate [e/d] 9.7% 19.9%



The information in the following table reflects the history of unit reservations for the Independent Living Units based on those Depositors who have paid an Entrance Fee Deposit, signed a Residency Agreement and have been approved in accordance with residency requirements as of May 9, 2017.

Table 23Marketing of the Independent Living Units

Source: Management and Marketing ConsultantNote: (1) Current through May 9, 2017.

New Deposits

Number of

Cancellations

Net

Reservations

for Month

Cumulative

Units Reserved

Cumulative

Percentage of

Total Units

2015:December 4 0 4 4 2.9%

2016:January 10 0 10 14 10.0%

February 12 0 12 26 18.6%

March 7 0 7 33 23.6%

April 7 0 7 40 28.6%

May 5 0 5 45 32.1%

June 3 1 2 47 33.6%

July 8 0 8 55 39.3%

August 5 0 5 60 42.9%

September 3 0 3 63 45.0%

October 7 0 7 70 50.0%

November 5 1 4 74 52.9%

December 4 0 4 78 55.7%

2017:January 13 0 13 91 65.0%

February 6 0 6 97 69.3%

March 4 0 4 101 72.1%

April 6 0 6 107 76.4%

May (1)

2 0 2 109 77.9%

Total 111 2 109 109 77.9%



The following table depicts the inventory of the Community’s reserved Independent Living Units as of May 9, 2017

Table 24Inventory of Independent Living Units Reserved

Source: Management and Marketing ConsultantNote: (1) Current through April 9, 2017.

Independent Depositor Confirmation

An independent confirmation process was performed by CliftonLarsonAllen LLP through a survey questionnaire of 102 of the 109 Depositors (93.6 percent of the Depositors) as of May 9, 2017. As of the date of this Study, 100 Depositors (98.0 percent) of the 102 Depositors surveyed had responded to the questionnaire.

Number of Number of Percentage of

Units Units Units

Type of Independent Living Units Available Reserved (1)

Reserved (1)

One-Bedroom Apartments

The Lafayette 13 11 84.6%

The Avalon 3 3 100.0%

One-Bedroom Plus Den Apartments

The Franklin 35 22 62.9%

Two-Bedroom Apartments

The Lincoln 3 3 100.0%

The Whittier 30 17 56.7%

The Hancock 4 4 100.0%

Two-Bedroom Plus Den Apartments

The Jefferson 4 4 100.0%

The Monroe 22 22 100.0%

Three-Bedroom Apartments

The Adams 2 2 100.0%

Two-Bedroom Villas

The Hale 6 6 100.0%

The Cabot 6 6 100.0%

The Madison 4 4 100.0%

Two-Bedroom Plus Den Villas

The Washington 8 5 62.5%

Total - Independent Living Units 140 109 77.9%



The following information was assembled for those 100 completed responses:

� 100 (100 percent) of the respondents indicated they had paid a deposit to reserve their selected unit at the Community.

� Respondents were asked if they intend to reside at the Community upon the availability of their residence. Responses to this question were as follows:

� 93 (93.0 percent) indicated “Yes”; � 2 (2.0 percent) indicated “No”; and� 5 (5.0 percent) indicated “Maybe”, “Probably”, or had some other response.

� 36 (36.0 percent) indicated that they would reside alone, and 58 (58.0 percent) indicated that they would reside with a spouse, or some other person, and 6 (6.0 percent) had some other response.

� 96 (96.0 percent) indicated they owned their home.

� 41 (44.1 percent) of the 96 respondents who indicated that they own their own home indicated that it would be necessary for them to use the proceeds from the sale of their home to pay the entrance fee at the Community.

� Respondents indicated the following as to how soon they intended to move into their Independent Living Unit after it becomes available:

Table 25Move-ins After Independent Living Units are Available

Source: Questionnaire responses

� 19 (19.0 percent) of the respondents indicated they had reserved an independent living unit or were on a waiting list at another retirement community. Respondents who reserved or are on a wait list of another community are as follows:

Number of Percentage

Respondents of Respondents

1 to 30 days 29 29.0%

31 to 60 days 21 21.0%

61 to 90 days 7 7.0%

Greater than 90 days 7 7.0%

After the sale of my home 28 28.0%

Other 8 8.0%

Total 100 100.0%



Table 26Reserved or on a Waitlist of Another Community

Source: Questionnaire responses(1) The Prospect – Woodward Home is planned to close in 2018 upon the planned opening of the Community.

� Respondents indicated their primary reasons for selecting the Community as follows:

Table 27Reason for Selecting the Community

Source: Questionnaire responsesNote: (1) Respondents were given the option of indicating more than one reason for selecting the Community.

Number of

Community Name Location Responses

RiverMead Peterborough, NH 10

Kendal at Hanover Hanover, NH 2

Applewood at Amherst Amherst, MA 1

Lathrop Community Northampton, MA 1

Scott-Farrar Home Peterborough, NH 1

Prince Edward Island Charlottetown, PEI Canada 1

The Prospect - Woodward Home (1)

Keene, NH 1

Ingleside at Rock Creek Washington, DC 1

Valley Cares Townshend, VT 1

Total 19

Number of

Responses (1)

Access to health care (Lifecare) 90

Proximity to family/ friends 65

Geographic Location 60

Social activities 43

Physical security 33

Reputation of Prospect Place/Woodward Home or Board of Trustees 22

Other 11

Total 324



The following table presents information regarding the reported net worth (including home values before payment of the entrance fee) and estimated annual income of the Depositors based on financial questionnaires that Depositors were required to fill out and that Management subsequently utilized to financially qualify Depositors for residency at the Community.

Table 28Reported Annual Income and Net Worth of the Depositors (1)

Source: ManagementNote: (1) Data is current through May 9, 2017. The median reported annual income of the Depositors is approximately $66,492 and the median reported net asset value of the Depositors is approximately $1,563,600. Management completes an evaluation of the financial profile of prospective residents which includes an analysis of the prospective resident’s available assets and their ability to liquidate and use those assets to supplement income sources.(2) The percent of total for each range may not foot to the total of all income levels due to rounding estimates.

Description and Utilization of Assisted Living Services

The New Hampshire Department of Health and Human Services regulates assisted living/residential care communities that provide support for adults who qualify for care in residential settings. Residential care facilities provide support for adults who qualify for care in residential settings. Residential care facilities are community-based settings that allow for maximum individual independence while tailoring services to individual needs. Often these settings are appropriate for frail seniors and adults with disabilities who need more personal assistance and supervision than possible with care at home. Some of the adult residential care services available are meal and homemaker services, personal care and individually tailored supports, nursing care, socialization, and transportation.

Management has used the general industry term “assisted living” to describe facilities that provide services, including meals, housekeeping, laundry, activities, assistance with activities of daily living, and general supervision. Facilities with a separate secured unit and specialized programs for residents with dementia are referred to as “Memory Care” housing. It should be noted that Management has included only those market-rate facilities restricted to persons aged 55 and over and those facilities with more than 20 beds in the analysis of existing comparable assisted living and memory care facilities in the PMA.

Existing Comparable Assisted Living Facilities

The following table summarizes the comparable assisted living communities in the PMA.

Net WorthLess $500,000 $1,000,000 $1,500,000 $2,000,000 Greater

than to to to to than % of

Annual Income: $500,000 $999,999 $1,499,999 $1,999,999 $2,999,999 $3,000,000 Total Total

Less than $50,000 2 8 10 4 4 9 37 34%

$50,000 to $74,999 2 5 5 2 3 7 24 22%

$75,000 to $99,999 1 7 4 4 6 1 23 21%

$100,000 to $150,000 0 2 7 2 2 3 16 15%

Greater than $150,000 0 0 0 2 3 4 9 8%

Total 5 22 26 14 18 24 109 100%

Percent of Total (2)

5% 20% 24% 13% 17% 22% 100.0%



Table 29Comparable Assisted Living Communities in the PMA

Source: Management, telephone interviews, personal visits, and other research conducted in February 2017.Notes:N/A = Not applicable to this facility.AL = Assisted Living.MC = Memory Care.(1) Upon opening of the Project, residents at The Prospect-Woodward Home will be transferred to the Project and TheProspect-Woodward Home will be closed.(2) There are a total of 109 units at the community and all of the units are licensed as assisted living. Staff estimated 74 units receive assisted living services.(3) Stated occupancy is overall occupancy for independent living and assisted living.

The following map shows the location of the comparable existing assisted living communities in the PMA.

Number Number Total Number AL MC Totalof AL of MC of AL & MC Occupancy Occupancy AL & MCUnits Units Units % % Occupancy %

The Community 42 18 60 N/A N/A N/A

Comparable AL Communities:The Prospect-Woodward Home

(1)24 0 24 90.0% N/A 90.0%

Bentley Commons at Keene 74(2)

0 74 (2)

97.2% (3)

N/A 97.2% (3)

Holton Home 35 0 35 85.7% N/A 85.7%

Langdon Place of Keene 132 24 156 72.0% 91.7% 75.0%

The Bradley House 28 0 28 85.7% N/A 85.7%

Sub-Total Comparable AL Communities 293 24 317 82.8% 91.7% 83.5%

Total Comparable AL Communities Including the Project 335 42 377



Source: Maptitude

The following tables summarize the Community and comparable existing assisted living facilities in the PMA.



Table 30Comparable Assisted Living Facilities in the PMA

The CommunityProspect-Woodward

Home (1)Bentley Commons at

KeeneStreet Address Wyman Road 194-202 Court Street 197 Water Street

City/State/ZIP Code Keene, NH 03431 Keene, NH 03431 Keene, NH 03431

Miles from the Project N/A 4 5

Owner/SponsorThe Corporation The Corporation

Kaplan Development

Group, LLC

Profit/Non-Profit Non-Profit Non-Profit Profit

Year Opened Planned Dec. 2018 1884 2008

Number of Units:AL studio-shared 0 0 0

AL studio-private 42 0 0

AL one-bedroom 0 24 *

AL two-bedroom 0 0 *

Total AL Units 42 24 74(1)

MC studios-shared 0 0 0

MC studios-private 18 0 0

MC one-bedroom 0 0 0

Total MC Units 18 0 0

Total AL/MC Units 60 24 74 (1)

Number of IL Units 140 0 35 (1)

Number of SNF Units 20 0 0

Square Footage:AL studio-shared N/A N/A N/A

AL studio-private 383 N/A 491

AL one-bedroom N/A 168 (2)

550

AL two-bedroom N/A N/A 772-835

MC studio-shared N/A N/A N/A

MC studio-private 312 N/A N/A

MC one-bedroom N/A N/A N/A

Monthly Fees:AL studio-shared N/A N/A N/A

AL studio-private $6,916 (1)(2)

N/A $4,800-4,900

AL one-bedroom N/A $3,636-4,841 $5,100-5,300

AL two-bedroom N/A N/A $6,200-6,800


MC studio-private $8,627 (1)(2)

N/A N/A


Occupancy Rate-AL N/A 90.0% 97.2% (2)

Occupancy Rate-MC N/A N/A N/A

Included in Monthly Service Fee:Meals - AL 3 meals/day 3 meals/Day 3 meals/day

Meals - MC 3 meals/day N/A N/A

Housekeeping service Weekly Weekly Weekly

Laundry service - AL

Weekly Weekly Weekly

Laundry service - MC Weekly N/A N/A

Personal care - AL All inclusive All Inclusive Levels of care (3)

Personal care - MC All inclusive N/A N/A



Table 30 (continued)Comparable Assisted Living Facilities in the PMA

Holton Home (1) Langdon Place of Keene The Bradley House (1)

Street Address 158 Western Avenue 136A Arch Street 65 Harris Avenue

City/State/ZIP Code Brattleboro, VT 05301 Keene, NH 03431 Brattleboro, VT 05301

Miles from the Project 23 4 21

Owner/SponsorHolton Home Genesis Healthcare Holton Home

Profit/Non-Profit Non-Profit Profit Non-Profit

Year Opened 1903 1994 1858

Number of Units:AL studio-shared 0 0 0

AL studio-private 32 * 28

AL one-bedroom 3 * 0

AL two-bedroom 0 * 0

Total AL Units 35 132 28

MC studios-shared 0 0 0

MC studios-private 0 24 0

MC one-bedroom 0 0 0

Total MC Units 0 24 0

Total AL/MC Units 35 156 28Number of IL Units 0 0 0

Number of SNF Units 0 25 0

Square Footage:AL studio-shared N/A N/A N/A

AL studio-private * *

AL one-bedroom * * *

AL two-bedroom N/A * N/A


MC studio-private N/A * N/A


Monthly Fees:AL studio-shared N/A N/A N/A

AL studio-private $3,833 $3,360-3,610 $3,300

AL one-bedroom $4,982 $4,140 N/A

AL two-bedroom N/A $5,140-6,330 N/A


MC studio-private N/A $7,320 N/A


Occupancy Rate-AL 85.7% 72.0% 85.7%

Occupancy Rate-MC N/A 91.7% N/A

Included in Monthly Service Fee:Meals - AL 3 meals/day 3 meals/day 3 meals/day

Meals - MC N/A 3 meals/day N/A

Housekeeping service Weekly Weekly Weekly

Laundry service - AL

Weekly

In some units, free

common laundry Weekly

Laundry service - MC N/A Weekly N/A

Personal care - AL Levels of care (2)

Levels of care (1)

Levels of care (2)

Personal care - MC N/A All inclusive N/A



Source: Management, telephone interviews, personal visits, and other research conducted in February 2017.Notes:* = Unable to obtain information from the facility.N/A = Not applicable to this facility.AL = Assisted LivingIL = Independent LivingMC = Memory CareSNF = Skilled Nursing FacilityThe Community(1) The table reflects monthly service fees that have been deflated by 3.0 percent from the Community's planned opening date in 2018 to reflect 2017 dollars.(2) Rates presented are for direct admissions to the Assisted Living Units.

Prospect-Woodward Home(1) Upon opening of the Project, residents at The Prospect-Woodward Home will be transferred to the Project and The Prospect-Woodward Home will be closed.(2) Square footage is the average of all units.

Bentley Commons at Keene(1) There are a total of 109 units at the community and all of the units are licensed as assisted living. Staff estimated 74 units receive assisted living services.(2) Stated occupancy is overall occupancy for independent living and assisted living.(3) The base level of care is included in the monthly rent. Additional levels of care are based on an assessment.

Holton Home(1) On December 31, 2015 Bradley House and Holton Home merged. They are both operating separately but under the governance of the Holton Home Board.(2) There are 2 levels of care. Level 1 is an additional $456 per month for a studio and $593 per month for a one-bedroom unit and Level 2 is an additional $1,095 per month for a studio and $1,424 per month for a one-bedroom unit.Langdon Place of Keene(1) There are three levels of care. Level 1 is an additional $750 per month, Level 2 is an additional $1,250 per month and Level 3 is an additional $2,000 per month.The Bradley House(1) On December 31, 2015 Bradley House and Holton Home merged. They are both operating separately but under the governance of the Holton Home Board.(2) Level of care pricing was not available at the time of research.

Planned Assisted Living Developments in the PMA

Based upon telephone interviews with local planning agencies, interviews with management at existing retirement communities, and other research, there is one assisted living community planning an expansion within the PMA as follows:

� Bradley House is planning an expansion to its existing community located at 65 Harris Avenue in Brattleboro, Vermont. The expansion is planned to include the addition of 7 rooms and adding common areas. The expansion has not received final approvals from the city but staff indicated they expect to commence construction in May 2017. The expansion is included in the penetration rate calculation presented subsequently herein.

There were no other assisted living communities that were disclosed as being planned in the PMA other than the Community.

Summary of Assisted Living Units

There are a total of 317 assisted living and memory care beds in the PMA, including the 24 units at The Prospect-Woodward Home and excluding the 60 units planned at the Community. Management has reflected the 317 existing



units less the 24 units at The Prospect-Woodward Home that will be eliminated upon the opening of the Community as comparable with the Community for purposes of calculating assisted living penetration rates presented subsequently hereinafter.

Assisted Living Estimated Penetration Analysis

The increased size of the private-paying frail elderly market has attracted providers to develop new and creative options for caring for this population. Methodologies for projecting bed need or demand for assisted living vary. Research studies have identified impairment levels in activities of daily living (“ADL”) such as dressing, bathing, eating, toileting, mobility, and taking medications, as well as instrumental activities of daily living (“IADL”), such as meal preparation, home maintenance, shopping, and personal finance, all of which generally are often 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 needs for assistance often depends on alternatives available and is somewhat more discretionary than the decision to enter a nursing care facility.

Population data and income statistics may be utilized to some extent to estimate the number of qualified households (age 75 and over) 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 care givers (assumed to be those households aged 45-to-64 earning in excess of $100,000 annually) and their parents may also provide for additional financial assistance as a means for non-income qualified seniors to afford this level of care. Additionally, non-income qualified seniors may have additional assets that could provide the financial means to afford this level of care. Thus, assisted living calculated estimated penetration rates, where relevant, and estimated market penetration rates are presented as a range between age-qualified households and age- and income-qualified households.

Management anticipates that the prospective residents of its Assisted Living Units will generally meet the following profile prior to occupancy:

� 75 years of age or older;

� Living alone; and

� Requiring some assistance with ADLs and/or IADLs.

Additionally, pre-tax income characteristics have been applied to estimate a range of market penetration rates for age and income qualified households. Management assumes that a prospective non-Resident of the Assisted Living Units will have an annual pre-tax income of at least $100,800 or an annual income of $25,000 or more if they own their own home. This assumption allows those owning a home to be included as qualified households in light of the additional potential financial resources from the sales proceeds.

The following table presents the household income distribution data in the PMA as well as the calculated income eligible households for the Assisted Living Units. The 2017 and 2022 data in the table are estimates as provided by The Nielsen Company. The following table also presents data for 2019 that has been interpolated from information provided by The Nielsen Company. Data for 2019 has been included because the Project is forecasted to be open for only one month in 2018.



Table 31Income Eligible Households in PMA

Source: The Nielsen Company and ManagementNote: (1) Interpolated data is based upon the 2017 and 2022 data provided by The Nielsen Company.

2017 (Estimated)Age Range: 65-74 75-84 85 & Over Total



Household Income:

Less than $25,000 1,318 1,065 657 3,040

$25,000 - 34,999 685 417 216 1,318

$35,000 - 49,999 1,094 554 198 1,846

$50,000 - 74,999 1,148 410 136 1,693

$75,000 - 99,999 655 202 58 916

$100,000 - 149,999 535 127 53 714

$150,000 - 199,999 224 62 13 299

$200,000 or More 265 65 14 343

Households with $23,600 or more of income 4,679 1,896 724 7,299


2019 (Interpolated) (1)Age Range: 65-74 75-84 85 & Over Total



Household Income:

Less than $25,000 1,342 1,047 654 3,043

$25,000 - 34,999 694 414 217 1,325

$35,000 - 49,999 1,148 564 204 1,916

$50,000 - 74,999 1,196 415 136 1,747

$75,000 - 99,999 706 209 62 977

$100,000 - 149,999 617 142 61 820

$150,000 - 199,999 266 70 15 351

$200,000 or More 328 76 16 420



2022 (Projected)Age Range: 65-74 75-84 85 & Over Total



Household Income:

Less than $25,000 1,379 1,020 649 3,047

$25,000 - 34,999 709 410 218 1,337

$35,000 - 49,999 1,229 578 213 2,020

$50,000 - 74,999 1,270 423 136 1,829

$75,000 - 99,999 781 220 67 1,068

$100,000 - 149,999 741 165 72 978

$150,000 - 199,999 328 82 17 427

$200,000 or More 424 93 19 535





The following table estimates the number of age- and income-qualified households that are living alone and estimated to require assistance with ADLs or IADLs within the PMA. The Assisted Living Units are expected to open in December of 2018, and this information is presented in 2019 which will be the first full year of operations.

Table 32Estimated Number of Qualified Individuals in the PMA – 2019

Source: The Nielsen Company and Management

Notes:

(1) Households with householders aged 75 years of age and older, from Table 31.

(2) Households with householders aged 75 years of age and over with reported incomes of $25,000 and over if they

own their homes (based on tenure data from the 2010 U.S. Census) plus all householders aged 75 years and older with

reported incomes of $100,800 or more (from Table 31).

(3) Percentage of persons aged 75 years of age and older estimated to need assistance with ADLs. Percentage is the

weighted average based upon the number of qualified households age 75 to 84 and age 85 and over. From the

National Center for Health Statistics, "Functional Limitations among Medicare Beneficiaries” from the Medicare

Current Beneficiary Survey, average for 2008-2010, May 2013.

(4) Percentage of persons aged 75 years of age and older estimated to be living alone. Percentage is from

www.census.gov for the PMA from the 2010 U.S. Census.

Assisted Living Estimated Penetration Rate Analysis

Penetration rates are one measure of the degree to which the PMA might be either under-served or saturated. As penetration rates increase, assisted living 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 assisted living housing options and may support higher penetration rates.

These penetration rates should be considered in conjunction with each other and other market factors such as occupancy levels at existing comparable communities within and near the PMA, the number of proposed facilities in the PMA, the planned design of the units and community spaces at the Community, alternatives for potential residents, and the proposed marketing plans and efforts of Management.

The market penetration rate is presented as the percentage of the age-qualified individuals and age- and income-qualified individuals that Management assumes that the total market has absorbed (or must absorb) for the entire market to achieve stabilized occupancy. The market penetration rate is calculated by dividing the number of comparable assisted living units within the PMA by the number of age-qualified individuals and the age- and income-qualified individuals within the PMA.

The project penetration rate is presented as a range between the percentages of the age-qualified individuals and the percentage of age- and income-qualified individuals that Management assumes that the Community’s Assisted Living Units would need to attract in order to achieve stabilized occupancy. Project penetration is calculated by dividing the number of Assisted Living Units at the Community by the total number of age-qualified individuals and age- and income-qualified individuals in the PMA.

Estimated Age Qualified

Households(1)

Estimated Age, Income and Asset

Qualified Households(2)

Percentage Requiring

Assistance(3)Percentage

Living Alone(4)

Estimated Number of Age

Qualified Individuals

Estimated Number of Age

and Income Asset Qualified

Individuals4,302 N/A 36.8% 54.2% 858 N/A

N/A 1,936 35.3% 54.2% N/A 371



Table 33Assisted Living Estimated Penetration Rate Analysis – 2019

Source: ManagementNote:(1) Number of qualified individuals from Table 32.

Description and Profile of Nursing Facilities in the PMA

The New Hampshire Department of Health and Human Services Health Facilities Administration is responsible for the oversight and enforcement of basic standards designed to promote safe and appropriate care of persons receiving care and treatment in hospitals and other medical facilities, residential facilities and through nonresidential health care providers. The Health Facility Licensing Unit Licenses and inspects a variety of health facilities, residential facilities and nonresidential health care providers including nursing homes. The Health Facility Certification Unit is the contract survey agency for the Nursing Home Medicaid Office and the U.S. Centers for Medicare and Medicaid Services (“CMS”). The Health Facility Certification Unit certifies and inspects health facilities, nursing facilities and nonresidential health care providers that participate in the Medicare/Medicaid programs.

Estimated Penetration Rates

Estimated Age Qualified

Individuals

Estimated Age and Income Qualified

IndividualsMarket Penetration Rate Analysis:Market Inventory of Assisted Living Units in the PMA:

The Project 60 60

Existing comparable assisted living and memory care facilities 293 293

Total units at the Project and existing comparable facilities 353 353

Number of units assuming 75% of Project residents originate from the PMA at 93% occupancy, and 75%

of existing comparable residents originate from the PMA at 93% occupancy [a] 246 246

Number of Qualified Individuals (1)

858 371

Plus the number of Qualified Individuals currently residing at exisiting comparable assisted living and

memory care units in the PMA 243 243

Total Qualified Individuals [b] 1,101 614

Market Penetration Rate - The Project and Existing Comparable Units [a/b] 22.3% 40.1%

Number of Planned comparable units assuming 75% of residents will originate from the PMA at 93%

occupancy [c] 5 5

Total existing and planned units to be occupied in the PMA [a+c] [d] 251 251

Market Penetration Rate - The Project Existing Comparable and Planned Comparable Units [d/b] 22.8% 40.9%

Project Penetration Rate Analysis:Number of units at the Project assuming 75% of residents originate from the PMA at 93% occupancy [e]

42 42

Project Penetration Rate [e/b] 3.8% 6.8%



The following map presents the location of the nursing facilities in the PMA.

Source: Maptitude



The following table presents a summary of the proportion of Medicare, Medicaid and other payor sources at each of the nursing facilities in the PMA based upon Medicare cost report data.

Table 34PMA Nursing Care Facilities’ Payor Mix

Source: Financial data for cost report periods ending 9/30/15 and 12/31/15, www.defhc.com, March 2017.Note: Swing bed units at Cheshire Medical Center are not included.

Planned Nursing Facility Developments in the PMA

Based upon telephone interviews with local planning agencies, interviews with management at existing retirement communities in the PMA and the review of certificate of need decisions and evaluations, there are no nursing facilities planned in the PMA, other than at the Community.

Summary of Nursing Facility Beds

Currently there are 636 nursing facility beds in service in the PMA excluding the planned beds at the Community. Including the 20 planned beds at the Community, there will be a total of 656 beds in the PMA.

Ratio Analysis

Nursing beds per thousand is a widely used statistic which allows comparison between areas that have different populations. The following table shows the number of total beds per 1,000 persons age 65 and over and age 85 and over for 2017 and 2022 for the PMA, New Hampshire and the United States.

Total Calculated Number of Days Percentage of Total Days

Facility Name Beds Occupancy Medicare Medicaid Other Total Medicare Medicaid Other

Applewood Rehabilitation Center 72 96.7% 3,348 19,632 2,427 25,407 13.2% 77.3% 9.6%

Keene Center 106 97.0% 5,354 25,186 7,005 37,545 14.3% 67.1% 18.7%

Langdon Place of Keene 25 96.2% 2,304 2,552 3,919 8,775 26.3% 29.1% 44.7%

Maplewood Nursing Home 148 88.7% 2,551 37,925 7,440 47,916 5.3% 79.1% 15.5%

Pine Heights at Brattleboro Center 80 85.8% 3,911 0 21,154 25,065 15.6% 0.0% 84.4%

Thompson House 60 94.6% 1,762 0 18,950 20,712 8.5% 0.0% 91.5%

Vernon Green Nursing Home 60 91.2% 1,353 0 18,616 19,969 6.8% 0.0% 93.2%

Westwood Center 85 94.6% 5,545 18,993 4,825 29,363 18.9% 64.7% 16.4%

Weighted Average 636 92.5% 26,128 104,288 84,336 214,752 12.2% 48.6% 39.3%



Table 35Nursing Beds per 1,000

2017 and 2022

Source: ManagementNotes:(1) Population data from The Nielsen Company.(2) The number of nursing facility beds in the PMA is from Table 34 and excludes the 20 beds planned at the Community.(3) Total nursing home beds are based upon data from the American Health Care Association, "LTC Stats: Nursing Facility Operational Characteristics Report”, December 2016, and represents total beds. (4) For 2022, the number of beds in the PMA has been adjusted to include the 20 beds planned at the Community.

Nursing Age 65 + Age 85 +Facility Beds Age 65 + Age 85 + Beds/1,000 Beds/1,000

PMA 636(2) 16,109 2,118 39.5 300.3

New Hampshire 7,471(3) 229,514 28,581 32.6 261.4

United States 1,694,078(3) 50,275,374 6,327,357 33.7 267.7

Nursing Age 65 + Age 85 +Facility Beds Age 65 + Age 85 + Beds/1,000 Beds/1,000

PMA 656(4) 17,991 2,195 36.5 298.9

New Hampshire 7,471(3) 268,509 29,926 27.8 249.6

United States 1,694,078(3) 59,074,889 6,688,544 28.7 253.3

2017 SNF BEDS PER 1,000

Population (1)

2022 SNF BEDS PER 1,000

Population (1)



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Corporation’s forecasted financial statements are presented using the accrual basis of accounting.

Cash and Cash Equivalents

Cash and cash equivalents are assumed to include certain investments in highly liquid instruments with original maturities of three months or less from the date of acquisition, which are not included in assets limited as to use or marketable securities.

Accounts Receivable

Accounts receivable will be reported at the net realizable amounts from third-party payers, residents and others.

Assets Limited as to Use

Assets limited as to use include assets held by a bond trustee under bond indenture agreements. Assets limited as to use which are assumed to be available to meet current obligations are classified as current assets. Assets limited as to use are assumed to be carried at fair value. Management and the Operator do not assume any changes in the underlying values of the assets limited as to use during the Forecast Period that would result in realized or unrealized gains or losses.

Property and Equipment

Property and equipment additions are stated at cost, which includes interest capitalized during construction. Donated property is assumed to be recorded at its estimated fair value at the date of receipt. Depreciation is forecasted on a straight-line basis for all depreciable assets over estimated useful life of each asset.

Deferred Financing Costs

Deferred financing costs incurred in connection with the issuance of long-term debt are assumed to be recorded as a direct deduction from the carrying amount of that debt and amortized as interest expense using the straight line method over the term of the related financing, which approximates the effective interest method.

Income Taxes

The Corporation has been granted exemption from federal taxes on income under Section 501(c)(3) of the Internal Revenue Code; accordingly, no provision for income taxes has been made in the forecasted financial statements.

Resident Services Revenue

Resident services revenue includes room charges and ancillary services to residents and is recorded at established billing rates, net of contractual adjustments, resulting from agreements with third-party payors and is recognized when the services are provided. Provisions for estimated third-party payor settlements are provided in the period the related services are rendered. Differences between the amounts accrued and subsequent settlements are recorded in revenue in the year of settlement. For the purpose of its forecasted financial statements, Management and the Operator havenot assumed any material third party settlements or adjustments during the Forecast Period.

Entrance Fees

Entrance fees paid by a resident upon entering into a Residency Agreement, net of the portion thereof that is refundable, are assumed to be recorded as deferred revenue and are assumed to be amortized to income using the



straight-line method over the assumed life expectancy of a resident. Upon death or withdrawal, the remaining unamortized nonrefundable portion of the entrance fee is taken into income. The refundable portion of entrance fees is recorded as refundable entrance fee liability. The refundable portion of entrance fees is not amortized to income.

Investments and Investment Income

Investments in equity securities with readily determinable fair values and all investments in debt securities areforecasted to be measured at fair value. Investment income or loss is assumed to be included in operating income unless the income or loss is restricted by donor or law. Management has not forecasted any unrealized gains or losses on investments during the Forecast Period.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Obligation to Provide Future Services

Management and the Operator are planning to calculate on an annual basis the present value of the net cost of future services and use of facilities to be provided to current Life Care Residents and to compare that amount with the balance of deferred revenue from entrance fees. If the present value of the net cost of future services and use of facilities exceeds the deferred revenue from entrance fees, a liability will be recorded (obligation to provide future services) with the corresponding charge to income. Management and the Operator assume that no obligation to provide future services to residents will be required to be recorded during the Forecast Period.



MANAGEMENT’S BASIS FOR FORECAST OF REVENUES AND ENTRANCE FEES

Resident Service Revenue

Forecasted revenue from the resident service revenues consists of revenue from the Existing Community until the Project opens and then from the Project’s Independent Living Units, the Assisted Living Units and the Nursing Care Rooms during the remainder of the Forecast Period. Management and KRI have forecasted and the Operator has reviewed resident services revenue based upon their historical experience operating the Existing Community and other communities and their plans for operating the Community during the Forecast Period.

Management and KRI have forecasted and the Operator has reviewed and agrees with the following occupancy for the Community during the Forecast Period:

Table 36The Community

Forecasted Average Occupancy – Units and Percentage for the ProjectFor the Years Ending December 31,

Source: Management and KRI(1) Represents the weighted average number of units occupied in the Project during the year.(2) Represents one month of operations.

Forecasted occupancy is based upon Management and the Operator’s assumed move-in schedule for the Project units.

The following tables reflect Management and the Operator’s anticipated move-in schedule for the Project as well as forecasted occupancy and utilization assumptions.

YearIndependent

LivingAssistedLiving

Nursing Care Total

Independent Living

AssistedLiving

Nursing Care Total

2018(2)

1.00 1.00 0.00 2.00 0.7% 1.7% 0.0% 0.9%

2019 67.05 25.00 5.50 97.55 47.9% 41.7% 27.5% 44.3%

2020 117.50 42.50 15.75 175.75 83.9% 70.8% 78.8% 79.9%

2021 132.09 50.50 17.00 199.59 94.3% 84.2% 85.0% 90.7%

2022 132.92 51.00 17.00 200.92 95.0% 85.0% 85.0% 91.3%

Occupied Units(1) Occupancy %



Table 37Project Units

Forecasted Move-In Schedule

Source: Management and KRINote: (1) Represents transfers from the Existing Community

Unit Cummulative Unit Cummulative Unit Cummulative Total PercentageMove-Ins Units Move-Ins Units Move-Ins Units Occupancy of Occupancy

2018December 12.0 12.0 12.0 12.0

(1)0.0 0.0 24.0 10.91%

2019January 12.0 24.0 2.0 14.0 0.0 0.0 38.0 17.27%

February 10.0 34.0 2.0 16.0 1.0 1.0 51.0 23.18%

March 10.0 44.0 2.0 18.0 1.0 2.0 64.0 29.09%

April 8.0 52.0 2.0 20.0 1.0 3.0 75.0 34.09%

May 8.0 60.0 2.0 22.0 1.0 4.0 86.0 39.09%

June 8.0 68.0 2.0 24.0 1.0 5.0 97.0 44.09%

July 5.6 73.6 2.0 26.0 1.0 6.0 105.6 48.02%

August 5.6 79.3 2.0 28.0 1.0 7.0 114.3 51.95%

September 5.6 84.9 2.0 30.0 1.0 8.0 122.9 55.87%

October 5.0 89.9 2.0 32.0 1.0 9.0 130.9 59.51%

November 5.0 94.9 2.0 34.0 1.0 10.0 138.9 63.15%

December 5.0 99.9 2.0 36.0 1.0 11.0 146.9 66.78%

2020January 4.0 103.9 1.0 37.0 1.0 12.0 152.9 69.51%

February 4.0 107.9 1.0 38.0 1.0 13.0 158.9 72.24%

March 3.0 110.9 1.0 39.0 1.0 14.0 163.9 74.51%

April 2.0 112.9 1.0 40.0 1.0 15.0 167.9 76.33%

May 2.0 114.9 1.0 41.0 1.0 16.0 171.9 78.15%

June 2.0 116.9 1.0 42.0 1.0 17.0 175.9 79.96%

July 2.0 118.9 1.0 43.0 0.0 17.0 178.9 81.33%

August 2.0 120.9 1.0 44.0 0.0 17.0 181.9 82.69%

September 2.0 122.9 1.0 45.0 0.0 17.0 184.9 84.05%

October 2.0 124.9 1.0 46.0 0.0 17.0 187.9 85.42%

November 2.0 126.9 1.0 47.0 0.0 17.0 190.9 86.78%

December 1.0 127.9 1.0 48.0 0.0 17.0 192.9 87.69%

2021January 1.0 128.9 1.0 49.0 0.0 17.0 194.9 88.60%

February 1.0 129.9 0.0 49.0 0.0 17.0 195.9 89.05%

March 1.0 130.9 1.0 50.0 0.0 17.0 197.9 89.96%

April 1.0 131.9 0.0 50.0 0.0 17.0 198.9 90.42%

May 1.0 132.9 1.0 51.0 0.0 17.0 200.9 91.33%

June 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

July 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

August 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

September 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

October 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

November 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

December 0.0 132.9 0.0 51.0 0.0 17.0 200.9 91.33%

Thereafter 132.9 51.0 17.0 200.9 91.33%

Nursing CareAssisted LivingIndependent Living



The forecasted double occupancy percentages for the Independent Living Units are as follows:

Table 38Forecasted Double Occupancy Percentage – Project Independent Living Units

Source: Management and KRIThe following table summarizes the Projects forecasted monthly service fees during the Forecast Period.

Table 39Project Independent Living UnitsForecasted Monthly Service Fees

For the Years Ending December 31,

Source: Management and KRI

Management and KRI have forecasted and the Operator has reviewed and agrees that the Independent Living Units monthly service fees will be inflated by an average of 3.0 percent per annum beginning January 1, 2019 and each year thereafter during the Forecast Period. Entrance Fees are forecasted to inflate by 3.0 percent per annum beginning January 1, 2020 and each year thereafter.

Year Ending December 31,2018 51%

2019 49%

2020 46%

2021 42%

2022 38%

Double Occupancy Percentage

NumberUnit Type of Units 2018 2019 2020 2021 2022Independent Living

Community Center

Lafayette 13 $3,162 $3,257 $3,355 $3,455 $3,559

Franklin 32 $3,595 $3,703 $3,814 $3,928 $4,046

Avalon 3 $3,770 $3,883 $4,000 $4,120 $4,243

Lincoln 3 $4,192 $4,318 $4,447 $4,581 $4,718

Whittier 33 $4,017 $4,138 $4,262 $4,389 $4,521

Hancock 4 $4,120 $4,244 $4,371 $4,502 $4,637

Monroe 22 $4,455 $4,589 $4,726 $4,868 $5,014

Jefferson 4 $4,455 $4,589 $4,726 $4,868 $5,014

Adams 2 $5,835 $6,010 $6,190 $6,376 $6,567

Community Center Subtotal/Weighted Average 116 $3,936 $4,054 $4,176 $4,301 $4,430

Villas

Hale 6 $3,966 $4,085 $4,208 $4,334 $4,464

Cabot 6 $4,120 $4,244 $4,371 $4,502 $4,637

Madison 4 $4,475 $4,609 $4,748 $4,890 $5,037

Washington 8 $5,727 $5,899 $6,076 $6,258 $6,446

Villas Subtotal/Weighted Average 24 $4,676 $4,817 $4,961 $5,110 $5,263

Independent Living Total/Weighted Average 140 $4,063 $4,185 $4,310 $4,440 $4,573

Second Person Occupancy Fee $1,236 $1,273 $1,311 $1,351 $1,391



Health Center

Forecasted revenue from the Health Center consists of revenue from operating the Assisted Living Units and Nursing Care Rooms during the Forecast Period. Management and KRI have forecasted and the Operator has reviewed and agrees with resident services revenue based upon their historical experience and their plans for operating the Assisted Living Units and the Nursing Care Rooms during the Forecast Period.

Management and KRI have forecasted and the Operator has reviewed and agrees with the following monthly service fees for the Assisted Living Units and Nursing Care Rooms during the Forecast Period.

Residents of the Independent Living Units may be directly admitted to the Assisted Living Units or the Nursing Care Rooms. Individuals from outside of the Community may be admitted to the Assisted Living Units. Non-life care residents of the Assisted Living Units may be admitted to the Nursing Care Rooms should they need additional care. Admissions to the Nursing Care Rooms directly from outside the Community are prohibited. Management and the Operator (defined herein) assume that there will be no Medicaid utilization and that the Community will not be Medicare certified.

Table 40Health Center

Forecasted Weighted Average Monthly Service FeesFor the Years Ending December 31,

Source: Management and KRINote (1) Represents expected skilled nursing utilization of Life Care Residents who receive services outside of the Community.

2018 2019 2020 2021 2022Health Center

Assisted Living UnitsUtilization - Monthly Average

Residents Transferred from Existing Units 1.0 6.0 3.0 - -

Life Care Residents - Life Care Rate - 0.4 1.4 2.7 5.1

Life Care Residents - Full Rate - 0.2 0.5 1.1 2.0

Private Pay Resident - 18.4 37.6 46.7 43.9

Total Utilization 1.0 25.0 42.5 50.5 51.0

Monthly Service Fee

Residents Transferred from Existing Units 4,058$ 4,179$ 4,305$ 4,434$ 4,567$

Life Care Residents - Life Care Rate 2,666 2,810 2,985 3,200 3,424

Life Care Residents - Full Rate 8,036 8,277 8,525 8,781 9,316

Private Pay Resident 8,036 8,277 8,525 8,781 9,316

Weighted Average Monthly Service Fees 4,058$ 7,199$ 8,049$ 8,479$ 8,725$

Nursing Care Rooms

Utilization - Annual Days

Temporary Life Care - 113.2 498.8 1,021.0 1,616.2

Life Care Residents - 557.3 1,569.3 1,850.4 1,868.6

Self Pay - 1,148.2 3,551.4 3,220.1 2,540.6

Medicare Eligible (10% of Temp. Transfer)(1)

- 12.6 55.4 113.4 179.6

Total Days - 1,831.3 5,675.0 6,205.0 6,205.0

Daily Rate

Temporary Life Care -$ -$ -$ -$ -$

Life Care Residents - 92.58 97.92 105.28 112.68

Self Pay - 325.72 328.98 332.26 335.59

Medicare Eligible (10% of Temp. Transfer) - - - - -

Weighted Average Daily Rate -$ 232.39$ 232.95$ 203.83$ 171.34$



Management and KRI have forecasted and the Operator has reviewed and agrees that the monthly services fees for the Assisted Living Units, and self-pay will be inflated by 3.0 percent per annum beginning on January 1, 2019 and during the remainder of the Forecast Period. Management and the Operator have assumed Life Care rates based on the average rates in the Independent Living Units. These rate changes were forecasted by Management and KRI and reviewed and agreed to by the Operator based upon their experience operating the Existing Community and/or other similar communities, current economic conditions, current nursing facility regulations, and assumed acuity and inflationary increases during the Forecast Period. Management and the Operator assume that there will be no Medicaid beds in the Health Center and that the Community will not be Medicare certified.

Entrance Fee Receipts

Entrance Fee receipts and refunds are forecasted based upon information provided by Management and KRI and were reviewed and agreed to by the Operator. The following table summarizes entrance fees received by initial residents of the Independent Living Units and by turnover residents, and refunds paid to residents during the Forecast Period.

Table 41Forecasted Project Entrance Fee Receipts and Refunds

For the Years Ending December 31,(000s Omitted)

Source: Management and Operator

Other Income

Management and KRI have forecasted and the Operator has reviewed and agrees with other revenue of approximately 3 percent of independent living revenue based upon historical experience. This revenue relates to additional guest room charges, application fees, beauty shop fees, chaplain services, wellness center services and other services revenues.

Existing Community Revenue

Management has forecasted the Existing Community’s revenue for the year ending December 31, 2017 and 2018 through the date of its closing and transfer of operations to the newly opened Project in 2018 based on its existing budget for 2017. This revenue is related to resident fees for the operation of an assisted living community.Management has forecasted the monthly service fees will be inflated by 3.0 percent on January 1, 2018.

Interest Income

Interest income consists of interest earned on available cash and cash equivalents, investments, and assets limited as to use. During construction of the Project, interest expense on the Series 2017 Bonds has been capitalized, net of

2017 2018 2019 2020 2021 2022

Entrance Fees Received from Initial Residents

Independent Living Units -$ 4,175$ 30,590$ 10,034$ 1,846$ -$

Initial Resident Entrance Fees - 4,175 30,590 10,034 1,846 -

Entrance Fees Received From Turnover - - - - 1,661 1,901

Entrance Fees Refunded From Turnover - - - - (641) (740)

Net Turnover Entrance Fees - - - - 1,020 1,161

Total Entrance Fees Received, Net of Refunds -$ 4,175$ 30,590$ 10,034$ 2,866$ 1,161$

Turnover Assumptions:

Number of Entrance Fees Received (Attrition) - - - - 4.5 5.0

Number of Entrance Fees Refunded (Attrition) - - - - 3.3 3.7



interest earned on the various trustee-held funds relating to the Series 2017 Bonds. The following table reflects Management’s assumed realized interest earnings rates during the Forecast Period based upon historical earnings rates and current economic conditions:

Table 42Forecasted Interest Earning Rates

Source: Management

2017 2018 2019 2020 2021 2022

Cash and Cash Equivalents 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Investments and Board Restricted Funds 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

Project Fund 0.50% 0.50% n/a n/a n/a n/a

Debt Service Reserve Fund 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Capitalized Interest Fund 0.50% 0.50% 0.50% n/a n/a n/a

Working Capital Fund 0.50% 0.50% 0.50% 0.50% 0.50% n/a

Entrance Fee Fund 0.00% 0.00% 0.00% 0.00% n/a n/a

State Reserve Requirement 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Bond Fund 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%

Repair and Replacement Fund n/a n/a n/a 0.50% 0.50% 0.50%



MANAGEMENT’S BASIS FOR FORECAST OF EXPENSES

Project Operating Expenses

Project operating expenses have been forecasted to be recognized during the month incurred. Management has forecasted operating expenses based upon its historical experience and were reviewed by the Operator based on its experience with the operations of other similar communities. In general, operating expenses are forecasted to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation following as occupancy increases after completion of the Project. The specific basis for major expense items were formulated by Management with input from the Operator and are discussed below.

Salaries and Wages

A full-time equivalent employee (“FTE”) is assumed to represent 2,080 hours of time paid annually. The table that follows presents a summary of forecasted FTEs, by department, for the Project for the years ending December 31, 2018 through 2022.

Table 43Forecasted Staffing and Average Hourly Rates of the Project

For the Years Ending December 31, 2018 through 2022(In Full-Time Equivalents)

Source: Management and Operator

Management and KRI have forecasted average hourly wage rates to inflate by 3.0 percent per annum throughout the Forecast Period. The Operator has reviewed and agrees with this assumption.

Payroll Taxes and Employee Benefits

Payroll taxes and employee benefits costs include FICA, unemployment taxes, workers’ compensation, medical insurance, life insurance, retirement contributions, and other miscellaneous benefits. Management and the KRI haveforecasted that these benefit costs will approximate 23 percent of salaries and wages during the Forecast Period, based on their experience operating other communities. The Operator has reviewed and agrees with this assumption.

General and Administration

Management and KRI have forecasted non-salary costs of general and administrative services of the Project to includeaccounting fees, computer expenses, human resources, telephone and cable service, supplies, and other miscellaneous costs associated with administrative services. These costs are anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation following as occupancy increases after completion of the Project. The Operator has reviewed and agrees with this assumption.

Number Average Number Average Number Average Number Average Number Averageof Hourly of Hourly of Hourly of Hourly of Hourly

Departments FTEs Rate FTEs Rate FTEs Rate FTEs Rate FTEs Rate

General and Administrative 2.1 38.36$ 7.4 29.53$ 7.4 30.42$ 7.4 31.33$ 7.4 32.27$

Marketing 0.5 35.16$ 2.0 27.03$ 2.0 27.84$ 2.0 28.68$ 2.0 29.54$

Assisted Living 1.0 29.46$ 10.7 26.95$ 15.4 25.29$ 17.6 25.14$ 17.6 25.90$

Nursing Care 0.4 33.12$ 8.4 26.22$ 18.2 23.50$ 24.1 23.24$ 24.1 23.94$

Food Services 1.1 21.33$ 11.8 17.67$ 19.5 16.79$ 28.5 16.19$ 28.5 16.67$

Housekeeping 0.3 16.84$ 5.0 15.87$ 8.7 15.21$ 10.7 15.27$ 10.7 15.73$

Maintenance & Security 1.1 23.52$ 6.0 21.29$ 7.2 21.95$ 9.3 22.63$ 9.3 23.31$

Activities 0.1 24.76$ 1.0 25.50$ 1.0 26.27$ 1.0 27.06$ 1.0 27.87$

Total/Overall 6.5 30.15$ 52.2 23.38$ 79.3 21.94$ 100.6 22.60$ 100.6 23.27$

20222018 2019 2020 2021



Management Fees

The Management Agreement requires the Operator to serve as the manager of operations and facilities for the Project and, in connection therewith, recommend and regularly evaluate policies and goals of Management, implement the policies, budgets, directives and goals for the Project established by Management, market the Project after the Project reaches stabilized occupancy, manage the day-to-day operations of the Project in accordance with Management’s policies, directives and goals, provide Management with relevant information as to past operations, and make recommendations as to the future operation of the Project. The Operator will hire, train and supervise the Executive Director of the Project, who will be an employee of the Operator. The Operator will recommend personnel policies and procedures for Management’s employees, recommend appropriate employee compensation and benefit plans, as necessary or appropriate, recruit employees to be employed by Management, and utilize personnel policies, procedures and guidelines adopted by Management, implement the recruitment, hiring, training, retention and termination of Management’s staff members.

The Operator will maintain a system of financial controls for the Project and provide Management with monthly financial statements and annual budgets for operating revenue and expense, capital expenditures and cash flow projections for the Project, and recommend a schedule of resident monthly services fees and other charges. Management expects to retain ultimate control over the retention of the Operator. Management will also evaluate the Operator’s performance and monitor the operating costs, wages, salaries, expenses and overall fiscal viability of the Project.

The term of the Management Agreement commenced on December 7, 2015 (the “Effective Date”) and will continue until the completion of 60 months from the date the first unit is occupied unless sooner terminated in accordance with the terms of the Management Agreement. Either party may terminate the Management Agreement without cause by giving written notice to the other party of party’s intention to terminate the Management Agreement.

The Corporation will pay to the Operator: (a) a Monthly Management Fee payable in advance, monthly on the first day of each calendar month commencing with the commencement of operations; (b) Development Stage Consulting Fee; (c) a Management Consulting Fee: (d) a Pre-opening Services Fee; (e) Performance Incentive Fee payable semi-annually based on the Project’s six months of operating results; and (f) Application Service Provider Fees, each fee aspreviously described (see Page C-14). A summary of the fees to be paid pursuant to the Management Agreement is presented below.

Table 44Forecasted Management Fees

Source: Management Agreement

Marketing

During the construction and fill-up period, marketing expense is based on the Marketing Consultant’s marketing plan. After occupancy has stabilized, Management and KRI have forecasted non-salary marketing expenses based upon their historical experience operating other communities and their operating plans for the Project during the Forecast

2017 2018 2019 2020 2021 2022

Management Agreement

Base Monthly Management Fee -$ 30,000$ 370,800$ 381,924$ 393,382$ 405,183$

Development-Stage Consulting Fee 30,000 - - - - -

Management Consulting Fee 70,000 50,000 - - - -

Pre-Opening Service Fee - 90,000 - - - -

Performance Incentive Fee - - - - - -

Application Service Provider Fee 35,000 15,500 15,965 16,444 16,937 17,445

Total Management Fees 135,000$ 185,500$ 386,765$ 398,368$ 410,319$ 422,629$



Period. Non-salary marketing expenses are forecasted to include the costs of advertising, public relations and other such expenses. Management has forecasted these costs will increase by approximately 3.0 percent per annum during the Forecast Period for inflation plus additional expenses beyond inflation as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

Assisted Living

Non-salary related costs of assisted living services are forecasted to include medical supplies, and other miscellaneous costs associated with providing assisted living and memory care services. Management and KRI assume that these costs would vary with changes in occupancy levels. Management has forecasted these costs beginning in the year ending 2018 based on the number of months the Health Center is planned to be open. In addition, these costs are anticipated to increase for inflation at 3.0 percent annually throughout the Forecast Period plus additional expenses beyond inflation as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

Nursing Care

Non-salary related nursing care unit costs are forecasted based upon Management and the KRI’s estimate of the cost of nursing supplies and other miscellaneous costs associated with providing healthcare services. Management and the Operator assume that these costs would vary with changes in occupancy levels. Management has forecasted these costs beginning in the year ending December 31, 2018 based on the number of months the Health Center is planned to be open. In addition, these costs are anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

Food Services

Non-salary costs of food services relate to the forecasted costs for providing food services to residents of the Community including raw food, dietary supplies, and other such costs. Management and KRI assume that these costs would vary with changes in occupancy levels. Additionally, Management has forecasted these costs beginning in the year ending December 31, 2018 based on the number of months the Health Center is planned to be open and the anticipated fill-up schedule. In addition, these costs are anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

Housekeeping

Management and KRI have forecasted the non-salary costs of providing housekeeping to include the costs for supplies, and other miscellaneous costs associated with providing these services. Management has forecasted these costs beginning in the year ending December 31, 2018 based on the number on months the Community is planned to be open and the anticipated fill-up schedule. In addition, these costs are anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

Maintenance and Security

Non-salary related costs of maintenance and security are forecasted to include the cost of service contracts, repairs, supplies, and other miscellaneous costs associated with maintenance services. Management has forecasted these costs beginning in the year ending December 31, 2018 based on the number of months the Community is planned to be open and the anticipated fill-up schedule. In addition, these costs are anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.



Facility Operating

Facility operating costs including gas, electricity, water, sewer, trash disposal, and cable television, insurance and real estate taxes. Management expects to enter into a payment in lieu of taxes (“PILOT”) agreement with the City of Keene. Management has assumed the PILOT will allow the Community to negotiate a payment of between 70 and 75 percent of the calculated tax rate, approximately $400,000 per year beginning at completion of the Project. Management has forecasted these costs beginning in the year ending December 31, 2018 based on the number ofmonths the Community is planned to be open. In addition, these costs are anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation following as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

Activities

Management and KRI have forecasted non-salary related costs of resident activities to include the cost of resident services programs, activities supplies, office supplies, and other such costs associated with resident activities.Additionally, Management has forecasted these costs beginning in the year ending December 31, 2018 based on the number of months the Health Center is planned to be open and the anticipated fill-up period. In addition, these costsare anticipated to increase at 3.0 percent annually throughout the Forecast Period for inflation plus additional expenses beyond inflation following as occupancy increases after completion of the Project. The Operator has reviewed and agrees with these assumptions.

New Hampshire Nursing Home Bed Fee

The state of New Hampshire has implemented a nursing home bed fee of 5.5% of nursing home revenues to provide additional income to facilities with a large Medicaid census. The Community will be required to pay the fee even though they will have no Medicaid utilization.

Existing Community Expenses

Management has forecasted the Existing Community’s expenses for the year ending December 31, 2017 and 2018 through the date of its closing and transfer of operations to the newly opened Project in 2018 based on its existing budget for 2017. This expense is related to operation of an assisted living community, including salaries, benefits, supplies, and other operating expenses. Management has forecasted these expenses will be inflated by an average of 3.0 percent from 2017 to 2018.

Depreciation

Property and equipment are forecast to be depreciated over the estimated useful lives by the straight-line method.

Interest Expense

Interest expense is assumed to be related to the line of credit and the debt service requirements and the amortization of the deferred financing costs associated with the Series 2017 Bonds. Management plans to capitalize interest expense during the construction period of the Project.



MANAGEMENT’S BASIS FOR FORECAST OF OTHER ITEMS

Current Assets and Current Liabilities

Cash and Cash Equivalents

Cash and cash equivalent balances for the Forecast Period are based on the results of the Forecasted Statements of Cash Flows. Management has forecasted that cash and cash equivalent balances in excess of $3,000,000 will be transferred to a long-term investment account during the Forecast Period.

Accounts Receivable

Accounts receivable, net of an allowance for non-collectible accounts, has been forecasted by Management andreviewed and agreed to by the Operator based on their historical experience and their plans for operating the Community. Management and the Operator have assumed accounts receivable at approximately 15 days of resident services revenue in accounts receivable throughout the Forecast Period.

Accounts Payable

Accounts payable have been forecast throughout the Forecast Period based upon the operating experience of Management and reviewed and agreed to by the Operator to be approximately 20 days of operating expenses in accounts payable, excluding salaries, employee benefits and payroll taxes, depreciation, amortization and interest.

Accrued Interest

Accrued interest is forecasted based upon the terms of the Series 2017 Bonds during the Forecast Period.

Accrued Salaries, Benefits and Payroll Taxes

Accrued salaries, benefits and payroll taxes are forecast based upon historical levels, which is approximately 14 days of salaries, wages, payroll taxes and fringe benefits throughout the Forecast Period.

Assets Limited as to Use

Held by Trustee

In general, the following funds are anticipated to be required to be maintained by the trustee for the Series 2017Bonds:

Construction Fund - The construction fund represents amounts that will be utilized to pay construction costs funded by the Corporation’s Series 2017 Bonds related to the Project. It is forecasted that the project fund will be fully expended by 2018.

Debt Service Reserve Fund - The Corporation is anticipated to be required to maintain a debt service reserve fundrelated to the Series 2017 Bonds funded from proceeds of Series 2017 Bonds. This fund will be available to pay debt service in the year that the respective series of bonds is repaid in full.

Capitalized Interest Fund - The capitalized interest fund represents amounts that will be utilized to pay interest expense related to a portion of the Series 2017 Bonds through the first 24 months after the assumed issuance of the Series 2017 Bonds.

Entrance Fee Fund - Entrance Fees are planned to be deposited into the entrance fee fund which will be held by the trustee under the trust indenture of the Corporation. Amounts on deposit in the entrance fee fund are assumed to be used first to pay refunds of initial entrance fees as required by Residency Agreements with respect to the Independent



Living Units and then $6,000,000 of Initial Entrance Fees will be deposited into the Working Capital Fund with the remaining amounts being used to pay the principal on the Series 2017B, Series 2017C and Series 2017D Bonds.After the Series 2017B, Series 2017C and Series 2017D Bonds have been redeemed, the Corporation need not deposit any initial entrance fees into the entrance fees fund and any amounts on deposit in the entrance fee fund shall be remitted to the Corporation and the entrance fee fund shall be closed.

Working Capital Fund – The Working Capital Fund is planned to be funded in the amount of $6,000,000 from Initial Entrance Fees and $2,000,000 from the proceeds of the Series 2017 Bonds and will be available to be used to pay (A) costs of the initial construction and equipping of the Project, (B) development and marketing fees and expenses related to the Project, (C) operating expenses relating to the Project, (D) the costs of needed repairs to the Project, (E) routine capital expenditures relating to the Project, (F) judgments against the Institution, (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which those Entrance Fees were received, or (H) amounts due on any Bonds (other than optional prepayment or redemption).

All amounts on deposit in the Working Capital Fund may be released to the Corporation, and the Working CapitalFund shall be closed, upon receipt of an officer’s certificate requesting such release and stating that (a) all of the Series 2017B, Series 2017C and Series 2017D Bonds have been redeemed, (b) stabilization with respect to the Project has been achieved, and (c) no Bond Indenture Event of Default has occurred and is continuing, assumed to be in the year ending December 31, 2020.

Bond Fund - The Bond Fund represents monthly advance payments of bond principal and interest to be made by the Corporation to the trustee relating to the Series 2017 Bonds. The funds held in the Bond Fund will be used by the trustee to make the principal payments and the interest payments to the owners of the Series 2017 Bonds when due.

Renewal and Replacement Fund – Commencing on the first day of the month following the final redemption and repayment in full of the Series 2017B, Series 2017C and Series 2017D Bonds. The Corporation will deposit into the Renewal and Replacement Fund, in monthly installments equal to $180,000 per year until such time as the amount on deposit in the Renewal and Replacement Fund shall equal the sum of $2,000,000.

Other Funds

State Reserve Requirement – The Community is expected to be required to have a reserve that is equal to 12 months principal and interest payments plus two months of operating expense related to their life care residents. The Community expects to establish an account representing the operating expense portion of the requirement.

Donor Restricted Investments – Throughout the Forecast Period, the Community is expected to maintain in a separate account historic Donor Restricted Investments.

Property and Equipment

Property and equipment balances, net of accumulated depreciation, were forecasted based on historical balances, costs of constructing the Project, and other routine property and equipment additions during the Forecast Period, reduced by estimated annual depreciation. The following table reflects Project related costs, capitalized interest, and other routine capital additions during the Forecast Period.



Table 45Forecasted Property and Equipment Additions

(000s Omitted)

Source: Management(1) Beginning property and equipment balance for 2017 includes $1,224,000 of construction-in-progress.(2) Project costs and capitalized interest are shown as construction-in-progress on the forecast statements of financial position until placed in service.

Long-Term Debt

Line of Credit

On February 17, 2017 the Corporation entered into a $500,000 line of credit with the Savings Bank of Walpole (the “Line of Credit”). The Line of Credit has a nine month term and bears an interest rate of prime plus one percent.Management assumes that the Line of Credit will bear interest at a rate of 4.75% during its term and that it will be repaid as part of the closing of the Series 2017 Bonds.

Series 2017 Bonds

See notes to Table 7 for a summary of the terms of the Series 2017 Bonds.

Forecasted principal payments on the Corporation’s total long-term debt is presented in the following table, which is presented on a December 31, calendar year basis.

Table 46Forecasted Principal Payments

Series 2017 Bonds(000s Omitted)

2017 2018 2019 2020 2021 2022

Property and Equipment - Beginning(1)

2,155$ 24,167$ 76,665$ 76,665$ 76,765$ 76,915$

Payments of Project Costs(2)

18,814 47,915 - - - -

Capitalized Interest Expense, Net of Interest Income 3,198 4,583 - - - -

Routine Capital Additions - - - 100 150 200

Property and Equipment - Ending 24,167$ 76,665$ 76,665$ 76,765$ 76,915$ 77,115$

YearLine of Credit

Series 2017A Bonds

Series 2017B Bonds

Series 2017C Bonds

Series 2017D Bond Total

2017 500$ -$ -$ -$ -$ 500$

2018 - - - - - -

2019 - - - 17,620 2,005 19,625

2020 - - 18,000 - - 18,000

2021 - 605 - - - 605

2022 - 635 - - - 635

2023 - 670 - - - 670

2024 - 700 - - - 700

2025 - 740 - - - 740

2026 - 775 - - - 775

Thereafter - 51,850 - - - 51,850

Total 500$ 55,975$ 18,000$ 17,620$ 2,005$ 94,100$



Source: ManagementNote - Management assumed the Series 2017B, Series 2107C and Series 2017D Bonds will be paid from a portion of Entrance Fee receipts from initial residents of the Independent Living Units. Principal payments are assumed based on the forecasted availability of first generation entrance fee receipts from the Independent Living Units.

Deferred Financing Costs

Deferred financing costs relate to capitalized issuance costs associated with the Series 2017 Bonds, less accumulated amortization.

Net Assets

Unrestricted Net Assets

Unrestricted net assets for the Forecast Period are based on the results of the forecasted statements of operations and changes in unrestricted net assets.

Temporarily Restricted Net Assets

Temporarily restricted net assets represent those net assets subject to donor imposed restrictions that will be satisfied by actions of the Corporation or the passage of time. The Corporation releases donor funds from restriction upon use of those funds for the designated purpose. Management has forecasted temporarily restricted net assets to generally consist of funds available for program services and remain consistent with historical levels during the Forecast Period.

Permanently Restricted Net Assets

Permanently restricted net assets represent those net assets subject to donor-imposed restrictions that stipulate the resources be maintained permanently, but permit the Corporation to use or expend part or all of the income derived from the donated assets for either specified or unspecified purposes. Management has forecasted permanently restricted net assets to remain consistent with historical levels during the Forecast Period.



SENSITIVITY ANALYSES

The financial forecast was prepared based on assumptions made by Management concerning future operations of the Corporation. Various factors and conditions may occur which could adversely affect the forecast of the financial condition of the Corporation and its ability to meet debt service requirements. These factors may include, but may not be limited to, legislation and regulatory actions, changes in assumptions concerning occupancy, rental rates, financing, construction costs, operating costs, occupancy variations due to increased competition from other senior housing facilities, independent living turnover and Management’s failure to implement its marketing and or operational plans. Furthermore, Management prepared its financial forecast assuming that the Corporation obtains financing at rates and terms similar to those provided by the Underwriter, and the debt service requirements of the Series 2017 Bonds do not change during the Forecast Period.

The analyses that follow should not be construed as reflecting the only significant assumptions presented in the forecast. The sensitivity analyses represent Management’s estimates and the Underwriter’s request and have not been examined.

The sensitivity analyses are not intended to be all-inclusive, and are presented for the purpose of demonstrating the significance of: (1) a decrease in occupancy of the Community in 2021 to a breakeven point such that the Corporation’s forecasted debt service coverage ratio would approximate near 1.0 with no corresponding decrease in operating expenses and (2) the impact of a 6-month extension in the fill-up period for all unit types in the Community with no corresponding adjustment in operating expenses.



Sensitivity Analysis #1 in Table 47, as presented by Management, was conducted to reflect the impact of a decrease in occupancy of the Community in 2021 to a breakeven point such that the Corporation’s forecasted debt service coverage ratio would approximate near 1.0 with no corresponding decrease in operating expenses. The following table contrasts the forecasted financial metrics against the sensitivity analyses.

Table 47Sensitivity Analysis #1

For the Year Ending December 31, 2021

Source: Management

As Forecasted: 2021

Maximum Annual Debt Service Coverage Ratio 1.36

Number of Days Cash on Hand 294

Independent Living Units:

Average Occupied Units 132.09

Occupancy Percentage 94.30%

Assisted Living Units:



Memory Care Units:



Total



Sensitivity #1: 2021

Maximum Annual Debt Service Coverage Ratio 1.00

Number of Days Cash on Hand 60.00







Memory Care Units:

Average Occupancy 16.00


Total

Average Occupancy 174.67




Sensitivity Analysis #2 in Table 48, as presented by Management, was conducted to reflect the impact of a 6-month extension in the fill-up period for each type of unit in the Community with no corresponding adjustment in operating expenses. The following table contrasts the forecasted financial metrics against the sensitivity analyses.

Table 48Sensitivity Analysis #2

For the Years Ending December 31,

Source: ManagementN/A = Not applicable

AS FORECASTED: 2019 2020 2021 2022

Maximum Annual Debt Service Coverage Ratio N/A N/A 1.36 1.44

Number of Days Cash on Hand N/A N/A 294 348


Initial Move-in Period, Number of Months = 30

Stable Occupancy Achieved = May 2021

Average Occupied Units 67.05 117.50 132.09 132.92



Stable Occupancy Achieved = May 2021


Memory Care Units:


Stable Occupancy Achieved = June 2020


SENSITIVITY #2 2019 2020 2021 2022

Maximum Annual Debt Service Coverage Ratio N/A N/A 1.27 1.44

Subordination of Management Fees

Number of Days Cash on Hand N/A N/A 277 331



Stable Occupancy Achieved = November 2021




Stable Occupancy Achieved = November 2021


Memory Care Units:


Stable Occupancy Achieved = December 2020

Average Occupancy 5.50 14.25 17.00 17.00


APPENDIX D

CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS


D-1

APPENDIX D

CERTAIN PROVISIONS OF PRINCIPAL DOCUMENTS

The following are definitions of certain words and terms used in the Bond Indenture and the Loan Agreement and used in this Official Statement, and excerpts of certain provisions of the Bond Indenture and the Loan Agreement. The following should not be regarded as a full statement of the Indenture or the Loan Agreement. Reference is made to the Bond Indenture and the Loan Agreement in their entirety for a complete statement of the provisions thereof, copies of which are on file with the Bond Trustee.

DEFINITIONS

“Accountant” shall mean any firm of recognized independent certified public accountants appointed by the Institution to whom the Bond Trustee and the Authority make no reasonable objection.

“Accounts Receivable” shall mean any and all rights of the Institution to payment for services rendered or for goods sold or leased which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance.

“Act” shall mean the New Hampshire Health and Education Facilities Authority Act, Chapter 195 D of the New Hampshire Revised Statutes Annotated, as amended.

“Additional Bonds” shall mean the bonds or notes issued by the Authority pursuant to Section 2.13 of the Bond Indenture.

“Additional Indebtedness” shall mean any Indebtedness incurred by the Institution subsequent to the issuance of the Series 2017 Notes.

“Additional Notes” shall mean the notes issued by the Institution pursuant to Section 3.5 of the Agreement to secure Additional Bonds issued by the Authority pursuant to Section 2.13 of the Bond Indenture.

“Administrative Fee” shall mean the fee for the general administrative services of the Authority which shall be an amount equal to that shown on the prevailing fee schedule of the Authority, to be paid at closing or on an annual basis, as determined by the Institution.

“Advance-Refunded Municipal Bonds” shall mean obligations that are exempt from Federal income taxation, that have been advance refunded prior to their maturity, that are fully and irrevocably secured as to principal and interest by Government Obligations held in trust for the payment thereof, and that are serial bonds or term bonds not callable prior to maturity except at the option of the holder thereof.

“Agreement Event of Default” shall mean any one or more of those events set forth in Section 6.1 of the Agreement.

“Agreement” shall mean the Loan Agreement and Mortgage (Security Agreement), dated as of June 1, 2017, by and between the Authority and the Institution, and when amended or supplemented, the Agreement, as amended or supplemented.

“Alternate Debt” shall mean Indebtedness of the Institution permitted by Section 5.21 of the Agreement.

“Annual Debt Service” shall mean the Debt Service Requirement for the Fiscal Year in question.

“Architect” shall mean any firm of recognized independent architects appointed by the Institution to whom the Authority makes no reasonable objection.

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“Assigned Project Documents” shall mean any occupancy, lease, residence and care, developer, management, marketing or service agreements or contracts with respect to the Facility, and any surety bond with respect to the Facility and any permits or approvals required with respect to the Facility, to be assigned to the extent permitted by law pursuant to the Collateral Assignments.

“Authenticating Agent” shall mean the Bond Trustee, and any successor to its duties under the Bond Indenture.

“Authority Representative” shall mean the Chairman, Vice Chairman, any Director or the Executive Director and Secretary of the Authority or such other Person as the Authority may designate to act on its behalf by written certificate furnished to the Institution and the Bond Trustee containing the specimen signature of such Person and signed on behalf of the Authority by the Chairman, Vice Chairman, Director or Executive Director and Secretary.

“Authority” shall mean the New Hampshire Health and Education Facilities Authority, a public body corporate and agency of the State of New Hampshire.

“Balloon Indebtedness” shall mean (i) Long Term Indebtedness, or Short Term Indebtedness which is intended to be refinanced upon or prior to its maturity by Long Term Indebtedness so that such Short Term Indebtedness will be Outstanding, in the aggregate, for more than one year as certified in an Officer’s Certificate, twenty five percent (25%) or more of the initial principal amount of which matures (or is payable at the option of the holder) in any twelve-month period, if such twenty five percent (25%) or more is not to be amortized to below twenty five percent (25%) by mandatory redemption prior to such twelve month period, or (ii) any portion of an issue of Long Term Indebtedness which, if treated as a separate issue of Indebtedness, would meet the test set forth in clause (i) of this definition and which Indebtedness is designated as Balloon Indebtedness in an Officer’s Certificate stating that such portion shall be deemed to constitute a separate issue of Balloon Indebtedness.

“Beneficial Owner” shall mean whenever used with respect to a Series 2017 Bond, the Person in whose name such Series 2017 Bond is recorded as the beneficial owner of such Series 2017 Bond by a DTC participant on the records of such participant or such Person’s subrogee.

“Board” shall mean the directors of the Authority.

“Bond Counsel” shall mean an attorney or firm of attorneys of national recognition experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds selected or employed by the Authority and acceptable to the Bond Trustee.

“Bond Fund” shall mean the fund created pursuant to Section 5.1(a) of the Bond Indenture.

“Bond Indenture Event of Default” shall mean any one or more of those events set forth in Section 7.1 of the Bond Indenture.

“Bond Indenture” shall mean the Bond Indenture with respect to the Bonds, dated as of June 1, 2017, by and between the Authority and the Bond Trustee, and when amended or supplemented, such Bond Indenture, as amended or supplemented.

“Bond Payment Date” shall mean each date on which interest or both principal and interest shall be payable on any of the Bonds according to their respective terms so long as any Bonds are Outstanding.

“Bond Purchase Contract” shall mean the contract of purchase between the Authority and the Original Purchaser pertaining to the sale of the Series 2017 Bonds.

“Bond Resolution” shall mean the Bond Resolution relating to the financing and refinancing of the Project which is the subject of the Agreement, adopted by the Authority on January 19, 2017.

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“Bond Trustee” shall mean U.S. Bank National Association, having an office in Boston, Massachusetts, and any successor to its duties under the Bond Indenture.

“Bond Year” shall mean the period commencing January second of each year and ending January first of the next year.

“Bonds” shall mean the Series 2017 Bonds, and any Additional Bonds issued under the Bond Indenture.

“Book Entry Bonds” shall mean the Series 2017 Bonds held by DTC as the registered owner thereof pursuant to the terms and provisions of Section 2.14 of the Bond Indenture.

“Buildings” shall mean the buildings, structures, fixtures and improvements now or hereafter located on the Land.

“Business Day” shall mean any day of the week other than Saturday, Sunday or a day which shall be in the State of New Hampshire or in the jurisdiction of the Bond Trustee, the Paying Agent, the Authenticating Agent or the Registrar a legal holiday or a day on which banking corporations are authorized or obligated by law or executive order to close.

“Capital Additions” shall mean all property or interests in property, real, personal and mixed (a) which constitute additions, improvements or extraordinary repairs to or replacements of all or any part of the Facility, and (b) the cost of which is properly capitalized under generally accepted accounting principles.

“Cash and Investments” shall mean the sum of cash, cash equivalents, marketable securities, including without limitation board designated assets, and amounts, if any, on deposit in the Construction Fund, but excluding (a) trustee-held funds other than those described above in this definition, (b) donor restricted funds to the extent that the payment of debt service on Indebtedness of the Institution would be inconsistent with the donor’s restrictions and (c) any funds pledged or otherwise subject to a security interest for debt as shown on the most recent audited or unaudited financial statements of the Institution.

“Clean Up” shall mean the removal, remediation of, monitoring of and all other response to, any Contamination to the satisfaction of all applicable governmental agencies, in compliance with Environmental Laws and otherwise in compliance with good commercial practice.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Collateral Assignments” shall mean the Collateral Assignments of the Assigned Project Documents, each dated as of June 1, 2017, each from the Institution to the Bond Trustee.

“Construction Consultant” shall mean Alcala Construction Management, Inc., or any successor appointed by the Institution.

“Construction Contract” shall mean the Construction Agreement, dated April 14, 2017, between the Institution and DEWMacMillin.

“Construction Fund” shall mean the fund created pursuant to Section 4.1 and Section 5.1(b) of the Bond Indenture.

“Consultant” shall mean an independent consulting firm which is appointed by the Institution for the purpose of passing on questions relating to the financial affairs, marketing, management or operations of the Institution or an investment bank or financial advisor appointed by the Institution for the purpose of passing on questions relating to interest rates and interest rate assumptions in connection with the Institution’s Long-Term Indebtedness and (i) has a favorable reputation for skill and experience in performing similar services in respect of entities of a comparable size and nature and (ii) is not unsatisfactory to the Bond Trustee (acting at the direction of a majority of the Bondholders within fourteen (14) days of the Institution’s appointment of the Consultant). If any

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Consultant’s certificate or report is required to be given with respect to matters partly within and partly without the expertise of any Consultant, such Consultant may rely upon the report or opinion of another Consultant possessing the necessary expertise.

“Contamination” shall mean the presence of any Hazardous Materials or the Release of any Hazardous Materials.

“Contributions” means the aggregate amount of all contributions, grants, gifts, bequests and devises actually received in cash or marketable securities by any Person in the applicable fiscal year of such Person and any such contributions, grants, gifts, bequests and devises originally received in a form other than cash or marketable securities by any Person which are converted in such fiscal year to cash or marketable securities.

“Corporate Trust Office” shall mean the office of the Bond Trustee at which its corporate trust business with respect to the administration of the Bond Indenture is principally conducted, which at the date hereof is located at U.S. Bank National Association, One Federal Street, 10th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department.

“Cumulative Cash Loss” means, as of any calculation date, the sum, on a cumulative basis, of (a) resident service revenues (excluding amortization of Entrance Fees), (b) other Revenues, (c) Entrance Fees (excluding Initial Entrance Fees), and (d) investment earnings, minus the sum of (i) Entrance Fees refunded to residents (ii) the aggregate of all Expenses (including, without limitation, development fees paid pursuant to the Development Agreement), and (iii) interest on Indebtedness.

“Current Assets” shall mean any cash and cash equivalent deposits, any marketable securities, Accounts Receivable, any accrued interest receivable, any funds designated by the Governing Body for any specific purpose and any other assets of the Institution ordinarily considered current assets under generally accepted accounting principles.

“Days Cash on Hand” shall mean, as of the date of calculation, the amount determined by dividing (a) the amount of Cash and Investments on such date by (b) the quotient obtained by dividing Expenses (including interest on Indebtedness) for the most recent twelve month period ended as of the date of the calculation, by 365.

“Debt Service Coverage Ratio” shall mean, for any period, the ratio of (a) Income Available for Debt Service received during such period to (b) Maximum Annual Debt Service.

“Debt Service Requirement” means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of (i) principal of Long-Term Indebtedness (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment or otherwise), (ii) interest on outstanding Long-Term Indebtedness and (iii) capitalized lease payments; provided that: (a) the amount of such payments for a future period shall be calculated in accordance with the assumptions contained in Section 5.19 hereof; (b) interest shall be excluded from the determination of the Debt Service Requirements to the extent that Funded Interest is available to pay such interest; (c) principal of Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal; (d) principal of Indebtedness due in its final year shall be excluded from the determination of Debt Service Requirements to the extent moneys were initially deposited and are on deposit as of the date of calculation in a debt service reserve fund which required that moneys on deposit in the debt service reserve fund be used to pay a principal payment in the final year of such Indebtedness, and except for the payment to be received from such debt service reserve fund, the Indebtedness would have had approximately level debt service; and (e) principal and interest payments on Subordinated Indebtedness shall be excluded from Debt Service Requirements.

“Debt Service Reserve Fund Requirement” shall mean, (A) with respect to the Series 2017 Tax-Exempt Bonds, at the time of computation, for the then current or any future Bond Year, an amount equal to the sum of (i) the greatest amount with respect to the payment of principal and interest on the Outstanding Series 2017A Bonds

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and (ii) the maximum amount of interest coming due on the Series 2017B Bonds and the Series 2017C Bonds during such Bond Year; and, (B) with respect to the Series 2017D Bonds, at the time of computation, for the then current or any future Bond Year, an amount equal to the maximum amount of interest coming due on the Series 2017D Bonds during such Bond Year.

“Debt Service Reserve Fund Value” shall mean the current market value of moneys and investments credited to the Debt Service Reserve Fund (taking into account straight line amortizations and accretions of premiums and discounts).

“Debt Service Reserve Fund” shall mean the fund created pursuant to Section 5.1(c) of the Bond Indenture.

“Development Agreement” shall mean the Project Development Consulting Services Agreement between the Development Consultant and the Institution.

“Development Consultant” shall mean Kelly Real Estate Investment Properties, LLC.

“Disbursement Agreement” shall mean the Construction Disbursement and Monitoring Agreement, dated as of June 1, 2017, by and between the Institution and the Construction Consultant.

“Disclosure Agreement” shall mean the Continuing Disclosure Agreement, dated the date of delivery of the Series 2017 Bonds, by and between the Institution and the Bond Trustee.

“Discount Indebtedness” shall mean Indebtedness sold to the original purchaser thereof (other than any underwriter or other similar intermediary) at a discount from the par amount of such Indebtedness.

“DTC” shall mean The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York, and its successors and assigns.

“Entrance Fee Redemption Date” shall mean each January 1, April 1, July 1 and October 1 on which amounts shall be on deposit in the Entrance Fee Redemption Fund and available to redeem the Series 2017B Bonds, the Series 2017C Bonds or the Series 2017D Bonds for Entrance Fee Redemption in accordance with Sections 3.3 and 5.9 of the Bond Indenture.

“Entrance Fee Redemption Fund Account” shall mean the Entrance Fee Redemption Account of the Bond Fund created pursuant to Section 5.1(a)(v) of the Bond Indenture.

“Entrance Fees” shall mean any and all entrance fees and entrance fee deposits received by or on behalf of the Institution from or on behalf of any and all prospective or actual Residents of the Facility pursuant to a Residency Agreement upon the execution and delivery of a Residency Agreement; provided however that prior to the expiration of the ten day waiting period prescribed in N.H.R.S.A. 420-D:12.I(m) any entrance deposit paid by a prospective Resident of the Project shall not be considered an Entrance Fee for purposes of this definition.

“Entrance Fees Fund” shall mean the fund so designated which is established pursuant to Section 5.1(e) of the Bond Indenture.

“Environmental Law” shall mean any and all federal, State and local laws, ordinances, regulations, and administrative orders relating to Hazardous Materials.

“Equipment” shall mean the equipment, machinery, furnishings, fixtures (to the extent not a part of the Buildings), and other similar items of tangible personal property necessary or convenient for the operation of the Mortgaged Property, whether now owned or held or hereafter acquired, less any equipment, machinery, furnishings, fixtures to the extent not a part of the Buildings, and other similar items.

“Expenses” shall mean, for any period, the aggregate of all expenses calculated under generally accepted accounting principles during such period, minus (a) interest on funded indebtedness (taking into account any interest

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rate agreement); (b) depreciation and amortization; (c) extraordinary expenses, losses on the sale, disposal or abandonment of assets other than in the ordinary course of business and losses on the extinguishment of debt or termination of pension plans; (d) any expenses resulting from a forgiveness of or the establishment of reserves against Indebtedness which does not constitute an extraordinary expense; (e) losses resulting from any reappraisal, revaluation or write down of assets other than bad debts; (f) any losses from the sale or other disposition of fixed or capital assets; (g) any losses resulting from changes in the valuation of investment securities and unrealized changes in the value of derivative instruments or resulting from the other than temporary impairment of investment securities; (h) any other non cash expenses; and (i) any development, marketing, operating or other subordinated fees that have been deferred from the year in which they were originally due as a result of subordination.

“Facility” shall mean the Land, the Buildings and the Equipment constituting the continuing care retirement community to be known as Hillside Village to be located at 99 Wyman Road, Keene, New Hampshire.

“Feasibility Report” means a report prepared and signed by a Consultant, who is an Accountant, setting forth for a forecast period not exceeding five Fiscal Years from the later of the date of the issuance of the Long-Term Indebtedness in question, or the completion of the Capital Additions financed with such Long-Term Indebtedness: (i) forecasted financial statements prepared on the same basis as the Institution’s audited financial statements; and (ii) a full explanation of the assumptions and rationale used in preparing such forecasts, including that such forecasts have taken into account the projected utilization of the Institution’s facilities, the rates and charges to patients and residents and such other data and information as may be necessary to support the forecasted financial statements; which shall be accompanied by an opinion of such Consultant that the underlying assumptions provide a reasonable basis for such forecast.

“Fiscal Year” shall mean the fiscal year of the Institution, which is initially January 1 to December 31, or such other fiscal year as shall be designated from time to time in writing by the Institution to the Authority and the Bond Trustee.

“Funded Interest” means amounts irrevocably deposited in an escrow or other trust account to pay interest on Long-Term Indebtedness and interest earned on amounts irrevocably deposited in an escrow or other trust account to the extent such interest earned is required to be applied to pay interest on Long-Term Indebtedness.

“Future Test Period” shall mean the two full Fiscal Years immediately following the computation then being made, or, if such computation is then being made in connection with the provision of funds for capital improvements, following completion of the capital improvements then being financed.

“Governing Body” shall mean the Institution’s board of trustees.

“Government Obligations” shall mean direct general obligations of, or obligations the timely payment of principal and interest on which are unconditionally guaranteed by, the United States of America.

“Gross Receipts” shall mean all receipts, revenues, income and other moneys received by or on behalf of the Institution, including, but without limiting the generality of the foregoing, revenues derived from the ownership or operation of the Property, including insurance and condemnation proceeds with respect to the Property or any portion thereof, and all rights to receive the same, whether in the form of accounts, Accounts Receivable, Entrance Fees, contract rights or other rights, and the proceeds of such rights, and whether now owned or held or hereafter coming into existence; provided, however, that gifts, grants, bequests, donations and contributions heretofore or hereafter made and designated or specified by the granting authority, donor or maker thereof as being for specified purposes inconsistent with the payment of debt service or Expenses and the income derived therefrom to the extent required by such designation or specification shall be excluded from Gross Receipts.

“Guaranty” shall mean all obligations of the Institution guaranteeing in any manner, whether directly or indirectly, any obligation of any other Person which would, if such other Person were the Institution, constitute Indebtedness under the Agreement, unless the obligation of such other Person is other than for the payment of a sum certain or reasonably ascertainable.

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“Hazardous Materials” shall mean, without limitation, asbestos, gasoline, petroleum products, explosives, radioactive materials, polychlorinated biphenyls, chemical liquids, or any other solid, liquid or gaseous materials, or related or similar materials, or any other substance or material defined as a hazardous or toxic substance, material or waste by any applicable federal, State or local law, ordinance, rule, regulation, administrative order or administrative guideline.

“Historic Test Period” shall mean, at the option of the Institution, either (i) any twelve (12) consecutive calendar months out of the most recent period of eighteen (18) full calendar months, or (ii) the most recent period of twelve (12) full consecutive calendar months for which the financial statements of the Institution have been reported upon by an Accountant, or (iii) the most recent Fiscal Year of the Institution.

“Holder” or “Bondholder” shall mean the registered owner of any Bond, including DTC as the sole registered owner of Book Entry Bonds.

“Income Available for Debt Service” shall mean, with respect to the Institution, as to any period of time, the excess of Revenues over Expenses for such period.

“Indebtedness” shall mean without duplication, (i) all indebtedness of the Institution for borrowed moneys or which has been incurred or assumed in connection with the Project, (ii) all indebtedness, no matter how created, secured by the Facility or other property of the Institution, whether or not such indebtedness is assumed by the Institution, (iii) the liability of the Institution under any lease of real or personal property that is properly capitalized on the balance sheet of the Institution in accordance with generally accepted accounting principles, and (iv) any guaranty by the Institution of any other Person for borrowed moneys or which has been incurred or assumed by such Person in connection with the acquisition of property or the leasing of real or personal property which is properly capitalized on the balance sheet of such Person in accordance with generally accepted accounting principles, excluding Indebtedness that has been defeased.

“Independent Living Units” shall mean the independent living units to be constructed as part of the Facility.

“Initial Entrance Fees” shall mean Entrance Fees generated by the initial Resident of a unit of the Facility, including the entrance fee deposit made by such initial Resident and which is released to the Institution pursuant to N.H.R.S.A. 420-D:10 and the entrance fee escrow account agreement established by the Institution thereunder.

“Initial Occupancy Date” shall mean the earliest date on which a Resident takes physical possession of one Independent Living Unit of the Facility.

“Institution Representative” shall mean the Chair, the Vice Chair, and any Person or Persons at any time designated to act on behalf of the Institution by written certificate furnished to the Authority and the Bond Trustee, containing the specimen signature of such Person and signed on behalf of the Institution by its chairman, its president or chief executive officer, or its chief financial officer.

“Institution” shall mean the private, not for profit, voluntary and charitable corporation organized and existing under the laws of the State of New Hampshire, operating continuing care retirement community facilities located in Keene, New Hampshire, the corporate name of which is The Prospect-Woodward Home, and its successors.

“Insurance Consultant” shall mean a Person appointed by the Institution and not reasonably objected to by the Authority or the Bond Trustee, qualified to survey risks and to recommend insurance coverage for continuing care retirement community facilities and organizations engaged in like operations, who may be a broker or agent with whom the Institution transacts business, but who shall have no interest, direct or indirect, in the Institution and shall not be a member, director or employee of either the Institution or the Authority.

“Interest Account” shall mean the account of the Bond Fund created pursuant to Section 5.1(a)(i) of the Bond Indenture.

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“Land” shall mean the real property, interests in real property, rights of way, easements, licenses, and other rights in real property described on Schedules A-1 and A-2 to the Agreement.

“Lien” shall mean any mortgage, pledge, leasehold interest, security interest, choate or inchoate lien, judgment lien, easement, or other encumbrance on title, including, but not limited to, any mortgage or pledge of, security interest in or lien or encumbrance on any Property of the Institution which secures any Indebtedness or any other obligation of the Institution.

“Long Term Indebtedness” shall mean all Indebtedness, other than Short Term Indebtedness, for any of the following:

(i) Payments of principal and interest with respect to money borrowed for an original term, or renewable at the option of the borrower for a period from the date originally incurred, of longer than one year;

(ii) Payments under leases which are capitalized in accordance with generally accepted accounting principles having an original term, or renewable at the option of the lessee for a period from the date originally incurred, longer than one year; and

(iii) Payments under installment purchase contracts having an original term in excess of one year.

“Manager” shall mean Life Care Services LLC, or any successor appointed by the Institution. Subject to satisfaction of the provisions of Section 5.30 hereof, if at any time the Institution does not have a comprehensive management agreement in place with a third party Manager, all references in the Agreement to the Manager and replacement of the Manager shall be deemed to refer to the chief executive officer of the Institution.

“Marketing Consultant” shall mean Bluespire, Inc., or any successor appointed by the Institution.

“Maximum Annual Debt Service” shall mean, at the time of computation, the greatest Debt Service Requirement for the then current or any future Fiscal Year.

“Monthly Fees” shall mean the monthly service fees payable by a Resident pursuant to such Resident’s Residency Agreement.

“Mortgaged Property” shall mean the Facility and the Original Facility, subject to the Institution’s right to sell the Original Facility, as provided herein.

“Municipality” shall mean Keene, New Hampshire.

“Non Recourse Indebtedness” shall mean any Indebtedness secured by a Lien, which Indebtedness is not a general obligation of the Institution, and the liability for which Indebtedness is effectively limited to the Property subject to such Lien with no recourse, directly or indirectly, to any other Property of the Institution.

“Note” shall mean any Note issued, authenticated and delivered under the Agreement, including the Series 2017 Note and any Additional Notes.

“Noteholder” shall mean the registered owner of any Note in registered form or the bearer of any Note in coupon form which is not registered to bearer.

“Note Payments” shall mean all payments to be made by the Institution under the Notes issued to or for the account of the Authority.

“Occupied” shall mean an Independent Living Unit for which a Residency Agreement has been executed and all related Entrance Fees and Monthly Fees have been paid.

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“Officer’s Certificate” shall mean a certificate signed by an Institution Representative.

“Opinion of Bond Counsel” shall mean an opinion in writing signed by Bond Counsel.

“Opinion of Counsel” shall mean a written opinion of an attorney or firm of attorneys acceptable to the Bond Trustee and the Institution and, to the extent the Authority is asked to take action in reliance thereon, the Authority, and who (except as otherwise expressly provided herein or in the Bond Indenture) may be either counsel for the Institution or for the Bond Trustee.

“Original Facility” shall mean, collectively, the Land, the Buildings and the Equipment constituting the continuing care retirement facilities of the Institution formerly known as Prospect Place and located at 361 Court Street, Keene, New Hampshire and The Prospect-Woodward Home located at 194-202 Court Street, Keene, New Hampshire.

“Original Purchaser” shall mean the Person designated in the Bond Purchase Contract as the initial purchaser or purchasers of the Series 2017 Bonds or, if so designated in such Bond Purchase Contract, the representatives or lead or managing underwriters of such initial purchasers.

“Outstanding”, when used with reference to the Bonds, shall mean, as of any date of determination, all Bonds theretofore authenticated and delivered except: (i) Bonds theretofore cancelled by the Bond Trustee or delivered to the Bond Trustee for cancellation; (ii) Bonds which are deemed paid and no longer Outstanding as provided in the Bond Indenture; (iii) Bonds in lieu of which other Bonds have been issued pursuant to the provisions of the Bond Indenture relating to Bonds destroyed, stolen or lost, unless evidence satisfactory to the Bond Trustee has been received that any such Bond is held by a bona fide purchaser; and (iv) for purposes of any consent or other action to be taken under the Agreement or under the Bond Indenture by the Holders of a specified percentage of principal amount of Bonds, Bonds held by or for the account of the Authority, the Institution, or any Person controlling, controlled by, or under common control with, either of them.

“Outstanding”, when used with reference to Notes, Guaranties and all other Indebtedness, shall mean, as of any date of determination, all Notes, Guaranties and all other Indebtedness theretofore issued or incurred and not paid and discharged except: (i) Notes theretofore cancelled by the Bond Trustee or delivered to the Bond Trustee for cancellation; (ii) Notes or Guaranties which are deemed paid and no longer Outstanding as provided in the Agreement; (iii) Notes for which provision for payment has been made in the manner provided in the Agreement; (iv) Notes in lieu of which other Notes have been authenticated and delivered or have been paid unless proof satisfactory to the Bond Trustee has been received that any such Note is held by a bona fide purchaser; and (v) Indebtedness not represented by Notes or Guaranties which has been cancelled, paid in full, discharged in full by the obligee or defeased.

“Paying Agent” shall mean the Bond Trustee and any other banks with trust powers or trust companies and their successors designated as the paying agencies or places of payment for the Bonds.

“Permitted Acquisitions” shall mean acquisitions of Property permitted by Section 5.16 of the Agreement.

“Permitted Debt” shall mean Indebtedness of the Institution permitted by Section 5.18 of the Agreement.

“Permitted Dispositions” shall mean dispositions of Property permitted by Section 5.15 of the Agreement.

“Permitted Encumbrances” shall mean encumbrances on Property permitted by Section 5.14 of the Agreement.

“Permitted Investments” shall mean and include any of the following, if and to the extent the same are at the time legal for the investment of the Authority’s money:

(a) Government Obligations;

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(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 top three highest Rating Categories by any Rating Agency, including Advance Refunded Municipal Bonds;

(c) any bond, debenture, note, participation certificate or other similar obligation which is either (i) issued or guaranteed by the Federal National Mortgage Association, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal Farm Credit Bank or the Student Loan Marketing Association, or (ii) backed by the full faith and credit of the United States of America;

(d) U.S. denominated deposit account, demand deposits including interest bearing money market accounts, trust deposits, certificates of deposit, banker’s acceptances, and other bank deposit products with domestic commercial banks, including the Bond Trustee or its affiliates, which have a rating on their short-term bank deposit on the date of purchase of “A 1”, “P 1” or “F-1” (or equivalent) by any Rating Agency, without regard to gradation, and which matures not more than 360 days after the date of purchase;

(e) commercial paper which is rated at the time of purchase within the classification of “A 1”, “P 1” or “F-1” (or equivalent) by any Rating Agency, without regard to gradation, 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 S&P, Moody’s or Fitch in any one of the three highest Rating Categories;

(g) investment agreements which provide that moneys invested thereunder may be withdrawn without premium, penalty or charge upon no more than seven (7) days’ notice (except in the case of any investment of moneys for capitalized interest, in which case such investment agreement may provide that capitalized interest moneys may be withdrawn only on an Interest Payment Date on which such capitalized interest is to be paid); and such investment agreements shall be with banks, including the Bond Trustee or its affiliate, that at the time such agreement is executed are rated in one of the three highest Rating Categories assigned by any Rating Agency or investment agreements with non-bank financial institutions, including the Bond Trustee or its affiliates, for which all of the unsecured, direct long-term debt (or in case of an insurance company, claims-paying ability), of either the non-banking 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 three highest Rating Categories for obligations of that nature; provided that if at any time after purchase the provider of the investment agreement drops below the three highest Rating Categories assigned by any Rating Agency, the investment agreement must, within 30 days, either (1) be assigned to a provider rated in one of the three highest Rating Categories, or (2) be secured by the provider with collateral securities the fair market value of which, in relation to the amount of the investment agreement including principal and interest, is equal to at least 102%; investment agreements with banks or non-bank financial institutions shall not be permitted if no rating is available with respect to the investment agreement provider or the related guarantor of such provider;

(h) repurchase agreements with respect to and secured by Government Obligations or by obligations described in clause (b) and (c) above, which agreements may be entered into with a bank (including without limitation the Bond Trustee or any of its affiliates), a trust company, financial services firm or a broker dealer which is a member of the Securities Investors Protection Corporation, provided that (i) the Bond Trustee or a custodial agent of the Bond Trustee has possession of the collateral and that the collateral is, to the knowledge of the Bond Trustee, free and clear of third-party claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are valued no less frequently than monthly, and (iv) the fair market value of the collateral securities in relation to the

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amount of the repurchase obligation, including principal and interest, is equal to at least 103%, and (v) such obligations must be held in the custody of the Bond Trustee’s agent;

(i) shares of a 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 Permitted Investments as defined in paragraphs (a) through (h) above, including without limitation, any mutual fund for which the Bond Trustee or an affiliate of the Bond Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Bond Trustee or an affiliate of the Bond Trustee receives fees from such funds for services rendered, (b) the Bond Trustee charges and collects fees for services rendered pursuant to the Bond Indenture, which fees are, separate from the fees received from such funds, and (c) services performed for such funds and pursuant to the Bond Indenture may at times duplicate those provided to such funds by the Bond Trustee or its affiliates; and

(j) Advance-Refunded Municipal Bonds.

The Bond Trustee shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter, absent receipt of written notice or information to the contrary.

“Permitted Releases” shall mean releases of mortgages on or security interests in Property permitted by Section 5.17 of the Agreement.

“Permitted Reorganizations” shall mean the consolidation, merger, or reorganization of the Institution permitted by Section 5.20 of the Agreement.

“Person” shall include an individual, association, unincorporated organization, corporation, partnership, joint venture, or government or agency or political subdivision thereof.

“Pledged Revenues” shall mean all revenues, proceeds and receipts of the Authority derived from the Note Payments, and the proceeds of the Bonds pending their application in accordance with the Bond Indenture.

“Principal Account” shall mean the account of the Bond Fund created pursuant to Section 5.1(a)(ii) of the Bond Indenture.

“Project” shall mean the acquisition, construction, equipping and furnishing of the Facility and other related costs as described in Schedule B to the Agreement, to be financed and refinanced from the proceeds of the Series 2017 Bonds.

“Property” shall mean any and all assets of the Institution, any land, leasehold interests, buildings, machinery, equipment, hardware, and inventory of the Institution wherever located and whether now owned or hereafter acquired, any and all rights, titles and interests in and to any and all fixtures, and property whether real or personal, tangible or intangible and wherever situated and whether now owned or hereafter acquired and shall include all Current Assets, funds, endowments, revenues, receipts or other moneys, or right to receive any of the same, including, without limitation, Gross Receipts, accounts, Accounts Receivable, the Land, the Buildings, the Equipment, the Project, contract rights and general intangibles, and all proceeds of all of the foregoing.

“Property, Plant and Equipment” shall mean all Property of the Institution which is property, plant and equipment under generally accepted accounting principles.

“Rating Agency” shall mean S&P Global Ratings, Moody’s Investors Service or Fitch Ratings and such other nationally recognized securities rating agency.

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“Rating Category” shall mean one of the generic rating categories of any Rating Agency without regard to any refinement or gradation of such rating by a numerical modifier or otherwise.

“Record Date” shall mean, with respect to the Series 2017 Bonds, each June 15 and December 15 and, with respect to any Additional Bonds, such dates as may be established therefor in the Supplement authorizing such Additional Bonds.

“Redemption Account” shall mean the account of the Bond Fund created pursuant to Section 5.1(a)(iv) of the Bond Indenture.

“Redemption Price” shall mean, when used with respect to a Bond or portion thereof to be redeemed, the principal amount of such Bond or portion thereof plus the applicable premium, if any, payable upon redemption thereof.

“Registrar” shall mean the Bond Trustee, and any successor to its duties under the Bond Indenture.

“Release” shall mean the intentional or unintentional presence, seepage, spilling, leaking, disposing, discharging, emitting, depositing, injecting, leaching, escaping or any other release or threatened release, however defined, of any Hazardous Materials.

“Renewal and Replacement Fund” shall mean the fund created pursuant to Section 5.1(d) of the Bond Indenture.

“Representation Letter” shall mean the Representation Letter from the Authority to DTC with respect to the Bonds.

“Required Information Recipient” means the Bond Trustee, the Authority, the Original Purchaser, the Electronic Municipal Market Access System maintained by the Municipal Securities Rulemaking Board, and all Bondholders who hold $500,000 or more of the Bonds and request such reports in writing (which written request shall include a certification as to such ownership).

“Reserved” means an Independent Living Unit (a) which is Occupied or (b) for which the Institution has received a deposit equal to not less than 10% of the Entrance Fee related to such Independent Living Unit.

“Residency Agreement” shall mean the Residence and Care Agreement, as it may have been or may be amended from time to time between the Institution and each resident of the Facility pursuant to which, in consideration of the Entrance Fees, the monthly fees, or other payments, the Institution will provide living accommodations, medical and other care and services, as therein provided.

“Resident” shall mean a Person who as paid an Entrance Fee, entered into a Residency Agreement and occupies or is entitled to occupy, a unit of the Project.

“Revenues” means, for any period, the sum of (i) net patient service revenues and resident service revenues, plus (ii) other operating revenues, plus (iii) non-operating revenues (other than Contributions, income derived from the sale of assets not in the ordinary course of business, any gain from the extinguishment of debt or other extraordinary item, earnings which constitute Funded Interest or earnings on amounts which are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness, but including investment income), plus (iv) Unrestricted Contributions, plus (v) Entrance Fees (other than Initial Entrance Fees) received, minus (A) Entrance Fees amortized during such Fiscal Year, and (B) Entrance Fees refunded to Residents.

“Serial Bonds” shall mean the Bonds which are so designated in the Bond Indenture and are stated to mature in annual installments.

“Series 2017 Bonds” shall mean the bonds designated New Hampshire Health and Education Facilities Authority Revenue Bonds, Hillside Village Issue, Series 2017, consisting of the $____________ Series 2017A

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Bonds, the $____________ Series 2017B Entrance Fee Principal Redemption Bonds ,the $____________ Series 2017C Entrance Fee Principal Redemption Bonds and the $___________ Series 2017D Federally Taxable Entrance Fee Principal Redemption Bonds to be issued pursuant to the Bond Resolution and the Bond Indenture to finance and refinance the costs of the Project.

“Series 2017 Notes” shall mean the Series 2017 Notes created and issued pursuant to the Agreement, issued to the Bond Trustee as assignee of the Authority by the Institution to evidence the loan to the Institution from the Authority of the proceeds of the Series 2017 Bonds, in substantially the form set forth in Schedule C to the Agreement.

“Series 2017 Tax-Exempt Bonds” shall mean, collectively, the Series 2017 A Bonds, the Series 2017B Bonds and the Series 2017C Bonds.

“Short Term Indebtedness” shall mean all Indebtedness, other than Long Term Indebtedness, for any of the following:

(i) Payments of principal and interest with respect to money borrowed for an original term, or renewable at the option of the borrower for a period from the date originally incurred, of one year or less;

(ii) Payments under leases which are capitalized in accordance with generally accepted accounting principles having an original term, or renewable at the option of the lessee for a period from the date originally incurred, of one year or less; and

(iii) Payments under installment purchase contracts having an original term of one year or less.

“Sinking Fund Account” shall mean the account of the Bond Fund created pursuant to Section 5.1(a)(iii) of the Bond Indenture.

“Sinking Fund Account Requirement” shall mean, as to Term Bonds having the same stated maturity date, the aggregate principal amount of such Bonds required to be retired on or before the corresponding Sinking Fund Account Retirement Date.

“Sinking Fund Account Retirement Date” shall mean, as to Term Bonds having the same stated maturity date, the date on or before which such Term Bonds are required to be retired in an amount equal to the Sinking Fund Account Requirement for such date.

“Stabilization” shall mean the time at which all of the following conditions shall have occurred and been satisfied: (i) the Series 2017B Bonds, the Series 2017C Bonds and the Series 2017D Bonds have been paid and discharged, (ii) at least eighty five percent (85%) of the Independent Living Units are Occupied, (iii) there is no deficiency in the Debt Service Reserve Fund, and (iv) no Agreement Event of Default has occurred and is continuing.

“State” shall mean the State of New Hampshire.

“State Reserve Requirement” shall have the meaning ascribed thereto in Section 5.36 hereof.

“Subordinated Indebtedness” shall mean all obligations incurred or assumed by the Institution, the payment of which is by its terms specifically subordinated to payments on all Notes, or the principal of and interest on which would not be paid (whether by the terms of such obligation or by agreement of the obligee) when the Notes are in default or while bankruptcy, insolvency, receivership or other similar proceedings are instituted and implemented.

“Subsidiary” shall mean a corporation, partnership, joint venture, association, business trust or similar entity organized under the laws of the United States of America or a state thereof which is directly or indirectly

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controlled by, or under common control by the same Person as, the Institution or any other Subsidiary. For purposes of this definition, control means the power to direct the management and policies of a Person through the ownership of a majority of its voting securities, the right to designate or elect a majority of the members of its board of directors or other governing board or body or the power and right to make management and policy decisions which would otherwise be made by a board of directors or other governing board or body of such Person.

“Supplement” shall mean an indenture supplementing or modifying the provisions of the Bond Indenture entered into by the Authority and the Bond Trustee in accordance with Article IX of the Bond Indenture.

“Tax Exempt Organization” shall mean 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) and exempt from federal income taxes under Section 501(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

“Tax Regulatory Agreement” shall mean the Tax Regulatory Agreement, dated the date of delivery of the Series 2017 Bonds, by and between the Authority and the Institution.

“Term Bonds” shall mean the Bonds designated as Term Bonds in the Bond Indenture.

“Unrestricted Contributions” means Contributions to the extent that they are not restricted in any way that would prevent their application to the payment of debt service on Indebtedness of the Person receiving such Contributions.

“Value” when used in connection with Property of the Institution, shall mean: (i) when used in connection with Property, Plant and Equipment of the Institution, at the option of the Institution (a) the cost basis of such Property, Plant and Equipment, net of accumulated depreciation, as it is carried on the books of the Institution and in conformity with generally accepted accounting principles consistently applied, or (b) the appraised value of such Property, Plant and Equipment as determined by an appraiser who is a Member of the Appraisal Institute (MAI) and reasonably acceptable to the Authority and the Bond Trustee, such appraisal taking place within two (2) years of the date such value is used in any computation or calculation required by the Agreement, and (ii) when used in connection with Accounts Receivable, Current Assets and Gross Receipts, shall mean the value of such items as set forth in the most recent audited financial statements of the Institution.

“Variable Rate Indebtedness” shall mean Indebtedness that bears interest at a variable, adjustable or floating rate.

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CERTAIN PROVISIONS OF THE BOND INDENTURE

PROVISIONS OF GENERAL APPLICATION

Section 1.3. All Bonds Equally and Ratably Secured; Bonds Not General Obligations of the Authority. All Bonds issued hereunder and at any time Outstanding shall in all respects be equally and ratably secured hereby, without preference, priority, or distinction on account of the date or dates or the actual time or times of the issuance or maturity of the Bonds, so that all Bonds at any time issued and Outstanding hereunder shall have the same right, lien, preference hereunder, and shall all be equally and ratably secured hereby. The Bonds are special obligations of the Authority payable solely from and secured by a pledge of Pledged Revenues and funds provided therefor under this Bond Indenture. Neither the State nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Bonds, other than from Pledged Revenues, and neither the faith and credit nor the taxing power of the State or of any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds.

AUTHORIZATION AND TERMS OF BONDS

Section 2.3. Medium and Place of Payment. Both principal of, premium, if any, and interest on the Bonds shall be payable in any coin or currency of the United States of America which, on the respective dates of payment of principal and interest, is tender for the payment of public and private debts.

(a) Except for Book-Entry Bonds held by DTC in accordance with the terms and provisions of Section 2.14 hereof, interest on the Bonds shall be payable by check drawn upon the Paying Agent and mailed to the registered Holders of such Bonds at the addresses of such Holders as they appear on the books of the Registrar on the Record Date, provided, however, that interest may be paid by wire transfer to a Holder of at least $500,000 aggregate principal amount of Bonds to the address designated by such Holder to the Paying Agent at or prior to the Record Date for such payment. Principal of and premium, if any, on the Bonds shall be paid when due upon presentation and surrender of such Bonds at the Corporate Trust Office of the Paying Agent.

(b) In the event of a default by the Authority in the payment of interest due on a Bond on a Bond Payment Date, such defaulted interest will 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 established by notice mailed by the Registrar to the registered owners of Bonds not less than ten (10) days preceding such special record date.

Section 2.4. Mutilated, Destroyed, Lost and Stolen Bonds. If (a) any mutilated Bond is surrendered to the Bond Trustee or if the Authority, the Registrar, the Paying Agent or the Bond Trustee receives evidence to their satisfaction of the destruction, loss or theft of any Bond, and (b) there is delivered to the Authority, the Registrar, the Paying Agent and the Bond Trustee such security or indemnity as may be required by them to hold them harmless, then, in the absence of notice to the Authority, the Registrar, the Paying Agent or the Bond Trustee that such Bond has been acquired by a bona fide purchaser and upon the Holder paying the reasonable expenses of the Authority, the Registrar, the Paying Agent and the Bond Trustee, the Authority shall cause to be executed and the Authenticating Agent shall authenticate and deliver, in exchange for such mutilated Bond or in lieu of such destroyed, lost or stolen Bond, a new Bond of like principal amount, date and tenor. If any such mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, then the Bond Trustee and any Paying Agent may, in their discretion, pay such Bond when due instead of delivering a new Bond.

Section 2.6. Exchange of Bonds. Bonds, upon presentation and surrender thereof to the Registrar together with written instructions satisfactory to the Registrar, duly executed by the registered Holder or his attorney duly authorized in writing, may be exchanged for an equal aggregate face amount of fully registered Bonds with the same interest rate and maturity of any other authorized denominations.

Section 2.7. Negotiability and Transfer of Bonds. (a) All Bonds issued hereunder shall be negotiable, subject to the provisions for registration and transfer thereof contained herein or in the Bonds.

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(b) So long as any Bonds are Outstanding, the Authority shall cause to be maintained at the offices of the Registrar books for the registration and transfer of Bonds, and shall provide for the registration and transfer of any Bond under such reasonable regulations as the Authority or the Registrar may prescribe. The Registrar shall act as bond registrar for purposes of exchanging and registering Bonds in accordance with the provisions hereof.

(c) Each Bond shall be transferable only upon the registration books maintained by the Registrar, by the Holder thereof in person or by his attorney duly authorized in writing, upon presentation and surrender thereof together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered Holder or his duly authorized attorney. Upon surrender for transfer of any such Bond, the Authority shall cause to be executed and upon the written request of the Authority, the Authenticating Agent shall authenticate and deliver, in the name of the transferee, one or more new Bonds of the same aggregate face amount, maturity and rate of interest as the surrendered Bond, as fully registered Bonds only.

Section 2.9. Provisions with Respect to Transfers and Exchanges. (a) All Bonds surrendered in any exchange or transfer of Bonds shall forthwith be cancelled by the Registrar.

(b) In connection with any such exchange or transfer of Bonds the Holder requesting such exchange or transfer shall as a condition precedent to the exercise of the privilege of making such exchange or transfer remit to the Registrar an amount sufficient to pay any tax, or other governmental charge required to be paid with respect to such exchange or transfer.

(c) Neither the Authority nor the Registrar shall be obligated to (i) issue, exchange or transfer any Bond during the period of fifteen days preceding any Bond Payment Date, or (ii) transfer or exchange any Bond which has been or is being called for redemption in whole or in part.

Section 2.13. Additional Bonds. (a) One or more series of Additional Bonds may be authenticated and delivered by the Authenticating Agent upon original issuance from time to time pursuant to this Section 2.13: (i) to complete or make additions or improvements to the Project, (ii) to provide extensions, additions, improvements or repairs to the Project or other property of the Institution, (iii) to refund any or all Outstanding Bonds issued under the Bond Indenture, or (iv) to provide additional funds for the Debt Service Reserve Fund created under the Bond Indenture. The proceeds of any Additional Bonds shall be applied as provided in the Supplement authorizing such Additional Bonds and such Supplement shall set forth the terms and conditions for such Additional Bonds.

(b) The Authority shall not issue any Additional Bonds hereunder unless at or prior to the delivery to the Authenticating Agent of an order from the Authority to authenticate and deliver such Additional Bonds there shall be filed with the Bond Trustee (in addition to all other documents required by the Bond Indenture):

(i) a certificate of an Authority Representative, stating that the Authority is not then in default on any Bonds Outstanding or in the performance of any of the covenants, conditions, agreements or provisions contained in the Bond Indenture or the Agreement;

(ii) a certificate of an Institution Representative, stating that the Institution is not then in default in the performance of any of the covenants, conditions, agreements or provisions contained in the Agreement; and

(iii) evidence to the effect that the applicable provisions set forth in Section 5.18 of the Agreement for the incurrence of Additional Indebtedness shall have been satisfied.

(c) Prior to the issuance of any Additional Bonds hereunder, the Authority and the Institution shall enter into an amendment to the Agreement or a supplemental agreement which shall provide, among other things, that the payments under the Agreement shall be increased, if necessary, and computed so as to amortize in full the principal of and interest on such Additional Bonds and any other costs in connection therewith. An executed counterpart of such amendment to the Agreement or supplemental agreement shall be delivered to the Bond Trustee

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prior to the authentication and delivery of such Additional Bonds by the Authenticating Agent. Nothing contained herein shall be construed as prohibiting the Authority from issuing refunding bonds as other than Additional Bonds pursuant to its corporate powers under a separate resolution or indenture for the purpose of refunding all or a portion of the Outstanding Bonds without complying with the conditions contained above.

Section 2.14. Book-Entry Bonds. (a) Except as provided in paragraph (c) of this Section 2.14, the registered owner of all of the Series 2017 Bonds shall be DTC and the Series 2017 Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Payment of interest for any Series 2017 Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of New York clearing house or equivalent next day funds to the account of Cede & Co. on the Bond Payment Date for the Series 2017 Bonds at the address indicated on the regular Record Date or special record date for Cede & Co. in the registry books of the Authority kept by the Registrar.

(b) The Series 2017 Bonds shall be initially issued in the form of separate single fully registered Bonds, authenticated by the Authenticating Agent, in the amount of each separate stated maturity of each subseries of the Series 2017 Bonds. Upon initial issuance, the ownership of such Series 2017 Bonds shall be registered in the registry books of the Authority kept by the Registrar in the name of Cede & Co., as nominee of DTC. The Bond Trustee, the Registrar, the Paying Agent and the Authority may treat DTC (or its nominee) as the sole and exclusive owner of the Series 2017 Bonds registered in its name for the purposes of payment of the principal or redemption price of or interest on the Series 2017 Bonds, selecting the Series 2017 Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders under the Bond Indenture, registering the transfer of Series 2017 Bonds, obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever, and neither the Bond Trustee, the Registrar, the Paying Agent nor the Authority shall be affected by any notice to the contrary. Neither the Bond Trustee, the Registrar, the Paying Agent nor the Authority shall have any responsibility or obligation to any DTC participant, any Person claiming a beneficial ownership interest in the Series 2017 Bonds under or through DTC or any DTC participant, or any other Person which is not shown on the registration books of the Registrar as being a Bondholder, with respect to the accuracy of any records maintained by DTC or any DTC participant; the payment of DTC or any DTC participant of any amount in respect of the principal or redemption price of or interest on the Series 2017 Bonds; any notice which is permitted or required to be given to Bondholders under the Bond Indenture; the selection by DTC or any DTC participant of any Person to receive payment in the event of a partial redemption of the Series 2017 Bonds; or any consent given or other action taken by DTC as Bondholder. The Paying Agent shall pay all principal of and premium, if any, and interest on the Series 2017 Bonds only to or “upon the order of” DTC (as that term is used in the Uniform Commercial Code as adopted in the State of New Hampshire), and all such payments shall be valid and effective to fully satisfy and discharge the Authority’s obligations with respect to the principal of and premium, if any, and interest on the Series 2017 Bonds to the extent of the sum or sums so paid. No Person other than DTC shall receive an authenticated Series 2017 Bond for each separate stated maturity evidencing the obligation of the Authority to make payments of principal of and premium, if any, and interest pursuant to the Bond Indenture. Upon delivery by DTC to the Bond Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Record Dates, the word “Cede & Co.” in this Bond Indenture shall refer to such new nominee of DTC.

(c) In the event the Authority determines that it is in the best interest of the Beneficial Owners that they be able to obtain Series 2017 Bond certificates, the Authority may notify DTC and the Bond Trustee, whereupon DTC will notify the DTC participants, of the availability through DTC of Series 2017 Bond certificates. In such event, the Bond Trustee shall issue, transfer and exchange Series 2017 Bond certificates as requested by DTC and any other Bondholders in appropriate amounts. DTC may determine to discontinue providing its services with respect to the Series 2017 Bonds at any time by giving notice to the Authority and the Bond Trustee and discharging its responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the Authority and the Bond Trustee shall be obligated to deliver Series 2017 Bond certificates as described in the Bond Indenture. In the event Series 2017 Bond certificates are issued, the provisions of the Bond Indenture shall apply to, among other things, the transfer and exchange of such certificates and the method of payment of principal of and interest on such certificates. Whenever DTC requests the Authority and the Bond Trustee to do so, the Bond Trustee and the Authority will cooperate with DTC in taking appropriate action after reasonable notice (i) to make available one or more separate certificates

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evidencing the Series 2017 Bonds to any DTC participant having Series 2017 Bonds credited to its DTC account or (ii) to arrange for another securities depository to maintain custody of certificates evidencing the Series 2017 Bonds.

(d) Notwithstanding any other provision of this Bond Indenture to the contrary, so long as any Series 2017 Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to the principal of and premium, if any, and interest on such Series 2017 Bond and all notices with respect to such Series 2017 Bond shall be made and given, respectively, to DTC as provided in the Representation Letter.

(e) In connection with any notice or other communication to be provided to Bondholders pursuant to the Bond Indenture by the Authority or the Bond Trustee with respect to any consent or other action to be taken by Bondholders, the Authority or the Bond Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than fifteen (15) calendar days in advance of such record date to the extent possible. Notice to DTC shall be given only when DTC is the sole Bondholder.

REDEMPTION OF BONDS

Section 3.8. Selection of Bonds to be Redeemed or Purchased. In the event of any redemption or purchase of less than all Outstanding Bonds of a series or subseries, any maturity or maturities and amounts within maturities of Bonds of such series or subseries to be redeemed or purchased shall be selected by the Bond Trustee at the written direction of the Institution. If less than all of the Bonds of the same maturity and series or subseries are to be redeemed or purchased upon any redemption or purchase of Bonds hereunder, the Bond Trustee shall select the Bonds of such series or subseries to be redeemed or purchased by lot in such manner as the Bond Trustee may determine, provided that for so long as the Book-Entry only system is being used, the particular Series 2017 Bonds or portions thereof to be redeemed or purchased within a maturity of any series or subseries shall be selected by lot by DTC in such manner as DTC and the participants may determine. In making such selection, the Bond Trustee (or DTC) shall treat each Bond as representing that number of Bonds of the lowest authorized denomination as is obtained by dividing the principal amount of such Bond by such denomination.

Section 3.9. Partial Redemption or Purchase of Bonds. Upon the selection and call for redemption or purchase of, and the surrender of, any Bond for redemption or purchase in part only, the Authority shall cause to be executed and upon written request by the Authority, the Authenticating Agent shall authenticate and deliver to or upon the written order of the Holder thereof, at the expense of the Institution, a new Bond or Bonds of authorized denominations in an aggregate face amount equal to the unredeemed or unpurchased portion of the Bond surrendered, which new Bond or Bonds shall be a fully registered Bond or Bonds without coupons, in authorized denominations.

The Authority and the Bond Trustee may agree with any Holder of any such Bond that such Holder may, in lieu of surrendering the same for a new Bond, endorse on such Bond a notice of such partial redemption or purchase, which notice shall set forth, over the signature of such Holder, the redemption or purchase date, the principal amount redeemed or purchased and the principal amount remaining unpaid. Such partial redemption or purchase shall be valid upon payment of the amount thereof to the registered owner of any such Bond and the Authority and the Bond Trustee shall be fully released and discharged from all liability to the extent of such payment irrespective of whether such endorsement shall or shall not have been made upon the reverse of such Bond by the owner thereof and irrespective of any error or omission in such endorsement.

Section 3.10. Effect of Call for Redemption. On the date designated for redemption by notice given as herein provided, the Bonds so called for redemption shall become and be due and payable at the Redemption Price provided for redemption of such Bonds on such date. If on the date fixed for redemption moneys for payment of the Redemption Price and accrued interest are held by the Bond Trustee or paying agents as provided herein, interest on such Bonds so called for redemption shall cease to accrue, such Bonds shall cease to be entitled to any benefit or security hereunder except the right to receive payment from the moneys held by the Bond Trustee or the paying agents and the amount of such Bonds so called for redemption shall be deemed paid and no longer Outstanding.

Any optional or extraordinary optional redemption of Series 2017 Bonds shall be credited against Sinking Fund Account Requirements, if applicable, in such manner and order as may be directed by the Institution.

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REVENUES AND FUNDS

Section 5.3. Flow of Funds. So long as any Bonds are Outstanding, in each Bond Year, Note Payments received by the Bond Trustee shall be applied, subject to Section 5.7 hereof, in the following manner and order of priority:

(a) Interest Account. The Bond Trustee shall deposit to the Interest Account, from moneys received by the Bond Trustee from or on account of the Institution, on or before the last day of each June and December, the amount, if any, necessary to cause the amount then being credited to the Interest Account, together with investment earnings on investments then on deposit in the Interest Account, if such earnings will be received before the next Bond Payment Date (but only to the extent that such amount or investment earnings have not previously been credited for purposes of such calculation), to be not less than the full amount of interest to be paid on Outstanding Bonds on such Bond Payment Date. Moneys in each subaccount of the Interest Account shall be used to pay interest on the applicable series of Bonds as it becomes due.

(b) Principal Account. The Bond Trustee shall deposit to the Principal Account, from moneys received by the Bond Trustee from or on account of the Institution, on or before the last day of each December during each Bond Year ending on a date on which Serial Bonds mature, the amount necessary to cause the amount then being credited to the Principal Account, together with the investment earnings on investments then on deposit in the Principal Account, if such earnings will be received before the last day of the Bond Year (but only to the extent that such amount or investment earnings have not previously been credited for purposes of such calculation), to be not less the principal amount of Serial Bonds Outstanding which will mature on the last day of such Bond Year. Moneys in each subaccount of the Principal Account shall be used to retire Serial Bonds of the applicable series by payment at their scheduled maturity.

(c) Sinking Fund Account. The Bond Trustee shall deposit to the Sinking Fund Account, from moneys received by the Bond Trustee from or on account of the Institution, on or before the last day of each December during each Bond Year ending on a date which is a Sinking Fund Account Retirement Date, the amount necessary to cause the amount credited to the Sinking Fund Account, together with investment earnings on investments then on deposit in the Sinking Fund Account, if such earnings will be received before the last day of the Bond Year (but only to the extent that such amount or investment earnings have not previously been credited for purposes of such calculation), to be not less than the unsatisfied Sinking Fund Account Requirements to be satisfied on or before the last day of such Bond Year. Moneys in the Sinking Fund Account shall be used to retire Term Bonds by purchase, by mandatory redemption or by payment at their scheduled maturity.

The Bond Trustee may, and upon the written direction of the Institution shall use its best efforts to, apply moneys credited to the Sinking Fund Account to purchase Term Bonds identified by the Institution in satisfaction of Sinking Fund Account Requirements for such Term Bonds for a Sinking Fund Account Retirement Date. The Bond Trustee shall use reasonable efforts to purchase any such Term Bond solely from amounts on deposit in the Sinking Fund Account at a price or cost (including any brokerage fees or commissions or other charges) which does not exceed the principal amount thereof plus interest accrued to the date of purchase. Such accrued interest shall be paid from the Interest Account. The principal amount of Term Bonds of each maturity so purchased shall be credited against the unsatisfied balance of Sinking Fund Account Requirements for such maturity in such order of Sinking Fund Account Retirement Dates as the Institution may direct in writing. All Bonds so purchased shall be cancelled.

(d) Debt Service Reserve Fund. When moneys in the Bond Fund are insufficient to pay principal of or interest on Bonds when due, moneys in the applicable account of the Debt Service Reserve Fund shall be applied to cure any deficiency in the Bond Fund. Moneys in the Series 2017 Tax-Exempt Bonds Debt Service Reserve Fund Account shall be applied solely to pay debt service on the Series 2017 Tax-Exempt Bonds and moneys in the Series 2017D Debt Service Reserve Fund Account shall be applied solely to pay debt service on the Series 2017D Bonds. Prior to applying moneys in the Debt Service Reserve Fund to cure any deficiency in the Bond Fund, the Bond Trustee shall apply amounts available from first, the Entrance Fees Working Capital Account of the Working Capital Fund, and second, moneys in the Renewal and Replacement Fund. When moneys in the Debt Service Reserve Fund are so used, the Bond Trustee shall forthwith give notice to the Authority. If at any time the Debt Service Reserve Fund Value of the applicable account of the Debt Service Reserve Fund exceeds one hundred percent (100%) of the Debt Service Reserve Fund Requirement, such excess may be transferred, at the written

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direction of the Institution and applied as set forth in Section 5.7 hereof. The Bond Trustee is hereby directed to make such deposits into the Debt Service Reserve Fund as are required to be made hereunder or under the Agreement, including, but not limited to any payments received by the Bond Trustee from the Institution pursuant to Section 4.2(e) or (f) of the Agreement. On the final payment date of any series of the Bonds (whether by maturity or earlier redemption), if the Reserve Fund Value of the applicable account of the Debt Service Reserve Fund exceeds one hundred percent (100%) of the Debt Service Reserve Fund Requirement for such series of Bonds after giving effect to such final payment, such excess moneys in the applicable account of the Debt Service Reserve Fund shall be used to pay the principal or Redemption Price of, and interest on, such series of Bonds on such final payment date.

(e) Redemption Account. If the Institution makes an optional prepayment of any installment on the Notes, the amount so paid shall be credited to the Redemption Account and applied promptly by the Bond Trustee as follows: first, to cause the amounts credited to the Interest Account, Principal Account and Sinking Fund Account of the Bond Fund, in that order to be not less than the amounts then required to be credited thereto, and, then, to retire Bonds by purchase, redemption or both purchase and redemption in accordance with the Institution’s written directions. Any such purchase shall be made solely from amounts in the Redemption Account at the written direction of the Institution and no Bond shall be so purchased at a cost or price (including brokerage fees or commissions or other charges) which exceeds the Redemption Price at which such Bond could be redeemed on the date of purchase or on the next succeeding date upon which such Bond is subject to optional redemption plus accrued interest to the date of purchase. Any such redemption shall be of Bonds then subject to optional redemption at the Redemption Price then applicable for optional redemption of such Bonds.

The principal amount of any Term Bonds so purchased or redeemed shall be credited against the unsatisfied balance of Sinking Fund Account Requirements for such maturity in order of Sinking Fund Account Retirement Dates.

Upon receipt by the Bond Trustee of moneys accompanied by a certificate of an Institution Representative stating that such moneys are insurance proceeds with respect to casualty losses or condemnation awards, that the amount of such proceeds or awards with respect to such casualty loss or taking exceeds 10% of the Value of the Property, Plant and Equipment and that such moneys are to be applied to redeem Bonds in accordance with Section 3.5 hereof and specifying the amount and maturities of Bonds to be redeemed, the Bond Trustee shall credit such moneys to the Redemption Account and shall apply such moneys to redeem Bonds in accordance with Section 3.5 hereof.

Any balance remaining in the Redemption Account after the purchase or redemption of Bonds in accordance with the Institution’s written directions, or in any event on the day following the Bond Payment Date next succeeding the prepayment by the Institution, shall be transferred to the Interest Account.

Section 5.8. Renewal and Replacement Fund. (a) Commencing on the first day of the month following the final redemption and repayment in full of the Series 2017B Bonds, the Institution shall pay to the Bond Trustee for deposit into the Renewal and Replacement Fund, in monthly installments equal to $15,000 until such time as the amount on deposit in the Renewal and Replacement Fund shall equal the sum of $2,000,000 (the “Renewal and Replacement Fund Requirement”).

(b) So long as no Agreement Event of Default has occurred and is continuing, the Bond Trustee, at the written direction of the Institution, shall withdraw from the Renewal and Replacement Fund and pay to the Institution such amounts as the Institution may certify in writing to be necessary for the payment of costs of: (1) construction or acquisition of capital additions to the Facility, (2) renewal, renovation or replacement of any part of the Facility; or (3) maintenance or repair of the Facility of an extraordinary and nonrecurring nature; provided, however, that any such expenditure from the Renewal and Replacement Fund shall only be made for purposes which the Institution shall certify to the Authority and the Bond Trustee are properly chargeable to plant or property account under generally accepted accounting principles and are not included in the Institution’s regular capital budget for the then current or any future Fiscal Year and for which the Institution does not have other moneys on hand for the payment of such amounts. The Renewal and Replacement Fund may also be used for payment of debt service on the Series 2017 Bonds as set forth in the next succeeding sentence, or for the payment of operating expenses relating to the Facility, if the Institution delivers to the Bond Trustee an Officer’s Certificate that following

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application of the Entrance Fees Working Capital Account of the Working Capital Fund, other moneys of the Institution are insufficient therefor. Notwithstanding the foregoing, if the Institution fails to make the Note Payments required under Section 4.2 of the Agreement within the grace period provided therein, the Bond Trustee shall withdraw such amount from the Renewal and Replacement Fund and deposit the same in the Bond Fund following the application of moneys in the Entrance Fees Working Capital Account of the Working Capital Fund. In addition, in the event that a Bond Indenture Event of Default occurs and payment of the Bonds is accelerated pursuant to the Bond Indenture, the Bond Trustee shall use moneys in the Renewal and Replacement Fund in accordance with Section 7.5 hereof.

(c) If, following any withdrawal from the Renewal and Replacement Fund pursuant to the paragraph (b) above, the amount remaining on deposit therein shall be less than the Renewal and Replacement Fund Requirement, then the Institution shall pay to the Bond Trustee for deposit into the Renewal and Replacement Fund on the first day of the month following such withdrawal and on the first day of each month thereafter, the sum of $15,000 until such time as the amount on deposit in the Renewal and Replacement Fund shall equal the Renewal and Replacement Fund Requirement.

Section 5.9. Entrance Fees Fund. Pursuant to the Agreement, the Institution has agreed that all Initial Entrance Fees received by the Institution with respect to the Facility shall be transferred to the Bond Trustee within five Business Days of the receipt thereof for deposit into the Entrance Fees Fund. All moneys received by the Bond Trustee and held in the Entrance Fees Fund pursuant to this Section 5.9 shall be trust funds under the terms of this Bond Indenture for the benefit of all of the Bonds Outstanding hereunder (except as otherwise provided herein). Such moneys shall be held in trust and applied in accordance with the provisions of the Bond Indenture.

Moneys in the Entrance Fees Fund shall be disbursed by the Bond Trustee on the first Business Day of each month as follows in the following order of priority:

FIRST: to the Institution to pay refunds required by Residency Agreements. Such disbursements shall be made upon receipt by the Bond Trustee of a written certificate of an Authorized Officer of the Institution certifying that it is required by a Residency Agreement to pay refunds within the next 30 days and the amount of such refunds.

SECOND: to the Entrance Fees Working Capital Account within the Working Capital Fund established by Section 5.10 hereof, until the total principal amount deposited into the Entrance Fees Working Capital Account within the Working Capital Fund equals $6,000,000. The Bond Trustee shall not transfer Entrance Fees from the Entrance Fees Fund into the Working Capital Fund once a total amount of $6,000,000 from Entrance Fees has been transferred to the Working Capital Fund.

THIRD: after the transfers pursuant to the preceding numbered paragraphs have been made, the Bond Trustee shall transfer the remaining amount in the Entrance Fees Fund to the Entrance Fee Redemption Account. Without further direction from the Authority or the Institution, the amount on deposit in the Entrance Fee Redemption Account shall be applied by the Bond Trustee to redeem the Series 2017B Bonds, the Series 2017C Bonds and the Series 2017D Bonds on each Entrance Fee Redemption Date in the following order of priority: first, to redeem the Series 2017D Bonds, second, to redeem the Series 2017C Bonds and third, to redeem the Series 2017B Bonds, all in accordance with Section 3.3 of this Bond Indenture. Redemption of the Series 2017B Bonds and the Series 2017C Bonds from funds on deposit in the Entrance Fee Redemption Account shall not begin until the Series 2017D Bonds have been redeemed and paid in full. Redemption of the Series 2017B Bonds from funds on deposit in the Entrance Fee Redemption Account shall not begin until the Series 2017C Bonds have been redeemed and paid in full.

When the Institution delivers an Officer’s Certificate to the Bond Trustee stating that (A) the Series 2017B, the Series 2017C Bonds and the Series 2017D Bonds are no longer Outstanding, (B) no Event of Default has occurred and is continuing under this Bond Indenture, and (C) requesting that any funds remaining on deposit in the Entrance Fees Fund be transferred to the Institution, thereafter the Institution need not deposit any Entrance Fees

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into the Entrance Fees Fund, any amounts on deposit in the Entrance Fees Fund shall be remitted to the Institution by the Bond Trustee, and the Entrance Fees Fund shall be closed.

Section 5.10. Working Capital Fund. On the date of issuance of the Series 2017 Bonds, $2,000,000 of proceeds of the Series 2017 Bonds shall be deposited in the Bond Proceeds Working Capital Account within the Working Capital Fund. All amounts received from Entrance Fees pursuant to Section 5.9 hereof shall be deposited in the Entrance Fees Working Capital Account within the Working Capital Fund. All moneys received by the Bond Trustee and held in the Working Capital Fund upon the issuance of the Bonds and as provided in Section 5.9 hereof shall be trust funds under the terms of this Bond Indenture for the benefit of all of the Bonds Outstanding hereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Institution. Such moneys shall be held in trust and applied in accordance with the provisions of this Bond Indenture.

Moneys in the Working Capital Fund shall be disbursed by the Bond Trustee to or for the account of the Institution within seven days after receipt by the Bond Trustee of a written request certifying that the withdrawal is made to pay any of the following (A) costs of the initial construction and equipping of the Facility, (B) development and marketing fees and expenses related to the Facility, (C) operating expenses relating to the Facility, (D) the costs of needed repairs to the Facility, (E) routine capital expenditures relating to the Facility, (F) judgments against the Institution (such payments shall be made solely from amounts on deposit in the Entrance Fees Working Capital Account), (G) refunds of Entrance Fees as required by Residency Agreements pursuant to which those Entrance Fees were received (such payments shall be made solely from amounts on deposit in the Entrance Fees Working Capital Account), or (H) amounts due on any Bonds (other than optional prepayment or redemption) (such payments shall be made solely from amounts on deposit in the Entrance Fees Working Capital Account). Withdrawals to be made for the purposes set forth in clauses (A), (B), (C), (D) or (E) of the prior sentence shall be made first from the Bond Proceeds Working Capital Account to the extent funds are on deposit therein.

Any surplus amounts on deposit in the Bond Proceeds Working Capital Account not needed to pay working capital after the final redemption of the Series 2017B Bonds and the Series 2017C Bonds and after Stabilization has been achieved shall be applied (a) to pay costs of the Project or routine capital expenditures at the Facility, (b) to redeem the Bonds in accordance with Article III hereof, or (c) to such other purposes as shall be permitted by the Authority and Bond Counsel.

All amounts on deposit in the Entrance Fees Working Capital Account of the Working Capital Fund may be released, and the Working Capital Fund shall be closed, upon receipt by the Bond Trustee of an Officer’s Certificate of the Institution requesting such release which Officer’s Certificate shall state that (a) the Series 2017B Bonds, the Series 2017C Bonds and the Series 2017D Bonds are no longer Outstanding, (b) Stabilization with respect to the Facility has been achieved, and (c) no Bond Indenture Event of Default has occurred and is continuing.

GENERAL COVENANTS OF THE AUTHORITY

Section 6.1. Payment of Principal and Interest. Subject to the limited sources of payment specified herein, the Authority covenants that it will promptly pay or cause to be paid the principal of, premium, if any, and interest on each Bond issued hereunder at the place, on the dates and in the manner provided herein and in said Bonds according to the terms thereof. The principal of, premium, if any, and interest on the Bonds are payable solely from the Pledged Revenues and moneys held by the Bond Trustee hereunder, all of which are hereby specifically assigned and pledged to such payment in the manner and to the extent specified herein and nothing herein or in the Bonds shall be construed as assigning or pledging any other funds or assets of the Authority.

Section 6.2. Performance of Covenants. The Authority covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions on its part to be performed as provided herein in each and every bond executed, authenticated and delivered hereunder and in all proceedings of the Authority pertaining thereto.

Section 6.4. Rights Under Notes and Agreement. The Authority agrees that the Bond Trustee in its own name or in the name of the Authority may enforce all rights of the Authority and all obligations of the Institution under the Notes and the Agreement for and on behalf of the Holders, but only while the Authority is in

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default hereunder; provided, however, that nothing herein shall constitute an assignment of any right of the Authority under the Agreement to grant approvals, consents or waivers, to receive notices, or for indemnification or reimbursement of costs and expenses.

Section 6.5. Protection of Lien. The Authority hereby agrees not to make or create or suffer to be made or created any assignment or lien having priority or preference over the assignment and lien hereof upon the interests granted hereby or any part thereof except as otherwise specifically provided herein. The Authority agrees that no obligations the payment of which is secured by Pledged Revenues will be issued by it except Additional Bonds and Bonds in lieu of, or upon transfer of registration or exchange of, any Bond as provided herein.

DEFAULTS AND REMEDIES

Section 7.1. Bond Indenture Events of Default. Each of the following is hereby declared a “Bond Indenture Event of Default” hereunder:

(a) If payment by the Authority in respect of any installment of interest on any Bond shall not be made in full when the same becomes due and payable;

(b) If payment by the Authority in respect of the principal of or redemption premium, if any, on any Bond shall not be made in full when the same becomes due and payable, whether at maturity or by proceedings for redemption or by declaration of acceleration or otherwise;

(c) The Authority shall fail duly to observe or perform any covenant or agreement on its part under this Bond Indenture for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Authority and the Institution by the Bond Trustee, or to the Authority, the Institution, and the Bond Trustee by the holders of at least twenty-five percent (25%) in aggregate principal amount of Bonds then Outstanding. If the breach of covenant or agreement is one which is capable of cure but cannot be completely remedied within the thirty (30) days after written notice has been given, it shall not be a Bond Indenture Event of Default as long as the Authority has taken active steps within the thirty (30) days after written notice has been given to remedy the failure and is diligently pursuing such remedy provided it shall be cured within ninety (90) days of such written notice;

(d) The entry of a decree or order by a court having jurisdiction in the premises adjudging the Authority a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Authority under the Federal Bankruptcy Code or any other applicable Federal or state law, or appointing a receiver, liquidator, assignee, or sequestrator (or other similar official) of the Authority or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of ninety (90) consecutive days;

(e) The institution by the Authority of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other similar applicable Federal or state law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Authority or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due;

(f) If there occurs an Agreement Event of Default.

Section 7.2. Acceleration; Annulment of Acceleration. (a) Upon the occurrence of a Bond Indenture Event of Default described in Section 7.1(a) or (b) hereof, then, without any further action, the Bond Trustee may, and shall at the written direction of the Holders of 25% in aggregate principal amount of the Bonds Outstanding, declare all Bonds Outstanding immediately due and payable, anything in the Bonds or herein to the contrary notwithstanding. Upon the occurrence of a Bond Indenture Event of Default described in Section 7.1(c), (d), (e) or

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(f) hereof then, without any further action, the Bond Trustee may, and shall at the written direction of the holders of a majority in aggregate principal amount of the Bonds Outstanding, declare all Bonds Outstanding immediately due and payable, anything in the Bonds or herein to the contrary notwithstanding. In the event of an acceleration, there shall be due and payable on the Bonds an amount equal to the total principal amount of all such Bonds, plus all interest accrued thereon and which accrues to the date of payment. The Bond Trustee shall give prompt written notice of such acceleration to the Authority, the Paying Agent, the Registrar, and the Institution, and the Registrar shall give notice thereof to the Bondholders in the manner provided in Section 7.12 hereof, stating the accelerated date on which the Bonds shall be due and payable.

(b) At any time after the principal of the Bonds shall have been so declared to be due and payable as a result of a Bond Indenture Event of Default, and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of such default, or before the completion of the enforcement of any other remedy under this Bond Indenture, in the event that moneys shall have accumulated in the appropriate Funds and Accounts created under this Bond Indenture sufficient to pay the principal of all matured Bonds and all arrears of interest, if any, upon all Bonds then Outstanding (except the principal of any Bonds not then due and payable by their terms and the interest accrued on such Bonds since the last Bond Payment Date), and the charges, compensation, expenses, disbursements, advances and liabilities of the Bond Trustee and all other amounts then payable by the Institution hereunder shall have been paid or a sum sufficient to pay the same shall have been deposited with the Bond Trustee, and every other default known to the Bond Trustee in the observance or performance of any covenant, condition, agreement or provision contained in the Bonds or in this Bond Indenture (other than a default in the payment of the principal of such Bonds then due and payable only because of the declaration under this Section) shall have been remedied to the satisfaction of the Bond Trustee, then and in every such case the Bond Trustee shall, by written notice to the Authority and the Institution, rescind and annul such declaration and its consequences, and the Registrar shall promptly give notice of such annulment in the same manner as provided in subsection (a) of this Section for giving notice of acceleration. No such annulment shall extend to or affect any subsequent Bond Indenture Event of Default or impair any right consequent thereon.

Section 7.3. Rights of Bond Trustee Concerning the Notes. The Bond Trustee, as pledgee and assignee for security purposes of all the right, title and interest of the Authority in and to the Agreement, and those certain Notes delivered thereunder with respect to Bonds, shall, upon compliance with applicable requirements of law and except as otherwise set forth in this Article, be the sole real party in interest in respect of, and shall have standing to enforce each and every right granted to the Authority under the Agreement and under those certain Notes delivered thereunder with respect to Bonds. The Authority and the Bond Trustee hereby agree without in any way limiting the effect and scope thereof, that the pledge and assignment hereunder to the Bond Trustee of any and all rights of the Authority in and to the Notes and the Agreement shall constitute an agency appointment coupled with an interest on the part of the Bond Trustee which, for all purposes of this Bond Indenture, shall be irrevocable and shall survive and continue in full force and effect notwithstanding the bankruptcy or insolvency of the Authority or its default hereunder or on the Bonds. In exercising such rights and the rights given the Bond Trustee under this Article, upon and during the continuance of a Bond Indenture Event of Default, the Bond Trustee shall take such action as, in the judgment of the Bond Trustee, a prudent person would exercise under the circumstances in the conduct of such person’s own affairs, taking into account the provisions of the Bond Indenture, the Agreement, and the Notes, together with the security and remedies afforded to holders of Notes thereunder.

Section 7.4. Additional Remedies and Enforcement of Remedies. (a) Upon the occurrence and continuance of any Bond Indenture Event of Default, the Bond Trustee may or upon the written request of the Holders of not less than twenty-five percent (25%) in an aggregate principal amount of the Bonds Outstanding, together with indemnification of the Bond Trustee to its satisfaction therefor, shall proceed forthwith to protect and enforce its rights and the rights of the Bondholders hereunder and under the Act and the Bonds by such suits, actions or proceedings as the Bond Trustee, being advised by counsel, shall deem expedient, including but not limited to:

(i) Civil action to recover money or damages due and owing;

(ii) Civil action to enjoin any acts or things, which may be unlawful or in violation of the rights of the Holders of Bonds;

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(iii) Enforcement of any other right of the Bondholders conferred by law or hereby; and

(iv) Enforcement of any other right conferred by the Agreement.

(b) Regardless of the happening of a Bond Indenture Event of Default, the Bond Trustee, if requested in writing by the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding, shall upon being indemnified to its satisfaction therefor, institute and maintain such suits and proceedings as it may be advised shall be necessary or expedient (i) to prevent any impairment of the security hereunder by any acts which may be unlawful or in violation hereof, or (ii) to preserve or protect the interests of the Holders, provided that such request is in accordance with law and the provisions hereof and, in the sole judgment of the Bond Trustee, is not unduly prejudicial to the interest of the Holders of Bonds not making such request.

Section 7.5. Application of Revenues and Other Moneys After Default. During the continuance of a Bond Indenture Event of Default all moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the costs and expenses of the proceedings which result in the collection of such moneys and of the fees, expenses and advances incurred or made by the Bond Trustee and the Authority with respect thereto, be deposited in the Bond Fund, and all amounts held by the Bond Trustee hereunder shall be applied as follows:

(a) Unless the principal of all Outstanding Bonds shall have become or have been declared due and payable:

First: To the payment to the Persons entitled thereto of all installments of interest then due on the Bonds in the order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon to the Persons entitled thereto, without any discrimination or preference; and

Second: To the payment to the Persons entitled thereto of the unpaid principal amounts or Redemption Price of any Bonds which shall have become due (other than Bonds previously called for redemption for the payment of which moneys are held pursuant to the provisions hereof), whether at maturity or by call for redemption, in the order of their due dates, and if the amounts available shall not be sufficient to pay in full all the Bonds due on any date, then to the payment thereof ratably, according to the principal amounts or Redemption Price due on such date, to the Persons entitled thereto, without any discrimination or preference.

(b) If the principal amounts of all Outstanding Bonds shall have become or have been declared due and payable, to the payment of the principal amounts and interest then due and unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal amounts and interest, to the Persons entitled thereto without any discrimination or preference.

(c) If the principal amounts of all Outstanding Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal amounts of all Outstanding Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.

Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Bond Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall be a Bond Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the principal amounts to be paid on such dates shall cease to

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accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the Holder of any Bond until such Bond shall be presented to the Bond Trustee for appropriate endorsement of any partial payment or for cancellation if fully paid.

Whenever all Bonds and interest thereon have been paid under the provisions of this Section and all expenses and charges of the Bond Trustee have been paid, any balance remaining shall be paid to the Person entitled to receive the same; if no other Person shall be entitled thereto, then the balance shall be paid to the Institution or as a court of competent jurisdiction may direct.

Section 7.6. Remedies Not Exclusive. No remedy by the terms hereof conferred upon or reserved to the Bond Trustee or the Bondholders is intended to be exclusive of any other remedy but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or existing at law or in equity or by statute (including the Act) on or after the date hereof.

Section 7.7. Remedies Vested in the Bond Trustee. All rights of action (including the right to file proof of claims) hereunder or under any of the Bonds may be enforced by the Bond Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto. Any such suit or proceeding instituted by the Bond Trustee may be brought in its name as the Bond Trustee without the necessity of joining as plaintiffs or defendants any Holders of the Bonds. Subject to the provisions of Section 7.5 hereof, any recovery or judgment shall be for the equal benefit of the Holders of the Outstanding Bonds.

Section 7.8. Bondholders’ Control of Proceedings. If a Bond Indenture Event of Default shall have occurred and be continuing, notwithstanding anything herein to the contrary, the Holders of a majority in aggregate principal amount of Bonds then Outstanding shall have the right, at any time, by any instrument in writing executed and delivered to the Bond Trustee to direct the method and place of conducting any proceeding to be taken in connection with the enforcement of the terms and conditions hereof, provided that such direction is in accordance with law and the provisions hereof (including indemnity to the Bond Trustee as provided herein) and, in the sole judgment of the Bond Trustee, is not unduly prejudicial to the interest of Bondholders not joining in such direction and provided further that nothing in this Section shall impair the right of the Bond Trustee in its discretion to take any other action hereunder which it may deem proper and which is not inconsistent with such direction by Bondholders.

Section 7.9. Individual Bondholder Action Restricted. (a) No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement hereof or for the execution of any trust hereunder or for any remedy hereunder unless:

(i) a Bond Indenture Event of Default has occurred (A) under paragraph (a) or (b) of Section 7.1 hereof of which the Bond Trustee is deemed to have notice, or (B) under paragraph (c), (d), (e) or (f) of Section 7.1 hereof as to which the Bond Trustee has actual knowledge or as to which the Bond Trustee has been notified in writing;

(ii) the Holders of at least twenty-five percent (25%) in aggregate principal amount of Bonds Outstanding shall have made written request to the Bond Trustee to proceed to exercise the powers granted herein or to institute such action, suit or proceeding in its own name;

(iii) such Bondholders shall have offered the Bond Trustee indemnity as provided in Section 8.2 hereof;

(iv) the Bond Trustee shall have failed or refused to exercise the powers herein granted or to institute such action, suit or proceedings in its own name for a period of sixty (60) days after receipt by it of such request and offer of indemnity; and

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(v) during such sixty (60) day period no direction inconsistent with such written request has been delivered to the Bond Trustee by the Holders of a majority in aggregate principal amount of Bonds then Outstanding in accordance with Section 7.8 hereof.

(b) No one or more Holders of Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the security hereof or to enforce any right hereunder except in the manner herein provided and for the equal benefit of the Holders of all Bonds Outstanding.

(c) Nothing contained herein shall affect or impair, or be construed to affect or impair, the right of the Holder of any Bond (i) to receive payment of the principal of or interest on such Bond on or after the due date thereof or (ii) to institute suit for the enforcement of any such payment on or after such due date; provided, however, no Holder of any Bond may institute or prosecute any such suit or enter judgment therein if, and to the extent that, the institution or prosecution of such suit or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the lien hereof on the moneys, funds and properties pledged hereunder for the equal and ratable benefit of all Holders of Bonds.

Section 7.10. Termination of Proceedings. In case any proceeding taken by the Bond Trustee on account of a Bond Indenture Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Trustee or to the Bondholders, then the Authority, the Bond Trustee and the Bondholders shall be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Bond Trustee and the Bondholders shall continue as if no such proceeding had been taken.

Section 7.11. Waiver of Bond Indenture Event of Default. (a) No delay or omission of the Bond Trustee or of any Holder of the Bonds to exercise any right or power accruing upon any Bond Indenture Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Bond Indenture Event of Default or an acquiescence therein. Every power and remedy given by this Article to the Bond Trustee and the Holders of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient by them.

(b) The Bond Trustee may waive any Bond Indenture 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 hereof, or before the completion of the enforcement of any other remedy hereunder.

(c) Notwithstanding anything contained herein to the contrary, the Bond Trustee, upon the written request of the Holders of at least a majority of the aggregate principal amount of Bonds then Outstanding, shall waive any Bond Indenture Event of Default hereunder and its consequences; provided, however, that, except under the circumstances set forth in paragraph (b) of Section 7.2 hereof, a default in the payment of the principal amount of, premium, if any, or interest on any Bond, when the same shall become due and payable by the terms thereof or upon call for redemption, may not be waived without the written consent of the Holders of all the Bonds at the time Outstanding.

(d) In case of any waiver by the Bond Trustee of a Bond Indenture Event of Default hereunder, the Authority, the Bond Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Bond Indenture Event of Default or impair any right consequent thereon. The Bond Trustee shall not be responsible to any one for waiving or refraining from waiving any Bond Indenture Event of Default in accordance with this Section.

Section 7.12. Notice of Default. (a) Promptly, but in any event within thirty (30) days after (i) the occurrence of a Bond Indenture Event of Default under Section 7.1(a) or (b) hereof, which the Bond Trustee is deemed to have notice, or (ii) receipt, in writing or otherwise, by the Bond Trustee of actual knowledge or notice of a Bond Indenture Event of Default under Section 7.1 (c), (d), (e) or (f) hereof, the Bond Trustee shall, unless such Bond Indenture Event of Default shall have theretofore been cured or waived, give written notice thereof by first class mail to each Holder of a Bond then Outstanding, provided that, except in the case of a default in the payment of principal amounts, Sinking Fund Installments, or the Redemption Price of or interest on any of the Bonds, the Bond Trustee may withhold such notice to such Holders if, in its sole judgment, it determines that the withholding of such notice is in the best interests of the Bondholders.

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(b) The Bond Trustee shall promptly, within one Business Day, notify the Authority of (i) the occurrence of a Bond Indenture Event of Default under Section 7.1(a) or (b) hereof and (ii) when the Bond Trustee has received actual knowledge or notice, in writing or otherwise, of a Bond Indenture Event of Default under Section 7.1(c), (d), (e) or (f) hereof.

Section 7.13. Limitation of the Authority’s Liability. No agreements or provisions contained herein nor any agreement, covenant or undertaking by the Authority contained in any document executed by the Authority in connection with the Project or the issuance, sale and delivery of the Bonds shall give rise to any pecuniary liability of the Authority or a charge against its general credit, or shall obligate the Authority financially in any way, except with respect to the Pledged Revenues and their application as provided herein. No failure of the Authority to comply with any term, covenant or agreement herein or in any document executed by the Authority in connection with the Project, shall subject the Authority to liability for any claim for damages, costs or other financial or pecuniary charge except to the extent that the same can be paid or recovered from the Pledged Revenues. Nothing herein shall preclude a proper party in interest from seeking and obtaining, to the extent permitted by law, specific performance against the Authority for any failure to comply with any term, condition, covenant or agreement herein; provided, that no costs, expenses or other monetary relief shall be recoverable from the Authority except as may be payable from the Pledged Revenues.

The Bond Trustee, the Institution and all Holders of Bonds, by their purchase of the Bonds, agree that the Authority may be sued in connection with any matter involving or related to the Bonds or the Project, if at all, only in a court in the State of New Hampshire.

Section 7.14. Limitations on Remedies. It is the purpose and intention of this Article to provide rights and remedies to the Bond Trustee and Bondholders which may be lawfully granted under the provisions of the Act, but should any right or remedy herein granted be held to be unlawful, the Bond Trustee and the Bondholders shall be entitled as above set forth, to every other right and remedy provided in this Bond Indenture and by law.

THE BOND TRUSTEE

Section 8.1. Acceptance of Trust; General. By execution hereof, the Bond Trustee shall evidence the acceptance of the powers, duties and obligations of the Bond Trustee as set forth herein and in the Agreement. All Bonds shall be authenticated by the Authenticating Agent before delivery in the manner and form provided herein. The Bond Trustee shall have no duty, responsibility or obligation for the issuance of Bonds or for the validity or exactness hereof, or of any other document relating to such issuance. The Bond Trustee shall have no duty, responsibility or obligation for the payment of Bonds except for payment in accordance with the terms and provisions hereof from, and to the extent of, funds which are held in trust by the Bond Trustee for the purpose of such payment. The Bond Trustee hereby agrees to the provisions of the Agreement relating to it. Prior to the time when the occurrence of an Event of Default becomes known to a responsible officer of the Bond Trustee and after the curing or waiving of all such Events of Default with respect to the Bonds that may have occurred, the duties, and obligations of the Bond Trustee hereunder and with respect to the Bonds shall be determined solely by the express provisions of this Bond Indenture, and the Bond Trustee shall not be liable with respect to the Bonds except for the performance of such duties and obligations as are specifically set forth in this Bond Indenture. If an Event of Default has occurred and is continuing, the Bond Trustee shall exercise the rights and powers vested in it by this Bond Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

The Bond Trustee shall have no liability for any act or omission to act hereunder, or under any other instrument or document executed pursuant hereto except for the Bond Trustee’s own negligence, willful misconduct or breach of trust. The duties and obligations of the Bond Trustee shall be determined solely by the express provisions hereof and of the Agreement and no implied covenants or obligations against the Bond Trustee shall be read into this Bond Indenture or the Agreement.

The Bond Trustee shall not be required to expend or risk its own funds or otherwise incur individual liability in the performance of any of its duties or in the exercise of any of its rights or powers as the Bond Trustee, except as may result from its own negligence, willful misconduct or breach of trust.

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The Bond Trustee shall not be liable for any action taken in good faith and reasonably believed by it to be within the powers conferred upon it hereunder, unless it shall be proven that the Bond Trustee was negligent in ascertaining the pertinent facts; and shall not be liable for action taken by it pursuant to any direction or instruction by which it is governed or required to act under the terms hereof, or for action omitted to be taken by it by reason of the lack of direction or instruction required under the terms hereof for such action to be taken.

The Bond Trustee shall not be charged with knowledge or notice of any matter unless actually known to an officer of the Bond Trustee working in its Corporate Trust Office and responsible for the administration of this Bond Indenture or written notice thereof is received at the Corporate Trust Office.

A permissive grant of power or right to the Bond Trustee hereunder shall not be construed to be a duty to act.

The Bond Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds, except for any information provided by the Bond Trustee.

Section 8.2. The Bond Trustee Not Required to Take Action Unless Indemnified. The Bond Trustee shall neither be required to institute any suit or action or other proceeding hereunder or appear in any suit or action or other proceeding in which it may be a defendant, or to take any steps to enforce its rights and expose it to liability, nor shall the Bond Trustee be deemed liable for failure to take any such action, unless and until it shall have been indemnified, to its satisfaction, against any and all reasonable costs, expenses, outlays, counsel and other fees, other disbursements including its own reasonable fees and against all liability and damages. The Bond Trustee may, nevertheless, begin suit, or appear in and defend suit, or do anything else which in its judgment is proper to be done by it as the Bond Trustee, without prior assurance of indemnity, and in such case the Institution shall reimburse the Bond Trustee for all reasonable costs, expenses, outlays, counsel and other fees, and other reasonable disbursements including its own fees, and for all liability and damages suffered by the Bond Trustee in connection therewith, except for the Bond Trustee’s negligence, willful misconduct or breach of trust. If the Bond Trustee begins, appears in or defends such a suit, the Bond Trustee shall give reasonably prompt written notice of such action to the Authority and the Institution, and shall give such notice prior to taking such action if possible. If the Institution shall fail to make such reimbursement, the Bond Trustee may reimburse itself from any surplus money created hereby; provided, however, that if the Bond Trustee shall collect any amounts or obtain a judgment, decree or recovery, by exercising the remedies available to it hereunder, the Bond Trustee shall have a first claim upon the amount recovered for payment of its reasonable costs, expenses and fees incurred.

Section 8.6. Removal and Resignation of the Bond Trustee. The Bond Trustee may resign or 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 Bonds then Outstanding. Written notice of such resignation or removal shall be given to the Authority and the Institution and such resignation or removal shall take effect upon the appointment and qualification of a successor Bond Trustee. In the event a successor Bond Trustee has not been appointed and qualified within sixty (60) days of the date notice of resignation is given, the Bond Trustee, the Authority or the Institution, in all cases at the Institution’s expense, may apply to any court of competent jurisdiction for the appointment of a successor Bond Trustee to act until such time as a successor is appointed as provided in this Section. No resignation or removal of the Bond Trustee shall be effective until the successor has been appointed and qualified as Bond Trustee.

In addition, the Bond Trustee may be removed at any time with or without cause, by Supplement hereto signed by the Authority at the direction of the Institution so long as (i) no Agreement Event of Default or Indenture Event of Default shall have occurred and be continuing and (ii) the Authority determines, in such Supplement, that the removal of the Bond Trustee shall not have an adverse effect upon the rights or interests of the Bondholders.

In the event of the resignation or removal of the Bond Trustee or in the event the Bond Trustee is dissolved or otherwise becomes incapable to act as the Bond Trustee, the Authority shall be entitled to appoint a successor Bond Trustee. In no event shall such resignation or removal be effective, unless the successor Bond Trustee has been appointed. Upon such appointment, the successor Bond Trustee shall cause notice to be mailed to the Holders of all Bonds then Outstanding in such manner deemed appropriate by the Authority. If the Bond Trustee resigns, the

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resigning Bond Trustee shall pay for such notice. If the Bond Trustee is removed, is dissolved, or otherwise becomes incapable of acting as Bond Trustee, the Institution shall pay for such notice.

If the Holders of a majority of the principal amount of Bonds then Outstanding object to the successor Bond Trustee so appointed by the Authority and if such Holders designate another Person qualified to act as the Bond Trustee, the Authority shall then appoint as the Bond Trustee the Person so designated by the Holders.

Unless otherwise ordered by a court or regulatory body having competent jurisdiction, or unless required by law, any successor Bond 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 the State and having an officially reported combined capital, surplus, undivided profits and reserves aggregating at least $25,000,000, if there is such an institution willing, qualified and able to accept the trust upon reasonable or customary terms.

Every successor Bond Trustee howsoever appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority and the Institution an instrument in writing, accepting such appointment hereunder, and thereupon such successor Bond Trustee, without further action, shall become fully vested with all the rights, immunities, powers, trusts, duties and obligations of its predecessor, and such predecessor shall execute and deliver an instrument transferring to such successor Bond Trustee all the rights, powers and trusts of such predecessor. The predecessor Bond Trustee shall execute any and all documents necessary or appropriate to convey all interest it may have to the successor Bond Trustee. The predecessor Bond 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 Bond Trustee.

Each successor Bond Trustee, not later than ten (10) days after its assumption of the duties hereunder, shall mail a notice of such assumption to each Holder of a registered Bond.

Notwithstanding the provisions of Section 8.6 above, any corporation or association into which the Bond Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall be and become successor Bond Trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto.

SUPPLEMENTS

Section 9.1. Supplements Not Requiring Consent of Bondholders. The Authority and the Bond Trustee may, without the consent of or notice to any of the Holders, enter into one or more Supplements for one or more of the following purposes:

(a) to cure any ambiguity or formal defect or omission herein;

(b) to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising hereunder which shall not materially adversely affect the interests of the Holders;

(c) To grant or confer upon the Holders any additional rights, remedies, powers or authority that may lawfully be granted or conferred upon them;

(d) To secure additional revenues or provide additional security or reserves for payment of the Bonds;

(e) To preserve the exemption of the interest income borne on the Series 2017 Bonds from federal income taxes;

(f) To authorize the issuance of Additional Bonds hereunder; and

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(g) To remove the Bond Trustee in accordance with the second paragraph of Section 8.6 hereof.

Section 9.2. Supplements Requiring Consent of Bondholders. (a) (1) Other than Supplements referred to in Section 9.1 hereof and subject to the terms and provisions and limitations contained in this Article and not otherwise, the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained herein to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Bond Trustee of such Supplements as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained herein. In computing the majority of Holders for purposes of consents to amendments pursuant to this paragraph (a), there shall be excluded from any consents and from the calculation of Outstanding Bonds, any Bonds owned or held by or for the account of the Institution. Nothing in this Section shall permit or be construed as permitting a Supplement which would:

(i) extend the stated maturity of or time for paying interest on any Bond or reduce the principal amount of or the redemption premium or rate of interest payable on any Bond without the consent of the Holder of such Bond, except as set forth in paragraph (a)(2) below;

(ii) prefer or give a priority to any Bond over any other Bond without the consent of the Holder of each Bond then Outstanding not receiving such preference or priority; or

(iii) reduce the aggregate principal amount of Bonds then Outstanding the consent of the Holders of which is required to authorize such Supplement without the consent of the Holders of all Bonds then Outstanding.

(2) If an Event of Default hereunder shall have occurred and is continuing, amendments of the type described in paragraph (a)(1)(i) above may be made with the consent of the Holders of not less than 80% of the aggregate principal amount of Outstanding Bonds which are affected by such amendment. Notwithstanding the foregoing, no such amendment made pursuant to this paragraph (a)(2) shall result in any preference or priority of any Bond over any other Bond and no such amendment shall result in a disproportionate change, reduction or modification with respect to any Bond. In computing the required percentage of Holders for purposes of consents to amendments pursuant to this paragraph (a)(2), there shall be excluded from any consents and from the calculation of Outstanding Bonds, any Bonds owned or held by or for the account of the Institution.

(b) If at any time the Authority shall request the Bond Trustee to enter into a Supplement pursuant to this Section, the Authority shall cause to be delivered to the Bond Trustee a form of notice of such Supplement to be mailed to Holders and the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause such notice of the proposed execution of such Supplement to be mailed by first class mail, postage prepaid, to all Holders of Bonds then Outstanding at their addresses as they appear on the registration books herein provided for. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail, or the failure of such Bondholder to receive, the notice required by this Section, and any such failure shall not affect the validity of such Supplement when consented to and approved as provided in this Section. Such notice shall briefly set forth the nature of the proposed Supplement and shall state that copies thereof are on file at the Corporate Trust Office of the Bond Trustee for inspection by all Bondholders.

(c) If within such period, not exceeding three years, as shall be prescribed by the Institution, following the first publication of such notice, the Bond Trustee shall receive an instrument or instruments purporting to be executed by the Holders of not less than the aggregate principal amount or number of Bonds specified in Section 9.2(a) for the Supplement in question which instrument or instruments shall refer to the proposed Supplement described in such notice and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof referred to in such notice as on file with the Bond Trustee, thereupon, but not otherwise, the Bond Trustee may execute such Supplement in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto.

(d) Any such consent shall be binding upon the Holder of the Bond giving such consent and upon any subsequent Holder of such Bond and of any Bond issued in exchange therefor (whether or not such subsequent Holder thereof has notice thereof), unless such consent is revoked in writing by the Holder of such Bond giving such

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consent or by a subsequent Holder thereof by filing with the Bond Trustee, prior to the execution by the Bond Trustee of such Supplement, such revocation. At any time after the Holders of the required principal amount or number of Bonds shall have filed their consents to the Supplement, the Bond Trustee shall make and file with the Authority a written statement to that effect. Such written statement shall be conclusive that such consents have been so filed.

(e) If the Holders of the required principal amount or number of the Bonds Outstanding shall have consented to and approved the execution of such Supplement as herein provided, no Holder of any Bond shall have any right to object to the execution thereof, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Notwithstanding anything herein to the contrary, in the event that the Institution is the owner of one hundred percent (100%) of the Outstanding Bonds affected by any proposed amendment to this Bond Indenture or to the Agreement, the Institution may consent to any such amendments to this Bond Indenture or to the Agreement, and upon the effectiveness and implementation of such amendments, such consent shall be binding upon future Holders of the Bonds.

Section 9.4. Amendments to Agreement not Requiring Consent of Bondholders. The Authority and the Bond Trustee may without the consent of or notice to any of the Holders, consent to and join in the execution and delivery of any amendment, change or modification of the Agreement as may be required (a) by the provisions hereof or of the Agreement; (b) to cure any ambiguity or formal defect or omission therein; (c) to preserve the exemption of the interest borne on the Bonds from federal income taxes; (d) in the event there is a change to generally accepted accounting principles which has the effect of changing accounting related definitions and covenants contained in the Agreement, provided there is delivered to the Authority and the Bond Trustee an opinion of an Accountant which provides that after giving effect to such changes in generally accepted accounting principles, the definitions and covenants, as modified, are substantially similar to the definitions and covenants which have been superseded; or (e) in connection with any other change therein as to which there is filed with the Bond Trustee and the Authority an Opinion of Counsel stating that the proposed change will not adversely affect the interests of the Holders, and which in the opinion of the Bond Trustee will not adversely affect the interests of the Holders or the Bond Trustee.

Section 9.5. Amendments to Agreement Requiring Consent of Bondholders. (a) Except for amendments, changes or modifications to the Agreement referred to in Section 9.4 hereof, the Authority and the Bond Trustee may consent to and join in the execution and delivery of any amendment, change or modification to the Agreement only upon the consent of the Holders of not less than a majority in aggregate principal amount of Bonds then Outstanding given as provided in this Section, provided, however, except as provided in Section 9.2(a)(2), no such amendment, change or modification may affect the obligation of the Institution to make payments under the Notes or reduce the amount of or extend the time for making such payments without the consent of the Holders of all Bonds then Outstanding.

(b) If at any time the Authority and the Institution shall request the consent of the Bond Trustee to any such amendment, change or modification to the Agreement the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses (including counsel fees), cause notice of the proposed amendment, change or modification to be given in the same manner as provided in Section 9.2 hereof with respect to Supplements hereto. Such notice shall briefly set forth the nature of the proposed amendment, change or modification and shall state that copies thereof are on file at the office of the Bond Trustee for inspection by all Bondholders.

(c) If the consent to and approval of the execution of such amendment, change or modification is given by the Holders of not less than the aggregate principal amount or number of Bonds specified in paragraph (a) within the time and in the manner as provided by Section 9.2 hereof with respect to Supplements hereto, but not otherwise, such amendment, change or modification may be consented to, executed and delivered upon the terms and conditions and with like binding effect upon the Holders as provided in Sections 9.2 and 9.3 hereof with respect to Supplements hereto.

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SATISFACTION AND DISCHARGE

Section 10.1. Discharge. If payment of all principal of, premium, if any, and interest on the Bonds in accordance with their terms and as provided herein is made, or is provided for in accordance with this Article, and if all other sums payable by the Authority hereunder shall be paid or provided for, and all obligations of the Institution thereunder have been satisfied in full, then the liens, estates and security interests granted hereby shall cease. Thereupon, upon the request of the Authority, and upon receipt by the Bond Trustee of an Opinion of Counsel stating that all conditions precedent to the satisfaction and discharge of the lien hereof have been satisfied, the Bond Trustee shall execute and deliver proper instruments acknowledging such satisfaction and discharging the lien hereof and the Bond Trustee shall transfer all property held by it hereunder, other than moneys or obligations held by the Bond Trustee for payment of amounts due or to become due on the Bonds, to the Authority, the Institution or such other Person as may be entitled thereto as their respective interests may appear. Such satisfaction and discharge shall be without prejudice to the rights of the Bond Trustee thereafter to charge and be compensated or reimbursed for services rendered and expenditures incurred in connection herewith.

The Authority or the Institution may at any time surrender to the Bond Trustee for cancellation any Bonds previously authenticated and delivered which the Authority or the Institution may have acquired in any manner whatsoever and such Bond upon such surrender and cancellation shall be deemed to be paid and retired.

Section 10.2. Providing for Payment of Bonds. Payment of all or any portion of the Bonds may be provided for by the deposit with the Bond Trustee of moneys or non-callable Government Obligations or Advance-Refunded Municipal Bonds or any combination thereof. The moneys and the maturing principal and interest income on such investments, if any, shall be sufficient to pay when due the principal or Redemption Price of and interest on such Bonds. The moneys and investments shall be held by the Bond Trustee irrevocably in trust for the Holders of such Bonds solely for the purpose of paying the principal or Redemption Price of and interest on such Bonds as the same shall mature, come due or become payable upon prior redemption, and, if applicable, upon simultaneous direction, expressed to be irrevocable, to the Bond Trustee as to the dates upon which any such Bonds are to be redeemed prior to their respective maturities.

In connection with any advance refunding (as such term is defined in the Code) of the Series 2017 Bonds, there shall be delivered to the Bond Trustee a verification report of an Accountant as to the adequacy of the escrow so established.

If payment of the Bonds is so provided for, the Bond Trustee shall mail a notice so stating to each Holder of a Bond.

Bonds the payment of which has been provided for in accordance with this Section shall no longer be deemed Outstanding hereunder or secured hereby. The obligation of the Authority in respect of such Bonds shall nevertheless continue but the Holders thereof shall thereafter be entitled to payment only from the moneys or investments deposited with the Bond Trustee to provide for the payment of such Bonds.

No Bond may be so provided for if, as a result thereof or of any other action in connection with which the provision for payment of such Bond is made, the interest payable on any Series 2017 Bond is made subject to federal income taxes. The Bond Trustee may rely upon an Opinion of Bond Counsel (which opinion may be based upon a ruling or rulings of the Internal Revenue Service) to the effect that the provisions of this paragraph will not be breached by so providing for the payment of any Bonds.

Section 10.3. Payment of Bonds After Discharge. Notwithstanding the discharge of the lien hereof as in this Article provided, the Bond Trustee shall nevertheless retain such rights, powers and duties hereunder as may be necessary and convenient for the payment of amounts due or to become due on the Bonds and the registration, transfer, exchange and replacement of Bonds as provided herein. Nevertheless, any moneys held by the Bond Trustee or any Paying Agent for the payment of the principal of, premium, if any, or interest on any Bond remaining unclaimed for five years after the principal of all Bonds has become due and payable, whether at maturity or upon proceedings for redemption or by declaration as provided herein, shall, upon written request to do so, be paid to the Institution and the Holders of any Bonds not theretofore presented for payment shall thereafter be entitled to look

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only to the Institution for payment thereof as unsecured creditors and all liability of the Bond Trustee or any Paying Agent with respect to such moneys shall thereupon cease.

MISCELLANEOUS

Section 11.1. Evidence of Acts of Bondholders. Any request, direction, consent or other instrument provided hereby to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes hereof and shall be conclusive in favor of the Bond Trustee and the Authority, with regard to any action taken by them, or either of them, under such request or other instrument, namely:

(a) The fact and date of the execution by any Person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments in such jurisdiction, that the Person signing such writing acknowledged before him the execution thereof, or by the affidavit of a witness of such execution; and

(b) The ownership of all Bonds shall be proved by the register of such Bonds maintained by the Registrar.

Nothing in this Section shall be construed as limiting the Bond Trustee to the proof herein specified, it being intended that the Bond Trustee may accept any other evidence of the matters herein stated which it may deem sufficient.

Any action taken or suffered by the Bond Trustee pursuant to any provision hereof, upon the request or with the assent of any Person who at the time is the Holder of any Bond or Bonds shall be conclusive and binding upon all future Holders of the same Bond or Bonds.

Section 11.5. Holidays. When the date on which principal of or interest or premium on any Bond is due and payable is a day on which banking institutions at a place of payment on the Bonds are authorized or required by law or executive order to remain closed, payment may be made on Bonds presented at such place of payment on the next ensuing day on which banking institutions at such place are not authorized or required by law or executive order to remain closed with effect as though payment were made on the due date, and, if such payment is made, no interest shall accrue from and after such due date. When any other action is provided herein to be done on a day named or within a time period named, and the day or the last day of the period falls on a day other than a Business Day, it may be performed on the next ensuing Business Day with effect as though performed on the appointed day or within the specified period.11.1, 11.5

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CERTAIN PROVISIONS OF THE LOAN AGREEMENT

ISSUANCE OF SERIES 2017 BONDS AND SERIES 2017 NOTES

Section 3.1. Loan Agreement; Issuance of Series 2017 Bonds and Application of Proceeds. The Authority hereby agrees to loan, and hereby loans, to the Institution, the proceeds of the Series 2017 Bonds to provide funds to finance and refinance the Project upon the terms and conditions set forth or referred to in this Agreement. The Institution agrees to borrow and hereby borrows, and agrees to repay, the proceeds of the Series 2017 Bonds upon the terms and conditions set forth or referred to in this Agreement. This Agreement shall constitute a general obligation of the Institution. To provide funds to finance and refinance the Project, the Authority agrees to use its best efforts to issue the Series 2017 Bonds in accordance with the Bond Indenture and to cause the proceeds thereof to be paid to the Bond Trustee as provided in the Bond Indenture. The Institution agrees that the proceeds of the Series 2017 Bonds to be made available to finance and refinance the Project shall be deposited with the Bond Trustee and applied as provided in the Bond Indenture. The Institution acknowledges and agrees that it shall have no interest in the proceeds of the Series 2017 Bonds equal to or greater than that of the Holders who shall have a first and prior beneficial interest in such money until applied in accordance herewith and with the Bond Indenture.

Section 3.2. Issuance of Series 2017 Notes. In consideration of the issuance by the Authority of the Series 2017 Bonds and the application of the proceeds thereof as provided in the Bond Indenture, and as security for the loan referred to in Section 3.1 hereof, the Institution agrees to issue and to cause to be authenticated and delivered to the Bond Trustee as assignee of the Authority, pursuant to the Agreement, concurrently with the delivery of the Series 2017 Bonds to the Original Purchaser thereof in accordance with the Bond Purchase Contract, the Series 2017 Notes in substantially the form attached hereto as Schedule C with such necessary and appropriate omissions, insertions and variations as are permitted or required by the Bond Indenture. The Authority agrees that the Series 2017 Notes shall be registered in the name of the Bond Trustee as assignee of the Authority. The Institution agrees that the principal amount of the Series 2017 Notes shall be limited to the aggregate principal amount of the Series 2017 Bonds, except for any Series 2017 Note authenticated and delivered in lieu of another Series 2017 Note with respect to Series 2017 Notes mutilated, destroyed, lost or stolen or, subject to the provisions of Section 3.3 hereof, upon transfer or registration or exchange of the Series 2017 Notes.

Section 3.5. Additional Notes. The Institution may issue Additional Notes, on a parity with the Series 2017 Notes, but only to secure Additional Bonds issued in accordance with the Bond Indenture.

Section 3.6. Security for Bonds. (a) The Institution agrees that the principal and Redemption Price of and the interest on the Bonds shall be payable in accordance with the Bond Indenture and the right, title and interest of the Authority hereunder and in and to the Series 2017 Notes, any Additional Notes issued to secure Additional Bonds, the Note Payments and other amounts paid or payable by the Institution hereunder, other than fees and expenses payable or reimbursable to the Authority, shall be assigned and pledged by the Authority to the Bond Trustee pursuant to the Bond Indenture to secure the payment of the Bonds. The Institution agrees that all of the rights accruing to or vested in the Authority with respect to the Notes or hereunder may be exercised, protected and enforced by the Bond Trustee for or on behalf of the Holders in accordance with the provisions hereof and of the Bond Indenture.

(b) This Agreement is executed in part to induce the purchase by others of the Bonds, and to induce the Bond Trustee to accept its duties and obligations under the Bond Indenture, and, accordingly, all covenants and agreements on the part of the Institution and the Authority, as set forth in this Agreement, are hereby declared to be for the benefit of the holders and owners from time to time of the Bonds.

(c) The Institution agrees to do all things within its power in order to comply with and to enable the Authority to comply with all requirements, and to fulfill and to enable the Authority to fulfill all covenants, of the Bond Resolution, the Tax Regulatory Agreement and the Bond Indenture.

(d) The Institution agrees to deliver or cause to be delivered, at the Institution’s expense, at the time of the delivery of the Series 2017 Bonds, a title insurance policy with respect to the Land described on Schedules A-1 and A-2 hereto satisfactory to the Authority and its counsel.

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(e) As security for its obligation to make the Note Payments required under this Agreement, and for its obligation to make payments pursuant to Sections 4.5 and 6.6 of this Agreement, the Institution by this Agreement grants to the Authority a security interest in all Gross Receipts, but the existence of such security interest shall not prevent the expenditure, deposit or commingling of Gross Receipts by the Institution so long as no Agreement Event of Default exists hereunder and all required Note Payments hereunder are made when due. Without limiting the generality of the foregoing, this security interest shall apply to all rights to receive Gross Receipts whether in the form of accounts, Accounts Receivable, contract rights or other rights, and to the proceeds of such rights. This security interest shall apply to all of the foregoing, whether now existing or hereafter coming into existence and whether now owned or held or hereafter acquired by the Institution. If an Agreement Event of Default exists hereunder and any required Note Payment hereunder is not made when due, any Gross Receipts subject to this security interest which are then on hand and any such Gross Receipts thereafter received, shall not be commingled or deposited but shall immediately, or upon receipt, be transferred to the Bond Trustee (giving recognition to proration for any parity security interest in Gross Receipts granted in accordance with this Agreement) for deposit into the Bond Fund to the extent needed to make the amount on deposit in the Bond Fund at least equal to the requirements of the Bond Fund. The Institution hereby represents that as of the date of the delivery of this Agreement it has granted no security interest in Gross Receipts prior to or equal to the security interest granted by this Section 3.6(e), except for any applicable security interest listed as a pre-existing encumbrance securing other bonds of the Authority issued for the benefit of the Institution in Schedule D attached hereto and incorporated herein.

(f) As further security for its obligation to make the Note Payments required under this Agreement, the Institution by this Agreement grants to the Authority a security interest in its Equipment and a mortgage lien on the Mortgaged Property. The Institution hereby represents that as of the date of delivery of this Agreement it has granted no security interest in its Equipment and no mortgage lien on the Mortgaged Property prior to or equal to the security interest and mortgage lien granted by this Section 3.6(f), but for any applicable security interest listed as a pre-existing encumbrance securing other bonds of the Authority issued for the benefit of the Institution in Schedule D attached hereto and incorporated herein.

(g) By the date of issue of the Series 2017 Bonds, the Institution will have filed or cause to be filed all financing statements describing the Gross Receipts and the Equipment (and for so long as any Series 2017 Bond is outstanding the Institution will file, continue, and amend, or cause the Trustee or the Authority to file, continue and amend, all such financing statements and transfer such possession or control) as may be necessary to establish and maintain such priority in each jurisdiction in which the Institution is organized or the Gross Receipts or the Equipment may be located or that may be otherwise applicable pursuant to the New Hampshire Uniform Commercial Code Sections 9.301 through 9.306. Upon delivery of the Series 2017 Bonds and thereafter, the Institution agrees, to the extent required by law, to cause the Agreement and all supplements thereto, together with all related UCC financing statements or other instruments, to be kept, recorded and filed in such manner and in such places as may be required by law in order to create, perfect, preserve and protect fully the security of the holders of the Series 2017 Bonds in the Gross Receipts and the Equipment and any other collateral and the rights of the Bond Trustee for the holders of the Series 2017 Bonds. The Institution covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such further acts, instruments and transfers as may be required for the better securing, assuring, continuing, transferring, conveying, pledging, assigning and confirming unto the holders of the Series 2017 Bonds or the Bond Trustee, the Gross Receipts and the Equipment and any other collateral pledged to the payment of the principal of, premium, if any, and interest on the Series 2017 Bonds. Except to the extent it is exempt therefrom, the Institution agrees to pay or cause to be paid all filing fees incident to such filing and all expenses incident to the preparation, execution and acknowledgment of such instruments of further assurance, and all federal or State fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of such instruments of further assurance.

(h) As further security for its obligations hereunder, the Institution has caused to be executed and delivered to the Bond Trustee the Collateral Assignments.

PAYMENTS

Section 4.1. Payments of Principal, Premium and Interest. The Institution covenants that it will duly and punctually pay the principal of and interest and any premium on the Notes at the dates and in the places and

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manner mentioned therein and herein. Notwithstanding any schedule of payments to be made on the Notes set forth therein or herein, the Institution agrees to make payments upon the Notes and be liable therefor at the times and in the amounts equal to the amounts to be paid as principal or Redemption Price of or interest on the Bonds from time to time Outstanding under the Bond Indenture as the same shall become due whether at maturity, upon redemption, by declaration of acceleration or otherwise.

All amounts payable with respect to the Notes or hereunder by the Institution to the Authority, except as otherwise expressly provided herein, shall be paid to the Bond Trustee for the account of the Authority so long as any Bonds remain Outstanding.

The Institution agrees and represents that it has received fair consideration in return for the obligations undertaken and to be undertaken by the Institution resulting from each Note issued or to be issued by the Institution hereunder.

Section 4.2. Note Payments. (a) Except as otherwise provided below in this Section 4.2, the Note Payments shall be made not later than the 25th day of each June and December, as set forth below. Any scheduled payment which shall not be paid when due shall bear interest at the highest rate of interest borne on any Bond from the date the Note Payment is due until the same shall be paid.

(b) The Note Payments with respect to interest on the Bonds shall be made by the Institution not later than the 25th day of each June and December, commencing December 25, 2017, and shall include the amount, if any, necessary to cause the amount credited to the Interest Account together with available moneys and investment earnings on investments then on deposit in the Interest Account, if such earnings will be received before the next Bond Payment Date as determined by the Bond Trustee (but only to the extent that such moneys or investment earnings have not previously been credited for purposes of such calculation), to be not less than the full amount of the interest to be paid on Outstanding Bonds on such Bond Payment Date. The Note Payments to be made pursuant to this paragraph (b) shall be appropriately adjusted to reflect the date of issuance of the Bonds and accrued or capitalized interest, if any, deposited in the Interest Account.

(c) The Note Payments with respect to principal on the Bonds shall be made by the Institution not later than the 25th day of each June during each Bond Year ending on a date on which Serial Bonds mature and shall include (after credit for any investment earnings in such Account that have not previously been credited), the amount credited to the Principal Account, together with the available moneys and investment earnings on investments then on deposit in the Principal Account, if such earnings will be received before the last day of the Bond Year as determined by the Bond Trustee (but only to the extent that such moneys or investment earnings have not previously been credited for purposes of such calculation), to be not less than the principal amount of Serial Bonds Outstanding which will mature on the last day of the Bond Year.

(d) The Note Payments with respect to Sinking Fund Account Requirements shall be made by the Institution not later than the 25th day of each June during each Bond Year ending on a date which is a Sinking Fund Account Retirement Date, and shall include (after credit for any investment earnings in such Account that have not previously been credited) the amount necessary to cause the amount credited to the Sinking Fund Account, together with available moneys and investment earnings on investments then on deposit in the Sinking Fund Account, if such earnings will be received before the last day of the Bond Year as determined by the Bond Trustee (but only to the extent that such moneys or investment earnings have not previously been credited for purposes of such calculation), to be not less than the unsatisfied Sinking Fund Account Requirements to be satisfied on or before the last day of the Bond Year.

(e) The Note Payments shall include, in addition to the amounts referred to in paragraphs (b), (c) and (d) of this Section, twelve equal monthly installments (to be paid on the 25th day of each month) of amounts to be deposited to the Debt Service Reserve Fund sufficient to cause the Debt Service Reserve Fund Value to be not less than the Debt Service Reserve Fund Requirement within a period of twelve (12) months from any transfer of funds by the Bond Trustee from the Debt Service Reserve Fund in accordance with the Bond Indenture in the event that a deficiency in the Debt Service Reserve Fund Requirement results from such transfer.

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(f) The Note Payments shall include, in addition to the amounts referred to in paragraphs (b), (c), (d), and (e) of this Section, an amount or amounts to be deposited monthly on the 25th day of each month to the Debt Service Reserve Fund sufficient to cause the Debt Service Reserve Fund Value to be not less than ninety percent (90%) of the Debt Service Reserve Fund Requirement within 120 days after a computation of the Debt Service Reserve Fund Value by the Bond Trustee indicates that the Debt Service Reserve Fund Value is below such ninety percent (90%) level, in the event that such deficiency results from a decline in the market value of obligations held in the Debt Service Reserve Fund.

(g) The Note Payments shall include, in addition to the above, (i) an amount or amounts to be deposited to the Renewal and Replacement Fund sufficient to satisfy the Renewal and Replacement Fund Requirement, at the times and in the amounts as provided in Section 5.8 of the Bond Indenture, and (ii) all Initial Entrance Fees required to be deposited to the Entrance Fees Fund at the times and to the extent required by Section 5.9 hereof and Section 5.9 of the Bond Indenture.

Section 4.6. Obligations Unconditional. This Agreement is a general obligation of the Institution and the obligations of the Institution to make payments pursuant hereto and pursuant to the Notes shall be absolute and unconditional. The obligation of the Institution to perform and observe all other covenants and agreements on its part contained herein shall be absolute and unconditional to the extent permitted by law. Until this Agreement is terminated or payment in full of all Bonds is made or is provided for in accordance with the Bond Indenture, the Institution (i) will not suspend or discontinue any payments hereunder or neglect to perform any of its duties required hereunder or under the Tax Regulatory Agreement or the Disclosure Agreement; (ii) will perform and observe all of its obligations set forth in this Agreement and in the Tax Regulatory Agreement and the Disclosure Agreement; and (iii) except as provided herein, will not terminate this Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration; commercial frustration of purpose; any change in the tax or other laws or administrative rulings of, or administrative actions by or under authority of, the United States of America or of the State; or any failure of the Authority to perform and observe any obligation set forth in this Agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement, the Tax Regulatory Agreement or the Bond Indenture.

Nothing contained in this Section shall be construed to release the Authority from the performance of any of its obligations contained herein. In the event the Authority fails to perform any such obligation, the Institution may institute such action against the Authority as the Institution may deem necessary and to the extent permitted by law to compel performance so long as such action shall not violate the terms or conditions of this Agreement, and provided that no costs, expenses or other monetary relief shall be recovered from the Authority except as may be payable from the Pledged Revenues. The Institution may, however, at its own cost and expense and in its own name or, to the extent lawful and upon written notice to, and prior receipt of written consent of the Authority, in the name of the Authority, prosecute or defend any action or proceeding or take any other action involving third Persons which the Institution deems reasonably necessary in order to secure or protect its rights hereunder. In such event the Authority hereby agrees, to the extent reasonable, to cooperate fully with the Institution, but at the Institution’s expense, and to take all action necessary to effect the substitution of the Institution for the Authority in any such action or proceeding if the Institution shall so request.

Notwithstanding any other provisions contained in this Agreement, the rights of the Bond Trustee or any party or parties on behalf of whom the Bond Trustee is acting (including, specifically, but without limitation, the right to receive the Note Payments) shall not be subject to any defense, set off, counterclaim or recoupment whatsoever, whether arising out of any breach of any duty or obligation of the Authority or the Bond Trustee owing to the Institution, or by reason of any other indebtedness or liability at any time owing by the Authority or the Bond Trustee to the Institution.

Section 4.9. Cost of Construction. The Institution represents and warrants that it will use its best efforts to construct or cause the construction of the Facility, to the extent commercially reasonable, at a price which will permit completion of the Facility within the amount of the funds to be deposited in the Construction Fund and within the amount of other available funds of the Institution. The Institution will not permit any mechanics or material’s or other liens to be filed or remain against the Facility for labor or materials furnished in connection with the construction and installation of the Facility, provided it will not constitute an Event of Default hereunder upon such lien being filed, if the Institution promptly notifies the Bond Trustee and Authority of any such liens and the

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Institution in good faith contests such liens in accordance with Section 4.13 hereof; and in such event the Institution may permit the liens so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom.

Section 4.15. Institution Required to Pay Costs of the Project if Construction Fund Insufficient. If the moneys in the Construction Fund available for payment of the costs of the Project are not sufficient to pay the costs thereof in full, the Institution agrees to complete the acquisition, construction, renovation, equipping, and installation of the Project and to pay all that portion of costs of the Project as may be in excess of the moneys available therefor in the Construction Fund. The Authority does not make any warranty, either express or implied, that the moneys which will be paid into the Construction Fund and which, under the provisions of this Agreement, will be available for payment of the costs of the Project, will be sufficient to pay all the costs which will be incurred in that connection. The Institution agrees that after exhaustion of the moneys in the Construction Fund, the Institution will pay any portion of the said costs of the Project pursuant to the provisions of this Section, and it will not be entitled to any reimbursement therefor from the Authority or from the Bond Trustee or from the Holders of any of the Bonds, nor will it be entitled to any diminution of the loan payments payable under the Series 2017 Notes.

PARTICULAR COVENANTS

Section 5.1. Covenants as to Corporate Existence, Maintenance of Property, Etc. The Institution hereby covenants:

(a) Except as otherwise expressly provided herein, to preserve its corporate or other separate legal existence and all its material rights and licenses to the extent necessary or desirable in the operation of its business and affairs and to be qualified to do business in each jurisdiction where its ownership of Property or the conduct of its business requires such qualifications; provided, however, that nothing herein contained shall be construed to obligate it to retain or preserve any of its rights or licenses no longer used or useful in the conduct of its business.

(b) At all times to cause its business to be carried on and conducted and its Property to be maintained, preserved and kept in good repair, working order and condition as may be reasonably necessary to continue to operate such Property and conduct its affairs; provided, however, that nothing herein contained shall be construed (i) to prevent it from ceasing to operate any portion of its Property, if in its judgment (evidenced, in the case of such a cessation other than in the ordinary course of business, by a determination by its Governing Body delivered to the Authority and the Bond Trustee) it is advisable not to operate the same, or if it intends to sell or otherwise dispose of the same in accordance with the provisions of this Agreement and within a reasonable time endeavors to effect such sale or other disposition, or (ii) to obligate it to retain, preserve, repair, renew or replace any Property, leases, rights, privileges or licenses no longer used or useful in the conduct of its business.

(c) To do all things reasonably necessary to conduct its affairs and carry on its business and operations in such manner as to comply in all material respects with any and all applicable laws of the United States and the several states thereof and to duly observe and conform to all valid orders, regulations or requirements of any governmental authority relative to the conduct of its business and the ownership of its Property; provided, nevertheless, that nothing herein contained shall require it to comply with, observe and conform to any such law, order, regulation or requirement of any governmental authority so long as the validity thereof or the applicability thereof to it shall be contested in good faith; provided, however, that no such contest shall subject the Bond Trustee or the Authority to the risk of any liability, and, in any event, that the Institution shall indemnify the Bond Trustee and the Authority to their reasonable satisfaction against any liability resulting from such contest.

(d) Promptly to pay all lawful taxes, governmental charges and assessments at any time levied or assessed upon or against it or its Property; provided, however, that it shall have the right to contest in good faith any such taxes, charges or assessments or the collection of any such sums and pending such contest may delay or defer payment thereof; provided, however, that no such contest shall subject any of its property to risk of forfeiture or foreclosure or subject the Bond Trustee or the Authority to the risk of any liability, and, in any event, that the Institution shall indemnify the Bond Trustee and the Authority to their reasonable satisfaction against any liability resulting from such contest.

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(e) Promptly to pay or otherwise satisfy and discharge all of its obligations and Indebtedness and all material demands and claims against it as and when the same become due and payable, other than any thereof (exclusive of the Notes issued and Outstanding hereunder) whose validity, amount or collectability is being contested in good faith; provided, however, that no such contest shall subject any of its Property to risk of forfeiture or foreclosure or the Bond Trustee or the Authority to the risk of any liability, and, in any event, that the Institution shall indemnify the Bond Trustee and the Authority to their reasonable satisfaction against any liability resulting from such contest.

(f) At all times to comply with all material terms, covenants and provisions of any Liens at such time existing upon its Property or any part thereof or securing any of its Indebtedness; provided, however, that it shall have the right to contest in good faith any such terms, covenants or provisions and pending such contest may delay or defer compliance therewith; provided, however, that no such contest shall subject any of its Property to risk of forfeiture or foreclosure or subject the Bond Trustee or the Authority to the risk of any liability, and, in any event, that the Institution shall indemnify the Bond Trustee and the Authority to their reasonable satisfaction against any liability resulting from such contest.

(g) To procure and maintain a certificate of authority with respect to the Facility, and all necessary material licenses and permits and maintain accreditation of its continuing care retirement facilities (other than those of a type for which accreditation is not then available) and the status of its continuing care retirement community facilities (other than those not currently having such status) as a provider of health care services eligible for reimbursement under any appropriate third party payor programs and comparable programs, including future governmental programs as long as, in the opinion of the Institution, such eligibility or accreditation is in the best interests of the Institution.

(h) To maintain its status as a Tax Exempt Organization and to take no action or suffer any action to be taken by others under their control which would result in the interest on any Series 2017 Tax-Exempt Bond becoming subject to federal income taxes, and to fully comply with the provisions of the Tax Regulatory Agreement.

(i) On the date on which the Institution becomes subject to the provisions of this Agreement and at all times thereafter, to consent to the jurisdiction of the courts of the State for causes of action arising solely under the terms of this Agreement.

(j) That all action heretofore and hereafter taken by the Institution to operate and maintain the Institution’s Property, Plant and Equipment and to maintain the Project, and all actions hereafter taken by the Authority to maintain the Project upon the recommendation or request of any officer, employee or agent of the Institution have been and will be in full compliance with the Bond Resolution, the Bond Indenture, the Tax Regulatory Agreement, and the Agreement and will comply in all material respects with all pertinent laws, ordinances, rules, regulations and orders applicable to the Institution or the Authority; and in connection with the operation, maintenance, repair and replacement of the Institution’s Property, Plant and Equipment, that it shall comply in all material respects with all applicable ordinances, laws, rules, regulations and orders of the United States of America, the State, or the Municipality.

(k) That the Institution’s Property, Plant and Equipment have been and will be in compliance in all material respects with all applicable zoning, subdivision, building, land use, environmental and similar laws and ordinances and in compliance with all Environmental Laws; and that it shall not take any action or request the Authority to take any action which would cause such Property or any part thereof to be in material violation of such laws, ordinances or Environmental Laws. The Institution acknowledges that any review by the staff or counsel of the Authority of any such actions heretofore or hereafter taken has been or will be solely for the protection of the Authority.

(l) To hold and use the Facility for continuing care retirement community purposes so long as the principal of and interest on the Bonds have not been fully paid and retired and all other conditions of the Bond Indenture, the Tax Regulatory Agreement and this Agreement have not been satisfied and the lien and security interests created under the Bond Indenture and this Agreement have not been released in accordance with the provisions hereof.

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(m) The Project shall be used only for the purposes described in the Act and no part of the Project shall be used for any purpose which would cause the Authority’s financing and refinancing of the Project to constitute a violation of the First Amendment of the United States Constitution; and, in particular, that no part of the Project, so long as it is owned or controlled by the Institution, shall be used for any sectarian instruction or as a place of religious worship or in connection with any part of a program of a school or department of divinity for any religious denomination in a manner which would cause a violation of the First Amendment of the United States Constitution; and any proceeds of any sale, lease, taking by eminent domain of the Project or other disposition thereof shall not be used for, or to provide a place for, such instruction, worship or program. The provisions of the foregoing sentence shall, to the extent permitted and required by law, survive termination of this Agreement.

(n) To provide parking for the Facility in compliance with applicable zoning requirements.

(o) To obtain the approval of the Authority, which approval shall not be unreasonably withheld, prior to entering into any derivative financial product, interest rate swap or other similar off-balance sheet transaction relating to the Bonds or the Project financed thereby.

Section 5.2. Preservation of Exempt Status. (a) The Institution represents and warrants that as of the date of the Agreement: (i) it is a Tax Exempt Organization described in Section 501(c)(3) of the Code; (ii) it has received a letter or determination from the Internal Revenue Service to that effect; (iii) such letter or determination has not been modified, limited or revoked; (iv) it is in compliance with all terms, conditions and limitations, if any, contained in or forming the basis of such letter or determination; (v) the facts and circumstances which form the basis of such letter or determination continue substantially to exist as represented to the Internal Revenue Service; (vi) it is exempt from Federal income taxes under Section 501(a) of the Code and it is in compliance with the provisions of said Code and any applicable regulations thereunder necessary to maintain such status; and (viii) it is a “participating health care institution” within the meaning of the Act, being a not for profit continuing care retirement community located within and incorporated under the laws of the State and licensed as a continuing care retirement community by the Department of Health and Human Services of such State.

(b) The Institution agrees that (i) it shall not perform any acts, enter into any agreements, carry on or permit to be carried on at the Institution, or permit the Institution to be used in or for any trade or business, which shall adversely affect the basis for the exemption under Section 501 of such Code; (ii) it shall not use more than five percent (5%) of the net proceeds of the Series 2017 Tax-Exempt Bonds or permit the same to be used, directly or indirectly, in any trade or business that constitutes an unrelated trade or business as defined in Section 513(a) of the Code or in any trade or business carried on by any Person or Persons who are not governmental units or Tax Exempt Organizations; (iii) it shall not directly or indirectly use the proceeds of the Series 2017 Tax-Exempt Bonds to make or finance loans to Persons other than governmental units or Tax Exempt Organizations; (iv) it shall not take any action or permit any action to be taken on its behalf, or cause or permit any circumstances within its control to arise or continue, if such action or circumstances, or its expectation on the date of issuance of the Bonds, would cause the Series 2017 Tax-Exempt Bonds to be “arbitrage bonds” under the Code or cause the interest paid by the Authority on the Series 2017 Tax-Exempt Bonds to be subject to Federal income tax in the hands of the holders thereof; and (v) it shall use its best efforts to maintain the tax exempt status of the Series 2017 Tax-Exempt Bonds.

(c) The Institution (or any related person, as defined in Section 147(a)(2) of the Code) shall not, pursuant to an arrangement, formal or informal, purchase the Bonds in an amount related to the amount of the payments due from the Institution under the Agreement.

Section 5.5. Securities Law Status. The Institution affirmatively represents, warrants and covenants that, as of the date of the Agreement, it is an organization organized and operated: (A) exclusively for charitable purposes; (B) not for pecuniary profit; and (C) no part of the net earnings of which inure to the benefit of any Person (other than a Tax-Exempt Organization), private stockholder or individual, all within the meaning, respectively, of the Securities Act of 1933, as amended, and of the Securities Exchange Act of 1934, as amended. The Institution agrees that it shall not perform any act nor enter into any agreement which shall change such status as set forth in this Section.

Section 5.7. Limitation of Authority’s Liability. No obligation of the Authority under or arising out of this Agreement, the Bond Indenture or any document executed by the Authority in connection with any Property

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of the Institution financed or refinanced, directly or indirectly, out of Bond proceeds or the issuance, sale or delivery of any Bonds shall impose, give rise to or be construed to authorize or permit a debt or pecuniary liability of, or a charge against the general credit of, the Authority, the State or any political subdivision of the State, but each such obligation shall be a limited obligation of the Authority payable solely from the Pledged Revenues.

Section 5.9. Source of Payments; Transfer of Initial Entrance Fees to Bond Trustee. The Institution agrees to make or cause to be made the payments required by this Agreement from the general funds or any other moneys legally available to the Institution in the manner and at the times provided by this Agreement. The Institution agrees to transfer or cause to be transferred to the Bond Trustee for deposit to the Entrance Fees Fund in accordance with Section 5.9 of the Bond Indenture, all Initial Entrance Fees within five (5) Business Days of receipt thereof. The Institution further agrees to charge Persons using any facilities of the Institution fees, rentals or other charges which, together with its general funds and other moneys legally available to it, shall provide moneys sufficient at all times (i) to make such payments as are required by this Agreement, and (ii) to pay all other obligations of the Institution as the same become due and payable. However, the foregoing shall not affect any state or federal obligation of the Institution to provide free medical or health care services.

Section 5.10. Budget. The Institution agrees that it shall submit to the Required Information Recipients, at least thirty (30) days prior to the beginning of each Fiscal Year of the Institution during the period when the Bonds are Outstanding, commencing with the first Fiscal Year ending December 31, 2019 a budget for the operation and cash flow of the Institution for each such Fiscal Year. The Institution further agrees, to the extent that it shall be reasonably possible and subject to law or regulation, that such budgets shall indicate that the Institution shall be operated during such Fiscal Year so that the Institution shall be in compliance with all covenants of this Agreement. The Institution also agrees that such budgets shall be prepared in accordance with principles of accounting generally accepted and recommended within the continuing care retirement community industry in the United States of America.

Section 5.11. Financial Statements; Books and Records; Reports and Required Information. (a) If an Agreement Event of Default shall have occurred and be continuing, the Institution covenants that it will (i) promptly notify the Authority and the Bond Trustee thereof, (ii) take prompt remedial action to cure such Agreement Event of Default, whether or not the Institution has notified the Authority and the Bond Trustee of the occurrence thereof, (iii) file with the Authority and the Bond Trustee such other financial statements and information concerning its operations and financial affairs as the Authority and the Bond Trustee may from time to time reasonably request, excluding specifically donor records, patient records and personnel records and (iv) provide access to its facilities for the purpose of inspection by the Authority, its agents or consultants and the Bond Trustee, its agents or consultants during regular business hours or at such other times as the Authority, its agents or consultants or the Bond Trustee, its agents or consultants may reasonably request.

(b) The Institution covenants that it will provide the Authority with documents it provides under the Disclosure Agreement in accordance with the timing provided in the Disclosure Agreement.

(c) The Institution will furnish or cause to be furnished to each Required Information Recipient, the following:

(i) Prior to Stabilization, a monthly statement of the Institution as soon as practicable after the information is available but in no event more than 45 days after the completion of such month, including:

(A) Prior to the issuance of a certificate of occupancy for the first building containing Independent Living Units, (I) a calculation of the marketing levels for the Facility as of the end of such month, including the number of Independent Living Units that have been reserved or cancelled during that month and on an aggregate basis by unit type; (II) a copy of the report prepared by the Construction Consultant;, (III) a report by the Institution on the progress of the construction showing the dollar amount and percentage of completion for each stage of construction of the Facility, comparing such amounts to the amounts estimated in the schedule of values and the construction progress schedule delivered at closing, estimating the amount of funds required to complete the Project, and certifying that the amount available in the Construction

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Fund, together with anticipated investment earnings, will be sufficient to pay the costs of completing the Facility; (IV) a report on the development costs of the Project incurred during that month and on an aggregate basis; and (V); if such month is the last month of the fiscal quarter, a calculation of compliance with the Marketing Requirements; and

(B) After the issuance of a certificate of occupancy for the first building containing Independent Living Units, (I) a calculation of the marketing levels for the Facility as of the end of such month, including the number of Independent Living Units that have been reserved or cancelled during that month and on an aggregate basis by unit type; (II) occupancy levels of the Facility as of the end of such month including the number of Independent Living Units by unit type, assisted living units and nursing beds that were occupied and vacated during that month and on an aggregate basis and a payor mix for the nursing beds; (III) a summary statement on the status of construction until the issuance of the last certificate of occupancy for the Facility; (IV) a report on the development costs incurred during that month and on an aggregate basis until the issuance of the last certificate of occupancy for the Facility; (V) an unaudited statement of revenues and expenses and statement of cash flows of the Institution for such month and an unaudited balance sheet of the Institution as of the end of such month, showing a comparison to the current annual budget provided pursuant to Section 5.10 hereof; and (VI) if such month is the last month of the fiscal quarter, a calculation of compliance with the Marketing Requirements and Occupancy Requirements, and a calculation of the Cumulative Cash Loss covenant, for such fiscal quarter, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Institution Representative, and

(ii) Beginning with the first full fiscal quarter following Stabilization, quarterly unaudited financial statements of the Institution as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Institution during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, a payor mix for the nursing beds, occupancy levels of the Facility as of the end of such quarter including the number of Independent Living Units, assisted living units and nursing beds and a calculation of compliance with Days’ Cash on Hand Requirement as of the most recent semiannual testing date as set forth in Section 5.27 hereof and the Debt Service Coverage Ratio covenant for such fiscal quarter, all prepared in reasonable detail and certified, subject to year end adjustment, by an officer of the Institution. Such financial statements and calculations shall be accompanied by a comparison to the annual budget provided pursuant to Section 5.10 hereof. Inclusion of the most recent Days’ Cash on Hand calculation in each quarterly report is for informational purposes and nothing in this Section shall be construed to require calculation of the Days’ Cash on Hand Requirement on any date other than the semiannual testing dates set forth in Section 5.27 hereof;

(iii) If on any required testing date, the Debt Service Coverage Ratio of the Institution for any Fiscal Year is less than 1.20 (or 1.10 for the first Fiscal Year in which the Debt Service Coverage Ratio is to be calculated) and the Days’ Cash on Hand of the Institution is less than the Days’ Cash on Hand Requirement for any testing date as provided herein, the Institution will deliver the financial information and the calculations described in paragraph (ii) above on a monthly basis within 45 days of the end of each month until the Debt Service Coverage Ratio of the Institution is at least 1.20 (or 1.10 for the first Fiscal Year in which the Debt Service Coverage Ratio is to be calculated) and the Days’ Cash on Hand of the Institution is at least equal to the applicable Days’ Cash on Hand Requirement;

(iv) Within 150 days of the end of each Fiscal Year, an annual audited financial report of the Institution prepared by an Accountant, including a balance sheet as of the end of such Fiscal Year and a statement of cash flows for such Fiscal Year and a statement of revenues and expenses for such Fiscal Year, showing in comparative form the financial figures for the preceding Fiscal Year, if applicable, together with a separate written statement of the Accountant preparing such report containing calculations of the Institution’s Debt Service Coverage Ratio for said Fiscal

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Year and the Days’ Cash on Hand of the Institution at the end of such Fiscal Year if required to be calculated hereunder; provided, however, that the report of the Accountant shall be subject to and restricted by any then current recommendations and/or pronouncements of the American Institute of Certified Public Accountants;

(v) On or before the date of delivery of the financial reports referred to in subsection (iv) above, an Officer’s Certificate of the Institution (A) stating that the Institution is in compliance with all of the terms, provisions and conditions of this Agreement or, if not, specifying all such defaults and the nature thereof, (B) calculating and certifying the Marketing Requirements, Occupancy Requirements, Cumulative Cash Loss, Days’ Cash on Hand, and Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year hereunder, as of the end of such month or Fiscal Year, as appropriate, and (C) beginning with the first Fiscal Year following Stabilization, attaching (I) information about occupancy of the Independent Living Units, including a comparison to prior year’s occupancy, (II) the payor mix for the nursing beds, (III) the turnover statistics with respect to the Independent Living Units, and (IV) changes in any services offered to the Residents of the Facility;

(vi) On or before the date of delivery of the financial reports referred to in subsections (i), (ii) and (iv) above, a management’s discussion and analysis of the financial and operating results for the applicable fiscal period;

(vii) The Institution shall use its best efforts to make available one or more representatives for a quarterly telephone conference call (or more frequently if requested by a majority of Bondholders) with the Bondholders to discuss the financial results of the preceding quarter and such other matters as are relevant or are reasonably requested by the Bondholders. The Institution shall post notice of such calls to Electronic Municipal Market Access System (“EMMA”) maintained by the Municipal Securities Rulemaking Board (the “MSRB”) at least one week prior to the scheduled date of each call;

(viii) Any correspondence to or from the Internal Revenue Service concerning the status of the Institution as a tax exempt organization or with respect to the tax exempt status of any Bonds, promptly upon receipt; and

(ix) Within thirty (30) days of any revision of the schedule of Entrance Fees or Monthly Fees being charged or quoted to residents or prospective residents of the Project, a report on the amounts of such revised Entrance Fees or Monthly Fees for each type of unit setting forth the reasons for such revision and, if applicable, the reason why any increases in such fees forecasted in the feasibility study relating to the Facility have not been made.

(d) The Institution also agrees that, within 10 days after its receipt thereof, the Institution will file with each Required Information Recipient a copy of each Consultant’s report or counsel’s opinion required to be prepared under the terms of this Agreement.

(e) Upon the written direction of the Authority, the Institution shall also provide a copy of the audited financial statements required to be delivered pursuant to this Section to any firm of independent auditors designated by the Authority in such written direction.

(f) The Bond Trustee shall have no duty to review or analyze the financial statements, reports and information delivered to it pursuant to this Section and shall hold such financial statements and reports solely as a repository for the benefit of the Bondholders. The Bond Trustee shall not be deemed to have notice of any information contained therein or any Bond Indenture Event of Default which may be disclosed therein in any manner.

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Section 5.14. Permitted Encumbrances. (a) The Institution covenants that, except for Permitted Encumbrances described in paragraph (b) of this Section 5.14, the Institution shall not create, permit to be created, or suffer to be created, any Lien upon any of the Institution’s Property now owned or hereafter acquired.

(b) Permitted Encumbrances shall include only the following:

(1) the Lien represented by the mortgage to the Authority created upon the Mortgaged Property by this Agreement;

(2) the Lien represented by the security interest to the Authority created upon the Equipment by this Agreement;

(3) the Lien represented by the security interest to the Authority created upon the Gross Receipts by this Agreement;

(4) liens permitted pursuant to Section 5.18(c) hereof to secure Permitted Debt incurred in accordance with Section 5.18;

(5) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, any Lien upon the Facility or Gross Receipts only if and to the extent that such portion of the Facility or Gross Receipts has been released as a Permitted Release under Section 5.24 hereof;

(6) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, any Lien upon Property only if and to the extent that such Property could have been disposed of as a Permitted Disposition under Section 5.15 hereof;

(7) any Lien upon Property that is not part of the Facility and that does not generate Gross Receipts, without limitation;

(8) any Lien arising by reason of good faith deposits with the Institution in connection with leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by the Institution to secure public or statutory obligations, or to secure, or given in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges;

(9) any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable the Institution or a Subsidiary 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 social security, or to share in the privileges or benefits required for companies participating in such arrangements, including, but not limited to, Liens arising under NHRSA 420-D;

(10) any Lien in the form of a judgment lien or notice of pending action against the Institution so long as such judgment or pending action is being contested and execution thereon is stayed or while the period for responsive pleadings has not lapsed;

(11) any choate or inchoate Lien in the form of (A) 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, such Property; (B) any liens on any 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 liens have not been perfected or if such liens have been perfected, and are being contested, and the Institution has posted security for the payment of such liens in an amount

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satisfactory to the Authority; (C) easements, rights-of-way, servitudes, restrictions and other minor defects, encumbrances, and irregularities in the title to any Property which do not materially impair the use of such Property or materially and adversely affect the value thereof; and (D) rights reserved to or vested in any municipality or public authority to control or regulate any 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;

(12) any Lien described on Schedule D hereto which is existing on the date of authentication and delivery of the Series 2017 Notes, including renewals or refinancings thereof, provided that no such Lien may be extended or modified to apply to any Property of the Institution not subject to such Lien on such date, unless such Lien as so extended or modified otherwise qualifies as a Permitted Encumbrance hereunder;

(13) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, any Lien on Property (other than a Lien on Property which is part of the Facility) acquired by the Institution if the assumption of the Indebtedness secured by the Lien by the Institution is Permitted Indebtedness permitted under the provisions of Section 5.18 hereof, and if an Officer’s Certificate is delivered to the Authority and the Bond Trustee certifying that (A) the Lien and the Indebtedness secured thereby were created and incurred by a Person other than the Institution prior to the acquisition of such Property by the Institution, (B) the Lien was created prior to the decision of the Institution to acquire the Property and was not created for the purpose of enabling the Institution to avoid the limitations hereof on creation of Liens on Property of the Institution and (C) the Lien attaches solely to the Property acquired and such Lien does not by its terms extend, automatically or otherwise, to the other Property of the Institution;

(14) any Lien representing rights of setoff and banker’s liens with respect to funds on deposit in a financial institution in the ordinary course of business;

(15) any Lien on Property received by the Institution through gifts, grants or bequests, such Liens being due to restrictions on such gifts, grants or bequests of Property or the income thereon;

(16) any Lien in favor of a trustee on the proceeds of Indebtedness prior to the application of such proceeds;

(17) any Lien on moneys deposited by Residents or others with the Institution as security for or as prepayment for the cost of patient care;

(18) any Lien due to rights of third-party payors for recoupment of amounts paid to the Institution;

(19) any Lien representing statutory rights of the United States of America by reason of federal funds made available under 42 U.S.C. §291 et seq. and similar rights under other federal and state statutes; and

(20) the conservation easement granted on a portion of the Land described on Schedule A-2 hereto as required in connection with the wetlands permit issued by the New Hampshire Department of Environmental Services.

Section 5.15. Permitted Dispositions. (a) The Institution covenants that, except for Permitted Dispositions described in paragraph (b) of this Section 5.15, the Institution shall not sell, lease, remove, transfer, assign, convey or otherwise dispose of any of the Institution’s Property.

(b) Permitted Dispositions shall include only the following:

(1) Transfers aggregating in any Fiscal Year not more than 3% of net Property, Plant and Equipment (as shown on last audit) and not more than 7.5% of net Property, Plant and Equipment in any period of three consecutive Fiscal Years.

(2) Transfers of tangible Property at any one time in excess of 3% of net Property, Plant and Equipment provided that (i) the required Cumulative Cash Operating Loss Covenant, Debt Service Coverage Ratio

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and Days’ Cash on Hand Requirement will be met after giving effect to such disposition, (ii) a Consultant certifies that the transfer will not materially adversely affect use or operation of the Facility, and (iii) either:

(A) an Accountant has provided the Institution, in writing, with a calculation showing that if such transfer had been made at the beginning of the last Fiscal Year, the Debt Service Coverage Ratio of the Institution would have been at least 90% of the actual ratio and not less than 1.35; or

(B) a Consultant forecasts that the Debt Service Coverage Ratio of the Institution for the two Fiscal Years following the transfer will be at least 90% of the actual ratio for the preceding Fiscal Year and not less than 1.35.

(3) Except as permitted elsewhere by this Section, Current Assets may not be transferred to any Person unless (i) the Series 2017B Bonds and the Series 2017C Bonds have been repaid in full, and (iii) an Accountant provides the Institution with pro forma calculations showing that if the transfer had been made at the beginning of the prior Fiscal Year, the Debt Service Coverage Ratio for such Fiscal Year would have been at least 1.35 and the Days’ Cash on Hand at the end of such Fiscal Year would have been at least 300;

(4) Payments for goods and services in arm’s length transactions, investments in marketable securities and transfers of Property replaced in the ordinary course of business, provided that in the case of any transfer of Property (other than payment for goods and services or investments) in the ordinary course of business, at least 15 days prior written notice shall be given to the Bond Trustee and the Authority of any such transfer of Property having a book value in excess of 1% of net book value of all of the net Property, Plant and Equipment of the Obligated Group;

(5) the disposition of Land that is unused or surplus upon which neither the Project, the Buildings or the Equipment are situated;

(6) the disposition of Property in the case of any proposed or potential condemnation or taking for public or quasi public use of the Property or any portion thereof, provided that the proceeds of any such condemnation or taking shall be applied in the manner set forth in Section 5.24 of this Agreement;

(7) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, the disposition of Property to any Person if prior to the sale, lease, removal or other disposition there is delivered to the Authority and the Bond Trustee an Officer’s Certificate stating that in the judgment of the signer such Property has, or within the next succeeding twenty four (24) calendar months is reasonably expected to, become inadequate, obsolete, worn out, unsuitable, unprofitable, undesirable or unnecessary and the sale, lease, removal or other disposition thereof will not impair the structural soundness, efficiency or economic value of the remaining Property;

(8) the disposition of Property if such Property is replaced promptly by other Property of comparable utility or worth;

(9) the disposition of Property if the Institution receives fair market value therefor and the proceeds of such disposition are applied to the purchase of additional capital assets, applied to the defeasance, discharge, redemption or retirement of Indebtedness or deposited into a renewal or replacement fund;

(10) leases which relate to Property which is of a type that is customarily the subject of such leases, such as office space for physicians and educational institutions, food and beverage service facilities, gift shops, commercial, beauty shop, banking, radiology, other similar specialty services, pharmacy and similar departments or employee rental apartments; and any leases, licenses or similar rights to use Property whereunder the Institution is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would obtain in a comparable arm’s length transaction; and

(11) the disposition of the Original Facility.

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(c) For avoidance of doubt, it is understood that this Section does not prohibit: (i) any transfer of cash by the Institution in payment of any of its obligations, Indebtedness and liabilities, the incurrence of which obligation, Indebtedness or liability did not or would not, either immediately or with the giving of notice, the passage of time or both, result in the occurrence of an Event of Default; (ii) the making of loans to Residents for their financial assistance; or (iii) the expenditure by the Institution of the proceeds of gifts, grants, bequests, donations or contributions heretofore or hereafter made which are designated by the donor at the time made for certain specific purposes other than described in clauses (i) and (ii) of this sentence.

Section 5.17. Permitted Releases. (a) The Authority and the Institution covenant that, except for Permitted Releases described in paragraph (b) of this Section 5.17, the Authority and the Institution shall not release any of the Facility from the mortgage lien created by this Agreement, or any of the Gross Receipts or any of the Equipment from the security interest created by this Agreement.

(b) Permitted Releases shall include only the following:

(1) the release of the Original Facility in connection with the disposition thereof pursuant to Section 5.15(b)(11) hereof.

(2) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, a release made with respect to a portion of the Facility or Gross Receipts that are to be disposed of in conjunction with a Permitted Disposition of a portion of the Facility or Gross Receipts;

(3) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, a release made with respect to a portion of the Facility or Gross Receipts that are permitted to be disposed of, but in fact are not to be disposed of, in accordance with the provisions of this Agreement relating to Permitted Dispositions;

(4) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, a release made with respect to a portion of the Facility or Gross Receipts in connection with the granting of a Permitted Encumbrance on such portion of the Facility or Gross Receipts; provided that:

(i) prior to the effective date of such release, the Authority and the Bond Trustee shall have been provided with an Opinion of Bond Counsel to the effect that such release will not adversely affect the exemption from federal or State income tax of the interest paid or payable on the Bonds;

(ii) prior to the effective date of such release, the Authority and the Bond Trustee shall have been provided with an Opinion of Counsel to the effect that the remaining security interest in the Gross Receipts and in the Equipment created under this Agreement, and the remaining mortgage lien on the Facility created under this Agreement shall not be adversely affected as to priority or perfection; and

(iii) prior to the effective date of such release the Authority and the Bond Trustee shall have been provided with a Consultant’s opinion, report or certificate to the effect that the Debt Service Coverage Ratio of the Institution would have been at least 1.35 for the Historic Test Period, with the Debt Service Coverage Ratio calculated as if the release had occurred at the beginning of such Historic Test Period and the Days’ Cash on Hand would have been at least 200 for the Historic Test Period, calculated as is the release had occurred at the beginning of such Historic Test Period.

Section 5.18. Permitted Debt. (a) The Institution covenants that, except for Permitted Debt described in paragraph (b) of this Section 5.18, the Institution shall not incur Additional Indebtedness, directly, indirectly or contingently.

(b) Permitted Debt shall include only the following:

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(1) Alternate Debt. With the prior written consent of the Authority, which consent shall not be unreasonably withheld, Alternate Debt;

(2) Additional Bonds. With the prior written consent of the Authority, which consent shall not be unreasonably withheld, upon satisfaction of the applicable tests set forth in Section (b)(3), (7) or (8) of this Section 5.18, Additional Indebtedness owed to the Authority incurred by the Institution to secure Additional Bonds of the Authority;

(3) Long-Term Indebtedness. If no Event of Default shall have occurred and then be continuing, with the prior written consent of the Authority, which consent shall not be unreasonably withheld, Long-Term Indebtedness if evidence of compliance with any of the following is delivered to the Authority and the Bonds Trustee:

(i) Historical Pro Forma Test. Except as provided in paragraphs (ii) through (viii) below, an Officer’s Certificate stating that the Debt Service Coverage Ratio of the Institution for the immediately preceding Fiscal Year (taking into account the Long-Term Indebtedness to be incurred) was not less than 1.25 and that the Institution was in compliance with the Days’ Cash on Hand Requirement.

(ii) Historical Test and Forecast. In lieu of the requirements of paragraph (i) above,

(A) An Officer’ s Certificate stating that the Debt Service Coverage Ratio of the Institution for the immediately preceding Fiscal Year (without taking into account the Long-Term Indebtedness to be incurred) was not less than 1.25 and that the Institution was in compliance with the Days’ Cash on Hand Requirement, and

(B) A Feasibility Report stating that (a) the Debt Service Coverage Ratio of the Institution (taking into account the Long-Term Indebtedness to be incurred) is expected to be not less than 1.30 for (i) the first complete Fiscal Year following the Fiscal Year during which the Capital Addition financed with such Long-Term Indebtedness is expected to be placed into service, or (ii) if the Long-Term Debt will finance a Capital Addition that includes additional Independent Living Units or health care beds, the earlier of (1) the first complete Fiscal Year for which the additional units achieve average occupancy of 85% or (2) the first complete Fiscal Year that begins at least 18 months after the date such additional units are expected to be placed in service, and (b) the Institution is forecasted to be in compliance with the Days’ Cash on Hand Requirement.

(iii) Pro Forma Test. In lieu of the requirements of paragraphs (i) and (ii) above, a Feasibility Report stating that the Debt Service Coverage Ratio of the Institution (taking into account the Long-Term Indebtedness to be incurred) is expected to be not less than 1.35 for (i) the first complete Fiscal Year following the Fiscal Year during which the Capital Addition financed with such Long-Term Indebtedness is expected to be placed into service, or (ii) if the Long-Term Debt will finance a Capital Addition that includes additional Independent Living Units or health care beds, the earlier of (1) the first complete Fiscal Year for which the additional units achieve average occupancy of 85% or (2) the first complete Fiscal Year that begins at least 18 months after the date such additional units are expected to be placed in service, and the Institution is forecasted to be in compliance with the Days’ Cash on Hand Requirement.

(iv) Limit Based on Revenues. Commencing one year after the certificate of occupancy has been issued with respect to the Project, in lieu of the requirements of paragraphs (i) through (iii) above, an Officer’s Certificate showing that the proposed Long-Term Indebtedness, together with all Long-Term Indebtedness incurred pursuant to this paragraph (iv) which is then outstanding and which is not covered by an Officer’s Certificate or Feasibility Report delivered pursuant to paragraphs (i) through (iii) above, does not exceed 5% of Revenues of the Institution for the immediately preceding Fiscal Year.

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(v) Completion Indebtedness. In the case of Long-Term Indebtedness incurred or assumed to finance the completion of the Project or a Capital Addition, in lieu of the requirements of paragraphs (i) through (iv) above, so long as the scope of the Project or such Capital Addition is not being changed, either (A) an Officer’s Certificate showing that the principal amount of the proposed Long-Term Indebtedness does not exceed 10% of the principal amount of the Long-Term Indebtedness originally incurred to finance the Project or such Capital Addition or (B) a Feasibility Report stating that the forecasted Debt Service Coverage Ratio of the Institution for each of the two Fiscal Years immediately following the completion of the Project or such Capital Addition will be not less than what such Debt Service Coverage Ratio would have been without the incurrence of such Indebtedness. In addition, the Institution must provide an Architect’s certificate that the Long-Term Indebtedness incurred or assumed to finance the completion of the Project or a Capital Addition will be sufficient to complete the Project.

(vi) Refunding Indebtedness. In lieu of the requirements of paragraphs (i) through (v) above, in the case of Long-Term Indebtedness incurred to refinance outstanding Long-Term Indebtedness, an Officer’s Certificate showing that the Maximum Annual Debt Service on the proposed Long-Term Indebtedness does not exceed 110% of the Maximum Annual Debt Service on the Long-Term Indebtedness to be refinanced.

(vii) Future Phase Indebtedness. In lieu of the requirements of paragraphs (i) through (vi) above, in the case of additional Long-Term Indebtedness for the construction of new Independent Living Units (a “Future Phase”) if (A) at least 70% of the Independent Living Units to be constructed as the Future Phase have been reserved with executed Residency Agreements and deposits at least equal to 10% of the Entrance Fee shall have been received for such units; (B) there is a guaranteed maximum price or stipulated construction contract for the Future Phase; (C) the Institution is in compliance with all then applicable covenants contained herein and with the State Reserve Requirements, (D) all required deposits have been made in the Entrance Fees Fund; (E) the Project has achieved Stabilization; and (F) a Feasibility Report shows that the Debt Service Coverage Ratio of the Institution for the two Fiscal Years following the completion of the Future Phase will be at least 1.25 and the Days’ Cash on Hand at the end of the first Fiscal Year in which the average occupancy of such Independent Living Units is forecasted to reach 85% will be at least 200;

(4) Reimbursement Agreements. Any Indebtedness represented by a letter of credit reimbursement agreement or other similar reimbursement agreement entered into by the Institution and a financial institution providing either a liquidity or credit support with respect to any other Indebtedness incurred in accordance with any other provision of this Section 5.18(b);

(5) Obligations Not for Borrowed Money. Any Indebtedness (or obligations not for borrowed money), which Indebtedness or obligation is not generally treated as indebtedness, such as contributions for employee benefit plans, social security alternative plans, self insurance programs, captive insurance companies and unemployment insurance liabilities;

(6) Non-Recourse Indebtedness. Non Recourse Indebtedness, in a principal amount Outstanding at any one time not in excess of fifteen percent (15%) of Revenues for the Historic Test Period, which Non Recourse Indebtedness is: (i) secured by a Lien on Property which is part of the Property, Plant and Equipment which Lien is created in compliance with the provisions of Section 5.18(c)(iii) or (iv) hereof; or (ii) secured by a Lien on Property which is inventory or pledges of gifts or grants to be received in the future without limit, provided that such gifts or grants shall be excluded from the calculation of Income Available for Debt Service so long as such Indebtedness is Outstanding;

(7) Subordinated Indebtedness. Subordinated Indebtedness, without limitation, so long as payments on such Subordinated Indebtedness are permitted no more often than quarterly and:

(i) No payment may be made in any quarter on any Subordinate Indebtedness unless: (i) all Short-Term Indebtedness has been paid in full; (ii) the Debt Service Coverage Ratio of the Institution for

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the immediately preceding four consecutive fiscal quarters was not less than 1.35; (iii) there is no deficiency in any Debt Service Reserve Fund; (iv) the Days’ Cash on Hand, after giving effect to such payment, will be not less than 300; (v) the average occupancy of the Independent Living Units has been at least 90% for the preceding 12 months; and (vi) no Event of Default has occurred and is continuing; and

(ii) Payments not permitted to be paid on Subordinate Indebtedness pursuant to the preceding paragraph will be deferred without additional interest, until all of the conditions described above have been met for payment on such Subordinate Indebtedness.

(iii) The relative priority of payment of Subordinated Obligations shall be provided for in the agreement pursuant to which such Subordinated Obligations are issued.

(8) Short-Term Indebtedness. The Institution may, from time to time, incur, assume or allow to remain outstanding at any time Short-Term Indebtedness in any amount up to ten percent (10%) of Revenues of the Institution for the preceding Fiscal Year. Any such Short-Term Indebtedness must, for a period of at least 30 consecutive days during each Fiscal Year, be less than 3% of Revenues for the preceding Fiscal Year. Short-Term Indebtedness in excess of such 3% limit shall be permitted to remain outstanding only if permitted to exist under this Agreement as Long-Term Indebtedness.

(c) Security for Permitted Debt. As long as no Event of Default has occurred and is continuing, Permitted Debt may be secured only as hereinafter provided:

(i) Additional Bonds and Alternate Debt. Additional Bonds or Alternate Debt secured on a parity with the Bonds.

(ii) Other Secured Long-Term Indebtedness. Any Permitted Debt that does not constitute Additional Bonds or Alternate Debt may be secured only as follows:

(A) by a lien on and security interest in any Property or interest in Property, real, personal or mixed, of the Institution other than the Mortgaged Property or the Gross Receipts; or

(B) by a purchase money security interest in fixtures and Equipment (whether or not part of the Mortgaged Property) or by a security interest given to refinance such purchase money security interest.

(iii) Security for Short-Term Indebtedness and Working Capital Debt. Any Short-Term Indebtedness or any Long-Term Indebtedness which is incurred for the purpose of providing working capital may be secured by a security interest on the Gross Receipts (but not the Mortgaged Property) on a parity with the security interest created by this Agreement, and if so secured, the agreement for the repayment of such Short-Term Indebtedness and instruments evidencing or securing the same shall provide that: (i) any event of default thereunder shall be an Event of Default hereunder; and (ii) if any event of default shall have occurred with respect to such Short-Term Indebtedness, the holder thereof shall be entitled only to such rights to exercise, consent to or direct the exercise of remedies as are available to the Bond Trustee hereunder. Any agreement for the repayment of such Indebtedness and instruments evidencing or securing the same shall provide for notices to be given to the Authority and the Bond Trustee regarding defaults by the Institution thereunder, and shall specify the right of the Bond Trustee to pursue remedies upon the receipt of such notice, and the sharing of the right to control the exercise of remedies with the holder of such indebtedness.

(iv) Security for Subordinated Indebtedness. The Institution may secure Subordinated Indebtedness incurred or assumed pursuant to this Section with a lien on the Gross Receipts (but not the Mortgaged Property) that is subordinate to the lien on this Agreement.

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Section 5.19. Calculation of Debt Service Requirements.

(a) For the purpose of determining the interest rate on Long-Term Indebtedness which bears interest at a variable rate, such interest rate shall be assumed to be: (1) for the purpose of determining whether such Long-Term Indebtedness may be incurred, the rate estimated by a Consultant to be in effect on Indebtedness of comparable terms and creditworthiness at the time of such incurrence; or (2) for the purpose of Long-Term Indebtedness outstanding, the higher of (a) the average interest rate on such Long-Term Indebtedness for the preceding calendar year or (b) the rate then in effect on such Long-Term Indebtedness.

(b) For the purpose of determining the Debt Service Requirements on any Long-Term Indebtedness incurred to finance a Capital Addition, the admission to which is subject to Residency Agreements, there shall be applied as a credit against the principal amount of such Long-Term Indebtedness the amount of Entrance Fees or other moneys which are forecasted to be used (other than from the proceeds of Long-Term Indebtedness) to pay the principal of such Long-Term Indebtedness during the forecast period covered by a Feasibility Report, provided that no such forecast period shall extend more than five full Fiscal Years beyond the date of completion of the Capital Additions being financed with such Long-Term Indebtedness or, in the case of Long-Term Indebtedness issued or incurred for refinancing purposes, five full Fiscal Years beyond the date of issuance thereof.

(c) For the purpose of determining the Debt Service Requirements on that portion of Long-Term Indebtedness which constitutes Balloon Indebtedness, at the option of the Obligated Group Representative (and in lieu of the provisions of the preceding paragraph, if applicable):

(i) If such Balloon Indebtedness is less than 5% of Revenues of the Institution for the Fiscal Year preceding the date it is incurred, the Debt Service Requirements on such Long-Term Indebtedness shall be deemed to be those if such Long-Term Indebtedness were amortized over a term of 15 years, based on level payments of principal and interest, using an interest rate estimated by a Consultant to be in effect on debt of comparable terms and creditworthiness;

(ii) If the Debt Service Coverage Ratio of the Institution for the preceding Fiscal Year was at least 1.35 and Days’ Cash on Hand at the end of the last Fiscal Year, and as of the most recent fiscal quarter, was at least 220, the Debt Service Requirements on such Long-Term Indebtedness shall be deemed to be those which would be payable if such Long-Term Indebtedness were amortized over a term of 25 years, based on level payments of principal and interest, using an interest rate estimated by a Consultant to be in effect on debt of comparable terms and creditworthiness;

(iii) If the Institution received an enforceable commitment for funding new Long-Term Indebtedness to repay such prior Indebtedness, the Debt Service Requirements shall be deemed to be those of the new Long-Term Indebtedness obligation;

(iv) If such Long-Term Indebtedness is secured by a letter of credit in an amount at least equal to the principal amount of such Long-Term Indebtedness, the Debt Service Requirements shall be deemed to be those which will become due from the Institution assuming such Credit Facility is drawn upon to pay such Long-Term Indebtedness at any maturity of such Balloon Indebtedness; and

(v) If such Long-Term Indebtedness does not meet any of the requirements of subparagraphs (i), (ii), (iii) or (iv) above, or if such Balloon Indebtedness matures within 12 months of the date of calculation, the Debt Service Requirements shall include the full amount of principal stated to be due in any year on such Long-Term Indebtedness.

(d) For the purpose of determining whether any particular Guaranty may be incurred, it shall be assumed that 100% of the Indebtedness guaranteed is Long-Term Indebtedness of the guarantor under such Guaranty. For the purpose of calculating any historical Debt Service Requirements, the guarantor’s Debt Service Requirements under a Guaranty shall be deemed to be the actual amount paid on such Guaranty by the guarantor. For any other purpose, a guarantor shall be considered liable only for 20% of the annual debt service requirement on the Indebtedness guaranteed; provided, however, if the guarantor has been required by reason of its guaranty to

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make a payment in respect of such Indebtedness within the immediately preceding 24 months, the guarantor shall be considered liable for 100% of the annual debt service requirement on the Indebtedness guaranteed.

Section 5.20. Permitted Reorganizations. (a) The Institution covenants that, except for Permitted Reorganizations described in paragraph (b) of this Section 5.20, the Institution shall not merge, consolidate or reorganize (which reorganization involves a transfer of a license or a substantial portion of the Institution’s assets) with any other corporation.

(b) Permitted Reorganizations shall include only the following:

(1) with the prior written consent of the Authority, which consent shall not be unreasonably withheld, a merger, consolidation or reorganization in which (i) either the Institution will be the continuing corporation, or the successor corporation shall be a corporation organized and existing under the laws of the United States of America or a state thereof and such corporation shall expressly assume the due and punctual payment of the principal of and premium, if any, and interest on all Outstanding Notes according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Agreement by a supplement satisfactory to the Authority and the Bond Trustee, executed and delivered to the Authority and the Bond Trustee by such corporation; (ii) the Institution immediately after such merger, consolidation or reorganization would not be in default in the performance or observance of any covenant or condition contained in this Agreement, including the Cumulative Cash Loss Covenant, the Debt Service Coverage Ratio Covenant and the Days’ Cash on Hand Covenant, to the extent that compliance with the foregoing covenants is then required, with such calculations to be performed on a pro forma basis after giving effect to such reorganization; (iv) there shall be delivered to the Bond Trustee written confirmation from all rating agencies then maintaining a rating on the Bonds that the proposed Permitted Reorganization will not result in a reduction or withdrawal of the rating such rating agency then maintains on the Bonds; and (v) there shall have been delivered to the Authority and the Bond Trustee, an Opinion of Bond Counsel, in form and substance satisfactory to the Authority and the Bond Trustee, to the effect that under then existing law the consummation of such merger, consolidation or reorganization would not adversely affect the validity of the Bonds or the exemption from federal income taxation of interest payable on such Bonds.

(c) In case of any such consolidation, merger or reorganization and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named herein as the Institution. Such successor corporation thereupon may cause to be signed, and may issue in its own name Notes hereunder. All Outstanding Notes so issued by such successor corporation hereunder shall in all respects have the same legal rank and benefit under this Agreement as Outstanding Notes theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Notes had been issued hereunder by the Institution without any such consolidation, merger or reorganization having occurred.

(d) In case of any such consolidation, merger or reorganization such changes in phraseology and form (but not in substance) may be made in Notes thereafter to be issued as may be appropriate.

(e) The Authority and the Bond Trustee shall receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger or reorganization, and any such assumption, complies with the provisions of this Section and that it is proper for the Authority under the provisions of Section 7.1 hereof and of this Section to join in the execution of the supplement hereto provided for in this Section.

Section 5.21. Alternate Debt. (a) The Institution, with the prior written consent of the Authority and the Bond Trustee (which consent shall not be unreasonably withheld if all of the conditions of this Section are met) may incur Alternate Debt by borrowing money from lenders (institutional or otherwise) other than through the Authority under this Agreement or by assuming debt owing to others, but only as hereinafter in this Section 5.21 provided. Holders of Alternate Debt shall be entitled to a parity position with the Authority as to, and only as to, (i) the full faith and credit of the Institution, (ii) the security interest created by this Agreement in the Gross Receipts,

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(iii) the security interest created by this Agreement in the Equipment, and (iv) the mortgage lien of the Authority created by this Agreement in the Facility. Any security given by the Institution to holders of Alternate Debt shall also be granted, on a parity, to the Authority as further security for the Bonds.

(b) The Institution may incur Alternate Debt only after certifying to the Bond Trustee and the Authority that the conditions precedent to the incurring of such Alternate Debt have been satisfied as hereinafter required. Alternate Debt may be incurred from time to time pursuant to this Section 5.21 for the purpose of (i) paying the costs of completing, making additions to, or improving the Project; (ii) providing extensions, additions, improvements or repairs to the Project or the Facility or any of the Institution’s other Property; or (iii) providing additional funds for the Reserve Fund created under the Bond Indenture; or (iv) refinancing any outstanding Alternate Debt or Outstanding Bonds. Whenever the Institution desires to incur Alternate Debt for the purposes described in clauses (i) or (ii) above of this paragraph (b), it shall cause to be prepared and filed with the Bond Trustee and the Authority the items specified below:

(A) a certificate of an Institution Representative or an Architect, setting forth the estimated cost of the proposed extensions, additions, repairs or improvements, including an allowance for contingencies, interest during construction and financing costs, the estimated date on which such extensions, additions, repairs or improvements will first be placed in service and the amount, if any, to be provided or already provided by the Institution from other sources toward payment of the costs of such extensions, additions, repairs or improvements and the manner in which such funds will be provided;

(B) a certificate of an Institution Representative, stating that the Institution is not then in default in the performance of any of the covenants, conditions, agreements or provisions contained in the Agreement.

(C) The Institution shall not incur any Alternate Debt for the purposes described in clauses (i) or (ii) of paragraph (b) above unless at or prior to the incurrence of such Alternate Debt there shall be filed with the Authority and the Bond Trustee, in addition to the certificates required by paragraph (b) of this Section 5.21, evidence to the effect that the provisions of any one of the tests for the incurrence of Long-Term Indebtedness set forth in Section 5.18(b)(3) shall have been satisfied.

Section 5.22. Insurance. The Institution agrees that it will maintain, or cause to be maintained, insurance (including one or more self insurance programs considered to be adequate under the provisions of Section 5.23(d) hereof) as required by Section 4.16 hereof and such other insurance as required by this Section 5.22 covering such risks and in such amounts as, in its reasonable judgment, is adequate to protect it and its Property and operations. The insurance required to be maintained pursuant hereto shall be subject to the review of an Insurance Consultant every two years, commencing on the last day of the Fiscal Year ending in 2019, and the Institution agrees that it will follow any recommendations of the Insurance Consultant, except to the extent that its Governing Body determines in good faith that such recommendations are unreasonable and delivers an Officer’s Certificate to the Authority and the Bond Trustee setting forth the reasons for such determination. The Institution agrees that it will deliver or cause to be delivered to the Authority and the Bond Trustee at or prior to the delivery of the Series 2017 Bonds, and thereafter annually within thirty (30) days after the beginning of the next succeeding Fiscal Year, an Officer’s Certificate setting forth a description of the insurance maintained, or caused to be maintained, by the Institution pursuant to this Section and then in effect and stating whether such insurance and the manner of providing such insurance and any reductions or eliminations of the amount of any insurance coverage during the annual period covered by such report comply with the requirements of this Section and Section 5.23 hereof and adequately protect the Institution and its Property and operations. Such annual report shall also set forth any recommendations of the Insurance Consultant as to additional insurance, if any, reasonably required (during the period preceding the next such annual report) for the protection referred to in the next preceding sentence in light of available insurance coverage and practice in the continuing care retirement community industry and, if any change shall be made in such insurance as to either amount or type of coverage, a description and notice of such change shall be immediately furnished to the Authority and the Bond Trustee by the Institution. In the event that the Institution fails to maintain any insurance as provided herein, the Authority may procure and maintain such insurance at the expense of the Institution. All policies and certificates of insurance required hereby shall name the Authority and the Bond Trustee as a loss payee and shall further be open to inspection by the Authority and the Bond Trustee at all reasonable times.

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Section 5.23. Reduction and Modification of Insurance Coverage. (a) If the Institution has or hereafter obtains any of the following types of insurance, it must secure the concurrence of an Insurance Consultant before it may reduce or eliminate (other than in the ordinary course of business) the amount of its insurance coverage for the following types of insurance: (i) comprehensive general public liability insurance, including product liability, blanket contractual liability and automobile insurance including owned, non owned and hired automobiles (excluding collision and comprehensive coverage thereon), (ii) fire, flood, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, damage from aircraft, smoke and uniform standard coverage and vandalism and malicious mischief endorsements and business interruption insurance covering such perils, (iii) professional liability or medical malpractice insurance, (iv) worker’s compensation insurance, (v) boiler insurance, and (vi) business interruption insurance.

(b) In making its decision whether to concur in such reduction or eliminations the Insurance Consultant may take into account whether the Institution has established an adequate self insurance program with respect to the risk involved in accordance with paragraph (d) below.

(c) Insurance required under this Agreement may be in the form of a blanket insurance policy or policies and in the case of all policies may include additional names of insureds. Required limits of coverage may be provided by so called “umbrella” coverages.

(d) In lieu of obtaining third party coverage for the foregoing risks, the Institution may self insure any of the required coverages (or a portion thereof) or provide such self-insurance through a captive insurance company, provided, that if such self insurance is other than in the ordinary course of business, it delivers to the Authority and the Bond Trustee a report of an Insurance Consultant stating that the Institution’s decision to self insure such risks is consistent with proper management and insurance practices. In addition, as long as the Institution maintains any self insurance or captive insurance against general, professional or excess liability coverage, the Institution will provide the Authority and the Bond Trustee at least once every year and more frequently if requested by the Authority, with a report of an Insurance Consultant concerning the adequacy of funding and the funding determination processes employed by the Institution for such self insurance or by such captive insurance company.

(e) The Institution may arrange insurance coverage through a captive insurance company provided an Insurance Consultant’s report indicates that such insurance is consistent with proper management and insurance practices.

(f) In the event that the insurance required by this Agreement is not commercially available and the Institution has chosen not to self insure against such losses, the Institution shall employ an Insurance Consultant acceptable to the Authority, who shall review the insurance coverage of the Institution and the Property, Plant and Equipment and make recommendations on the types, amounts and provisions of insurance that should be carried. Insurance requirements shall be modified to conform with the recommendations of the Insurance Consultant except as the Authority may authorize deviations from such recommendations.

Section 5.24. Insurance and Condemnation Proceeds. (a) The Institution may make agreements and covenants with the holders of Indebtedness which is incurred in compliance with the provisions hereof 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.

(b) After application in accordance with paragraph (a) above, remaining amounts received by the Institution as insurance proceeds with respect to any casualty loss or as condemnation awards shall be applied pro rata to all Outstanding Bonds and Alternate Debt and may be used in such manner as the recipient may determine, including, without limitation, applying such moneys to the payment or prepayment of any Note or Notes in accordance with the terms thereof, subject to compliance with the provisions hereof; provided that if the amount of such proceeds or awards received with respect to any casualty loss or condemnation exceeds ten percent (10%) of the Value of the Property, Plant and Equipment, the Institution agrees that it will promptly remit such proceeds or awards to the Bond Trustee, and the Institution may elect to direct the Bond Trustee to cause such funds to be applied either (i) to the repair, reconstruction, restoration or replacement of the damaged or condemned facility or the purchase of capital equipment or (ii) to the prepayment of Notes issued and Outstanding, pro-rata among all such

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Notes. If the Institution elects the provisions of clause (i) above, any remaining balance of such funds after such repair, reconstruction, restoration or replacement shall be paid to the Institution.

Section 5.25. Cumulative Cash Loss Covenant. (a) The Institution shall maintain a maximum Cumulative Cash Loss for each fiscal quarter commencing with the first full fiscal quarter ending after the Initial Occupancy Date of no greater than the maximum Cumulative Cash Loss shown below for such fiscal quarter.

Fiscal Quarter Following Initial Occupancy Date Maximum Cumulative Cash Loss

1 $1,500,000 2 3,100,000 3 4,600,000 4 6,300,000 5 6,800,000 6 7,000,000 7 7,200,000

8 and thereafter 7,300,000

(b) Testing Compliance. Compliance with the Cumulative Cash Loss covenant shall be tested by the Institution quarterly commencing with the first full fiscal quarter ending after the Initial Occupancy Date and ending with the fiscal quarter in which Stabilization has been achieved, as shown on the unaudited financial reports required pursuant to Section 5.11 hereof. Following Stabilization, the Institution shall no longer be required to comply with the provisions of this Section 5.25.

(c) Failure to Meet Cumulative Cash Loss Covenant. (i) If the Institution exceeds the Cumulative Cash Loss amount set forth in this Section 5.25 for any one quarter, the Institution shall prepare and deliver to the Required Information Recipients a report and plan within thirty (30) days of delivery of the unaudited quarterly financial statements delivered in accordance with Section 5.11 hereof, describing in detail the reasons for the failure to meet such Cumulative Cash Loss covenant, and the proposed actions to be undertaken to achieve compliance with the Cumulative Cash Loss covenant on the earliest practicable date.

(ii) If the Institution again exceeds the Cumulative Cash Loss amount set forth in this Section 5.25 at any time after the delivery of the Institution’s report and plan required by clause (c)(i) above are due, the Institution shall cause to be prepared and delivered to the Required Information Recipients a report and plan of a Consultant (which Consultant may be Life Care Services LLC or other qualified Consultant) within sixty (60) days of the delivery of the unaudited quarterly financial statements delivered in accordance with Section 5.11 hereof, describing in detail the reasons for the failure to meet such covenant and recommending actions to be undertaken to achieve compliance on the earliest practicable date.

(iii) Failure to satisfy the maximum Cumulative Cash Loss Covenant shall not constitute an Event of Default hereunder for so long as the Institution shall obtain the reports required by (c)(i) and (ii) above and shall follow the recommendations set forth in such reports to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law.

Section 5.26. Debt Service Coverage Ratio Covenant.

(a) The Institution covenants and agrees to operate the Facility on a revenue producing basis and to charge such fees and rates for the Facility and its services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it hereunder to the extent permitted by law. The Institution further covenants and agrees that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of this Section. The Institution agrees that it will calculate the Debt Service Coverage Ratio of the Institution (i) as of the end of each fiscal quarter on a rolling 12-month basis, commencing with the first full fiscal quarter following Stabilization (provided that for the first nine-months that the Debt Service Coverage

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Ratio is required to be computed, the Debt Service Coverage Ratio may be calculated on an annualized basis from the first day of the first fiscal quarter for which such ratio is required to be computed), and (ii) as of the end of each Fiscal Year, based on audited financial statements, commencing with the first Fiscal Year during which the Debt Service Coverage Ratio is required to be computed for each fiscal quarter.

(b) If the Debt Service Coverage Ratio of the Institution for any calculation date is less than 1.10 during the first Fiscal Year for which the Debt Service Coverage Ratio is required to be calculated, and thereafter if the Debt Service Coverage Ratio is less than 1.20, the Institution, shall, within thirty (30) days of such calculation, prepare a report and plan detailing the reasons for such deficiency and the proposed actions to increase the Debt Service Coverage Ratio to the required level on the earliest practicable date. If the Debt Service Coverage Ratio is again below the required level on any testing date thereafter, the Institution shall retain a Consultant (which may be Life Care Services LLC) within sixty (60) days following the calculation of any such deficiency to make recommendations with respect to the rates, fees and charges of the Institution and the Institution’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 for the following Fiscal Year. Notwithstanding anything herein to the contrary, for the first Fiscal Year in which the Debt Service Coverage Ratio is to be calculated pursuant to (a) above, the Debt Service Coverage Ratio for such fiscal year shall be not less than 1.10.

(c) The Institution shall cause a copy of the reports and recommendations required by paragraph (b) above to be filed with each Required Information Recipient. The Institution shall follow each recommendation in such reports to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law. This Section shall not be construed to prohibit the Institution from serving indigent patients to the extent required for it to continue its qualification as a tax exempt organization or from serving any other class or classes of patients without charge or at reduced rates.

(d) If the Institution fails to achieve a Debt Service Coverage Ratio of 1.20 (or 1.10 as applicable) as of the end of any Fiscal Year following Stabilization but did achieve a Debt Service Coverage Ratio of at least 1.00 as of the end of such Fiscal Year, such failure shall not constitute an Event of Default under the Agreement if (i) the Institution takes all action necessary to comply with the procedures set forth above for preparing a report and adopting a plan and (ii) follows each recommendation contained in such reports to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law. Failure by the Institution to comply with (i) or (ii) of the preceding sentence may become an Event of Default, with the giving of notice.

(e) If the Institution fails to achieve a Debt Service Coverage Ratio of at least 1.00 at the end of any Fiscal Year following Stabilization, such failure shall constitute an Event of Default under this Agreement.

Section 5.27. Days’ Cash on Hand Covenant. (a) The Institution covenants that it will calculate the Days’ Cash on Hand of the Institution semiannually on each June 30 and December 31, commencing with the first semiannual testing date that follows Stabilization. The Institution is required to conduct its business so that on each semiannual testing date the Institution shall have no less than 180 Days’ Cash on Hand (the “Days’ Cash on Hand Requirement”).

(b) If the amount of Days’ Cash on Hand as of any testing date is less than the Day’s Cash on Hand Requirement, the Institution shall, within thirty (30) days after delivery of the Officer’s Certificate disclosing such deficiency, prepare and deliver a report and plan describing in detail the reasons for the failure to satisfy the Days’ Cash on Hand Requirement and the proposed actions to be undertaken to achieve compliance with the Days’ Cash on Hand Requirement on the earliest practicable date.

(c) If on any testing date thereafter the Institution shall again fail to satisfy the Days’ Cash on Hand Requirement, the Institution shall, within sixty (60) days after delivery of the Officer’s Certificate disclosing such deficiency, retain a Consultant (which may be Life Care Services LLC or other qualified Consultant) to make recommendations with respect to the rates, fees and charges of the Institution and the Institution’s methods of operation and other factors affecting its financial condition in order to increase the Days’ Cash on Hand to the Days’ Cash on Hand Requirement for future periods. A copy of the reports and recommendations required by paragraph (b) above and this paragraph (c) shall be filed with each Required Information Recipient. The Institution shall

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follow each recommendations in such reports applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law.

(d) Notwithstanding any other provision of this Agreement to the contrary, failure of the Institution to achieve the required Days’ Cash on Hand Requirement for any Fiscal Year shall not constitute an Event of Default under this Agreement if the Institution takes all action necessary to comply with the procedures set forth in paragraphs (b) and (c) above and follows each recommendation contained in such reports to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law.

Section 5.28. Marketing Covenant. (a) Beginning with the first full fiscal quarter following the fiscal quarter in which the Series 2017 Bonds are issued, and ending with the first full fiscal quarter following Stabilization, the Institution will use its best efforts to maintain the percentage of Independent Living Units that are part of the Facility which are Reserved (the “Percentage of Reserved Independent Living Units”) at or above the applicable levels set forth below, which determinations shall be measured as of the last day of the applicable quarter (the “Marketing Requirements”). The applicable Marketing Requirements shall be as follows:

Reserved Independent Living Units Quarter Ending #Units Percent

09/30/17 104 74.3% 12/31/17 110 78.6 03/31/18 114 81.4 06/30/18 118 84.3 09/30/18 122 87.1

12/31/18 and thereafter 126 90.0

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

(c) If the Percentage of Reserved Independent Living units is less than the Marketing Requirement for two successive fiscal quarters, the Institution is required to retain a Consultant within 30 days thereafter to make recommendations regarding the actions to be taken to increase the Percentage of Reserved Independent Living Units to the Marketing Requirements set forth herein for future periods. Notwithstanding anything herein to the contrary, Bluespire, Inc. may provide the recommendations provided for in the previous sentence upon the first covenant breach described herein. Within 60 days of retaining any such Consultant, the Institution is required to cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Required Information Recipient. The Institution is required to follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Board of the Institution) and permitted by law. The Institution will not be required to obtain a Consultant’s report in any two consecutive fiscal quarters.

(d) Failure of the Institution to achieve the Marketing Requirements for any fiscal quarter will not constitute an Event of Default under this Agreement if the Institution takes all action necessary to comply with the procedures set forth in paragraphs (b) and (c) above for preparing a Management Marketing Report or obtaining a Consultant’s report and adopting a plan and follows each recommendation contained in such Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law.

Section 5.29. Occupancy Covenant. (a) The Institution covenants that for each fiscal quarter (a) commencing with the first fiscal quarter which ends not less than 60 days following the issuance of the first

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certificate of occupancy for the first building containing Independent Living Units that are part of the Facility, and (b) ending with the first full fiscal quarter following Stabilization (each an “Occupancy Quarter”), the Institution will use its best efforts to have Occupied the percentage of the total number of all Independent Living Units that are part of the Facility (the “Percentage of Units Occupied”) at or above the requirements set forth below, which levels shall be measured as of the last day of the applicable Occupancy Quarter (the “Occupancy Requirements”):

Occupancy Requirements

Occupancy Quarter #Units Percent 1 15 10.7% 2 35 25.0 3 50 35.7 4 65 46.4 5 75 53.6 6 85 60.7 7 92 65.7 8 99 70.7 9 106 75.7

10 113 80.7 11 120 85.7

12 and thereafter 126 90.0

(b) If the Percentage of Units Occupied for any Occupancy Quarter is less than the Occupancy Requirement set forth above for that Occupancy Quarter, the Institution is required to prepare and submit to the Required Information Recipients, within 30 days of the end of such fiscal quarter, (a) an occupancy report (a “Management Occupancy Report”) that includes the following information: (i) the Percentage of Units Occupied and (ii) the number of reservations and cancellations of Independent Living Units that are part of the Facility during the immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared by management of the Institution, of the number of Independent Living Units that are part of the Facility expected to be Occupied in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the Management Occupancy Report is being prepared; and (c) a description of the sales and marketing plan of the Institution.

(c) If the Percentage of Units Occupied for any two consecutive fiscal quarters is less than the Occupancy Requirement set forth above for those fiscal quarters, the Institution is required to retain a Consultant within thirty (30) days thereafter to make recommendations regarding the actions to be taken to increase the Percentage of Units Occupied to the Occupancy Requirement set forth above for future periods. Bluespire, Inc. may provide the recommendations provided for in the previous sentence upon the first covenant breach described herein. Within 60 days of retaining any such Consultant, the Institution is required to cause a copy of the Consultant’s report and recommendations, if any, to be filed with each Required Information Recipient. The Institution is required to follow each recommendation of the Consultant to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law. The Institution will not be required to obtain a Consultant’s report in any two consecutive fiscal quarters.

(d) Failure of the Institution to achieve the Occupancy Requirement for any Occupancy Quarter will not constitute an Event of Default under this Agreement if the Institution takes all action necessary to comply with the procedures set forth above for preparing a Management Occupancy Report or obtaining a Consultant’s report and adopting a plan and follows each recommendation contained in such Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Institution) and permitted by law.

Section 5.30. Management Company and Marketing Consultant. (a) The Institution is required to engage a Manager and a Marketing Consultant (which may be the same firm) at all times so long as any Bonds are Outstanding. The Institution may serve as Manager of the Facility if (1) (i) the Series 2017B and Series 2017C Bonds have been paid in full, (ii) the Institution has achieved a 1.30 Debt Service Coverage Ratio for six consecutive fiscal quarters, (iii) the Institution has 200 Days’ Cash on Hand for six consecutive quarters, (iv) the Debt Service Reserve Fund is funded at required levels, (v) the Institution has achieved Stabilization for the most

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recent six fiscal quarters, and (vi) no Event of Default has occurred and is continuing hereunder, and (2) the Institution provides the Bond Trustee with written confirmation from the auditor of the financial statements of the Institution that there are no material weaknesses, material control issues or other adverse material negative findings in the financial statement of the Institution. In lieu of (1) or (2) in the preceding sentence, the Institution may obtain consent from the Holders of a majority of Outstanding Bonds. Except as provided in subsections (b) and (c) below, the Institution shall be required to retain a new Manager or Marketing Consultant or both, upon the written direction of the Holders of at least a majority of aggregate principal amount of the Bonds Outstanding, if:

(i) the Institution fails to make any Note Payment when due; or

(ii) the Institution fails to maintain a Debt Service Coverage Ratio of at least 1.00 as shown on any two (2) successive quarterly unaudited financial statements; or

(iii) the Institution fails to meet the required Debt Service Coverage Ratio by the end of the second fiscal quarter following the date the Consultant’s report is required as described above under Section 5.26(b) hereof; or

(iv) the Institution fails to meet the required Occupancy Requirements by the end of the second Occupancy Quarter following the date the Consultant’s report is required as described above under Section 5.29(c);or

(v) the Institution fails to meet the required Marketing Requirements by the end of the second fiscal quarter following the date the Consultant’s report is required as described above under Section 5.28(c); or

(vi) the Institution fails to meet the Cumulative Cash Loss requirement by the end of the second fiscal quarter following the date the Consultant’s report is required as described above under Section 5.25(c)(ii); or

(vii) the Institution fails to meet the Days’ Cash on Hand Requirement by the end of the second fiscal quarter following the date the Consultant’s report is required as described above under Section 5.27(c).

(b) Whenever the Institution is required to retain a new Manager or Marketing Consultant, as described in clauses (i) through (vii) of paragraph (a) above, the Institution shall immediately retain a Consultant who shall, within 30 days of the event requiring appointment of a new Manager and/or Marketing Consultant, submit to the Bond Trustee and the Authority, a list of two or more Persons experienced in the management, or marketing, as the case may be, of continuing care retirement facilities of a type and size similar to the Facility. If the Institution is required to retain a new Manager or Marketing Consultant under the circumstances described above, the Institution shall retain as Manager and/or Marketing Consultant a Person from the list submitted by the Consultant. Notwithstanding anything herein to the contrary, in the event that a new Manager or Marketing Consultant is appointed by the Institution, the provisions of the Agreement shall not be applied to require the further appointment of another Manager or Marketing Consultant until the new Manager or Marketing Consultant has been employed for at least twelve months.

(c) Notwithstanding the foregoing, the Institution shall not be required to retain a new Manager or Marketing Consultant if the Bond Trustee and the Authority receive, within 30 days of the event requiring appointment of a new Manager or Marketing Consultant:

(i) a written report (prepared by a Consultant, but not by the Manager or Marketing Consultant) containing sufficient detail to support the conclusions made therein and concluding (a) that the failure of the Institution to comply with the Debt Service Coverage Ratio Covenant, the Occupancy Requirement, the Days’ Cash on Hand Requirement, the Marketing Requirements, and/or the Cumulative Cash Loss requirement is primarily due to factors outside the control of the present Manager or Marketing Consultant, or (b) that retaining a

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new Manager or Marketing Consultant is not likely to materially improve the Institution’s ability to comply with such requirements; and

(ii) a certificated copy of a resolution of the Governing Body of the Institution stating that the performance by the Manager or Marketing Consultant of its duties is satisfactory and setting forth the reasons supporting retention of the present Manager or Marketing Consultant.

Section 5.31. Rating Application. The Institution covenants that it will seek at its expense a rating of the Series 2017 Bonds from at least one Rating Agency each year after a determination is made by the Institution Representative in consultation with the Original Purchaser that an investment grade rating is reasonably obtainable, until achievement of an investment grade rating; provided that if during any such year the Institution receives a preliminary indication from such Rating Agency that the Series 2017 Bonds will not be assigned an investment grade rating, the Institution shall withdraw any request for such year to have such Rating Agency assign a rating to the Series 2017 Bonds.

Section 5.33. Management and Operating Agreements. The Institution shall provide to the Authority from time to time as requested by the Authority, certified copies of every management, operating and other similar agreement covering all or substantially all of the Facility, if any. Each such agreement shall be in form and substance acceptable to the Authority, shall be subordinate and subject to the lien of this Agreement and shall be in compliance with the Tax Regulatory Agreement, the Code and applicable regulations and IRS Revenue Procedures promulgated thereunder.

Section 5.34. Compliance with Environmental Laws. (a) Obligations of Institution. The Institution hereby covenants to comply with, and to cause its officers, directors, shareholders, partners, agents, servants and employees and each tenant and other occupant and user of the Property, and the officers, directors, shareholders, partners, agents, servants and employees of such tenants, occupants and users to comply with, each and every Environmental Law applicable to the Institution, the Property and each such tenant, occupant or user with respect to the Property. Specifically, but without limitation, with respect to the Property:

(i) the Institution shall obtain and maintain (and cause each tenant, occupant and user to obtain and maintain) all permits, certificates, licenses and other consents and approvals required by each Environmental Law from time to time applicable to the Institution, each and every part of the Property and/or the conduct of any business thereat or related thereto;

(ii) the Institution shall not cause any Release on or off the Property and will not suffer or permit any Release, or the presence of Hazardous Materials, in, on or at the Property (except in compliance with all applicable Environmental Laws);

(iii) if the Institution causes a Release on or off the Property, or if a Release occurs on the Property, the Institution shall promptly effect the Clean Up of any resulting Contamination in accordance with and as required by the provisions of all applicable Environmental Laws; and

(iv) within thirty (30) days after the date that any lien is imposed against the Property or any part thereof under any Environmental Law, the Institution shall cause such lien to be discharged or bonded or otherwise secured to the Authority’s satisfaction.

(b) No Obligation of Authority. Notwithstanding any provision of this Agreement or any other loan document to the contrary, neither the execution by the Institution, nor the execution or acceptance by the Authority, of this Agreement nor any provision of this Agreement or any other loan document shall create or confer upon the Authority any obligation to (a) cure any failure by the Institution to comply with any Environmental Law, (b) take any actions or complete any actions taken, or expend any sums, to cure any failure by the Institution to comply with any Environmental Law or (c) compel, enjoin or otherwise cause the Institution to do any of the same; nor shall the execution by the Institution, or the execution or acceptance by the Authority, of this Agreement, or the existence or the exercise of any provision hereof or of any other loan document, operate to place upon the Authority any responsibility for the operation, control, care, management or repair of the Property, or any responsibility for, or any

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right, power or ability to control or direct the storage, transportation, release, removal, containment, encapsulation, remediation, monitoring, or other disposition of any Hazardous Materials, or make the Authority an “operator” of the Property within the meaning of any Environmental Laws.

(c) Survival. The provisions of this Section shall survive any satisfaction, release, discharge or reconveyance of this Agreement and the Institution shall continue to be obligated to indemnify each indemnified party with respect to any breach by the Institution of any of such provisions pursuant to Section 5.6 hereof for so long as such indemnified party may be liable for or subject to any claim, liability, damage, loss, order, penalty, fine, cost, charge or expense arising out of or related to any matter for which such indemnified party is indemnified under Section 5.6 hereof.

(d) Future Environmental Surveys and Testing. The Institution shall, at the request of the Authority, procure and provide to the Authority such environmental surveys and perform such environmental testing as the Authority shall, in the reasonable exercise of its discretion, deem appropriate; provided, however, that absent an event described in subsection (a) hereof, the Authority shall not require such surveys or testing more frequently than once every four (4) years.

Section 5.35. Continuing Disclosure. The Institution covenants and agrees to comply with, and cause any obligated person (within the meaning of the hereinafter defined Rule) to comply with, the continuing disclosure requirements promulgated under SEC Rule 15c2-12 (the “Rule”), as amended from time to time, and to incur all costs associated with compliance with such Rule. Notwithstanding any other provision of this Agreement, failure of the Institution to comply with the requirements of the Rule shall not constitute an Event of Default hereunder.

Section 5.36. State Reserve Requirement. The Institution covenants to maintain Cash and Investments sufficient to meet the liquid reserve requirements of Chapter 420-D of New Hampshire Revised Statutes Annotated (the “State Reserve Requirement”), it being understood that such Cash and Investments shall be included in the calculation of compliance with the Days’ Cash on Hand Covenant required under this Agreement. The Institution may treat amounts on deposit in the Debt Service Reserve Fund as “liquid reserves” for purposes of compliance with the State Reserve Requirement to the extent permitted by law.

EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Agreement Events of Default. Each of the following events shall constitute and be referred to herein as an “Agreement Event of Default”:

(a) The Institution shall fail to make, within two (2) days of the due date thereof, any payment of the principal of, the premium, if any, and interest on any Note Payment when and as the same shall become due and payable, whether at maturity, by proceedings for redemption, by acceleration or otherwise, in accordance with the terms thereof.

(b) The Institution shall fail duly to observe or perform any covenant or agreement on its part under this Agreement or under the Tax Regulatory Agreement for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Institution by the Authority or the Bond Trustee, or to the Institution, the Authority and the Bond Trustee by the holders of at least twenty five percent (25%) in aggregate principal amount of the Notes then Outstanding. If the breach of covenant or agreement is one which is capable of cure but cannot be completely remedied within the thirty (30) days after written notice has been given to the Institution, it shall not be an Agreement Event of Default as long as the Institution has taken active steps within thirty (30) days after written notice has been given to remedy the failure and is pursuing such remedy and provided that such default is cured within one hundred twenty (120) days after written notice of such default is given to the Institution.

(c) The Institution shall default with respect to any Indebtedness for borrowed moneys (other than Indebtedness which is Non Recourse Indebtedness), which Indebtedness is in a principal amount (or in the case of capitalized leases, a present value of future rental payments) in excess of $250,000, where the effect of such default entitles the holder of such Indebtedness to accelerate the maturity of such Indebtedness; provided, however, that

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such default shall not constitute an Agreement Event of Default within the meaning of this Section if within thirty (30) days, or within the time allowed for service of a responsive pleading if any proceeding to enforce payment of the Indebtedness is commenced, whichever is longer, (i) the Institution in good faith commences proceedings to contest the existence or payment of such Indebtedness, and (ii) sufficient moneys or other adequate security are escrowed with a bank or trust company for the payment of such Indebtedness.

(d) The entry of a decree or order by a court having jurisdiction in the premises adjudging the Institution a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Institution under the Federal Bankruptcy Code or any other applicable federal or State law, or appointing a receiver, liquidator, assignee, or sequestrator (or other similar official) of the Institution or of any substantial part of its Property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of ninety (90) consecutive days.

(e) The institution by the Institution of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other similar applicable federal or State law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Institution or of any substantial part of its Property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due.

(f) If there occurs any Bond Indenture Event of Default.

An Agreement Event of Default shall be deemed to be in effect upon the actual occurrence of such event, whether or not notice thereof has been given or received. Upon having actual notice of the existence of an Agreement Event of Default, the Bond Trustee shall serve written notice thereof upon the Institution unless the Institution has expressly acknowledged the existence of such Agreement Event of Default in a writing delivered by the Institution to the Bond Trustee or filed by the Institution in any court; provided, however, that any failure or delay on the part of the Bond Trustee in giving such notice shall not relieve, release or otherwise eliminate any of the Institution’s obligations or liabilities hereunder.

Section 6.2. Remedies in General; Statutory Power of Sale. Upon the occurrence and during the continuance of any Agreement Event of Default, the Bond Trustee on behalf of the Authority, at its option, may, and shall at the written direction of the Holders of 25% in aggregate principal amount of Bonds Outstanding for any Agreement Event of Default under Section 6.1(a) or (f) (arising from a Bond Indenture Event of Default under Section 7.1(a) or (b) thereof) or at the written direction of the Holders of a majority in aggregate principal amount of Bonds Outstanding for any Agreement Event of Default under Section 6.1(b), (c), (d), (e) or (f) (arising from a Bond Indenture Event of Default under Sections 7.1 (c),(d), (e) or (f) thereof), take such action as it deems necessary or appropriate to collect amounts due hereunder, to enforce performance and observance of any obligation or agreement of the Institution hereunder or to protect the interests securing the same, and may, without limiting the generality of the foregoing:

(a) Exercise any or all rights and remedies given hereby or available hereunder or given by or available under any other instrument of any kind securing the Institution’s performance hereunder.

(b) Take any action at law or in equity to collect the Note Payments then due, whether on the stated due date or by declaration of acceleration or otherwise, for damages or for specific performance or otherwise to enforce performance and observance of any obligation, agreement or covenant of the Institution hereunder.

(c) Apply to a court of competent jurisdiction for the appointment of a receiver (but only in the case of an Agreement Event of Default not described in Section 6.1(b) or (c) hereof) of any or all of the property of the Institution, such receiver to have such powers as the court making such appointment may confer. The Institution hereby consents and agrees, and will if requested by the Bond Trustee consent and agree at the time of application by the Bond Trustee for appointment of a receiver, to the appointment of such receiver and that such receiver may be given the right, power and authority, to the extent the same may lawfully be given, to take possession of and

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operate and deal with such property and the revenues, profits and proceeds therefrom, with like effect as the Institution could do so, and to borrow money and issue evidences of indebtedness as such receiver.

Prior to taking any such action hereunder, the Bond Trustee may demand indemnity satisfactory to it in accordance with the Bond Indenture. In the event of any Agreement Event of Default, the Authority, in addition to any other right or remedies it may have at law or in equity, shall have the right to and may enter into the Mortgaged Property without being liable for any prosecution or damages therefor and may dispossess the Institution and may lease the Mortgaged Property or any part thereof to another party for a term which may extend beyond the term hereof, and receive the rent therefor, upon such terms as shall be satisfactory to the Authority. Such entry by the Authority shall not operate to release the Institution from any sums to be paid or covenants to be performed under the Agreement during the full term hereof. In addition, the Institution hereby agrees that the receipt of rents, awards, and any other moneys or evidences thereof, and any disposition of the same by the Authority shall not constitute a waiver of the right of foreclosure and sale of the Mortgaged Property by the Authority or the Bond Trustee in the case of an Agreement Event of Default.

For the purpose of leasing the Mortgaged Property to another party, the Authority shall be authorized to make such repairs or alterations in or to the Mortgaged Property as the Authority may deem necessary to place the same in good order and condition. The Institution shall be liable to the Authority for the cost of such repairs or alterations and all expenses of such leasing. If the sum realized or to be realized from the leasing is insufficient to satisfy the sum payable by the Institution under the Agreement, the Authority, at its option, may require the Institution to pay such deficiency month by month, or may hold the Institution liable in advance for the entire deficiency to be realized during the term of the leasing of the Mortgaged Property. Notwithstanding such entry by the Authority, the Institution agrees that any utility service (including heat) furnished to the Mortgaged Property by the Institution prior to such entry shall continue to be furnished by the Institution to the Facility at the expense of the Institution.

This Agreement is upon the conditions herein and the “Statutory Conditions” as defined by Section 29 of Chapter 477 of the New Hampshire Revised Statutes Annotated, as amended, for any breach of which the Authority shall have the “Statutory Power of Sale” under New Hampshire law. Upon compliance with the requirements of New Hampshire law respecting a Power of Sale mortgage foreclosure of real estate, the Authority, in addition to exercising such other rights and remedies as it may deem advisable, may sell the Mortgaged Property, or any part thereof, at some place in Keene, New Hampshire, while proceeding in a commercially reasonable manner, and may convey the same by proper deed or deeds to the purchaser or purchasers absolutely and in fee simple; and such sale shall forever bar the Institution and all Persons claiming under it from all right and interest in the Mortgaged Property whether at law or in equity. In exercising any power of sale under this Section, it is agreed that a parcel may consist wholly of real estate, wholly of tangible personal property or any combination of both.

All rights and remedies herein given or granted to the Authority are cumulative, non exclusive and in addition to any and all rights and remedies that the Authority may have or be given by reason of any law, statute, ordinance or otherwise. Without limiting the generality of the foregoing, the Authority shall have all rights and remedies of a secured party under the New Hampshire Uniform Commercial Code with respect to (i) the Equipment, (ii) any fixtures or tangible personal property which are or may become part of the Mortgaged Property, and (iii) the Gross Receipts. The Authority may deal with such as collateral under said Code or as part of the Mortgaged Property mortgaged hereunder or in part one and in part the other. Notice in accordance with Section 7.10 hereof, mailed to the Institution at least fifteen (15) days before any proposed realization upon such collateral, shall constitute reasonable notification of such event under said Uniform Commercial Code.

Section 6.3. Discontinuance or Abandonment of Default Proceedings. If any proceedings taken by the Authority or the Bond Trustee on account of any Agreement Event of Default shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Authority or the Bond Trustee, then and in every case the Authority, the Bond Trustee and the Institution shall be restored to their former position and rights hereunder, respectively, and all rights, remedies and powers of the Authority and the Bond Trustee shall continue as though no such proceeding had taken place.

Section 6.4. Remedies Cumulative. No remedy conferred upon or reserved to the Authority or the Bond Trustee hereby or now or hereafter existing at law or in equity or by statute, shall be exclusive but shall be

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cumulative with all others. Such remedies are not mutually exclusive and no election need be made among them, but any such remedy or any combination of such remedies may be pursued at the same time or from time to time so long as all amounts realized are properly applied and credited as provided herein. No delay or omission to exercise any right or power accruing upon any Agreement Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient by the Authority or the Bond Trustee. In the event of any waiver of an Agreement Event of Default hereunder, the parties shall be restored to their former positions and rights hereunder, but no such waiver shall extend to any other or subsequent Agreement Event of Default or impair any right arising as a result thereof. In order to entitle the Bond Trustee to exercise any remedy reserved to it, it shall not be necessary to give notice other than as expressly required herein.

Section 6.5. Application of Moneys Collected. Any amounts collected pursuant to action taken under this Article VI shall be applied in accordance with the provisions of Article VII of the Bond Indenture, and to the extent applied to the payment of amounts due on the Bonds shall be credited against amounts due on the Notes.

Section 6.6. Attorneys’ Fees and Other Expenses. If, as a result of the occurrence of an Agreement Event of Default, the Authority or the Bond Trustee employs attorneys or incurs other expenses for the collection of payments due hereunder or for the enforcement of performance or observance of any obligation or agreement on the part of the Institution, the Institution will, on demand, reimburse the Authority or the Bond Trustee, as the case may be, for the reasonable fees and expenses of such attorneys and such other reasonable expenses so incurred.

MISCELLANEOUS

Section 7.8. Limitation of Rights; Right of Authority to Grant Waivers and Consent. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Agreement is intended or shall be construed to give to any Person other than the parties hereto, and the Holders of the Bonds, any legal or equitable right, remedy or claim under or in respect to this Agreement or any covenants, conditions or provisions herein contained; this Agreement and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the Holders of the Bonds as herein provided. The Authority reserves the right to give its consent as provided herein, and to waive any provision of Sections 5.1(o), 5.22, 5.23 and 5.34 of this Agreement, in its sole discretion and without the consent of the Holders of the Bonds, provided such consent or waiver does not cause the Authority to violate any of its covenants or agreements under the Bond Indenture. Any waiver or consent authorized to be given by the provisions of this Agreement may be given by an Authority Representative in writing.


APPENDIX E

FORMS OF APPROVING OPINIONS OF BOND COUNSEL


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Form of Approving Opinion of Hawkins Delafield & Wood LLP for Series 2017 Tax-Exempt Bonds

_______, 2017

New Hampshire Health and Education Facilities Authority 54 South State Street Concord, New Hampshire 03301

Ladies and Gentlemen:

We have examined a record of proceedings relating to the issuance of $_____ Revenue Bonds, Hillside Village Issue, Series 2017 consisting of the $____________ Series 2017A Bonds, $___________ Series 2017B Entrance Fee Principal Redemption BondsSM and $____________ Series 2017C Entrance Fee Principal Redemption BondsSM (collectively, the “Bonds”), of New Hampshire Health and Education Facilities Authority (the “Authority”), a public body corporate and agency of the State of New Hampshire.

The Bonds are issued under and pursuant to the New Hampshire Health and Education Facilities Authority Act, Chapter 195-D of the New Hampshire Revised Statutes Annotated, as amended (the “Act”), and under and pursuant to a bond resolution of the Authority adopted on January 19, 2017 (the “Bond Resolution”) and a Bond Indenture, dated as of June 1, 2017 (the “Bond Indenture”), by and between the Authority and U.S. Bank National Association, as bond trustee (the “Bond Trustee”).

The Series 2017A Bonds are dated their date of delivery and shall bear interest from their date at the rates per annum (payable on January 1, 2018 and semiannually thereafter on each January 1 and July 1) and mature on July 1 in the years and in the respective principal amounts as follows:

Year Amount Interest

Rate Year Amount Interest

Rate

The Series 2017B Bonds are dated their date of delivery and shall bear interest at a rate per annum

equal to ____% (payable on January 1, 2018 and semiannually thereafter on each January 1 and July 1) and mature on July 1, ____ in the principal amount of $__________________.

The Series 2017C Bonds are dated their date of delivery and shall bear interest at a rate per annum equal to ____% (payable on January 1, 2018 and semiannually thereafter on each January 1 and July 1) and mature on July 1, ____ in the principal amount of $__________________.

The Bonds are subject to redemption prior to maturity upon the terms and conditions provided therein, in the Bond Resolution and in the Bond Indenture. The Bonds are in the form of fully-registered bonds in the denomination of $100,000 and multiples of $5,000 in excess thereof and are numbered separately within each series thereof from R-1 upward in order of issuance.

We have also examined an executed copy of the Loan Agreement and Mortgage (Security Agreement), dated as of June 1, 2017 (the “Agreement”), by and between the Authority and The Prospect-

28 LIBERTY STREET NEW YORK, NY 10005 WWW.HAWKINS.COM

APPENDIX E

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Woodward Home (the “Institution”). Pursuant to the Agreement, in order to secure the financing and refinancing of certain continuing care retirement facilities, the Institution has granted to the Authority a security interest in Gross Receipts (as defined in the Agreement) of the Institution and in certain personal property of the Institution. In addition, pursuant to the Agreement, the Institution has mortgaged to the Authority certain of its buildings and real property (the “Mortgaged Property”). The Institution has agreed in the Agreement, among other things, to make payments to the Authority in amounts and at the times stated therein which will be applied to pay the principal of, redemption premium, if any, and interest on the Bonds when due.

The Authority reserves the right to issue additional bonds on the terms and conditions and for the purposes stated in the Bond Indenture. Except as otherwise provided in the Bond Indenture, all such bonds will rank equally as to security with the Bonds.

We are of the opinion that:

(1) The Authority is duly created and validly existing under the provisions of the Act and has good right and lawful authority to utilize proceeds of the Bonds to assist the Institution in the financing and refinancing of the Project (as defined in the Agreement) and to establish and maintain payments, fees or charges in respect thereof and collect revenues therefrom and to perform all obligations of the Authority under the Bond Resolution and the Bond Indenture in those respects.

(2) The Authority has the right and power under the Act to adopt the Bond Resolution, and the Bond Resolution has been duly and lawfully adopted by the Authority, is in full force and effect and is valid and binding upon the Authority and enforceable in accordance with its terms, and no other authorization for the Bond Resolution is required. The Bond Resolution and the Bond Indenture create the valid pledge which they purport to create of the Pledged Revenues (as defined in the Agreement) and all income and receipts earned on funds held or set aside under the Bond Indenture, subject only to the application thereof to the purposes and on the conditions permitted by the Bond Indenture.

(3) The Authority is duly authorized and entitled to issue the Bonds and the same have been duly and validly authorized and issued by the Authority in accordance with the Constitution and statutes of the State of New Hampshire, including the Act, the Bond Resolution and the Bond Indenture, and constitute valid, binding, special obligations of the Authority, enforceable in accordance with their terms and the terms of the Bond Resolution and the Bond Indenture and are entitled to the benefits of the Act, the Bond Resolution and the Bond Indenture.

(4) The Agreement has been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the Institution, constitutes a valid and legally binding agreement by and between the parties thereto, enforceable in accordance with its terms.

(5) The Bond Indenture has been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the Bond Trustee, constitutes a valid and legally binding agreement by and between the parties thereto, enforceable in accordance with its terms.

(6) Under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described below, (i) interest on the Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations.

The Code establishes certain requirements that must be met subsequent to the issuance and delivery of the Bonds in order that, for Federal income tax purposes, interest on the Bonds be not included in gross income pursuant to Section 103 of the Code. These requirements include, but are not limited to, requirements relating to the use and expenditure of Bond proceeds, restrictions on the investment of Bond proceeds prior to expenditure and the requirement that certain earnings be rebated to the Federal government. Noncompliance with

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such requirements may cause interest on the Bonds to become subject to Federal income taxation retroactive to their date of issue, irrespective of the date on which such noncompliance occurs or is ascertained.

On the date of delivery of the Bonds, the Authority and the Institution will execute a Tax Regulatory Agreement (the “Tax Regulatory Agreement”) relating to the Bonds containing provisions and procedures pursuant to which such requirements can be satisfied. In executing the Tax Regulatory Agreement, the Authority and the Institution covenant that they will comply with the provisions and procedures set forth therein and that they will do and perform all acts and things necessary or desirable to assure that interest paid on the Bonds will, for Federal income tax purposes, be excluded from gross income.

In rendering the opinion in paragraph 6 hereof, we have relied upon and assumed (i) the material accuracy of the representations, statements of intention and reasonable expectation, and certifications of fact contained in the Tax Regulatory Agreement with respect to matters affecting the status of interest paid on the Bonds, and (ii) compliance by the Authority and the Institution with the procedures and covenants set forth in the Tax Regulatory Agreement as to such tax matters.

(7) Under existing statutes, the Bonds, their transfer and the income therefrom, including any profit made on the sale thereof, will be exempt from taxes directly imposed thereon by The State of New Hampshire and the municipalities and other political subdivisions of The State of New Hampshire.

Except as stated in paragraphs 6 and 7 above, we express no opinion as to any other Federal, state or local tax consequences arising with respect to the Bonds or the ownership or disposition thereof. In addition, we express no opinion as to any transaction that is not expressly referenced in this opinion or the effect of any such transaction on the exclusion of interest on the Bonds from gross income for Federal income tax purposes. We render our opinion under existing statutes and court decisions as of the issue date, and we assume no obligation to update, revise or supplement this opinion after the issue date to reflect any action hereafter taken or not taken, or any facts or circumstances, or any change in law or in interpretations thereof, or otherwise, that may hereafter arise or occur, or for any other reason. Furthermore, we express no opinion herein as to the effect of any action hereafter taken or not taken in reliance upon an opinion of counsel other than ourselves on the exclusion from gross income for Federal income tax purposes of interest on the Bonds.

In rendering our opinion, we have relied on the opinion of Hinckley, Allen & Snyder LLP, counsel to the Institution, regarding, among other matters, the current qualification of the Institution as an organization described in Section 501(c)(3) of the Code. We note that the opinion of counsel to the Institution is subject to a number of qualifications and limitations. The Institution has covenanted that it will do nothing to impair its status as a tax-exempt organization, and that it will comply with the requirements of the Code and any applicable regulations throughout the term of the Bonds. Failure of the Institution to be organized and operated in accordance with the Internal Revenue Service’s requirements for the maintenance of the Institution’s status as an organization described in Section 501(c)(3) of the Code or to use the assets being financed and refinanced with the proceeds of the Bonds in activities of the Institution that do not constitute unrelated trades or businesses within the meaning of Section 513 of the Code may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of issuance of the Bonds.

The foregoing opinions are qualified only to the extent that the enforceability of the Bonds, the Bond Resolution, the Bond Indenture, the Tax Regulatory Agreement and the Agreement may be limited by bankruptcy, insolvency, and other laws affecting creditors’ rights or remedies heretofore or hereafter enacted.

We have examined an executed Bond, and in our opinion the form of said Bond and its execution are regular and proper.

Very truly yours,

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Form of Approving Opinion of Hawkins Delafield & Wood LLP for Series 2017D Bonds

_______, 2017

New Hampshire Health and Education Facilities Authority 54 South State Street Concord, New Hampshire 03301

Ladies and Gentlemen:

We have examined a record of proceedings relating to the issuance of $_______ Federally Taxable Entrance Fee Principal Redemption BondsSM, Hillside Village Issue, Series 2017D (the “Bonds”), of New Hampshire Health and Education Facilities Authority (the “Authority”), a public body corporate and agency of the State of New Hampshire.

The Bonds are issued under and pursuant to the New Hampshire Health and Education Facilities Authority Act, Chapter 195-D of the New Hampshire Revised Statutes Annotated, as amended (the “Act”), and under and pursuant to a bond resolution of the Authority adopted on January 19, 2017 (the “Bond Resolution”) and a Bond Indenture, dated as of June 1, 2017 (the “Bond Indenture”), by and between the Authority and U.S. Bank National Association, as bond trustee (the “Bond Trustee”).

The Bonds are dated their date of delivery and shall bear interest at a rate per annum equal to ____% (payable on January 1, 2018 and semiannually thereafter on each January 1 and July 1) and mature on July 1, ____ in the principal amount of $__________________.

The Bonds are subject to redemption prior to maturity upon the terms and conditions provided therein, in the Bond Resolution and in the Bond Indenture. The Bonds are in the form of fully-registered bonds in the denomination of $100,000 and multiples of $5,000 in excess thereof and are numbered separately within each series thereof from R-1 upward in order of issuance.

We have also examined an executed copy of the Loan Agreement and Mortgage (Security Agreement), dated as of June 1, 2017 (the “Agreement”), by and between the Authority and The Prospect-Woodward Home (the “Institution”). Pursuant to the Agreement, in order to secure the financing and refinancing of certain continuing care retirement facilities, the Institution has granted to the Authority a security interest in Gross Receipts (as defined in the Agreement) of the Institution and in certain personal property of the Institution. In addition, pursuant to the Agreement, the Institution has mortgaged to the Authority certain of its buildings and real property (the “Mortgaged Property”). The Institution has agreed in the Agreement, among other things, to make payments to the Authority in amounts and at the times stated therein which will be applied to pay the principal of, redemption premium, if any, and interest on the Bonds when due.

The Authority reserves the right to issue additional bonds on the terms and conditions and for the purposes stated in the Bond Indenture. Except as otherwise provided in the Bond Indenture, all such bonds will rank equally as to security with the Bonds.

28 LIBERTY STREET NEW YORK, NY 10005 WWW.HAWKINS.COM

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We are of the opinion that:

(1) The Authority is duly created and validly existing under the provisions of the Act and has good right and lawful authority to utilize proceeds of the Bonds to assist the Institution in the financing and refinancing of the Project (as defined in the Agreement) and to establish and maintain payments, fees or charges in respect thereof and collect revenues therefrom and to perform all obligations of the Authority under the Bond Resolution and the Bond Indenture in those respects.

(2) The Authority has the right and power under the Act to adopt the Bond Resolution, and the Bond Resolution has been duly and lawfully adopted by the Authority, is in full force and effect and is valid and binding upon the Authority and enforceable in accordance with its terms, and no other authorization for the Bond Resolution is required. The Bond Resolution and the Bond Indenture create the valid pledge which they purport to create of the Pledged Revenues (as defined in the Agreement) and all income and receipts earned on funds held or set aside under the Bond Indenture, subject only to the application thereof to the purposes and on the conditions permitted by the Bond Indenture.

(3) The Authority is duly authorized and entitled to issue the Bonds and the same have been duly and validly authorized and issued by the Authority in accordance with the Constitution and statutes of the State of New Hampshire, including the Act, the Bond Resolution and the Bond Indenture, and constitute valid, binding, special obligations of the Authority, enforceable in accordance with their terms and the terms of the Bond Resolution and the Bond Indenture and are entitled to the benefits of the Act, the Bond Resolution and the Bond Indenture.

(4) The Agreement has been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the Institution, constitutes a valid and legally binding agreement by and between the parties thereto, enforceable in accordance with its terms.

(5) The Bond Indenture has been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the Bond Trustee, constitutes a valid and legally binding agreement by and between the parties thereto, enforceable in accordance with its terms.

(6) Under existing statutes and court decisions, interest on the Bonds is included in gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended (the “Code”).

(7) Under existing statutes, the Bonds, their transfer and the income therefrom, including any profit made on the sale thereof, will be exempt from taxes directly imposed thereon by The State of New Hampshire and the municipalities and other political subdivisions of The State of New Hampshire.

Except as stated in paragraphs 6 and 7 above, we express no opinion as to any other Federal, state or local tax consequences arising with respect to the Bonds or the ownership or disposition thereof. In addition, we express no opinion as to any transaction that is not expressly referenced in this opinion. We render our opinion under existing statutes and court decisions as of the issue date, and we assume no obligation to update, revise or supplement this opinion after the issue date to reflect any action hereafter taken or not taken, or any facts or circumstances, or any change in law or in interpretations thereof, or otherwise, that may hereafter arise or occur, or for any other reason. Furthermore, we express no opinion herein as to the effect of any action hereafter taken or not taken in reliance upon an opinion of counsel other than ourselves.

The foregoing opinions are qualified only to the extent that the enforceability of the Bonds, the Bond Resolution, the Bond Indenture and the Agreement may be limited by bankruptcy, insolvency, and other laws affecting creditors’ rights or remedies heretofore or hereafter enacted.

We have examined an executed Bond, and in our opinion the form of said Bond and its execution are regular and proper.

Very truly yours,


APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT


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CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (this “Agreement”) dated as of June 1, 2017 is made and entered into by and between The Prospect-Woodward Home (the “Institution”) and U.S. Bank National Association, as Dissemination Agent (the “Dissemination Agent”) in connection with the issuance by the New Hampshire Health and Education Facilities Authority (the “Authority”) of its $_________ Revenue Bonds, Hillside Village Issue, Series 2017 (the “Bonds”), consisting of $________ Series 2017A Bonds, $________ Series 2017B Entrance Fee Principal Redemption Bonds, $________ Series 2017C Entrance Fee Principal Redemption Bonds and $________ Series 2017D Federally Taxable Entrance Fee Principal Redemption Bonds. The Bonds are being issued pursuant to a Bond Indenture dated as of June 1, 2017 (the “Indenture”) between the Authority and U.S. Bank National Association, in its capacity as trustee for the holders of the Bonds (in such capacity, together with any successor trustee, the “Trustee”).

NOW THEREFORE, intending to be legally bound hereby, the parties hereto hereby covenant and agree as follows:

SECTION 1. Purpose of the Continuing Disclosure Agreement. This Agreement is being executed and delivered for the benefit of the holders and Beneficial Owners of the Bonds and in order to assist Herbert J. Sims & Co., Inc. (the “Participating Underwriter”) in complying with the Rule (defined below). The Institution acknowledges that the Authority has undertaken no responsibility with respect to any reports, notices or disclosures provided or required to be provided under this Agreement and has no liability to any person, including (without limitation) any holder or Beneficial Owner of the Bonds, with respect to any such reports, notices or disclosures.

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture or the Loan Agreement (each defined below), which apply to any capitalized term used in this Agreement unless otherwise defined herein, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Institution pursuant to, and as described in, Sections 3 and 4 of this Agreement.

“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.

“Dissemination Agent” shall mean U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Institution and which has filed with its predecessor Dissemination Agent a written acceptance of such designation in accordance with Section 10 hereof.

“EMMA” means the Electronic Municipal Market Access system of the MSRB as provided at http://www.emma.msrb.org, or any similar system that is acceptable to or as may be prescribed by the MSRB for purposes of the Rule and approved by the SEC from time to time. A current list of such systems may be obtained from the SEC at http://www.sec.gov/info/municipal/nrmsir.htm\.

“Indenture” shall mean the Bond Indenture dated as of June 1, 2017 between the Authority and the Trustee.

“Listed Events” shall mean any of the events listed in Section 5 of this Agreement.

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“Loan Agreement” shall mean the Loan Agreement and Mortgage (Security Agreement) dated as of June 1, 2017 between the Authority and the Institution.

“Monthly Report” shall mean any Monthly Report provided by the Institution pursuant to, and as described in, Section 6(a) of this Agreement.

“MSRB” shall mean the Municipal Securities Rulemaking Board.

“Official Statement” shall mean the Official Statement dated ____ __, 2017 relating to the Bonds.

“Quarterly Report” shall mean any Quarterly Report provided by the Institution pursuant to, and as described in, Section 6(b) of this Agreement.

“Rule” shall mean Rule 15c2-12 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 Securities and Exchange Commission.

SECTION 3. Provision of Annual Reports.

(a) The Institution shall file, or shall deliver to the Dissemination Agent for the Dissemination Agent to file, with the MSRB, within 150 days of the the end of the fiscal year of the Institution, commencing with the fiscal year ending December 31, 2017, an Annual Report which is consistent with the requirements of Section 4 of this Agreement. If the Institution is relying on the Dissemination Agent to file the Annual Report with the MSRB, it shall provide such Annual Report, together with a Compliance Certificate in substantially the form attached hereto as Exhibit A, to the Dissemination Agent at least five Business Days prior to the applicable filing date. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Agreement. If the Institution’s fiscal year changes, the Institution will file or cause the Dissemination Agent to file a notice of such change with the MSRB.

(b) If the Dissemination Agent receives the Annual Report from the Institution and delivers the Annual Report to the MSRB, the Dissemination Agent shall file a report with the Institution to the effect that the Annual Report has been so delivered pursuant to this Agreement and stating the date it was delivered. If the Institution delivers the Annual Report directly to the MSRB, it shall provide a certificate in substantially the form attached hereto as Exhibit B to the Dissemination Agent.

(c) If the Institution fails either to (i) provide the Annual Report to the Dissemination Agent in a time, manner and condition sufficient for the Dissemination Agent to deliver the Annual Report in compliance with Section 3(a), or (ii) report to the Dissemination Agent that it has on its own so delivered the Annual Report, the Dissemination Agent shall send a notice to the MSRB (and copies thereof to the Institution) in substantially the form attached as Exhibit C attached hereto.

SECTION 4. Content of Annual Reports. The Annual Report shall contain or include by reference the following information:

(a) The annual financial statements for the Institution for the most recently completed Fiscal Year prepared in accordance with generally accepted accounting principles and

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audited by a certified public accountant in accordance with generally accepted auditing standards; provided, however, if the audited financial statements are not available within 150 days after the end of the Fiscal Year, unaudited financial statements shall be filed and subsequently replaced or supplemented by the audited financial statements when available.

(b) a separate written statement of the Accountant preparing the audited financial statements containing calculations of the Institution’s Debt Service Coverage Ratio for said Fiscal Year and the Days’ Cash on Hand of the Institution at the end of such Fiscal Year, if required to be calculated under the Loan Agreement; provided, however, that the report of the Accountant shall be subject to and restricted by any then current recommendations and/or pronouncements of the American Institute of Certified Public Accountants.

(c) an Officer’s Certificate of the Institution (A) stating that the Institution is in compliance with all of the terms, provisions and conditions of the Loan Agreement or, if not, specifying all such defaults and the nature thereof, (B) calculating and certifying the Marketing Requirements, Occupancy Requirements, Cumulative Cash Loss, Days’ Cash on Hand, and Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year under the Loan Agreement, as of the end of such Fiscal Year, and (C) beginning with the first Fiscal Year following Stabilization, attaching (I) information about occupancy of the Independent Living Units, including a comparison to prior year’s occupancy, (II) the payor mix for the nursing beds, (III) the turnover statistics with respect to the Independent Living Units, and (IV) changes in any services offered to the Residents of the Facility.

(d) a management’s discussion and analysis of the financial and operating results for the applicable Fiscal Year.

The information described above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Institution is an “obligated person” (as defined by the Rule), which have been filed with the MSRB or the SEC. If the document included by reference is a final official statement, it must be available from the MSRB. The Institution shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events. In a timely manner not in excess of ten Business Days after the occurrence of the event, the Institution shall file with the MSRB or deliver to the Dissemination Agent for filing with the MSRB notice of any of the following events with respect to the Bonds:

(i) Principal and interest payment delinquencies;

(ii) Non-payment related defaults, if material

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties;

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties;

(v) Substitution of credit or liquidity providers, or their failure to perform;

(vi) 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

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material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(vii) Modifications to rights of the Holders of the Bonds, if material;

(viii) Bond calls (other than mandatory sinking fund redemptions), if material, and tender offers;

(ix) Defeasances;

(x) Release, substitution, or sale of property, if any, securing repayment of the Bonds, if material;

(xi) Rating changes;

(xii) Bankruptcy, insolvency, receivership or similar event of the Institution;

(xiii) The consummation of a merger, consolidation, or acquisition involving the Institution or the sale of all or substantially all of the assets of the Institution, 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

(xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

SECTION 6. Monthly Reports; Quarterly Reports; Additional Information;

(a) Prior to Stabilization, the Institution shall file, or shall deliver to the Dissemination Agent for the Dissemination Agent to file, with the MSRB, not later than 45 days after the end of each month:

(1) Prior to the issuance of a certificate of occupancy for the first building containing Independent Living Units, (I) a calculation of the marketing levels for the Facility as of the end of such month, including the number of Independent Living Units that have been reserved or cancelled during that month and on an aggregate basis by unit type; (II) a copy of the report prepared by the Construction Consultant;, (III) a report by the Institution on the progress of the construction showing the dollar amount and percentage of completion for each stage of construction of the Facility, comparing such amounts to the amounts estimated in the schedule of values and the construction progress schedule delivered at closing, estimating the amount of funds required to complete the Facility, and certifying that the amount available in the Construction Fund, together with anticipated investment earnings, will be sufficient to pay the costs of completing the Facility; (IV) a report on the development costs of the Facility incurred during that month and on an aggregate basis; and (V); if such month is the last month of the fiscal quarter, a calculation of compliance with the Marketing Requirements; and

(2) After the issuance of a certificate of occupancy for the first building containing Independent Living Units, (I) a calculation of the marketing levels for the Facility as of the end of such month, including the number of Independent Living Units that have been reserved or cancelled during that month and on an aggregate basis by unit type; (II) occupancy levels of the Facility as of the end of such month including the number of Independent Living Units by unit type, assisted living units and nursing beds that were occupied and vacated during that month and on an aggregate basis and a payor mix for the nursing beds; (III) a summary statement on the status of construction until the issuance of the last

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certificate of occupancy for the Facility; (IV) a report on the development costs incurred during that month and on an aggregate basis until the issuance of the last certificate of occupancy for the Facility; (V) an unaudited statement of revenues and expenses and statement of cash flows of the Institution for such month and an unaudited balance sheet of the Institution as of the end of such month, showing a comparison to the current annual budget; and (VI) if such month is the last month of the fiscal quarter, a calculation of compliance with the Marketing Requirements and Occupancy Requirements, and a calculation of the Cumulative Cash Loss covenant, for such fiscal quarter, all prepared in reasonable detail and certified, subject to year-end adjustment, by an Institution Representative.

(b) Beginning with the first full fiscal quarter following Stabilization, the Institution shall file, or shall deliver to the Dissemination Agent and shall cause the Dissemination Agent to file, with the MSRB, not later than 45 days after the end of each fiscal quarter, unaudited financial statements of the Institution as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Institution during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, a payor mix for the nursing beds, occupancy levels of the Facility as of the end of such quarter including the number of Independent Living Units, assisted living units and nursing beds and a calculation of compliance with Days’ Cash on Hand Requirement as of the most recent semiannual testing date as set forth in the Loan Agreement and the Debt Service Coverage Ratio covenant for such fiscal quarter, all prepared in reasonable detail and certified, subject to year-end adjustment, by an Institution Representative. Such financial statements and calculations shall be accompanied by a comparison to the annual budget provided pursuant to the Loan Agreement. If on any required testing date, the Debt Service Coverage Ratio of the Institution for any Fiscal Year is less than 1.20 (or 1.10 for the first Fiscal Year in which the Debt Service Coverage Ratio is to be calculated) and the Days’ Cash on Hand of the Institution is less than the Days’ Cash on Hand Requirement for any testing date as provided in the Loan Agreement, the Institution will deliver the financial information and the calculations described in this paragraph (b) on a monthly basis within 45 days of the end of each month until the Debt Service Coverage Ratio of the Institution is at least 1.20 (or 1.10 for the first Fiscal Year in which the Debt Service Coverage Ratio is to be calculated) and the Days’ Cash on Hand of the Institution is at least equal to the applicable Days’ Cash on Hand Requirement.

(c) If the Institution is relying on the Dissemination Agent to file a Monthly or Quarterly Report with the MSRB, it shall provide such Report, together with a Compliance Certificate in substantially the form attached hereto as Exhibit A, to the Dissemination Agent at least five Business Days prior to the applicable filing date.

(d) In addition to the Monthly and/or Quarterly Reports described above, the Institution shall file, or shall deliver to the Dissemination Agent and shall cause the Dissemination Agent to file, with the MSRB:

(i) Any correspondence to or from the Internal Revenue Service concerning the status of the Institution as a Tax Exempt Organization or with respect to the tax exempt status of any Bonds, promptly upon receipt.

(ii) Within thirty (30) days of any revision of the schedule of Entrance Fees or Monthly Fees being charged or quoted to residents or prospective residents of the Facility, a report on the amounts of such revised Entrance Fees or monthly service fees for each type of unit setting forth the reasons for such revision and, if applicable, the reason why any increases in such fees forecasted in the feasibility study relating to the Facility have not been made.

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(iii) within 10 days after its receipt thereof, a copy of each Consultant’s report or counsel’s opinion required to be prepared under the terms of the Loan Agreement.

(e) The Institution shall use its best efforts to make available one or more representatives for a quarterly telephone conference call (or more frequently if requested by a majority of Bondholders) with the Bondholders to discuss the financial results of the preceding fiscal quarter and such other matters as are relevant or are reasonably requested by the Bondholders. The Institution shall post notice of such calls to EMMA at least one week prior to the scheduled date of each call.

SECTION 7. Failure to Provide Required Notices. In a timely manner, the Institution shall file with the MSRB written notice of any failure by the Institution to provide any information required pursuant to Section 4, 5 or 6 above within the time limit specified therein.

SECTION 8. Termination of Reporting Obligation. Except as otherwise provided herein, the obligations under this Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If the Institution’s obligations under the Loan Agreement are assumed in full by another person or entity, such other person or entity shall be responsible for compliance with this Agreement in the same manner as if it were the Institution and the Institution shall have no further responsibility hereunder. If such termination or substitution occurs prior to the final maturity of the Bonds, the Institution shall give notice of such termination or substitution in the same manner as for a Listed Event under Section 5 hereof.

SECTION 9. Transmission of Information and Notices. Whenever providing information to the Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, Listed Event notices and Failure to File Event notices, the Institution shall endeavor to indicate the full name of the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided information relates. Unless otherwise required by law, all documents provided to the MSRB in compliance with the Agreement shall be provided to the MSRB in an electronic format and shall be accompanied by identifying information, in each case as prescribed by the MSRB. As of the date of this Agreement, the MSRB has established EMMA as its continuing disclosure service for purposes of the Rule, and unless and until otherwise prescribed by the MSRB, all documents provided to the MSRB in compliance with this Agreement shall be submitted through EMMA in the format prescribed by the MSRB.

SECTION 10. Dissemination Agent. The initial Dissemination Agent shall be U.S. Bank National Association. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report, including, without limitation, any Annual Report or quarterly report, prepared by the Institution pursuant to this Agreement. The Institution may, from time to time upon 30 days’ written notice to the Dissemination Agent, appoint or engage a new Dissemination Agent, and may discharge any such Dissemination Agent, upon the appointment of a successor Dissemination Agent which shall be evidenced and be effective upon such successor Dissemination Agent’s execution and delivery to the Commission and the existing Dissemination Agent of a Form of Acceptance of Dissemination Agent’s Duties substantially in the form attached hereto as Exhibit D. The Institution shall be responsible for all fees and associated expenses of the Dissemination Agent. The Institution may also, upon 30 days’ written notice to the Dissemination Agent, discharge the Dissemination Agent without appointing a successor and assume the duties of the Dissemination Agent hereunder.

SECTION 11. Amendment; Waiver. Notwithstanding any other provision of this Agreement, the Institution may amend this Agreement and any provision of this Agreement may be waived if such amendment or waiver would not, in the opinion of counsel experienced in matters relating to federal securities law, cause the undertakings herein to violate the Rule as in effect at the time of the original

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issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, or materially impair the interests of the holders or Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Agreement, the Institution shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Institution. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 12. Additional Information. Nothing in this Agreement shall be deemed to prevent the Institution from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Agreement. If the Institution chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Agreement, the Institution shall not have any obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 13. Default. In the event of a failure of the Institution to comply with any provision of this Agreement, the Dissemination Agent shall, at the written direction of a Participating Underwriter or the holders of at least 25% in aggregate principal amount of Outstanding Bonds (but only if and to the extent the Dissemination Agent is indemnified to its satisfaction from any costs, liability or expense including, without limitation, fees and expenses of its attorneys, as provided in the Indenture), or any holder or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Institution to comply with its obligations under this Agreement. A default under this Agreement shall not be deemed an Event of Default under the Indenture or the Loan Agreement, and the sole remedy under this Agreement in the event of a failure of the Institution to comply with this Agreement shall be an action to compel performance; provided, however that nothing in this Agreement shall limit any Beneficial Owner’s rights that it otherwise would have under applicable federal securities laws. In no event shall the Dissemination Agent be liable for monetary damages in the event of a default under this Agreement.

SECTION 14. Duties, Immunities and Liabilities of Dissemination Agent. Article VIII of the Indenture is hereby made applicable to this Agreement as if this Agreement were (solely for this purpose) contained in the Indenture and applicable to the Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Agreement, and no further duties or responsibilities shall be implied, and the Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Institution has provided such information to the Dissemination Agent as required by this Agreement. The Dissemination Agent shall not have any liability under, nor duty to inquire into the terms and provisions of, any agreement or instructions, other than as outlined in this Agreement. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Dissemination Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Dissemination Agent shall not be liable for any action taken or omitted by it in good faith unless a court of competent jurisdiction determines that the

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Dissemination Agent’s gross negligence or willful misconduct was the primary cause of any loss to the Institution. The Dissemination Agent shall not incur any liability for following the instructions herein contained or expressly provided for, or written instructions given by the Institution. In the administration of this Agreement, the Dissemination Agent may execute any of its powers and perform its duties hereunder directly or through agents or attorneys and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Dissemination Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. The Dissemination Agent may resign and be discharged from its duties or obligations hereunder by giving notice in writing of such resignation specifying a date when such resignation shall take effect. Any corporation or association into which the Dissemination Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Dissemination Agent in its individual capacity shall be a party, or any corporation or association to which all or substantially all the corporate trust business of the Dissemination Agent in its individual capacity may be sold or otherwise transferred, shall be the Dissemination Agent under this Agreement without further act. The Institution covenants and agrees to hold the Dissemination Agent and its directors, officers, agents and employees (collectively, the “Indemnitees”) harmless from and against any and all liabilities, losses, damages, fines, suits, actions, demands, penalties, costs and expenses, including out-of-pocket, incidental expenses, legal fees and expenses, the allocated costs and expenses of in-house counsel and legal staff and the costs and expenses of defending or preparing to defend against any claim (“Losses”) that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them for following any instruction or other direction upon which the Dissemination Agent is authorized to rely pursuant to the terms of this Agreement. In addition to and not in limitation of the immediately preceding sentence, the Institution also covenants and agrees to indemnify and hold the Indemnitees and each of them harmless from and against any and all Losses that may be imposed on, incurred by, or asserted against the Indemnitees or any of them in connection with or arising out of the Dissemination Agent’s performance under this Agreement provided the Dissemination Agent has not acted with gross negligence or engaged in willful misconduct. Anything in this Agreement to the contrary notwithstanding, in no event shall the Dissemination Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Dissemination Agent has been advised of such loss or damage and regardless of the form of action. The obligations of the Institution under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall have no obligation to disclose information about the Bonds except as expressly provided herein. The fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship with the Institution, apart from the relationship created by the Rule, shall not be construed to mean that the Dissemination Agent has actual knowledge of any event or condition except as may be provided by written notice from the Institution. Nothing in this Agreement shall be construed to require the Dissemination Agent to interpret or provide an opinion concerning any information made public. If the Dissemination Agent receives a request for an interpretation or opinion, the Dissemination Agent may refer such request to the Institution for response. The Institution shall pay or reimburse the Dissemination Agent for its reasonable fees and expenses for the Dissemination Agent's services rendered in accordance with this Agreement. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the Institution, the Bondholder or any other party.

SECTION 15. Beneficiaries. This Agreement shall inure solely to the benefit of the Institution, the Dissemination Agent, the Participating Underwriter, and the holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 16. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

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SECTION 17. Applicable Law. This Agreement shall be construed under the laws of the State of New Hampshire and, to the extent inconsistent, with the laws of the United States of America.

IN WITNESS WHEREOF, the Institution has executed this Agreement under seal on the date and year first written above.

THE PROSPECT-WOODWARD HOME By:____________________________________ [Title] U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By:____________________________________ Authorized Officer

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EXHIBIT A

COMPLIANCE CERTIFICATE

New Hampshire Health and Education Facilities Authority Revenue Bonds, Hillside Village Issue, Series 2017

[Date] [U.S. Bank National Association, as Dissemination Agent] [Attention] [Address] Re: Re: Compliance Certificate for [Annual Report][Monthly Report][Quarterly Report] Dear _______________: Pursuant to the Continuing Disclosure Agreement dated as of June 1, 2017 between The Prospect-Woodward Home and U.S. Bank National Association, (the “Dissemination Agent”), the undersigned as a representative of The Prospect-Woodward Home, does hereby certify that the enclosed [Annual Report][Monthly Report][Quarterly Report] for the [fiscal year-end][fiscal quarter-end] [month end] _______________, of The Prospect-Woodward Home, complies with the requirements of the Continuing Disclosure Agreement. THE PROSPECT-WOODWARD HOME By: ________________________________ Name: Title: Enclosure

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EXHIBIT B

REPORT OF FILING

New Hampshire Health and Education Facilities Authority Revenue Bonds, Hillside Village Issue, Series 2017

[Date] [U.S. Bank National Association, as Dissemination Agent] [Attention] [Address] Re: Re: Compliance Certificate for Annual Report Dear _______________: Pursuant to the Continuing Disclosure Agreement dated as of June 1, 2017 between The Prospect-Woodward Home and U.S. Bank National Association, (the “Dissemination Agent”), the undersigned as a representative of The Prospect-Woodward Home, does hereby certify that the enclosed Annual Report for the fiscal year-end _______________, of The Prospect-Woodward Home, complies with the requirements of this Continuing Disclosure Agreement and was submitted directly to the MSRB on ___________ (date). THE PROSPECT-WOODWARD HOME By: ________________________________ Name: Title: Enclosure

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EXHIBIT C

NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: New Hampshire Health and Education Facilities Authority Name of Bond Issue: Revenue Bonds, Hillside Village Issue, Series 2017 CUSIP: Date of Issuance: June __, 2017 NOTICE IS HEREBY GIVEN that The Prospect-Woodward Home has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement dated as of June 1, 2017. Dated: cc: The Prospect-Woodward Home New Hampshire Health and Education Facilities Authority

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EXHIBIT D

FORM OF ACCEPTANCE OF DISSEMINATION AGENT’S DUTIES

hereby accepts and assumes all of the duties and obligations as Dissemination Agent under that certain Continuing Disclosure Agreement, dated as of June 1, 2017, by and between The Prospect-Woodward Home and U.S. Bank National Association respecting the New Hampshire Health and Education Facilities Authority Revenue Bonds, Hillside Village Issue, Series 2017. [NAME OF SUCCESSOR DISSEMINATION AGENT] By: Dated: Authorized Officer cc: The Prospect-Woodward Home New Hampshire Health and Education Facilities Authority




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